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Exhibit 10.36
Customer No. 1083
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of April 30, 1999, is made by
Genaissance Pharmaceuticals, Inc. (the "Borrower"), a Delaware corporation
having its principal place of business and chief executive office at Five
Science Park, New Haven, Connecticut, 06511, in favor of Transamerica Business
Credit Corporation, a Delaware corporation (the "Lender"), having its principal
office at 9399 West Higgins Road, Suite 600, Rosemont, Illinois 60018 and having
an office at 76 Batterson Park Road, Farmington, Connecticut 06032.
WHEREAS, the Borrower has requested that the Lender make a Loan to the
Borrower; and
WHEREAS, the Lender has agreed to make such Loan on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to extend credit, the Borrower hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings, and
shall be equally applicable to both the singular and plural forms of the terms
defined:
AGREEMENT shall mean this Loan and Security Agreement together with all
schedules and exhibits hereto, as amended, supplemented, or otherwise modified
from time to time.
APPLICABLE LAW shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the parties'
choice of Illinois law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
BUSINESS DAY shall mean any day other than a Saturday, Sunday, or public
holiday or the equivalent for banks in New York City.
CASH EQUIVALENTS means (1) securities issued, guaranteed or insured by the
United States or any of its agencies with maturities of not more than one year
from the date acquired; (ii) certificates of deposit with maturities of not more
than one year from the date acquired, issued by any U.S. federal or state
chartered commercial bank of recognized standing which has capital and
unimpaired surplus in excess of $100,000,000; (iii) investments in money market
funds registered under the Investment Company Act of 1940; (iv) mutual funds, at
least 90% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i) -- (iii) of this definition; and (v) other instruments,
commercial paper or investments acceptable to the Lender in its sole discretion.
CLOSING DATE means the date first set forth above.
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CODE shall have the meaning specified in Section 8(d).
COLLATERAL shall have the meaning specified in Section 2.
COLLATERAL ACCESS AGREEMENT shall mean any landlord waiver, mortgagee
waiver, bailee letter, or similar acknowledgment of any warehouseman or
processor in possession of any Collateral.
CONTINGENT OBLIGATION means any direct, indirect, contingent or
non-contingent guaranty or obligation for the indebtedness of another Person,
except endorsements in the ordinary course of business.
EFFECTIVE DATE shall mean the date on which all of the conditions specified
in Section 3.3 shall have been satisfied.
EVENT OF DEFAULT shall mean any event specified in Section 7.
FINANCIAL STATEMENTS shall have the meaning specified in Section 6.1.
GAAP shall mean generally accepted accounting principles in the United
States of America, as in effect from time to time.
LOANS shall mean the loans and financial accommodations made by the Lender
to the Borrower in accordance with the terms of this Agreement and any Note
delivered hereunder.
LOAN DOCUMENTS shall mean, collectively, this Agreement, the Notes, and all
other present and future documents, agreements, certificates, and instruments
delivered by the Borrower under, in connection with or relating to this
Agreement, or any other present or future instrument or agreement between Lender
and Borrower, as each of the same may be amended, modified, extended, restated
or supplemented from time to time.
MATERIAL ADVERSE CHANGE shall mean, with respect to any Person, a material
adverse change in the business, operations, results of operations, assets,
liabilities, or financial condition of such Person taken as a whole.
MATERIAL ADVERSE EFFECT shall mean, with respect to any Person, a material
adverse effect on the business, operations, results of operations, assets,
liabilities, or financial condition of such Person taken as a whole.
NOTE shall mean each Promissory Note, in substantially the form attached
hereto, made by the Borrower in favor of the Lender, as amended, supplemented,
or otherwise modified from time to time.
OBLIGATIONS shall mean and include all loans (including the Loans),
advances, debts, liabilities, obligations, covenants and duties owing by
Borrower to Lender of any kind or nature, present or future, whether or not
evidenced by the Note or any note, guaranty or other instrument, whether or not
arising under or in connection with, this Agreement, any other Loan Document or
any other present or future instrument or agreement, whether or not for the
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payment of money, whether arising by reason of an extension of credit, opening,
guaranteeing or confirming of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment, purchase, discount or otherwise), whether absolute
or contingent, due or to become due, now due or hereafter arising and however
acquired (including without limitation all loans previously made by Lender to
Borrower). The term includes, without limitation, all interest (including
interest accruing on or after an bankruptcy, whether or not an allowed claim),
charges, prepayment fees and charges due hereunder or in connection with any
Note, expenses, commitment, facility, closing and collateral management fees,
letter of credit fees, reasonable attorneys fees, taxes and any other sum
properly chargeable to Borrower under this Agreement, the other Loan Documents
or any other present or future agreement between Lender and Borrower.
PERMITTED LIENS shall mean such of the following as to which no
enforcement, collection, execution, levy, or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments, and other governmental charges
or levies or the claims or demands of landlords, carriers, warehousemen,
mechanics, laborers, materialmen, and other like Persons arising by operation of
law in the ordinary course of business for sums which are not yet due and
payable, or liens which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves are
maintained to the extent required by GAAP; (b) deposits or pledges to secure the
payment of worker's compensation, unemployment insurance, or other social
security benefits or obligations, public or statutory obligations, surety or
appeal bonds, bid or performance bonds, or other obligations of a like nature
incurred in the ordinary course of business; (c) licenses, restrictions, or
covenants for or on the use of the Collateral which do not materially impair
either the use of the Collateral in the operation of the business of the
Borrower or the value of the Collateral; (d) attachment or judgment liens that
do not constitute an Event of Default; (e) a lien on any item of equipment
created substantially simultaneously with the acquisition of such equipment for
the purpose of financing such acquisition, provided that such lien shall attach
only to the equipment acquired; (f) liens to Technology Investment Fund and the
Connecticut Department of Economic and Community Development ("CDECD") securing
obligations in the approximate amount of $438,000; (g) liens to CDECD securing
obligations in the approximate amount of $350,000: (h) leasehold mortgage to
Connecticut Innovation Incorporation in the approximate amount of $950,000 (i)
assignments or liens on leaseholds in connection with tenant improvements; and
(j) liens identified on SCHEDULE A.
PERSON shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company,
institution, entity, party, or government (including any division, agency,
or department thereof), and the successors, heirs, and assigns of each.
RECEIVABLE shall have the meaning set forth in Section 8(e).
SCHEDULE shall mean Schedule A hereto containing certain information
pertaining to the Borrower.
SOLVENT means, with respect to any Person, that as of the date as to which
such Person's solvency is measured:
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(a) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
TAXES shall have the meaning specified in Section 5.5.
SECTION 2. CREATION OF SECURITY INTEREST: COLLATERAL. The Borrower hereby
assigns and grants to the Lender a continuing general, lien on, and security
interest in, all the Borrower's right, title, and interest in and to the
collateral described in the next sentence (the "Collateral") to secure the
payment and performance of all the Obligations, subject only to Permitted Liens.
Collateral means Receivables, Investment Property, Inventory, Equipment, and
Other Property and all additions and accessions thereto and substitutions and
replacements therefor and improvements thereon, and all proceeds (whether cash
or other property) and products thereof, including, without limitation, all
proceeds of insurance covering the same and all tort claims in connection
therewith, and all records, files, computer programs and files, data and
writings relating to the foregoing, and all equipment containing the foregoing.
EQUIPMENT means all machinery, equipment, furniture, fixtures, conveyors,
tools, materials, storage and handling equipment, hydraulic presses, cutting
equipment, computer equipment and hardware, including central processing units,
terminals, drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, molds, dies, stamps, vehicles, and other equipment of
every kind and nature and wherever situated now or hereafter owned by Borrower
or in which Borrower may have any interest as lessee or otherwise (to the extent
of such interest), together with all additions and accessions thereto, all
replacements and all accessories and parts therefor, all manuals, blueprints,
know-how, warranties and records in connection therewith, all rights against
suppliers, warrantors, manufacturers, sellers or others in connection therewith,
and together with all substitutes for any of the foregoing; and
INVENTORY means all present and future goods intended for sale, lease or
other disposition by Borrower including, without limitation, all raw materials,
work in process, finished goods and other retail inventory, goods in the
possession of outside processors or other third parties, goods consigned to
Borrower to the extent of its interest therein as consignee, materials and
supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of any such goods, and all documents of title or documents
representing the same; and
INVESTMENT PROPERTY means any and all investment property of Borrower,
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising; and
OTHER PROPERTY means all present and future instruments, documents,
documents of title, securities, bonds, notes, promissory notes, drafts,
acceptances, letters of credit and rights to
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receive proceeds of letters of credit, deposit accounts, chattel paper,
certificates, insurance policies, insurance proceeds, leases, computer tapes,
causes of action, judgments, claims against third parties, leasehold rights in
any personal property, books, ledgers, files and records, general intangibles
(including without limitation, all contract rights, tax refunds, rights to
receive tax refunds, patents, patent applications, copyrights (registered and
unregistered), royalties, licenses, permits, franchise rights, authorizations,
customer lists, rights of indemnification, contribution and subrogation,
computer programs, discs and software, trade secrets, computer service
contracts, trademarks, trade names, service marks and names, logos, goodwill,
deposits, choses in action, designs, blueprints, plans, know-how, telephone
numbers and rights thereto, credits, reserves, and all forms of obligations
whatsoever now or hereafter owing to Borrower), all property at any time in the
possession or under the control of Lender, and all security given by Borrower to
Lender pursuant to any other loan document or agreement; and
RECEIVABLES means all present and future accounts and accounts receivable,
together with all security therefor and guaranties thereof and all rights and
remedies relating thereto, including any right of stoppage in transit.
SECTION 3. THE CREDIT FACILITY.
SECTION 3.1. BORROWINGS. The Lender, subject to the terms and
conditions of this Agreement, agrees to make a Loan to Borrower in a single
drawdown, at Borrower's request, in a principal amount not to exceed
$2,000,000. Such Loan shall be in an amount not less than $2,000,000.
Notwithstanding anything herein to the contrary, the Lender shall be
obligated to make such Loan only after the Lender, in its sole discretion,
determines that the applicable conditions for borrowing contained in
Sections 3.3 and 3.4 are satisfied. The timing and financial scope of
Lender's obligation to make Loans hereunder are limited as set forth in a
commitment letter executed by Lender and Borrower, dated as of April 9,
1999 and attached hereto as EXHIBIT A (the "Commitment Letter").
SECTION 3.2. APPLICATION OF PROCEEDS. The Borrower shall use the
proceeds of the Loans for its general working capital purposes.
SECTION 3.3. CONDITIONS TO LOAN.
(a) The obligation of the Lender to make the Loan is subject to the
Lender's receipt of the following, on or before the Closing Date, each
dated the date of the Loan or as of an earlier date acceptable to the
Lender, in form and substance satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11) listing all
effective Uniform Commercial Code financing statements naming the
Borrower as debtor and all tax lien, judgment, and litigation searches
for the Borrower as the Lender shall deem necessary or desirable;
(ii) acknowledgment copies of Uniform Commercial Code financing
statements (naming the Lender as secured party and the Borrower as
debtor), duly filed in all jurisdictions that the Lender deems
necessary or desirable to perfect and protect the security interests
created hereunder, and evidence that all other filings, registrations
and recordings have
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been made in the appropriate governmental offices, and all other
action has been taken, which shall be necessary to create, in favor
of the Lender, a perfected first priority lien on the Collateral,
subject only to Permitted Liens;
(iii) a Note duly executed by the Borrower evidencing the amount
of such Loan;
(iv) an Intellectual Property Security Agreement, in form and
substance satisfactory to the Lender and its counsel, duly executed by
the Borrower, specifically identifying and granting to the Lender a
security interest in all of the Borrower's intellectual property;
(v) if requested by the Lender, a Collateral Access Agreement
duly executed by the lessor or mortgagee, as the case may be, of each
premises where the equipment Collateral is located;
(vi) a Notice of Security Interest, in form and substance
satisfactory to the Lender and its counsel, to each financial
institution at which any deposit accounts of Borrower are maintained;
(vii) the warrants described in the Commitment Letter, if any;
(viii) certificates of insurance required under Section 5.4 of
this Agreement together with loss payee endorsements for all such
policies naming the Lender as lender loss payee and as an additional
insured;
(ix) a certificate of the Secretary or an Assistant Secretary of
the Borrower ("Secretary's Certificate") certifying (A) that attached
to the Secretary's Certificate is a true, complete, and accurate copy
of the resolutions of the Board of Directors of the Borrower (or a
unanimous consent of directors in lieu thereof) authorizing the
execution, delivery, and performance of this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and
that such resolutions have not been amended or modified since the date
of such certification and are in full force and effect; (B) the
incumbency, names, and true signatures of the officers of the Borrower
authorized to sign the Loan Documents to which it is a party; (C) that
attached to the Secretary's Certificate is a true and correct copy of
the Articles or Certificate of Incorporation of the Company, as
amended, which Articles or Certificate of Incorporation have not been
further modified, repealed or rescinded and are in full force and
effect; (D) that attached to the Secretary's Certificate of the
Borrower is a true and correct copy of the Bylaws, as amended, which
Bylaws of the Company have not been further modified, repealed or
rescinded and are in full force and effect; and (E) that attached to
the Secretary's Certificate is a valid Certificate of Good Standing
issued by the Secretary of the State of the Borrower's state of
incorporation;
(x) the opinion of counsel for the Borrower covering such matters
incident to the transactions contemplated by this Agreement as the
Lender may reasonably require;
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(xi) evidence of the consent or authorization of, filing with or
other act by or in respect of any governmental agency or authority or
any other Person required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, or the
other Loan Documents or the consummation of the transactions
contemplated hereby or thereby; and
(xii) such other documents, agreements and instruments as the
Lender deems necessary in its sole and absolute discretion in
connection with the transactions contemplated hereby.
(b) The security interests in the Collateral granted in favor of the
Lender under this Agreement shall have been duly perfected and shall
constitute first priority liens, except for Permitted Liens.
SECTION 3.4. ADDITIONAL CONDITIONS PRECEDENT. The obligation of the
Lender to make the Loan is subject to the satisfaction of the following
additional conditions precedent:
(a) There shall be no pending or, to the knowledge of the Borrower
after due inquiry, threatened litigation, proceeding, inquiry, or other
action (i) seeking an injunction or other restraining order, damages, or
other relief with respect to the transactions contemplated by this
Agreement or the other Loan Documents or thereby or (ii) which affects or
could affect the business, prospects, operations, assets, liabilities, or
condition (financial or otherwise) of the Borrower, except, in the case of
clause (ii), where such litigation, proceeding, inquiry, or other action
could not be expected to have a Material Adverse Effect in the judgment of
the Lender;
(b) all representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct on and as of the date of
such Loan as if then made, other than representations and warranties that
expressly relate solely to an earlier date, in which case they shall have
been true and correct as of such earlier date;
(c) No Event of Default or event which with the giving of notice or
the passage of time, or both, would constitute an Event of Default shall
have occurred and be continuing or would result from the making of the
requested Loan as of the date of such request; and
(d) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender.
SECTION 3.5. INTEREST RATE; REPAYMENT. The interest rate applicable to
the Loan made by the Lender hereunder, and the repayment date for such
Loan, are as set forth in the Note evidencing such Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
SECTION 4.1. GOOD STANDING; QUALIFIED TO DO BUSINESS. The Borrower (a)
is duly organized, validly existing, and in good standing under the laws of
the State of its
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organization, (b) has the power and authority to own its properties and
assets and to transact the businesses in which it is presently, or proposes
to be, engaged, and (c) is duly qualified and authorized to do business and
is in good standing in every jurisdiction in which the failure to be so
qualified could have a Material Adverse Effect on (i) the Borrower, (ii)
the Borrower's ability to perform its obligations under the Loan Documents,
or (iii) the rights of the Lender hereunder.
SECTION 4.2. DUE EXECUTION, ETC. The execution, delivery, and
performance by the Borrower of each of the Loan Documents to which it is a
party are within the powers of the Borrower, do not contravene the
organizational documents, if any, of the Borrower, and do not (a) violate
any law or regulation, or any order or decree of any court or governmental
authority, (b) conflict with or result in a breach of, or constitute a
default under, any material indenture, mortgage, or deed of trust or any
material lease, agreement, or other instrument binding on the Borrower or
any of its properties, or (c) require the consent, authorization by, or
approval of or notice to or filing or registration with any governmental
authority or other Person, except as may be set forth in the Schedule. This
Agreement is, and each of the other Loan Documents to which the Borrower is
or will be a party, when delivered hereunder or thereunder, will be, the
legal, valid, and binding obligation of the Borrower enforceable against
the Borrower in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by general principles of equity.
SECTION 4.3. SOLVENCY; NO LIENS. The Borrower is Solvent and will be
Solvent upon the completion of all transactions contemplated to occur
hereunder (including, without limitation, the Loan to be made on the
Effective Date); the security interests granted herein constitute and shall
at all times constitute the first and only liens on the Collateral other
than Permitted Liens; and the Borrower is, or will be at the time
additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, consign, transfer, and create a
security interest therein, free and clear of any and all claims or liens in
favor of any other Person other than Permitted Liens.
SECTION 4.4. NO JUDGMENTS, LITIGATION. No judgments are outstanding
against the Borrower nor is there now pending or, to the best of the
Borrower's knowledge, threatened any litigation, contested claim, or
governmental proceeding by or against the Borrower except judgments and
pending or threatened litigation, contested claims, and governmental
proceedings which would not, in the aggregate, have a Material Adverse
Effect on the Borrower.
SECTION 4.5. NO DEFAULTS. The Borrower is not in default or has not
received a notice of default under any material contract, lease, or
commitment to which it is a party or by which it is bound. The Borrower
knows of no dispute regarding any contract, lease, or commitment which
could have a Material Adverse Effect on the Borrower.
SECTION 4.6. COLLATERAL LOCATIONS. The address of the principal place
of business and chief executive office of Borrower is, and the books and
records of Borrower and all of its chattel paper and records relating to
Collateral are maintained exclusively in the possession of Borrower at, the
address of Borrower specified in the heading of this Agreement. Borrower
has places of business, and Collateral is located, only at such address and
at the
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addresses set forth in the Schedule and at any additional locations
reported to the Lender as provided in Section 5.7 as to which the Lender
has taken all necessary action to perfect and protect its security
interests in the Collateral at any such locations.
SECTION 4.7. CORPORATE AND TRADE NAMES; FEDERAL TAX ID. During the
past five years, Borrower has not been known by or used any other
corporate, trade or fictitious name except for its name as set forth on the
signature page of this Agreement and the other names specified in the
Schedule. The Borrower's Federal Tax ID number is as set forth in the
Schedule.
SECTION 4.8. NO EVENTS OF DEFAULT. No Event of Default has occurred
and is continuing nor has any event occurred which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default.
SECTION 4.9. NO LIMITATION ON LENDER'S RIGHTS. Except as permitted
herein, none of the Collateral is subject to contractual obligations that
may restrict or inhibit the Lender's rights or abilities to sell or dispose
of the Collateral or any part thereof after the occurrence of an Event of
Default.
SECTION 4.10. PERFECTION AND PRIORITY OF SECURITY INTEREST. This
Agreement creates a valid and, upon completion of all required filings of
financing statements and compliance with applicable law, perfected,
exclusive, security interest in the Collateral, except for any Permitted
Liens, securing the payment of all the Obligations.
SECTION 4.11. INTELLECTUAL PROPERTY. Set forth in the Schedule is a
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights (registered and unregistered), and all applications
therefor and licenses thereof, of Borrower. Borrower owns or licenses all
material patents, trademarks, service-marks, logos, tradenames, trade
secrets, know-how, copyrights, or licenses and other rights with respect to
any of the foregoing, which are necessary or advisable for the operation of
its business as presently conducted or proposed to be conducted. To the
best of its knowledge after due inquiry, Borrower has not infringed any
patent, trademark, service-mark, tradename, copyright, license or other
right owned by any other Person by the sale or use of any product, process,
method, substance, part or other material presently contemplated to be sold
or used, where such sale or use would reasonably be expected to have a
Material Adverse Effect and no claim or litigation is pending, or to the
best of Borrower's knowledge, threatened against or affecting Borrower that
contests its right to sell or use any such product, process, method,
substance, part or other material.
SECTION 4.12. CONSENTS AND FILINGS. No consent, authorization or
approval of, or filing with or other act by, any shareholders of Borrower
or any governmental authority or other Person is required in connection
with the execution, delivery, performance, validity or enforceability of
this Agreement or any other Loan Document, the consummation of the
transactions contemplated hereby or thereby or the continuing operations of
Borrower following such consummation, except (i) those that have been
obtained or made, (ii) the filing of financing statements under the Code
and (iii) any necessary filings with U.S. Copyright Office and the U.S.
Patent and Trademark Office.
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SECTION 4.13. YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a
review and assessment of all areas within its business and operations that
could be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer applications used by the Borrower may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior
to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii)
to date, implemented that plan in accordance with that timetable. The
Borrower reasonably believes that all computer applications that are
material to its business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
SECTION 4.14. TAXES. Borrower has properly completed and timely filed
all income tax returns it is required to file, and all Taxes, assessments,
fees and other governmental charges for periods beginning prior to the date
of this Agreement have been timely paid (or, if not yet due or being
disputed in good faith, adequate reserves therefor have been established in
accordance with GAAP) and Borrower has no liability for Taxes in excess of
the amounts so paid or reserves so established. No deficiencies for Taxes
have been claimed, proposed or assessed by any taxing or other governmental
agency or authority against Borrower and no notice of any tax lien has been
filed. There are no pending or (to the best knowledge of Borrower)
threatened audits, investigations or claims for or relating to any
liability for Taxes and there are no matters under discussion with any
governmental agency or authority which could result in an additional
material liability for Taxes.
SECTION 4.15. FINANCIAL STATEMENTS. Borrower has provided to the
Lender complete and accurate Financial Statements, which have been prepared
in accordance with GAAP (except for the absence of footnotes and subject to
normal year-end adjustments with respect to unaudited financial statements)
consistently applied throughout the periods involved and fairly present the
financial position and results of operations of Borrower for each of the
periods covered, subject, in the case of any quarterly financial
statements, to normal year-end adjustments and the absence of notes.
Borrower has no Contingent Obligation or liability for Taxes, unrealized
losses, unusual forward or long-term commitments or long-term leases, which
is not reflected in such Financial Statements or the footnotes thereto.
Since the last date covered by such Financial Statements, there has been no
sale, transfer or other disposition by Borrower of any material part of its
business or property and no purchase or other acquisition of any business
or property (including any capital stock of any other Person) material in
relation to the financial condition of Borrower at said date. Since said
date, (i) there has been no change, occurrence, development or event which
has had or could reasonably be expected to have a Material Adverse Effect
and (ii) no material portion of the capital stock of Borrower has been
redeemed, retired, purchased or otherwise acquired for value by Borrower.
SECTION 4.16. ACCURACY AND COMPLETENESS OF INFORMATION. All data,
reports, and information heretofore, contemporaneously, or hereafter
furnished by or on behalf of the Borrower in writing to the Lender or for
purposes of or in connection with this Agreement or any other Loan
Document, or any transaction contemplated hereby or thereby, are or will be
true and accurate in all material respects on the date as of which such
data, reports, and information are dated or certified and not incomplete by
omitting to state any material fact necessary to make
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such data, reports, and information not misleading at such time. There are
no facts now known to the Borrower which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect and which
have not been specified herein, in the Financial Statements, or in any
certificate, opinion, or other written statement previously furnished by
the Borrower to the Lender.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. EXISTENCE, ETC. The Borrower shall: (a) retain its
existence and its current yearly accounting cycle, (b) maintain in full
force and effect all licenses, bonds, franchises, leases, trademarks,
patents, contracts, and other rights necessary or desirable to the
profitable conduct of its business unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect on the Borrower,
(c) continue in, and limit its operations to, substantially the same
general lines of business as those presently conducted by it, and (d)
comply with all applicable laws and regulations of any federal, state, or
local governmental authority, except for such laws and regulations the
violations of which would not, in the aggregate, have a Material Adverse
Effect on the Borrower.
SECTION 5.2. NOTICE TO THE LENDER. As soon as possible, and in any
event within five days after the Borrower learns of the following, the
Borrower will give written notice to the Lender of the following:
(a) any proceeding instituted or threatened to be instituted by or
against the Borrower in any federal, state, local, or foreign court or
before any commission or other regulatory body (federal, state, local, or
foreign) involving a sum, together with the sum involved in all other
similar proceedings, in excess of $50,000 in the aggregate,
(b) any contract that is terminated or amended and which has had or
could reasonably be expected to have a Material Adverse Effect on the
Borrower,
(c) the occurrence of any Material Adverse Change with respect to the
Borrower;
(d) the occurrence of any Event of Default or event or condition
which, with notice or lapse of time or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has
taken or proposes to take with respect thereto;
(e) of any discovery or determination by Borrower that any computer
application (including those of its suppliers and vendors) that is material
to its business and operations will not be Year 2000 compliant on a timely
basis, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect;
(f) of any material damage to, the destruction of or any other
material loss to any Collateral owned or used by Borrower other than any
such Collateral with a net book value (individually or in the aggregate)
less than $50,000 or any condemnation, confiscation or other taking, in
whole or in part, or any event that otherwise diminishes so as to render
impracticable or unreasonable the use of such Collateral owned or used by
Borrower together with the amount of the damage, destruction, loss or
diminution in value;
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(g) of any copyright registration made by it, any rights Borrower may
obtain to any copyrightable works, new trademarks or any new patentable
inventions, and of any renewal or extension of any trademark registration,
or if it shall otherwise become entitled to the benefit of any patent or
patent application or trademark or trademark application; and
(h) of the opening of any new bank account or other deposit account,
and any new securities account.
SECTION 5.3. MAINTENANCE OF BOOKS AND RECORDS. Borrower shall (i)
maintain books and records (including computer records) pertaining to the
Collateral in such detail, form and scope as is customary for companies in
similar businesses in similar situations and (ii) provide the Lender and
its agents access to the premises of Borrower at any time and from time to
time, during normal business hours and upon reasonable notice under the
circumstances, and at any time on and after the occurrence and during the
existence of an Event of Default, or event or condition which, with notice
or lapse of time or both, would constitute an Event of Default, for the
purposes of (A) inspecting and verifying the Collateral, (B) inspecting and
copying (at Borrower's expense) any and all records pertaining thereto, and
(C) discussing the affairs, finances and business of Borrower with any
officer, employee or director of Borrower or with Borrower's accountants.
Upon the occurrence and continuance of an Event of Default, Borrower shall
reimburse the Lender for the reasonable travel and related expenses of the
Lender's employees or, at the Lender's option, of such outside accountants
or examiners as may be retained by the Lender to verify or inspect
Collateral, records or documents of Borrower on a regular basis or for a
special inspection if the Lender deems the same appropriate. If the
Lender's own employees are used, Borrower shall also pay therefor $600 per
person per day (or such other amount as shall represent the Lender's then
current standard charge for the same), or, if outside examiners or
accountants are used, Borrower shall also pay the Lender such reasonable
sum as the Lender may be obligated to pay as fees therefor.
SECTION 5.4. INSURANCE. Borrower shall maintain public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on its assets (including the
Collateral) under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are at all times
reasonably satisfactory to the Lender in its commercially reasonable
judgment, all of which policies covering the Collateral shall name the
Lender as an additional insured and lender loss payee in case of loss, and
contain other provisions as the Lender may reasonably require to protect
fully the Lender's interest in the Collateral and any payments to be made
under such policies.
SECTION 5.5. TAXES. The Borrower will pay, when due, all taxes,
assessments, claims, and other charges ("Taxes") lawfully levied or
assessed against the Borrower or the Collateral other than taxes that are
being diligently contested in good faith by the Borrower by appropriate
proceedings promptly instituted and for which an adequate reserve is being
maintained by the Borrower in accordance with GAAP. If any Taxes remain
unpaid after the date fixed for the payment thereof, or if any lien shall
be claimed therefor, then, without notice to the Borrower, but on the
Borrower's behalf, the Lender may pay such Taxes, and the amount thereof
shall be included in the Obligations.
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SECTION 5.6. BORROWER TO DEFEND COLLATERAL AGAINST CLAIMS; FEES ON
COLLATERAL. The Borrower will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest
therein except with respect to Persons holding Permitted Liens and their
agents. The Borrower will not permit any notice creating or otherwise
relating to liens on the Collateral or any portion thereof to exist or be
on file in any public office other than Permitted Liens. The Borrower shall
promptly pay, when payable, all transportation, storage, and warehousing
charges and license fees, registration fees, assessments, charges, permit
fees, and taxes (municipal, state, and federal) which may now or hereafter
be imposed upon the ownership, leasing, renting, possession, sale, or use
of the Collateral, other than taxes on or measured by the Lender's income
and fees, assessments, charges, and taxes which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves are maintained to the extent required by GAAP.
SECTION 5.7. CHANGE OF LOCATION, STRUCTURE, OR IDENTITY. The Borrower
will give Lender at least 30 days prior written notice of any change of
Borrower's chief executive office or of the opening of any additional place
of business. The Borrower will not move or permit the movement of any item
of Collateral from the locations specified in the Schedule, except that the
Borrower keep Collateral at other locations within the United States
provided that the Borrower has delivered to the Lender (i) prior written
notice thereof and (ii) duly executed financing statements and other
agreements and instruments (all in form and substance satisfactory to the
Lender) necessary or, in the opinion of the Lender, desirable to perfect
and maintain in favor of the Lender a security interest in the Collateral,
subject only to Permitted Liens. Notwithstanding anything to the contrary
in the immediately preceding sentence, the Borrower may keep any Collateral
consisting of motor vehicles or rolling stock at any location in the United
States provided that the Lender's security interest in any such Collateral
is conspicuously marked on the certificate of title thereof and the
Borrower has complied with the provisions of Section 5.9.
SECTION 5.8. USE OF COLLATERAL; LICENSES; REPAIR. The Collateral shall
be operated by competent, qualified personnel in connection with the
Borrower's business purposes, for the purpose for which the Collateral was
designed and in accordance with applicable operating instructions, laws,
and government regulations, and the Borrower shall use every reasonable
precaution to prevent loss or damage to the Collateral from fire and other
hazards. The Borrower shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by
federal, state, or local laws or by any governmental body, agency, or
authority in connection with the delivery, installation, use, and operation
of the Collateral.
SECTION 5.9. FURTHER ASSURANCES. The Borrower will, promptly upon
request by the Lender, execute and deliver or use its best efforts to
obtain any document required by the Lender (including, without limitation,
warehouseman or processor disclaimers, mortgagee waivers, landlord
disclaimers, or subordination agreements with respect to the Obligations
and the Collateral), give any notices, execute and file any financing
statements, mortgages, or other documents (all in form and substance
satisfactory to the Lender), mark any chattel paper, deliver any chattel
paper or instruments to the Lender, and take any other actions that are
necessary or, in the opinion of the Lender, desirable to perfect or
continue the perfection and the first priority of the Lender's security
interest in the Collateral, to protect the Collateral against the rights,
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claims, or interests of any Persons, or to effect the purposes of this
Agreement. The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of the Borrower
where permitted by law. A carbon, photographic, or other reproduction of
this Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted
by law. To the extent required under this Agreement, the Borrower will pay
all costs incurred in connection with any of the foregoing.
SECTION 5.10. NO DISPOSITION OF COLLATERAL. The Borrower will not in
any way hypothecate or create or permit to exist any lien, security
interest, charge, or encumbrance on or other interest in any of the
Collateral, except for the lien and security interest granted hereby and
Permitted Liens. In the event the Collateral, or any part thereof, is sold,
transferred, assigned, exchanged, or otherwise disposed of in violation of
this Agreement, the security interest of the Lender shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange, or other disposition, and the Borrower will hold the proceeds
thereof in a separate account for the benefit of the Lender. Following such
a sale, the Borrower will transfer such proceeds to the Lender in kind.
SECTION 5.11. NO LIMITATION ON LENDER'S RIGHTS. The Borrower will not
enter into any contractual obligations from the date hereof which may
restrict or inhibit the Lender's rights or ability to sell or otherwise
dispose of the Collateral or any part thereof.
SECTION 5.12. PROTECTION OF COLLATERAL. Upon notice to the Borrower
(provided that if an Event of Default has occurred and is continuing the
Lender need not give any notice), the Lender shall have the right at any
time to make any payments and do any other acts the Lender may deem
necessary to protect its security interests in the Collateral, including,
without limitation, the rights to satisfy, purchase, contest, or compromise
any encumbrance, charge, or lien which, in the reasonable judgment of the
Lender, appears to be prior to or superior to the security interests
granted hereunder, and appear in, and defend any action or proceeding
purporting to affect its security interests in, or the value of, any of the
Collateral. The Borrower hereby agrees to reimburse the Lender for all
payments made and expenses incurred under this Agreement including fees,
expenses, and disbursements of attorneys and paralegals (including the
allocated costs of in-house counsel) acting for the Lender, including any
of the foregoing payments under, or acts taken to protect its security
interests in, any of the Collateral, which amounts shall be secured under
this Agreement, and agrees it shall be bound by any payment made or act
taken by the Lender hereunder absent the Lender's gross negligence or
willful misconduct. The Lender shall have no obligation to make any of the
foregoing payments or perform any of the foregoing acts.
SECTION 5.13. DELIVERY OF ITEMS. The Borrower will (a) promptly (but
in no event later than one Business Day) after its receipt thereof, deliver
to the Lender or its agent any documents issued with respect to any
property included in the Collateral, and any promissory notes, letters of
credit or instruments related to or otherwise in connection with any
property included in the Collateral, which in any such case come into the
possession of the Borrower, or shall cause the issuer thereof to deliver
any of the same directly to the Lender, in each case with any necessary
endorsements in favor of the Lender and (b) deliver to the Lender as soon
as available copies of any and all press releases and other similar
communications issued by the Borrower.
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SECTION 5.14. SOLVENCY. The Borrower shall be and remain Solvent at
all times.
SECTION 5.15. INTELLECTUAL PROPERTY. Borrower shall do and cause to be
done all things necessary to preserve, maintain and keep in full force and
effect all of its registrations of trademarks, service marks and other
marks, trade names and other trade rights, patents, copyrights and other
intellectual property in accordance with prudent business practices, except
to the extent that the failure to preserve or maintain any of the foregoing
would not reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, Borrower agrees promptly, and in
any event not later than 30 days after the date hereof, to have any of its
currently unregistered copyrightable software, computer programs and other
materials registered with the U.S. Copyright Office in Washington, D.C.
(the "Copyright Office") and to promptly provide TBCC with evidence of such
registration. Borrower will, on an ongoing basis, promptly register any
future unregistered copyrightable software, computer programs and other
materials with the Copyright Office.
SECTION 5.16. FUNDAMENTAL CHANGES. The Borrower shall not (a) amend or
modify its name, unless the Borrower delivers to the Lender thirty days
prior to any such proposed amendment or modification written notice of such
amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements
(in form and substance satisfactory to the Lender) or (b) merge or
consolidate with any other entity or make any material change in its
capital structure, except the issuance of stock shall not be considered a
change in capital structure, in each case without the Lender's prior
written consent which shall not be unreasonably withheld.
SECTION 5.17. CONTINGENT OBLIGATIONS. Borrower will not, directly or
indirectly, incur, assume, or suffer to exist any Contingent Obligation,
excluding indemnities given in connection with this Agreement or the other
Loan Documents in favor of the Lender or in connection with the sale of
inventory or other asset dispositions permitted hereunder, except
Contingent Obligations and other similar third party credit support
relating to obligations of vendors and suppliers of Borrower in respect of
transactions entered into in the normal course of business, provided that
the aggregate amount of any such guarantees and other similar third party
credit support shall not exceed $100,000 at any time outstanding, and
provided further that no Default or Event of Default shall exist either
immediately prior to or after giving effect to the making of the foregoing
guarantees or the entering into any third party credit support
transactions.
SECTION 5.18. CHANGE IN NATURE OF BUSINESS. Borrower will not at any
time make any material change in the lines of its business as carried on at
the date of this Agreement or enter into any new line of business; provided
that Borrower may enter businesses reasonably related or incidental to its
current lines of business.
SECTION 5.19. SALES OF ASSETS. Borrower will not, directly or
indirectly, in any fiscal year, sell, transfer or otherwise dispose of any
assets, or grant any option or other
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right to purchase or otherwise acquire any assets other than (1) equipment
with an aggregate value of less than $100,000 the proceeds of which shall
be paid to the Lender and applied to the Obligations unless substituted
with for other Collateral of equal value, (ii) sales of inventory in the
ordinary course of business and (iii) licenses or sublicenses on a
non-exclusive or exclusive basis of intellectual property in the ordinary
course of Borrower's business, and provided it is in the best interest of
the Borrower.
SECTION 5.20. LOANS TO OTHER PERSONS. Borrower will not at any time
make loans or advance any credit (except to trade debtors in the ordinary
course of business) to any Person in excess of $100,000 in the aggregate at
any time for all such loans, except that Borrower may make cashless
advances of credit to senior members of Borrower's management team to
purchase restricted stock of Borrower.
SECTION 5.21. DIVIDENDS, STOCK REDEMPTIONS. Borrower will not,
directly or indirectly, pay any dividends or distributions on, purchase,
redeem or retire any shares of any class of its capital stock or any
warrants, options or rights to purchase any such capital stock, whether now
or hereafter outstanding ("Stock"), or make any payment on account of or
set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of its Stock, or
make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Borrower,
except for dividends paid solely in stock of the Borrower and repurchases
of stock owned by employees, directors and consultants of Borrower pursuant
to terms of employment, consulting or other stock restrictions agreements
at such time as any such employee, director or consultant terminates his or
her affiliations with the Borrower, provided that no Default or Event of
Default shall exist either immediately prior to or after giving effect to
such repurchase, and provided further that the total amount paid in
connection therewith by Borrower shall not exceed $50,000 in any
consecutive 12-month period.
SECTION 5.22. INVESTMENTS IN OTHER PERSONS. Borrower will not,
directly or indirectly, at any time make or hold any Investment in any
Person (whether in cash, securities or other property of any kind) other
than investments in Cash Equivalents, without the Lender's prior written
consent which shall not be unreasonably withheld.
SECTION 5.23. ACQUISITION OF STOCK OR ASSETS. Borrower will not
acquire or commit or agree to acquire all or any stock, securities or
assets of any other Person other than inventory and equipment acquired in
the ordinary course of business, without the Lender's prior written consent
which shall not be unreasonably withheld.
SECTION 5.24. PARTNERSHIPS; SUBSIDIARIES; JOINT VENTURES; MANAGEMENT
CONTRACTS. Borrower will not at any time create any direct or indirect
Subsidiary, enter into any joint venture or similar arrangement (other than
joint ventures or strategic partnerships consisting of non-exclusive or
exclusive licensing of technology or the providing of technical support or
subsidiaries or affiliates, the assets of which include a portion of
Borrower's technology) or become a partner in any general or limited
partnership or enter into any management contract (other than an employment
contract for the employment of an officer or employee entered into in the
regular course of Borrower's business) permitting third party management
rights with respect to Borrower's business.
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SECTION 5.25. ADDITIONAL REQUIREMENTS. The Borrower shall take all
such further actions and execute all such further documents and instruments
as the Lender may reasonably request.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and satisfaction in
full of all Obligations, the Borrower shall deliver to the Lender the
following financial information:
SECTION 6.1. ANNUAL FINANCIAL STATEMENTS. As soon as available, but
not later than 90 days after the end of each fiscal year of the Borrower
and its consolidated subsidiaries, the consolidated balance sheet, income
statement, and statements of cash flows and shareholders equity for the
Borrower and its consolidated subsidiaries (the "Financial Statements") for
such year, reported on by independent certified public accountants without
an adverse qualification; and
SECTION 6.2. QUARTERLY FINANCIAL STATEMENTS. As soon as available, but
not later than 30 days after the end of each of the first three fiscal
quarters in any fiscal year of the Borrower and its consolidated
subsidiaries, the Financial Statements for such fiscal quarter, together
with a certification duly executed by a responsible officer of the Borrower
that such Financial Statements have been prepared in accordance with GAAP
and are fairly stated in all material respects (subject to normal year-end
audit adjustments).
SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) the Borrower shall fail to pay when due any principal,
interest, fee or other amount required to be paid by the Borrower
under or in connection with any Note and this Agreement;
(b) any representation or warranty made or deemed made by the
Borrower under or in connection with any Loan Document or any
Financial Statement shall prove to have been false or incorrect in any
material respect when made or deemed made;
(c) the Borrower shall fail to perform or observe (i) any of the
terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10,
5.14 or 5.16 through 5.25 hereof or (ii) any other term, covenant, or
agreement contained in any Loan Document (other than the other Events
of Default specified in this Section 7) and such failure remains
unremedied for the earlier of ten days from (A) the date on which the
Lender has given the Borrower written notice of such failure and (B)
the date on which the Borrower knew or should have known of such
failure;
(d) any defined "Event of Default" shall occur under any other
Loan Document; or Borrower or any Person shall deny or disaffirm its
obligations under any of the Loan Documents or any Liens granted in
connection therewith or shall otherwise challenge any of its
obligations under any of the Loan Documents; or any Liens granted in
any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated
by this Agreement; or any Loan Document shall for any reason cease to
create a valid and perfected Lien on the Collateral purported to be
covered thereby, of first priority (except for Permitted Liens);
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(e) dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its
debts as they mature, admission in writing by the Borrower of its
inability generally to pay its debts as they mature, or calling of a
meeting of the Borrower's creditors for purposes of compromising any
of the Borrower's debts;
(f) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or
similar proceedings under any federal or state law and, in the case of
any such involuntary proceeding, such proceeding remains undismissed
or unstayed for sixty days following the commencement thereof, or any
action by the Borrower is taken authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a
trustee, custodian, receiver, or similar official for the Borrower or
for any substantial property of the Borrower, or any action by the
Borrower authorizing any such proceeding;
(h) the Borrower shall default in (i) the payment of principal or
interest on any indebtedness in excess of $100,000 (other than the
Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such indebtedness was created, and
such payment default has not been cured within any applicable grace
period unless such default has been waived by such Person; or (ii) the
observance or performance of any other agreement or condition relating
to any such indebtedness or contained in any instrument or agreement
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such indebtedness to cause, with
the giving of notice if required, such indebtedness to become due
prior to its stated maturity, and such default has not been cured
within any applicable grace period unless such default has been waived
by such Person; or (iii) any loan or other agreement under which the
Borrower has received financing from Transamerica Corporation or any
of its affiliates;
(i) the Borrower suffers or sustains a Material Adverse Change;
(j) any tax lien, other than a Permitted Lien, is filed of record
against the Borrower and is not bonded or discharged within thirty
Business Days after Borrower has received notice of any such lien;
(k) any judgment or order for the payment of money in excess of
$50,000 and not otherwise covered by applicable insurance shall be
rendered against the Borrower and such judgment or order shall not be
stayed, vacated, bonded, or discharged within thirty days;
(l) any material covenant, agreement, or obligation, as
determined in the sole discretion of the Lender, made by the Borrower
and contained in or evidenced by any of the Loan Documents shall cease
to be enforceable, or shall be determined to be unenforceable, in
accordance with its terms; the Borrower shall deny or disaffirm the
Obligations under any of the Loan Documents or any liens granted in
connection therewith; or any liens granted on any
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material portion of the Collateral in favor of the Lender shall be
determined to be void, voidable, or invalid, or shall not be given the
priority contemplated by this Agreement.
(m) there is a change, which change results from a single
transaction or series of related transactions, but not from the sale
of newly issued securities to investors, in more than 35% of the
ownership of any equity interests of the Borrower on the date hereof
or more than 35% of such interests become subject to any contractual,
judicial, or statutory lien, charge, security interest, or encumbrance
and Borrower has prior knowledge of such contractual, judicial or
statutory lien, charge, security interest or encumbrance.
SECTION 8. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) The Lender may, without prejudice to any of its other rights
under any Loan Document or Applicable Law, declare all Obligations to
be immediately due and payable (except with respect to any Event of
Default set forth in Section 7(f) hereof, in which case all
Obligations shall automatically become immediately due and payable
without necessity of any declaration) without presentment,
representation, demand of payment, or protest, which are hereby
expressly waived.
(b) The Lender may take possession of the Collateral and, for
that purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral or any part hereof is, or
may be placed, and remove the same.
(c) The obligation of the Lender, if any, to make additional
Loans or financial accommodations of any kind to the Borrower shall
immediately terminate.
(d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any
Loan Document) or otherwise available to it, all the rights and
remedies of a secured party under the applicable Uniform Commercial
Code (the "Code") whether or not the Code applies to the affected
Collateral and also may (i) require the Borrower to, and the Borrower
hereby agrees that it will at its expense and upon request of the
Lender forthwith, assemble all or part of the Collateral as directed
by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties
and (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale,
at any of the Lender's offices or elsewhere, for cash, on credit, or
for future delivery, and upon such other terms as the Lender may deem
commercially reasonable.
(e) The Lender may accelerate or extend the time of payment,
compromise, issue credits, or bring suit on all accounts receivable
("Receivables") and other Collateral (in the name of Borrower or the
Lender) and otherwise administer and collect the Receivables and other
Collateral.
(f) The Lender may collect, receive, dispose of and realize upon
any investment property Collateral, including withdrawal of any and
all funds from any securities accounts.
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(g) The Lender may (i) settle or adjust disputes or claims
directly with account debtors for amounts and upon terms which it
considers advisable, and (ii) notify account debtors on the
Receivables and other Collateral that the Receivables and Collateral
have been assigned to the Lender, and that payments in respect thereof
shall be made directly to the Lender. If an Event of Default has
occurred and is continuing, Borrower hereby irrevocably authorizes and
appoints the Lender, or any Person the Lender may designate, as its
attorney-in-fact, at Borrower's sole cost and expense, to exercise,
all of the following powers, which are coupled with an interest and
are irrevocable, until all of the Obligations have been indefeasibly
paid and satisfied in full in cash: (A) to receive, take, endorse,
sign, assign and deliver, all in the name of the Lender or Borrower,
any and all checks, notes, drafts, and other documents or instruments
relating to the Collateral; (B) to receive, open and dispose of all
mail addressed to Borrower; and (C) to take or bring, in the name of
the Lender or Borrower, all steps, actions, suits or proceedings
deemed by the Lender necessary or desirable to enforce or effect
collection of Receivables and other Collateral or file and sign
Borrower's name on a proof of claim in bankruptcy or similar document
against any obligor of Borrower.
(h) The Borrower agrees that, to the extent notice of sale shall
be required by law, at least ten days' notice to the Borrower of the
time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The
Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn
any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Borrower recognizes that the Lender may be unable to make a public
sale of any or all of any investment property Collateral, by reason of
prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of
purchasers for investment and not with a view to any distribution
thereof shall be considered a commercially reasonable sale.
(i) Unless expressly prohibited by any licensor thereof, the
Lender is hereby granted a license to use all computer software
programs, data bases, processes, trademarks, tradenames and materials
used by Borrower in connection with its businesses or in connection
with the Collateral.
(j) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Lender, be held by the
Lender as collateral for, or then or at any time thereafter applied in
whole or in part by the Lender against, all or any part of the
Obligations in such order as the Lender shall elect. Any surplus of
such cash or cash proceeds held by the Lender and remaining after the
full and final payment of all the Obligations shall be paid over to
the Borrower or to such other Person to which the Lender may be
required under applicable law, or directed by a court of competent
jurisdiction, to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1. NOTICES. Except as otherwise provided herein, all
notices, approvals, consents, correspondence, or other communications
required or desired to be given hereunder shall be given in writing and
shall be delivered by overnight courier, hand delivery, or
20
<PAGE>
certified or registered mail, postage prepaid, if to the Lender, then to at
76 Batterson Park Road, Farmington, Connecticut 06032, with a copy to the
Lender at Riverway II, West Office Tower, 9399 West Higgins Road, Rosemont,
Illinois 60018, and if to the Borrower, then to Five Science Park, New
Haven, Connecticut, 06511, Attention: Chief Financial Officer with a copy
to Robinson & Cole LLP, 280 Trumbull Street, Hartford, CT 06103, Attn:
Felicia DeDominicis, Esq. or such other address as shall be designated by
the Borrower or the Lender to the other party in accordance herewith. All
such notices and correspondence shall be effective when received.
SECTION 9.2. HEADINGS. The headings in this Agreement are for purposes
of reference only and shall not affect the meaning or construction of any
provision of this Agreement.
SECTION 9.3. ASSIGNMENTS AND PARTICIPATIONS. The Borrower shall not
have the right to assign any Note or this Agreement or any interest therein
unless the Lender shall have given the Borrower prior written consent and
the Borrower and its assignee shall have delivered assignment documentation
in form and substance satisfactory to the Lender in its sole discretion.
The Lender may assign (without the consent of Borrower) to one or more
Persons all or a portion of its rights and obligations under this Agreement
and the other Loan Documents (provided that such Person shall not be a
direct or indirect competitor of the Borrower). The Lender may sell
participations in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of
any Loans); provided, however, that the Lender's obligations under this
Agreement shall remain unchanged. The Lender may, in connection with any
permitted assignment or participation or proposed assignment or
participation pursuant to this Agreement, disclose to the assignee or
participant or proposed assignee or participant any information relating to
Borrower furnished to the Lender by or on behalf of Borrower.
SECTION 9.4. AMENDMENTS, WAIVERS, AND CONSENTS. Any amendment or
waiver of any provision of this Agreement and any consent to any departure
by the Borrower from any provision of this Agreement shall be effective
only by a writing signed by the Lender (and, with respect to any amendment,
the Borrower) and shall bind and benefit the Borrower and the Lender and
their respective successors and assigns, subject, in the case of the
Borrower, to the first sentence of Section 9.3.
SECTION 9.5. INTERPRETATION OF AGREEMENT. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in a Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the extent
a term or provision of this Agreement conflicts with any Note, or any term
or provision thereof, and is not dealt with herein with more specificity,
this Agreement shall control with respect to the subject matter of such
term or provision. Acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant in determining the
meaning of this Agreement even though the accepting or acquiescing party
had knowledge of the nature of the performance and opportunity for
objection.
SECTION 9.6. CONTINUING SECURITY INTEREST. This Agreement shall create
a continuing security interest in the Collateral and shall (i) remain in
full force and effect until the indefeasible payment in full of the
Obligations, (ii) be binding upon the Borrower and
21
<PAGE>
its successors and assigns and (iii) inure, together with the rights and
remedies of the Lender hereunder, to the benefit of the Lender and its
successors, transferees, and assigns.
SECTION 9.7. REINSTATEMENT. To the extent permitted by law, this
Agreement and the rights and powers granted to the Lender hereunder and
under the Loan Documents shall continue to be effective or be reinstated if
at any time any amount received by the Lender in respect of the Obligations
is rescinded or must otherwise be restored or returned by the Lender upon
the insolvency, bankruptcy, dissolution, liquidation, or reorganization of
the Borrower or upon the appointment of any receiver, intervenor,
conservator, trustee, or similar official for the Borrower or any
substantial part of its assets, or otherwise, all as though such payments
had not been made.
SECTION 9.8. SURVIVAL OF PROVISIONS. All representations, warranties,
and covenants of the Borrower contained herein shall survive the execution
and delivery of this Agreement, and shall terminate only upon the full and
final payment and performance by the Borrower of the Obligations secured
hereby.
SECTION 9.9. INDEMNIFICATION. The Borrower agrees to indemnify and
hold harmless the Lender and its directors, officers, agents, employees,
and counsel from and against any and all costs, expenses, claims, or
liability incurred by the Lender or such Person hereunder and under any
other Loan Document or in connection herewith or therewith, unless such
claim or liability shall be due to willful misconduct or gross negligence
on the part of the Lender or such Person. In addition and without limiting
the generality of the foregoing, Borrower shall, upon demand, pay to the
Lender all reasonable costs and expenses incurred by the Lender (including
the reasonable fees and disbursements of counsel and other professionals)
in connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents, and pay to the Lender all
reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by the
Lender in order to enforce or defend any of its rights under or in respect
of this Agreement, any other Loan Document or any other document or
instrument now or hereafter executed and delivered in connection herewith,
collect the Obligations or otherwise administer this Agreement, foreclose
or otherwise realize upon the Collateral or any part thereof, prosecute
actions against, or defend actions by, account debtors; commence, intervene
in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise
enforce the Lender's security interest in, the Collateral; and otherwise
represent the Lender in any litigation relating to Borrower.
SECTION 9.10. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement
may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which shall together constitute
one and the same instrument. This Agreement and each of the other Loan
Documents and any notices given in connection herewith or therewith may be
executed and delivered by facsimile transmission all with the same force
and effect as if the same was a fully executed and delivered original
manual counterpart.
22
<PAGE>
SECTION 9.11. SEVERABILITY. In case any provision in or obligation
under this Agreement or any Note or any other Loan Document shall be
invalid, illegal, or unenforceable in any jurisdiction, the validity,
legality, and enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
SECTION 9.12. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Lender to exercise any right or remedy hereunder, whether
before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such
Event of Default. No single or partial exercise by the Lender of any right
or remedy shall preclude any other or further exercise thereof, or preclude
any other right or remedy.
SECTION 9.13. ENTIRE AGREEMENT. The Borrower and the Lender agree that
this Agreement, the Schedule hereto, Promissory Note and the Commitment
Letter are the complete and exclusive statement and agreement between the
parties with respect to the subject matter hereof, superseding all
proposals and prior agreements, oral or written, and all other
communications between the parties with respect to the subject matter
hereof. Should there exist any inconsistency between the terms of the
Commitment Letter and this Agreement, the terms of this Agreement shall
prevail.
SECTION 9.14. SETOFF. In addition to and not in limitation of all
rights of offset that the Lender may have under Applicable Law, and whether
or not the Lender has made any demand or the Obligations of the Borrower
have matured, the Lender shall have the right to appropriate and apply to
the payment of the Obligations of the Borrower all deposits and other
obligations then or thereafter owing by the Lender to or for the credit or
the account of the Borrower.
SECTION 9.15. JOINT AND SEVERAL LIABILITY. If Borrower consists of
more than one Person, their liability shall be joint and several, and the
compromise of any claim with, or the release of, any Borrower shall not
constitute a compromise with, or a release of, any other Borrower.
SECTION 9.16. MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
parties hereto hereby agree that all agreements between them under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be
paid, to the Lender for the use, forbearance, or detention of the money
loaned to Borrower and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein,
exceed the maximum non-usurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or
received on the Obligations, under the laws of the State of Illinois (or
the laws of any other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of this Agreement and the other Loan
Documents), or under applicable federal laws which may presently or
hereafter be in effect and which allow a higher maximum non-usurious
interest rate than under the laws of the State of Illinois (or such other
jurisdiction), in any case after taking into account, to the extent
permitted
23
<PAGE>
by applicable law, any and all relevant payments or charges under this
Agreement and the other Loan Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions (the "Highest Lawful
Rate"). If due to any circumstance whatsoever, fulfillment of any
provisions of this Agreement or any of the other Loan Documents at the time
performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified
or reduced to the extent necessary to limit such interest to the Highest
Lawful Rate, and if from any such circumstance the Lender should ever
receive anything of value deemed interest by applicable law which would
exceed the Highest Lawful Rate, such excessive interest shall be applied to
the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid
balance then outstanding hereunder and such other then outstanding
Obligations, such excess shall be refunded to Borrower. All sums paid or
agreed to be paid to the Lender for the use, forbearance, or detention of
the Obligations and other indebtedness of Borrower to the Lender shall, to
the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness, until payment in
full thereof, so that the actual rate of interest on account of all such
indebtedness does not exceed the Highest Lawful Rate throughout the entire
term of such indebtedness. The terms and provisions of this Section shall
control every other provision of this Agreement, the other Loan Documents
and all other agreements between the parties hereto.
SECTION 9.17. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.18. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.19. VENUE; SERVICE OF PROCESS. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN COOK COUNTY, OR
OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY
WAIVES, IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (a) ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS AND (b) THE RIGHT TO INTERPOSE ANY NONCOMPULSORY
SETOFF, COUNTERCLAIM, OR CROSS-CLAIM. THE BORROWER
24
<PAGE>
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE
ADDRESS FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN EACH INSTANCE TO THE
PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
IN WITNESS WHEREOF, the undersigned Borrower has caused this Agreement
to be duly executed and delivered by its proper and duly authorized officer
as of the date first set forth above.
GENAISSANCE PHARMACEUTICALS, INC.
By: /s/ Kevin Rakin
-----------------------------
Name: Kevin Rakin
---------------------------
Title: CFO & EVP
--------------------------
Accepted as of the
______day of April, 1999
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Robert Pomeroy
---------------------------
Name: Robert Pomeroy
---------------------------
Title:
---------------------------
25
<PAGE>
SCHEDULE A
TO
LOAN AND SECURITY AGREEMENT
<TABLE>
<S> <C>
Consents and Approvals (Section 4.2): Connecticut Department of
Economic & Community
Development
Other Places of Business and Locations of Collateral (Section 4.16): None
Prior Names of Obligor (Section 4.7): BIOS Laboratories, Inc.
Prior Trade Names of Obligor (Section 4.7): None
Existing Trade Names of Obligor (Section 4.7): None
Federal Tax ID (Section 4.7): 06-1338846
Registered and Unregistered Patents (Section 4.11): See Exhibit 4.11(a) hereto
Registered and Unregistered Trademarks (Section 4.11): See Exhibit 4.11(b) hereto
Registered Copyrights (Section 4.11): See Exhibit 4.11(c) hereto
</TABLE>
26
<PAGE>
PROMISSORY NOTE
1083-001
Date: April 30, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Transamerica Business Credit Corporation or its assigns (the "Payee") at its
office located at Riverway II, West Office Tower, 9399 West Higgins Road,
Rosemont, Illinois 60018, or at such other place as the Payee or the holder
hereof may designate in writing, the principal amount of Two Million and 00/100
Dollars ($2,000,000.00) received by the undersigned, plus interest, in lawful
money of the United States and in immediately available funds. Interest only
payments shall be due and payable commencing June 1, 1999 and continuing through
November 1, 1999. Thereafter, interest and principal payments shall be due in 33
consecutive monthly installments of Seventy Two Thousand, Three Hundred Eighty
Eight and 62/100 Dollars ($72,388.62). No amount of principal paid or prepaid
hereunder may be reborrowed.
This Note is the Note referred to in the Loan and Security Agreement dated
as of April 30, 1999 (as amended, supplemented or otherwise modified from time
to time, the "Agreement"), between the undersigned and the Payee and is subject
and entitled to all provisions and benefits thereof. Capitalized terms used but
not defined herein shall have the meanings set forth in the Agreement.
If any installment of this Note is not paid within five days after its due
date, the undersigned agrees to pay on demand, in addition to the amount of such
installment, an amount equal to 5% of such installment, but only to the extent
permitted by Applicable Law.
The undersigned shall have the right to prepay this Note at any time on or
after 180 days from the date hereof, on thirty days' prior written notice to the
Payee. On the date of any such prepayment or the acceleration of the maturity,
the undersigned shall pay an amount equal to the present value of the remaining
payments (principal and interest) due hereunder discounted at 8% simple interest
PER ANNUM, together with all interest, fees and other amounts payable on the
amount so prepaid or in connection therewith to the date of such prepayment. Any
prepayments shall be applied to the installments hereof in the inverse order of
maturity.
Upon the maturity of this Note, the entire unpaid principal amount on this
Note, together with all interest, fees and other amounts payable hereon or in
connection herewith, shall be immediately due and payable without further notice
or demand, with interest on all such amounts at a rate not to exceed the lawful
limit, from the date of such maturity or acceleration, as the case may be, until
all such amounts have been paid. Upon default or the acceleration of the
maturity of this Note in accordance with the terms of the Agreement, the entire
unpaid principal amount on this Note, together with all interest, fees,
prepayment fees and charges in an amount equal to the present value of the
remaining payments (principal and interest) due hereunder discounted at 6%
simple interest PER ANNUM and other amounts payable hereon or in connection
herewith, shall be immediately due and payable without further notice or demand,
with interest on all such amounts at a rate not to exceed the lawful limit, from
the date of such maturity, default or acceleration, as the case may be, until
all such amounts have been paid.
<PAGE>
If any payment on this Note becomes payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day.
The undersigned hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice. The undersigned agrees to pay all amounts under this Note
without offset, deduction, claim, counterclaim, defense or recoupment, all of
which are hereby waived.
The Payee, the undersigned and any other parties to the Loan Documents
intend to contract in strict compliance with applicable usury law from time to
time in effect. In furtherance thereof such Persons stipulate and agree that
none of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by Applicable Law from time to time in effect. Neither the undersigned
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under Applicable Law from time
to time in effect, and the provisions of this paragraph shall control over all
other provisions of the Loan Documents which may be in conflict or apparent
conflict herewith. The Payee expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of any Obligation is accelerated. If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or (c) the Payee or any other holder of any or all of the Obligations
shall otherwise collect amounts which are determined to constitute interest
which would otherwise increase the interest on any or all of the Obligations to
an amount in excess of that permitted to be charged by Applicable Law then in
effect, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then outstanding
principal of the related Obligations or, at the Payee's or such holder's option,
promptly returned to the undersigned upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under Applicable Law, the Payee and the
undersigned (and any other payors thereof) shall to the greatest extent
permitted under Applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread the total amount of interest through the entire contemplated term of this
Note in accordance with the amount outstanding from time to time thereunder and
the maximum legal rate of interest from time to time in effect under Applicable
Law in order to lawfully charge the maximum amount of interest permitted under
Applicable Law.
This Note may not be changed, modified or terminated orally, but only by an
agreement in writing signed by the undersigned and the Payee or any holder
hereof.
The undersigned shall, upon demand, pay to the Payee all costs and expenses
incurred by the Payee (including the fees and disbursements of counsel and other
professionals) in connection with the preparation, execution and delivery of
this Note and all other Loan
2
<PAGE>
Documents, and in connection with the administration, modification and amendment
of the Loan Documents, and pay to the Payee all costs and expenses (including
the fees and disbursements of counsel and other professionals) paid or incurred
by the Payee in (A) enforcing or defending its rights under or in respect of
this Note or any of the other Loan Documents, (B) collecting any of the
liabilities by the undersigned to the Payee or otherwise administering the Loan
Documents, (C) foreclosing or otherwise collecting upon any collateral and (D)
obtaining any legal, accounting or other advice in connection with any of the
foregoing.
This Note shall be binding upon the successors and assigns of the
undersigned and inure to the benefit of the Payee and its successors, endorsees
and assigns. If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected thereby.
EACH OF THE UNDERSIGNED AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE
ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
GENAISSANCE
PHARMACEUTICALS, INC.
By: /s/ Kevin Rakin
-----------------------------
Name: Kevin Rakin
---------------------------
Title: CFO & EVP
--------------------------
3
