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EXHIBIT 10.3
BANK OF CALIFORNIA
PROMISSORY NOTE
TRADE FINANCE - BASE RATE
MARQUEZ/R/18992
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Borrower Name GENETRONICS, INC.
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Borrower Address Office Loan Number
40067 3116638944 0001-00-0-000
Maturity Date Amount
11199 SORRENTO VALLEY ROAD AUGUST 31, 2001 $2,000,000.00
SAN DIEGO, CA 92121
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Date SEPTEMBER 29, 2000 $2,000,000.00
FOR VALUE RECEIVED, on AUGUST 31, 2000 the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated
below, the principal sum of TWO MILLION AND NO/100 Dollars ($2,000,000.00), or
so much thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at a per annum rate or rates and at
the times set forth below.
1. PAYMENTS. Principal Payments. Debtor shall pay principal as to each advance
under this note, the full amount of the advance on the earlier of: 90 days after
the advance is made; 90 days after release of documents relating to the advance
or NOVEMBER 20, 2001 Interest Payments. Debtor shall pay interest on the LAST
day of each MONTH commencing OCTOBER 31, 2000. Should interest not be paid when
due, it shall become a part of the principal and thereafter bear interest as
herein provided. All computations of interest under this note shall be made on
the basis of a year of 360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder
in minimum amounts of at least $100,000.00 shall bear interest at a
rate, based on an index selected by Debtor, which is 1.750% per annum
in excess of Bank's LIBOR Rate for the Interest Period selected by
Debtor, acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified until
the expiration of the Interest Period selected by Debtor. The exercise of
interest rate options by Debtor shall be as recorded in Bank's records,
which records shall be prime facie evidence of the amount borrowed under
either interest option and the interest rate; provided, however, that
failure of Bank to make any such notation in its records shall not
discharge Debtor from its obligations to repay in full with interest all
amounts borrowed. In no event shall any Interest Period extend beyond the
maturity date of this note except as set forth in the TRADE CREDIT
AGREEMENT as may be amended from time to time.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing, and on
the expiration of any Interest Period with respect to principal outstanding
on which a Base Interest Rate has been accruing, select an Index offered by
Bank for a Base Interest Rate Loan and an Interest Period by telephoning an
authorized lending officer of Bank located at the banking office identified
below prior to 10:00 a.m., Pacific time, on any Business Day and advising
that officer of the selected index, the Interest Period and the Origination
Date selected (which Origination Date, for a Base Interest Rate Loan based
on the LIBOR Rate, shall follow the date of such selection by no more than
two (2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the rate
selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves the
right to fund the principal from any source of funds notwithstanding any
Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a rate
per annum of 1.000% less than the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
If any interest rate defined in this note ceases to be available from Bank
for any reason, then said interest rate shall be replaced by the rate then
offered by Bank, which, in the sole discretion of Bank, most closely
approximates the unavailable rate.
At any time prior to the maturity of this note, subject to the provisions
of paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed the
principal amount of this note. Debtor shall pay all amounts due under this
note in lawful money of the Untied States at Bank's GOLDEN TRIANGLE
COMMERCIAL BANKING Office, or such other office as may be designated by
Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to FIVE AND
NO/1000 percent (5.000%) in excess of the interest rate specified in paragraph
1.b, above, calculated from the date of default until all amounts payable under
this note are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based on
the Reference Rate may be prepaid in whole or in part at any time, without
penalty or premium. Debtor may prepay amounts outstanding under this note
bearing interest at a Base Interest Rate in whole or in part provided Debtor
has given Bank not less than five (5) Business Days prior written notice of
Debtor's intention to make such prepayment and pays to Bank the prepayment fee
due as a result. The prepayment fee shall also be paid, if Bank, for any other
reason, including acceleration or foreclosure, receives all or any portion of
principal bearing interest at a Base Interest Rate prior to its scheduled
payment date. The prepayment fee shall be an amount equal to the present value
of the product of: (i) the difference (but not less than zero) between (a) the
Base Interest Rate applicable to the principal amount which is being prepaid,
and (b) the return which Bank could obtain if it used the amount of such
prepayment of principal to purchase at bid price regularly quoted securities
issued by the United States having a maturity date most closely coinciding
with the relevant Base Rate Maturity Date and such securities were held by
Bank until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a
fraction, the numerator of which is the number of days in the period between
the date of prepayment and the relevant Base Rate Maturity Date and the
denominator of which is 360; and (iii) the amount of the principal so prepaid
(except in the event that principal payments are required and have been made as
scheduled under the terms of the Base Interest Rate Loan being prepaid, then an
amount equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of
(1) the amount prepaid and (2) the amount of principal scheduled under the
terms of the Base Interest Rate Loan being prepaid to be outstanding at the
relevant Base Rate Maturity Date). Present value under this note is determined
by discounting the above product to present value using the Yield Rate as the
annual discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim against
Bank, should the return which Bank could obtain under this prepayment formula
exceed the interest that Bank would have received if no prepayment had
occurred. All prepayments shall include payment of accrued interest on the
principal amount so prepaid and shall be applied to payment of interest
before application to principal. A determination by Bank as to the prepayment
fee amount, if any shall be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on account of
prepayment. Debtor acknowledges that (i) Bank establishes a Base Interest Rate
upon the understanding that it apply to the Base Interest Rate Loan for the
entire Interest Period, and (ii) Bank would not lend to Debtor without
Debtor's express agreement to pay Bank the prepayment fee described above.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
not be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any
Obligor of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
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relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any [ILLEGIBLE] personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note. Debtor and any endorsers of this note, for the maximum period of time
and the full extent permitted by law, (a) waive diligence, presentment, demand,
notice of nonpayment, protest, notice of protest, and notice of every kind; (b)
waive the right to assert the defense of any statute of limitations to any debt
or obligation hereunder; and (c) consent to renewals and extensions of time for
the payment of any amounts due under this note. If this note is signed by more
than one party, the term "Debtor" includes each of the undersigned and any
successors in interest thereof; all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the credit
of such payment based upon Bank's schedule of funds availability, and interest
under this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any Obligor, including
their successors and assigns, hereby consent to the jurisdiction of any
competent court within the State of California, as provided in any alternative
dispute resolution agreement executed between Debtor and Bank, and consent to
service of process by any means authorized by said state's law. The term "Bank"
includes, without limitation, any holder of this note. This note shall be
construed in accordance with and governed by the laws of the State of
California. This note hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Debtor and
Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "BASE INTEREST RATE" means a rate of interest
based on the LIBOR rate. "BASE INTEREST RATE LOAN" means amounts outstanding
under this note that bear interest at a Base Interest Rate. "BASE RATE MATURITY
DATE" means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. "BUSINESS DAY" means a day on which
Bank is open for business for the funding of corporate loans, and, with respect
to the rate of interest based on the LIBOR Rate, on which dealings in U.S.
dollar deposits outside of the United States may be carried on by Bank.
"INTEREST PERIOD" means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of THREE MONTHS. In determining an
Interest Period, a month means a period that starts on one Business Day in a
month and ends on and includes the day preceding the numerically corresponding
day in the next month. For any month in which there is no such numerically
corresponding day, then as to that month, such day shall be deemed to be the
last calendar day of such month. Any Interest Period which would otherwise end
on a non-Business Day shall end on the next succeeding Business Day unless that
is the first day of a month, in which event such Interest Period shall end on
the next preceding Business Day. "LIBOR RATE" means a per annum rate of interest
(rounded upward, if necessary, to the nearest 1/100 of 1%) at which dollar
deposits, in immediately available funds and in lawful money of the United
States would be offered to Bank, outside of the United States, for a term
coinciding with the Interest Period selected by Debtor and for an amount equal
to the amount of principal covered by Debtor's interest rate selection, plus
Bank's costs, including the cost, if any, of reserve requirements. "ORIGINATION
DATE" means the first day of the Interest Period. "REFERENCE RATE" means the
rate announced by Bank from time to time at its corporate headquarters as its
Reference Rate. The Reference Rate is an index rate determined by Bank from time
to time as a means of pricing certain extensions of credit and is neither
directly tied to any external rate of interest or index nor necessarily the
lowest rate of interest charged by Bank at any given time.
GENETRONICS, INC.
BY: /s/ MARTIN NASH 9/27/00 CEO
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