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EXHIBIT 10.27
EXECUTION COPY
THE INDEBTEDNESS CREATED PURSUANT TO THIS LOAN AND SECURITY AGREEMENT IS
"DESIGNATED SENIOR INDEBTEDNESS" AS THAT TERM IS DEFINED IN THE INDENTURE, DATED
AS OF MARCH 15, 1998, BETWEEN AVIRON AND MARINE MIDLAND BANK WITH RESPECT TO THE
5 3/4% CONVERTIBLE SUBORDINATED NOTES OF AVIRON DUE 2005
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of June 23, 1999, is
made by AVIRON (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, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and an office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lender make loans to
it; 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 make such loans, 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:
"Affiliate" shall mean as to any Person, any other Person who
directly or indirectly controls, is under common control with, is controlled by
or is a director or officer of such Person. As used in this definition,
"control" (including its correlative meanings, "controlled by" and "under common
control with") means possession, directly or indirectly, of the power to direct
or cause the direction of management or policies (whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person who owns directly or
indirectly ten percent (10%) or more of the securities having ordinary voting
power for the election of the members of the board of
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directors or other governing body of a corporation or ten percent (10%) or more
of the partnership or other ownership interests of any other Person (other than
as a limited partner of such other Person) will be deemed to control such
corporation, partnership or other Person.
"Agreement" shall mean this Loan and Security Agreement, as
amended, supplemented, or otherwise modified from time to time.
"American Home Products Corporation" shall mean American Home
Products Corporation, a Delaware corporation.
"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, with respect to laws limiting the rates of
interest charges on loans, the laws of the United States of America, whichever
laws allow the greater interest to be charged thereon, 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 Chicago, Illinois.
"Cash Equivalents" shall mean (i) securities issued, guaranteed
or insured by the United States or any of its agencies; (ii) certificates of
deposit maturing no more than one (1) year from the date of investment issued by
(x) the Lender or its Affiliates; (y) any U.S. federal or state chartered
commercial bank of recognized standing which has capital and unimpaired surplus
in excess of $500,000,000; or (z) any bank or its holding company that has a
short-term commercial paper rating of at least A-1 or the equivalent by Standard
& Poor's Ratings Services or at least P-1 or the equivalent by ▇▇▇▇▇'▇ Investors
Service, Inc.; (iii) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within two (2) years from the date of acquisition thereof; (iv)
corporate commercial paper, corporate notes and bonds, bankers acceptances,
certificates of deposit and repurchase agreements which, if Short Term, have a
minimum credit rating of A-1 or P-1 or, if Long Term, have a minimum credit
rating of A by Standard & Poor's Ratings Services or the equivalent by ▇▇▇▇▇'▇
Investors Service, Inc., provided that the investments referred to in this
clause shall mature no more than two (2) years from the date of purchase by the
Borrower and no single investment shall be in an amount greater than $7,500,000
unless such investment is issued by the United States Government or any of its
agencies or is a repurchase agreement collateralized by same or is an approved
money market fund; (v) non-diversified short duration mutual funds with an
average
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credit rating of at least A- by Standard & Poor's Ratings Services or the
equivalent by ▇▇▇▇▇'▇ Investors Service, Inc. and a duration not to exceed one
and one-half (1.5) years; (vi) investments in money market funds registered
under the Investment Company Act of 1940, which have net assets of at least
$500,000,000 and at least eighty-five percent (85%) of whose assets consist of
securities and other obligations of the type described in clauses (i) through
(v) above; and (vii) other instruments, commercial paper or investments
acceptable to the Lender in its sole discretion.
"Cash Covenant" shall have the meaning specified in Section 7.
"Cash Covenant Default" shall have the meaning specified in
Section 9(n).
"Code" shall have the meaning specified in Section 10(a)(viii).
"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 9.
"Financial Statements" shall have the meaning specified in
Section 6.1.
"First Loan" shall have the meaning specified in Section 3.1.
"First Note" shall mean the promissory note, substantially in the
form of Exhibit A, as amended, supplemented or otherwise modified from time to
time.
"Fourth Note" shall mean the promissory note, substantially in
the form of Exhibit D, as amended, supplemented or otherwise modified from time
to time.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect from time to time.
"Governing Documents" shall mean the Borrower's
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certificate of incorporation and bylaws, or similar organizational documents of
the Borrower.
"Indebtedness" shall mean, with respect to any Person, as of the
date of determination thereof (without duplication), (i) all obligations of such
Person for borrowed money of any kind or nature, including funded and unfunded
debt, and Swaps regardless of whether the same is evidenced by any note,
debenture, bond or other instrument, (ii) all obligations of such Person to pay
the deferred purchase price of property or services (other than current trade
accounts payable under normal trade terms and which arise in the ordinary course
of business), (iii) all obligations of such Person to acquire or for the
acquisition or use of any fixed asset, including capitalized lease obligations
(other than, in any such case, any portion thereof representing interest or
deemed interest or payments in respect of taxes, insurance, maintenance or
service), or improvements which are payable over a period longer than one year,
regardless of the term thereof or the Person or Persons to whom the same are
payable, (iv) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right to be secured by) a Lien on any asset of
such Person whether or not the Indebtedness is assumed by such Person, provided
that for the purpose of determining the amount of Indebtedness of the type
described in this clause (iv), if recourse with respect to such Indebtedness is
limited to the assets of such Person, then the amount of Indebtedness shall be
limited to the fair market value of such assets, (v) all Indebtedness of others
to the extent guaranteed by such Person and (vi) all obligations of such Person
in respect of letters of credit, bankers acceptances or similar instruments
issued or accepted by banks or other financial institutions for the account of
such Person.
"Intellectual Property" shall have the meaning specified in
Section 2.
"Letter of Credit" shall have the meaning specified in Section
9(n).
"Lien" shall mean any lien, claim, charge, encumbrance, pledge,
security interest, assignment, hypothecation, deed of trust, mortgage, lease,
conditional sale, retention of title or other preferential arrangement having
substantially the same economic effect as any of the foregoing, whether
voluntary or imposed by law.
"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 amended, supplemented or otherwise modified from time to time.
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"Loans" shall mean the First Loan and the Subsequent Loans.
"Long Term" shall mean maturing at any time after the date that
is the one-year anniversary from the date of issuance.
"Material Adverse Change" shall mean, with respect to any Person,
a material adverse change in the business, prospects, operations, results of
operations, assets, liabilities, or condition (financial or otherwise) of such
Person taken as a whole.
"Material Adverse Effect" shall mean, with respect to any Person,
a material adverse effect on the business, prospects, operations, results of
operations, assets, liabilities, or condition (financial or otherwise) of such
Person taken as a whole.
"Notes" shall mean the First Note, the Second Note, the Third
Note and the Fourth Note.
"Obligations" shall mean all indebtedness, obligations, and
liabilities of the Borrower under the Loan Documents, whether on account of
principal, interest, rent, finance charges, indemnities, fees (including,
without limitation, attorneys' fees, remarketing fees, origination fees,
collection fees, and all other professionals' fees), costs, expenses, taxes, or
otherwise.
"Permitted Indebtedness" shall mean (a) Indebtedness of the
Borrower in favor of the Lender, (b) Indebtedness secured by any Permitted
Liens, (c) Subordinated Indebtedness, (d) Swaps which are not speculative and
which hedge pre-existing risks and (e) extensions, refinancings, modifications,
amendments and restatements of any of the items of Permitted Indebtedness above,
but only to the extent such extensions, refinancings, modifications, amendments
or restatements (other than under clause (a)) do not increase the Indebtedness
of the Borrower.
"Permitted Liens" shall mean (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, pledges or
Liens to secure the payment of workmen's compensation, unemployment insurance,
or other social security benefits or obligations, public or statutory
obligations, surety or appeal
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bonds, bid or performance bonds, or other obligations of a like nature incurred
in the ordinary course of business; (c) licenses, leases, restrictions, or
covenants for or on the use of Equipment or Intellectual Property which do not
materially impair either the use of such Equipment or Intellectual Property in
the operation of the business of the Borrower or the value thereof; (d)
attachment or judgment Liens that do not constitute an Event of Default; (e)
Liens in favor of the Lender; (f) Liens on Equipment leased by the Borrower or
any of its subsidiaries pursuant to an operating or capital lease in the
ordinary course of business (including proceeds thereof and accessions thereto)
incurred solely for the purpose of financing the lease of such Equipment; (g)
easements, reservations, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances affecting real
property not constituting a Material Adverse Effect; (h) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payments of
customs duties in connection with the importation of goods; (i) Liens
constituting rights of setoff of a customary nature or banker's or securities
intermediaries' Liens with respect to amounts on deposit or investment deposits,
whether arising by operation of law or by contract, in connection with
arrangements entered into with banks in the ordinary course of business; (j)
earn-out and royalty obligations existing on the date hereof or entered into in
connection with an acquisition permitted by Section 5.14; (k) Liens (i) on
assets acquired by the Borrower or its subsidiaries after the date of this
Agreement which Liens existed prior to such acquisition or (ii) on assets
acquired or held by the Borrower or its subsidiaries to secure the purchase
price of such assets or Indebtedness incurred solely for the purpose of
financing the acquisition of such assets, provided that (A) each such Lien shall
attach only to the property to be acquired; (B) such Liens shall be created
substantially simultaneously with the acquisition of such assets; (C) a
description of the assets so acquired is furnished to the Lender; and (D) the
principal amount of the Indebtedness secured by such Liens shall at no time
exceed $5,000,000 in the aggregate; (l) Liens in favor of American Home Products
Corporation to secure Subordinated Indebtedness; and (m) Liens securing loans up
to $38,000,000 to the Borrower on terms satisfactory to the Lender in its sole
discretion to be used to finance the construction by the Borrower of a bulk
manufacturing facility at which the Borrower's "FluMist" product will be
manufactured and personal property and leasehold improvements to be situated
therein; provided, however, that in no event shall any Lien securing assets of
the type specified in the last sentence of Section 2 be deemed to be a
"Permitted Lien."
"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
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department thereof), and the successors, heirs, and assigns of each.
"Receivables" shall have the meaning specified in Section 2(iii).
"Second Note" shall mean the promissory note, substantially in
the form of Exhibit B, as amended, supplemented or otherwise modified from time
to time.
"Short Term" shall mean maturing at any time on or before the
date that is the one-year anniversary from the date of issuance.
"Solvent" shall mean, 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.
"Subordinated Indebtedness" shall mean the convertible
subordinated Indebtedness issued by the Borrower under the Trust Indenture dated
March 5, 1998, by and between the Borrower and Marine Midland Bank, as Trustee,
and any Indebtedness of the Borrower (other than Indebtedness owed to Affiliates
of the Borrower) which is subordinated to the Obligations on terms and under
documentation in form and substance satisfactory to the Lender in its sole
discretion.
"Subsequent Loans" shall have the meaning specified in Section
3.1.
"Swaps" shall mean, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether periodically or
upon the happening of a contingency. For the purposes of this Agreement, the
amount of the obligation under any Swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to such Person
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thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Taxes" shall have the meaning specified in Section 5.5.
"Third Note" shall mean the promissory note, substantially in the
form of Exhibit C, as amended, supplemented or otherwise modified from time to
time.
SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The
Borrower hereby assigns and grants to the Lender a continuing general 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
(i) all present and future machinery, equipment,
furniture, fixtures, leasehold improvements, conveyors, tools,
materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware, including
central processing units, terminals, drives, memory units,
printers, keyboards, screens, peripherals and input or output
devices, molds, dies, stamps, and other equipment of every kind
and nature and wherever situated now or hereafter owned and held
for use by the Borrower or in which the Borrower may have any
interest as lessee (to the extent of such interest), together
with all additions and accessions thereto, all replacements and
all accessories and parts therefor, all manuals, blueprints,
know-how, warranties and records in connection therewith
(including, without limitation, any computer software, whether on
tape, disc, card, strip or cartridge or in any other form) and
all rights against suppliers, warrantors, manufacturers, and
sellers or others in connection therewith, together with all
substitutes for any of the foregoing (collectively, "Equipment");
(ii) all present and future goods intended for sale,
lease or other disposition by the Borrower including, without
limitation, all raw materials, work in process, systems,
accessories, spare parts, finished goods and other retail
inventory, goods in the possession of outside processors or other
third parties, consigned goods (to the extent of the consignee's
interest therein), materials, parts and supplies of any kind,
nature or description which are
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or might be used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of any such goods,
all documents of title or documents representing the same and all
records, files and writings (including, without limitation, any
computer software, whether on tape, disc, card, strip or
cartridge or in any other form) with respect thereto;
(iii) all of the Borrower's present and future accounts
(including rights to receive payments for goods sold or services
rendered arising out of the sale or delivery of personal property
or work done or labor performed), contract rights, agreements,
understandings, open purchase and sale orders, promissory notes,
chattel paper, documents, tax refunds, rights to receive tax
refunds, bonds, certificates, insurance policies, insurance
proceeds, licenses, rights to receive fees, royalties and other
payments under license agreements, permits, franchise rights,
authorizations, customer and supplier lists, rights of
indemnification, contribution and subrogation, leases, computer
tapes, programs, discs and software, computer service contracts,
deposits, causes of action, choses in action, judgments, designs,
blueprints, quotations and bids, plans, specifications, sales
literature, all other general intangibles, claims against third
parties of every kind or nature, investment securities, notes,
drafts, acceptances, letters of credit and rights to receive
payments under letters of credit, deposit accounts, book
accounts, prepaid expenses, credits and reserves and all forms of
obligations whatsoever owing, instruments, documents of title,
leasehold rights, including in any goods, books, ledgers, files
(including credit and project files) and records (including tax
records) with respect to any collateral or security, together
with all right, title, security and guaranties with respect
thereto, including any right of stoppage in transit
(collectively, "Receivables"); and
(iv) all proceeds of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include patents, patent
applications, copyrights (registered and unregistered), trademarks, trade names,
service marks, names, logos, goodwill, trade secrets, know-how and royalties for
any of the foregoing (collectively, "Intellectual Property"). Notwithstanding
anything to the contrary, the grant of a security interest as provided in this
Agreement shall not extend to, and the term "Collateral" shall not include, any
accounts, general intangibles, instruments or chattel paper of the Borrower
(whether owned or held as licensee or lessee, or otherwise), to
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the extent that (i) such accounts, general intangibles, instruments, or chattel
paper are not assignable as a matter of law or under the terms of the license,
lease or other agreement applicable thereto (but solely to the extent that any
such restriction shall be effective under Applicable Law), without the consent
of the Person to whose benefit such restrictions exist and (ii) such consent has
not been obtained; provided, however, that the foregoing grant of security
interest shall extend to, and the term "Collateral" shall include, (A) any and
all proceeds of any general intangibles, accounts, instruments or chattel paper
which are otherwise excluded to the extent that the assignment or encumbrance of
such proceeds is not so restricted, including under Section 9-318 of the Code,
and (B) upon obtaining the consent of any such licensor, lessor or other
applicable party's consent with respect to any such otherwise excluded general
intangibles, accounts, instruments or chattel paper, and all proceeds thereof
that might otherwise have been excluded from such grant of a security interest
and the term "Collateral."
SECTION 3. THE LOANS.
SECTION 3.1. BORROWING. The Loans shall be in an aggregate
amount not greater than $10,000,000 available for borrowing, upon the
satisfaction of the conditions in Section 3.3 of this Agreement, in up to four,
but no less than two, installments (the first of which being referred to herein
as the "First Loan" and the remaining installments being referred to herein as
the "Subsequent Loans"), each of which shall be in an amount of not less than
$2,500,000 and shall be made on or before December 31, 1999. Notwithstanding
anything herein to the contrary, the Lender shall be obligated to make the Loans
only after the Lender, in its sole discretion, determines that the applicable
conditions for borrowing contained in Section 3.3 are satisfied.
SECTION 3.2. APPLICATION OF PROCEEDS. The Borrower shall
not directly or indirectly use any proceeds of the Loan other than to finance
the purchase or lease of Equipment.
SECTION 3.3. CONDITIONS TO LOANS. The obligation of the
Lender to make the Loans is subject to the following conditions:
(a) In the case of the First Loan, the Lender's receipt of
the following, each dated the date of the making of the 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
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Borrower as the Lender shall deem necessary or desirable,
in each case with results satisfactory to the Lender;
(ii) Uniform Commercial Code financing statements (Form
UCC-1) duly executed by the Borrower (naming the Lender as
secured party and the Borrower as debtor and in form acceptable
for filing in all jurisdictions that the Lender deems necessary
or desirable to perfect the security interests granted to it
hereunder) and, if applicable, termination statements or other
releases duly filed in all jurisdictions that the Lender deems
necessary or desirable to perfect and protect the priority of
the security interests granted to it hereunder;
(iii) the First Note, duly executed by the Borrower;
(iv) certificates of insurance required under Section 5.4
together with loss payee endorsements for all such policies
naming the Lender as lender loss payee and as an additional
insured;
(v) copies of the Governing Documents of the Borrower and
a copy of the resolutions of the Board of Directors of the
Borrower (or a unanimous consent of directors in lieu thereof)
authorizing the execution, delivery, and performance of this
Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, attached to which is a
certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (A) that such copies of the Governing
Documents and resolutions are true, complete, and accurate, 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;
(vi) a certified copy of a certificate of the Secretary of
State of the state of Delaware, dated a recent date, listing the
certificate of incorporation of the Borrower and each amendment
thereto on file in such official's office and certifying that
(A) such amendments are the only amendments to such certificate
of incorporation on file in that office, (B) the Borrower has
paid all franchise taxes to the date of such certificate and (C)
the Borrower is in good standing in that jurisdiction;
(vii) a certified copy of a certificate of the
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Secretary of State of California, dated a recent date,
certifying that the Borrower is in good standing in that
jurisdiction;
(viii) the opinion of counsel for the Borrower covering
such matters incident to the transactions contemplated by this
Agreement as the Lender may reasonably require;
(ix) a copy of the Borrower's Statement on Form 10-Q for
its fiscal quarter ended March 31, 1999 filed with the United
States Securities and Exchange Commission; and
(x) such other agreements and instruments as the Lender
reasonably deems necessary in connection with the transactions
contemplated hereby.
(b) In the case of a Subsequent Loan, the Lender's receipt
of the Second Note, the Third Note or the Fourth Note, as the case may be, duly
executed by the Borrower.
(c) There shall be no pending or, to the knowledge of the
Borrower after due inquiry, threatened litigation, proceeding, inquiry, or other
action (i) seeking an injunction or other restraining order, damages, or other
relief with respect to the transactions contemplated by this Agreement or the
other Loan Documents or (ii) which affects or could reasonably be expected to
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 reasonably
be expected to have a Material Adverse Effect in the judgment of the Lender.
(d) The Borrower shall have paid to the Lender all fees
and expenses required to be paid by it to the Lender as of such date as
specified in the commitment letter agreement dated May 7, 1999 between the
Borrower and the Lender.
(e) All representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents shall be true and
correct on and as of the date of the making of the applicable Loan; provided,
however, that those representations and warranties expressly referring to
another date shall be true and correct in all material respects as of such date.
(f) 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 be continuing or would result from the making of the applicable Loan.
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(g) the Lender shall have conducted and completed due
diligence to its satisfaction with respect to the Borrower's marketing and
development arrangement with American Home Products Corporation for the
Borrower's "FluMist" product.
SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
SECTION 4.1. GOOD STANDING; QUALIFIED TO DO BUSINESS; NO
TRADE NAMES. The Borrower (a) is duly organized, validly existing, and in good
standing under the laws of the State of Delaware, (b) has the power and
authority to own its properties and assets and to transact the businesses in
which it is presently, or proposes to be, engaged, and (c) is duly qualified and
authorized to do business and is in good standing in every jurisdiction in which
the failure to be so qualified could reasonably be expected to have a Material
Adverse Effect on (i) the Borrower, (ii) the Borrower's ability to perform its
obligations under the Loan Documents or (iii) the rights of the Lender
hereunder. The Borrower does not use, and has not used during the past five
years, any trade or other fictional name.
SECTION 4.2. DUE EXECUTION, ETC. The execution, delivery,
and performance by the Borrower of each of the Loan Documents to which it is a
party are within the powers of the Borrower, do not contravene the Governing
Documents 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 of, authorization
by, approval of, notice to or filing or registration with any Person. This
Agreement is, and each of the other Loan Documents to which the Borrower is or
will be a party, when delivered will be, the legal, valid, and binding
obligation of the Borrower enforceable against the Borrower in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and except as such enforceability may
be limited by general principles of equity, whether considered in a suit in law
or in equity).
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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 making of the Loans); the
security interests granted herein constitute and shall at all times constitute
the only Liens on the Collateral (other than Permitted Liens, of which those
specified in clauses (a), (f), (g), (h), (i) and (k) of the definition of
"Permitted Liens" may have priority over the Lender's 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. Except as set forth
on Schedule 4.4, no judgments are outstanding against the Borrower nor is there
now pending or, to the best of the Borrower's knowledge, threatened any
litigation, contested claim, or governmental proceeding by or against the
Borrower.
SECTION 4.5. NO DEFAULTS. The Borrower is not in default
and 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, (i)
except as set forth on Schedule 4.6, each item of the Collateral consisting of
goods is located at the address of the Borrower specified in the introductory
paragraph of this Agreement and (ii) the principal place of business and chief
executive office of the Borrower and the office where the Borrower keeps its
records is the address of the Borrower specified in the introductory paragraph
of this Agreement. None of the Collateral is evidenced by promissory notes or
other instruments.
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. None of the
Collateral is subject to contractual obligations that may restrict or inhibit
the Lender's rights or ability to sell or otherwise dispose of the Collateral or
any part thereof after an Event of Default.
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SECTION 4.9. PERFECTION AND PRIORITY OF SECURITY INTEREST.
This Agreement creates a valid and, upon completion of all required filings of
financing statements and similar registrations and except with respect to
deposit accounts and investment property, perfected first priority and exclusive
security interest in the Collateral (other than Permitted Liens), securing the
payment of all the Obligations. There is no contractual or other restriction
applicable to the granting by the Borrower of the Liens hereunder.
SECTION 4.10. 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 on the Borrower and which have not been specified herein, in the
Financial Statements, or in any certificate, opinion, or other written statement
previously furnished by the Borrower to the Lender.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. EXISTENCE, ETC. The Borrower will: (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 in the commercially reasonable
judgment of the Lender to the conduct of its business, (c) continue in, and
limit its operations to, the same general lines of business as those presently
conducted by it and (d) comply with all applicable laws and regulations of any
federal, state or local governmental authority except where any noncompliance
with respect to such laws and regulations could not reasonably be expected to
have a Material Adverse Effect.
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SECTION 5.2. NOTICE TO THE LENDER. As soon as possible,
and in any event within five Business 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 $500,000 in
the aggregate, (b) any contract that is terminated or amended and which has had
or could reasonably be expected to have a Material Adverse Effect on the
Borrower, (c) the occurrence of any Material Adverse Change with respect to the
Borrower and (d) the occurrence of any Event of Default or event or condition
which, with notice or lapse of time, or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has taken or
proposes to take with respect thereto.
SECTION 5.3. MAINTENANCE OF BOOKS AND RECORDS. The
Borrower will maintain books and records pertaining to the Collateral in such
detail, form, and scope as the Lender shall require in its commercially
reasonable judgment. The Borrower agrees that the Lender or its agents may enter
upon the Borrower's premises at any time and from time to time during normal
business hours and upon reasonable notice, and at any time on and after the
occurrence of an Event of Default (without notice), for the purpose of
inspecting the Collateral and any and all records pertaining thereto.
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SECTION 5.4. INSURANCE. The Borrower will maintain
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, and covering such risks as are at all
times satisfactory to the Lender. All such policies shall be made payable to the
Lender, in case of loss, under a 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. During the continuance of an Event
of Default, 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, and if any Lien shall be claimed therefor, then,
without notice to the Borrower, the Lender may pay such Taxes on the Borrower's
behalf, and the amount thereof shall be included in the Obligations.
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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, excluding, however,
(i) all taxes on or measured by the Lender's income and (ii) all charges, fees,
taxes and assessments that are being diligently contested in good faith by the
Borrower for which a reserve has been taken in accordance with 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 such location if, after
giving effect thereto, the aggregate value of the Collateral not at such
locations would exceed $250,000, except that the Borrower may change its chief
executive office and move or permit the movement of any item of Collateral to
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 such Collateral.
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SECTION 5.8. FURTHER ASSURANCES. The Borrower will,
promptly upon request by the Lender, execute and deliver or use its best efforts
to obtain any document reasonably required by the Lender (including, without
limitation, warehouseman or processor disclaimers, mortgagee waivers, landlord
disclaimers, or subordination agreements with respect to the Obligations under
the Loan Documents and the Collateral), give any notices, execute and file any
financing statements, intellectual property assignments, mortgages, or other
documents (all in form and substance satisfactory to the Lender), ▇▇▇▇ any
chattel paper or deliver any chattel paper or instruments to the Lender, and
take any other actions that are necessary or, in the reasonable 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 Person (other than Permitted
Liens), or to effect the purposes of this Agreement. The Borrower hereby
authorizes the Lender to file one or more financing or continuation statements,
intellectual property assignments and amendments thereto, relating to all or any
part of the Collateral without the signature of the Borrower where permitted by
law. A carbon, photographic, or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. To the extent
required under this Agreement, the Borrower will pay all reasonable costs
incurred in connection with any of the foregoing.
SECTION 5.9. NO DISPOSITION OF COLLATERAL. The Borrower
will not in any way hypothecate or create or permit to exist any Lien on any of
the Collateral, except for the Lien and security interest granted hereby and
Permitted Liens, and the Borrower will not sell, transfer, assign, pledge,
collaterally assign, exchange, or otherwise dispose of any of the Collateral
other than (i) sales of inventory in the ordinary course of the Borrower's
business, (ii) non-exclusive licenses and similar arrangements for the use of
the property of the Borrower or its subsidiaries in the ordinary course of
business, or (iii) used, worn-out or obsolete equipment. In the event the
Collateral, or any part thereof, is sold, transferred, assigned, exchanged, or
otherwise disposed of in violation of these provisions, the security interest of
the Lender shall continue in such Collateral or part thereof notwithstanding
such sale, transfer, assignment, exchange, or other disposition, and the
Borrower will hold the proceeds thereof in a separate account for the benefit of
the Lender. Following such a sale, the Borrower will transfer such proceeds to
the Lender in kind.
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SECTION 5.10. NO LIMITATION ON LENDER'S RIGHTS. The
Borrower will not enter into any contractual obligations (other than Permitted
Liens) which may restrict or inhibit the Lender's rights or ability to sell or
otherwise dispose of the Collateral or any part thereof.
SECTION 5.11. PROTECTION OF COLLATERAL. The Lender shall
have the right at any time to make any payments and do any other acts the Lender
deems necessary to protect its security interests in the Collateral, including,
without limitation, the rights to satisfy, purchase, contest, or compromise any
Lien (other than Permitted Liens) which, in the 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 reasonably incurred
in accordance with the terms of 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 that
it shall be bound by any payment reasonably made or act reasonably 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. The powers conferred on the Lender hereunder are (i)
solely to protect its interest in the Collateral, (ii) do not extend beyond such
interest and (iii) shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession, the
accounting for money actually received by it hereunder and the obligations of
the Lender under Section 11.8(b), the Lender shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
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SECTION 5.12. DELIVERY OF ITEMS. The Borrower will (a)
promptly (but in no event later than five Business Days) after its receipt
thereof, deliver to the Lender any documents or certificates of title issued
with respect to any property included in the Collateral, and any promissory
notes in excess of $250,000, 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 5.13. SOLVENCY. The Borrower shall be and remain
Solvent at all times.
SECTION 5.14. FUNDAMENTAL CHANGES. The Borrower will 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 or make any material change in its capital structure (other
than the Borrower's issuance of equity capital or Subordinated Indebtedness),
provided that such merger or consolidation may be made as long as the Borrower
is the surviving entity and an Event of Default does not exist before and would
not exist after giving effect to such transaction, and provided, further, that
any subsidiary of the Borrower may merge into the Borrower or another
wholly-owned subsidiary of the Borrower.
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SECTION 5.15. INDEBTEDNESS. The Borrower will not incur or
suffer to exist any Indebtedness other than Permitted Indebtedness.
SECTION 5.16. CERTAIN INTELLECTUAL PROPERTY.
(i) The Borrower will not in any way hypothecate or create
or permit to exist any Lien on any of the Intellectual Property,
and the Borrower will not sell, transfer, assign, pledge,
collaterally assign, exchange, or otherwise dispose of any of
the Intellectual Property. Notwithstanding the foregoing, the
Borrower may in the ordinary course of its business (A) grant
licenses with respect to any of the Intellectual Property, (B)
amend existing license agreements under which the Borrower is
licensee or licensor and (C) assign any of the Intellectual
Property, provided that no such license may be granted or
assignment made to secure Indebtedness of the Borrower to any
Person other than the Lender.
(ii) The Borrower agrees that, should it obtain an
ownership interest in (x) any material patent or (y) any
exclusive rights as a licensee under a material patent license,
(A) the provisions of Section 5.16(i) shall automatically apply
thereto and (B) with respect to any ownership interest in any
such patent or patent license that the Borrower should obtain,
it shall give notice thereof to the Lender in writing, promptly
after obtaining such ownership interest.
(iii) The Borrower agrees to take all necessary steps
including, without limitation, in the United States Patent and
Trademark Office or in any court, to (A) maintain each of its
patents and patent licenses and (B) pursue each of its patent
applications, now or hereafter owned or submitted by it,
including, without limitation, the filing of divisional,
continuation, continuation-in-part and substitute applications,
the filing of applications for reissue, renewal or extensions,
the payment of maintenance fees, and the participation in
interference, reexamination, opposition or infringement and
misappropriation proceedings, except in each case to the extent
reasonably necessary to further the economic interest of the
Borrower. Except to the extent reasonably necessary to further
its best economic interests, the Borrower agrees to take
corresponding steps with respect to each new or acquired patent,
patent application, or any rights obtained under any patent
license, in each case, to
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which it is now or later becomes entitled. Any expenses incurred
in connection with such activities shall be borne by the
Borrower.
(iv) The Borrower shall take all commercially reasonable
additional steps not set forth in subsections (i) and (ii)
hereof which the Lender requests to preserve and protect the
Borrower's material patents and patent licenses.
(v) The Borrower shall not abandon any patent or any
pending patent application without the written consent of the
Lender, except, in each case in which the Borrower has
reasonably determined that any of the foregoing is not of
material economic value to the Borrower.
(vi) In the event that the Borrower becomes aware that any
of its material patents has been infringed or misappropriated by
a third party, the Borrower shall notify the Lender promptly in
writing, in reasonable detail, and shall take such actions as
are reasonably appropriate under the circumstances to protect
such patent including, without limitation, suing for damages or
for an injunction against such infringement or misappropriation.
Any expense incurred in connection with such activities shall be
borne by the Borrower. The Borrower will advise the Lender
promptly in writing, in reasonable detail, of any material
adverse determination or the institution of any proceeding
(including, without limitation, the institution of any
proceeding in the United States Patent and Trademark Office or
any court) regarding any of its material patents.
SECTION 5.17. ADDITIONAL REQUIREMENTS. The Borrower will
take all such further actions and execute all such further documents and
instruments as the Lender may reasonably request.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and
satisfaction in full of all Obligations, the Borrower shall deliver to the
Lender the following financial information:
SECTION 6.1. ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 120 days after the end of each fiscal year of the
Borrower and its consolidated subsidiaries, the consolidated balance sheet,
income statement, and statements of cash flows and shareholders' equity for the
Borrower and its consolidated subsidiaries (the "Financial Statements") for such
year, reported on by independent certified public accountants without an adverse
qualification; and
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SECTION 6.2. QUARTERLY FINANCIAL STATEMENTS. As soon as
available, but not later than forty-five 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.
SECTION 7. CASH COVENANT. Until termination of the Lender's
obligations to make any Loan under this Agreement and payment and satisfaction
in full of all Obligations, the Borrower shall at all times maintain verifiable
cash balances (other than cash securing any Letter of Credit) in its bank
accounts and Cash Equivalents which are free and clear of all Liens of at least
$20,000,000 in the aggregate (the "Cash Covenant").
SECTION 8. LIMITED RELEASE. In the event that the Borrower enters
into a definitive agreement with a third party lender to finance the acquisition
or construction by the Borrower of a bulk manufacturing facility, the Lender
shall release its Liens on personal property purchased for use in and to be
located at such facility and leasehold improvements to such facility, but only
to the extent the purchase of such Equipment has not been financed by the Lender
and only if such third party lender shall have made a written request to the
Lender to release such Liens in accordance with Section 11.1.
SECTION 9. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) failure of the Borrower to pay any of the obligations
required to be paid by the Borrower under or in connection with the Notes, this
Agreement or any other Loan Document when due, whether at stated maturity, by
acceleration or otherwise;
(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 incorrect in any material respect when made;
(c) failure of the Borrower to perform or observe (i) any
of the terms, covenants or agreements contained in Sections 5.2, 5.4, 5.7, 5.9,
5.10, 5.14, 5.15, 5.17, 6.1 or 6.2 or (ii) any other term, covenant, or
agreement contained in any Loan Document (other than the other Events of Default
specified in this Section) that has not been cured within fifteen days after
such failure occurs;
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(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
proceeding 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 proceeding;
(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, and in the case of any such involuntary appointment,
such appointment remains undismissed or unstayed for forty-five days following
the commencement thereof, or any action by the Borrower authorizing any such
proceeding;
(h) the Borrower shall default in (i) the payment of
principal or interest on indebtedness of $250,000 or in the aggregate at any one
time (other than the Obligations), beyond the period of grace, if any, provided
in the instrument or agreement under which such indebtedness was created; or
(ii) the observance or performance of any other agreement or condition relating
to any such indebtedness or contained in any instrument or agreement relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such indebtedness to cause, with the giving of notice if required,
such indebtedness to become due prior to its stated maturity;
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(i) the Borrower suffers and sustains a Material Adverse
Change;
(j) any tax Lien, other than a Permitted Lien, is filed of
record against the Borrower and is not bonded or discharged within thirty
Business Days;
(k) one or more judgments in excess of $250,000 in the
aggregate are entered against the Borrower and such judgments shall not be
stayed, vacated, bonded, or discharged within sixty days;
(l) any material covenant, agreement, or obligation, as
determined in the good faith business judgment of the Lender, made by the
Borrower and contained in or evidenced by any of the Loan Documents shall cease
to be enforceable, or shall be determined to be unenforceable, in accordance
with its terms; the Borrower shall deny or disaffirm any of the Obligations 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;
(m) this Agreement shall for any reason (other than
pursuant to the terms hereof) cease to create a valid and perfected senior lien
on the Collateral, subject only to the Liens specified in the definition of
"Permitted Liens," purported to be covered hereby;
(n) the Borrower shall fail to be in compliance with the
Cash Covenant at any time (a "Cash Covenant Default") and (ii) deliver to the
Lender within five days of a Cash Covenant Default an irrevocable standby letter
of credit (the "Letter of Credit"), from a bank or other financial institution,
and on terms and conditions, in each case satisfactory to the Lender in its sole
discretion, in an amount equal to the then unpaid portion of the Obligations
naming the Lender as beneficiary;
(o) the Letter of Credit required to be delivered to the
Lender under Section 9(n) shall cease to be valid and enforceable in accordance
with its terms for any reason; or
(p) there occurs a change in ownership of an aggregate of
more than 35% of any equity interests of the Borrower having voting rights in
any transaction or related series of transactions (other than in connection with
any offering of equity securities by the Borrower) or any of such interests
becomes subject to any contractual, judicial or statutory Lien.
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SECTION 10. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, the Lender may, without prejudice to any of its other rights under
any Loan Document or Applicable Law:
(i) declare all Obligations under the Loan Documents to be
immediately due and payable (except with respect to any Event of
Default set forth in Section 9(f), in which case all Obligations
under the Loan Documents 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;
(ii) take possession of the Collateral and, for that
purpose may enter, with the aid and assistance of any person or
persons and subject to applicable law, any premises where the
Collateral or any part thereof is, or may be placed, and remove
the same;
(iii) remove for copying all documents, instruments, files
and records (including the copying of any computer records)
relating to the Borrower's Receivables, or use (at the expense
of the Borrower) such supplies or space of the Borrower at the
Borrower's places of business necessary to administer and
collect the Borrower's Receivables;
(iv) terminate its obligation, if any, to give additional
(or to continue) financial accommodations of any kind to the
Borrower;
(v) accelerate or extend the time of payment, compromise,
issue credits, or bring suit on the Borrower's Receivables (in
the name of the Borrower or the Lender) and otherwise administer
and collect such Receivables;
(vi) sell, assign and deliver the Borrower's Receivables
with or without advertisement, at public or private sale, for
cash, on credit or otherwise, subject to applicable law;
(vii) use all computer software programs, data bases,
processes, trademarks, tradenames and materials used by the
Borrower in connection with its businesses or in connection with
the Collateral (with respect to which the Lender shall have a
limited license therefor); and
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(viii) exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein (or in any
other 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 five Business 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.
(b) 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.
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SECTION 11. MISCELLANEOUS PROVISIONS.
SECTION 11.1. 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 Technology Finance Division, ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Legal
Department, with a copy to the Lender at Riverway II, West Office Tower, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department, and if
to the Borrower, then to Aviron, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, 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 communications shall be effective when
received or when delivery is refused.
SECTION 11.2. CONFIDENTIALITY. Neither the Borrower nor
any of its agents shall use or refer to the Lender or to any Affiliate of the
Lender in any disclosure (including, without limitation, press releases and
financial statements) made in connection with the Loan Documents or any of the
transactions contemplated thereunder without the prior written consent of the
Lender.
SECTION 11.3. 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 11.4. ASSIGNMENTS. The Borrower shall not have the
right to assign the Notes or this Agreement or any interest therein. The Lender
may assign its rights and delegate its obligations under the Notes, this
Agreement or any other Loan Document.
SECTION 11.5. 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 the Borrower and shall bind
and benefit the Borrower and the Lender and their respective successors and
assigns.
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SECTION 11.6. BORROWER REMAINS LIABLE. Anything herein to
the contrary notwithstanding, (a) the Borrower shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Lender of any of the rights hereunder shall not release the Borrower from any of
its duties or obligations under the contracts and agreements included in the
Collateral and (c) the Lender shall not have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Lender be obligated to perform any of the obligations
or duties of the Borrower thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
SECTION 11.7. 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 the Notes shall have the meaning set forth in the
Code, except where the context otherwise requires. To the extent a term or
provision of this Agreement conflicts with any term or provision of the Notes,
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 11.8. CONTINUING SECURITY INTEREST.
(a) This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the final 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.
(b) Upon the final payment in full of the Obligations, the
security interest provided herein shall terminate with respect to all Collateral
and the Lender shall at the expense of the Borrower return to the Borrower all
Collateral then held by the Lender, if any, and at the expense of the Borrower
shall execute, in form for filing, termination statements of the security
interest herein granted or any other documents reasonably requested by the
Borrower to evidence such termination, and thereafter, no party shall have any
further right or obligation hereunder except for the obligations of the Borrower
under Section 11.10.
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SECTION 11.9. 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 11.10. 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.
SECTION 11.11. 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 other 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 other Person.
SECTION 11.12. 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. Each of this Agreement and the other Loan Documents 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 11.13. SEVERABILITY. In case any provision in or
obligation under this Agreement, the Notes 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.
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SECTION 11.14. DELAYS; PARTIAL EXERCISE OF REMEDIES. No
delay or omission of the Lender to exercise any right or remedy hereunder,
whether before or after the occurrence 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 11.15. ENTIRE AGREEMENT. The Borrower and the
Lender agree that this Agreement and the other Loan Documents are the complete
and exclusive statement and agreement between the parties with respect to the
subject matter hereof, superseding all proposals and prior agreements, oral or
written, and all other communications between the parties with respect to the
subject matter hereof.
SECTION 11.16. 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 all deposits and other obligations then or
thereafter owing by the Lender to or for the credit or the account of the
Borrower.
SECTION 11.17. WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 11.18. GOVERNING LAW. THE VALIDITY,
INTERPRETATION, AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 11.19. VENUE; SERVICE OF PROCESS. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN ▇▇▇▇ COUNTY, OR OF
THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES, IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING, (A) ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND (B) THE RIGHT TO INTERPOSE
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ANY NONCOMPULSORY SETOFF, COUNTERCLAIM OR CROSS-CLAIM. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR IT SPECIFIED
IN SECTION 11.1. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN
EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
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IN WITNESS WHEREOF, the undersigned Borrower has caused this
Agreement to be duly executed and delivered by its proper and duly authorized
officer as of the date first set forth above.
AVIRON
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Senior Vice President and
Chief Financial Officer
By: /s/ ▇. ▇▇▇▇▇▇▇▇ READ
-------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇ Read
Title: Chairman of the Board and
Chief Executive Officer
Accepted as of the
22nd day of June, 1999
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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