Exhibit 10.18
EQUIPMENT LOAN AND SECURITY AGREEMENT
Dated as of December 15, 1999
between
MMC/GATX PARTNERSHIP NO. I
as Lender
and
MITOKOR
a California corporation
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▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Borrower
CREDIT AMOUNT: $1,000,000
Repayment Period: 36 months
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Final Payment Percentage: 10% Treasury Note Maturity: 36 months
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Minimum Funding Amount: $ 100,000 Loan Margin: 300 basis points
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Maximum Number of Fundings: monthly
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Commitment Termination Date: August 31, 2000
Eligible Equipment: Computers, computer equipment, laboratory test and
measurement equipment, office equipment and furnishings
The defined terms and information set forth on this cover page are a
part of this EQUIPMENT LOAN AND SECURITY AGREEMENT, dated as of the date first
written above (this "Agreement"), entered into by and between MMC/GATX
PARTNERSHIP NO. I ("Lender") and the borrower ("Borrower") set forth above. The
terms and conditions of this Agreement agreed to between Lender and Borrower are
as follows:
1.01. CERTAIN DEFINITIONS . Unless otherwise indicated in this
Agreement or any other Operative Document, the following terms, when used in
this Agreement or any other Operative Document, shall have the following
respective meanings:
"BORROWER'S HOME STATE" shall mean California, the state in which
Borrower's principal place of business is located.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
public holiday under the laws of California or Borrower's Home State or other
day on which banking institutions are authorized or obligated to close in
California or Borrower's Home State.
"CLAIM" has the meaning given to that term in SECTION 10.03.
"COLLATERAL" has the meaning given to that term in SECTION 5.01(a).
"COMMITMENT FEE" shall mean the $10,000 fee previously paid by Borrower
to Lender upon the execution and delivery by Lender and Borrower of the "term
sheet" dated August 27, 1999 setting out certain principal terms and conditions
of the transaction contemplated by this Agreement.
"COMMITMENT TERMINATION DATE" shall mean the date specified on the
cover page of this Agreement.
"CREDIT AMOUNT" shall mean the maximum amount that Lender is committed
to lend (if the conditions specified in Schedule 3 are satisfied), which amount
is set forth following such term on the cover page of this Agreement.
"DEFAULT" shall mean any event which with the passing of time or the
giving of notice or both would become an Event of Default hereunder.
"DEFAULT RATE" shall mean the per annum rate of interest equal to the
higher of (i) 18% or (ii) the Prime Rate plus 6%, but such rate shall in no
event be more than the highest rate permitted by applicable law.
"ELIGIBLE EQUIPMENT" shall mean, to the extent acceptable to Lender,
Equipment of the types listed following such term on the cover page of this
Agreement; provided that Eligible Equipment shall not include Equipment placed
in service more than 90 days prior to the date of any Schedule; provided
further, in the case of the first Loan only, Eligible Equipment shall also
include Equipment placed in service more than 90 days but not more than 120 days
prior to the date of any Schedule.
"ENVIRONMENTAL LAW" shall mean the Resource Conservation and Recovery
Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, and any other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree (in each case having the force of law)
regulating or imposing liability or standards of conduct concerning any
Hazardous Material, as now or at any time hereafter in effect.
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"EQUIPMENT" has the meaning given to that term in SECTION 5.01(a).
"EQUITY SECURITIES" shall mean (a) all common stock, preferred stock,
participations, shares, partnership interests or other equity interest in and of
Borrower (regardless of how designated and whether or not voting or non-voting)
and (b) all warrants, options and other rights to acquire any of the foregoing.
"EVENT OF DEFAULT" has the meaning given to that term in SECTION 9.01.
"EVENT OF LOSS" has the meaning given to that term in SECTION 6.01(e).
"FAIR MARKET VALUE," with respect to an item of Equipment, shall mean a
price determined on the basis of and equal in amount to the value which would
obtain in an arm's-length transaction between an informed and willing buyer-user
(other than a used equipment dealer) and an informed and willing seller under no
compulsion to sell, on the assumptions that: such item of Equipment (i) is being
sold "in place and use," at the premises of Borrower; (ii) is free and clear of
all liens and encumbrances; and (iii) is in condition required by SECTION
6.01(i) of this Agreement. In such determination, cost of removal from the
location of current use shall not be a deduction from such value. If Lender and
Borrower are unable to agree on the Fair Market Value of such item of Equipment
within 90 days prior to the Maturity Date of the applicable Loan, such value
shall be determined in accordance with the foregoing definition by a qualified
independent appraiser mutually agreeable to Lender and Borrower or, failing such
agreement, by three appraisers, one selected by Borrower, one selected by Lender
and one selected by the appraisers selected by Lender and Borrower. Such
appraiser(s) shall be furnished with a copy of this Agreement and the relevant
Loan Terms Schedule(s) and such other information as any appraiser deems
relevant to such appraiser's determination of such value. Each appraiser shall
be instructed to deliver such appraiser's determination in writing to Lender and
Borrower within 20 days after being appointed under this Agreement, but in no
event later than 30 days prior to such Maturity Date. The determination by the
appraiser or appraisers shall be made on the request of Lender in accordance
with the Uniform Standards of Professional Appraisal Practice (or successor
rules) in the United States in effect at the date of such determination. Each of
Lender and Borrower shall pay one half of the single appraiser's fees and all
other appraisal fees and expenses, or if there are three appraisers, the fees
and expenses of the appraiser selected by it and one-half of the fees and
expenses of the third appraiser and all other appraisal fees and expenses.
"FINAL PAYMENT" shall mean, with respect to each Loan, a payment (in
addition to the regular monthly payment of principal and accrued interest on the
Loan) due on the Maturity Date for such Loan equal to the Loan Amount for such
Loan at such time multiplied by the Final Payment Percentage.
"FINAL PAYMENT PERCENTAGE" means the percentage set forth following
such term on the cover page of this Agreement.
"FUNDING DATE" shall mean any date on which a Loan is made to or on
account of Borrower under this Agreement.
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"HAZARDOUS MATERIAL" means any hazardous, dangerous or toxic
constituent material, pollutant, waste or other substance, whether solid, liquid
or gaseous, which is regulated by any federal, state or local governmental
authority.
"INDEBTEDNESS" shall mean, with respect to Borrower or any Subsidiary,
the aggregate amount of, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services (excluding
trade payables aged less than 180 days), (d) all capital lease obligations of
such Person, (e) all obligations or liabilities of others secured by a lien on
any asset of such Person, whether or not such obligation or liability is
assumed, (f) all obligations or liabilities of others guaranteed by such Person;
and (g) any other obligations or liabilities which are required by GAAP to be
shown as debt on the balance sheet of such Person. Unless otherwise indicated,
the term "INDEBTEDNESS" shall include all Indebtedness of Borrower and the
Subsidiaries.
"INTERIM PAYMENT" shall mean, which respect to each Loan, an amount
equal to the initial Loan Amount multiplied by the percentage equal to the
product of (i) the quotient derived from dividing the Loan Factor with respect
to such Loan by 30, and (ii) the number of days from (and including) the Funding
Date of such Loan to (but not including) the first Payment Date with respect to
such Loan.
"LANDLORD CONSENT" shall mean a consent in the form of EXHIBIT B or
such other form as Lender may agree to accept.
"LIEN" shall mean any pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreements, charge, claim, encumbrance or
other lien in favor of any Person.
"LOAN" shall mean each advance by Lender to Borrower under this
Agreement.
"LOAN AMOUNT" shall mean, as of any date, with respect to each Loan,
the original principal amount of such Loan less the aggregate of all Stated
Costs of Equipment with respect to which prepayments of such Loan have been
made.
"LOAN FACTOR" shall mean, with respect to each Loan, the amount set
forth as a percentage with respect to such Loan in the applicable Loan Terms
Schedule, calculated using the Loan Rate applicable to such Loan.
"LOAN MARGIN" shall mean the number of basis points set forth following
such term on the cover page of this Agreement.
"LOAN RATE" shall mean, with respect to each Loan, the per annum rate
of interest (based on a year of twelve 30-day months) equal to the sum of (a)
the U.S. Treasury note rate of a term equal to the Treasury Note Maturity as
quoted in the Wall Street Journal on the date the Loan Terms Schedule for such
Loan is prepared, plus (b) the applicable Loan Margin.
"LOAN TERMS SCHEDULE" shall mean, with respect to each Loan, a schedule
in the form of
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SCHEDULE 1 hereto, duly completed to set forth the terms applicable to such
Loan.
"LOAN VALUE" shall mean, with respect to each Loan, the percentage set
forth in the Loan Terms Schedule applicable to such Loan, determined as of the
Payment Date on which payment of an amount is to be made, or if such date is not
a Payment Date, as of the next Payment Date following such date.
"MATURITY DATE" shall mean, with respect to each Loan, the earlier of:
(a) the last Business Day of the Repayment Period applicable to such Loan, (b)
if there is a Redemption Event, then with respect to each and all Loans, five
(5) Business Days prior to the Redemption Event, or (c) the date of acceleration
of such Loan by Lender following an Event of Default.
"MAXIMUM NUMBER OF FUNDINGS" shall mean the maximum number of fundings
under this Agreement specified on the cover page of this Agreement.
"MINIMUM FUNDING AMOUNT" shall mean the dollar amount specified on the
cover page of this Agreement.
"NEW EQUIPMENT" shall mean Eligible Equipment placed in service not
more than ninety (90) days prior to the date of a Schedule.
"OBLIGATIONS" has the meaning given to that term in SECTION 5.01.
"OPERATIVE DOCUMENTS" shall mean this Agreement, the Warrant, the
Landlord Waiver and Consent(s) and all other documents, instruments and
agreements (including Loan Terms Schedules) executed and delivered in connection
herewith or therewith or in respect of the closing of the transactions
contemplated hereby or thereby.
"PAYMENT DATE" has the meaning given to that term in SECTION 2.04(a).
"PERMITTED LIENS" shall mean (a) the Lien created by this Agreement,
(b) Liens for fees, taxes, levies, imposts, duties or other governmental charges
of any kind which are not yet delinquent or which are being contested in good
faith by appropriate proceedings which suspend the collection thereof (PROVIDED,
HOWEVER, that such proceedings do not involve any substantial danger of the
sale, forfeiture or loss of any item of Equipment and that Borrower has
adequately bonded such Lien or reserves sufficient to discharge such Lien have
been provided on the books of Borrower), (c) Liens identified on SCHEDULE 2, (d)
Liens to secure payment of worker's compensation, employment insurance, old age
pensions or other social security obligations of Borrower in the ordinary course
of business of Borrower, (e) minor easements, licenses, reservations, covenants,
conditions, waivers, on real property, restrictions on the use of real property,
or minor irregularities of title to real property, which, in each case, do not
in the aggregate materially impair the use thereof in the operation of the
business of Borrower, (f) purchase money Liens on equipment not financed or
secured hereunder acquired or held by Borrower or its Subsidiaries incurred for
financing the acquisition of such equipment; (g) Liens of equipment not financed
or secured hereunder leased by Borrower or any Subsidiary pursuant to an
operating lease in the ordinary course of Borrower's business (including
proceeds thereof and accessions thereto) incurred solely for the purposes of
financing the lease of
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such equipment, (h) Liens on Borrower's property not financed or secured
hereunder consisting of rights of set-off of a customary nature or bankers'
liens on amounts on deposit, whether arising by contract or operation of law,
incurred in the ordinary course of business, and (i) Liens on Borrower's
property not financed or secured hereunder incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Permitted Liens
of the type described above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and not on
property financed or secured hereunder and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase.
"PERSON" shall mean and include an individual, a partnership, a
corporation, a business trust, a joint stock company, a limited liability
company, an unincorporated association or other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.
"PRIME RATE" shall mean the interest rate per annum publicly announced
from time to time by Bank of America NT & SA (or its successor) as its reference
rate, but such rate shall in no event be more than the highest interest rate
permitted by applicable law.
"REDEMPTION EVENT" shall mean the date Borrower is required to redeem,
or any redemption or cash payment is scheduled to occur to the holders of, or on
account of , any of Borrower's Equity Securities, whether mandatory or
otherwise, pursuant to the Borrower's Articles of Incorporation, as amended or
modified, in an aggregate amount not to exceed one hundred thousand dollars
($100,000).
"REPAYMENT PERIOD" shall mean the period beginning on the first Payment
Date and continuing for the number of calendar months or quarters set forth
following such term on the cover page of this Agreement.
"RESPONSIBLE PERSON" means each of the President, the Chief Executive
Officer or the Director of Finance and Administration of Borrower.
"SCHEDULED PAYMENTS" has the meaning given to that term in SECTION
2.04(a).
"STATED COST" shall mean, with respect to each item of Equipment (i)
one hundred percent (100%) of the purchase price (net of taxes, freight and
other similar costs) of New Equipment, and (ii) Lender's appraised value as set
forth in Annex A to the applicable Loan Terms Schedule with respect to Used
Equipment.
"STIPULATED LOSS VALUE" shall mean, with respect to each item of
Equipment, the Loan Value multiplied by the Stated Cost financed under this
Agreement.
"SUBSIDIARY" shall mean any corporation of which a majority of the
outstanding capital stock entitled to vote for the election of directors
(otherwise than as the result of a default) is owned by Borrower directly or
indirectly through Subsidiaries.
"TERM" shall mean the period from and after the date hereof until the
payment or satisfaction
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in full of all Obligations under this Agreement and the other Operative
Documents.
"TREASURY NOTE MATURITY" shall mean the period of months set forth
following such term on the cover page of this Agreement.
"USED EQUIPMENT" shall mean all Eligible Equipment which is not New
Equipment.
"WARRANT" shall mean a warrant to purchase securities of Borrower
substantially in the form of EXHIBIT C.
1.02. HEADINGS . Headings in this Agreement and each of the other
Operative Documents are for convenience of reference only and are not part of
the substance hereof or thereof.
1.03. PLURAL TERMS . All terms defined in this Agreement or any other
Operative Document in the singular form shall have comparable meanings when used
in the plural form and VICE VERSA.
1.04. CONSTRUCTION . This Agreement is the result of negotiations
among, and has been reviewed by, Borrower and Lender and their respective
counsel. Accordingly, this Agreement shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Borrower or Lender.
1.05. ENTIRE AGREEMENT . This Agreement, together with the terms set
forth in each Loan Terms Schedule and each of the other Operative Documents,
taken together, constitute and, contain the entire agreement of Borrower and
Lender and, with regard to their respective subject matters, supersede any and
all prior agreements, term sheets, negotiations, correspondence, understandings
and communications among the parties, whether written or oral, with respect to
their respective subject matters. Borrower acknowledges that it is not relying
on any representation or agreement made by Lender or any employee, agent or
attorney of Lender, other than the specific agreements set forth in this
Agreement and the Operative documents.
1.06. OTHER INTERPRETIVE PROVISIONS . References in this Agreement to
"Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to articles,
sections, exhibits, schedules and annexes herein and hereto unless otherwise
indicated. References in this Agreement and each of the other Operative
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement or any other Operative Document shall refer
to this Agreement or such other Operative Document, as the case may be, as a
whole and not to any particular provision of this Agreement or such other
Operative Document, as the case may be. The words "include" and "including" and
words of similar import when used in this Agreement or any other Operative
Document shall not be construed to be limiting or exclusive. Unless otherwise
indicated in this Agreement or any other Operative Document, all accounting
terms used in this Agreement or any other Operative Document shall be construed,
and all accounting and financial computations hereunder or thereunder shall be
computed, in accordance with generally accepted accounting
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principles as in effect in the United States of America from time to time.
2.01 CREDIT FACILITY . On the terms and subject to the conditions
hereof and relying upon the representations and warranties herein set forth as
and when made or deemed to be made, Lender agrees to lend to Borrower, from time
to time (but not to exceed more than once per calendar month) prior to the
Commitment Termination Date, the Loans; PROVIDED, HOWEVER, that the aggregate
original principal amount of the Loans shall not exceed the Credit Amount at any
time; PROVIDED, FURTHER, that the aggregate original principal amount of any
Loan relating to the financing of Eligible Equipment shall not exceed the
aggregate original Fair Market Value of the items of Eligible Equipment being
financed with such Loan; PROVIDED, FURTHER, that the aggregate original
principal amount of all Loans relating to the financing of tenant improvements,
computer software packages and Equipment specially designed or manufactured for
Borrower, as well as other financing of intangible items (collectively, "Soft
Costs"), shall not exceed thirty percent (30%) of the aggregate original
principal amount of all Loans. If repaid or prepaid, the principal of the Loans
may not be re-borrowed.
2.02. USE OF PROCEEDS; THE LOANS AND THE LOAN TERMS SCHEDULE.
(a) USE OF PROCEEDS. The proceeds of the Loans shall be used
solely for the purchase of, or reimbursement to Borrower of the Stated Cost of
Eligible Equipment and Soft Costs as set forth in SECTION 2.01.
(b) THE LOANS AND THE LOAN TERMS SCHEDULE. The obligation of
Borrower to repay the aggregate unpaid principal amount of and interest on and
to make the Final Payments on the Loans, or to pay the Stipulated Loss Value
applicable to each Loan, shall be evidenced by the Loan Terms Schedule.
2.03. PROCEDURE FOR MAKING LOANS .
(a) LOAN TERMS SCHEDULE. Whenever Borrower desires that Lender
make a Loan, Borrower shall deliver to Lender a list of the Equipment and soft
costs proposed to be financed by such Loan and request that Lender prepare a
Loan Terms Schedule for such Loan. Lender's obligation to make the initial Loan
shall be subject to the satisfaction of the conditions set forth in SECTIONS
8.01 AND 8.02. Lender's obligation to make each subsequent Loan shall be subject
to the satisfaction of the conditions set forth in SECTION 8.02. The terms and
conditions set forth in each Loan Terms Schedule are incorporated herein by this
reference.
(b) LOAN RATE. Each Loan Terms Schedule shall establish the Loan
Rate applicable to that Loan. The Loan Rate shall not be subject to change in
the absence of manifest error or upon the written agreement of Borrower and
Lender. All computations of interest on Loans shall be based on a year of twelve
30-day months. If Borrower pays interest on any Loan which is determined to be
in excess of the then legal maximum rate, then that portion of each interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of the
applicable Loan.
(c) LOAN FACTOR AND LOAN VALUE CALCULATION. Each Loan Terms
Schedule shall establish the
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Loan Factor and Loan Values with respect to such Loan. The Loan Factor shall be
calculated in a manner to fully amortize the Loan over the Repayment Period
applicable to such Loan in equal periodic installments. The Loan Factor and Loan
Values applicable to each Loan shall be conclusive in the absence of manifest
error.
(d) DISBURSEMENT. Subject to the receipt by Lender of a Loan
Terms Schedule duly executed by Borrower and the satisfaction of the conditions
set forth in SECTIONS 8.01 AND 8.02 with respect to the initial Loan and the
satisfaction of the conditions set forth in SECTION 8.02 with respect to each
subsequent Loan, Lender shall disburse such Loan by wire transfer to Borrower
unless otherwise directed in writing by Borrower.
(e) TERMINATION OF COMMITMENT TO LEND. Notwithstanding anything
to the contrary in the Operative Documents, Lender's obligation to lend the
undisbursed portion of the Credit Amount to Borrower hereunder shall terminate
on the earlier of (i) the occurrence of any Event of Default hereunder, (ii) the
occurrence of a Redemption Event, and (iii) the Commitment Termination Date.
2.04. OTHER PAYMENT TERMS .
(a) PRINCIPAL AND INTEREST PAYMENTS ON PAYMENT DATES. Borrower
shall make payments of principal and accrued interest for each Loan
(collectively, "SCHEDULED PAYMENTS"), commencing on the date set forth on the
Loan Terms Schedule applicable to such Loan and continuing thereafter during the
Repayment Period on the first day of each calendar month (each a "PAYMENT
DATE"), in an amount equal to the Loan Factor multiplied by the Loan Amount for
such Loan as of such Payment Date. The Loans may not be prepaid except: (i) in
the circumstances set forth in Section 6.01(e) in which case such Loan shall be
prepaid to the extent and in the manner provided in such section, or (ii) if the
Loans are accelerated following the occurrence of an Event of Default or
otherwise (other than following an Event of Loss), or (iii) if there is a
Redemption Event, in which case all Loans shall immediately become due and
payable without notice on the Maturity Date; in the case of (ii) or (iii),
Borrower shall immediately pay to Lender the amounts specified in Section 9.02.
(b) INTERIM PAYMENT. Unless the Funding Date for a Loan is a
Payment Date, Borrower shall pay to Lender the Interim Payment payable with
respect to such Loan on the date specified in the Loan Terms Schedule applicable
to such Loan.
(c) FINAL PAYMENT. Unless a Loan is prepaid in full, on the
Maturity Date with respect to such Loan, Borrower shall pay, in addition to any
remaining unpaid principal and accrued interest and all other amounts previously
due with respect to such Loan, an amount equal to the Final Payment with respect
to such Loan.
(d) COMMITMENT FEE. The Commitment Fee shall be applied first to
Lender's expenses (not to exceed $2,000) in connection with due diligence and
the preparation, negotiation, and documentation of the Agreement and the other
Operative Documents and funding of Loans hereunder and thereunder. The balance
of the Commitment Fee shall be applied to the Final Payment due under each Loan
on a pro rata basis. If Borrower shall not have borrowed under this Agreement,
on or prior to the Commitment Termination Date or the earlier termination of
this Agreement, Loans aggregating in an original principal amount equal to the
Credit Amount, then the
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remaining balance of the Commitment Fee shall be retained by Lender.
(e) PLACE AND MANNER. Borrower shall make all payments due to
Lender in lawful money of the United States at the address for payments and in
the manner specified in SECTION 10.05(a).
(f) DATE. Whenever any payment due hereunder shall fall due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(g) DEFAULT RATE. If either (i) any amounts required to be paid
by Borrower under this Agreement or the other Operative Documents (including
principal or interest payable on any Loan, any fees or other amounts) remain
unpaid after such amounts are due, or (ii) an Event of Default has occurred and
is continuing, Borrower shall pay interest on the aggregate, outstanding
principal balance hereunder from the date due or from the date of the Event of
Default, as applicable, until such past due amounts are paid in full or until
all Events of Defaults are cured, as applicable, at a per annum rate equal to
the Default Rate, such rate to change from time to time as the Prime Rate shall
change. All computations of such interest shall be based on a year of twelve
30-day months.
3.01. REPRESENTATIONS AND WARRANTIES . Except as set forth on Annex C
to Schedule No. 1 hereto, Borrower makes the following representations and
warranties to Lender as of the date hereof and again on each Funding Date:
(a) ORGANIZATION AND QUALIFICATION. Borrower is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and is duly qualified to do business in the state(s) in
which the Equipment will be located.
(b) AUTHORITY. Borrower has all necessary corporate power,
authority and legal right and has obtained all approvals and consents and has
given all notices necessary to execute and deliver this Agreement and the other
Operative Documents and to perform the terms hereof and thereof. Borrower has
all requisite corporate power and authority to own and operate its properties
and to carry on its businesses as now conducted.
(c) CONFLICT WITH OTHER INSTRUMENTS, ETC. Neither the execution
and delivery of any Operative Document to which Borrower is a party nor the
consummation of the transactions therein contemplated nor compliance with the
terms, conditions and provisions thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the charter or the
bylaws of Borrower or, to its knowledge, any law or any regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
material agreement or instrument to which Borrower is a party or by which it or
any of its properties is bound or to which it or any of its properties is
subject, or constitute a default thereunder or result in the creation or
imposition of any Lien, other than Permitted Liens.
(d) TITLE TO PROPERTIES. Borrower has good and marketable title
to all Equipment which constitutes or will constitute Collateral, free and clear
of all Liens, other than Permitted Liens.
(e) AUTHORIZATION, GOVERNMENTAL APPROVALS, ETC. The execution
and delivery by Borrower
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of each Operative Document, the granting of the security interest in the
Collateral, the issuance of the Warrant, the issuance of the securities into
which the Warrant is exercisable, the issuance of any securities into which the
securities issuable upon exercise of the Warrant are convertible, and the
performance of the obligations herein and therein contemplated have each been
duly authorized by all necessary action on the part of Borrower. No
authorization, consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or filing with, or notice to, any Person
is, was or will be necessary to (i) the valid execution and delivery of any
Operative Document to which Borrower is a party, (ii) the performance of
Borrower's obligations under any Operative Document, or (iii) the granting of
the security interest in the Collateral. The Operative Documents have been or
will be duly executed and delivered and constitute or will constitute legal,
valid and binding obligations of Borrower, enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general application relating to
or affecting the enforcement of creditors' rights or by general principles of
equity.
(f) LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Borrower, threatened against or
affecting Borrower, or the business or any property or asset owned by it, before
any court or governmental department, agency or instrumentality which if
adversely determined might have a material adverse effect on the financial
condition, business or operations of Borrower.
(g) DISCLOSURE. Neither any Operative Document nor any other
agreement, document or certificate furnished by Borrower to Lender, including,
without limitation, historical financial statements, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading. As of
the date hereof, there is no fact known to Borrower which materially adversely
affects, or which could in the future materially adversely affect, its ability
to perform its obligations under the Operative Documents to which it is a party.
(h) SECURITY INTEREST. Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state and/or
local authorities, the security interests in the Collateral granted to Lender
pursuant to this Agreement (i) constitute and will continue to constitute first
priority security interests (except to the extent any other Permitted Lien
(other than Permitted Liens identified in CLAUSE (e) of the definition thereof)
existing on the date of this Agreement may create any priority to Lender's Lien
under this Agreement) and (ii) are and will continue to be superior and prior to
the rights of all other creditors of Borrower (except to the extent of such
Permitted Liens).
(i) EXECUTIVE OFFICES. The principal place of business and chief
executive office of Borrower, and the office where Borrower will keep the
Collateral and all records and files regarding the Collateral, is set forth on
the cover page of this Agreement.
4.01. FURNISHING REPORTS. Borrower shall furnish to Lender:
(a) NOTICE OF EVENT OF LOSS. As soon as possible, and in any
event within ten (10) days thereafter, notice in writing in reasonable detail of
any Event of Loss.
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(b) NOTICE OF DEFAULTS. As soon as possible, and in any event
within five (5) days after the discovery of a Default or Event of Default
provide Lender with an officer's certificate of Borrower setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.
(c) MISCELLANEOUS. Such other information as Lender may
reasonably request from time to time in connection with a Funding Date or
otherwise.
5.01. GRANT OF SECURITY INTEREST.
(a) GRANT. Borrower, in order to secure the payment of the
principal, interest and Final Payment due with respect to the Loans made
pursuant to this Agreement, all other sums due under and in respect hereof and
of the other Operative Documents, including fees, charges, expenses and
attorneys' fees and costs and the performance and observance by Borrower of all
other terms, conditions, covenants and agreements herein and in the other
Operative Documents (all such amounts and obligations being herein sometimes
called the "OBLIGATIONS"), does hereby grant to Lender and its successors and
assigns, a security interest in and to the following property (collectively, the
"COLLATERAL"):
All right, title, interest, claims and demands of Borrower in
and to each and every item of equipment, fixtures or personal property
which is financed with or is designated as collateral for a Loan on and
after the date of this Agreement by designating such equipment,
fixtures and personal property on ANNEX A to each Loan Terms Schedule,
whether now owned or hereafter acquired, together with all
substitutions, renewals or replacements of and additions, improvements,
accessions, replacement parts and accumulations to any and all of such
equipment, fixtures or personal property (collectively, the
"EQUIPMENT"), together with all proceeds thereof, including, without
limitation, insurance, condemnation, requisition or similar payments,
and all proceeds from sales, renewals, releases or other dispositions
thereof.
The security interest herein granted shall constitute a first priority security
interest upon the proper filing of one or more financing statements identifying
the Collateral with the proper state and/or local authorities.
(b) AFTER-ACQUIRED PROPERTY. All Equipment which is financed
through Loans shall IPSO FACTO, and without any further conveyance, assignment
or act on the part of Borrower or Lender, become and be subject to the security
interest herein granted as fully and completely as though specifically described
herein. The definition of the term "Equipment" shall be deemed amended on each
Funding Date to incorporate all property financed with, or which will constitute
Collateral for, the Loan advanced on such Funding Date. Any failure to formally
amend such definition shall not affect the grant by Borrower to Lender of the
security interest in such Collateral pursuant to this SECTION 5.01. This
Agreement and the other documents in connection herewith may be supplemented and
amended from time to time, as required by Lender, to reflect the additional
Collateral subject to the security interest granted pursuant to this SECTION
5.01.
5.02. DURATION OF SECURITY INTEREST. Lender's security interest in the
Collateral shall
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continue until the payment in full and the satisfaction of all Obligations,
whereupon such security interest shall terminate; PROVIDED, HOWEVER, that if any
item of Collateral is subject to an Event of Loss, then following the prepayment
of the Loan with respect to such item pursuant to SECTION 6.01(e), Lender shall
release its security interest in such item of Collateral. Lender shall execute
such further documents and take such further actions as may be necessary to
effect the release and/or termination contemplated by this SECTION 5.02,
including duly executing and delivering termination statements for filing in all
relevant jurisdictions.
5.03. POSSESSION OF COLLATERAL . So long as no Event of Default has
occurred and is continuing, Borrower shall remain in full possession, enjoyment
and control of the Collateral (except only as may be otherwise required by
Lender for perfection of its security interest therein) and to manage, operate
and use the same and each part thereof with the rights and franchises
appertaining thereto; PROVIDED, HOWEVER, that the possession, enjoyment, control
and use of the Collateral shall at all times be subject to the observance and
performance of the terms of this Agreement.
5.04. MARKINGS ON THE COLLATERAL . If requested at any time by Lender,
Borrower shall place in a conspicuous location on each item of Collateral a
notice (to be supplied by Lender) which reads as follows:
"MMC/GATX Partnership No. I
Lienholder".
Such notice shall not be removed (or if removed or damaged such notice shall be
replaced) until the security interest in favor of Lender in such item of
Collateral is terminated pursuant to this Agreement.
6.01 AFFIRMATIVE COVENANTS.
(a) GOOD STANDING. Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could have a material adverse effect on the financial condition, operations or
business of Borrower. Borrower shall maintain in force all licenses, approvals
and agreements, the loss of which could have a material adverse effect on its
financial condition, operations or business.
(b) GOVERNMENT COMPLIANCE. Borrower shall comply with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, noncompliance with which could materially adversely affect the
financial condition, operations or business of Borrower.
(c) FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Lender (i) as soon as available, but in any event within thirty (30)
days after the end of each month, a company prepared balance sheet, income
statement and cash flow statement covering Borrower's operations during such
period, certified by a Responsible Officer; (ii) as soon as available, but in
any event within one hundred twenty (120) days after the end of Borrower's
fiscal year, audited financial statements of Borrower prepared in accordance
with generally accepted accounting principles, consistently applied, together
with an unqualified opinion on such financial statements of a nationally
recognized or other independent public accounting firm reasonably acceptable to
Lenders;
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(iii) promptly upon becoming available, copies of all statements, reports and
notices sent or made available generally by Borrower to its security holders;
(iv) immediately upon receipt of notice thereof, a report of any material legal
actions pending or threatened against Borrower; and (v) such other financial
information as Lenders may reasonably request from time to time.
(d) INSURANCE. Unless such provisions are amended pursuant to
the terms of any Loan Terms Schedule:
(i) Borrower shall, obtain and maintain for the Term, at
its own expense, (x) "all risk" insurance against loss or damage to the
Collateral, (y) commercial general liability insurance (including contractual
liability, products liability and completed operations coverages) reasonably
satisfactory to Lender, and (z) such other insurance against such other risks of
loss and with such terms, as shall in each case be reasonably satisfactory to or
reasonably required by Lender (as to carriers, amounts and otherwise). The
amount of the "all risk" insurance shall be the greater of (x) the replacement
value of the Collateral (as new) or (y) the Loan Value of the Loan Amount
applicable to each Loan. Such amounts shall be determined to Lender's reasonable
satisfaction as of each anniversary date of this Agreement and the appropriate
amount of coverage shall be put in effect on the next succeeding renewal or
inception date of such insurance.
(ii) The deductible with respect to "all-risk" insurance
required by clause (x) above and product liability insurance required by clause
(y) above shall not exceed $25,000; otherwise there shall be no deductible with
respect to any insurance required to be maintained hereunder. The amount of
commercial general liability insurance (other than products liability coverage
and completed operations insurance) required by clause (y) above shall be at
least $2,000,000 per occurrence. The amount of the products liability and
completed operations insurance required by clause (y) above shall be at least
$2,000,000 per occurrence. Each "all risk" policy shall: (x) name Lender as sole
loss payee with respect to the Equipment, (y) provide for each insurer's waiver
of its right of subrogation against Lender, and (z) provide that such insurance
(A) shall not be invalidated by any action of, or breach of warranty by,
Borrower of a provision of any of its insurance policies, and (B) shall waive
set-off, counterclaim or offset against Lender. Each liability policy shall (w)
name Lender as an additional insured and (x) provide that such insurance shall
have cross-liability and severability of interest endorsements (which shall not
increase the aggregate policy limits of Borrower's insurance). All insurance
policies shall (y) provide that Borrower's insurance shall be primary without a
right of contribution of Lender's insurance, if any, or any obligation on the
part of Lender to pay premiums of Borrower, and (z) shall contain a clause
requiring the insurer to give Lender at least 30 days' prior written notice of
its cancellation (other than cancellation for non-payment for which 10 days'
notice shall be sufficient. Borrower shall on or prior to the first Funding Date
and prior to each policy renewal, furnish to Lender certificates of insurance or
other evidence satisfactory to Lender that such insurance coverage is in effect.
(e) LOSS; DAMAGE; DESTRUCTION AND SEIZURE. (i) Borrower shall
bear the risk of the Collateral being lost, stolen, destroyed, damaged or seized
by a governmental authority for any reason whatsoever at any time until the
expiration or termination of the Term. (ii) Except as set forth in SECTION
6.01(e)(iii), if during the Term any item of Equipment is lost, stolen,
destroyed, damaged or seized by a governmental authority for a period equal to
at least the remainder of the Term (an "EVENT OF LOSS"), then Lender shall
receive from the proceeds of insurance maintained
13
pursuant to SECTION 6.01(d), from any award paid by the seizing governmental
authority or, to the extent not received from the proceeds of insurance or award
or both, from Borrower, on or before the Payment Date next succeeding such Event
of Loss, an amount equal to the sum of: (x) all accrued and unpaid Scheduled
Payments with respect to such Loan due prior to the next such Payment Date, (y)
a prepayment in an amount equal to the Stipulated Loss Value of each affected
item of Collateral and (z) all other sums, if any, that shall have become due
and payable hereunder with respect to such Loan, including interest at the
Default Rate with respect to any past due amounts. On the date of receipt by
Lender of the amount specified above with respect to each such item of
Collateral subject to an Event of Loss, the provisions of this Agreement shall
terminate as to such Collateral. Any proceeds of insurance maintained by
Borrower pursuant to SECTION 6.01(d) and received by Borrower shall be paid to
Lender promptly upon their receipt by Borrower. If any proceeds of insurance or
awards received from governmental authorities are in excess of the amount owed
under this SECTION 6.01(e), Lender shall promptly remit to Borrower the amount
in excess of the amount owed to Lender. (iii) So long as no Event of Default has
occurred and is continuing, any proceeds of insurance maintained pursuant to
SECTION 6.01(d) received by Lender or Borrower with respect to an item of
Collateral the repair of which is practicable shall, at the election of
Borrower, be applied either to the repair or replacement of such Collateral or,
upon Lender's receipt of evidence of the repair or replacement of the Collateral
reasonably satisfactory to Lender, to the reimbursement of Borrower for the cost
of such repair or replacement. All replacement parts and equipment acquired by
Borrower in replacement of Collateral pursuant to this SECTION 6.01(e)(iii)
shall immediately become part of the Collateral upon acquisition by Borrower.
Borrower shall take such actions and provide such documentation as may be
reasonably requested by Lender to protect and preserve Lender's first priority
security interest and otherwise to avoid any impairment of Lender's rights under
the Operative Documents, in connection with such repair or replacement.
(f) CERTIFICATES OF COMPLIANCE. Each time financial statements
are furnished pursuant to Section 6.01(c) above, there shall be delivered to
Lender, a certificate signed by a Responsible Officer (each, an "Officer's
Certificate") with respect to such financial reports to the effect that: (i) no
Event of Default or Default has occurred and is continuing hereunder since the
date of this Agreement or, if later, since the date of the prior Officer's
Certificate or, if such an event or condition has occurred and is continuing,
the nature and extent thereof and the action Borrower proposes to take with
respect thereto, and (ii) Borrower is in compliance with the provisions of
Sections 6 and 7.
(g) PAYMENT OF TAXES, ETC. Borrower shall pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien upon any of its properties; PROVIDED that there shall be no
requirement to pay any such tax, assessment, charge, levy or claim (i) which is
being contested in good faith and by appropriate proceedings or which presents
no risk of seizure, forfeiture, levy or other event which could jeopardize any
Collateral and (ii) for which payment in full is bonded or reserved in
Borrower's financial statements.
(h) INSPECTION RIGHTS. Borrower shall, at any reasonable time
and from time to time, permit Lender or any of its agents or representatives to
inspect the Equipment, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, Borrower and
14
to discuss the affairs, finances and accounts of Borrower with any of its
officers or directors relating in each case to Lender's capacity as lender and
secured party hereunder and with respect to the Collateral.
(i) USE; MAINTENANCE. (i) Borrower shall, at its expense, make
all necessary site preparations and cause the Collateral to be operated in
accordance with any applicable manufacturer's manuals or instructions. So long
as no Default or Event of Default has occurred and is continuing, Borrower shall
have the right to quietly possess and use the Collateral as provided herein
without interference by Lender. (ii) Borrower shall, at its expense, maintain
the Collateral in good condition, reasonable wear and tear excepted, and comply
in all material respects with all laws, rules and regulations to which the use
and operation of the Collateral may be or become subject. Such obligation shall
extend to repair and replacement of any partial loss or damage to the
Collateral, regardless of the cause. If maintenance is mandated by manufacturer,
Borrower shall obtain and keep in effect, at all times during the Term
maintenance service contracts with suppliers approved by Lender, which approval
shall not be unreasonably withheld. All parts furnished in connection with such
maintenance or repair shall immediately become part of the Collateral. All such
maintenance, repair and replacement services shall be immediately paid for and
discharged by Borrower with the result that no Lien will attach to the
Collateral. All parts or accessories attached to or made part of the Collateral
shall be new, fabricated or rebuilt and in any case shall be consistent with the
applicable specifications, if any, prescribed by the manufacturer of the
affected Collateral.
7.01. NEGATIVE COVENANTS . So long as the Loans or other amounts
hereunder remain outstanding, Borrower shall not:
(a) COLLATERAL CONTROL. Subject to its rights under SECTION 5,
(i) terminate, waive or release any material right with respect to any
Collateral or remove any item of Collateral from Borrower's facility located at
the address set forth on the cover page of this Agreement, or (ii) affix or
attach or permit to be affixed or attached to any item of Collateral any other
item of property owned by Borrower or any other lender, lessor or financing
party which is not readily identifiable or separable without any damage to such
item of Collateral, without Lender's prior written consent.
(b) LIENS. Create, incur, assume or suffer to exist any Lien of
any kind upon any property of Borrower, whether now owned or hereafter acquired,
except Permitted Liens.
(c) OTHER DISPOSITIONS OF COLLATERAL. Convey, sell, lease or
otherwise dispose of all or any part of the Collateral to any Person, except for
Equipment in which Lender shall have released its security interest pursuant to
SECTION 5.02.
(d) EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter
into any transaction not in the ordinary and usual course of Borrower's
business, including the sale, lease, license or other disposition of, moving,
relocation, or transfer, whether by sale or otherwise, of Borrower's assets,
other than (i) sales of inventory in the ordinary and usual course of Borrower's
business as presently conducted and (ii) sales or other dispositions in the
ordinary course of business of assets, other than Collateral, that have become
worn out or obsolete or that are promptly being replaced.
(e) RESTRUCTURE. Change Borrower's name; make any material
change in Borrower's
15
financial structure or business operations; cause, permit, or suffer any
material change in Borrower's ownership; or suspend operation of Borrower's
business.
8.01. CLOSING. At the time of execution and delivery of this
Agreement, Borrower shall have duly executed and/or delivered to Lender the
items set forth in PART I OF SCHEDULE 3.
8.02. OTHER CONDITIONS. The obligation of Lender to make each Loan
shall be subject to the execution and/or delivery to Lender of each of the items
set forth in PART I OF SCHEDULE 3 and the satisfaction of by Borrower of each
condition set forth in PART II OF SCHEDULE 3.
8.03. COVENANT TO DELIVER. Borrower agrees (not as a condition but as
a covenant) to deliver to Lender each item required to be delivered to Lender as
a condition to each Loan, if such Loan is advanced. Borrower expressly agrees
that the extension of such Loan prior to the receipt by Lender of any such item
shall not constitute a waiver by Lender of Borrower's obligation to deliver such
item.
9.01 EVENTS OF DEFAULT. An "Event of Default" shall mean the
occurrence of one or more of the following described events:
(a) Borrower shall (i) default in the payment of principal of,
or interest on, or fail to make the Final Payment on any Loan when the same is
due, or (ii) default in the payment of any expense or other amount payable
hereunder or thereunder for five (5) days after receipt of written notice from
Lender that the same is due; or
(b) any representation or warranty made herein or on a Funding
Date by Borrower in any Operative Document, or any certificate or financial
statement furnished pursuant to the provisions of any Operative Document, shall
prove to have been false or misleading in any material respect as of the time
made or furnished; or
(c) Borrower shall default in the performance of any covenant,
agreement or obligation (other than a covenant, agreement or obligation referred
to in SECTION 9.01(a) or SECTION 9.01(e)) contained in any Operative Document
(other than the Warrant), or in any other present or future agreement between
Borrower and Lender and as to any default under such covenant, agreement or
obligation that can be cured, has failed to cure such default within fifteen
(15) days after the occurrence of such default; provided, however, that if the
default cannot by its nature be cured within the fifteen (15) day period or
cannot by diligent attempts by Borrower be cured within such fifteen (15) day
period, then Borrower shall have an additional period of thirty (30) days to
attempt to cure such default.
(d) Borrower shall have breached the terms of the Warrant; or
(e) Borrower fails to maintain the insurance coverage required
under SECTION 6.01(d) or breaches any provision of SECTION 7.01; or
(f) any Operative Document shall in any material respect ceases
to be, or Borrower shall assert that any Operative Document is not, a legal,
valid and binding obligation of Borrower enforceable in accordance with its
terms; or
(g) defaults exist under any agreements of Borrower which
consist of the failure to pay any Indebtedness in an aggregate amount
exceeding $100,000 at
16
maturity or which result in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of the Indebtedness of Borrower or a
default shall exist under any financing agreement with Lender or any of Lender's
affiliates; or
(h) a material adverse change occurs in Borrower's business or a
material impairment of the prospect of repayment of any portion of the
Obligations owing to Lender or a material impairment of the value or priority of
Lender's security interests in the Collateral; or
(i) any material portion of Borrower's assets is attached,
seized, subjected to writ or distress warrant, or is levied upon, or comes into
possession of any trustee, receiver or Person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material part of its business
affairs, or if a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower's assets by the United States Government, or any
department, agency or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by Borrower; or
(j) a Redemption Event occurs; or
(k) a judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least One Hundred Thousand
Dollars ($100,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days; or
(l) a proceeding shall have been instituted in a court of
competent jurisdiction seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) consecutive days or such court
shall enter a decree or order granting the relief sought in such proceeding; or
(m) Borrower shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian (or other similar
official) of Borrower or for any substantial part of its property, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action in
furtherance of any of the foregoing.
9.02. CONSEQUENCES OF EVENT OF DEFAULT. (a) If an Event of Default
specified under CLAUSES (a) THROUGH (k) of SECTION 9.01 shall occur and be
continuing, Lender may (i) declare the Loan Value of the Loan Amount of each
Loan and all other liabilities of Borrower hereunder and under the other
Operative Documents to be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived, and (ii) terminate its commitment to make Loans hereunder and terminate
any commitment to advance money or extend credit to or for the benefit of
Borrower pursuant to any other agreement or commitment extended by
17
Lender to Borrower. (b) If an Event of Default specified under CLAUSE (l) OR (m)
OF SECTION 9.01 shall occur, then immediately and without notice (i) the Loan
Value of the Loan Amount of each Loan and all other liabilities of Borrower
hereunder and under the other Operative Documents shall automatically become due
and payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and (ii) Lender's commitment hereunder to
make the Loans and any other commitment of Lender to Borrower to advance money
or extend credit pursuant to any other agreement or commitment shall be
terminated.
9.03. RIGHTS REGARDING COLLATERAL. Borrower agrees that when any
Event of Default has occurred and is continuing, Lender shall have the rights,
options, duties and remedies of a secured party as permitted by law and, in
addition to and without limiting the foregoing, Lender may exercise any one or
more or all, and in any order, of the remedies herein set forth, including the
following: (a) Lender, personally or by agents or attorneys, shall have the
right (subject to compliance with any applicable mandatory legal requirements)
to require Borrower to assemble the Collateral and make it available to Lender
at a place designated by Lender or to take immediate possession of the
Collateral, or any portion thereof, and for that purpose may pursue the same
wherever it may be found, and may enter any of premises of Borrower, with or
without notice, demand, process of law or legal procedure, to the extent
permitted by applicable law, and search for, take possession of, remove, keep
and store the same, or use and operate or lease the same until sold; (b) Lender
may, if at the time such action may be lawful and always subject to compliance
with any mandatory legal requirements, either with or without taking possession
and either before or after taking possession, without instituting any legal
proceedings whatsoever, having first given notice of such sale by registered or
certified mail to Borrower once at least ten (10) days prior to the date of such
sale, and having first given any other notice which may be required by law, sell
and dispose of the Collateral, or any part thereof, at a private sale or at
public auction, to the highest bidder, in one lot as an entirety or in separate
lots, and either for cash or on credit and on such terms as Lender may
determine, and at any place (whether or not it be the location of the Collateral
or any part thereof) designated in the notice referred to above. To the extent
permitted by applicable law, any such sale or sales may be adjourned from time
to time by announcement at the time and place appointed for such sale or sales,
or for any such adjourned sale or sales, without further published notice, and
Borrower, Lender or its successors or assigns as to the Loans, or of any
interest therein, may bid and become the purchaser at any such sale; and (c)
Lender may proceed to protect and enforce this Agreement and the other Operative
Documents by suit or suits or proceedings in equity, at law or in bankruptcy,
and whether for the specific performance of any covenant or agreement herein
contained or in execution or aid of any power herein granted; or for foreclosure
hereunder, or for the appointment of a receiver or receivers for any real
property security or any part thereof, or for the recovery of judgment for the
Obligations or for the enforcement of any other proper, legal or equitable
remedy available under applicable law.
9.04. WAIVER BY BORROWER. Upon the occurrence of an Event of Default,
to the extent permitted by law, Borrower covenants that it will not at any time
insist upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of, any stay or extension law now or at any time hereafter in force,
nor claim, take nor insist upon any benefit or advantage of or from any law now
or hereafter in force providing for the valuation or appraisement of the
Collateral or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or to the decree, judgment or order
of any court of competent jurisdiction; nor, after such sale or
18
sales, claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and, to the full extent legally permitted, except as to rights
expressly provided herein, hereby expressly waives for itself and on behalf of
each and every Person, except decree or judgment creditors of Borrower,
acquiring any interest in or title to the Collateral or any part thereof
subsequent to the date of this Agreement, all benefit and advantage of any such
law or laws, and covenants that it will not invoke or utilize any such law or
laws or otherwise hinder, delay or impede the execution of any power herein
granted and delegated to Lender, but will suffer and permit the execution of
every such power as though no such power, law or laws had been made or enacted.
9.05. EFFECT OF SALE. Any sale, whether under any power of sale
available to Lender or by virtue of judicial proceedings, shall operate to
divest all right, title, interest, claim and demand whatsoever, either at law or
in equity, of Borrower in and to the property sold, and shall be a perpetual
bar, both at law and in equity, against Borrower, its successors and assigns,
and against any and all persons claiming the property sold or any part thereof
under, by or through Borrower, its successors or assigns.
9.06. APPLICATION OF COLLATERAL PROCEEDS. The proceeds and/or avails
of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lender at the
time of, or received by Lender after, the occurrence of an Event of Default
hereunder) shall be paid to and applied as follows: (a) FIRST, to the payment of
reasonable costs and expenses, including all amounts expended to preserve the
value of the Collateral, of foreclosure or suit, if any, and of such sale and
the exercise of any other rights or remedies, and of all proper fees, expenses,
liability and advances, including reasonable legal expenses and attorneys' fees,
incurred or made hereunder by Lender; (b) SECOND, to the payment to Lender of
the amount then owing or unpaid on the Loan for Scheduled Payments and the Loan
Value of the Loan Amount with respect to each Loan, and in case such proceeds
shall be insufficient to pay in full the whole amount so due, owing or unpaid
upon the Loans, then FIRST, to the unpaid interest thereon, SECOND, to unpaid
principal thereof and THIRD to the remaining balance of the Loan Value of the
Loan Amount with respect to each Loan; (c) THIRD, to the payment of other
amounts then payable to Lender under any of the Operative Documents; and (d)
FOURTH, to the payment of the surplus, if any, to Borrower, its successors and
assigns, or to whomsoever may be lawfully entitled to receive the same.
9.07. REINSTATEMENT OF RIGHTS. If Lender shall have proceeded to
enforce any right under this Agreement or any other Operative Document by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Lender shall be restored to its former position and
rights hereunder with respect to the property subject to the security interest
created under this Agreement.
10.01. MODIFICATIONS, AMENDMENTS OR WAIVERS. The provisions of any
Operative Document may be modified, amended or waived only by a written
instrument signed by the parties thereto.
10.02. NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED. No
delay or failure of Lender in exercising any right, power or remedy hereunder
shall affect or operate as a waiver
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thereof; nor shall any single or partial exercise thereof or any abandonment or
discontinuance of steps to enforce such a right, power or remedy preclude any
further exercise thereof or of any other right, power or remedy. The rights and
remedies hereunder of Lender are cumulative and not exclusive of any rights or
remedies which it would otherwise have. Any waiver, permit, consent or approval
of any kind or character on the part of Lender of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only in the specified
instance and to the extent specifically set forth in such writing.
10.03. EXPENSES; INDEMNIFICATION. Borrower agrees upon demand to pay
or reimburse Lender for all liabilities, obligations and out-of-pocket expenses,
including reasonable fees and expenses of counsel for Lender, from time to time
arising in connection with the enforcement or collection of sums due under the
Operative Documents. Borrower shall indemnify, reimburse and hold Lender, each
of Lender's partners, and each of their respective successors, assigns, agents,
officers, directors, shareholders, servants, agents and employees harmless from
and against all liabilities, losses, damages, actions, suits, demands, claims of
any kind and nature (including claims relating to environmental discharge,
cleanup or compliance), all costs and expenses whatsoever to the extent they may
be incurred or suffered by such indemnified party in connection therewith
(including reasonable attorneys' fees and expenses), fines, penalties (and other
charges of applicable governmental authorities), licensing fees relating to any
item of Collateral, damage to or loss of use of property (including
consequential or special damages to third parties or damages to Borrower's
property), or bodily injury to or death of any person (including any agent or
employee of Borrower) (each, a "CLAIM"), directly or indirectly relating to or
arising out of the use of the proceeds of the Loans, including acquisition, use,
ownership, operation, possession, control, storage, return or condition of any
item of Equipment financed by a Loan or constituting Collateral (regardless of
whether such item of Equipment is at the time in the possession of Borrower),
the falsity of any representation or warranty of Borrower or Borrower's failure
to comply with the terms of this Agreement or any other Operative Document
during the Term. The foregoing indemnity shall cover, without limitation, (i)
any Claim in connection with a design or other defect (latent or patent) in any
item of Equipment financed by a Loan or constituting Collateral, (ii) any Claim
for infringement of any patent, copyright, trademark or other intellectual
property right, (iii) any Claim resulting from the presence on or under or the
escape, seepage, leakage, spillage, discharge, emission or release of any
Hazardous Materials from any item of Equipment financed by a Loan or
constituting Collateral, including any Claims asserted or arising under any
Environmental Law, or (iv) any Claim for negligence or strict or absolute
liability in tort; PROVIDED, HOWEVER, that Borrower shall not indemnify Lender
for any liability incurred by Lender as a direct and sole result of Lender's
gross negligence or willful misconduct. Such indemnities shall continue in full
force and effect, notwithstanding the expiration or termination of this
Agreement. Upon Lender's written demand, Borrower shall assume and diligently
conduct, at its sole cost and expense, the entire defense of Lender, each of its
partners, and each of their respective, agents, employees, directors, officers,
shareholders, successors and assigns against any indemnified Claim described in
this SECTION 10.03. Borrower shall not settle or compromise any Claim against or
involving Lender without first obtaining Lender's written consent thereto, which
consent shall not be unreasonably withheld.
10.04. WAIVERS. (a) Borrower shall give Lender written notice within
one hundred eighty (180) days of obtaining knowledge of the occurrence of any
claim or cause of action it believes it
20
has, or may seek to assert to allege against Lender whether such claim is based
in law or equity, arising under or related to this Agreement or any of the other
Operative Documents or to the transactions contemplated hereby or thereby, or
any act or omission to act by Lender with respect hereto or thereto, and that if
it shall fail to give such notice to Lender with regard to any such claim or
cause of action, Borrower shall be deemed to have waived, and shall be forever
barred from bringing or asserting such claim or cause of action in any suit,
action or proceeding in any court or before any governmental agency or authority
or any arbitrator. (b) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT MAY SEEK AND RECOVER
FROM LENDER ACTUAL DAMAGES, BUT THAT IT SHALL NOT SEEK FROM LENDER UNDER ANY
THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
10.05. NOTICES; PAYMENTS. (a) All notices and other communications
given to or made upon any party hereto in connection with this Agreement shall
be in writing (including telexed, telecopied or telegraphic communication) and
mailed (by certified or registered mail), telexed, telegraphed, telecopied or
delivered to the respective parties, as follows:
Borrower: At the address set forth on the signature page of the
applicable Loan Terms Schedule.
Lender: MMC/GATX PARTNERSHIP NO. I
C/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & COMPANY
▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or in accordance with any subsequent written direction from either party to the
other. All such notices and other communications shall, except as otherwise
expressly herein provided, be effective when received; or in the case of
delivery by messenger or overnight delivery service, when left at the
appropriate address.
(b) Unless Lender specifies otherwise in writing, all payments shall
be made to:
GATX Capital Corporation, as Agent
▇/▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 30384-8592
10.06. TERMINATION. This Agreement shall terminate on the latest
Maturity Date; PROVIDED, HOWEVER, that the termination of this Agreement shall
not affect any of the rights and remedies of Lender hereunder (including,
without limitation, the security interests granted to Lender), it being
understood and agreed that all such rights and remedies shall continue in full
force and effect until payment of all amounts owed to Lender under or in
connection with the Operative Documents, whether on account of principal,
interest, fees or otherwise.
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10.07. SEVERABILITY. If any provision of any Operative Document is
held invalid or unenforceable to any extent or in any application, the remainder
of such Operative Document and all other Operative Documents, or the application
of such provision to different Persons or circumstances or in different
jurisdictions, shall not be affected thereby.
10.08. SURVIVAL. All representations, warranties and covenants of
Borrower made in this Agreement shall continue in full force and effect so long
as any Obligations remain outstanding. The obligations of Borrower to indemnify
Lender with respect to the expenses, damages, losses, costs and liabilities
described in Section 10.03 shall survive until all applicable statute of
limitations periods with respect to actions that may be brought against Lender
have run.
10.09. GOVERNING LAW. This Agreement, the other Operative Documents
and the rights and obligations of the parties hereto and thereto shall be
governed by and construed and enforced in accordance with the laws of the State
of California. Any action to enforce this Agreement against Borrower may be
brought in California or, with regard to Collateral, may also be brought
wherever such Collateral is located.
10.10. RELATIONSHIP OF PARTIES. Borrower and Lender acknowledge,
understand and agree that the relationship between the Borrower and Lender is,
and at all time shall remain solely that of a borrower and lender. Lender shall
not under any circumstances be construed to be a partner or joint venturer of
Borrower or any of its Affiliates; nor shall Lender under any circumstances be
deemed to be in a relationship of confidence or trust or a fiduciary
relationship with Borrower or any of its Affiliates, or to owe any fiduciary
duty to Borrower or any of its Affiliates. Lender does not undertake or assume
any responsibility or duty to Borrower or any of its Affiliates to select,
review, inspect, supervise, pass judgment upon or otherwise inform the Borrower
or any of its Affiliates of any matter in connection with its or their Property,
any Collateral held by any Lender or the operations of Borrower or any of its
Affiliates. Borrower and each of its Affiliates shall rely entirely on their own
judgment with respect to such matters, and any review, inspection, supervision,
exercise of judgment or supply of information undertaken or assumed by Lender in
connection with such matters is solely for the protection of Lender and neither
Borrower nor any Affiliate is entitled to rely thereon.
10.11. SUCCESSORS AND ASSIGNS. This Agreement and the other
Operative Documents shall be binding upon and inure to the benefit of Lender,
Borrower and their respective successors and permitted assigns, except that
Borrower may not assign or transfer its rights hereunder or any interest herein
without the prior written consent of Lender. Lender may sell to any other
financial entity (a "PARTICIPANT") participation interests in Lender's rights
under this Agreement and the other Operative Documents. Lender may disclose the
Operative Documents and any other financial or other information relating to
Borrower or any Subsidiary to any potential Participant, provided that such
Participant agrees to protect the confidentiality of such documents and
information using the same measures that it uses to protect its own confidential
information.
10.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.13. FURTHER ASSURANCES; POWER OF ATTORNEY. Borrower will, at its
own expense, from time to time do, execute, acknowledge and deliver all and
every further acts, deeds, conveyances, transfers and assurances, and all
financing and continuation statements and similar notices, reasonably necessary
or proper for the perfection of the security interest being herein provided for
in the Collateral, whether now owned or hereafter acquired. Borrower does hereby
irrevocably appoint Lender, the true and lawful attorney-in-fact of Borrower
with full power of substitution, for
22
it and in its name to execute any UCC financing statements or UCC financing
statement amendments as to Collateral in any applicable jurisdiction, and
generally to use its name in the exercise of all powers hereby conferred on
Lender with full power of substitution. The power and authority hereby given and
granted to Lender shall be deemed coupled with an interest and not revocable by
any party.
10.14. POWER OF ATTORNEY UPON DEFAULT. Borrower does hereby
irrevocably appoint Lender (which appointment is coupled with an interest), the
true and lawful attorney-in-fact of Borrower with full power of substitution,
for it and in its name (a) to perform (but Lender shall not be obligated to and
shall incur no liability to Borrower or any third party for failure to perform)
any act which Borrower is obligated by this Agreement to perform, (b) to ask,
demand, collect, receive, receipt for, ▇▇▇ for, compound and give acquittance
for any and all rents, issues, profits, avails, distributions, income, payment
draws and other sums in which a security interest is granted under SECTION 5.01
with full power to settle, adjust or compromise any claim thereunder as fully as
if Lender were Borrower itself, (c) to receive payment of and to endorse the
name of Borrower to any items of Collateral (including checks, drafts and other
orders for the payment of money) that come into Lender's possession or under
Lender's control, (d) to make all demands, consents and waivers, or take any
other action with respect to, the Collateral, (e) in Lender's discretion, to
file any claim or take any other action or institute proceedings, either in its
own name or in the name of Borrower or otherwise, which Lender may reasonably
deem necessary or appropriate to protect and preserve the right, title and
interest of Lender in and to the Collateral, and (f) to otherwise act with
respect thereto as though Lender were the outright owner of the Collateral;
PROVIDED, HOWEVER, that the power of attorney herein granted shall be
exercisable only upon the occurrence and during the continuation of an Event of
Default unless in Lender's reasonable opinion immediate action is necessary to
preserve or protect the Collateral. Borrower agrees to reimburse Lender upon
demand for all reasonable costs and expenses, including attorneys' fees and
expenses, which Lender may incur while acting as Borrower's attorney in fact
hereunder, all of which costs and expenses are included within the Obligations.
10.15. CONFIDENTIALITY. All information (other than periodic reports
filed by Borrower with the Securities and Exchange Commission) disclosed by
Borrower to Lender in writing or through inspection pursuant to this Agreement
shall be considered confidential. Lender agrees to use the same degree of care
to safeguard and prevent disclosure of such confidential information as Lender
uses with its own confidential information, but in any event no less than a
reasonable degree of care. Lender shall not disclose such information to any
third party (other than Lender's or Lender's partner's attorneys and auditors
subject to the same confidentiality obligation set forth herein) and shall use
such information only for purposes of evaluation of its investment in Borrower
and the exercise of Lender's rights and the enforcement of their remedies under
this Agreement and the other Operative Agreements. The obligations of
confidentiality shall not apply to any information that (a) was known to the
public prior to disclosure by Borrower under this Agreement, (b) becomes known
to the public through no fault of Lender, (c) is disclosed to Lender by a third
party having a legal right to make such disclosure, or (d) is independently
developed by Lender.
10.16 RECOVERY OF LITIGATION COSTS. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
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MITOKOR
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Title: Chairman & CEO
---------------------------
MMC/GATX PARTNERSHIP NO. I
By: GATX Capital Corporation,
as General Partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Title: V.P.
---------------------------
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SCHEDULES
1 Loan Terms Schedule
2 Existing Liens
3 Conditions Precedent
EXHIBITS
A Intentionally omitted
B Landlord Consent
C Warrant
25
