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Exhibit 10.1
CREDIT AGREEMENT
This Credit Agreement ("Agreement") is made and entered into on August 6,
1999, by and between TREGA BIOSCIENCES, INC., a Delaware corporation and
Imperial Bank, a California banking corporation, ("Bank").
Subject to the terms and conditions of this Agreement, any security
agreement(s) executed by Borrower in favor of Bank, any note executed by
Borrower in favor of Bank, or any other agreements executed in conjunction
therewith (collectively, the "Loan Documents"), Bank shall make the loans and
or advances (individually a "Loan" and collectively "Loans") referred to
below to Borrower.
In consideration of mutual covenants and conditions hereof, the parties
hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.01 REVOLVING CREDIT COMMITMENT.
(a) REVOLVING LINE OF CREDIT. Subject to the terms and conditions of
this Agreement, provided that no event of default then has occurred and is
continuing, Bank shall, upon Borrower's request make advances ("Revolving
Loans") to Borrower, for general corporate purposes, in an amount not to
exceed $1,500,000 (the "Revolving Line of Credit") until August 5, 2000, (the
"Revolving Line of Credit Maturity Date"). Revolving Loans may be repaid and
reborrowed, provided that all outstanding principal and accrued interest on
the Revolving Loans shall be payable in full on the Revolving Credit Maturity
Date.
(b) REVOLVING NOTE. The interest rate, principal and interest payments,
maturity date and certain other terms of the Revolving Loan will be contained
in a promissory note dated the date of this agreement, as such may be amended
or replaced from time to time.
(c) LATE CHARGE. If any installment payment, interest payment, principal
payment or principal balance due under the Revolving Line of Credit is
delinquent ten (10) or more days, Borrower agrees to pay Bank a late charge
in the amount of five percent (5%) of the payment so due and unpaid, in
addition to the payment; but nothing in this paragraph is to be construed as
any obligation on the part of the Bank to accept payment of any payment past
due or less than the total unpaid principal balance after maturity. All
payments, at Bank's sole discretion, shall be applied first to any late
charges owing, then to interest and the remainder, if any, to principal.
(d) DEFAULT RATE. If an Event of Default occurs hereunder, then during
the continuance thereof at the Bank's option, the interest rate shall be five
percent (5%) per year in excess of the rate otherwise applicable.
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(e) INTEREST CALCULATIONS. The term "Prime Rate" shall mean the rate
that the Bank has announced as its prime lending rate, which shall vary
concurrently with any change in the Prime Rate. Interest based on the Prime
Rate shall vary concurrently with any change in the Prime Rate. All interest
shall be computed at the rate specified in any note on the basis of the
actual number of days during which the principal balance of the corresponding
Loans are outstanding divided by 360, which shall for interest computation
purposes be considered one (1) year.
1.02 DOCUMENTATION FEE, COSTS AND EXPENSES. In addition to any other
amounts due, or to become due, concurrently with the execution hereof,
Borrower agrees to pay to Bank a documentation fee in the amount of $250.00,
and all other costs and expenses incurred by the Bank in the preparation of
this Agreement, the other Loan Documents and the perfection of any security
interest granted to Bank by Borrower.
1.03 COLLATERAL. Borrower shall grant or cause to be granted to Bank a
first priority lien on any and all personal property assets of Borrower which
is assigned or hereafter is assigned to Bank as security or in which Bank now
has or hereafter acquires a security interest or pursuant to the terms of any
security agreement, or otherwise as security for all of Borrower's
obligations to Bank all as may be subject to section 5.03 herein.
1.04 COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all
interest, fees, costs, and/or expenses due under this Agreement by charging
Borrower's demand deposit account number 38-051-695 with Bank, or any other
demand deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such deficiency
shall be immediately due and payable by Borrower.
2. REPRESENTATIONS OF BORROWER
Borrower represents and warrants that:
2.01 EXISTENCE AND RIGHTS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of California,
without limit as to the duration of its existence. Borrower is authorized and
in good standing to do business in the state of its incorporation; Borrower
has the appropriate powers and adequate authority, rights and franchises to
own its property and to carry on its business as now conducted, and is duly
qualified and in good standing in each state in which the character of the
properties owned by it therein or the conduct of its business makes such
qualification necessary; and Borrower has the power and adequate authority to
make and carry out this Agreement. Borrower has no investment in any other
business entity, other than Navicyte and ChromaXome, unless specified in
writing to Bank.
2.02 AGREEMENT AUTHORIZED. The execution, delivery and performance of
this Agreement and the Loan Documents are duly authorized and do not require
the consent or approval of any governmental body or other regulatory
authority; are not in contravention of or
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in conflict with any law or regulation or any term or provision of Borrower's
charter/articles of incorporation, or similar document as the case may be,
and this Agreement is the valid, binding and legally enforceable obligation
of Borrower in accordance with its terms; subject only to bankruptcy,
insolvency or similar laws affecting creditors rights generally.
2.03 NO CONFLICT. The execution, delivery and performance of this
Agreement and the Loan Documents are not in contravention of or in conflict
with any agreement, indenture or undertaking to which Borrower is a party or
by which it or any of its property may be bound or affected, and do not cause
any lien, charge or other encumbrance to be created or imposed upon any such
property by reason thereof.
2.04 LITIGATION. Except as disclosed in writing to bank by Borrower,
there is no litigation or other proceeding pending or threatened against or
affecting Borrower which if determined adversely to Borrower or its interest
would have a material adverse effect on the financial condition of Borrower,
and Borrower is not in default with respect to any order, writ, injunction,
decree or demand of any court or other governmental or regulatory authority.
2.05 FINANCIAL CONDITION. The balance sheet of Borrower as of March 31,
1999, and the related profit and loss statement for the six month period
ended as of that date, a copy of which has heretofore been delivered to Bank
by Borrower, and all other statements and data submitted in writing by
Borrower to Bank in connection with this request for credit are true and
correct, and said balance sheet truly presents the financial condition of
Borrower as of the date thereof, and has been prepared in accordance with
generally accepted accounting principles on a basis consistently maintained.
Since such date there have been no material adverse changes in the financial
condition or business of Borrower. Borrower has no knowledge of any
liabilities, contingent or otherwise, at such date not reflected in said
balance sheet, and Borrower has not entered into any special commitments or
substantial contracts which are not reflected in said balance sheet, other
than in the ordinary and normal course of its business, which may have a
materially adverse effect upon its financial condition, operations or
business as now conducted.
2.06 TITLE TO ASSETS. Borrower has good title to its assets, and the same
are not subject to any liens or encumbrances other than those permitted by
Section 5.03 hereof.
2.07 TAX STATUS. Borrower has no liability for any delinquent state,
local or federal taxes, and, if Borrower has contracted with any government
agency, Borrower has no liability for renegotiation of profits.
2.08 TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license
rights of others.
2.09 REGULATION U. None of the proceeds of any Loan shall be used to
purchase or carry margin stock (as defined within Regulation U of the Board
of Governors of the Federal Reserve system).
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2.10 ERISA. All defined benefit pension plans as defined in the Employees
Retirement Income Security Act of 1974, as amended ("ERISA"), of Borrower
meet, as of the date hereof, the minimum funding standards of Section 302 of
ERISA, and no Reportable Event or Prohibited Transaction as defined in ERISA
has occurred with respect to any such plan.
2.11 YEAR 2000 COMPLIANCE. Borrower and its subsidiaries, as applicable,
have reviewed the areas within their operations and business which could be
adversely affected by, and have developed or are developing a program to
address on a timely basis, the Year 2000 Problem and have made related
appropriate inquiry of material suppliers and vendors, and based on such
review and program, to the best of Borrower's knowledge, the Year 2000
Problem will not have a material adverse effect upon its financial condition,
operations or business as now conducted. "Year 2000 Problem" means the
possibility that any computer applications or equipment used by Borrower may
be unable to recognize and properly perform date sensitive functions
involving certain dates prior to and any dates one or after December 31, 1999.
3. CONDITIONS PRECEDENT TO LOAN.
Prior to Bank being obligated to make any Loan pursuant to this
Agreement, Bank must receive all of the following, each of which must be in
form and substance satisfactory to Bank:
3.01 PROMISSORY NOTE. Original, executed promissory note.
3.02 SECURITY AGREEMENT. Original, executed security agreement covering
the personal property collateral securing the Loan.
3.03 FINANCING STATEMENT. Financing statement executed by Borrower.
3.04 INSURANCE. Borrower shall have delivered to Bank evidence of
insurance coverage required pursuant to that Agreement to Provide Insurance
executed by Borrower, in form, substance, amounts, covering risks and issued
by companies satisfactory to Bank, and where required by Bank, with loss
payable endorsements in favor of Bank.
3.05 ORGANIZATIONAL DOCUMENTS. Copies of the articles of incorporation,
similar document as the case may be, of the Borrower.
3.06 AUTHORIZATIONS. Certified copies of all action taken by the
Borrower to authorize the execution, delivery and performance of the Loan
Documents.
3.07 GOOD STANDING. Good standing certificates from the appropriate
secretary of state of the state in which the Borrower is organized.
3.08 WARRANTS. Borrower to deliver to Bank a warrant to purchase of
$35,000 worth
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of common stock at $1.75 per share.
3.09 ADDITIONAL DOCUMENTS. Such other documents as Bank may reasonably
deem necessary.
4. AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, under borrowings, or
other indebtedness, or so long as Bank has any obligation to extend credit to
Borrower it will, unless Bank shall otherwise consent in writing:
4.01 RIGHTS AND FACILITIES. Maintain and preserve all rights, franchises
and other authority adequate for the conduct of its business; maintain its
properties, equipment and facilities in good order and repair; conduct its
business in an orderly manner without voluntary interruption and, if a
corporation or partnership, maintain and preserve its existence.
4.02 USE OF PROCEEDS. Use the proceeds of the Loans only for purposes
specified in Section 1 of this Agreement.
4.03 INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property against
fire and other hazards with responsible insurance carriers to the extent
usually maintained by similar businesses and/or in the exercise of good
business judgment, and as required by that Agreement to Provide Insurance
executed by Borrower, with the Bank to be shown as Lenders Loss Payee on such
policies.
4.04 TAXES AND OTHER LIABILITIES. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent and so long
as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse effect upon
its financial condition or the loss of any right of redemption from any sale
thereunder; and
(b) It shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting practice) deemed by it to be
adequate with respect thereto.
4.05 RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles on a
basis consistently maintained; permit Bank's representatives to have access
to, and to examine its properties, books and
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records at all reasonable times and upon reasonable notice during normal
business hours; and furnish Bank:
(a) MONTHLY FINANCIAL STATEMENT. As soon as available, and in any event
within thirty (30) days after the close of each month, a balance sheet,
profit and loss statement and reconciliation of Borrower's capital balance
accounts as of the close of such period and covering operations for the
portion of Borrower's fiscal year ending on the last day of such period, all
in reasonable detail and reasonably acceptable to Bank, in accordance with
generally accepted accounting principles on a basis consistently maintained
by Borrower and certified by an appropriate officer of Borrower.
(b) QUARTERLY FINANCIAL STATEMENT. As soon as available, and in any
event within forty-five (45) days of each quarter end of Borrower, a
quarterly report (SEC form 10-Q) in reasonable detail in accordance with
generally accepted accounting principles on a basis consistently maintained
by Borrower certified by an appropriate officer of Borrower.
(c) ANNUAL FINANCIAL STATEMENT. As soon as available, and in any event
within one hundred, twenty (120) days after and as of the close of each
fiscal year of Borrower, an annual report of Company, in reasonable detail,
audited by an independent certified public accountant, in accordance with
generally accepted accounting principles on a basis consistently maintained
by Borrower and certified by an appropriate officer of Borrower and
Borrower's SEC form 10K, within ten (10) days of filing with the SEC.
(d) OFFICER'S CERTIFICATE. Within thirty (30) days after the end of each
month and fiscal year of Borrower, a certificate of the chief financial
officer of Borrower, stating that Borrower has performed and observed each
and every covenant contained in this Agreement to be performed by it and that
no event has occurred and no condition then exists which constitutes an event
of default hereunder or would constitute such an event of default upon the
lapse of time or upon the giving of notice and the lapse of time specified
herein; or, if any such event has occurred or any such condition exists,
specifying the nature thereof.
(e) OTHER INFORMATION. Such other information relating to the affairs of
Borrower as the Bank reasonably may request from time to time.
4.06 MINIMUM LIQUIDITY. Maintain minimum monthly Liquidity, defined as
unrestricted cash and cash equivalents plus net trade accounts receivable
measured monthly, the greater of 1) $4,000M, or 2) four months cash burn
(defined as the average cash burn of the prior three months multiplied by
four).
4.07 OUT OF DEBT PERIOD. Borrower to maintain no borrowings under the
Revolving Line from January 1, 2000 to January 31, 2000.
4.08 ERISA. Cause all defined benefit pension plans, as defined in
ERISA, of Borrower to, at all times, meet the minimum funding standards of
Section 302 of ERISA, and
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ensure that no Reportable Event or Prohibited Transaction, as defined in
ERISA, will occur with respect to any such plan.
4.09 LAWS. At all times comply with, or cause to be complied with, in all
material respects, all laws, statues, rules, regulations, orders and
directions of any governmental authority having jurisdiction over Borrower or
Borrower's business.
4.10 GAAP. Compliance with all financial covenants shall be calculated
based on generally accepted accounting principles applied on a consistent
basis as maintained by Borrower.
4.11 YEAR 2000 COMPLIANT. Borrower shall perform all acts reasonably
necessary to ensure that (a) Borrower and any business in which Borrower
holds a substantial interest, and (b) all customers, suppliers and vendors
whose compliance is likely to be material to Borrower's business, become Year
2000 Compliant in a timely manner. Such acts shall include, without
limitation, performing a comprehensive review and assessment of all
Borrower's systems and adopting a detailed plan, with itemized budget, for
the remediation, monitoring and testing of such systems. As used in this
paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity,
will properly perform date sensitive functions before, during and after the
year 2000. Borrower shall, immediately upon request, provide to Agent such
certifications or other evidence of Borrower's compliance with the terms of
this paragraph as Bank may from time to time require.
4.12 OPERATING ACCOUNTS. Maintain all primary accounts and banking
relationship with the Bank.
4.13 NOTICES. Promptly notify Bank in writing of (i) the occurrence of
any Event of Default hereunder or any event which upon notice and lapse of
time would be an Event of Default; (ii) all litigation affecting Borrower
where the amount is $250,000 or more; any substantial dispute which may exist
between Borrower and any governmental regulatory body or law enforcement
authority; any change in Borrower's name or principal place of business; or
any other matter which has resulted or might result in a material adverse
change in Borrower's financial condition or operations.
5. NEGATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, or so long as Bank
has any obligation to extend credit to Borrower, it will not, without Bank's
written consent:
5.01 TYPE OF BUSINESS. Make any substantial change in the character of
its business (changes within the bio-technology and bio-pharmaceutical fields
excepted).
5.02 OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness for borrowed moneys other than Loans from the Bank except
obligations now
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existing as shown in the financial statement dated March 31, 1999, in excess
of $250,000 without prior Bank approval, excluding those obligations being
refinanced by Bank, and other than those Permitted Indebtedness or sell or
transfer, either with or without recourse, any accounts or notes receivable
or any moneys due or to become due.
5.03 LIENS AND ENCUMBRANCES. Create, incur, permit to exist, or assume
any mortgage, pledge, encumbrance, lien or charge of any kind upon any asset
now owned or hereafter acquired by it, other than liens for taxes not
delinquent, purchase money security interests and liens in Bank's favor and
other than liens agreed to in writing by Bank.
5.04 LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans or
advances to any person or other entity other than in the ordinary and normal
course of its business as now conducted or make any investment in the
securities of any person or other entity other than according to Borrower's
investment policy dated May 18, 1999, and attached hereto as Exhibit 5.04; or
guarantee or otherwise become liable upon the obligation of any person or
other entity, except by endorsement of negotiable instruments for deposit or
collection in the ordinary and normal course of its business in excess of
$250,000 without prior bank approval.
5.05 ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase
or otherwise acquire the assets or business of any person or other entity; or
liquidate, dissolve, merge or consolidate, or commence any proceedings
therefor; or sell any assets except in the ordinary and normal course of its
business as now conducted; or sell, lease, assign, or transfer any
substantial part of its business or fixed assets, or any property or other
assets necessary for the continuance of its business as now conducted,
including without limitation the selling of any property or other asset
accompanied by the leasing back of the same.
5.06 SUBORDINATED LIABILITIES. Make any payments on any Borrower's
obligation subordinated to the obligations to Bank, other than in accordance
with the provisions of any subordination agreement executed by the Bank and
the subordinated debt holder.
6. EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Events of
Default") shall, at Bank's option, terminate Bank's commitment to lend and
make all sums of principal and interest then remaining unpaid on all
Borrower's indebtedness to Bank immediately due and payable, all without
demand, presentment or notice, all of which are hereby expressly waived:
6.01 FAILURE TO PAY. Failure to pay any installment of principal or of
interest on any indebtedness of Borrower to Bank within, five (5) days of its
due date.
6.02 BREACH OF COVENANT. Failure of Borrower to perform any other
material term or condition of this Agreement or any Loan Document binding
upon Borrower.
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6.03 BREACH OF WARRANTY. Any of Borrower's representations or warranties
made herein or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false or misleading in any
respect.
6.04 INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become insolvent; or
admit its inability to pay its debts as they mature; or make an assignment
for the benefit of creditors; or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business.
6.05 JUDGMENTS, ATTACHMENTS. Any money judgment in excess of $250,000,
writ or warrant of attachment, or similar process shall be entered or filed
against Borrower or any of its assets and shall remain unvacated, unbonded or
unstayed for a period of ten (10) days or in any event later than five (5)
days prior to the date of any proposed sale thereunder.
6.06 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against Borrower and,
if instituted against it, shall not be dismissed within thirty (30) days
thereafter.
6.07 CESSATION OF BUSINESS. Borrower shall voluntarily suspend its
business.
6.08 ADVERSE CHANGE. Any change which, in the reasonable opinion of Bank,
is materially adverse to the financial condition of Borrower; or should Bank,
for any reason, reasonably believe that the prospect of Borrower's payment or
performance hereunder or under any other agreement or instrument with Bank be
impaired.
6.09 OTHER DEFAULTS. Borrower shall commit or do or fail to commit or do
any act or thing which would constitute an event of default under any of the
terms of any other agreement, document or instrument executed or to be
executed by it concerning the obligation to pay money.
6.10 ADVANCES. Notwithstanding anything to the contrary contained herein,
Bank shall have no duty to make advances while any event of default exists
notwithstanding any cure period provided for herein.
7. MISCELLANEOUS PROVISIONS
7.01 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
Bank or any holder of notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
All rights and remedies existing under this Agreement or any note issued in
connection with a Loan that Bank may make hereunder, are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
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7.02 COUNTERPARTS; ENTIRE AGREEMENT. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute together but one and the
same agreement. This Agreement, and the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements, written or oral, with
respect thereto.
7.03 ATTORNEY'S FEES. Borrower will pay promptly to Bank without demand
after notice, with interest thereon from the date of expenditure at the rate
applicable to the Loan, reasonable attorneys' fees and all costs and expenses
paid or incurred by Bank in collecting or compromising the Loan after the
occurrence of an Event of Default, whether or not suit is filed. If suit is
brought to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover its reasonable attorneys' fees and court costs
in addition to any other remedy or recovery awarded by the court.
7.04 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or
banker's lien.
7.05 INUREMENT. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assigns of
Borrower.
7.06 APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the state of California, to the
jurisdiction of whose courts the parties hereby agree to submit.
7.07 OFFSET. In addition to and not in limitation of all rights of offset
that Bank or other holder of the Loan may have under applicable law, Bank or
other holder of any note issued hereunder shall, upon the occurrence of any
Event of Default or any event which with the passage of time or notice would
constitute such an Event of Default, have the right to appropriate and apply
to the payment of the Loan any and all balances, credits, deposits, accounts
or monies of Borrower then or thereafter with Bank or other holder, within
ten (10) days after the Event of Default, and notice of the occurrence of any
Event of Default by Bank to Borrower.
7.08 SEVERABILITY. Should any one or more provisions of the Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
7.09 TIME OF THE ESSENCE. Time is hereby declared to be of the essence of
this Agreement and of every part hereof.
7.10 ACCOUNTING. All accounting terms shall have the meanings applied
under generally accepted accounting principles unless otherwise specified.
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7.11 REFERENCE PROVISION.
(a) Other than (i) nonjudicial foreclosure and all matters in connection
therewith regarding security interests in real or personal property; or (ii)
the appointment of a receiver, or the exercise of other provisional remedies
(any and all of which may be initiated pursuant to applicable law), each
controversy, dispute or claim between the parties arising out of or relating
to this Credit Agreement, any security agreement executed by Borrower in
favor of Bank or any note executed by Borrower in favor of Bank or any other
agreement or instrument issued in favor of Bank by Borrower (collectively in
this Section, the "Agreement") which controversy, dispute or claim is not
settled in writing within thirty (30) days after the "CLAIM DATE" (defined as
the date on which a party subject to this Agreement gives written notice to
all other parties that a controversy, dispute or claim exists), will be
settled by a reference proceeding in California in accordance with the
provisions of Section 638 ET SEQ. of the California Code of Civil Procedure,
or their successor section ("CCP"), which shall constitute the exclusive
remedy for the settlement of any controversy, dispute or claim concerning
this Agreement, including whether such controversy, dispute or claim is
subject to the reference proceeding and except as set forth above, the
parties waive their rights to initiate any legal proceedings against each
other in any court or jurisdiction other than the Superior Court in the
County where the Real Property, if any, is located or San Diego County if
none (the "COURT"). The referee shall be a retired Judge of the Court
selected by mutual agreement of the parties, and if they cannot so agree
within forty-five (45) days after the Claim Date, the referee shall be
promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of Court (or any subsequently enacted Rule).
Each party shall have one peremptory challenge pursuant to CCP Section 170.6.
The referee shall (a) be requested to set the matter for hearing within sixty
(60) days after the date of selection of the referee and (b) try any and all
issues of law or fact and report a statement of decision upon them, if
possible, within ninety (90) days of the Claim Date. Any decision rendered
by the referee will be final, binding and conclusive and judgment shall be
entered pursuant to CCP Section 644 in any court in the state of California
having jurisdiction. Any party may apply for a reference proceeding at any
time after thirty (30) days following notice to any other party of the nature
of the controversy, dispute or claim, by filing a petition for a hearing
and/or trial. All discovery permitted by this Agreement shall be completed
no later than fifteen (15) days before the first hearing date established by
the referee. The referee may extend such period in the event of a party's
refusal to provide requested discovery for any reason whatsoever, including,
without limitation, legal objections raised to such discovery or
unavailability of a witness due to absence or illness. No party shall be
entitled to "priority" in conducting discovery. Depositions may be taken by
either party upon seven (7) days written notice, and request for production
or inspection of documents shall be responded to within ten (10) days after
service. All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided
herein, the Superior Court is empowered to issue temporary and/or provisional
remedies, as appropriate.
(b) Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of all
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hearings, the order of presentation of evidence, and all other questions that
arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter except that when any party so
requests, a court reporter will be used at any hearing conducted before the
referee. The party making such a request shall have the obligation to
arrange for and pay for the court reporter. The costs of the court reporter
at the trial shall be borne equally by the parties.
(c) The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the state of California.
The rules of evidence applicable to proceedings at law in the state of
California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will
be binding upon the parties. The referee shall issue a single judgment at
the close of the reference proceeding which shall dispose of all of the
claims of the parties that are the subject of the reference. The parties
hereto expressly reserve the right to contest or appeal from the final
judgment or any appealable order or appealable judgment entered by the
referee. The parties hereto expressly reserve the right to findings of fact,
conclusions of laws, a written statement of decision, and the right to move
for a new trial or a different judgment, which new trial, if granted, is also
to be a reference proceeding under this provision.
(d) In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by the
reference procedure herein described will be resolved and determined by
arbitration. The arbitration will be conducted by a retired judge of the
Court, in accordance with the California Arbitration Act, Section 1280
through Section 1294.2 of the CCP as amended from time to time. The
limitations with respect to discovery as set forth hereinabove shall apply to
any such arbitration proceeding.
7.12 This Agreement may be modified only by writing signed by all parties
hereto.
This Agreement is executed on behalf of the parties by duly authorized
officers as of the date first above written.
IMPERIAL BANK TREGA BIOSCIENCES, INC.
("BANK") ("BORROWER")
By: By:
------------------------------ ----------------------------------
Michael G. Grey, President & CEO
Its: By:
----------------------------- ----------------------------------
Gerald A. Wills, VP Finance & CFO
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