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APPENDIX E
THIS CREDIT FACILITY AGREEMENT dated for reference the 27th day of July,
2000,
BETWEEN:
MFC MERCHANT BANK S.A., a bank organized under the laws of
Switzerland (hereinafter, the "Lender")
AND:
HIPPOCAMPE S.A., a societe anonyme organized under the laws of
France (hereinafter, the "Borrower")
WHEREAS the Borrower has requested that the Credit Facility be made
available by the Lender to the Borrower and the Lender has agreed to make
the Credit Facility available to the Borrower upon the terms and conditions
set out herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto agree as
follows:
ARTICLE 1 - INTERPRETATION
Section 1.1. Definitions. When used in this agreement (including the
recitals and schedules hereto) (the "Agreement") or in any amendment
hereto, the terms listed in Schedule B hereto shall, unless otherwise
expressly provided, have the meanings assigned to them therein.
ARTICLE 2 - THE CREDIT FACILITY
Section 2.1. Credit Facility. The Lender shall make available to the
Borrower in accordance with, and subject to the terms and conditions of,
this Agreement, until August 31, 2001 (the "Maturity Date"), a revolving
term facility in the principal amount of up to Euro 1,300,000 (the "Credit
Facility") and made available to the Borrower by way of Advances in
accordance with Section 2.2 hereof.
Section 2.2. The Advances. On the terms and conditions set forth
herein the Lender, from time to time, on any banking day, prior to the
Maturity Date, agrees to make advances to the Borrower ("Advances"). Each
Advance shall be in an aggregate amount of not less than Euro 50,000 and in
integral multiples of Euro 10,000.
Section 2.3. Making the Advances. Each Advance shall be made on three
banking days' notice. Each such notice shall be given by a borrowing
notice in form satisfactory to the Lender (the "Borrowing Notice") which
shall specify therein (i) the requested date of such Advance; (ii) the
aggregate amount of such Advance; and (iii) the Outstanding Amount having
given effect to such Advance.
Section 2.4. Use of Proceeds. The Borrower shall use all Advances to
fund: (i) fees associated with registering and maintaining the registration
of the Patents; (ii) operating and research activities until December 31,
2000; and (iii) working capital and general corporate activities.
ARTICLE 3 - REPAYMENT
Section 3.1. Payments. The Borrower shall pay or repay to the Lender
on the Maturity Date all amounts owing under the Credit Facility and not
previously paid or repaid hereunder, without set-off, counterclaim or
deduction, unless, in the case of set-off, such set-off is specifically
acknowledged in writing by the Lender.
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Section 3.2. Interest on Advances. The Borrower shall pay to the
Lender on the first banking day of each calendar month (the "Interest
Payment Dates"), the first such date falling on October 1, 2000, Interest
on the unpaid principal amount of each Advance made to it from the date of
such Advance in Euros, until such principal amount shall be repaid in full,
at the Interest Rate. Interest shall accrue from day to day and shall be
compounded monthly in arrears.
Section 3.3. Fees. Provided the Lender is prepared to make Advances
to the Borrower up to the amount set forth in Section 2.1 hereof, the
Borrower shall pay the Lender on the Closing Date an arrangement fee equal
to Euro 130,000 (the "Arrangement Fee"), whether or not any Advances are
made under this Agreement; provided that the parties hereto may agree in
writing to include the Arrangement Fee as an Outstanding Amount, with
Interest to be paid thereon in accordance with Section 3.2 hereof and to be
repaid in accordance with Section 3.1 hereof.
Section 3.4. Borrower's Right to Prepay the Loan. The Borrower may,
on ten banking days' prior notice given to the Lender, prepay the
outstanding aggregate principal amount of the Advances made to the Borrower
under the Credit Facility, in whole or in part, together with accrued
Interest to the date of such prepayment on the amount prepaid. Each
prepayment shall be in a principal amount of not less than Euro 50,000 and
in integral multiples of Euro 10,000 thereafter.
ARTICLE 4 - SECURITY
Section 4.1. Security. As general and continuing security for the
performance of all Obligations of the Borrower under the Credit Facility
Documents, the Borrower shall deliver to the Lender, in form and substance
satisfactory to the Lender:
(a) on or prior to the Closing Date, a pledge agreement in the
aggregate principal amount of Euro 1,300,000, which
agreement shall pledge all existing and future pecuniary
claims of the Borrower against third parties;
(b) on or prior to the Closing Date, a pledge agreement in the
aggregate principal amount of Euro 1,300,000, which
agreement shall pledge the Patents (now existing and
hereafter acquired or registered); and
(c) at or prior to the time of completion of the
Reorganization, a demand debenture in the aggregate
principal amount of Euro 1,300,000 duly created by the
Borrower in favour of the Lender, which debenture shall
contain a first fixed and specific charge and security
interest on the interest of the Borrower in and to all of
its property, assets and undertakings and a floating charge
on the interest of the Borrower in and to all of its other
property, assets and undertakings not otherwise
specifically mortgaged and charged under the debenture.
In addition, as general and continuing security for the performance of all
Obligations of the Borrower under the Credit Facility Documents, the
Borrower undertakes to pledge to the Lender, until the debenture
contemplated in Section 4.1(c) above is delivered to the Lender, any of its
future patents derived from the Patents, in and restricted to the field of
human and animal AIDS, each time and as soon as such future patent comes
into existence, and to deliver to the Lender a patent pledge agreement in
form and substance satisfactory to the Lender; provided that the Lender at
the time of entering into each future patent pledge agreement
simultaneously undertakes in writing to the Borrower and any other party
designated by the Borrower not to hinder the applications of such future
patents in fields other than human and animal AIDS.
Section 4.2. Continued Perfection and Agreed Releases of Security.
The Borrower shall take such action and execute and deliver to the Lender
such agreements, conveyances, deeds and other documents and instruments as
the Lender shall reasonably request for the purpose of establishing,
perfecting, preserving and protecting the Security, in each case forthwith
upon request therefor by the Lender and in form and
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substance reasonably satisfactory to the Lender.
ARTICLE 5 - CONDITIONS PRECEDENT TO THE ADVANCES
Section 5.1. Conditions Precedent to the Initial Advance. The
obligation of the Lender to make its initial Advance is subject to the
fulfillment of: (i) the conditions precedent set forth in Section 5.2; and
(ii) the following conditions precedent:
(a) the Lender shall have received, in a form satisfactory to
it: (i) copies certified by a senior officer of the
Borrower of its Charter Documents, the resolutions of its
board of directors approving the Credit Facility Documents
and all documents evidencing any necessary corporate action
of the Borrower with respect to the Credit Facility
Documents; (ii) a certificate of good standing for the
Borrower; and (iii) a favourable opinion of Borrower's
counsel as to such matters as the Lender may require;
(b) the Credit Facility Documents shall have been executed and
delivered to the Lender, the Security shall have been
created, and all registrations, filings or recordings
necessary or desirable to preserve, protect or perfect the
enforceability and priority of the Security shall have been
completed, all in such form, content and manner as is
satisfactory to the Lender;
(c) all of the representations and warranties contained in
Article 6 hereof shall be correct on and as of the Closing
Date as though made on and as of such date; and
(d) the Lender shall have received such other documents as it
may reasonably request.
Section 5.2. Conditions Precedent to All Advances. The obligation of
the Lender to make an Advance and the right of the Borrower to deliver a
Borrowing Notice shall be subject to the condition precedent that on the
date of such Advance and after giving effect thereto and to the application
of proceeds therefrom: (i) the representations and warranties contained in
Article 6 hereof are true and correct in every material respect on the date
of the Advance as if made on and as at such date; (ii) no event has
occurred and is continuing, or would result from such Advance, which
constitutes or would, with the giving of notice or the passage of time,
constitute an Event of Default; (iii) such Advance will not violate any
applicable Law; (iv) there have been no amendments to the Charter Documents
or authorizing resolutions of the Borrower, subsequent to those delivered
to the Lender pursuant to Section 5.1(a) which are material to the ability
of the Borrower to enter into this Agreement and any of the other Credit
Facility Documents and to perform its obligations hereunder and thereunder;
and (v) the Lender shall have received, if requested, such other
certificates and documentation as it may reasonably request with respect to
the foregoing and opinions from Borrower's counsel updating opinions
previously delivered.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties by the Borrower. The
Borrower represents and warrants to the Lender as outlined in Schedule C
hereto.
ARTICLE 7 - COVENANTS OF THE BORROWER
Section 7.1. Affirmative Covenants. Until the Obligations are paid
and satisfied in full and this Agreement has been terminated, the Borrower
shall (or, if applicable, shall cause the relevant action to take place):
(a) Financial Reporting. Deliver to the Lender as soon as
available and in any case within 45 days or 90 days after
the end of each financial quarter or year, respectively,
quarterly and audited annual financial statements of the
Borrower prepared in accordance with French
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GAAP and certified by a senior officer of the Borrower as
being true and correct in all material respects;
(b) Corporate Existence. Preserve and maintain in full force
and effect its corporate existence and all qualifications
to carry on the Borrower's business;
(c) Compliance with Laws, etc. Comply with all applicable
Laws, non-compliance with which could have a Material
Adverse Effect;
(d) Payment of Taxes and Claims. Pay and discharge before the
same shall become delinquent: (i) all Taxes, assessments
and Official Body charges or levies; and (ii) all lawful
claims which, if unpaid, might become a Lien upon or in
respect of the Borrower's business or the Borrower's assets
or properties;
(e) Visitation, Inspection, etc. Permit the Lender or any
representative thereof on reasonable notice to visit and
inspect the Borrower's business, to examine the Borrower's
records and make copies and take extracts therefrom, and to
discuss the Borrower's affairs, finances and accounts with
the officers of the Borrower at such reasonable times
during normal office hours and as often as may be
reasonably requested;
(f) Notice of Default. Promptly notify the Lender in writing
of any Default or Event of Default or any default, or
event, condition or occurrence which with notice or lapse
of time, or both, would constitute a default, under any
agreement;
(g) Maintain Registration of Patents. File all such materials,
documents and applications, and take all such actions, as
are necessary to maintain the validity and proper
registration of the Patents;
(h) Maintain Title. Maintain and, as soon as reasonably
practicable, defend and take, all action necessary or
advisable at any time, and from time to time, to maintain,
defend, exercise or renew its right, title and interest in
and to all of its property and assets;
(i) Pay Obligations to Lender and Perform Other Covenants.
Make full and timely payment of its Obligations hereunder
and duly comply with the terms and covenants contained in
each of the Credit Facility Documents, all at the times and
places and in the manner set forth therein, and at all
times take all action necessary to maintain the Liens
provided for under or pursuant to this Agreement and the
Security Documents as valid and perfected first Liens on
the property intended to be covered thereby (subject only
to Permitted Encumbrances);
(j) Notices of Official Body Action. Promptly notify the
Lender in writing of any notice of any action by any
Official Body or any action, suit, proceeding or
investigation (or any basis therefor) pending, or to the
knowledge of the Borrower threatened, against or affecting
the Borrower before any Official Body, where the amount
involved exceeds Euro 50,000 or the equivalent amount in
another currency;
(k) Debenture. Execute and deliver to the Lender the debenture
contemplated in Section 4.1(c) hereof at or prior to the
time of completion of the Reorganization;
(l) Reorganization. Complete the Reorganization on or before
February 1, 2001 on terms satisfactory to the Lender and
furnish the Lender with such evidence of such completion as
the Lender may require; and
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(m) Further Assurances. At its cost and expense, upon request
by the Lender, duly execute and deliver, or cause to be
duly executed and delivered, to the Lender, such further
instruments and do and cause to be done such other acts as
may be necessary or proper in the reasonable opinion of the
Lender to carry out more effectually the provisions and
purposes of this Agreement and the other Credit Facility
Documents.
Section 7.2. Negative Covenants. Until the Obligations are paid and
satisfied in full and this Agreement has been terminated, the Borrower
shall not (or if applicable shall not permit the relevant action to take
place), unless the Lender otherwise consents in accordance with the
provisions of this Agreement:
(a) Liens. Create, incur, assume or suffer to exist any Lien
on any of its property or assets now owned or hereafter
acquired other than the Liens created prior to the entering
into of this Agreement or Liens created by the Security and
any Permitted Encumbrances;
(b) Debt. Create, incur, assume or suffer to exist,
contingently or otherwise, any Debt other than Debt created
prior to the entering into of this Agreement or Debt
created by this Agreement;
(c) Change in Nature of Business. Make or permit to exist any
change, condition, event or occurrence in or with respect
to the nature of its business which when taken individually
with all other changes, conditions, events or occurrences
could reasonably be expected to have a Material Adverse
Effect;
(d) Mergers, etc. Enter into or agree to enter into any
transaction or series of related transactions (whether by
way of reconstruction, reorganization, consolidation,
combination, amalgamation, merger, transfer, sale, lease,
modification or otherwise), other than in connection with
the Reorganization, whereby: (i) all or substantially all
of the Borrower's undertaking, property or assets will
become the property of any other person or the continuing
corporation resulting therefrom; (ii) all or substantially
all of the AIDS Related Intellectual Property Rights will
become the property of any other person; (iii) there would
be permitted any change in the direct or indirect Control
of the Borrower; or (iv) the corporate structure of the
Borrower would be modified, changed, altered or amended in
any manner;
(e) Reorganization. Complete the Reorganization without taking
such action and without executing and delivering to the
Lender such agreements, conveyances, deeds and other
documents and instruments as the Lender shall request in
connection therewith for the purpose of preserving and
protecting the Security, in each case forthwith upon
request therefor by the Lender and in form and substance
satisfactory to the Lender;
(f) Distributions. Prior to payment in full of all Obligations
hereunder, make any payment on account of a redemption or a
distribution or return of capital (including, without
limitation, cash dividends or any repayment of shareholder
loans or distributions) to any shareholder or holder of
securities;
(g) Use of Proceeds. Other than repayments of advances to the
Borrower by Aralis S.A. in the aggregate amount of FFr.
600,000 used by the Borrower for patent fees and
registration and PCT extensions, use the proceeds of any
Advance made available to it hereunder for repayment of any
shareholder loans or short-term loans or redemption of any
shareholder capital without the prior written consent of
the Lender;
(h) Subsidiaries. Create any Subsidiaries or transfer and/or
assign any assets or operations to any Subsidiaries; and
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(i) Agreements with Related Parties. Enter into any agreement
or arrangement with any person with whom the Borrower does
not deal at arm's-length, including any affiliate thereof.
Section 7.3. Warrants. As part of the Lender's compensation for the
services to be performed by it under this Agreement, the Borrower agrees to
issue and deliver to the Lender the following share purchase warrants and
to execute and deliver warrant certificate(s) setting forth the terms and
conditions of the share purchase warrants, which shall be substantially in
the form of the warrant certificate attached as Schedule A to the
underwriting agreement made between the Borrower and the Lender dated for
reference July 24, 2000 (the "Underwriting Agreement"):
(a) warrants to be issued on the Closing Date entitling the
Lender to convert an amount equal to the maximum amount set
forth in Section 2.1 hereof of Euro 1,300,000 into 10% of
the common shares of the Borrower (the "Common Shares"),
calculated on a post-Reorganization and fully diluted basis
and determined on the date of the completion of the
Reorganization (the "Conversion Rate"), exercisable at any
time up to and including the date three years after the
Closing Date at a price equal to Euro 1,170,000/0.10n,
where "n" equals the number of Common Shares outstanding on
the applicable calculation date, calculated on the date of
the completion of the Reorganization on a post-
Reorganization and fully diluted basis (the "Conversion
Price"); and
(b) warrants to be issued on the Closing Date entitling the
Lender to convert an amount equal to the retainer fee of
Euro 90,000 under the Underwriting Agreement and the
Arrangement Fee of Euro 130,000 and the Interest under this
Agreement into Common Shares at the Conversion Rate,
exercisable at any time up to and including the date three
years after the Closing Date at a price equal to the
Conversion Price.
It is understood by both parties hereto that the issuance and delivery of
the share purchase warrants pursuant to Section 5.7 of the Underwriting
Agreement satisfies the obligations of the Borrower to issue and deliver
the warrants described in this Section 7.3.
ARTICLE 8 - EVENTS OF DEFAULT
Section 8.1. Events of Default. An event of default ("Event of
Default") shall have occurred and be continuing in respect of the Borrower
if:
(a) Failure to Make Payments. The Borrower shall fail to pay
any principal, Interest, fees or other amounts hereunder
when the same becomes due and payable and in the case of
Interest, fees and other amounts, the failure shall remain
unremedied for a period of three banking days following
notice from the Lender to the Borrower;
(b) Representations and Warranties Incorrect. Any
representation or warranty made by the Borrower herein or
in any other Credit Facility Document or any
representation, warranty or certification made by the
Borrower (or any of their officers) in any certificate or
other writing delivered in connection with any of the
Credit Facility Documents, or any representation or
warranty deemed to be made by the Borrower provided herein
or therein, shall prove to have been incorrect in any
material respect when made or deemed to be made;
(c) Failure to Perform Negative Covenants. The Borrower shall
fail to observe any of the negative covenants or financial
covenants contained in the Credit Facility Documents
including, without limitation, in Section 7.2;
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(d) Failure to Perform Other Covenants. The Borrower shall
fail to perform or observe any other term, covenant or
agreement contained in any of the Credit Facility Documents
and such failure shall remain unremedied for 15 days;
(e) Failure to Pay Debts to Third Parties. The Borrower shall
fail to pay the principal of or premium or interest on any
Debt which is outstanding in an aggregate principal amount
in excess of Euro 50,000 (or the equivalent amount in any
other currency) when the same becomes due and payable and
such failure shall remain unremedied for a period of five
banking days;
(f) Event of Bankruptcy. The Borrower shall commit or permit
to exist any Event of Bankruptcy in respect of the
Borrower;
(g) Judgments. Any judgment or order for the payment of money
in excess of Euro 50,000 (or the equivalent amount in any
other currency) in respect of the Borrower shall be
rendered against the Borrower and enforcement proceedings
shall have been commenced by any creditor upon such
judgment or order and not stayed within 10 days;
(h) Unenforceability. This Agreement or any Credit Facility
Document shall, at any time after execution and delivery,
and for any reason (other than in accordance with the
respective terms), cease to be in full force and effect or
shall be declared to be null and void, or the validity or
enforceability of any thereof shall be contested by the
Borrower or any other party thereto, or the Borrower or any
other such party shall deny that it has any further
liability or obligation thereunder;
(i) Challenge to Security. Any of the Security shall at any
time after the execution and delivery of the relevant
Security Document and for any reason cease to constitute a
valid and subsisting Lien (subject only to Permitted
Encumbrances) in respect of the assets and properties
referred to therein or cease to rank in priority or in the
matter contemplated herein other than by reason of the act
or omission of the Lender;
(j) Material Adverse Effect. There occurs any change,
condition, event or occurrence which, when considered
individually or together with all other changes,
conditions, events or occurrences could reasonably be
expected to have a Material Adverse Effect;
(k) Failure to Complete Reorganization. The Borrower shall
terminate, cancel or otherwise not complete the
Reorganization on or before February 1, 2001; or
(l) Failure to Deliver Debenture. The Borrower shall fail to
execute and deliver to the Lender the debenture
contemplated in Section 4.1(c) hereof at or prior to the
time of completion of the Reorganization,
then in any such event, the Lender may by notice to the Borrower: (i)
cancel all the obligations of the Lender in respect of the Credit Facility,
whereupon no further Advances may be made; (ii) declare the Obligations
under the Agreement to be forthwith due and payable, whereupon the same
shall become and be forthwith due and payable; and (iii) take all steps and
proceedings as, in the opinion of the Lender is necessary or desirable to
preserve, protect or enforce the Security.
ARTICLE 9 - MISCELLANEOUS
Section 9.1. Notices, etc. Except as otherwise expressly provided
herein, all notices, requests, demands, directions and communications by
one party to the other shall be sent by hand delivery or registered mail,
and shall be effective when hand delivered or when delivered by the
relevant postal service, as the case may be. All such notices shall be
addressed to the President of the notified party at its address
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given on the signature page of this Agreement, or in accordance with any
unrevoked written direction from such party to the other party in
accordance with this Section 9.1.
Section 9.2. Reimbursement for Certain Expenses. (1) The Borrower
shall pay or cause to be paid and shall indemnify and save the Lender
harmless against liability for the payment of all reasonable out-of-pocket
expenses, including without limitation counsel or compliance review fees
and expenses and disbursements incurred by the Lender in connection with,
among other things, the preparation or review of documentation pursuant to
this Agreement, on-site inspections by the Lender or the enforcement or
preservation of rights under this Agreement or the other Credit Facility
Documents or any agreement or instrument contemplated hereby or thereby,
including such expenses as may be incurred by the Lender in the collection
of the Obligations or any litigation, proceeding or dispute in any way
relating to the Obligations or the Credit Facility Documents.
(2) The parties hereto may agree in writing to include any expenses as
an Outstanding Amount, with Interest to be paid thereon in accordance with
Section 3.2 hereof and to be repaid in accordance with Section 3.1 hereof.
Section 9.3. No Waiver; Remedies. No failure on the part of the
Lender or the Borrower to exercise, and no delay in exercising, any right
under any of the Credit Facility Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under any of
the Credit Facility Documents preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by Law.
Section 9.4. Taxes, Costs, etc. All payments by the Borrower under
this Agreement and the other Credit Facility Documents shall be made free
and clear of, and without deduction or withholding for, Taxes unless such
Taxes are required by Law to be deducted or withheld. If the Borrower
shall be required by Law to deduct or withhold any Taxes from or in respect
of any sum payable under this Agreement or the other Credit Facility
Documents: (i) the sum payable shall be increased as may be necessary so
that after making all required deductions or withholdings applicable to
additional amounts paid under this Section 9.4, the Lender receives an
amount equal to the sum it would have received if no deduction or
withholding had been made; (ii) the Borrower shall make such deductions or
withholdings; and (iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxation authority or other authority in
accordance with applicable Law.
Section 9.5. Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Lender shall have the right, to
the fullest extent permitted by Law, to set off and apply any and all
deposits at any time held and other indebtedness at any time owing by the
Lender to or for the credit or the account of the Borrower, against any and
all of the obligations of the Borrower now or hereafter existing under any
of the Credit Facility Documents.
Section 9.6. Judgment Currency. If, for the purposes of obtaining
judgment in any court, it is necessary to convert a sum due hereunder to
the Lender from Euros (the "Original Currency") into the Judgment Currency,
the parties hereto agree that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Lender could
purchase the Original Currency with the Judgment Currency on the banking
day preceding that on which final judgment is paid or satisfied.
Section 9.7. Governing Law. The Credit Facility Documents shall be
governed by, and construed in accordance with, the laws of Switzerland and
shall be treated in all respects as Swiss contracts without giving effect
to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
Section 9.8. Consent to Jurisdiction. (1) Each of the parties hereby
irrevocably attorns to the non-exclusive jurisdiction of the Courts of
Geneva (Switzerland) in any action or proceeding arising out of or
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relating to this Agreement, or any other Credit Facility Document. The
Borrower agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by Law.
(2) Nothing in this Section 9.8 shall affect the right of the Lender
to serve legal process in any other manner permitted by Law or affect the
right of the Lender to bring any action or proceeding against the Borrower
or its property in the courts of other jurisdictions.
Section 9.9. English Version. The parties hereby represent, warrant,
acknowledge and agree that: (i) they have agreed that this Agreement be
drawn up in the English language; and (ii) the English version of this
Agreement shall govern for all purposes.
Section 9.10. Successors and Assigns. The Borrower shall not have the
right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender, which consent may be arbitrarily
withheld.
Section 9.11. Severability. If one or more provisions of this
Agreement and/or a Security Document be or become invalid, or unenforceable
in whole or in part in any jurisdiction, the validity of the remaining
provisions of this Agreement and/or a Security Document shall not be
affected. The parties hereto undertake to replace any such invalid
provision without delay with a valid provision which as nearly as possible
duplicates the economic intent of the invalid provision.
Section 9.12. Counterparts. This Agreement may be executed in
counterparts and by different parties in separate counterparts, each of
which when so executed shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWER
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HIPPOCAMPE S.A.
52, avenue Chanoine Cartellier
F-69230 Saint-Genis-Laval
France Per:
--------------------------
Authorized Signing Officer
Per:
--------------------------
Authorized Signing Officer
THE LENDER
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MFC MERCHANT BANK S.A.
53, route de Malagnou
P.O. Box 509
CH-1211 Geneva 17
Switzerland Per:
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Authorized Signing Officer
Per:
--------------------------
Authorized Signing Officer
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SCHEDULE A
LIST OF PATENTS OF BORROWER
Application No. Application Date Publication No.
- --------------- ---------------- ---------------
97/14387 November 17, 1997 2711011
PCT/FR98/02447 November 17, 1998 W099/25377
99/06528 May 21, 1999 N/A
PCT/FR00/01399 May 22, 2000 N/A
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SCHEDULE B
DEFINITIONS
"AIDS Related Intellectual Property Rights" means the Patents and any
existing or future related AIDS applications, interests, intellectual
property rights, research, studies and technology deriving therefrom or
from the AIDS related research of the Borrower;
"BBA" means the British Bankers' Association;
"BBA Libor" means the one month Euro London Inter-Bank Offered Rate fixed
daily by the BBA;
"Charter Documents" means constating documents and by-laws, and all
amendments thereto;
"Closing Date" means two banking days following satisfaction by the
Borrower or waiver by the Lender of all conditions to Advance set out in
the Credit Documents or such other date as may be agreed upon by the
parties;
"Consent" means any permit, license, approval, consent, order, right,
certificate, judgment, writ, injunction, award, determination, direction,
decree, authorization, franchise, privilege, grant, waiver, exemption and
other concession or by-law, rule or regulation;
"Control" over a person means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of such person, whether through the ownership of voting securities or other
equity interest, representation on its board of directors or body
performing similar functions, by contract or otherwise. The terms
"Controlling" and "Controlled" will have corollary meanings;
"Credit Facility Documents" means the Agreement, the Security Documents and
the Information Documents and all other documents to be executed and
delivered to the Lender or by the Borrower thereunder;
"Debt" of any person means: (i) all indebtedness of such person for and in
respect of borrowed money, including obligations with respect to bankers'
acceptances, letters of credit and letters of guarantee; (ii) all
indebtedness of such person for the deferred purchase price of property or
services represented by a note or other evidence of indebtedness or other
security; (iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such person (even though the rights or remedies of the seller or lender
under such agreement in the event of default are limited to repossession or
sale of such property); (iv) all obligations under leases which, in
accordance with GAAP (or accounting principles generally accepted in the
jurisdiction of incorporation or organization of such person), are recorded
as capital leases in respect of which such person is liable as lessee; (v)
the aggregate amount at which any shares in the capital of such person
which are redeemable or retractable at the option of the holder thereof may
be retracted or redeemed; and (vi) all Debt Guaranteed by such person;
provided that obligations related to any grant or subsidy which is to be
reimbursed on a revenue or profit success basis are not considered Debt
under this definition;
"Debt Guaranteed" by any person means the maximum amount which may be
outstanding at any time of all Debt of the kind referred to in (i) through
(v) or the definition of Debt which is directly or indirectly guaranteed by
such person or such person agreed (contingently or otherwise) to purchase
or otherwise acquire, or in respect of which such person is otherwise
assured a creditor against loss by means of an indemnity, security or bond;
12
B-2
"Event of Bankruptcy" means, in respect of any person, that such person
shall generally not pay its Debts as such Debts become due, or shall admit
in writing its inability to pay its Debts generally as they become due, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any such person seeking to
adjudicate it a bankrupt or insolvent or seeking liquidation, winding-up, a
reorganization, arrangement, adjustment, protection, relief or a
composition of it or its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or for the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of
its property and, in the case of any such proceeding instituted against
such person (but not instituted by such person), either such proceeding
shall remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against such person or for the appointment of a
receiver, trustee, custodian or other similar official for such person or
for any substantial part of its property) shall occur; or such person shall
take any action to authorize any of the actions set forth above;
"Information Documents" means, collectively, at any time and in any form,
information provided by the Borrower or on behalf of the Borrower to the
Lender in writing in respect of the Borrower's business, including, without
limitation, all certificates, the financial statements of the Borrower and
all materials reasonably requested by the Lender for the purpose, inter
alia, of providing such information to prospective assignees, all as from
time to time amended, supplemented or replaced;
"Interest" means the interest accrued on Advances outstanding from time to
time at the Interest Rate compounded monthly not in advance, and payable,
in arrears, on the Interest Payment Dates;
"Interest Periods" means, collectively, periods of one month, each
subsequent period commencing upon the expiry of the prior period, and
"Interest Period" means any one such period. Interest shall be calculated
on the basis of a year of 360 days and the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such Interest is payable;
"Interest Rate" means, at any time, Libor plus 4% per annum. With each
successive Interest Period the Libor shall be reset on the second banking
day prior to the commencement of the Interest Period and there shall be a
corresponding change in the rate of interest payable under the Agreement
without the necessity of prior notice thereof to the Borrower or any other
person;
"Judgment Currency" means the currency in which a court of competent
jurisdiction may render judgment in connection with any litigation relating
to the repayment of any amounts under the Agreement;
"Law" means any law (including common law and equity), constitution,
statute, order, treaty, regulation, rule, ordinance, order, injunction,
writ, judgment, determination, decree or award of any Official Body;
"Libor" means BBA Libor or, if no such published rate is then available,
the rate of interest calculated by the Lender, as being the arithmetic
average (rounded up, if necessary, to the nearest full multiple of 1/16 of
one percent) at which, in accordance with its normal practice, it would be
prepared to offer to leading banks in the London interbank market for
delivery on the first day of the particular Interest Period and for a
period equal to such Interest Period based on the number of days comprised
therein, deposits in Euros of amounts comparable to the Principal Sum or
the balance outstanding thereof during such Interest Period, at or prior to
11:00 a.m. London, England, local time on the second banking day prior to
an Advance and thereafter on the second banking day prior to the
commencement of each subsequent Interest Period;
"Lien" means any mortgage, pledge, lien, hypothecation, security interest
or other encumbrance or charge (whether fixed, floating or otherwise) or
title retention, any right of set-off (arising otherwise than by operation
of Law) and any deposit of monies under any agreement or arrangement
whereby such monies may be withdrawn only upon the fulfillment of any
condition as to the discharge of any other indebtedness or other obligation
to any creditor, or any right of or arrangement of any kind with any
creditor to have its claim
13
B-3
satisfied prior to other creditors with or from the proceeds of any
properties, assets or revenues of any kind now owned or later acquired;
"Material Adverse Effect" means: (i) a material adverse effect on the
property or assets of the Borrower and its Subsidiaries taken as a whole;
(ii) a material adverse effect on the condition or prospects, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole; (iii) a
material adverse effect on the ability of the Borrower to perform and
comply with the Agreement or to pay or perform any of the Obligations; (iv)
a material adverse effect on the priority, effectiveness or enforceability
of the Security; or (v) a material adverse effect on the condition or
prospects, financial or otherwise, of the Borrower;
"Obligations" means all obligations, liabilities and indebtedness of the
Borrower to the Lender with respect to the principal of and Interest on
Advances and the payment or performance of all other obligations,
liabilities and indebtedness of the Borrower to the Lender under the
Agreement or arising under and pursuant to any one or more of the Credit
Facility Documents or with respect to the Advances and all fees, costs,
expenses and indemnity obligations thereunder;
"Official Body" means any government or political subdivision or any agency
(including, without limitation, any licensing or regulatory agency), body,
office, authority, bureau, central bank, monetary authority, commission,
department or instrumentality thereof, or any court, board, tribunal, grand
jury or arbitrator, commission or instrumentality thereof, whether foreign
or domestic and, when used in the context of a particular person having
jurisdiction over such person;
"Outstanding Amount" means, in respect of the Credit Facility, on any day,
an amount calculated and expressed in Euros equal to the aggregate
principal amount of all Advances made by the Lender under the Credit
Facility;
"Patents" means the patents set forth in Schedule A hereto and any existing
or future related AIDS applications deriving therefrom or from the AIDS
related research of the Borrower;
"Permitted Encumbrances" means, in respect of the Borrower, from time to
time, any Lien not intentionally created by the Borrower and covering an
asset which the Lender determines (acting reasonably) not to be required
for or integral to the operation of the business of the Borrower or the
effectiveness or value of the Security, and in respect of which Lien either
(i) the same is discharged or (ii) the Borrower provides the Lender such
substituted security as the Lender shall consider satisfactory, in either
(i) or (ii) above within 15 days of written notice from the Lender to the
Borrower;
"Reorganization" means a reorganization of the Borrower contemplated in the
Underwriting Agreement pursuant to which the Borrower may directly or
indirectly transfer and/or assign to a new company or an existing "shell"
company, in one or a series of related transactions, among other things,
the following: (i) the Borrower's rights and obligations under the
Underwriting Agreement; (ii) the AIDS Related Intellectual Property Rights;
and (iii) certain outsourcing contracts;
"Security" means the security given to the Lender, at any time and from
time to time to secure the Obligations, including, without limitation, the
security referred to in Section 4.1 of the Agreement;
"Security Documents" means the documents referred to in Section 4.1 of the
Agreement and the agreements, instruments and documents delivered from time
to time to the Lender by the Borrower or any other person, for the purpose
of establishing, perfecting, preserving and protecting the Security; and
"Security Document" means any one of them as the context prescribes or
requires;
14
B-4
"Subsidiary" means, at any time, as to any person, any corporation,
partnership or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at such time
directly or indirectly owned by such a person; and
"Taxes" means any and all present or future taxes (including, without
limitation, all stamp, documentary, excise or property taxes), levies,
imposts, deductions, charges or withholdings and liabilities with respect
thereto.
15
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
(a) Organization and Corporate Power. The Borrower has been duly
incorporated and organized and is validly subsisting and in good
standing under the laws of its jurisdiction and has full corporate
right, power and authority to enter into and perform its obligations
under each of the Credit Facility Documents to which it is or shall
be a party and has full corporate right, power and authority to own
and operate its properties and to carry on its business;
(b) Conflict with Other Instruments. The execution and delivery by the
Borrower of each of the Credit Facility Documents and the performance
by the Borrower of its obligations thereunder, including, without
limitation, the performance of the terms of the Security Documents,
do not and will not: (i) conflict with or result in a breach of any
of the terms, conditions or provisions of: (A) the Charter Documents
of the Borrower; (B) any Law applicable to or binding on the
Borrower; or (C) any contractual restriction binding on or affecting
the Borrower or its properties the breach of which would have a
Material Adverse Effect; or (ii) result in, or require or permit: (A)
the imposition of any Lien on or with respect to the properties now
owned or hereafter acquired by the Borrower; or (B) the acceleration
of the maturity of any Debt of the Borrower, under any contractual
provision binding on or affecting the Borrower;
(c) Consents, Official Body Approvals. The execution and delivery of
each of the Credit Facility Documents and the performance by the
Borrower of its obligations thereunder have been duly authorized by
all necessary action on the part of the Borrower, and no Consent
under any applicable Law and no registration, qualification,
designation, declaration or filing with any Official Body having
jurisdiction over the Borrower is or was necessary therefor. The
Borrower possesses all Consents, in full force and effect, under any
applicable Law which are necessary in connection with the operation
of its business, the non-possession of which could reasonably be
expected to have a Material Adverse Effect;
(d) Execution of Binding Obligation. The Agreement has been duly
executed and delivered by the Borrower, and the Agreement
constitutes, and the remaining Credit Facility Documents when duly
executed by the Borrower pursuant to the Agreement and delivered for
value will constitute, legal, valid and binding obligations of the
Borrower, enforceable against it in accordance with their respective
terms;
(e) No Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, after due enquiry, threatened
against or affecting the Borrower (nor, to the knowledge of the
Borrower, after due enquiry, any basis therefor) before any Official
Body having jurisdiction over the Borrower which purport to or do
challenge the validity or propriety of the transactions contemplated
by the Credit Facility Documents or the documents, instruments or
agreements executed and delivered in connection therewith or related
thereto, which if adversely determined could reasonably be expected
to have a Material Adverse Effect;
(f) No Defaults. The Borrower is not in breach of or in default under,
in any respect: (i) its Charter Documents; (ii) any applicable Law;
(iii) any contract or agreement binding on or affecting it or its
property or assets (including, without limitation, the Credit
Facility Documents); (iv) any material indenture, mortgage, deed of
trust; or (v) any writ, judgment, determination or award binding on
it or affecting it where such breach or defect could, in the case of
(ii), (iii), (iv) or (v) above, have a Material Adverse Effect;
16
C-2
(g) Information Documents. The information contained in the Information
Documents is true and accurate in all material respects and does not
contain any untrue statement of a material fact. The Information
Documents do not omit to state any fact necessary in order to make
any of the information contained in the Information Documents not
misleading in all material respects;
(h) Material Changes. No changes occurred or are continuing in respect
of the financial condition of the Borrower from that set out in the
most recently delivered financial statements of the Borrower which
could have a Material Adverse Effect; and no Law, regulation, rule or
policy, or any change therein, has been enacted or proposed prior to
the Closing Date which may have a Material Adverse Effect;
(i) Patents. To the best of the Corporation's knowledge, all necessary
patent applications in respect of the Patents have been duly filed
and the Corporation has good and valid title to the patents, and the
Corporation did not disclose to the public the existence of the
subject matter of any of the patents prior to the date of filing of
each of the Patents;
(j) Title to Assets. The Borrower has good and marketable title to all
of its properties and assets, and the Security will constitute a
first charge on the legal and beneficial interests of the Borrower in
and to all such properties and assets, subject only to such Liens as
are described in Section 7.2(a) of the Agreement and the Permitted
Encumbrances;
(k) Absence of Changes. Since the date of the most recently delivered
financial statements of the Borrower, the Borrower has carried on its
business, operations and affairs only in the ordinary and normal
course consistent with past practice; and
(l) Subsidiaries. The Borrower has no Subsidiaries.