1
EXHIBIT 10.34
SECURED NONRECOURSE PROMISSORY NOTE
S1,000,000 Oakland, California October 12, 1995
FOR VALUE RECEIVED, the undersigned, CALYPTE BIOMEDICAL CORPORATION,
a California corporation ("Maker"), promises to pay to the order of PEPGEN
CORPORATION, a California corporation (together with any successors or
assigns, "Payee"), having its address at 1440 Fourth Street, Berkeley,
California 94710, the principal sum of One Million Dollars (S1,000,000) plus
interest on the unpaid principal calculated at the rate of four percent (4%)
per annum.
This Note is made pursuant and subject to the provisions of that
certain Master Stock Purchase Agreement between Maker, Payee and former
preferred shareholders of Payee, dated September 19, 1995 (the "Purchase
Agreement"), including but not limited to the provisions of Section 1.2(b)
thereof pertaining to the redemption of the preferred stock in Payee purchased
by Maker with the proceeds under this Note.
All principal and accrued interest under this Note shall be due and
payable in full not later than sixty (60) days following the earlier to occur
of: (i) approval by the United States Food and Drug Administration of Payee's
HIV screening assay, or (ii) completion of an initial Public Offering of
Payee's stock, as that term is defined in Section 1.2(b) of the Purchase
Agreement.
All payments shall be payable to Payee at its address set forth above,
or at such other place as Payee may designate from time to time in writing to
Maker. All payments shall be applied first to the payment of interest due, then
to the payment of other sums payable hereunder, and finally to the principal
amount then remaining unpaid. This Note may be prepaid in whole or in part at
any time without penalty or premium.
Maker shall be deemed in default hereunder in the event (i) Maker
shall fail to make payment of principal and accrued interest as and when due
hereunder, or (ii) Maker shall fail to perform any other term, covenant or
agreement Maker is obligated to perform or observe contained in this Note or
the Pledge Agreement (as defined below). If an event of default is not cured
within ten (10) days following written notice from Payee, then all sums owed
hereunder shall, at the option of Payee, become immediately due and payable.
Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever hereunder.
Maker agrees to pay all costs incurred by Payee in the collection or
enforcement of this Note, including reasonable attorneys' fees.
2
This Note shall be secured by Maker's pledge of shares of stock in
Payee pursuant to the terms and conditions of that certain Security and Pledge
Agreement of even date herewith between Maker and Payee (the "Pledge
Agreement").
Notwithstanding any provision to the contrary in this Note or the
Pledge Agreement, this Note is nonrecourse. The holder hereof shall have no
recourse to any assets or properties of Maker other than the collateral that is
pledged by Maker pursuant to the Pledge Agreement.
All references herein to Maker shall be deemed to include its
successors and assigns and all obligations hereunder shall be binding upon its
successors and assigns. This Note shall not be assigned by the holder thereof
without the written consent of Maker.
This Note shall be interpreted and enforced in accordance with the
laws of the State of California, and shall be deemed to have been executed and
delivered in the State of California.
"Maker"
CALYPTE BIOMEDICAL CORPORATION,
a California Corporation
By: /s/ JACK DAVIS
------------------------------
Name: Jack Davis
------------------------------
Its: President
------------------------------
2
3
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT ("Agreement") is made and entered
into as of September 19, 1995, by and among PEPGEN CORPORATION, a California
corporation ("Pledgee"), CALYPTE BIOMEDICAL CORPORATION, a California
corporation ("Pledgor") and WENDEL, ROSEN, BLACK & DEAN ("Pledge Holder").
RECITALS
A. Pledgor and Pledgee entered into that certain Master Stock
Purchase Agreement, dated September 19, 1995, whereby Pledgor purchased from
Pledgee 3,041,406 shares of Series A Preferred Stock of Pledgee (the "Shares").
B. The purchase price for the Shares was paid in part by delivery
of Pledgor's Secured Nonrecourse Promissory Note, dated of or about even date
herewith, in the principal sum of One Million Dollars ($1,000,000), a copy of
which is attached hereto as Exhibit A (the "Note").
C. Pledgor has agreed to secure its obligations under the Note
with a pledge of the Shares, subject to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the above recitals of fact and the
mutual covenants and obligations set forth herein, the parties hereby agree as
follows:
AGREEMENT
1. Appointment and Powers of Pledge Holder. Pledgor and Pledgee
appoint Pledge Holder for the purposes set forth in this Agreement. Each of
Pledgor and Pledgee hereby constitutes and appoints Pledge Holder as its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument which Pledge Holder
may reasonably deem necessary or appropriate to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest, that being Pledge
Holder's rights and duties under this Agreement.
2. Pledge. As security for payment and performance of the Note,
Pledgor hereby pledges and grants to Pledgee a security interest in (i) the
Shares, and (ii) any warrants, options, or additional shares of Pledgee at any
time and from time to time receivable or otherwise distributable in respect of,
in exchange for or in substitution for any of the Shares, together with any
proceeds thereof (collectively, the "Collateral"). Pledgor herewith deposits
with Pledge Holder the Shares as represented by certificate no. PA-15,
accompanied by stock powers executed in blank with respect thereto, which Shares
and stock powers are to be held by Pledge Holder for use in accordance with the
terms and provisions of this Agreement. Pledge
1
4
Holder may, but need not, have the Shares registered in its name as Pledge
Holder pursuant to this Agreement.
3. Remedy Upon Default. In the event of default by Pledgor under
the Note and its failure to be cured in accordance with the terms thereof,
Pledgee's sole and exclusive remedy shall be to retain the Collateral in
satisfaction of Pledgor's obligations to Pledgee hereby secured. Pledgee shall
exercise this remedy by providing written notice thereof to Pledge Holder.
Upon receipt of such notice from Pledgee, Pledge Holder shall deliver to
Pledgee the Shares, any accompanying stock powers, and any other Collateral
held by Pledge Holder. Pledgee acknowledges that: (i) Pledgor's obligations
under the Note are non-recourse; and (ii) the foregoing remedy constitutes
Pledgee's only remedy in the event of default by Pledgor under the Note.
4. Waiver of Law. Except as otherwise expressly specified in this
Agreement, ail of the provisions of law governing the retention of pledged
property and prescribing the conditions, demands, and notice of mailing with
respect thereto are hereby expressly waived by Pledgor.
5. Nonwaiver. Should Pledge Holder postpone any action to be
taken hereunder, or accept a payment on a date beyond the due date of the Note,
such action shall not constitute a waiver of any of the rights of Pledgee
hereunder or under the Note.
6. Assignment. This Agreement may be assigned by Pledgee only in
connection with an assignment of the Note as may be permitted thereunder.
7. Enforcement. Should Pledgee be required to bring an action in
law or in equity against Pledgor for the enforcement of any of the provisions of
this Agreement, for the recovery of damages for breach of this Agreement or to
resolve a controversy arising hereunder, then the losing party shall pay the
costs of the prevailing party arising out of such action, including reasonable
attorneys' fees.
8. Voting; Dividends. Voting rights to the Collateral are to be
retained by Pledgor during the existence of this Agreement and so long as no
default occurs under the Note. Upon any default under the Note, Pledgee shall,
in addition to any other remedies permitted hereunder, be entitled to vote all
shares held by Pledge Holder until such time as the default is cured by payment
of the amount in default. Pledgor grants Pledgee an irrevocable proxy right to
vote the Collateral in such case, which proxy is coupled with an interest, that
being Pledgee's rights hereunder. Any and all cash dividends declared and paid
on the Collateral during the term of this Agreement shall be paid to Pledgor, so
long as Pledgor is not in default under the Note.
9. Release of Collateral. Upon payment of any portion of the
principal sum under the Note, Pledge Holder shall deliver to Pledgor that
percentage of the Collateral equal to the percentage of the principal of the
Note represented by that particular payment. When all sums of principal and
interest under the Note have been paid full, all Collateral held by Pledge
Holder
2
5
shall be delivered to Pledgor, and this Agreement shall be terminated. The
Collateral shall be released by Pledge Holder only after written notice from
Pledgee or such other holder of the Note (or upon adequate proof submitted by
Pledgor) that payment of principal and/or interest, as applicable, has been
made as required hereunder.
10. Release of Pledge Holder. Pledgor and Pledgee hereby release
Pledge Holder from any liability arising from Pledge Holder's performance
hereunder, except liability for acts of gross negligence or willful misconduct.
Without limiting the preceding sentence, Pledge Holder shall not be liable for
failure of any of the conditions of the pledge or for failure to ascertain the
terms or conditions, or comply with, any of the provisions of any agreement or
other document referred to in this Agreement nor shall Pledge Holder be liable
for the wrongful assertion by either Pledgor or Pledgee of its or their rights
and/or remedies hereunder. Pledge Holder shall not be liable for forgeries or
impersonations. Should any controversy arise between the parties hereto, or
with any third person, Pledge Holder shall not be required to determine the same
or take any action, but may await the settlement of such controversy by
appropriate legal proceedings. Pledgor and Pledgee hereby agree to and shall
indemnify, protect, defend and hold harmless Pledge Holder and its partners,
agents, employees, directors, officers, and principals from all liabilities,
obligations, losses, damages, actions, suits, costs and expenses (including,
without limitation, attorneys' fees) of whatever kind or nature imposed on,
incurred by, or asserted against Pledge Holder which are in any way related to
or arise out of the execution and delivery of this Agreement or any action taken
hereunder by Pledge Holder.
11. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given to any
party if delivered by hand, telexed, telecopied or mailed (certified or
registered mail), with postage prepaid, to the parties at the addresses set
forth on the signature pages hereof, or such other address as a party shall
furnish to the others in writing.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts thereof, individually or taken together, shall bear the signatures
of all the parties reflected hereon as signatories.
13. Binding Effect. All powers, rights and privileges hereinabove
given are to apply to and bind the heirs, executors and administrators of the
parties hereto.
14. Further Cooperation. Each party to this Agreement agrees to
execute and deliver such further documents and do such further acts and things
as may be reasonably necessary to effectuate the purposes of this Agreement.
15. Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of California.
3
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PLEDGOR: PLEDGEE:
CALYPTE BIOMEDICAL CORPORATION, PEPGEN CORPORATION,
a California corporation a California corporation
By: /s/ JACK DAVIS By: /s/ C.P. LIN
--------------------------- ---------------------------
Name: Jack Davis Name: C. P. Lin
------------------------- -------------------------
Title: President Title: President
------------------------ ------------------------
Address: 1440 Fourth Street Address: 19481 Pompano Lane, #104
Berkeley, CA 94710 Huntington Beach, CA 92648
PLEDGE HOLDER:
WENDEL, ROSEN, BLACK & DEAN
By: /s/ PETER PANG
---------------------------
Name: Peter Pang
---------------------------
Address: 1111 Broadway, 24th Floor
Oakland, CA 94607
4
7
EXHIBIT A
TO
SECURITY AND PLEDGE AGREEMENT
(to follow]
5