Exhibit 10.32
M&T BANK
Manufacturers and Traders Trust Company
CREDIT AGREEMENT
Maryland
July 31, 2003
BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION
a(n) [ ] individual [x] corporation [ ] general partnership [ ] limited
liability company [ ] ___________________________ organized under the laws of
the State of Delaware, having its chief executive office at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its chief executive ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Attention:
Office of General Counsel.
The Bank and the Borrower agree as follows:
1. DEFINITIONS.
a. "Credit" means any and all credit facilities and any other financial
accommodations made by the Bank in favor of the Borrower whether now
or hereafter in existence.
b. "Obligations" means any and all indebtedness or other obligations of
the Borrower to the Bank under this Agreement and the Transaction
Documents, together with all extensions, renewals and replacements
thereof, and all interest, fees, charges, costs or expenses which
accrue on or in connection with the foregoing, including; (i) any
indebtedness or obligations arising prior to, during or after any
pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in
such proceeding; and (ii) under the Equipment Line (as such term is
defined herein).
c. "Subsidiary" means any corporation or other business entity of which
at least fifty percent (50%) of the voting stock or other ownership
interest is owned by the Borrower directly or indirectly through one
or more Subsidiaries. If the Borrower has no Subsidiaries, the
provisions of this Agreement relating to the Subsidiaries shall be
disregarded, without affecting the applicability of such provisions
to the Borrower alone.
d. "Transaction Documents" means this Agreement and all documents,
instruments or other agreements by the Borrower in favor of the Bank
and/or the Maryland Industrial Development Financing Authority
("MIDFA") in connection (directly or indirectly) with the
Obligations, whether now or hereafter in existence, including
promissory notes, security agreements, guaranties and letter of
credit reimbursement agreements.
2. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties and any "Additional Representations and
Warranties" on the schedule attached hereto and made part hereof (the
"Schedule"), all of which shall be deemed to be continuing representations
and warranties as long as this Agreement is in effect:
a. COMMERCIAL LOAN. The Credit evidences a commercial loan and an
extension of credit for a commercial purpose within the meaning of
Md. Code, Commercial Law Art.
b. GOOD STANDING; AUTHORITY. The Borrower and each Subsidiary (if
either is not an individual) is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it was
formed. The Borrower and each Subsidiary is duly authorized to do
business in each jurisdiction in which failure to be so qualified
might have a material adverse effect on its business or assets and
has the power and authority to own each of its assets and to use
them in the ordinary course of business now and in the future.
c. COMPLIANCE. The Borrower and each Subsidiary conducts its business
and operations and the ownership of its assets in compliance with
each applicable statute, regulation and other law, including
environmental laws, the Employee Retirement Income Security Act of
1974, as amended, and laws prohibiting discrimination in employment.
All approvals, including authorizations, permits, consents,
franchises, licenses, registrations, filings, declarations, reports
and notices (the "Approvals") necessary for the conduct of the
Borrower's and each Subsidiary's business and for the Credit have
been duly obtained and are in full force and effect. The Borrower
and each Subsidiary is in compliance with the Approvals. The
Borrower and each Subsidiary (if either is not an individual) is in
compliance with its certificate of incorporation, by-laws,
partnership agreement, articles of organization, operating agreement
or other applicable organizational or governing document as may be
applicable to the Borrower or a Subsidiary depending on its
organizational structure ("Governing Documents"). The Borrower and
each Subsidiary is in compliance with each agreement to which it is
a party or by which it or any of its assets is bound.
d. LEGALITY. The execution, delivery and performance by the Borrower of
this Agreement and all related documents, including the Transaction
Documents, (i) are in furtherance of the Borrower's purposes and
within its power and authority; (ii) do not (A) violate any statute,
regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator
with respect to the Borrower or any Subsidiary or (B) violate the
Borrower's or any Subsidiary's Governing Documents (if either is not
an individual), constitute a default under any agreement binding on
the Borrower or any Subsidiary or result in a lien or encumbrance on
any assets of the Borrower or any Subsidiary; and (iii) if the
Borrower or any Subsidiary is not an individual, have been duly
authorized by all necessary organizational actions.
e. FISCAL YEAR. The fiscal year of the Borrower is the calendar year
unless the following blank states otherwise: year ending
__________________, 20___.
f. TITLE TO ASSETS. The Borrower and each Subsidiary has good and
marketable title to each of its assets free of security interests,
mortgages or other liens or encumbrances, except as set forth on the
Schedule titled "Permitted Liens" or pursuant to the Bank's prior
written consent.
g. JUDGMENTS AND LITIGATION. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment,
order or award of any court, agency or other governmental authority
or arbitrator (any, an "Action") which involves the Borrower, its
Subsidiaries or their respective assets and might have a material
adverse effect upon the Borrower or any Subsidiary or threaten the
validity of the Credit, any Transaction Document or any related
document or action.
h. FULL DISCLOSURE. Neither this Agreement nor any certificate,
financial statement or other writing provided to the Bank by or on
behalf of the Borrower or any Subsidiary contains any statement of
fact that is incorrect or misleading in any material respect or
omits to state any fact necessary to make any such statement not
incorrect or misleading. The Borrower has not failed to disclose to
the Bank any fact that might have a material adverse effect on the
Borrower or any Subsidiary.
3. AFFIRMATIVE COVENANTS. So long as this Agreement is in effect, the
Borrower will comply with any "Additional Affirmative Covenant" contained
in the Schedule and shall:
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a. FINANCIAL STATEMENTS AND OTHER INFORMATION. Promptly deliver to the
Bank and the Maryland Industrial Development Financing Authority
("MIDFA") (i) within forty-five (45) days after the end of each of
its first three fiscal quarters, an unaudited consolidating and
consolidated financial statement of the Borrower and each Subsidiary
as of the end of such quarter, which financial statement shall
consist of income and cash flows for the quarter, for the
corresponding quarter in the previous fiscal year and for the period
from the end of the previous fiscal year, with a consolidating and
consolidated balance sheet as of the quarter end all in such detail
as the Bank and MIDFA may request, quarterly statements to MIDFA
only on MIDFA's request, (ii) within ninety (90) days after the end
of each fiscal year, consolidating and consolidated statements of
the Borrower's and each Subsidiary's income and cash flows and its
consolidating and consolidated balance sheet as of the end of such
fiscal year, setting forth comparative figures for the preceding
fiscal year and to be (check applicable box, if no box is checked
the financial statements shall be audited):
[x] AUDITED [ ] REVIEWED [ ] COMPILED
by an independent certified public accountant acceptable to the Bank
and MIDFA; all such statements shall be certified by the Borrower's
chief financial officer to be correct and in accordance with the
Borrower's and each Subsidiary's records and to present fairly the
results of the Borrower's and each Subsidiary's operations and cash
flows and its financial position at year end; and (iii) with each
statement of income, a certificate executed by the Borrower's chief
executive and chief financial officers or other such person
responsible for the financial management of the Borrower (A) setting
forth the computations required to establish the Borrower's
compliance with each financial covenant, if any, during the
statement period, (B) stating that the signers of the certificate
have reviewed this Agreement and the operations and condition
(financial or other) of the Borrower and each of its Subsidiaries
during the relevant period and (C) stating that no Event of Default
occurred during the period, or if an Event of Default did occur,
describing its nature, the date(s) of its occurrence or period of
existence and what action the Borrower has taken with respect
thereto. The Borrower shall also promptly provide the Bank and MIDFA
with copies of all annual reports, proxy statements and similar
information distributed to shareholders, partners or members, and
copies of all filings with the Securities and Exchange Commission
and the Pension Benefit Guaranty Corporation, and shall provide, in
form satisfactory to the Bank and MIDFA, such additional
information, reports or other information as the Bank and MIDFA may
from time to time reasonably request regarding the financial and
business affairs of the Borrower or any Subsidiary.
b. ACCOUNTING; TAX RETURNS AND PAYMENT OF CLAIMS. The Borrower and each
Subsidiary will maintain a system of accounting and reserves in
accordance with generally accepted accounting principles, has filed
and will file each tax return required of it and, except as
disclosed in the Schedule, has paid and will pay when due each tax,
assessment, fee, charge, fine and penalty imposed by any taxing
authority upon it or any of its assets, income or franchises, as
well as all amounts owed to mechanics, materialmen, landlords,
suppliers and the like in the normal course of business.
c. INSPECTIONS. Promptly upon the Bank's or MIDFA's request, the
Borrower will permit, and cause its Subsidiaries to permit, the
Bank's and MIDFA's officers, attorneys or other agents to inspect
its and its Subsidiary's premises, examine and copy its records and
discuss its and its Subsidiary's business, operations and financial
or other condition with its and its Subsidiary's responsible
officers and independent accountants.
d. OPERATING ACCOUNTS. Maintain, and cause its Subsidiaries to
maintain, at least one of its primary operating accounts with the
Bank.
e. CASH MANAGEMENT AND INVESTMENT SERVICES. Maintain, and cause its
Subsidiaries to maintain, the Bank as a cash management service
provider and use its best efforts to utilize other investment
services of the Bank.
f. CHANGES in MANAGEMENT AND CONTROL. If the Borrower is not an
individual, immediately upon any change in the identity of the
Borrower's chief executive officers or in its beneficial ownership,
the Borrower will provide to the
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Bank and MIDFA a certificate executed by its senior individual
authorized to transact business on behalf of the Borrower,
specifying such change.
g. NOTICE OF DEFAULTS AND MATERIAL ADVERSE CHANGES. Immediately upon
acquiring reason to know of (i) any Event of Default, (ii) any event
or condition that might have a material adverse effect upon the
Borrower or any Subsidiary or (iii) any Action, the Borrower will
provide to the Bank and MIDFA a certificate executed by the
Borrower's senior individual authorized to transact business on
behalf of the Borrower, specifying the date(s) and nature of the
event or the Action and what action the Borrower or its Subsidiary
has taken or proposes to take with respect to it.
h. INSURANCE. Maintain its, and cause its Subsidiaries to maintain,
property in good repair and will on request provide the Bank and
MIDFA with evidence of insurance coverage satisfactory to the Bank
and MIDFA, including fire and hazard, liability, workers'
compensation and business interruption insurance and flood hazard
insurance as required.
i. FURTHER ASSURANCES. Promptly upon the request of the Bank and MIDFA,
the Borrower will execute, and cause its Subsidiaries to execute,
and deliver each writing and take each other action that the Bank
and MIDFA deems necessary or desirable in connection with any
transaction contemplated by this Agreement.
j. EMPLOYMENT COUNT. Upon request, but not more frequently than twice
annually, provide to MIDFA the employment count at the Borrowers
premises.
k. CORPORATE EXISTENCE. Maintain its existence in good standing under
the laws of the jurisdiction in which it was formed and maintain its
qualification to do business in the State of Maryland and in each
jurisdiction in which failure to be so qualified might have a
material adverse effect on its business or assets.
1. MIDFA'S INSURANCE PREMIUM. Pay directly to the Bank, for remittance
to MIDFA, MIDFA's insurance premium payable in advance on the
effective date of the insurance and on each anniversary of the
effective date in the amount of the greater of (a) 1/2% of the
outstanding insured balance of the Equipment Line, or (b) $500.00
per annum.
m. DRUG AND ALCOHOL FREE WORKPLACE. The Borrower shall comply with the
State of Maryland's policy concerning drug and alcohol free
workplaces, as set forth in Code of Maryland Regulations
01.01.1989.18 and 21.11.08 as adopted by the Department of Business
and Economic Development and remain in compliance so long as MIDFA's
insurance remains in effect.
n. APPRAISALS. Permit the Bank and MIDFA from time to time, at the
Borrower's expense, to order an appraisal of the Collateral (as such
term is defined in the Specific Security Agreement by and between
the Borrower and the Bank of even date herewith) to be performed by
an appraiser or appraisers selected by the Bank and/or MIDFA, in
their sole discretion; provided, however, that the Borrower shall
only be obligated to pay for one appraisal of the Collateral unless
an Event of Default has occurred and is continuing under the
Transaction Documents. The Borrower further agrees (a) to fully
cooperate with such appraisers, (b) to provide such appraisers with
access to the Collateral and with any information regarding the
Collateral as is reasonably requested, and (c) to permit the Bank
and MIDFA, their agents and representatives, to disclose to such
appraisers any and all information they may have with regard to the
Collateral, the Borrower and the Obligations as the Bank and MIDFA,
in their reasonable discretion, determine is necessary to provide
for an accurate appraisal of the Collateral.
4. NEGATIVE COVENANTS. As long as this Agreement is in effect, the Borrower
shall not violate, and shall not suffer or permit any of its Subsidiaries
to violate, any of the following covenants and any `Additional Negative
Covenant" on the Schedule. The Borrower shall not without the written
consent of the Bank and MIDFA which consent shall not be unreasonably
withheld:
a. INDEBTEDNESS. Permit any indebtedness (including direct and
contingent liabilities) not described on the Schedule titled
"Permitted Indebtedness" except for trade indebtedness or current
liabilities for salary and wages incurred in the ordinary course of
business and not substantially overdue.
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b. GUARANTIES. Become a guarantor, a surety, or otherwise liable for
the debts or other obligations of another, whether by guaranty or
suretyship agreement, agreement to purchase indebtedness, agreement
for furnishing funds through the purchase of goods, supplies or
services (or by way of stock purchase, capital contribution, advance
or loan) for the purpose of paying or discharging indebtedness, or
otherwise, except as an endorser of instruments for the payment of
money deposited to its bank account for collection in the ordinary
course of business and except as may be specified in the Schedule
titled "Permitted Guaranties".
c. LIENS. Permit any of its assets to be subject to any security
interest, mortgage or other lien or encumbrance, except as set forth
on the Schedule titled "Permitted Liens' and except for liens for
property taxes not yet due; pledges and deposits to secure
obligations or performance for workers' compensation, bids, tenders,
contracts other than notes, appeal bonds or public or statutory
obligations; and materialmen's, mechanics', carriers' and similar
liens arising in the normal course of business.
d. LOANS. Make any loan, advance or other extension of credit except as
disclosed on the Schedule titled "Permitted Loans", except for
endorsements of negotiable instruments deposited to the Borrower's
deposit account for collection, trade credit in the normal course of
business and intercompany loans approved in writing by the Bank and
MIDFA.
e. DISTRIBUTIONS. If the Borrower is not an individual, declare or pay
any distribution, except for (i) dividends payable solely in stock
and (ii) cash dividends paid to the Borrower by its Subsidiary.
f. CHANGES IN FORM; FISCAL YEAR; ACCOUNTING METHOD. (i) Transfer or
dispose of substantially all of its assets, (ii) enter into any
merger, consolidation, or dissolution unless the Borrower is the
surviving entity; (iii) acquire all or substantially all of the
assets of any person unless the purchase price paid for such assets
is less than $3,000,000; (iv) do business under or otherwise use any
name other than its true name (v) make any material change in its
business, structure, executive management, purposes or operations
that might have a material adverse effect on the Borrower or any of
its Subsidiaries, (vi) make a change in its fiscal year or (vii)
make any change in its method of accounting.
g. SALE AND LEASEBACK. Enter into any arrangement whereby the Borrower
shall sell or transfer all or any substantial part of its fixed
assets then owned by it and shall thereupon, or within one year
thereafter, rent or lease the assets so sold or transferred.
h. INVESTMENTS. Purchase or invest in non-operating assets, except
direct obligations of the United States and federally insured
certificates of deposit and except for investments consistent with
guidelines approved by the Board of Directors of the Borrower.
5. EQUIPMENT LINE
a. EQUIPMENT LINE. Subject to the terms and conditions set forth
herein, the Bank agrees to lend to the Borrower an amount equal to
100% of the purchase price of the Collateral, but in no event
greater than an aggregate amount of $5,500,000.00 (the "Equipment
Line").
b. TERM NOTES. The Borrower's indebtedness to the Bank under each
advance made by the Bank to the Borrower under the Equipment Line,
together with interest accrued thereon, shall be evidenced by
promissory notes (collectively, the "Promissory Note") in the form
as set forth on Exhibit A or Exhibit B attached hereto as selected
by the Borrower.
c. REPAYMENT OF THE EQUIPMENT LINE. The Borrower shall repay the
principal of each advance made under the Equipment Line beginning
thirty (30) days after each advance pursuant to the terms set forth
in the Promissory Note. Except as provided below, each advance shall
be repaid in forty-eight (48) equal payments of principal plus
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interest for advances secured by equipment other than computer
equipment. Advances secured by computer equipment shall be repaid in
thirty-six (36) equal payments of principal plus interest. The
number of monthly payments set forth above shall be reduced by the
number of months between the date of the first advance hereunder and
the date of the subsequent advance, e.g., an advance made during the
last month before the Termination Date shall be repaid in thirty-six
(36) monthly payments for advances secured by equipment other than
computer equipment and twenty-four (24) monthly payments for
advances secured by computer equipment.
d. CONDITIONS PRECEDENT TO ADVANCES. The Bank's obligation under this
Agreement to make each advance under the Equipment Line and the
obligation of MIDFA to issue its financial assistance for the
benefit of the Borrower is subject to the accuracy, as of the date
hereof and as of the date of each advance, of the representations
and warranties contained herein and in each of the other Transaction
Documents and to the satisfaction, in the sole discretion of the
Bank and MIDFA on or before such date, of the following conditions
precedent:
1. The Bank and MIDFA (unless otherwise provided) shall
have received the following, all of which must be
satisfactory in form and content to the Bank and MIDFA,
in their sole discretion:
(i) certified copies of such resolutions, statements,
invoices, cancelled checks and other documents as
the Bank, MIDFA or their respective counsel may
request;
(ii) such lien searches and executed financing
statements or other documents with respect to the
security interests created by the Transaction
Documents as the Bank and MIDFA may request, and
such evidence as the Bank may request that all
recordings and filings that the Bank, MIDFA or
their respective counsel deem necessary or
desirable to perfect the security interests
created by the Transaction Documents have been
effected;
(iii) payment by the Borrower to the Bank and MIDFA of
the balance of any commitment fee, loan
origination fee, appraisal fee, underwriting fee,
MIDFA insurance premium, or other fees or charges
of the Bank or MIDFA required under the
Transaction Documents;
(iv) the grant to the Bank by such documents as the
Bank may require of a first lien security interest
on a certificate of deposit or money market
account issued by or established with the Bank in
an amount of $500,000.00 which shall increase by
the amount of interest earned;
(v) a written appraisal of the Collateral by an
appraiser acceptable to the Bank which concludes
that the orderly liquidation value of the
Collateral will be no less than forty percent
(40%) of the original purchase price;
(vi) a written certification signed by the Borrower
that the Collateral is acceptable to the Borrower;
(vii) a landlord's waiver agreement signed by the
Borrower's landlord; and
(viii) an opinion letter from Borrower's counsel
addressed to the Bank and MIDFA.
2. MIDFA INSURANCE AGREEMENT. The Bank shall have received
a fully-executed deficiency insurance agreement under
the Conventional Program of MIDFA, Department of
Business and Economic Development which provides to the
Bank insurance of 40% of the outstanding principal
balance of the Equipment Line plus 40% of the accrued
and unpaid pre-default interest of the Equipment Line
but in no event more than Two Million Two Hundred
Thousand and No/100 Dollars ($2,200,000.00) at any time
for the first forty-two (42) months of the Equipment
Line.
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e. AVAILABILITY OF ADVANCES UNDER THE EQUIPMENT LINE. Any advances
under the Equipment Line are subject to the following conditions and
requirements:
1. No more than an aggregate of $1,500,000.00 will be
advanced under the Equipment Line until the Bank's
determination that the Borrower has obtained on or after
June 30, 2003, no less than $5,600,000.00 in cash,
equity contributions, cash derived from revenues or
payments received under collaborative agreements.
2. No more than an aggregate of $4,000,000.00 will be
advanced under the Equipment Line until the Bank's
determination that the Borrower has obtained on or after
June 30, 2003, no less than an additional $13,400,000 in
cash, equity contributions, cash derived from revenues
or payments received under collaborative agreements.
3. No more than an aggregate of $5,500,000.00 will be
advanced under the Equipment Line until the Bank's
determination that the Borrower has obtained no less
than an additional $8,000,000 in cash, equity
contributions, cash derived from revenues or payments
received under collaborative agreements.
4. If the Bank determines that the Borrower has failed to
obtain $27,000,000 in the aggregate in cash or equity
contributions by July 31, 2004, all amounts under the
Equipment Line shall become immediately due and payable
upon demand by the Bank.
The Bank shall not unreasonably withhold or delay its determination
under el-4 above.
f. TERMINATION OF THE EQUIPMENT LINE. The Bank shall make no advance
under the Equipment Line after July 31, 2004 (the "Termination
Date").
g. CONDITIONS PRECEDENT FOR THE BENEFIT OF THE BANK AND MIDFA. All
conditions precedent to the obligations of the Bank to make any
advance are imposed hereby solely for the benefit of the Bank and
MIDFA, and no other party may require satisfaction of any such
condition precedent or be entitled to assume that the Bank will
refuse to make any advance in the absence of strict compliance with
such conditions precedent. All requirements of this Agreement may be
waived by the Bank and MIDFA in whole or in part, at any time.
6. DEFAULT.
a. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an "Event of Default": (i) failure by the Borrower to pay
when due (whether at the stated maturity, by acceleration, upon
demand or otherwise) the Obligations, or any part thereof, or there
occurs any event or condition which after notice, lapse of time or
after both notice and lapse of time will permit acceleration of any
Obligation; (ii) the Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained
in this Agreement or any other Transaction Document and such default
shall continue for a period of thirty (30) days after written notice
thereof has been given to the Borrower by the Bank; (iii) any
representation or warranty made by the Borrower under this
Agreement, or any other Transaction Document, shall at any time
prove to have been incorrect or misleading in any material respect
when made or deemed made; (iv) the Borrower shall (A) default in
making any payment when due under any Debt and fail to cure such
default during the period of grace, if any, provided for such
default, or (B) default in the observance or performance of any
other covenant or agreement contained in any document relating to
any Debt, and fail to cure such default during the period of grace,
if any, provided for such cure, the effect of which default is to
cause, or to permit the holder of such Debt (or a trustee or agent
on behalf of such holder or holders) to cause, with the giving of
notice as required, any such Debt to become due prior to its stated
maturity. The term `Debt' means any obligation of the Borrower for
borrowed money, or for the deferred purchase price of property, in
which the outstanding amount of the obligation exceeds $100,000; (v)
the Borrower makes a general assignment, arrangement or composition
agreement with or for the benefit of its creditors or makes, or
sends notice of any intended, bulk sale; the sale, assignment,
transfer or delivery of all or
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substantially all of the assets of the Borrower to a third party; or
the cessation by the Borrower as a going business concern; (vi) the
Borrower files a petition in bankruptcy or institutes any action
under federal or state law for the relief of debtors or seeks or
consents to the appointment of an administrator, receiver, custodian
or similar official for the wind up of its business (or has such a
petition or action filed against it and such petition action or
appointment is not dismissed or stayed within forty-five (45) days;
(vii) the entry of any judgment in excess of $250,000 or order of
any court, other governmental authority or arbitrator against the
Borrower and such judgment or order is not paid, dismissed or a bond
posted therefor within thirty (30) days after the entry thereof;
(viii) intentional omission or intentional inaccuracy of facts
submitted to the Bank or any Affiliate (whether in a financial
statement or otherwise); (ix) an adverse change in the Borrower, its
business, operations, affairs or condition (financial or otherwise)
which change the Bank determines will have a material adverse effect
on the ability of the Borrower to pay or perform the Obligations;
(x) any pension plan of the Borrower fails to comply with applicable
law or has vested unfunded liabilities that, in the opinion of the
Bank, might have a material adverse effect on the Borrower's ability
to repay its debts; (xi) any indication or evidence received by the
Bank that the Borrower may have directly or indirectly been engaged
in any type of activity which, in the Bank's discretion, might
result in the forfeiture or any property of the Borrower to any
governmental authority; (xii) the occurrence of any event described
in Section 6(a)(i) through and including 6(a)(xi) with respect to
any Subsidiary or to any endorser, guarantor or any other party
liable for, or whose assets or any interest therein secures, payment
of any of the Obligations; or (xiii) MIDFA notifies the Bank without
the Bank's prior written consent, that its insurance of the Bank for
repayment of the Equipment Line is no longer effective or is
terminated, as a result of any act or omission of the Borrower.
b. RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence of any Event
of Default, the Bank and MIDFA without demand of performance or
other demand, presentment, protest, advertisement or notice of any
kind (except any notice required by law) to or upon the Borrower,
any Subsidiary or any other person (all and each of which demands,
presentments, protests, advertisements and notices are hereby
waived), may exercise all rights and remedies under the Borrower's
or its Subsidiaries' agreements with the Bank and MIDFA or its
Affiliates, applicable law, in equity or otherwise and may declare
all or any part of any Obligations not payable on demand to be
immediately due and payable without demand or notice of any kind and
terminate any obligation it may have to grant any additional loan,
credit or other financial accommodation to the Borrower or any
Subsidiary. All or any part of any Obligations whether or not
payable on demand, shall be immediately due and payable
automatically upon the occurrence of an Event of Default in Section
6(a)(vi) above. The provisions hereof are not intended in any way to
affect any rights of the Bank and MIDFA with respect to any
Obligations which may now or hereafter be payable on demand.
7. EXPENSES. The Borrower shall pay to the Bank and MIDFA on demand all costs
and expenses (including all fees and disbursements of counsel retained for
advice, suit, appeal or other proceedings or purpose and of any experts or
agents it may retain), which the Bank and MIDFA may incur in connection
with (i) the administration of the Obligations, including any
administrative fees the Bank and MIDFA may impose for the preparation of
discharges, releases or assignments to third-parties; (ii) the enforcement
and collection of any Obligations or any guaranty thereof, (iii) the
exercise, performance, enforcement or protection of any of the rights of
the Bank and MIDFA hereunder; or (iv) the failure of the Borrower or any
Subsidiary to perform or observe any provisions hereof. After such demand
for payment of any cost, expense or fee under this Section or elsewhere
under this Agreement, the Borrower shall pay interest at the highest
default rate specified in any instrument evidencing any of the Obligations
from the date payment is demanded by the Bank and MIDFA to the date
reimbursed by the Borrower. All such costs, expenses or fees under this
Agreement shall be added to the Obligations.
8. TERMINATION. This Agreement shall remain in full force and effect until
(i) all Obligations outstanding, or contracted or committed for (whether
or not outstanding), shall be finally and irrevocably paid in full and
(ii) all Transaction Documents have been terminated by the Bank.
9. RIGHT OF SETOFF. If an Event of Default occurs, the Bank shall have the
right to set off against the amounts owing under this Agreement and the
other Transaction Documents any property held in a deposit or other
account or otherwise
-8-
with the Bank or its Affiliates or otherwise owing by the Bank or its
Affiliates in any capacity to the Borrower, its Subsidiary or any
guarantor of, or endorser of any of the Transaction Documents evidencing,
the Obligations. Such setoff shall be deemed to have been exercised
immediately at the time the Bank or such Affiliate elect to do so.
10. MISCELLANEOUS.
a. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to
Borrower (at its address on the Bank and MIDFA's records), to the
Bank (at the address on page one and separately to the Bank officer
responsible for Borrower's relationship with the Bank) or to MIDFA
at the Department of Business & Economic Development at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Executive Director. Such notice or demand shall be deemed
sufficiently given for all purposes when delivered (i) by personal
delivery and shall be deemed effective when delivered, or (ii) by
mail or courier and shall be deemed effective three (3) business
days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1)
business day after delivery to a nationally recognized overnight
courier service (e.g., Federal Express). Notice by e-mail is not
valid notice under this or any other agreement between the Borrower
and the Bank and MIDFA.
b. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Any financial calculation
to be made, all financial statements and other financial information
to be provided, and all books and records, system of accounting and
reserves to be kept in connection with the provisions of this
Agreement, shall be in accordance with generally accepted accounting
principles consistently applied during each interval and from
interval to interval; provided, however, that in the event changes
in generally accepted accounting principles shall be mandated by the
Financial Accounting Standards Board or any similar accounting body
of comparable standing, or should be recommended by the Borrower's
certified public accountants, to the extent such changes would
affect any financial calculations to be made in connection herewith,
such changes shall be implemented in making such calculations only
from and after such date as the Borrower and the Bank shall have
amended this Agreement to the extent necessary to reflect such
changes in the financial and other covenants to which such
calculations relate.
c. INDEMNIFICATION. If after receipt of any payment of all, or any part
of, the Obligations, the Bank and MIDFA are, for any reason,
compelled to surrender such payment to any person or entity because
such payment is determined to be void or voidable as a preference,
an impermissible setoff, or a diversion of trust funds, or for any
other reason, the Transaction Documents shall continue in full force
and the Borrower shall be liable, and shall indemnify and hold the
Bank and MIDFA harmless for, the amount of such payment surrendered.
The provisions of this Section shall be and remain effective
notwithstanding any contrary action which may have been taken by the
Bank and MIDFA in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to the Bank and MIDFA's
rights under the Transaction Documents and shall be deemed to have
been conditioned upon such payment having become final and
irrevocable. The provisions of this Section shall survive the
termination of this Agreement and the Transaction Documents.
d. FURTHER ASSURANCES. From time to time, the Borrower shall take, and
cause its Subsidiaries to take, such action and execute and deliver
to the Bank and MIDFA such additional documents, instruments,
certificates, and agreements as the Bank and MIDFA may reasonably
request to effectuate the purposes of the Transaction Documents.
e. CUMULATIVE NATURE AND NON-EXCLUSIVE EXERCISE OF RIGHTS AND REMEDIES.
All rights and remedies of the Bank pursuant to this Agreement and
the Transaction Documents shall be cumulative, and no such right or
remedy shall be exclusive of any other such right or remedy. In the
event of any unreconcilable inconsistencies, this Agreement shall
control. No single or partial exercise by the Bank of any right or
remedy pursuant to this Agreement or otherwise shall preclude any
other or further exercise thereof, or any exercise of any other such
right or remedy, by the Bank.
-9-
f. GOVERNING LAW; JURISDICTION. This Agreement has been delivered to
and accepted by the Bank and will be deemed to be made in the State
of Maryland. Except as otherwise provided under federal law, this
Agreement will be interpreted in accordance with the laws of the
State of Maryland excluding its conflict of laws rules. THE BORROWER
HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK
MAINTAINS A BRANCH, AND CONSENTS THAT THE BANK MAY EFFECT ANY
SERVICE OF PROCESS IN THE MANNER AND AT THE BORROWER'S ADDRESS SET
FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING
CONTAINED IN THIS AGREEMENT WILL PREVENT THE BANK FROM BRINGING ANY
ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS
AGAINST THE BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST
ANY PROPERTY OF THE BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER
FOREIGN OR DOMESTIC JURISDICTION. The Borrower acknowledges and
agrees that the venue provided above is the most convenient forum
for both the Bank and the Borrower. The Borrower waives any
objection to venue and any objection based on a more convenient
forum in any action instituted under this Agreement.
g. JOINT AND SEVERAL; SUCCESSORS AND ASSIGNS. If there is more than one
Borrower, each of them shall be jointly and severally liable for all
amounts, which become due, and the performance of all obligations
under this Agreement, and the term "the Borrower" shall include each
as well as all of them. This Agreement shall be binding upon the
Borrower and upon its heirs and legal representatives, its
successors and assignees, and shall inure to the benefit of, and be
enforceable by, the Bank and MIDFA, their successors and assignees
and each direct or indirect assignee or other transferee of any of
the Obligations; provided, however, that this Agreement may not be
assigned by the Borrower without the prior written consent of the
Bank and MIDFA.
h. WAIVERS; CHANGES IN WRITING. No failure or delay of the Bank and
MIDFA in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power. The
Borrower expressly disclaims any reliance on any course of dealing
or usage of trade or oral representation of the Bank and MIDFA
(including representations to make loans to the Borrower) and agrees
that none of the foregoing shall operate as a waiver of any right or
remedy of the Bank and MIDFA. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances. No waiver of any
provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless made
specifically in writing by the Bank and MIDFA and then such waiver
or consent shall be effective only in the specific instance and for
the purpose for which given. No modification to any provision of
this Agreement shall be effective unless made in writing in an
agreement signed by the Borrower and the Bank and with the consent
of MIDFA.
i. INTERPRETATION. Unless the context otherwise clearly requires,
references to plural includes the singular and references to the
singular include the plural; references to "individual" shall mean a
natural person and shall include a natural person doing business
under an assumed name (e.g., a "DBA"); the word "or" has the
inclusive meaning represented by the phrase "and/or"; the word
"including", "includes" and "include" shall be deemed to be followed
by the words "without limitation"; and captions or section headings
are solely for convenience and not part of the substance of this
Agreement. Any representation, warranty, covenant or agreement
herein shall survive execution and delivery of this Agreement and
shall be deemed continuous. Each provision of this Agreement shall
be interpreted as consistent with existing law and shall be deemed
amended to the extent necessary to comply with any conflicting law.
If any provision nevertheless is held invalid, the other provisions
shall remain in effect. The Borrower agrees that in any legal
proceeding, a photocopy of this Agreement kept in the Bank's course
of business may be admitted into evidence as an original.
j. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK AND MIDFA HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL
BY JURY THE BORROWER AND THE BANK AND MIDFA MAY HAVE IN ANY ACTION
OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
AGREEMENT OR ANY TRANSACTIONS RELATED
-10-
HERETO. THE BORROWER REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE
OR AGENT OF THE BANK AND MIDFA HAVE REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK AND MIDFA WILL NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. THE BORROWER
ACKNOWLEDGES THAT THE BANK AND MIDFA HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
SECTION.
ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Agreement, including the GOVERNING LAW, JURISDICTION AND
WAIVER OF JURY TRIAL, and has been advised by counsel as necessary or
appropriate.
WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.
MANUFACTURERS AND TRADERS TRUST COMPANY
By /s/ ▇▇▇▇ ▇▇▇▇▇▇ (L.S.)
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
ADVANCIS PHARMACEUTICAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (L.S.)
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Title: Senior VP/CFO
---------------------------------
ACKNOWLEDGMENT
STATE OF ____________________)
:SS.
COUNTY OF ___________________)
On the_____________________ day of July, in the year 2003, before me, the
undersigned, a Notary Public in and for said State, personally
appeared_____________________________________, personally known to me or proved
to me on the basis of satisfactory evidence to be the Individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the Instrument.
/s/
------------------------------------
Notary Public
-11-
SCHEDULE
Additional Representations and Warranties (Section 2)
None
Additional Affirmative Covenants (Section 3)
None
Permitted Indebtedness (Section 4(a)): Indebtedness (i) owed to General Electric
Capital Corporation ("GECC") as of the date hereof and (ii) additional
indebtedness, in an amount such that the aggregate principal balance of all such
additional indebtedness is less than an amount equal to 10% of Borrower's net
worth when the indebtedness is incurred (such net worth to be determined as of
the end of the most recent fiscal quarter for which Borrower has provided a
financial statement to Bank).
Permitted Guaranties (Section 4(b)): Indebtedness (i) owed to GECC as of the
date hereof and (ii) additional indebtedness, in an amount such that the
aggregate principal balance of all such additional indebtedness is less than an
amount equal to 10% of Borrower's net worth when the indebtedness is incurred
(such net worth to be determined as of the end of the most recent fiscal quarter
for which Borrower has provided a financial statement to Bank).
Permitted Liens (Section 4(c)): Security interest held by GECC on certain
assets; liens on property of the Borrower in the nature of capital leases or
purchase money security interests securing indebtedness incurred to acquire such
property.
Permitted Loans (Section 4(e))
None
Additional Financial Covenants (Section 5)
None
-13-
EXHIBIT A TO CREDIT AGREEMENT
M&T Bank
Manufacturers and Traders Trust Company
TERM NOTE
MARYLAND
____________, 200_ $_____________
BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION
a(n) [ ] individual(s) [ ] partnership [x] corporation [ ] trust [ ] __________
organized under the laws of Delaware. Address of residence/chief executive
office: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with banking offices at ▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Attention:
Office of General Counsel.
PROMISE TO PAY. For value received, intending to be legally bound, Borrower
promises to pay to the order of the Bank, on the dates set forth below, the
principal sum of ____________________ Dollars ($_______________________) (the
"Principal") plus interest as agreed below and all fees and costs (including
without limitation attorneys' fees and disbursements whether for internal or
outside counsel) the Bank incurs in order to collect any amount due under this
Note, to negotiate or document a workout or restructuring, or to preserve its
rights or realize upon any guaranty or other security for the payment of this
Note ("Expenses").
INTEREST. The unpaid Principal of this Note shall earn interest calculated on
the basis of a 360-day year for the actual number of days of each year (365 or
366) from and including the date the proceeds of this Note were disbursed to,
but not including, the date all amounts hereunder are paid in full, at a rate
per year which shall be Two Hundred Eighty (280) basis points over the Bank's
Cost of Funds. "Cost of Funds" shall mean the most recent yield on United States
Treasury Obligations adjusted to a Constant maturity of _____________(_) years
in effect two (2) business days prior to the date of the advance as published by
the Board of Governors of the Federal Reserve System in the Federal Reserve
Statistical Release H.15 (519), or by such other quoting service, index or
commonly available source utilized by the Bank, plus the "ask" side of the
_________ (_) year swap spread in effect two (2) business days prior to each
advance as set forth in Bloomberg, L.P. or by such other quoting service, index
or commonly available source utilized by Manufacturers and Traders Trust
Company.
MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in no event
shall interest be payable at a rate in excess of the maximum rate permitted by
applicable law (the "Maximum Legal Rate"). Solely to the extent necessary to
prevent interest under this Note from exceeding the Maximum Legal Rate, any
amount that would be treated as excessive under a final judicial interpretation
of applicable law shall be deemed to have been a mistake and automatically
canceled, and, if received by the Bank, shall be refunded to Borrower.
DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 2
percentage points per year above the otherwise applicable rate per year, and any
judgment entered hereon or otherwise in connection with any suit to collect
amounts due hereunder shall bear interest at such default rate.
REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time.
The Maturity Date of this Note is ___________________, 200_.
[ ] Borrower shall pay the entire Principal on the Maturity Date. In
addition, until the outstanding Principal is paid in full, payments of all
accrued and unpaid interest in amounts which will vary will become due and
payable on the ________ day of each: [ ] month [ ] quarter [ ] year [ ]
commencing on _______________________, 20__.
[x] Borrower shall pay the Principal in __________ consecutive [x] monthly [ ]
quarterly [ ] annual installments commencing on ________________________,
200_ and on the first day of each [x] month [ ] quarter [ ] year
thereafter consisting of ________ equal installments each in the amount of
$____________________ and ONE (1) FINAL INSTALLMENT on the Maturity Date
in an amount equal to the outstanding Principal together with all other
amounts outstanding hereunder including, without limitation, accrued
interest, costs and expenses. In addition, until the outstanding Principal
is paid in full, payments of all accrued and unpaid interest in amounts
which will vary will become due and payable on the _______ day of each:
[x] month [ ] quarter [ ] year commencing on ___________________________,
200_.
[ ] Borrower shall pay Principal and interest in _____________ consecutive
level [ ] monthly [ ] quarterly [ ] annual installments consisting of both
Principal and interest, amortized over a period of _______ years,
commencing on __________________ 20__ and on the first day of each [x]
month [ ] quarter [ ] year thereafter consisting of ________ equal
installments of Principal and interest each in the amount of $____________
and ONE (1) FINAL INSTALLMENT on the Maturity Date in an amount equal to
the outstanding Principal together will all other amounts outstanding
hereunder including, without limitation, accrued interest, costs and
expenses. PLEASE NOTE THAT THE FINAL INSTALLMENT OF PRINCIPAL SHALL BE
HIGHER THAN EXPECTED IF (1) A PAYMENT IS RECEIVED AFTER THE DUE DATE OR
(2) THE INTEREST RATE UNDER THE NOTE IS A VARIABLE RATE AND THERE IS AN
INCREASE IN THE INTEREST RATE DURING THE TERM OF THE NOTE IN THOSE
SITUATIONS, MORE INTEREST WILL BE DUE THAN PLANNED AND LESS OF THE
INSTALLMENT WILL BE APPLIED TO PRINCIPAL.
PREPAYMENT PREMIUM. During the term of this Note, Borrower shall have the option
of paying the Principal to the Bank in advance of the Maturity Date, in whole or
in part, at any time and from time to time upon written notice received by the
Bank at least three (3) business days prior to making such payment; provided,
however, as consideration of the privilege of making such prepayment, Borrower
shall pay to the Bank a premium equal to the present value of the difference
between (i) the amount of interest that would have accrued on the Principal
during the remaining term of the Note, at the interest rate set forth herein in
effect on the date of prepayment and (ii) the amount of interest that would have
accrued on the Principal during the remaining term of this Note at the Current
Market Rate. "Current Market Rate" shall mean the most recent yield on United
States Treasury Obligations plus 200 basis points adjusted to a constant
maturity having a term most nearly corresponding to the term remaining from the
date of prepayment to the Maturity Date, in effect two (2) business days prior
to the prepayment date as published by the Board of Governors of the Federal
Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such
other quoting service, index or commonly available source utilized by the Bank.
The present value calculation used here in shall use the Current Market Rate as
the discount rate and shall be calculated as if each installment of the
Principal had been made during the remaining term of this Note. Each partial
prepayment of the Principal shall be applied in inverse order of maturity. Upon
making any prepayment of the Principal in whole, Borrower shall pay to the Bank
all interest and Expenses owing pursuant to this Note and remaining unpaid. This
will not apply if the Note is a variable rate.
In the event the Maturity Date of this Note is accelerated following an Event of
Default by Borrower, any tender of payment of the amount necessary to satisfy
the entire indebtedness made after such Event of Default shall be expressly
deemed a voluntary prepayment. In such a case, to the extent permitted by law,
the Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with the preceding paragraph.
EVENTS OF DEFAULT; ACCELERATION. Any of the following events or conditions shall
constitute an "Event of Default': (i) failure by the Borrower to pay when due
(whether at the stated maturity, by acceleration, upon demand or otherwise) the
Obligations, or any part thereof, or there occurs any event or condition which
after notice, lapse of time or after both notice and lapse of time will permit
acceleration of any Obligation; (ii) the Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement or any other Transaction Document and such default
shall continue for a period of thirty (30) days after written notice thereof has
been given to the Borrower by the Bank; (iii) any representation or warranty
made by the Borrower under this Agreement, or any other Transaction Document,
shall at any time prove to have been incorrect or misleading in any material
respect when made or deemed made; (iv) the Borrower shall (A) default in making
any payment when due under any Debt and fail to cure such default during the
period of grace, if any, provided for such default, or (B) default in the
-2-
observance or performance of any other covenant or agreement contained in any
document relating to any Debt, and fail to cure such default during the period
of grace, if any, provided for such cure, the effect of which default is to
cause, or to permit the holder of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice as required, any
such Debt to become due prior to its stated maturity. The term "Debt" means any
obligation of the Borrower for borrowed money, or for the deferred purchase
price of property, in which the outstanding amount of the obligation exceeds
$100,000; (v) the Borrower makes a general assignment, arrangement or
composition agreement with or for the benefit of its creditors or makes, or
sends notice of any intended, bulk sale; the sale, assignment, transfer or
delivery of all or substantially all of the assets of the Borrower to a third
party; or the cessation by the Borrower as a going business concern; (vi) the
Borrower files a petition in bankruptcy or institutes any action under federal
or state law for the relief of debtors or seeks or consents to the appointment
of an administrator, receiver, custodian or similar official for the wind up of
its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45)
days; (vii) the entry of any judgment in excess of $250,000 or order of any
court, other governmental authority or arbitrator against the Borrower and such
judgment or order is not paid, dismissed or a bond posted therefor within thirty
(30) days after the entry thereof; (viii) intentional omission or intentional
inaccuracy of facts submitted to the Bank or any Affiliate (whether in a
financial statement or otherwise); (ix) an adverse change in the Borrower, its
business, operations, affairs or condition (financial or otherwise) which change
the Bank determines will have a material adverse effect on the ability of the
Borrower to pay or perform the Obligations; (x) any pension plan of the Borrower
fails to comply with applicable law or has vested unfunded liabilities that, in
the opinion of the Bank, might have a material adverse effect on the Borrower's
ability to repay its debts; (xi) any indication or evidence received by the Bank
that the Borrower may have directly or indirectly been engaged in any type of
activity which, in the Bank's discretion, might result in the forfeiture or any
property of the Borrower to any governmental authority; (xii) the occurrence of
any event described in Section 6(a)(i) through and including 6(a)(xi) with
respect to any Subsidiary or to any endorser, guarantor or any other party
liable for, or whose assets or any interest therein secures, payment of any of
the Obligations; or (xiii) MIDFA notifies the Bank without the Bank's prior
written consent, that its insurance of the Bank for repayment of the Equipment
Line is no longer effective or is terminated, as a result of any act or omission
of the Borrower.
RIGHT OF SETOFF. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or any Affiliates or otherwise owing by the Bank or any Affiliate in any
capacity to Borrower or any Guarantor or endorser of this Note. Such setoff
shall be deemed to have been exercised immediately at the time the Bank or such
Affiliate elect to do so.
MISCELLANEOUS. This Note, together with any related loan and security agreements
and guaranties, contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this Note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. No course of dealing
or other conduct, no oral agreement or representation made by the Bank, and no
usage of trade, shall operate as a waiver of any right or remedy of the Bank. No
waiver of any right or remedy of the Bank shall be effective unless made
specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.
NOTICES. Any demand or notice hereunder or under any applicable law pertaining
hereto shall be in writing and duly given if delivered to Borrower (at its
address on the Bank's records) or to the Bank (at the address on page one and
separately to the Bank officer responsible for Borrowers relationship with the
Bank). Such notice or demand shall be deemed sufficiently given for all purposes
when delivered (i) by personal delivery and shall be deemed effective when
delivered, or (ii) by mail or courier and shall be deemed effective three (3)
business days after deposit in an official depository maintained by the United
States Post Office for the collection of mail or one (1) business day after
delivery to a nationally recognized overnight courier service (e.g., Federal
Express). Notice by e-mail is not valid notice under this or any other agreement
between Borrower and the Bank.
-3-
JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts and obligations which become due
under this Note and the term "Borrower' shall include each as well as all of
them.
GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by the
Bank and will be deemed to be made in the State of Maryland. Except as otherwise
provided under federal law, this Note will be interpreted in accordance with the
laws of the State of Maryland excluding its conflict of laws rules. BORROWER
HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK MAINTAINS A BRANCH AND
CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT
BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT
NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION,
ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER
INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN
ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower
acknowledges and agrees that the venue provided above is the most convenient
forum for both the Bank and Borrower. Borrower waives any objection to venue and
any objection based on a more convenient forum in any action instituted under
this Note.
WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY HAVE IN
ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS NOTE OR
THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF
RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO APPEAR FOR
BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE BANK OR ANY HOLDER HEREOF FOR THE
ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL OTHER
AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION
OF ONE AND ONE-HALF PERCENT (1.50%) OF SUCH PRINCIPAL AND INTEREST AND FOR DOING
SO THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND
ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR
EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. INTEREST ON ANY
SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE. NO SINGLE EXERCISE OF THE
FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE DEEMED
TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY
COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE
UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE BANK
SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED PAYMENT IN FULL OF
THE DEBT, INTEREST AND COSTS. THE PROVISIONS OF THIS SECTION DO NOT APPLY TO ANY
LOAN EVIDENCED BY THIS NOTE THAT IS WITHIN THE SCOPE OF THE SECTION ENTITLED
"SPECIAL PROVISIONS - LOANS OF $75,000 OR LESS" AND MADE TO AN INDIVIDUAL OR
SOLE PROPRIETOR BORROWER.
[ ] REPLACEMENT NOTE. This Note is given in replacement of and in substitution
for, but not in payment of, a note dated _______________________,
19__/20__, in the original principal amount of
$______________________________ issued by Borrower (or
_______________________) to the Bank (or its predecessor in interest), as
the same may have been amended from time to time.
-4-
PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #______________________________with the Bank
automatically for any amount which becomes due under this Note.
ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING LAW,
JURISDICTION and WAIVER OF JURY TRIAL, and has been advised by counsel as
necessary or appropriate.
WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.
TAX ID/SS # ADVANCIS PHARMACEUTICAL CORPORATION
------------------------------
By (L.S.)
---------------------------
Name:
------------------------------
Title:
-----------------------------
(L.S.) (L.S.)
----------------------------------- -----------------------------
Signature of Witness
(L.S.) (L.S.)
----------------------------------- -----------------------------
Typed Name of Witness
ACKNOWLEDGMENT
STATE OF ____________)
:SS.
COUNTY OF ___________)
On the _________ day of ___________________ in the year 20__ before me,
the undersigned, a Notary Public in and for said State, personally appeared
_____________________________________________, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s), acted, executed the instrument.
--------------------------------------------------
Notary Public
--------------------------------------------------------------------------------
FOR BANK USE ONLY
Authorization Confirmed:
--------------------------------------------------------
Disbursement of Funds:
Credit A/C # Off Ck # Payoff Obligation #
----------- ----------- -----------
$ $ $
----------- ----------- -----------
-5-
M&T Bank
Manufacturers and Traders Trust Company
EXHIBIT B TO CREDIT AGREEMENT
LIBOR TERM NOTE
MARYLAND
August 8 , 2003 $ 1,036,654.88
____________________________ ___ ________________________________
BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION
a(n) [ ] individual(s) [ ] partnership [x]corporation [ ] trust
____________________ organized under the laws of Delaware.
Address of residence/chief executive office: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with banking offices at ▇▇▇ ▇ & ▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Attention:
Office of General Counsel
1. DEFINITIONS. As used in this Note, each capitalized term shall have the
meaning specified in the Note or as it appears in initial capitalization.
Additionally, the following terms shall have the indicated meanings:
A. "APPLICABLE RATE" shall mean either the LIBOR Rate or the Base Rate,
as the case may be.
B. "ADJUSTMENT DATE" shall mean two (2) Business Days before the last
day of the Interest Period selected below (see LIBOR Rate
definition).
C. "BASE RATE" shall mean one (1) percentage point above the highest
prime rate published in The Wall Street Journal in its table
entitled "Money Rates" or such similar publication, quoting service
or commonly available source used by the Bank for determining prime
rate ("Prime").
D. "BUSINESS DAY" shall mean any day of the year on which banking
institutions in New York, New York are not authorized or required by
law or other governmental action to close and, in connection with
the LIBOR Rate, on which dealings are carried on in the London
interbank market.
E. "CONTINUATION DATE" shall mean the last day of each Interest Period.
F. "INTEREST PERIOD" shall mean, as to the LIBOR Rate, the period
commencing on the date of this Note or Continuation Date (as the
case may be) and ending on, with respect thereto, the numerically
corresponding day (or, if there is no numerically corresponding day,
on the last day) of the calendar month that is one (1), two (2) or
three (3) months thereafter (as selected by Borrower below);
provided, however, that if an Interest Period would end on a day
that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business
Day.
G. "LIBOR" shall mean the rate obtained by dividing (i) the one, two or
three month interest period London Interbank Offered Rate (as
selected by Borrower), fixed by the British Bankers Association for
United States dollar deposits in the London Interbank Eurodollar
Market at approximately 11:00 a.m. London, England time (or as soon
thereafter as practicable) as determined by the Bank from any
broker, quoting service or commonly available source utilized by the
Bank by (ii) a percentage equal to 100% minus the stated maximum
rate of all reserves required to be maintained against "Eurocurrency
Liabilities" as specified in Regulation D (or against any other
category of liabilities which includes deposits by reference to
which the interest rate on LIBOR Rate loans is determined or any
category of extensions of credit or other assets which includes
loans by a non-United States' office of a bank to United States
residents) on such date to any member bank of the Federal Reserve
System.
H. "LIBOR RATE" shall mean 280 percentage points above LIBOR with an
Interest Period duration of [x] one month, [ ] two months
[ ] three months (select applicable Interest Period. If no
interest period is selected, the one month interest period shall
apply).
I. "MATURITY DATE" is the Payment Due Day in
______________________________, 2007.
__
J. "PAYMENT DUE DAY" shall mean the same day of the calendar month as
the date of this Note (or if there is no numerically corresponding
day in a month, on the last day of such month); provided, however,
if that day is not a Business Day, the Payment Due Day shall be
extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in
which case such Payment Due Day shall end on the immediately
preceding Business Day.
K. "PRINCIPAL AMOUNT" shall mean
one million thirty six thousand six hundred fifty four and 88/100
___________________________________________________________________
Dollars ($1,036,654.88).
____________
1
2. PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.
A. PROMISE TO PAY. For value received and intending to be legally bound,
Borrower promises to pay to the order of the Bank on the dates set forth below,
the Principal Amount, plus interest as agreed below and all fees and costs
(including without limitation attorneys' fees and disbursements whether for
internal or outside counsel) the Bank incurs in order to collect any amount due
under this Note, to negotiate or document a workout or restructuring, or to
preserve its rights or realize upon any guaranty or other security for the
payment of this Note ("Expenses").
B. INITIAL APPLICABLE RATE. The initial Applicable Rate shall be the LIBOR
Rate based on the Interest Period (with the duration selected by Borrower) in
effect two (2) Business Days before the date of this Note. The initial Interest
Period shall start on the date of this Note.
C. INTEREST. Interest shall accrue on the outstanding Principal Amount
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) at the Applicable Rate that on each day shall be:
i. IF THE LIBOR RATE IS THE APPLICABLE RATE. Interest shall
accrue on the Principal Amount from and including the first
day of the Interest Period (with the duration selected by
Borrower) until, but not including, the last day of such
Interest Period or the day the Principal Amount is paid in
full (if sooner) at a rate per annum equal to the LIBOR Rate
in effect on the each Adjustment Date.
ii. IF THE BASE RATE IS THE APPLICABLE RATE. Interest shall accrue
on the Principal Amount from and including the first date the
Base Rate is the Applicable Rate to but not including, the day
such Principal Amount is paid in full or the Applicable Rate
is converted to the LIBOR Rate, at the rate per annum equal to
the Base Rate. Any change in the Base Rate resulting from a
change in Prime shall be effective on the date of such change.
D. PAYMENT SCHEDULE. (Check applicable box):
[ ] Borrower shall pay the entire outstanding Principal Amount on
the Maturity Date. In addition, until the outstanding
Principal Amount is paid in full, Borrower shall pay all
accrued and unpaid interest, in amounts which may vary, as
follows: (i) if the LIBOR Rate is the Applicable Rate, on the
last day of each Interest Period, (ii) if the Base Rate is the
Applicable Rate, on the Payment Due Date for each month and
(iii) at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
[x] Borrower shall pay the outstanding Principal Amount in
$1,036,654.88 consecutive monthly, bi-monthly or quarterly
installments (depending on the duration of the Interest Period
selected by Borrower on page one) starting on the last day of
the Interest Period that commences on the date of this Note
and on last day of each Interest Period thereafter consisting
of 47 equal installments of principal each in the amount of
$22,056.49 and ONE (1) FINAL INSTALLMENT on the Maturity Date
in an amount equal to the outstanding Principal Amount at that
time together with all other amounts outstanding hereunder
including, without limitation, accrued interest, costs and
Expense (the "'Final Installment"); provided, however, if the
Applicable Rate is converted to the Base Rate, Borrower shall
pay the outstanding Principal Amount in consecutive monthly
installments commencing on the first Payment Due Day after the
date of such conversion and on the same Payment Due Day
thereafter until conversion back to the LIBOR Rate (at which
time Borrower shall resume the monthly, bi-monthly or
quarterly installments in the amount set forth above or as
otherwise agreed to by the Bank and Borrower in writing) or
the Maturity Date (at which time Borrower shall pay the Final
Installment) with each such installment being equal in an
amount to fully amortize the outstanding Principal Amount of
the Note in full by the Maturity Date or such other date
agreed to by the Bank and Borrower in writing. The
determination by the Bank of the foregoing amount shall, in
the absence of manifest error, be conclusive and binding upon
Borrower. In addition, until the outstanding Principal Amount
is paid in full, Borrower shall pay all accrued and unpaid
interest, in amounts which may vary, as follows: (i) if the
LIBOR Rate is the Applicable Rate, on the last day of each
Interest Period, (ii) if the Base Rate is the Applicable Rate,
on the Payment Due Date for each month and (iii) at maturity
(whether by acceleration or otherwise) and, after such
maturity, on demand.
E. MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in
no event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Bank, shall be refunded to
Borrower.
2
F. DEFAULT RATE. If an Event of Default (defined below) occurs, the
interest rate on the unpaid Principal Amount shall immediately be automatically
increased to 2 percentage points per year above the higher of the LIBOR Rate or
the Base Rate, and any judgment entered hereon or otherwise in connection with
any suit to collect amounts due hereunder shall bear interest at such default
rate.
G. REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be
made in immediately available United States funds at any banking office of the
Bank. Interest will continue to accrue until payment is actually received. If
payment is not received within five days of its due date, Borrower shall pay a
late charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount
or (c) the Bank's then current late charge as announced from time to time. If
this Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.
3. CONTINUATIONS AND CONVERSIONS.
A. EXPIRATION OF INTEREST PERIOD. Subject to Section 3(b), upon the
expiration of the first Interest Period and each Interest Period thereafter, on
the Continuation Date the LIBOR Rate will be automatically continued with an
Interest Period of the same duration as the Interest Period duration initially
selected by Borrower.
B. CONVERSION UPON DEFAULT. Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether upon maturity, acceleration or otherwise),
or (ii) there exists a condition or event which with the passage of time, the
giving of notice or both shall constitute an Event of Default, the Bank, in its
sole discretion, may (i) permit the LIBOR Rate to continue until the last day of
the applicable Interest Period at which time such the Applicable Rate shall
automatically be converted to the Base Rate or (ii) convert the LIBOR Rate to
the Base Rate before the end of the applicable Interest Period. Notwithstanding
the foregoing, upon the occurrence of an Event of Default in Section 5(ix), the
Applicable Rate shall be automatically converted to the Base Rate without
further action by the Bank and Borrower shall have no right to have the
Applicable Rate converted from the Base Rate to the LIBOR Rate. Nothing herein
shall be construed to be a waiver by the Bank to have the Principal Amount
accrue interest at the Default Rate or the right of the Bank to the amounts set
forth in Section 2(h) of this Note.
4. EVENTS OF DEFAULT; ACCELERATION. Any of the following events or conditions
shall constitute an "Event of Default": (i) failure by the Borrower to pay when
due (whether at the stated maturity, by acceleration, upon demand or otherwise)
the Obligations, or any part thereof, or there occurs any event or condition
which after notice, lapse of time or after both notice and lapse of time will
permit acceleration of any Obligation; (ii) the Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement or any other Transaction Document and such default
shall continue for a period of thirty (30) days after written notice thereof has
been given to the Borrower by the Bank; (iii) any representation or warranty
made by the Borrower under this Agreement, or any other Transaction Document,
shall at any time prove to have been incorrect or misleading in any material
respect when made or deemed made; (iv) the Borrower shall (A) default in making
any payment when due under any Debt and fail to cure such default during the
period of grace, if any, provided for such default, or (B) default in the
observance or performance of any other covenant or agreement contained in any
document relating to any Debt, and fail to cure such default during the period
of grace, if any, provided for such cure, the effect of which default is to
cause, or to permit the holder of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice as required, any
such Debt to become due prior to its stated maturity. The term "Debt" means any
obligation of the Borrower for borrowed money, or for the deferred purchase
price of property, in which the outstanding amount of the obligation exceeds
$100,000; (v) the Borrower makes a general assignment, arrangement or
composition agreement with or for the benefit of its creditors or makes, or
sends notice of any intended, bulk sale; the sale, assignment, transfer or
delivery of all or substantially all of the assets of the Borrower to a third
party; or the cessation by the Borrower as a going business concern; (vi) the
Borrower files a petition in bankruptcy or institutes any action under federal
or state law for the relief of debtors or seeks or consents to the appointment
of an administrator, receiver, custodian or similar official for the wind up of
its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45)
days; (vii) the entry of any judgment in excess of $250,000 or order of any
court, other governmental authority or arbitrator against the Borrower and such
judgment or order is not paid, dismissed or a bond posted therefor within thirty
(30) days after the entry thereof; (viii) intentional omission or intentional
inaccuracy of facts submitted to the Bank or any Affiliate (whether in a
financial statement or otherwise); (ix) an adverse change in the Borrower, its
business, operations, affairs or condition (financial or otherwise) which change
the Bank determines will have a material adverse effect on the ability of the
Borrower to pay or perform the Obligations; (x) any pension plan of the Borrower
fails to comply with applicable law or has vested unfunded liabilities that, in
the opinion of the Bank, might have a material adverse effect on the Borrower's
ability to repay its debts; (xi) any
3
indication or evidence received by the Bank that the Borrower may have directly
or indirectly been engaged in any type of activity which, in the Bank's
discretion, might result in the forfeiture or any property of the Borrower to
any governmental authority; (xii) the occurrence of any event described in
Section 6(a)(i) through and including 6(a)(xi) with respect to any Subsidiary or
to any endorser, guarantor or any other party liable for, or whose assets or any
interest therein secures, payment of any of the Obligations; or (xiii) MIDFA
notifies the Bank without the Bank's prior written consent, that its insurance
of the Bank for repayment of the Equipment Line is no longer effective or is
terminated, as a result of any act or omission of the Borrower.
5. RIGHT OF SETOFF. The Bank shall have the right to set off against the
amounts owing under this Note any property held in a deposit or other account
with the Bank or any Affiliate or otherwise owing by the Bank or any Affiliate
in any capacity to Borrower or any guarantor or endorser of this Note. Such
set-off shall be deemed to have been exercised immediately at the time the Bank
or such Affiliate elect to do so.
6. INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.
A. INCREASED COSTS. If the Bank shall determine that, due to either (a)
the introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.
B. INABILITY TO DETERMINE RATES. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.
C. ILLEGALITY. If the Bank shall determine that the introduction of any
law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.
7. MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.
Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.
8. NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.
9. JOINT AND SEVERAL. If there is more than one Borrower, each of them shall
be jointly and severally liable for all amounts which become due under this Note
and the term "Borrower" shall include each as well as all of them.
4
10. GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted
by the Bank and will be deemed to be made in the State of Maryland. Except as
otherwise provided under federal law, this Note will be interpreted in
accordance with the laws of the State of Maryland excluding its conflict of laws
rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK MAINTAINS A
BRANCH AND CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE
MANNER AND AT BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND;
PROVIDED THAT NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING
ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST
BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER
WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION.
Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and Borrower. Borrower waives any objection
to venue and any objection based on a more convenient forum in any action
instituted under this Note.
11. WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT
NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
12. POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO
APPEAR FOR BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A
SERIES OF JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE BANK OR ANY HOLDER HEREOF
FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL
OTHER AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S
COMMISSION OF ONE AND ONE HALF PERCENT (1.50%) OF SUCH PRINCIPAL AND INTEREST
AND FOR DOING SO THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT
WARRANT. BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID
PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE. NO
SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH
EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE
POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS
OFTEN AS THE BANK SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED
PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS. THE PROVISIONS OF THIS SECTION
DO NOT APPLY TO ANY LOAN EVIDENCED BY THIS NOTE THAT IS WITHIN THE SCOPE OF THE
SECTION ENTITLED "SPECIAL PROVISIONS - LOANS OF $75,000 OR LESS" AND MADE TO AN
INDIVIDUAL OR SOLE PROPRIETOR BORROWER.
REPLACEMENT NOTE. This Note is given in replacement of and in substitution
for, but not in payment of, a note dated ________________________,
19_____/20_____ in the original principal amount of
$___________________________ issued by Borrower (or
______________________) to the Bank (or its predecessor in interest), as
the same may have been amended from time to time.
PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #___________________________ with the Bank
automatically for any amount which becomes due under this Note.
ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING LAW,
JURISDICTION and WAIVER OF JURY TRIAL, and has been advised by counsel as
necessary or appropriate.
5
WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.
TAX ID/SS# ADVANCIS PHARMACEUTICAL CORPORATION
------------------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (L.S.)
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Senior VP/CFO
----------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (L.S.) (L.S.)
----------------------------- ----------------------------------
Signature of Witness
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (L.S.)
----------------------------- ----------------------------------
Typed Name of Witness
ACKNOWLEDGMENT
STATE OF_______________)
:SS.
COUNTY OF______________)
On the _____day of _____________________ in the year 20___, before me, the
undersigned, a Notary Public in and for said State, personally appeared
_______________________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the Individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same In his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the Instrument.
/s/
----------------------------------
Notary Public
--------------------------------------------------------------------------------
FOR BANK USE ONLY
Authorization Confirmed:
Product Code: 22660
Disbursement of Funds:
Credit A/C # Off Ck # Payoff Obligation #
------------- ------------- -------------
$ $ $
------------- ------------- -------------
6
