Exhibit 10.1
BIOTRANSPLANT INCORPORATED
Third Avenue, Building 00
Xxxxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
August 10, 1999
Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Gentlemen:
This letter agreement will set forth certain understandings between
BioTransplant Incorporated, a Delaware corporation (the "Borrower") and Fleet
National Bank (the "Bank") with respect to Term Loans (hereinafter defined) to
be made by the Bank to the Borrower. In consideration of the mutual promises
contained herein and in the other documents referred to below, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Bank agree as follows:
I. AMOUNTS AND TERMS
1.1. References to Documents. Reference is made to (i) that certain
$1,000,000 face principal amount promissory note (the "Term Note") of even date
herewith made by the Borrower and payable to the order of the Bank, and (ii)
that certain Security Agreement (Equipment) of even date herewith from the
Borrower to the Bank (the "Security Agreement"). Notwithstanding anything to the
contrary contained herein, the Bank and the Borrower agree that the letter
agreement dated September 5, 1997 between the Borrower and the Bank, the
$500,000 face principal amount promissory note issued by the Borrower under said
letter agreement and the Security Agreement (Equipment) dated September 5, 1997
between the Borrower and the Bank have terminated and are of no force or effect.
1.2. The Borrowing: Term Note. Subject to the terms and conditions
hereinafter set forth, the Bank will make one or more loans (the "Term Loans")
to the Borrower, as the Borrower may request, on any Business Day prior to the
first to occur of (i) December 31, 1999 or (ii) the earlier termination of the
within-described term loan facility pursuant to ss.5.2 or ss.6.5. A Term Loan
shall be made, not more than once per calendar quarter (except that more than
one Term Loan may be made in any calendar quarter provided that each additional
Term Loan in any one calendar quarter is in an amount of at least $250,000), in
order to finance the costs of Qualifying Equipment and Qualifying Leasehold
Improvements acquired by the Borrower within the 90 days preceding the request
for such Term Loan (except that the first Term Loan may be used to finance
Qualifying Equipment and/or Qualifying Leasehold Improvement acquired at any
time after April 1, 1998), each such Term Loan to be in such amount as may be
requested by the Borrower; provided that (i) no Term Loan will be made after
December 31, 1999; (ii) the aggregate original principal amounts of all Term
Loans will not exceed $1,000,000; and (iii) no Term Loan will be in an amount
more than 80% of the invoiced actual costs of the tangible
property constituting the items of Qualifying Equipment and/or Qualifying
Leasehold Improvements with respect to which such Term Loan is made (excluding
taxes, shipping, software, installation charges, training fees and other "soft
costs"). Prior to the making of each Term Loan, and as a precondition thereto,
the Borrower will provide the Bank with: (i) invoices supporting the costs of
the relevant Qualifying Equipment and/or relevant Qualifying Leasehold
Improvements; (ii) such evidence as the Bank may reasonably require showing that
(A) all Qualifying Equipment has been delivered to the Borrower's Charlestown,
MA Premises, has been paid for by the Borrower (or is being paid for by the
Borrower substantially simultaneously with the making of such Term Loan) and is
owned by the Borrower free of all liens and interests of any other Person (other
than the security interest of the Bank pursuant to the Security Agreement), and
(B) all Qualifying Leasehold Improvements have been built into or installed at
the Borrower's Charlestown, MA Premises, have been completed and are fully
operational, have been paid for by the Borrower (or are being paid for by the
Borrower substantially simultaneously with the making of such Term Loan) and are
owned by the Borrower free of all liens and interests of any other Person (other
than the security interest of the Bank pursuant to the Security Agreement and
except that items so built into the relevant premises as to become an integral
part of the real estate may become the property of the owner of such premises);
(iii) supplements to the Security Agreement and related Uniform Commercial Code
financing statements reflecting the items of Qualifying Equipment and/or
Qualifying Leasehold Improvements with respect to which such Term Loan is being
made (all in form and substance reasonably satisfactory to the Bank); and (iv)
evidence satisfactory to the Bank that the Qualifying Equipment and Qualifying
Leasehold Improvements are fully insured against casualty loss, with insurance
naming the Bank as secured party and first loss payee. The Term Loans will be
evidenced by the Term Note. The Borrower hereby irrevocably authorizes the Bank
to make or cause to be made, on a schedule attached to the Term Note or on the
books of the Bank, at or following the time of making each Term Loan and of
receiving any payment of principal, an appropriate notation reflecting such
transaction and the then aggregate unpaid principal balance of the Term Loans.
The amount so noted shall constitute prima facie evidence as to the amount owed
by the Borrower with respect to principal of the Term Loans. Failure of the Bank
to make any such notation shall not, however, affect any obligation of the
Borrower or any right of the Bank hereunder or under the Term Note.
1.3. Principal Repayment of Term Loans. The Borrower shall repay principal
of the Term Loans in 36 equal consecutive monthly installments, commencing on
January 31, 2000 and continuing on the last Business Day of each month
thereafter. Each such monthly installment of principal shall be in an amount
equal to 1/36th of the aggregate principal amounts of the Term Loans outstanding
at the close of business on December 31, 1999. In any event, the then
outstanding principal balance of all Term Loans and all interest then accrued
but unpaid thereon shall be due and payable in full on December 31, 2002. Except
as set forth in ss. 1.7, the Borrower may prepay, at any time or from time to
time, without premium or penalty, the whole or any portion of the Term Loans;
provided that each such principal prepayment shall be accompanied by payment of
all interest under the Term Note accrued but unpaid to the date of payment. Any
partial prepayment of principal of the Term Loans will be applied to
installments of principal of
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the Term Loans thereafter coming due in inverse order of normal maturity.
Amounts repaid or prepaid with respect to the Term Loans are not available for
reborrowing.
1.4. Interest Rate. Except as otherwise provided below in this ss. 1.4,
interest on the Term Loans will be payable at a fluctuating rate per annum (the
"Floating Rate") which shall at all times be equal to the Prime Rate as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law), with a change in such rate of interest to
become effective on each day when a change in the Prime Rate becomes effective.
Subject to the conditions set forth herein, the Borrower may elect that all or
any portion of any Term Loan to be made under ss. 1.2 will be made as a LIBOR
Loan with an Interest Period of three months, that all or any portion of any
Floating Rate Loan (but not all or any portion of the COF Loan, if any) will be
converted to a LIBOR Loan with an Interest Period of three months and/or that
any LIBOR Loan will be continued at the expiration of the Interest Period
applicable thereto as a new LIBOR Loan with an Interest Period of three months.
Such election shall be made by the Borrower giving to the Bank a written or
telephonic notice received by the Bank within the time period specified below
and containing the information described in the next following sentence (a
"Fixed Rate Borrowing Notice"). The Fixed Rate Borrowing Notice must be received
by the Bank no later than 10:00 a.m. (Boston time) on that day which is two
Business Days prior to the date of the proposed borrowing, conversion or
continuation, as the case may be, and must specify the amount of the LIBOR Loan
requested (which shall be $200,000 or an integral multiple of $100,000 in excess
of $200,000), must identify the particular Term Loan or Loans so to be made,
converted or continued, as the case may be, and must specify the proposed
commencement date of the relevant Interest Period. Notwithstanding anything
provided elsewhere in this letter agreement, the Borrower may not elect to have
any installment of a Term Loan included in a LIBOR Loan if the Interest Period
applicable thereto would continue after the due date of such installment. Any
Fixed Rate Borrowing Notice shall, upon receipt by the Bank, become irrevocable
and binding on the Borrower, and the Borrower shall, upon demand and receipt of
a Bank Certificate with respect thereto, forthwith indemnify the Bank against
any loss or expense reasonably incurred by the Bank as a result of any failure
by the Borrower to borrow any requested LIBOR Loan, including, without
limitation, any loss or expense reasonably incurred by reason of the liquidation
or redeployment of deposits or other funds acquired by the Bank to fund or
maintain such LIBOR Loan. At the expiration of each Interest Period applicable
to a LIBOR Loan, the principal amount of such LIBOR Loan may be continued as a
new LIBOR Loan to the extent and on the terms and conditions contained in this
letter agreement by delivery to the Bank of a new Fixed Rate Borrowing Notice
conforming to the requirements set forth above in this ss. 1.4 (and any LIBOR
Loan not repaid and not so continued as a new LIBOR Loan will be deemed (subject
to the provisions of the next following paragraph) to have been converted into a
Floating Rate Loan). Notwithstanding any other provision of this letter
agreement, the Bank need not make any LIBOR Loan or allow any conversion of a
Floating Rate Loan to a LIBOR Loan at any time when there exists any Default or
Event of Default.
As at the close of business on December 31, 1999, the Borrower may convert
to a COF Loan all (but not less than all) of the Terms Loans then outstanding.
If the Borrower desires such conversion to a COF Loan, it will notify the Bank
of same not less than two Business Days prior
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to the proposed conversion and will request that the Bank offer with respect to
such Term Loans a rate of interest which shall be fixed (subject to adjustment
as provided in this letter agreement) for the period commencing on the date of
such conversion and ending on the final maturity date applicable to such Term
Loans (the "Fixed Rate Period"). Following such request for a fixed rate, the
Bank will endeavor to offer a proposed COF Interest Rate at a rate determined as
provided below and under conditions determined by the Bank in its sole
discretion. The Borrower may elect to accept such offer in the manner and within
the time period specified in such offer. Any such election shall be irrevocable
on the part of the Borrower. Upon such election, the interest rate payable with
respect to the outstanding Term Loans shall be fixed (subject to adjustment as
provided in this letter agreement) for the Fixed Rate Period and at the rate
communicated by the Bank as its proposed COF Interest Rate. Any proposed COF
Interest Rate offered under this Section will be a rate per annum equal to the
sum of (i) 2.25% per annum plus (ii) the COF Rate for the applicable Fixed Rate
Period (expressed as a per annum rate); provided, however, that the COF Interest
Rate shall in no event exceed the maximum rate permitted by applicable law. The
COF Rate shall be such rate per annum as is then quoted by the Bank as its
"costs of funds" rate for three-year money. Said "cost of funds" rate refers,
generally, as to any principal amount and for any period of time, to that per
annum rate of interest which the Bank is required to pay, or is offering to pay,
for wholesale liabilities of a similar principal amount and for a similar period
of time (taking into account amortization of the relevant COF Loan), adjusted
for reserve requirements and for such other requirements as may from time to
time be imposed by federal, state or local governmental and/or regulatory
agencies, all as determined from time to time in its sole discretion by the
Bank's treasury group. The source or sources of funding utilized for the
computation of the proposed rate shall be selected by the Bank at its sole
discretion for offering to the Borrower, and the Borrower shall not have any
claim against the Bank with respect to computation of any proposed COF Interest
Rate. If the Borrower is dissatisfied with any proposed COF Interest Rate, the
Borrower's sole remedy with respect thereto shall be not to accept such proposed
COF Interest Rate within the applicable time period, and thus to cause interest
on the Term Loans to be payable at the Floating Rate (subject to the Borrower's
ability set forth elsewhere herein to obtain LIBOR Loans). Notwithstanding the
foregoing provisions hereof, the Bank need not offer a proposed COF Interest
Rate for any period of time with respect to which the Bank, in its sole
discretion, determines that there are no recognized sources of funding available
to it for such time period or principal amount or that the cost of funds with
respect thereto would be unreasonably high or if there then exists any Default
or Event of Default. Further, the Borrower may not convert into a COF Loan any
LIBOR Loan prior to the end of the Interest Period applicable to such LIBOR
Loan.
If the Borrower does not elect a COF Interest Rate for all of the Term
Loans, the Borrower may request and the Bank may issue caps, collars, swaps and
other rate protection products, using the Bank's then customary documentation
for such transactions. Such caps, collars, swaps and other rate protection
products will be issued for such fees and upon such other terms and conditions
as may be agreed upon by the Bank and the Borrower at the time of issuance
thereof.
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Any request for a Fixed Rate Loan and any election to convert all or any
portion of the Term Loans to a Fixed Rate Loan may be made on behalf of the
Borrower only by a duly authorized officer; provided, however, that the Bank may
conclusively rely upon any written or facsimile communication received from any
individual whom the Bank believes in good faith to be such a duly authorized
officer.
1.5. Interest Payments. The Borrower will pay interest on the principal
amount of the Term Loans outstanding from time to time, from the date hereof
until payment of the Term Loans and the Term Note in full and the termination of
this letter agreement. Interest on Floating Rate Loans and the COF Loan (if any)
will be payable monthly in arrears on the first day of each month. Interest on
each LIBOR Loan will be payable in arrears on the applicable Interest Payment
Date. In any event, interest shall also be payable on the date of payment of the
Term Loans in full. Interest on Floating Rate Loans shall be payable at the
Floating Rate. The rate of interest payable on any LIBOR Loan will be the LIBOR
Interest Rate applicable thereto. Interest on the COF Loan will be payable at
the applicable COF Interest Rate. In any event, overdue principal of any Term
Loan and, to the extent permitted by law, overdue interest on any Term Loan
shall bear interest at a rate per annum which at all times shall be equal to the
sum of (i) four (4%) percent per annum plus (ii) the rate otherwise applicable
to such overdue principal (or to the principal amount as to which such interest
is overdue) pursuant to the Term Note and this letter agreement, payable on
demand. All interest payable hereunder and/or under the Term Note will be
calculated on the basis of a 360-day year for the actual number of days elapsed.
1.6. Rate Determination Protection. In the event that:
(i) the Bank shall determine that, by reason of circumstances
affecting the London interbank market or otherwise, adequate and
reasonable methods do not exist for ascertaining the LIBOR Interest
Rate which would otherwise be applicable during any Interest Period,
or
(ii) the Bank shall determine that:
(A) the making or continuation of any LIBOR Loan has been made
impracticable or unlawful by (1) the occurrence of any
contingency that materially and adversely affects the London
interbank market or (2) compliance by the Bank with any
applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental
authority charged with the interpretation or administration
thereof or with any request or directive of any such
governmental authority (whether or not having the force of
law); or
(B) LIBOR will not, in the reasonable determination of the
Bank, adequately and fairly reflect the cost to the Bank of
funding the LIBOR Loans for such Interest Period
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then the Bank shall forthwith give notice of such
determination (which shall be conclusive and binding on the
Borrower) to the Borrower. In such event the obligations of
the Bank to make LIBOR Loans shall be suspended until the Bank
determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Bank shall notify
the Borrower.
1.7. Prepayment of Fixed Rate Loans. The following provisions of this
ss.1.7 shall be effective only with respect to Fixed Rate Loans: If, due to
acceleration of the Term Note or due to voluntary or mandatory prepayment or due
to any other reason, the Bank receives payment of any principal of a LIBOR Loan
on any date prior to the last day of the relevant Interest Period or receives
payment of all or any portion of any installment of the COF Loan prior to the
regularly scheduled due date for such installment or if there shall be any
conversion pursuant to ss. 1.9, the Borrower shall, upon demand and receipt of a
Bank Certificate from the Bank with respect thereto, pay forthwith to the Bank a
yield maintenance fee in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the last day of
the Interest Period applicable to the affected LIBOR Loan or to the regularly
scheduled due date of the affected installment of the COF Loan (as the case may
be) shall be subtracted from the "cost of funds" component (i.e.,
reserve-adjusted LIBOR in the case of LIBOR Loans or the COF Rate in the case of
COF Loans) of the fixed rate in effect at the date of such prepayment or
conversion. If the result is zero or a negative number, there shall be no yield
maintenance fee. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the relevant Interest Period (or remaining until the
regularly scheduled due date of the prepaid installment of the COP Loan, as the
case may be). Said amount shall be reduced to present value calculated by using
the number of days remaining in the relevant Interest Period (or remaining until
the regularly scheduled due date of the prepaid installment of the COF Loan, as
the case may be) and by using the above-referenced United States Treasury
securities rate as the discount rate. The resulting amount shall be the yield
maintenance fee due to the Bank upon prepayment or conversion of the applicable
Fixed Rate Loan. Any acceleration of a Fixed Rate Loan due to an Event of
Default will give rise to a yield maintenance fee calculated with the respect to
such Fixed Rate Loan on the date of such acceleration in the same manner as
though the Borrower had exercised a right of prepayment at that date, such yield
maintenance fee being due and payable at that date.
1.8. Increased Costs; Capital Adequacy.
(i) If the adoption, effectiveness or phase-in, after the date
hereof, of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or
comparable agency:
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(A) shall subject the Bank to any Imposition or other charge
with respect to any Fixed Rate Loan, the Term Note or the
Bank's agreement to make Fixed Rate Loans, or shall change the
basis of taxation of payments to the Bank of the principal of
or interest on any Fixed Rate Loan or any other amounts due
under this letter agreement in respect of the Fixed Rate Loans
or the Bank's agreement to make Fixed Rate Loans (except for
changes in the rate of tax on the over-all net income of the
Bank); or
(B) shall impose, modify or deem applicable any reserve,
special deposit, deposit insurance or similar requirement
(including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System, but
excluding, with respect to any LIBOR Loan, any such
requirement already included in the applicable Reserve Rate
and excluding, with respect to any COF Loan, any such
requirement already included in the applicable COF Rate)
against assets of, deposits with or for the account of, or
credit extended by, the Bank or shall impose on the Bank or on
the London interbank market any other condition affecting any
Fixed Rate Loans, the Term Note or the Bank's agreement to
make Fixed Rate Loans
and the result of any of the foregoing is to increase the cost to the Bank
of making or maintaining any Fixed Rate Loan or to reduce the amount of
any sum received or receivable by the Bank under this letter agreement or
under the Term Note with respect to any Fixed Rate Loan by an amount
deemed by the Bank to be material, then, upon demand by the Bank and
receipt of a Bank Certificate from the Bank with respect thereto, the
Borrower shall pay to the Bank such additional amount or amounts as the
Bank certifies to be necessary to compensate the Bank for such increased
cost or reduction in amount received or receivable.
(ii) If the Bank shall have determined that the adoption, effectiveness or
phase-in after the date hereof of any applicable law, rule or regulation
regarding capital requirements for banks or bank holding companies, or any
change therein after the date hereof, or any change after the date hereof
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with
any request or directive of such entity regarding capital adequacy
(whether or not having the force of law) has or would have the effect of
reducing the return on the Bank's capital with respect to its agreement
hereunder to make Term Loans or with respect to any Term Loan (whether or
not then subject to any LIBOR Interest Rate or COF Interest Rate) to a
level below that which the Bank could have achieved (taking into
consideration the Bank's policies with respect to capital adequacy
immediately before such adoption, effectiveness, phase-in, change or
compliance and assuming that the Bank's capital was then fully utilized)
by any amount deemed by the Bank to be material: (A) the Bank shall
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promptly after its determination of such occurrence deliver a Bank
Certificate with respect thereto to the Borrower; and (B) the Borrower
shall pay to the Bank as an additional fee from time to time on demand
such amount as the Bank certifies to be the amount that will compensate it
for such reduction; provided that the Bank will not claim compensation
under this paragraph (ii) unless the Bank is seeking similar compensation
generally from other similar borrowers whose loan documents contain
similar provisions.
(iii) A Bank Certificate of the Bank claiming compensation under this
ss.1.8 shall be conclusive in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to
such compensation, the additional amount or amounts to be paid to the Bank
hereunder and the method by which such amounts are determined. In
determining any such amount, the Bank may use any reasonable averaging and
attribution methods.
(iv) No failure on the part of the Bank to demand compensation on any one
occasion shall constitute a waiver of its right to demand such
compensation on any other occasion and no failure on the part of the Bank
to deliver any Bank Certificate in a timely manner shall in any way reduce
any obligation of the Borrower to the Bank under this ss. 1.8.
1.9. Illegality or Impossibility. Notwithstanding any other provision of
this letter agreement, if the introduction of or any change in or in the
interpretation or administration of any law or regulation applicable to the Bank
or the Bank's activities in the London interbank market shall make it unlawful,
or any central bank or other governmental authority having jurisdiction over the
Bank or the Bank's activities in the London interbank market shall assert that
it is unlawful, or otherwise make it impossible, for the Bank to perform its
obligations hereunder to make LIBOR Loans or to continue to fund or maintain
LIBOR Loans, then on notice thereof and demand therefor by the Bank to the
Borrower, (i) the obligation of the Bank to fund LIBOR Loans shall terminate and
(ii) all affected LIBOR Loans shall be deemed to have been converted into
Floating Rate Loans (with the Borrower to be responsible for any amount payable
under ss. 1.7 as a consequence of such conversion) at the last day on which such
LIBOR Loans may legally remain outstanding. Except as expressly provided in the
immediately preceding sentence, no LIBOR Loan may be converted into a Floating
Rate Loan prior to the end of the Interest Period applicable to such LIBOR Loan.
1.10. Advances and Payments. The proceeds of all Term Loans shall be
credited by the Bank to a general deposit account maintained by the Borrower
with the Bank. The proceeds of each Term Loan will be used by the Borrower
solely to pay or reimburse acquisition costs of Qualifying Equipment and
Qualifying Leasehold Improvements.
The Bank may charge any general deposit account of the Borrower at the
Bank with the amount of all payments of interest, principal and other sums due,
from time to time, under this letter agreement and/or the Term Note; and will
thereafter notify the Borrower of the amount so
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charged. The failure of the Bank so to charge any account or to give any such
notice shall not affect the obligation of the Borrower to pay interest,
principal or other sums as provided herein or in the Term Note.
Whenever any payment to be made to the Bank hereunder or under the Term
Note shall be stated to be due on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day, and interest payable on
each such date shall include the amount thereof which shall accrue during the
period of such extension of time. All payments by the Borrower hereunder and/or
in respect of the Term Note shall be made net of any Impositions or taxes and
without deduction, set-off or counterclaim, notwithstanding any claim which the
Borrower may now or at any time hereafter have against the Bank. All payments of
interest, principal and any other sum payable hereunder and/or under the Term
Note shall be made to the Bank, in lawful currency of the United States in
immediately available funds, at its office at Xxx Xxxxxxx Xxxxxx, Xxxxxx, XX
00000 or to such other address as the Bank may from time to time direct. All
payments received by the Bank after 2:00 p.m. on any day shall be deemed
received as of the next succeeding Business Day. All monies received by the Bank
shall be applied first to fees, charges, costs and expenses payable to the Bank
under this letter agreement, the Term Note and/or any of the other Loan
Documents, next to interest then accrued on account of any Term Loans and only
thereafter to principal of the Term Loans.
1.11.Conditions to Advance. Prior to the making of the initial Term Loan,
the Borrower shall deliver to the Bank duly executed copies of this letter
agreement, the Security Agreement, the Term Note and the documents and other
items listed on the Closing Agenda delivered herewith by the Bank to the
Borrower, all of which, as well as all legal matters incident to the
transactions contemplated hereby, shall be satisfactory in form and substance to
the Bank and its counsel.
Without limiting the foregoing, any Term Loan (including the initial Term
Loan) is subject to the further conditions precedent that on the date on which
such Term Loan is made (and after giving effect thereto):
(a) All statements, representations and warranties of the Borrower made in
this letter agreement and/or in the Security Agreement (other than those
statements, representations and warranties which are expressly stated to apply
only as of a specific date and those statements, representations and warranties
relating to facts which this letter agreement contemplates may change from time
to time without violation of the terms of this letter agreement) shall continue
to be correct in all material respects as of the date of such Term Loan.
(b) All covenants and agreements of the Borrower contained herein and/or
in any of the other Loan Documents shall have been complied with in all material
respects on and as of the date of such Term Loan.
(c) No event which constitutes, or which with notice or lapse of time or
both would be reasonably likely to constitute, an Event of Default shall have
occurred and be continuing.
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(d) No other material adverse change shall have occurred in the financial
condition of the Borrower from that disclosed in the financial statements then
most recently furnished to the Bank.
Each request by the Borrower for any Term Loan, and each acceptance by the
Borrower of the proceeds of any Term Loan, will be deemed a representation and
warranty by the Borrower that at the date of such Term Loan and after giving
effect thereto all of the conditions set forth in the foregoing clauses (a)-(d)
of this ss. 1.11 will be satisfied.
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties. In order to induce the Bank to enter
into this letter agreement and to make Term Loans hereunder, the Borrower
warrants and represents to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of Delaware. The Borrower has full corporate power
to own its property and conduct its business as now conducted and as proposed to
be conducted, to grant the security interests contemplated by the Security
Agreement and to enter into and perform this letter agreement and the other Loan
Documents. The Borrower is duly qualified to do business and in good standing in
Massachusetts and in each other jurisdiction in which the Borrower maintains any
plant, office, warehouse or other facility and in each other jurisdiction where
the failure so to qualify would (singly or in the aggregate with all other such
failures) be reasonably likely to have a material adverse effect on the
financial condition, business or prospects of the Borrower, all such
jurisdictions being listed on item 2.1(a) of the attached Disclosure Schedule.
At the date hereof, the Borrower has no Subsidiaries, other than BioTransplant
Canada Limited. The Borrower is not a member of any partnership or joint
venture.
(b) At the date of this letter agreement, no Person is known to own, of
record and/or beneficially, more than 5% of the outstanding shares of any class
of the Borrower's capital stock, except as set forth on item 2.1(b) of the
attached Disclosure Schedule.
(c) The execution, delivery and performance by the Borrower of this letter
agreement and each of the other Loan Documents have been duly authorized by all
necessary corporate and other action and do not and will not:
(i) violate any provision of, or require as a prerequisite to
effectiveness any filing (other than filings under the Uniform Commercial
Code), registration, consent or approval under, any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Borrower;
(ii) violate any provision of the charter or by-laws of the
Borrower, or result in a breach of or constitute a default or require
any waiver or consent under any indenture or
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loan or credit agreement or any other material agreement, lease or
instrument to which the Borrower is a party or by which the Borrower or
any of its properties is bound or require any other consent of any Person
(other than pursuant to any such indenture, loan or credit agreement or
other material agreement, lease or instrument as to which violation by the
Borrower would not be reasonably likely to have a material adverse effect
on the financial condition, business or prospects of the Borrower); or
(iii) result in, or require, the creation or imposition of any lien,
security interest or other encumbrance (other than in favor of the Bank),
upon or with respect to any of the properties now owned or hereafter
acquired by the Borrower.
(d) This letter agreement and each of the other Loan Documents delivered
herewith has been duly executed and delivered by the Borrower and each is a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its respective terms.
(e) Except as described on item 2.1(e) of the attached Disclosure
Schedule, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary of the Borrower before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
would be reasonably likely to hinder or prevent the consummation of the
transactions contemplated hereby or call into question the validity of this
letter agreement or any of the other Loan Documents or any action taken or to be
taken in connection with the transactions contemplated hereby or thereby or
which in any single case or in the aggregate would be reasonably likely to
result in any material adverse change in the business, prospects, condition,
affairs or operations of the Borrower.
(f) The Borrower is not in violation of any term of its charter or by-laws
as now in effect. Neither the Borrower nor any Subsidiary is in material
violation of any term of any mortgage, indenture or judgment, decree or order,
or any other material instrument, contract or agreement to which it is a party
or by which any of its property is bound, which violation would be reasonably
likely to have a material adverse effect on the financial condition, business or
prospects of the Borrower.
(g) The Borrower has filed (and has caused each Subsidiary of the Borrower
to file) all federal, foreign, state and local tax returns, reports and
estimates required to be filed by the Borrower or any such Subsidiary. All such
filed returns, reports and estimates are proper and accurate and the Borrower
(or the Subsidiary concerned, as the case may be) has paid all taxes,
assessments, impositions, fees and other governmental charges required to be
paid in respect of the periods covered by such returns, reports or estimates,
other than any such taxes, assessments, impositions, fees and charges which are
being contested in good faith by appropriate proceedings which serve to stay the
remedies of the relevant taxing authority and as to which the Borrower has
established and maintains adequate reserves. No deficiencies for any tax,
assessment or
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governmental charge have been asserted or assessed, and the Borrower knows of no
material tax liability or basis therefor.
(h) The Borrower is in compliance (and each Subsidiary of the Borrower is
in compliance with) with all requirements of law, federal, foreign, state and
local, and all requirements of all governmental bodies or agencies having
jurisdiction over it, the conduct of its business, the use of its properties and
assets, and all premises occupied by it, failure to comply with any of which
would (singly or in the aggregate with all other such failures) be reasonably
likely to have a material adverse effect upon the assets, business, financial
condition or prospects of the Borrower. Without limiting the foregoing, the
Borrower has all the material franchises, licenses, leases, permits,
certificates and authorizations needed for the conduct of its business and the
use of its properties and all premises occupied by it, as now conducted, owned
and used.
(i) The audited financial statements of the Borrower as at December 31,
1998 and the management-generated financial statements of the Borrower as at
March 31, 1999, each heretofore delivered to the Bank, are complete and accurate
and fairly present the financial condition of the Borrower as at the dates
thereof and for the periods covered thereby, except that the
management-generated statements do not have footnotes and thus do not present
the information which would normally be contained in footnotes to financial
statements and are subject to normal year-end audit adjustments. The Borrower
does not have any liability, contingent or otherwise, not disclosed in the
aforesaid financial statements or in any notes thereto that would be reasonably
likely to materially adversely affect the financial condition of the Borrower.
Since December 31, 1998, here has been no material adverse development in the
business, condition or prospects of the Borrower, and the Borrower has not
entered into any material transaction other than in the ordinary course.
(j) The principal place of business and chief executive offices of the
Borrower are located at Third Avenue, Building 75, Charlestown Navy Yard,
Charlestown, MA 02129 (the "Premises"). All of the books and records of the
Borrower are located at the Premises. Except as described on item 2.1(j) of the
attached Disclosure Schedule, no assets of the Borrower are located at any
address other than the Premises. Said item 2.1(j) of the attached Disclosure
Schedule sets forth the names and addresses of all record owners of the
Premises.
(k) The Borrower owns or has a valid right to use all of the patents,
licenses, copyrights, trademarks and trade names now being used or necessary to
conduct its business. To the best knowledge of the Borrower, the conduct of the
Borrower's business as now operated does not conflict with valid patents,
copyrights, trademarks or trade names of others in any manner that would be
reasonably likely to materially adversely affect the business, prospects, assets
or condition, financial or otherwise, of the Borrower.
(l) None of the executive officers or key employees of the Borrower is
subject to any agreement in favor of anyone other than the Borrower which limits
or restricts that person's right to engage in the type of business activity
conducted or proposed to be conducted by the Borrower
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or which grants to anyone other than the Borrower any rights in any inventions
or other ideas susceptible to legal protection developed or conceived by any
such officer or key employee.
(m) The Borrower is not a party to any contract or agreement which now has
or, as far as can be foreseen by the Borrower at the date hereof, would be
reasonably likely to have a material adverse effect on the financial condition,
business, prospects or properties of the Borrower.
(n) The Borrower has reviewed the material software which it uses in its
business for "Year 2000" compliance and has determined that such software will
continue to function in the manner intended without interruption of service or
other difficulty resulting from the "Year 2000 problem". The Borrower will, at
the request of the Bank, provide such reports and other information as the Bank
may reasonably request in order to evidence such Year 2000 compliance.
III. AFFIRMATIVE COVENANTS AND REPORTING REQUIREMENTS
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Term Loan or any
of the other Obligations shall be outstanding:
3.1. Legal Existence; Qualification; Compliance. The Borrower will
maintain (and will cause each Subsidiary of the Borrower to maintain) its
corporate existence and good standing in the jurisdiction of its incorporation;
provided that any Subsidiary of the Borrower may be dissolved and its assets
transferred to the Borrower or may be merged into the Borrower, with the
Borrower to be the surviving entity. The Borrower will remain qualified to do
business in Massachusetts. The Borrower will qualify to do business and will
remain qualified and in good standing (and the Borrower will cause each
Subsidiary of the Borrower to qualify and remain qualified and in good standing)
in each other jurisdiction where the Borrower or such Subsidiary, as the case
may be, maintains any plant, office, warehouse or other facility and in each
other jurisdiction where the failure so to qualify would (singly or in the
aggregate with all other such failures) be reasonably likely to have a material
adverse effect on the financial condition, business or prospects of the Borrower
or any such Subsidiary; provided that any Subsidiary of the Borrower may be
dissolved and its assets transferred to the Borrower or may be merged into the
Borrower, with the Borrower to be the surviving entity. The Borrower will comply
(and will cause each Subsidiary of the Borrower to comply) with its charter
documents and by-laws. The Borrower will comply with (and will cause each
Subsidiary of the Borrower to comply with) all applicable laws, rules and
regulations (including, without limitation, ERISA and those relating to
environmental protection) other than (i) laws, rules or regulations the validity
or applicability of which the Borrower or such Subsidiary shall be contesting in
good faith by proceedings which serve as a matter of law to stay the enforcement
thereof and (ii) those laws, rules and regulations the failure to comply with
any of which would not (singly or in the aggregate) be reasonably likely to have
a material adverse effect on the financial condition, business or prospects of
the Borrower or any such Subsidiary.
-13-
3.2. Maintenance of Property; Insurance. The Borrower will maintain and
preserve (and will cause each Subsidiary of the Borrower to maintain and
preserve) all of its properties in good working order and condition, making all
necessary repairs thereto and replacements thereof. The Borrower will maintain
all such insurance as may be required under the Security Agreement and will also
maintain, with financially sound and reputable insurers, insurance with respect
to its property and business against such liabilities, casualties and
contingencies and of such types and in such amounts as shall be reasonably
satisfactory to the Bank from time to time and in any event all such insurance
as may from time to time be customary for companies conducting a business
similar to that of the Borrower in similar locales.
3.3. Payment of Taxes and Charges. The Borrower will pay and discharge
(and will cause each Subsidiary of the Borrower to pay and discharge) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or property, including, without limitation, taxes, assessments, charges
or levies relating to real and personal property, franchises, income,
unemployment, old age benefits, withholding, or sales or use, prior to the date
on which penalties would attach thereto, and all lawful claims (whether for any
of the foregoing or otherwise) which, if unpaid, might give rise to a lien upon
any property of the Borrower or any such Subsidiary, except any of the foregoing
which is being contested in good faith and by appropriate proceedings which
serve as a matter of law to stay the enforcement thereof and for which the
Borrower has established and is maintaining adequate reserves. The Borrower will
pay, and will cause each of its Subsidiaries to pay, in a timely manner, all
material lease obligations, material trade debt, material purchase money
obligations and material equipment lease obligations; provided that nothing
contained in this sentence will be deemed to require the Borrower or any such
Subsidiary to pay any such lease obligations, trade debt, purchase money
obligations or equipment lease obligations so long as the Borrower is disputing
in good faith its obligation to pay same under circumstances in which no
material property or interest of the Borrower is jeopardized by such non-payment
and in which the Borrower has established and is maintaining adequate reserves.
For the purpose of the immediately preceding sentence, Indebtedness and other
obligations will not be considered "material" unless any such Indebtedness or
obligations (together with all related Indebtedness and obligations) exceed
$100,000 in amount or unless the failure to pay same could cause the Borrower or
any Subsidiary to incur a loss in excess of $100,000. The Borrower will perform
and fulfill all material covenants and agreements under any material leases of
real estate, material agreements relating to purchase money debt, material
equipment leases and other material contracts; provided that nothing contained
in this sentence will be deemed to require the Borrower to perform or fulfill
any such covenants or agreements so long as the Borrower is disputing in good
faith its obligation to perform or fulfill same under circumstances in which no
material property or interest of the Borrower is jeopardized by such
nonperformance or nonfulfillment and in which the Borrower has established and
is maintaining adequate reserves. For the purpose of the immediately preceding
sentence, no lease, agreement or other contract will be considered "material"
unless the failure to perform same could cause the Borrower or any Subsidiary to
incur a loss in excess of $100,000. The Borrower will maintain in full force and
effect, and comply with the terms and conditions of, all permits, permissions
and licenses necessary or
-14-
desirable for its business and as to which the failure to maintain and/or comply
with same could have a material adverse effect on the Borrower.
3.4. Accounts. The Borrower will maintain its principal operating accounts
with the Bank.
3.5. Conduct of Business. The Borrower will conduct, in the ordinary
course, the business in which it is presently engaged. The Borrower will not,
without the prior written consent of the Bank, directly or indirectly (itself or
through any Subsidiary) enter into any other unrelated lines of business,
businesses or ventures not substantially related to the lines of business
conducted by the Borrower at the date of this letter agreement.
3.6. Reporting Requirements. The Borrower will furnish to the Bank (or
cause to be furnished to the Bank):
(i) Within 90 days after the end of each fiscal year of the
Borrower, a copy of the Borrower's Annual Report on Form 10-K for such
fiscal year, as filed with the SEC. Such Annual Report will contain or
will be accompanied by the annual audit report for such fiscal year for
the Borrower, including therein consolidated and consolidating balance
sheets of the Borrower and Subsidiaries as at the end of such fiscal year
and related consolidated and consolidating statements of income,
stockholders' equity and cash flow for the fiscal year then ended. The
annual consolidated financial statements shall be audited by the
Borrower's independent public accountants, such audit report to be in such
form as is generally recognized as "unqualified". The Borrower will also
deliver to the Bank, within 90 days after the commencement of each fiscal
year, projections of sales, income and expenses of the Borrower for such
fiscal year, prepared by the Borrower's management and approved by the
Borrower's Board of Directors, such projections to be in such detail as is
reasonably satisfactory to the Bank.
(ii) Within 45 days after the end of each fiscal quarter of the
Borrower, a copy of the Borrower's Quarterly Report on Form 10-Q for such
fiscal quarter, as filed with the SEC. Such Quarterly Report will contain
or will be accompanied by consolidated and consolidating balance sheets of
the Borrower and Subsidiaries and related consolidated and consolidating
statements of income and cash flow, unaudited but prepared in accordance
with generally accepted accounting principles consistently applied fairly
presenting the financial condition of the Borrower and Subsidiaries as at
the dates thereof and for the periods covered thereby (except that such
quarterly statements need not contain notes to the financial statements)
and certified as complete by the chief financial officer or chief
executive officer of the Borrower, such balance sheets to be as at the end
of such fiscal quarter and such statements of income and cash flow to be
for such fiscal quarter and for the year to date, in each case together
with a comparison to the results for the corresponding fiscal period of
the immediately prior fiscal year.
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(iii) At the time of delivery of each annual or quarterly report or
financial statement of the Borrower, a certificate executed by the chief
financial officer or chief executive officer of the Borrower stating that
he or she has reviewed this letter agreement and the other Loan Documents
and has no knowledge of any default by the Borrower in the performance or
observance of any of the provisions of this letter agreement or of any of
the other Loan Documents or, if he or she has such knowledge, specifying
each such default and the nature thereof. Each financial statement given
as at the end of any fiscal quarter of the Borrower will also set forth
the calculations necessary to evidence compliance with ss.ss.3.7-3.9.
(iv) Promptly after receipt, a copy of all audits or reports
submitted to the Borrower by independent public accountants in connection
with any annual, special or interim audits of the books of the Borrower
and any "management letter" submitted by such accountants.
(v) As soon as possible and in any event within five days after the
Borrower knows of or reasonably should have known of the occurrence of any
Default or Event of Default, the statement of the Borrower setting forth
details of each such Default or Event of Default and the action which the
Borrower proposes to take with respect thereto.
(vi) Promptly after the commencement thereof, notice of the
commencement of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, to which the Borrower or any
Subsidiary of the Borrower is a party; provided, however, that nothing
contained in this clause (vi) will be deemed to require the Borrower to
give notice of any such action, suit or proceeding which seeks monetary
damage only, such damages being in the amount of $100,000 or less.
(vii) As long as the Borrower has a class of securities which is
publicly traded, a copy of each periodic or current report of the Borrower
filed with the SEC or any successor agency and each annual report, proxy
statement and other communication sent by the Borrower to shareholders or
other securityholders generally, such copy to be provided to the Bank
promptly upon such filing with the SEC or such communication with
shareholders or securityholders, as the case may be.
(viii) Promptly after the Borrower has knowledge thereof, written
notice of any development or circumstance which would reasonably be
expected to have a material adverse effect on the Borrower or its
business, properties, assets, Subsidiaries or condition, financial or
otherwise.
(ix) Promptly upon request, such other information respecting the
financial condition, operations, receivables, inventory, machinery or
equipment of the Borrower or any Subsidiary as the Bank may from time to
time reasonably request.
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3.7. Capital Base. The Borrower will maintain, as at the close of each
fiscal quarter of the Borrower (commencing with its results as at March 31,
1999), a consolidated Capital Base of not less than $8,000,000.
3.8. Liquidity. The Borrower will maintain as at the close of each fiscal
quarter of Borrower (commencing with its results as at March 31, 1999), a ratio
of Net Quick Assets to Total Liabilities, which ratio shall be not less than 1.5
to 1.
3.9. Debt Service Coverage. As used herein, "Determination Date" means the
last day of each fiscal quarter of the Borrower. The Borrower will maintain on a
consolidated basis, as at each Determination Date (commencing with its results
as at March 31, 1999), a Debt Service Coverage Ratio of not less than 2.0 to 1.
As used herein, the "Debt Service Coverage Ratio", as determined as at any
Determination Date, means the ratio of (x) Earnings Available of the Borrower
and Subsidiaries for the 12-month period ending on such Determination Date to
(y) the total of (1) all interest on any Indebtedness (whether senior or
subordinated, long-term or current), which interest was paid or payable or
accrued by the Borrower or any Subsidiary of the Borrower during such 12-month
period ending on such Determination Date, plus (2) the aggregate current
maturities of long-term debt of the Borrower and Subsidiaries outstanding at
such Determination Date. Notwithstanding the foregoing, the Borrower need not
comply with the foregoing provisions of this ss.3.9 as at any Determination Date
if the Borrower's Unencumbered Cash Balance as at such Determination Date
exceeds $8,000,000.
3.10. Books and Records. The Borrower will maintain (and will cause each
of its Subsidiaries to maintain) complete and accurate books, records and
accounts which will at all times accurately and fairly reflect all of its
transactions in accordance with generally accepted accounting principles
consistently applied. The Borrower will, at any reasonable time and from time to
time upon reasonable notice and during normal business hours (and at any time
and without any necessity for notice following the occurrence of an Event of
Default), permit the Bank, and any agents or representatives thereof, to examine
and make copies of and take abstracts from the records and books of account of,
and visit the properties of the Borrower and any of its Subsidiaries, and to
discuss its affairs, finances and accounts with its officers, directors and/or
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this ss.3.10. Each
financial statement of the Borrower hereafter delivered pursuant to this letter
agreement will be complete and accurate and will fairly present in all material
respects the financial condition of the Borrower as at the date thereof and for
the periods covered thereby.
3.11. Landlord's Waiver. Prior to the making of the first Term Loan, the
Borrower will use its best efforts to obtain, and will thereafter use its best
efforts to maintain in effect at all times, waivers from the owners of all
premises in which any material amount of Collateral is located, such waivers to
be in form and substance reasonably satisfactory to the Bank.
-17-
IV. NEGATIVE COVENANTS
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Term Loan or any
of the other Obligations shall be outstanding:
4.1. Indebtedness. Without the prior written consent of the Bank, the
Borrower will not create, incur, assume or suffer to exist any Indebtedness (nor
allow any of its Subsidiaries to create, incur, assume or suffer to exist any
Indebtedness), except for:
(i) Indebtedness owed to the Bank, including, without limitation,
the Indebtedness represented by the Term Note;
(ii) Indebtedness of the Borrower or any Subsidiary for taxes,
assessments and governmental charges or levies not yet due and payable;
(iii) unsecured current liabilities of the Borrower or any
Subsidiary (other than for money borrowed or for purchase money
Indebtedness with respect to fixed assets) incurred upon customary terms
in the ordinary course of business;
(iv) purchase money Indebtedness (including, without limitation,
Indebtedness in respect of capitalized equipment leases) owed to equipment
vendors, equipment lessors and other Persons providing purchase money
financing to the Borrower for equipment purchased or leased by the
Borrower for use in the Borrower's business, provided that the total of
Indebtedness permitted under this clause (iv) plus presently-existing
equipment financing permitted under clause (v) of this ss.4.1 will not
exceed $500,000 in the aggregate outstanding at any one time;
(v) other Indebtedness (not described in any of clauses (i)-(iv)
above) existing at the date hereof, but only to the extent set forth on
item 4.1 of the attached Disclosure Schedule; and
(vi) any guaranties or other contingent liabilities expressly
permitted pursuant to ss.4.3.
4.2. Liens. The Borrower will not create, incur, assume or suffer to exist
(nor allow any of its Subsidiaries to create, incur, assume or suffer to exist)
any mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance (including the lien or retained security title of a conditional
vendor) of any nature (collectively, "Liens"), upon or with respect to any of
its property or assets, now owned or hereafter acquired (including, without
limitation, any trustee process affecting any account maintained by the Borrower
with the Bank), except that the foregoing restrictions shall not apply to:
-18-
(i) Liens for taxes, assessments or governmental charges or levies
on property of the Borrower or any of its Subsidiaries if the same shall
not at the time be delinquent or thereafter can be paid without interest
or penalty or are being contested in good faith and by appropriate
proceedings which serve as a matter of law to stay any enforcement thereof
and as to which adequate reserves are maintained;
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar Liens arising in the ordinary course of
business for sums not yet due or which are being contested in good faith
and by appropriate proceedings which serve as a matter of law to stay the
enforcement thereof and as to which adequate reserves are maintained;
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or similar
legislation;
(iv) Liens in favor of the Bank;
(v) Liens in favor of equipment vendors, equipment lessors and other
Persons securing purchase money Indebtedness to the extent permitted by
clause (iv) of ss.4.1; provided that no such Lien will extend to any
property of the Borrower other than the specific items of equipment
financed; or
(vi) other Liens existing at the date hereof, but only to the extent
and with the relative priorities set forth on item 4.2 of the attached
Disclosure Schedule.
Without limitation of the foregoing, the Borrower covenants and agrees
that it will not enter into (and represents and warrants that it is not now a
party to or subject to) any agreement or understanding with any Person other
than the Bank which could prohibit or restrict in any manner the right of the
Borrower to grant Liens on its assets to the Bank.
4.3. Guaranties. The Borrower will not, without the prior written consent
of the Bank, assume, guarantee, endorse or otherwise become directly or
contingently liable (including, without limitation, liable by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure any creditor
against loss) (and will not permit any of its Subsidiaries so to assume,
guaranty or become directly or contingently liable) in connection with any
indebtedness of any other Person, except (i) guaranties by endorsement for
deposit or collection in the ordinary course of business, and (ii) guaranties
existing at the date hereof and described on item 4.3 of the attached Disclosure
Schedule.
4.4. Dividends. The Borrower will not, without the prior written consent
of the Bank, make any distributions to its shareholders, pay any dividends
(other than dividends payable solely in capital stock of the Borrower) or
redeem, purchase or otherwise acquire, directly or indirectly any of its capital
stock, including, without limitation, any redemption of Preferred
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Stock as described in the Borrower's charter documents; provided, however, that
the Borrower may, without being deemed to be in violation of this ss.4.4,
repurchase any of its capital stock issued to current or former officers,
employees, directors, advisors or consultants of the Borrower pursuant to a plan
or arrangement approved by the Borrower's Board of Directors, so long as, at the
time of each such repurchase, and after giving effect thereto, there is no
Default or Event of Default, with compliance with each of ss.ss.3.7 and 3.8
being determined for this purpose (on a forma basis, giving effect to the
proposed transaction) both as at the then most recent fiscal quarter-end and as
at the date of the proposed transaction (even if not a fiscal quarter-end).
4.5. Loans and Advances. The Borrower will not make (and will not permit
any Subsidiary to make) any loans or advances to any Person, including, without
limitation, the Borrower's directors, officers and employees, except advances to
such directors, officers or employees with respect to expenses incurred by them
in the ordinary course of their duties and advances against salary, all of which
loans and advances will not exceed, in the aggregate, $250,000 outstanding at
any one time.
4.6. Investments. The Borrower will not, without the Bank's prior written
consent (such consent not to be unreasonably withheld or delayed), invest in,
hold or purchase any stock or securities of any Person (nor will the Borrower
permit any of its Subsidiaries to invest in, purchase or hold any such stock or
securities) except: (i) readily marketable direct obligations of, or obligations
guarantied by, the United States of America or any agency thereof; (ii) other
investment grade debt securities and other Readily-Marketable Securities; (iii)
mutual funds, the assets of which are primarily invested in items of the kind
described in the foregoing clauses (i) and (ii) of this ss.4.6; (iv) deposits
with or certificates of deposit issued by the Bank and any other obligations of
the Bank or the Bank's parent; (v) deposits with or certificates of deposit
issued by any other bank organized in the United States having capital in excess
of $100,000,000; (vi) existing investments described on item 4.6 of the attached
Disclosure Schedule; and (vii) investments in any Subsidiaries now existing or
hereafter created by the Borrower pursuant to ss.4.7 below; provided that in any
event the Tangible Net Worth of the Borrower alone (exclusive of its investment
in Subsidiaries and any debt owed by any Subsidiary to the Borrower) will not be
less than 90% of the consolidated Tangible Net Worth of the Borrower and
Subsidiaries.
4.7. Subsidiaries; Acquisitions. The Borrower will not, without the prior
written consent of the Bank, make any acquisition of all or substantially all of
the stock of any other Person or of all or substantially all of the assets of
any other Person. The Borrower will not become a partner in any partnership. The
Borrower will promptly inform the Bank if it forms any Subsidiaries.
4.8. Merger. The Borrower will not, without the prior written consent of
the Bank, merge or consolidate with any Person, or sell, lease, transfer or
otherwise dispose of any material portion of its assets (whether in one or more
transactions), other than sale of inventory in the ordinary course.
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4.9. Affiliate Transactions. The Borrower will not, without prior written
consent of the Bank (such consent not to be unreasonably withheld or delayed),
enter into any transaction, including, without limitation, the purchase, sale or
exchange of any property or the rendering of any service, with any affiliate of
the Borrower, except pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower
than would be obtained in a comparable arms'-length transaction with any Person
not an affiliate; provided that nothing in this ss.4.9 shall be deemed to
restrict the payment of salary, other similar payments or the granting of stock
options to any officer or director of the Borrower at a level consistent with
the salary, other payments and stock option grants being paid and made at the
date of this letter agreement, nor to prevent the hiring of additional officers
at a level of salary and other compensation and with stock option grants
consistent with industry practice, nor to prevent reasonable periodic increases
in salary and other compensation and additional stock option grants. For the
purposes of this letter agreement, "affiliate" means any Person which, directly
or indirectly, controls or is controlled by or is under common control with the
Borrower; any officer or director of the Borrower; any Person owning of record
or beneficially, directly or indirectly, 5% or more of any class of capital
stock of the Borrower or 5% or more of any class of capital stock or other
equity interest having voting power (under ordinary circumstances) of any of the
other Persons described above; and any member of the immediate family of any of
the foregoing. "Control" means possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of any Person,
whether through ownership of voting equity, by contract or otherwise.
Notwithstanding the foregoing, nothing contained in this ss.4.9 will be deemed
to apply to (i) the Borrower's existing arrangements with Xxxxxxx River
Laboratories, Inc. or Novartis Pharma [Borrower to supply correct name] or (iii)
the issuance of any equity securities of the Borrower, whether or not to any
affiliate thereof.
4.10. Change of Address, etc. The Borrower will not change its corporate
name or legal structure, nor will the Borrower change its chief executive
offices or principal place of business from the Premises described in ss.2.1(j),
nor will the Borrower keep any Collateral at any location other than the
Premises without, in each instance, giving the Bank at least 30 days' prior
written notice and providing all such financing statements, certificates and
other documentation as the Bank may reasonably request in order to maintain the
perfection and priority of the security interests granted or intended to be
granted pursuant to the Security Agreement. The Borrower will not change its
fiscal year or materially change its methods of financial reporting unless, in
each instance, prior written notice of such change is given to the Bank and
prior to such change the Borrower enters into amendments to this letter
agreement in form and substance reasonably satisfactory to the Bank in order to
preserve unimpaired the rights of the Bank and the obligations of the Borrower
hereunder.
4.11. Hazardous Waste. Except as provided below, the Borrower will not
dispose of or suffer or permit to exist any hazardous material or oil on any
site or vessel owned, occupied or operated by the Borrower or any Subsidiary of
the Borrower, nor shall the Borrower store (or permit any Subsidiary to store)
on any site or vessel owned, occupied or operated by the Borrower or any such
Subsidiary, or transport or arrange the transport of, any hazardous material or
oil (the terms "hazardous material", "oil", "site" and "vessel", respectively,
being used herein
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with the meanings given those terms in Mass. Gen. Laws, Ch. 21E or any
comparable terms in any comparable statute in effect in any other relevant
jurisdiction). The Borrower shall provide the Bank with written notice of (i)
the intended storage or transport of any hazardous material or oil by the
Borrower or any Subsidiary of the Borrower, (ii) any potential or known release
or threat of release of any hazardous material or oil at or from any site or
vessel owned, occupied or operated by the Borrower or any Subsidiary of the
Borrower, and (iii) any incurrence of any expense or loss by any government or
governmental authority in connection with the assessment, containment or removal
of any hazardous material or oil for which expense or loss the Borrower or any
Subsidiary of the Borrower may be liable. Notwithstanding the foregoing, the
Borrower and its Subsidiaries may use, store and transport, and need not notify
the Bank of the use, storage or transportation of, (x) oil in reasonable
quantities, as fuel for heating of their respective facilities or for vehicles
or machinery used in the ordinary course of their respective businesses and (y)
hazardous materials that are solvents, cleaning agents or other materials used
in the ordinary course of the respective business operations of the Borrower and
its Subsidiaries in reasonable quantities, as long as in any case the Borrower
or the Subsidiary concerned (as the case may be) has obtained and maintains in
effect any necessary governmental permits, licenses and approvals, complies with
all requirements of applicable federal, state and local law relating to such
use, storage or transportation, follows the protective and safety procedures
that a prudent businessperson conducting a business the same as or similar to
that of the Borrower or such Subsidiary (as the case may be) would follow, and
disposes of such materials (not consumed in the ordinary course) only through
licensed providers of hazardous waste removal services.
4.12. No Margin Stock. No proceeds of any Term Loan shall be used directly
or indirectly to purchase or carry any margin security.
4.13. Subordinated Debt. The Borrower will not directly or indirectly make
any optional or voluntary prepayment or purchase of Subordinated Debt or modify,
alter or add any provisions with respect to payment of Subordinated Debt. In any
event, the Borrower will not make any payment of any principal of or interest on
any Subordinated Debt at any time when there exists, or if there would result
therefrom, any Default or Event of Default hereunder.
V. DEFAULT AND REMEDIES
5.1. Events of Default. The occurrence of any one of the following events
shall constitute an Event of Default hereunder:
(a) The Borrower shall fail to make any payment of principal of or
interest on the Term Note on or before the date when due; or
(b) Any representation or warranty of the Borrower contained herein shall
at any time prove to have been incorrect in any material respect when made or
any representation or warranty made by the Borrower in connection with any Term
Loan shall at any time prove to have been incorrect in any material respect when
made; or
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(c) The Borrower shall default in the performance or observance of any
agreement or obligation under any of ss.ss.3.1, 3.3 (first sentence only), 3.6,
3.7, 3.8 or 3.9 or any provision of Article IV; or
(d) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this letter agreement and such default shall
continue unremedied for 30 days after written notice thereof shall have been
given to the Borrower; or
(e) Any default on the part of the Borrower or any Subsidiary of the
Borrower shall exist, and shall remain unwaived or uncured beyond the expiration
of any applicable notice and/or grace period, under any other contract,
agreement or undertaking now existing or hereafter entered into with or for the
benefit of the Bank (or any affiliate of the Bank); or
(f) Any default shall exist and remain unwaived or uncured with respect to
any Subordinated Debt of the Borrower or with respect to any instrument
evidencing, guaranteeing, securing or otherwise relating to any such
Subordinated Debt, or any such Subordinated Debt shall not have been paid when
due, whether by acceleration or otherwise, or shall have been declared to be due
and payable prior to its stated maturity, or any event or circumstance shall
occur which permits, or with the lapse of time or the giving of notice or both
would permit, the acceleration of the maturity of any Subordinated Debt by the
holder or holders thereof; or
(g) Any default shall exist and remain unwaived or uncured with respect to
any Indebtedness (for borrowed money) of the Borrower or any Subsidiary of the
Borrower in excess of $100,000 in aggregate principal amount or with respect to
any instrument evidencing, guaranteeing, securing or otherwise relating to any
such Indebtedness, or any such Indebtedness in excess of $100,000 in aggregate
principal amount shall not have been paid when due, whether by acceleration or
otherwise, or shall have been declared to be due and payable prior to its stated
maturity, or any event or circumstance shall occur which permits, or with the
lapse of time or the giving of notice or both would permit, the acceleration of
the maturity of any such Indebtedness by the holder or holders thereof; or
(h) The Borrower shall be dissolved, or the Borrower or any Subsidiary of
the Borrower shall become insolvent or bankrupt or shall cease paying its debts
as they mature or shall make an assignment for the benefit of creditors, or a
trustee, receiver or liquidator shall be appointed for the Borrower or any
Subsidiary of the Borrower or for a substantial part of the property of the
Borrower or any such Subsidiary, or bankruptcy, reorganization, arrangement,
insolvency or similar proceedings shall be instituted by or against the Borrower
or any such Subsidiary under the laws of any jurisdiction (except for an
involuntary proceeding filed against the Borrower or any Subsidiary of the
Borrower which is dismissed within 60 days following the institution thereof);
or
(i) Any execution or similar process shall be issued or levied against any
property of the Borrower or any Subsidiary and such execution or similar process
shall not be paid, stayed, released, vacated or fully bonded within 30 days
after its issue or levy; or
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(j) Any final uninsured judgment in excess of $100,000 shall be entered
against the Borrower or any Subsidiary of the Borrower by any court of competent
jurisdiction and shall not be paid or stayed within 30 days after entry thereof;
or
(k) The Borrower or any Subsidiary of the Borrower shall fail to meet its
minimum funding requirements under ERISA with respect to any employee benefit
plan (or other class of benefit which the PBGC has elected to insure) or any
such plan shall be the subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a
liability of the Borrower or any Subsidiary of the Borrower to the PBGC which,
in each case, in the reasonable opinion of the Bank would be reasonably likely
to have a material adverse effect upon the financial condition of the Borrower
or any such Subsidiary; or
(l) The Security Agreement or any other Loan Document shall for any reason
(other than due to payment in full of all amounts secured or evidenced thereby
or due to discharge in writing by the Bank) not remain in full force and effect;
or
(m) The security interest and liens of the Bank in and on any of the
Collateral described in the Security Agreement shall for any reason (other than
written release by the Bank) not be fully perfected liens and security
interests; or
(n) If; at any time, more than 50% of any class of voting stock of the
Borrower shall be held, of record and/or beneficially, by any Person or by any
"group" (as defined in the Securities Exchange Act of 1934, as amended, and the
regulations thereunder), other than as set forth on item 5.1(n) of the attached
Disclosure Schedule.
5.2. Rights and Remedies on Default. Upon the occurrence of any Event of
Default, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the following
rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Term Note then
outstanding, all interest accrued and unpaid thereon and all other amounts
payable under this letter agreement, and all other Indebtedness of the Borrower
to the Bank, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower.
(b) Terminate the arrangements for Term Loans provided for by this letter
agreement.
(c) Exercise all rights and remedies hereunder, under the Security
Agreement, under the Term Note and under each and any other agreement with the
Bank; and exercise all other rights and remedies which the Bank may have under
applicable law.
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5.3. Set-off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Bank is hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits and any
other Indebtedness at any time held or owing by the Bank or any affiliate
thereof to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to the Bank under
this letter agreement or otherwise, irrespective of whether or not the Bank
shall have made any demand hereunder and although said obligations, liabilities
or claims, or any of them, may then be contingent or unmatured and without
regard for the availability or adequacy of other collateral. ANY AND ALL RIGHTS
TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE EXERCISE BY THE
BANK OF ITS RIGHT OF SET-OFF UNDER THIS SECTION ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
VI. MISCELLANEOUS
6.1. Costs and Expenses. The Borrower agrees to pay, on demand and
delivery of a Bank Certificate therefor, all reasonable costs and expenses
(including, without limitation, reasonable legal fees) of the Bank in connection
with the preparation, execution and delivery of this letter agreement, the
Security Agreement, the Term Note and all other instruments and documents to be
delivered in connection with any Term Loan and any amendments or modifications
of any of the foregoing, as well as the reasonable costs and expenses
(including, without limitation, the reasonable fees and expenses of legal
counsel) incurred by the Bank in connection with preserving, enforcing or
exercising, upon default, any rights or remedies under this letter agreement,
the Security Agreement, the Term Note and all other instruments and documents
delivered or to be delivered hereunder or in connection herewith, all whether or
not legal action is instituted. In addition, the Borrower shall be obligated to
pay any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this letter agreement, the
Security Agreement, the Term Note and all other instruments and documents to be
delivered in connection with any Obligation. Any fees, expenses or other charges
which the Bank is entitled to receive from the Borrower under this Section shall
bear interest from that date which is 30 days after the date of any demand
therefor until the date when paid at a rate per annum equal to the sum of (i)
four (4%) percent per annum plus (ii) the highest per annum rate otherwise
payable under the Term Note (but in no event in excess of the maximum rate
permitted by then applicable law).
6.2. Facility Fee. With respect to the Term Loans, the Borrower is paying
to the Bank, at the date of execution and delivery of this letter agreement, a
non-refundable facility fee in the amount of $5,000. The fee described in this
Section is in addition to any balances and fees required by the Bank or any of
its affiliates in connection with any other services now or hereafter made
available to the Borrower.
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6.3. Other Agreements. The provisions of this letter agreement are not in
derogation or limitation of any obligations, liabilities or duties of the
Borrower under any of the other Loan Documents or any other agreement with or
for the benefit of the Bank. No inconsistency in default provisions between this
letter agreement and any of the other Loan Documents or any such other agreement
will be deemed to create any additional grace period or otherwise derogate from
the express terms of each such default provision. No covenant, agreement or
obligation of the Borrower contained herein, nor any right or remedy of the Bank
contained herein, shall in any respect be limited by or be deemed in limitation
of any inconsistent or additional provisions contained in any of the other Loan
Documents or any such other agreement.
6.4. Addresses for Notices, etc. All notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be mailed or
delivered to the applicable party at the address indicated below:
If to the Borrower:
BioTransplant Incorporated
Third Avenue, Building 00
Xxxxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Controller
If to the Bank:
Fleet National Bank
High Technology Division
Mail Code: MA OF XX0X
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Senior Vice President
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date received
or (ii) the date of delivery, refusal or non-delivery indicated on the return
receipt if deposited in the United States mails, sent postage prepaid, certified
or registered mail, return receipt requested, addressed as aforesaid.
6.5. Binding Effect: Assignment: Termination. This letter agreement shall
be binding upon the Borrower, its successors and assigns and shall inure to the
benefit of the Borrower and the Bank and their respective permitted successors
and assigns. The Borrower may not assign this letter agreement or any rights
hereunder without the express written consent of the Bank. The Bank may, in
accordance with applicable law, from time to time assign or grant
-26-
participations in this letter agreement, the Term Loans and/or the Term Note.
Without limitation of the foregoing generality,
(i) The Bank may at any time pledge all or any portion of its rights
under the Loan Documents (including any portion of the Term Note) to any
of the 12 Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement
thereof shall release the Bank from its obligations under any of the Loan
Documents.
(ii) The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the Borrower, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to lend
hereunder and/or any or all of the Term Loans held by the Bank hereunder.
In the event of any such grant by the Bank of a participating interest to
a Participant, whether or not upon notice to the Borrower, the Bank shall
remain responsible for the performance of its obligations hereunder and
the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations hereunder. The Bank may
furnish any information concerning the Borrower in its possession from
time to time to prospective assignees and Participants; provided that the
Bank shall require any such prospective assignee or Participant to agree
in writing to maintain the confidentiality of such information to the same
extent as the Bank would be required to maintain such confidentiality.
The Borrower may terminate this letter agreement and the financing
arrangements made herein by giving written notice of such termination to the
Bank; provided that no such termination will release or waive any of the Bank's
rights or remedies or any of the Borrower's obligations under this letter
agreement or any of the other Loan Documents unless and until the Borrower has
paid in full the Term Loans and all interest thereon and all fees and charges
payable in connection therewith.
6.6. Consent to Jurisdiction. The Borrower irrevocably submits to the
non-exclusive jurisdiction of any Massachusetts court or any federal court
sitting within The Commonwealth of Massachusetts over any suit, action or
proceeding arising out of or relating to this letter agreement and/or the Term
Note. The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding brought in such a court and any claim that any
such suit, action or proceeding has been brought in an inconvenient forum. The
Borrower agrees that final judgment in any such suit, action or proceeding
brought in such a court shall be enforced in any court of proper jurisdiction by
a suit upon such judgment, provided that service of process in such action, suit
or proceeding shall have been effected upon the Borrower in one of the manners
specified in the following paragraph of this ss.6.6 or as otherwise permitted by
law.
The Borrower hereby consents to process being served in any suit, action
or proceeding of the nature referred to in the preceding paragraph of this
ss.6.6 either (i) by mailing a copy
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thereof by registered or certified mail, postage prepaid, return receipt
requested, to it at its address set forth in ss.6.4 (as such address may be
changed from time to time pursuant to said ss.6.4) or (ii) by serving a copy
thereof upon it at its address set forth in ss.6.4 (as such address may be
changed from time to time pursuant to said ss.6.4).
6.7. Severability, In the event that any provision of this letter
agreement or the application thereof to any Person, property or circumstances
shall be held to any extent to be invalid or unenforceable, the remainder of
this letter agreement, and the application of such provision to Persons,
properties or circumstances other than those as to which it has been held
invalid and unenforceable, shall not be affected thereby, and each provision of
this letter agreement shall be valid and enforced to the fullest extent
permitted by law.
6.8. Governing Law. This letter agreement and the Term Note shall be
governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
6.9. Replacement Note. Upon receipt of an affidavit of an officer of the
Bank as to the loss, theft, destruction or mutilation of the Term Note or of any
other Loan Document which is not of public record and upon the Bank providing
reasonable indemnification for the Borrower (the Borrower agreeing that the
Bank's unsecured agreement of indemnity will be sufficient for this purpose)
and, in the case of any such mutilation, upon surrender and cancellation of the
Term Note or other Loan Document, the Borrower will issue, in lieu thereof, a
replacement Term Note or other Loan Document in the same principal amount (as to
the Term Note) and in any event of like tenor.
6.10. Usury. All agreements between the Borrower and the Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Term Note or otherwise, shall the
amount paid or agreed to be paid to the Bank for the use or the forbearance of
the Indebtedness represented by the Term Note exceed the maximum permissible
under applicable law. In this regard, it is expressly agreed that it is the
intent of the Borrower and the Bank, in the execution, delivery and acceptance
of the Term Note, to contract in strict compliance with the laws of The
Commonwealth of Massachusetts. If, under any circumstances whatsoever,
performance or fulfillment of any provision of the Term Note or any of the other
Loan Documents at the time such provision is to be performed or fulfilled shall
involve exceeding the limit of validity prescribed by applicable law, then the
obligation so to be performed or fulfilled shall be reduced automatically to the
limits of such validity, and if under any circumstances whatsoever the Bank
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced by the Term Note and not to the
payment of interest. The provisions of this ss.6.10 shall control every other
provision of this letter agreement and of the Term Note.
6.11. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY MUTUALLY WAIVE THE
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RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE TERM NOTE OR ANY OTHER LOAN
DOCUMENTS OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS LETTER AGREEMENT AND TO MAKE
TERM LOANS AS CONTEMPLATED HEREIN.
VII. DEFINED TERMS
7.1. Definitions, In addition to terms defined elsewhere in this letter
agreement, as used in this letter agreement, the following terms have the
following respective meanings:
"Bank Certificate" - A certificate signed by an officer of the Bank
setting forth any additional amount required to be paid by the Borrower to the
Bank pursuant to ss.1.4, ss.1.7, ss.1.8 or ss.6.1 of this letter agreement,
which certificate shall be submitted by the Bank to the Borrower in connection
with each demand made at any time by the Bank upon the Borrower with respect to
any such additional amount, and each such certificate shall, save for manifest
error, constitute presumptive evidence of the additional amount required to be
paid by the Borrower to the Bank upon each demand. A claim by the Bank for all
or any part of any additional amount required to be paid by the Borrower may be
made before and/or after the end of the Interest Period to which such claim
relates or during which such claim has arisen and before and/or after any
payment hereunder to which such claim relates. Each Bank Certificate shall set
forth in reasonable detail the basis for and the calculation of the claim to
which it relates.
"Business Day" - Any day which is not a Saturday, nor a Sunday nor a
public holiday under the laws of the United States of America or The
Commonwealth of Massachusetts applicable to a national bank or other day on
which banks in Boston, Massachusetts are authorized or directed to close;
provided however that if the applicable provision relates to a LIBOR Loan, then
the term "Business Day" shall not include any day on which dealings are not
carried on in the London interbank market or on which banks are not open for
business in London.
"Capital Base" - At any time, the sum of (i) the consolidated Tangible Net
Worth of the Borrower and Subsidiaries then existing, plus (ii) the principal
amount of Subordinated Debt of the Borrower then outstanding (nothing contained
herein being deemed to authorize the incurrence of any such Subordinated Debt).
"Cash-Equivalents" - Each of the following: (i) readily marketable direct
obligations of, or obligations guarantied by, the United States of America or
any agency thereof and entitled to the full faith and credit of the United
States of America, (ii) demand deposits with the Bank or with any other
commercial bank chartered by the United States or by any state and having
undivided capital and surplus of not less than $1,000,000,000, or (iii)
interests in mutual funds,
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substantially all of the assets of which shall be governmental obligations of
the type described in clause (i) of this sentence.
"COF Interest Rate" - A rate of interest per annum which is offered to the
Borrower with respect to its outstanding Term Loans pursuant to the second
paragraph of ss.1.4 and which is accepted by the Borrower as described therein.
"COF Loan" - The aggregate principal amounts of all Term Loans which bear
interest at a COF Interest Rate.
"COF Rate" - A fixed rate of interest per annum determined by the Bank as
described in the second paragraph of ss.1.4.
"Collateral" - All property now or hereafter owned by the Borrower or in
which the Borrower now or hereafter has any interest which is now or hereafter
described as "Collateral" in the Security Agreement.
"Default" - Any event or circumstance which, with the passage of time or
the giving of notice or both, could become an Event of Default.
"Earnings Available" - The consolidated Net Income (or consolidated Net
Loss) of the Borrower and Subsidiaries for any period, plus, without duplication
of any item, (i) all federal and state income taxes (but not taxes in the nature
of an ad valorem property tax or a sales or excise tax) paid or accrued with
respect to such period, (ii) all interest on any Indebtedness (whether senior
debt or subordinated debt) paid or accrued by the Borrower and/or any of its
Subsidiaries for such period and actually deducted on the consolidated books of
the Borrower for the purposes of computation of consolidated Net Income (or
consolidated Net Loss) for the period involved, and (iii) the amount of the
provision for depreciation and/or amortization actually deducted on the
consolidated books of the Borrower for the purposes of computation of
consolidated Net Income (or consolidated Net Loss) for the period involved.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended.
"Eurocurrency Liabilities" - Has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor), as in effect from time to time, or in any successor regulation
relating to the liabilities described in said Regulation D.
"Event of Default" - As defined in ss.5.1.
"FDIC" - The Federal Deposit Insurance Corporation or any successor
thereto.
"Fixed Interest Rate" - As to any LIBOR Loan, the applicable LIBOR
Interest Rate; and as to the COF Loan, the applicable COF Interest Rate.
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"Fixed Rate Loan" - All or any portion of any Term Loan which bears
interest at a Fixed Interest Rate.
"Floating Rate" - As defined in ss.1.4.
"Floating Rate Loan" - All or any portion of any Term Loan which bears
interest at a rate calculated with reference to the Prime Rate.
"Impositions" - All present and future taxes, levies, duties, impositions,
deductions, charges and withholdings applicable to the Bank with respect to any
Fixed Rate Loan, excluding, however, any taxes imposed directly on the Bank's
income and any franchise taxes imposed on it by the jurisdiction under the laws
of which the Bank is organized or any political subdivision thereof.
"Indebtedness" - All obligations of a Person, whether current or
long-term, senior or subordinated, which in accordance with generally accepted
accounting principles would be included as liabilities upon such Person's
balance sheet at the date as of which Indebtedness, is to be determined, and
shall also include guaranties, endorsements (other than for collection in the
ordinary course of business) or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement, contingent
or otherwise, to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"Interest Payment Date" - As to each LIBOR Loan, the last day of Interest
Period applicable to such LIBOR Loan.
"Interest Period" - As to each LIBOR Loan, the period commencing with the
date of the making of such LIBOR Loan and ending three months thereafter;
provided that (A) any such Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day occurs in a new calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day, (B) any
such Interest Period which begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period is to
end shall end on the last Business Day of such calendar month, and (C) no
Interest Period may be selected as to any principal amount of any Term Loan if
such Interest Period would end after the regularly-scheduled due date of such
principal amount.
"LIBOR" - With respect to each Interest Period for a LIBOR Loan, that rate
per annum (rounded upward, if necessary, to the nearest 1/32nd of one percent)
which represents the offered rate for deposits in U.S. Dollars, for a period of
time comparable to such Interest Period, which appears on the Telerate page 3750
as of 11:00 a.m. (London time) on that day that is two (2) London Banking Days
preceding the first day of such Interest Period; provided, however, that if the
rate described above does not appear on the Telerate System on any applicable
interest determination date, LIBOR for such Interest Period shall be the rate
(rounded upwards as
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described above, if necessary) for deposits in dollars for a period
substantially equal to such Interest Period shown on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on that day that is two
(2) London Banking Days prior to the beginning of such Interest Period. "London
Banking Day" shall mean any date on which commercial banks are open for business
in London. If both the Telerate and Reuters systems are unavailable, then LIBOR
for any Interest Period will be determined on the basis of the offered rates for
deposits in U.S. Dollars for a period of time comparable to such Interest Period
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m., London time, on that day that is two (2) London
Banking Days preceding the first day of such Interest Period, as selected by the
Bank. The principal London office of each of four major London banks will be
requested to provide a quotation of its U.S. Dollar deposit offered rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. Dollars to leading European banks for a period of time
comparable to such Interest Period offered by major banks in New York City at
approximately 11:00 a.m., New York City time, on that day that is two London
Banking Days preceding the first day of such Interest Period. In the event that
the Bank is unable to obtain any such quotation as provided above, it will be
deemed that LIBOR for the proposed Interest Period cannot be determined. The
Bank shall give prompt notice to the Borrower of LIBOR as determined for each
LIBOR Loan and such notice shall be deemed presumptively correct, absent
manifest error.
"LIBOR Interest Rate" - For any Interest Period, an interest rate per
annum, expressed as a percentage, determined by the Bank pursuant to the
following formula:
*LIR = LIBOR + 2.25
----------
[1.00 - RR]
Where LIR = LIBOR Interest Rate
LIBOR = See definition of LIBOR
RR = Reserve Rate
*LIR and each component thereof to be rounded upwards to
the next higher 1/32nd of 1%
The LIBOR Interest Rate will be adjusted during any Interest Period to reflect
any change in the Reserve Rate during such Interest Period.
"LIBOR Loan" - All or any portion of a Term Loan which bears interest at a
LIBOR Interest Rate.
"Loan Documents" - Each of this letter agreement, the Term Note, the
Security Agreement and each other instrument, document or agreement evidencing,
securing,
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guaranteeing or relating in any way to any of the Term Loans, all whether now
existing or hereafter arising or entered into.
"London" - The City of London in England.
"Net Income" (or "Net Loss") - The book net income (or book net loss, as
the case may be) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with
generally accepted accounting principles consistently applied.
"Net Quick Assets" - Such current assets of the Borrower as consist of
cash, Cash-Equivalents, Readily-Marketable Securities and outstanding
Receivables (net of appropriate reserves).
"Obligations" - All Indebtedness, covenants, agreements, liabilities and
obligations, now existing or hereafter arising, made by the Borrower with or for
the benefit of the Bank or owed by the Borrower to the Bank in any capacity.
"PBGC" - The Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" - An individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Premises" - As defined in Subsection 2.1(j).
"Prime Rate" - That variable rate of interest per annum designated by the
Bank, from time to time, as being its prime rate, it being understood that such
rate is merely a reference rate and does not necessarily represent the lowest or
best rate being charged to any customer.
"Qualifying Equipment" - Equipment purchased by the Borrower for use in
the Borrower's business which meets all of the following criteria: (i) such
equipment consists of one of the items shown on the equipment list heretofore
delivered by the Borrower to the Bank or has otherwise been approved by the Bank
for use in supporting a Term Loan (such approval not to be unreasonably
withheld), (ii) each item of such equipment has been delivered to and installed
at the Premises and has become fully operational, and (iii) the Borrower has
paid in full for each item of such equipment (or is paying for each such item
substantially simultaneously with the making of the relevant Term Loan) and
holds title to same, free of all interests and claims of any other Person (other
than the security interest of the Bank).
"Qualifying Leasehold Improvements" - Fixtures and leasehold improvements
purchased by the Borrower which meet all of the following criteria: (i) such
fixtures and leasehold improvements consist of one or more of the items shown on
the equipment list heretofore delivered by the Borrower to the Bank or have
otherwise been approved by the Bank for use in
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supporting a Term Loan, (ii) each item of such fixtures and leasehold
improvements has been built into or installed at the Premises and has become
fully operational, and (iii) the Borrower has paid in full for each item of such
fixtures and leasehold improvements (or is paying for each such item
substantially simultaneously with the making of the relevant Term Loan) and
holds title to same, free of all liens and interests of any other Person (other
than the security interest of the Bank pursuant to the Security Agreement and
except that items so built into the relevant premises as to become an integral
part of the real estate may become the property of the owner of such premises).
"Readily-Marketable Securities" - Such securities as are publicly traded
on the New York Stock Exchange, on the American Stock Exchange or on the NASDAQ
National Market System.
"Receivables" - As to any Person, all of such Person's present and future
accounts receivable for goods sold or for services rendered.
"Reserve Rate" - The aggregate rate, expressed as a decimal, at which the
Bank would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulation
relating to such reserve requirements) against Eurocurrency Liabilities, as well
as any other reserve required of the Bank with respect to the LIBOR Loans. The
LIBOR Interest Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Rate.
"SEC" - The Securities and Exchange Commission or any successor thereto.
"Subordinated Debt" - Any Indebtedness of the Borrower which is expressly
subordinated, pursuant to a subordination agreement in form and substance
satisfactory to the Bank, to all Indebtedness now or hereafter owed by the
Borrower to the Bank.
"Subsidiary" - Any corporation or other entity of which the Borrower
and/or any of its Subsidiaries, directly or indirectly, owns, or has the right
to control or direct the voting of, fifty (50%) percent or more of the
outstanding capital stock or other ownership interest having general voting
power (under ordinary circumstances).
"Tangible Net Worth" - An amount equal to the total assets of any Person
(excluding (i) the total intangible assets of such Person, (ii) any minority
interests in Subsidiaries and (iii) any assets representing amounts due from any
officer or employee of such Person or from any Subsidiary of such Person) minus
the total liabilities of such Person. Total intangible assets shall be deemed to
include, but shall not be limited to, the excess of cost over book value of
acquired businesses accounted for by the purchase method, formulae, trademarks,
trade names, patents, patent rights and deferred expenses (including, but not
limited to, unamortized debt discount and expense, organizational expense,
capitalized software costs and experimental and development expenses).
-34-
"Total Liabilities" - All Indebtedness of the Borrower and/or any
Subsidiary of the Borrower (secured or unsecured, senior or subordinated) which
would properly be included in liabilities shown on a consolidated balance sheet
of the Borrower prepared in accordance with generally accepted accounting
principles.
"Unencumbered Cash Balance" - At any time, the total of all cash,
Cash-Equivalents and Readily-Marketable Securities of the Borrower which are not
subject to any pledge, lien, encumbrance or other similar restriction, other
than in favor of the Bank.
Any defined term used in the plural preceded by the definite article shall
be taken to encompass all members of the relevant class. Any defined term used
in the singular preceded by "any" shall be taken to indicate any number of the
members of the relevant class.
-35-
This letter agreement is executed, as an instrument under seal, as of the
day and year first above written.
Very truly yours,
BIOTRANSPLANT INCORPORATED
By ____________________________
Name:
Title:
Accepted and agreed:
FLEET NATIONAL BANK
By ____________________________
Name:
Title:
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DISCLOSURE SCHEDULE
Item 2.1(a) Jurisdictions in which Borrower is qualified
Item 2.1(b) 5% Stockholders
Item 2.1(e) Litigation schedule
Item 2.1(j) Collateral locations; record owner of each location
Item 4.1 Existing Indebtedness
Item 4.2 Existing Liens
Item 4.3 Existing Guaranties
Item 4.6 Existing Investments
Item 5.1(n) Permitted 50% Stockholders
SECURITY AGREEMENT (EQUIPMENT)
SECURITY AGREEMENT (EQUIPMENT) dated as of August 10, 1999 by and between
BioTransplant Incorporated, a Delaware corporation (the "Debtor") and Fleet
National Bank (the "Secured Party").
WHEREAS, the Debtor and the Secured Party are parties to that certain
letter agreement of even date herewith (the "Letter Agreement") pursuant to
which the Secured Party may from time to time advance to the Debtor certain term
loans (the "Term Loans") for the purpose of acquisition of certain items of
equipment and leasehold improvements; and
WHEREAS, the Term Loans are evidenced by the Debtor's $1,000,000 face
principal amount promissory note of even date herewith (the "Term Note") payable
to the order of the Secured Party; and
WHEREAS, as a condition to the making of any Term Loan, the Secured Party
requires that the Debtor grant to the Secured Party a security interest in the
Collateral (as defined in Section 1);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby act and agree
as follows:
1. Definitions. As used in this Security Agreement, the following
terms have the following meanings:
"Collateral" - All of the Equipment and all of the following:
(a) all warranties, licenses, contract rights and other rights and
interests (other than any such warranties, licenses, contract rights or
other rights or interests which are by their terms non-assignable)
pertaining to any of the Equipment and/or the use thereof, all whether now
or hereafter existing or owned by the Debtor or in which the Debtor shall
now or hereafter have any interest; and
(b) all liens, guaranties, securities, rights, remedies and privileges
pertaining to, and all proceeds (including, without limitation, insurance
proceeds) of and all accessions to, any of the foregoing items of
Collateral, all whether now or hereafter existing or owned by the Debtor
or in which the Debtor shall now or hereafter have any interest.
"Equipment" - All of the items listed on Exhibit A hereto, as same may be
from time to time supplemented, and all accessions, additions, substitutions or
replacements to or for any of such items and all attachments, components,
accessories, parts and supplies relating thereto; all whether affixed or
moveable and wherever located, and whether now existing and owned by the Debtor
or herewith arising or acquired. As used herein, "Equipment" may include items
of
BIOTRANSPLANT
equipment (as defined in the UCC), fixtures (as defined in the UCC) and
leasehold improvements.
"Event of Default" - The occurrence of any one or more of the following:
(i) any "Event of Default" as defined in any Loan Document; or (ii) any
representation or warranty by the Debtor contained in this Security Agreement
shall prove to have been inaccurate or incomplete in any material respect on the
date when made; or (iii) the failure or default by the Debtor under any of
Subsections 4(a), 4(d), 4(e) or 4(g); or (iv) any failure by the Debtor to
perform or observe any of its other obligations or agreements under this
Security Agreement, which failure remains uncured for thirty (30) days after
notice thereof has been given to the Debtor.
"Lien" - Any lien, charge, encumbrance or security interest, whether
voluntary or involuntary.
"Loan Documents" - This Security Agreement, the Letter Agreement, the Term
Note and any other instruments, documents or other agreements made by the Debtor
with or in favor of the Secured Party in connection with any Term Loan, all
whether now existing or hereafter entered into or delivered. Notwithstanding
anything to the contrary contained herein, the term "Loan Documents" will not be
deemed to include the letter agreement dated September 5, 1997 between the
Secured Party and the Debtor, the Security Agreement (Equipment) dated September
5, 1997 from the Debtor to the Secured Party nor the $500,000 face principal
amount promissory note dated September 5, 1997 issued by the Debtor to the
Secured Party.
"Obligations" - Each Term Loan, the Term Note and any and all other
indebtedness, liabilities or obligations of the Debtor, joint or several, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, to or for the benefit of the Secured Party, which arise out
of or relate to any Term Loan.
"Person" - As defined in the Letter Agreement.
"Premises" - All locations (whether owned, leased, operated or otherwise
used by the Debtor) in which any of the Equipment is or will be located, all of
which are listed on Exhibit B hereto together with the record owner of each such
location.
"Security Agreement" - This Security Agreement (Equipment), as same may be
from time to time amended.
"UCC" - The Uniform Commercial Code as in effect from time to time in
Massachusetts, except that with respect to Collateral located or deemed located
in any other jurisdiction, such term shall refer to the Uniform Commercial Code
as in effect in each such other jurisdiction.
Any defined term used in the plural preceded by the definite article shall
be taken to encompass all members of the relevant class. Any defined term used
in the singular preceded by "any" shall be taken to indicate any number of the
members of the relevant class.
-2-
BIOTRANSPLANT
2. Grant of Security Interest. As security for the full and timely
satisfaction of the Obligations, the Debtor hereby grants to the Secured Party a
continuing security interest in the Collateral, and in each item thereof, all to
the maximum extent that the Debtor has an interest therein or at any time in the
future obtains such an interest.
3. Representations and Warranties. The Debtor represents and warrants to
the Secured Party that:
(a) The execution, delivery and performance by the Debtor of this Security
Agreement, including the security interests herein granted or intended to be
granted, have been duly authorized by all necessary corporate and other action
and do not and will not:
(i) require any waiver, consent or approval of the Debtor's
shareholders, any governmental authority or any other Person;
(ii) contravene the Debtor's charter or by-laws;
(iii) violate any provision of, or require any filing (other than the
filing of financing statements under the UCC with respect to the security
interests herein granted), registration, consent or approval under, any
law, rule, regulation (including, without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Debtor;
(iv) result in a breach of or constitute a default or require any
waiver or consent under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which the Debtor is party
or by which it or any of its properties are bound; or
(v) result in, or require, the creation or imposition of any Lien
(other than as created hereunder) upon or with respect to any of the
properties now owned or hereafter acquired by the Debtor.
(b) This Security Agreement has been duly executed and delivered on behalf
of the Debtor and is a legal, valid and binding obligation of the Debtor.
(c) No Obligation has been or will hereafter be incurred on account of
personal, family or household purposes.
(d) The principal place of business and chief executive offices of the
Debtor are located at Third Avenue, Building 75, Charlestown Navy Yard,
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 and all of the books and records of the Debtor
are kept at that location. Except as described on Exhibit B hereto, none of the
Collateral is kept at any other location. The Debtor is a tenant in its
-3-
BIOTRANSPLANT
Premises and the record owner of each location constituting the Premises is as
set forth on Exhibit B hereto.
(e) The Debtor does not conduct business under any trade name or style
other than its corporate name.
(f) The Debtor owns the Collateral free and clear of all Liens except (i)
Liens in favor of the Secured Party, and (ii) the Lien of taxes not yet due and
payable or contested in good faith by the Debtor by appropriate proceedings
which serve to stay the enforcement thereof and as to which the Debtor has
established and is maintaining adequate reserves.
(g) This Agreement, coupled with the filing of appropriate UCC financing
statements with appropriate public offices and the giving of value by the
Secured Party, creates in favor of the Secured Party a valid and perfected first
priority security interest in all of the Collateral.
(h) The Equipment has been accepted by the Debtor and is in good repair,
working order and condition, and the Debtor has not asserted (and the Debtor
knows of no basis for) any material warranty or other claim against any seller
or manufacturer thereof.
4. Covenants. (a) Payment and Performance. The Debtor shall
unconditionally pay when due or within any applicable grace period (or on
demand, if so payable) each Obligation and shall duly and punctually perform
each Obligation.
(b) Further Assurances. The Debtor will from time to time at its expense,
upon the Secured Party's request, promptly execute and deliver all such further
instruments and documents, and take all such further action, as the Secured
Party may reasonably request in order to perfect and/or protect the security
interests granted or intended to be granted hereby or to enable the Secured
Party to enforce its rights and remedies hereunder with respect to any
Collateral. Without limitation of the foregoing, as a precondition to the making
of each Term Loan, the Debtor will execute and deliver to the Secured Party (i)
an agreement in form and substance satisfactory to the Secured Party amending
Exhibit A hereto by adding to same (without deleting any items of Equipment
previously shown thereon) a list of the additional items of equipment and/or
leasehold improvements to be purchased (or with respect to which the Debtor is
to be reimbursed) with the proceeds of such Term Loan and all such additional
items will thereupon be deemed included in the Equipment described in this
Security Agreement, (ii) UCC financing statements which will be sufficient (when
filed) to give the Secured Party a fully perfected first security interest in
all of such additional items, and (iii) a certificate of the Debtor confirming
that the representation and warranties contained in Section 3 above remain true
and correct as of the date of such Term Loan and taking into account such
additional items of equipment and/or leasehold improvements.
(c) Information. The Debtor shall maintain complete and accurate records
of all of its Collateral and its dealings with respect thereto in accordance
with generally accepted accounting principles applied on a consistent basis.
Upon reasonable notice from time to time at reasonable
-4-
times during normal business hours (and at any time and without notice after the
occurrence and during the continuance of an Event of Default), the Debtor shall
permit the Secured Party and its employees, representatives and agents access to
the Premises and the Secured Party shall have the right to inspect the
Collateral and make copies of such books and records. The Debtor shall from time
to time furnish to the Secured Party such information concerning the Collateral
as the Secured Party may reasonably request, and will promptly notify the
Secured Party if any representation or warranty of the Debtor in Section 3
hereof becomes inaccurate, incomplete or misleading in any material respect.
(d) Insurance. The Debtor shall at its expense maintain fire and extended
coverage insurance policies insuring the Equipment, with responsible and
reputable insurance companies or associations, in amounts sufficient to provide
for full replacement cost coverage (with agreed amount endorsement), and in any
event not less than the amount necessary to avoid co-insurance. All such
insurance shall name the Secured Party as secured party and first loss payee.
All policies of such insurance shall contain a provision forbidding cancellation
of such insurance either by the carrier or by the insured without at least 15
days' prior written notice to the Secured Party. The Debtor shall upon the
Secured Party's request deliver to the Secured Party duplicate policies of such
insurance and/or binders, certificates or other evidence thereof (with evidence
of premiums having been paid) from the insurer or a reputable insurance broker.
In case of any casualty, loss or damage to which the following sentence is not
applicable, the Debtor shall, in its sole discretion, either (a) make the
necessary repairs or replacements and shall be entitled to be reimbursed
therefor from and to the extent of the proceeds of such insurance or (b) have
all such insurance proceeds paid to the Secured Party for application in the
order provided in Subsection 8(c) below (provided that the option set forth in
this clause (b) cannot be elected unless such insurance proceeds are sufficient,
or the Debtor makes other payments, so that the Term Loan (or portion thereof)
which relates to the damaged or destroyed items of Equipment is paid in full).
Upon the occurrence and during the continuance of any Event of Default, all
insurance payments in respect of Equipment shall be paid and applied as
specified in Subsection 8(c) below.
(e) Title; Sale or Removal of Collateral. The Debtor shall not create or
suffer to exist any Lien in or on any of the Collateral, except (i) the Lien of
the Secured Party and (ii) the Lien of taxes not yet due and payable or
contested in good faith by the Debtor by appropriate proceedings which serve to
stay the enforcement thereof and as to which the Debtor has established and is
maintaining adequate reserves. The Debtor shall not, without the Secured Party's
prior written approval, sell, transfer or remove any item of Collateral from the
Premises or otherwise dispose of any of the Collateral; provided that the Debtor
may move the Collateral to any other location if the Debtor gives the Secured
Party not less than thirty (30) days' prior written notice of such move and
provides all such financing statements and other documentation as may be
necessary to protect, perfect and/or confirm the first priority security
interests granted or intended to be granted in this Security Agreement (the
Debtor agreeing to use its best efforts to obtain reasonably satisfactory
landlord's waivers). The Debtor (i) shall maintain books and records relating to
Collateral only as described in Subsection 3(d) above, (ii) will not move its
chief executive office or principal place of business from the location
described in Subsection 3(d) above, (iii) will not change its name or identity
(or use any trade name or style except as
-5-
described in Subsection 3(e) above), and (iv) will not make or suffer to be made
any change in its corporate structure except, in each case, in compliance with
the requirements of Section 4.10 of the Letter Agreement.
(f) Maintenance and Use of Equipment. The Debtor will maintain all
Equipment in good order and condition, making all necessary repairs thereto. The
Debtor will not suffer any waste or destruction of any Equipment, nor use any
Equipment in violation of any applicable law or any insurance thereon. The
Debtor will promptly restore or replace any Equipment damaged or destroyed by
fire or other casualty, or, at its option, may have all insurance proceeds
relating to such damaged or destroyed items of Equipment paid to the Secured
Party for application in the order provided in Subsection 8(c) below (provided
that such option not to restore and replace Equipment cannot be elected unless
such insurance proceeds are sufficient, or the Debtor makes other payments, so
that the Term Loan (or portion thereof) which relates to the damaged or
destroyed items of Equipment is paid in full). The Debtor shall promptly furnish
to the Secured Party a statement as to any casualty, loss or damage in excess of
$10,000 to any Equipment.
(g) Taxes. The Debtor promptly shall pay, as they become due and payable,
all taxes, unemployment contributions and all other charges of any kind or
nature levied, assessed or claimed against the Debtor or the Collateral by any
Person whose claim could result in a Lien upon any of the Collateral, except to
the extent such taxes, contributions or other charges are being contested in
good faith and by appropriate proceedings which operate as a matter of law to
stay the enforcement of any such Lien and adequate reserves have been
established and are maintained by the Debtor.
5. Secured Party Appointed Attorney-in-Fact. (a) The Debtor hereby
irrevocably appoints the Secured Party as the Debtor's attorney-in-fact, but
effective only after the occurrence and during the continuance of any Event of
Default, with full authority in the name, place and stead of the Debtor, from
time to time in the Secured Party's discretion, to take any action and to
execute any instrument which the Secured Party may deem necessary or advisable
to accomplish the purposes of this Security Agreement, including, without
limitation, to obtain and adjust any insurance required pursuant to this
Security Agreement and/or the Letter Agreement.
(b) The power of attorney granted pursuant to this Section 5 is a power
coupled with an interest and shall be irrevocable until the Obligations are paid
indefeasibly in full.
6. Secured Party May Perform. If the Debtor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of the Secured Party incurred in connection
therewith shall be payable by the Debtor as provided under Section 9 hereof,
with interest as provided in the Letter Agreement.
7. Secured Party's Duties. The powers conferred on the Secured Party
hereunder are solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral actually in its possession and the
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accounting for monies actually received by it hereunder, the Secured Party shall
have no duty as to any Collateral. The Secured Party shall not be liable for any
acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Collateral, except for those arising out of or in connection with the Secured
Party's negligence, gross negligence or willful misconduct. The Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
like property, it being understood that the Secured Party shall be under no
obligation to take any necessary steps to collect any Collateral or preserve
rights against prior parties or any other rights pertaining to any Collateral,
but may do so at its option, and all reasonable expenses incurred in connection
therewith shall be for the sole account of the Debtor and shall be added to the
Obligations.
8. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the UCC and also may
without limitation:
(i) require the Debtor to, and the Debtor hereby agrees that it will, at
its expense and the upon reasonable request of the Secured Party, forthwith,
assemble all or any part of the Collateral as directed by the Secured Party
and make it available to the Secured Party at a place or places to be
designated by the Secured Party which is or are reasonably convenient to the
respective parties;
(ii) itself or through agents, without notice to any Person and without
judicial process of any kind, enter the Debtor's Premises (or any other
premises or location where any Collateral may be) and take physical
possession of any Collateral or disassemble, render unusable and/or repossess
any of the same, and the Debtor shall peacefully and quietly yield up and
surrender the same; and
(iii) without notice except as specified below, sell, lease, assign, grant
an option or options to purchase or otherwise dispose of the Collateral or
any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as are
commercially reasonable.
(b) The Secured Party may maintain possession of Collateral at the
Premises or remove the same or any part thereof to such places as the Secured
Party may elect. The Debtor agrees that, to the extent notice of sale shall be
required by law, 10 days' prior written notice to the Debtor shall constitute
reasonable notification. Notice of any public or private sale shall be
sufficient if it describes the Collateral to be sold in general terms, stating
the items or amounts thereof and the location and nature thereof, and (as to a
notice of public sale only) is published at least once in any newspaper selected
by the Secured Party and of general circulation in the locale
-7-
of such sale, not less than 10 days prior to the sale. The Secured Party shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given and may be the purchaser at any such sale, if public, to the
extent permitted by applicable law, free from any right of redemption. The
Debtor shall be fully liable for any deficiency. The Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(c) Any cash or other proceeds received by the Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral, shall be applied by the Secured Party in the following order of
priorities:
First, to the payment of the reasonable costs and expenses of any sale or
other reasonable expenses (including, without limitation, reasonable legal fees
and expenses), liabilities and advances made or incurred by the Secured Party in
connection therewith or referred to in Section 9 or provided for by the Letter
Agreement;
Next, to payment of interest on and principal of the Term Note and other
charges relating thereto (in such order as may be provided for in the Letter
Agreement or as otherwise determined by the Secured Party);
Next, to the payment of any other Obligations; and
Finally, after payment in full of all Obligations, to the payment to the
Debtor or its successors or assigns, or to whomsoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct, of any
surplus then remaining of such cash.
9. Expenses and Indemnification. The Debtor agrees to reimburse the
Secured Party for and to indemnify and hold harmless the Secured Party from and
against any and all liability, loss, damage, and all costs or expenses
(including, without limitation, reasonable fees and disbursements of counsel,
experts and agents) imposed on, incurred by or asserted against the Secured
Party arising out of or in connection with: preparation of this Security
Agreement, the documents relating hereto, or amendments, modifications or
waivers hereof; taxes (excluding any corporate excise or income taxes payable by
the Secured Party by reason hereof or otherwise) and other governmental charges
in connection with this Security Agreement and the Collateral; exercise of the
Secured Party's rights with respect to this Security Agreement and the
Collateral; any enforcement, collection or other proceedings resulting therefrom
or any negotiations or other measures to preserve the Secured Party's rights
hereunder; the custody or preservation of, or the sale of or other realization
upon, any of the Collateral; any failure by the Debtor to perform or observe any
of the provisions of this Security Agreement; any investigative, administrative
or judicial proceeding (whether or not the Secured Party is designated a party
thereto) relating to or arising out of this Security Agreement; or any
bankruptcy, insolvency or other similar proceeding relating to the Debtor,
unless the Secured Party was at fault with respect to such liability, loss,
damage, cost or expense or acted in bad faith with respect thereto. The
-8-
Debtor's obligations under the preceding sentence shall constitute Obligations
and shall survive the termination of this Security Agreement.
10. Termination. This Security Agreement shall remain in full force and
effect so long as any Obligation remains outstanding. Upon the satisfaction in
full of all of the monetary Obligations, the Secured Party shall, at the
Debtor's expense, promptly execute and deliver to the Debtor all instruments of
assignment or otherwise as may be necessary to establish full title of the
Debtor to any of the Collateral, subject to any prior sale or other disposition
thereof pursuant to Section 8. Until then, this Security Agreement shall itself
constitute conclusive evidence of the validity, effectiveness and continuing
force hereof, and any Person may rely hereon.
11. Waiver; Rights Cumulative. No failure to exercise and no delay in
exercising, on the part of the Secured Party, any right or remedy hereunder or
otherwise shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right or remedy. Waiver by the Secured Party of any right or remedy
on any one occasion shall not be construed as a bar to or waiver thereof or of
any other right or remedy on any future occasion. The Secured Party's rights and
remedies hereunder and under the Loan Documents shall be cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
The provisions of this Security Agreement are not in derogation or
limitation of any obligations, liabilities or duties of the Debtor under any of
the other Loan Documents or any other agreement with or for the benefit of the
Secured Party. No inconsistency in default provisions between this Security
Agreement and any of the other Loan Documents or any such other agreement will
be deemed to create any additional grace period or otherwise derogate from the
express terms of each such default provision. No covenant, agreement or
obligation of the Debtor contained herein, nor any right or remedy of the
Secured Party contained herein, shall in any respect be limited by or be deemed
in limitation of any inconsistent or additional provisions contained in any of
the other Loan Documents or any such other agreement.
12. Severability. In the event that any provision of this Security
Agreement or the application thereof to any Person, property or circumstance
shall be held to any extent to be invalid or unenforceable, the remainder of
this Security Agreement and the application of such provision to Persons,
properties and circumstances other than those as to which it has been held
invalid or unenforceable shall not be affected thereby, and each provision of
this Security Agreement shall be valid and enforceable to the fullest extent
permitted by law.
13. Binding Effect; Assignment. This Security Agreement shall be binding
upon the Debtor and its successors and assigns and shall inure to the benefit of
the Debtor and the Secured Party and their respective successors and assigns.
14. Notices. All notices and other communications under or relating to
this Security Agreement shall be given in the manner and to the addresses of the
parties provided for in ss.6.4 of the Letter Agreement.
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15. Headings. Section headings in this Security Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Security Agreement for any other purpose.
16. Governing Law. This Security Agreement shall be governed by, and
construed and enforced in accordance with, the laws of The Commonwealth of
Massachusetts, except that the creation, perfection and enforcement of security
interests in any Collateral located in jurisdictions other than Massachusetts
will be governed by the laws of the respective jurisdictions in which such
Collateral is located.
IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this
Security Agreement to be executed, as an instrument under seal, by their
respective officers thereunto duly authorized, as of the date first above
written.
BIOTRANSPLANT INCORPORATED
By_____________________________
Name:
Title:
FLEET NATIONAL BANK
By_____________________________
Name:
Title:
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EXHIBIT A - Equipment list
EXHIBIT B - Locations in which Equipment is located, including owners of
real estate
EXHIBIT A
EQUIPMENT LIST
Equipment list for first Term Loan attached.
Supplemental lists to be provided for each subsequent Term Loan.
EXHIBIT B
COLLATERAL LOCATIONS
Location Record Owner
-------- ------------
Third Avenue, Building 75 The Boston Redevelopment
Charlestown Navy Yard Authority (ground lessee:
Xxxxxxxxxxx, XX 00000 BioLease, Inc.)
PROMISSORY NOTE
$1,000,000.00 Boston, Massachusetts
August 10, 1999
FOR VALUE RECEIVED, the undersigned BioTransplant Incorporated, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of FLEET
NATIONAL BANK (the "Bank") the principal amount of One Million and 00/100
($1,000,000.00) Dollars or such portion thereof as may be advanced by the Bank
pursuant to ss.1.2 of that certain letter agreement of even date herewith
between the Bank and the Borrower (the "Letter Agreement") and remains
outstanding from time to time hereunder ("Principal"), with interest, at the
rate hereinafter set forth, on the daily balance of all unpaid Principal, from
the date hereof until payment in full of all Principal and interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times (except as
provided in the next following sentence) be equal to the Prime Rate, as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law), with a change in the aforesaid rate of
interest to become effective on the same day on which any change in the Prime
Rate is effective; provided, however, that (A) if a LIBOR Interest Rate (as
defined in the Letter Agreement) shall have become applicable to all or any
portion of the outstanding Principal for any Interest Period (as defined in the
Letter Agreement), then interest on such Principal or portion thereof shall
accrue at said applicable LIBOR Interest Rate for such Interest Period and shall
be payable on the Interest Payment Date (as defined in the Letter Agreement)
applicable to such Interest Period, and (B) if a COF Interest Rate (as defined
in the Letter Agreement) shall have become applicable to the outstanding
Principal, then interest on the outstanding Principal shall accrue at said COF
Interest Rate and shall be paid on the first day of each month. Overdue
Principal and, to the extent permitted by law, overdue interest shall bear
interest at a fluctuating rate per annum which at all times shall be equal to
the sum of (i) four (4%) percent per annum plus (ii) the per annum rate
otherwise payable under this note with respect to the Principal which is overdue
(or as to which such interest is overdue) (but in no event in excess of the
maximum rate permitted by then applicable law), compounded monthly and payable
on demand. As used herein, "Prime Rate" means that variable rate of interest per
annum designated by the Bank from time to time as its prime rate, it being
understood that such rate is merely a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer. If the entire
amount of any required Principal and/or interest is not paid within ten (10)
days after the same is due, the Borrower shall pay to the Bank a late fee equal
to five percent (5%) of the required payment.
All outstanding Principal shall be repaid by the Borrower to the Bank in
36 equal consecutive monthly installments (each in an amount equal to 1/36th of
the total Principal outstanding at the close of business on December 31, 1999),
such installments to commence
January 31, 2000 and to continue thereafter on the last Business Day (as defined
in the Letter Agreement) of each month through and including December 31, 2002,
on which date all then remaining Principal and all interest accrued but unpaid
thereon will be due and payable in full.
The Borrower may at any time and from time to time prepay all or any
portion of any Term Loan (as defined in the Letter Agreement), but, as to Fixed
Rate Loans (as defined in the Letter Agreement), only at the times and in the
manner, and (under certain circumstances) with the additional payments, provided
for in the Letter Agreement. Any prepayment of Principal, in whole or in part,
will be without premium or penalty (but, in the case of Fixed Rate Loans, may
require payment of additional amounts, as provided for in the Letter Agreement).
Each Principal prepayment shall be accompanied by payment of all interest on the
prepaid amount accrued but unpaid to the date of payment. Any partial prepayment
of Principal will be applied against Principal installments in inverse order of
normal maturity.
Payments of both Principal and interest shall be made, in lawful money of
the United States in immediately available funds, at the office of the Bank
located at Xxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other
address as the Bank may from time to time designate.
The undersigned Borrower irrevocably authorizes the Bank to make or cause
to be made, on a schedule attached to this note or on the books of the Bank, at
or following the time of making any Term Loan and of receiving any payment of
Principal, an appropriate notation reflecting such transaction (including date,
amount and maturity) and the then aggregate unpaid balance of Principal. Failure
of the Bank to make any such notation shall not, however, affect any obligation
of the Borrower hereunder or under the Letter Agreement. The unpaid Principal
amount of this note, as recorded by the Bank from time to time on such schedule
or on such books, shall constitute prima facie evidence of the aggregate unpaid
principal amount of the Term Loans.
The Borrower hereby, to the maximum extent permitted by applicable law,
(a) waives notice of and consents to any and all advances, settlements,
compromises, favors and indulgences (including, without limitation, any
extension or postponement of the time for payment), any and all receipts,
substitutions, additions, exchanges and releases of collateral, and any and all
additions, substitutions and releases of any person primarily or secondarily
liable, (b) waives presentment, demand, notice (other than any such notices
which are expressly provided for in the Letter Agreement or in the Security
Agreement (as defined in the Letter Agreement)), protest and all other demands
and notices (other than any such notices which are expressly provided for in the
Letter Agreement or in the Security Agreement) generally in connection with the
delivery, acceptance, performance, default or enforcement of or under this note,
and (c) agrees to pay, to the extent permitted by law, all reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred or
paid by the Bank in enforcing this note and any collateral or security therefor,
all whether or not litigation is commenced.
This note is the Term Note referred to in the Letter Agreement and is
entitled to the benefits of the Security Agreement. This note is subject to
prepayment as set forth in the Letter
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Agreement (which, in the case of Fixed Rate Loans, may require the making of
certain additional payments, as provided for in the Letter Agreement). The
maturity of this note may be accelerated upon the occurrence of an Event of
Default, as provided in the Letter Agreement.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS OR OUT OF
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PERSON. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ACCEPT THIS NOTE AND TO MAKE THE TERM LOANS AS CONTEMPLATED IN THE
LETTER AGREEMENT.
Executed, as an instrument under seal, as of the day and year first above
written.
CORPORATE SEAL BIOTRANSPLANT INCORPORATED
ATTEST:
____________________________ By:__________________________
Secretary Name:
Title:
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