EXHIBIT 1.5
TARGETED GENETICS CORPORATION
CREDIT AGREEMENT
DATED
AS OF
NOVEMBER 23, 1998
CONTENTS
EXHIBITS........................................................................... iii
1. Definitions................................................................. 1
1.1 Terms Defined......................................................... 1
1.2 Accounting Terms...................................................... 3
1.3 Currency.............................................................. 3
2. The Loan.................................................................... 3
2.1 Loan Commitment....................................................... 3
2.2 Use of Proceeds....................................................... 3
2.3 The Note.............................................................. 3
2.4 Advance of Proceeds................................................... 4
2.5 Interest Rate......................................................... 4
2.6 Repayment............................................................. 4
2.7 Prepayments........................................................... 5
2.8 Issuance of Common Stock.............................................. 5
3. Conditions Precedent to Funding the Loan.................................... 6
4. Affirmative Covenants of Borrower........................................... 6
4.1 Financial Data; Reporting Requirements................................ 6
4.2 Licenses and Permits.................................................. 7
4.3 Maintenance of Properties............................................. 7
4.4 Payment of Charges.................................................... 7
4.5 Insurance............................................................. 8
4.6 Maintenance of Records................................................ 8
4.7 Inspection............................................................ 8
4.8 Corporate Existence................................................... 8
4.9 Exchange of Note...................................................... 8
4.10 Other Agreements...................................................... 9
4.11 Further Assurances.................................................... 9
5. Negative Covenants of Borrower.............................................. 9
6. Representations and Warranties of Borrower.................................. 9
6.1 Organization, Good Standing and Qualification, Due Execution
and Validity.......................................................... 10
6.2 Authorization......................................................... 10
6.3 Governmental Consents................................................. 10
6.4 Litigation............................................................ 11
6.5 Compliance With Other Instruments..................................... 11
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6.6 SEC Reports; Financial Statements..................................... 11
6.7 Compliance With Laws.................................................. 12
6.8 Changes............................................................... 12
7. Events of Default; Remedies................................................. 13
7.1 Events of Default..................................................... 13
7.2 Acceleration; Remedies................................................ 14
8. Miscellaneous............................................................... 15
8.1 Notices............................................................... 15
8.2 Payment of Expenses................................................... 15
8.3 No Waiver............................................................. 16
8.4 Entire Agreement and Amendments....................................... 16
8.5 Benefit of Agreement.................................................. 16
8.6 Severability.......................................................... 17
8.7 Descriptive Headings.................................................. 17
8.8 Courts of Law......................................................... 17
8.9 Counterparts.......................................................... 17
8.10 Governing Law......................................................... 17
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EXHIBITS
Exhibit 2.3 -- Promissory Note
Exhibit 3(d) -- Opinion of Counsel
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 23rd day of November, 1998, by and
between TARGETED GENETICS CORPORATION, a Washington corporation ("Borrower"),
and MEDEVA PLC, a public limited liability company organized under the laws of
the United Kingdom ("Lender").
RECITAL
Borrower has requested Lender to extend to Borrower a term loan in the
amount of $2,000,000, and Lender is willing to extend such credit facility to
Borrower on the terms and conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 TERMS DEFINED
As used herein, the following terms have the meanings set forth below.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Master Agreement:
"Affiliate" means any individual, corporation, association or other
business entity which directly or indirectly controls, is controlled by or is
under common control with the party in question. As used in this definition of
"Affiliate," the term "control" means the direct or indirect ownership of more
than fifty percent (50%) of the stock having the right to vote for directors
thereof of the ability to otherwise control the management of the corporation or
other business entity whether through the ownership of voting securities, by
contract, resolution, regulation or otherwise.
"Business Day" means any day except a Saturday, Sunday, or other day on
which national banks in the state of Washington are authorized or required by
law to close.
"Common Stock" means the common stock of Borrower, $.01 par value per
share.
"Common Stock Purchase Agreement" means that certain Common Stock Purchase
Agreement dated of even date herewith entered into between Borrower and an
Affiliate of Lender and includes all amendments thereof.
"Default" means any condition or event that constitutes an Event of Default
or with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Event of Default" has the meaning set forth in Section 7.1 hereof.
"Governmental Approval" means any authorization, consent, approval,
certificate of compliance, license, permit, or exemption from, contract with,
registration or filing with, or report or notice to, any Governmental Authority
required or permitted by Applicable Laws.
"License and Collaboration Agreement" means that certain License and
Collaboration Agreement dated of even date herewith entered into between
Borrower and an Affiliate of Lender, and includes all amendments thereof.
"Loan" has the meaning set forth in Section 2.1 hereof and includes all
renewals and amendments of the Loan.
"Loan Documents" means this Agreement and the Note, together with all other
agreements, instruments, and documents arising out of or relating to this
Agreement or the Loan, and includes all amendments thereof.
"Manufacturing Facility" has the meaning set forth in Section 2.2 hereof.
"Master Agreement" means that certain Master Agreement dated of even date
herewith entered into between Borrower and an Affiliate of Lender, and includes
all amendments thereto.
"Material Adverse Effect" has the meaning set forth in Section 6.1 hereof.
"Note" has the meaning set forth in Section 2.3 hereof and includes all
renewals, replacements, and amendments of the Note.
"Payment Date" has the meaning set forth in Section 2.6 hereof.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust, or other enterprise or any Governmental
Authority.
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"Supply Agreement" means that certain Supply Agreement dated of even date
herewith entered into between Borrower and an Affiliate of Lender, and includes
all amendments thereof.
"Transaction Documents" means this Agreement, the Master Agreement, the
License and Collaboration Agreement, the Supply Agreement and the Common Stock
Purchase Agreement.
1.2 ACCOUNTING TERMS
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with U.S. generally accepted accounting principles consistently
applied.
1.3 CURRENCY
All reference to amounts of funds and "$" set forth in the Loan Documents
shall constitute references to the currency of the United States of America.
2. THE LOAN
2.1 LOAN COMMITMENT
Subject to and upon the terms and conditions set forth herein and in
reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, Lender shall lend to Borrower
$2,000,000 on a term-loan basis (the "Loan").
2.2 USE OF PROCEEDS
The proceeds of the Loan shall be used by Borrower to finance the design,
engineering, and construction of a manufacturing facility (the "Manufacturing
Facility") for the production of Bulk Licensed Product to supply Phase III
clinical trials and commercial sales (to the extent provided in the License and
Collaboration Agreement and the Supply Agreement) and to finance the acquisition
of furniture, fixtures, and equipment for such facility.
2.3 THE NOTE
The Loan shall be evidenced by a promissory note in the form attached
hereto as Exhibit 2.3 (the "Note").
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2.4 ADVANCE OF PROCEEDS
Upon satisfaction of the conditions described in Section 3 hereof, Lender
shall cause the Loan proceeds to be advanced to Borrower via wire transfer of
funds as set forth below within seven (7) Business Days following Borrower's
written request specifying the account to receive the funding: (a) no advances
shall be made prior to May 2, 1999; (b) on or after May 2, 1999 Borrower may
request the advance of $1,000,000, and (c) on or after August 2, 1999 Borrower
may request the advance of the remaining $1,000,000 or, if no advance was made
to Borrower pursuant to preceding clause (b), the full amount of the Loan.
2.5 INTEREST RATE
(a) The Loan shall bear annual interest on the principal amount
thereof remaining unpaid from time to time, at the rate of 150 basis points
over LIBOR (based on the one-month LIBOR rate, as published in the Wall Street
Journal on the first Business Day of each calendar month), provided that, except
as provided in Section 2.5(b), the interest rate charge on the Loan shall not be
greater than 7% nor less than 5%.
(b) Upon the occurrence and during the continuance of any Default,
Lender may, at its option, charge interest on the Loan and any interest or other
amounts past due hereunder at a rate of up to 2 percent per annum in excess of
the rate set forth in Section 2.5(a) hereof from the date of the occurrence of
the Default until the Default is cured or waived by Lender or, absent cure or
waiver, until the Loan and such other amounts are repaid in full.
(c) All computations of interest shall be based on a 365-day year for
the actual number of days elapsed.
(d) Notwithstanding any provision contained herein or in the Note, the
total liability of Borrower for payment of interest pursuant hereto shall not
exceed the maximum amount of interest permitted by Applicable Law to be charged,
collected, or received from Borrower; and if any payments by Borrower include
interest in excess of that maximum amount, Lender shall apply the excess first
to reduce the unpaid interest on and principal of the Loan, and any excess shall
be returned to Borrower.
2.6 Repayment
(a) Accrued interest on the Loan shall be paid annually on the
anniversary date of the first advance and, if earlier, on the date the
outstanding
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principal is due. All outstanding principal shall be due and payable in full on
the earlier of (a) the five-year anniversary date of this Agreement, or (b) the
end of the calendar quarter during which Lender's aggregate cumulative Net
Sales, measured from the date hereof, equal or exceed $60,000,000 (the "Payment
Date"). In the event that the Payment Date would fall on a day that is not a
Business Day, then the Payment Date shall be extended to the next succeeding
Business Day.
(b) Borrower shall pay to Lender on the Payment Date all outstanding
principal and interest on the Loan and any other amounts due hereunder: (i) by
paying cash directly to Lender in immediately available United States funds to
the account specified by Lender in writing, (ii) by issuing to Lender Common
Stock in accordance with the provisions of Section 2.8 hereof, or (iii) any
combination of cash or the issuance of Common Stock in accordance with Section
2.8 hereof; provided, however, that Lender may in its sole discretion elect to
require payment solely in cash.
2.7 PREPAYMENTS
Borrower may prepay all or any portion of the Loan at any time without
premium or penalty. All prepayments shall be applied first to any accrued
interest on the Loan and then to the outstanding principal balance of the Loan.
Prepayments may be made in the form of cash or the issuance of Common Stock or
any combination thereof; provided, however, that Lender may in its sole
discretion elect to require payment solely in cash. The date of any such
prepayment shall be referred to as the "Prepayment Date."
2.8 ISSUANCE OF COMMON STOCK
In the event that Borrower elects to pay or prepay all or any portion of
the Loan through the issuance of Common Stock, Borrower shall give Lender ten
(10) days' written notice. Upon receiving a written notice from Borrower,
Lender shall notify Borrower in writing within five (5) Business Days as to
whether Lender is willing to accept Common Stock as payment or prepayment of all
or any portion of the outstanding principal or interest on the Loan. If Common
Stock is to be issued, on or before the Payment Date or the Prepayment Date,
Lender shall deliver to Borrower customary representations as to Lender's
investment intent. The purchase price per share of Common Stock shall equal the
average closing price of the Common Stock on the twenty (20) trading days
immediately preceding the Payment Date or the Prepayment Date, as the case may
be. Borrower shall grant to Lender registration rights with respect to such
Common Stock pursuant to a Registration Rights Agreement in form and substance
reasonably satisfactory to Borrower and Lender.
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3. CONDITIONS PRECEDENT TO FUNDING THE LOAN
Lender shall not be required to make either funding under the Loan unless
or until the following conditions have been fulfilled:
(a) Lender shall have received this Agreement and the other
Transaction Documents and the Note, duly executed and delivered by Borrower.
(b) No Default or Event of Default shall exist, and after having given
effect to the funding of the Loan, no Default or Event of Default shall exist
and no default shall exist under the other Transaction Documents, and after
giving effect to the funding of the Loan, no such default shall exist
thereunder.
(c) All representations and warranties of Borrower contained herein or
in the other Loan Documents or the Transaction Documents or otherwise made in
writing in connection herewith or therewith shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date of the funding of the Loan.
(d) All corporate proceedings of Borrower shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including records of all corporate proceedings, and an
opinion of counsel to Borrower in the form of Exhibit 3(d) attached hereto, that
Lender has requested in connection therewith, such documents where appropriate
to be certified by proper corporate authorities or Governmental Authorities.
4. AFFIRMATIVE COVENANTS OF BORROWER
Borrower hereby covenants and agrees that so long as this Agreement is in
effect, and until the Loan, together with interest thereon, and all other
obligations incurred hereunder are paid or satisfied in full, Borrower shall:
4.1 FINANCIAL DATA; REPORTING REQUIREMENTS
Keep its books of account in accordance with U.S. generally accepted
accounting principles, consistently applied, and furnish to Lender:
(a) As soon as practicable and in any event within five (5) days after
filing, a copy of all periodic and special reports and forms filed by Borrower
with the U.S. Securities and Exchange Commission.
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(b) Promptly after the commencement thereof, notice of all actions,
suits and proceedings before any Governmental Authority, affecting Borrower,
which, if determined adversely to Borrower, could have a Material Adverse
Effect.
(c) With reasonable promptness, such other information regarding the
business, operations, and financial condition of Borrower as Lender may from
time to time reasonably request.
4.2 LICENSES AND PERMITS
Maintain all material Governmental Approvals and all related or other
material agreements necessary for Borrower to operate its business, as it now
exists or as it may be modified or expanded as contemplated by the Transaction
Documents. Borrower shall at all times comply with all material Applicable Laws
relating to the operations, facilities, or activities of Borrower.
4.3 MAINTENANCE OF PROPERTIES
Keep the Manufacturing Facility and Borrower's material properties in good
repair and in good working order and condition, in a manner consistent with past
practices and comparable to industry standards; from time to time make all
appropriate and proper repairs, renewals, replacements, additions, and
improvements thereto; and keep them and all material equipment that may now or
in the future be subject to compliance with any Applicable Laws in full
compliance with such Applicable Laws.
4.4 PAYMENT OF CHARGES
Duly pay and discharge all (a) taxes, assessments, levies, and any other
charges of Governmental Authorities imposed on or against Borrower or its
property or assets, or upon any property leased by Borrower, prior to the date
on which penalties attached thereto, unless and to the extent only that such
taxes, assessments, levies, and any other charges of Governmental Authorities,
after written notice thereof having been given to Lender, are being contested in
good faith and by appropriate proceedings; (b) claims allowed by Applicable
Laws, whether for labor, materials, rentals, or anything else, which could, if
unpaid, become a lien or charge upon Borrower's property or assets or the
outstanding capital stock of Borrower or result in a Material Adverse Effect
(unless and to the extent only that the validity thereof is being contested in
good faith and by appropriate proceedings after written notice thereof has been
given to Lender); (c) trade bills in accordance with the terms thereof or
generally prevailing industry standards; and (d) other indebtedness heretofore
or hereafter incurred or assumed by Borrower, unless such indebtedness be
renewed or
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extended. In the event any charge is being contested by Borrower as allowed
above, Borrower shall establish adequate reserves against possible liability
therefor.
4.5 INSURANCE
Maintain insurance upon Borrower's properties and business in accordance
with prevailing industry standards, including, without limitation, general
liability insurance (including products liability and personal injury liability
(for bodily injury and death)), upon Borrower's properties, products and
business, waiving subrogation, with minimum limits of no less than US$5,000,000
per occurrence. Borrower shall use Reasonable Commercial Efforts to add Lender
as an additional insured under such insurance coverage. All such insurance
policies shall require at least thirty (30) days' prior written notice to Lender
concerning cancellation thereof. At least annually and otherwise upon request
by Lender, Borrower shall deliver to Lender a certificate or certificates of
insurance evidencing the required coverage. Compliance herewith in no way
limits Borrower's indemnity obligations, except to the extent that Borrower's
insurance company actually pays Lender or its Affiliates amounts which Borrower
would otherwise pay Lender.
4.6 MAINTENANCE OF RECORDS
Keep at all times books of account and other records in which full, true,
and correct entries will be made of all material dealings or transactions in
relation to the business and affairs of Borrower.
4.7 INSPECTION
Subject to reasonable notice to Borrower and at reasonable times, allow any
representative of Lender to examine the books of account and other records and
files of Borrower relevant to the Loan, and to discuss the affairs, business,
finances, and accounts of Borrower with its senior officers and inspect the
Manufacturing Facility.
4.8 CORPORATE EXISTENCE
Maintain and preserve the corporate existence of Borrower.
4.9 EXCHANGE OF NOTE
Upon receipt of a written notice of loss, theft, destruction, or mutilation
of the Note, and upon surrendering such Note for cancellation if mutilated,
execute and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed, or mutilated Note. Lender hereby agrees to indemnify and hold
Borrower harmless from all
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claims, losses, and damages (including reasonable attorneys' fees) incurred by
Borrower as a result of loss, theft, or destruction of the Note.
4.10 OTHER AGREEMENTS
Comply with all covenants and agreements set forth in or required pursuant
to any of the other Loan Documents or Transaction Documents.
4.11 FURTHER ASSURANCES
Promptly upon request by Lender, duly execute and deliver or cause to be
duly executed and delivered to Lender such further instruments, agreements, and
documents and do or cause to be done such further acts as may be necessary to
carry out more effectively the provisions and purpose of this Agreement and the
other Loan Documents.
5. NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that until the Loan, together with interest
thereon, and all other obligations incurred hereunder are paid or satisfied in
full, Borrower shall not, without the prior written consent of Lender, which
consent shall not be unreasonable withheld or delayed:
(a) declare or pay any cash distributions or dividends or return any
capital to any of Borrower's shareholders;
(b) wind up, liquidate, or dissolve Borrower's affairs or enter into any
transaction to dispose of (or agree to do any of the foregoing at any time) all
or substantially all of its assets;
(c) grant any mortgage on or any security interest in any lease agreement
relating to the Manufacturing Facility; or
(d) grant any security interest in any equipment, personal property,
furniture or fixtures associated with the Manufacturing Facility; provided,
however, that Borrower may grant such a security interest to any entity
providing financing to facilitate the acquisition of such equipment, personal
property, furniture or fixtures, limited, however, to the property so acquired
and to the acquisition price thereof.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants to Lender as of the date hereof and
the date of each funding of the Loan as follows:
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6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION, DUE EXECUTION AND
VALIDITY
Borrower is a corporation organized and validly existing under the laws of
the state of Washington and has all requisite corporate power and authority to
own its properties and carry on its business as currently conducted and as
contemplated by the Transaction Documents. Borrower is duly qualified to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its financial condition, results of operations, business or properties
(a "Material Adverse Effect"). Borrower has previously provided the Investor
with complete and correct copies of its Restated Articles of Incorporation and
its Amended and Restated Bylaws as in effect on the date of this Agreement.
6.2 AUTHORIZATION
Borrower has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and the other Loan Documents. All
corporate action on the part of Borrower, its officers, directors and
shareholders necessary for the authorization, execution and delivery of this
Agreement and the other Loan Documents and the transactions contemplated herein
and therein and the performance of all obligations of Borrower hereunder and
thereunder have been taken or will be taken prior to the initial funding of the
Loan. Borrower, its officers, directors, and shareholders will have taken all
corporate action necessary for the authorized issuance of Common Stock
hereunder, if any, prior to the Payment Date or Prepayment Date on which such
Common Stock is to be issued. Each of the Agreement and the other Loan
Documents have been duly executed and delivered by Borrower and constitutes a
valid and legally binding obligation of Borrower, enforceable in accordance with
its terms, except as (a) such enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (b) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
6.3 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority on the part of Borrower is required in connection with the
consummation of the transactions contemplated by this Agreement or the other
Loan Documents.
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6.4 LITIGATION
There is no action, suit, claim, proceeding or investigation pending or, to
Borrower's knowledge, threatened against Borrower that relates to or challenges
the legality, validity or enforceability of this Agreement or the other Loan
Documents or that could either individually or in the aggregate have a Material
Adverse Effect, nor has the U.S. Food and Drug Administration taken any action
with respect to the Licensed Products which would prohibit the marketing of the
Licensed Products if developed as contemplated by the License and Collaboration
Agreement. Borrower is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or other Governmental
Authority that could have a Material Adverse Effect.
6.5 COMPLIANCE WITH OTHER INSTRUMENTS
Borrower is not in violation of any provision of its Restated Articles of
Incorporation or its Amended and Restated Bylaws or in violation or default of
any provision of any instrument, Applicable Lawjudgment, order, writ, decree or
contract to which it is a party or by which it is bound, which violation or
default would adversely affect the legality, validity, or enforceability of this
Agreement or the other Loan Documents or have a Material Adverse Effect. The
execution, delivery and performance of this Agreement or the other Loan
Documents and the consummation of the transactions contemplated hereby will not
require any consent under or be in conflict with or constitute, with or without
the passage of time or the giving of notice or both, either a violation or
default under any such provision, instrument, Applicable Law, judgment, order,
writ, decree or contract or give rise to a right to terminate or accelerate any
contract or an event which results in the creation of any lien, charge or
encumbrance upon any of Borrower's assets.
6.6 SEC REPORTS; FINANCIAL STATEMENTS
Borrower has furnished the Investor with a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
Borrower with the Securities and Exchange Commission (the "SEC") since December
31, 1997 (the "SEC Documents"), which are all the documents that Borrower has
been required to file with the SEC during such period. As of their respective
dates, the SEC Documents complied with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended, as applicable, and the rules and regulations of the SEC thereunder,
and none of the SEC Documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were
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made, not misleading. The financial statements of Borrower included in the SEC
Documents are complete in all material respects and were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of unaudited financial statements, as permitted by Form 10-Q of the
SEC) and fairly present (subject, in the case of unaudited financial statements,
to normal recurring audit adjustments) the financial position of Borrower at the
dates thereof and the results of its operations and changes in financial
position for the periods then ended.
6.7 COMPLIANCE WITH LAWS
Borrower has complied, and is in compliance with, all Applicable Laws and
all federal, state, county, local and foreign decrees and orders, and possesses
all governmental franchises, permits and consents, and has made all governmental
filings and declarations, applicable to the operation of its business, to its
employees, or to the real property and the personal property that it owns or
leases (including, without limitation, all such Applicable Laws, decrees and
orders relating to pharmaceutical, antitrust, consumer protection, currency
exchange, environmental protection, equal opportunity, health, occupational
safety, pension, securities and trading-with-the-enemy matters), the failure to
comply with which would, individually or in the aggregate, have a Material
Adverse Effect. Borrower has not received any notification of any asserted
present or past unremedied failure by Borrower to comply with any of such
Applicable Laws, decrees or orders.
6.8 CHANGES
Since June 30, 1998 there has not been:
(a) any damage, destruction or loss (whether or not covered by
insurance) which has had or is expected to have a Material Adverse Effect;
(b) any material change in the accounting methods or practices
followed by Borrower;
(c) any material debt obligation or liability (whether absolute or
contingent) incurred by Borrower (whether or not presently outstanding) except
(i) current liabilities incurred, and obligations under agreements entered into,
in the ordinary course of business and (ii) obligations or liabilities entered
into or incurred in connection with the execution of the Transaction Documents;
(d) any sale, lease, abandonment or other disposition by Borrower of
any real property or, other than in the ordinary course of business, of any
equipment
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or other operating properties or any sale, assignment, transfer, license or
other disposition by Borrower of any intellectual property relevant to the
Licensed Products or other intangible asset (except any license to an Affiliate
of Lender pursuant to the Transaction Documents); or
(e) any other event or occurrence that has had or is expected to have
a Material Adverse Effect.
7. EVENTS OF DEFAULT; REMEDIES
7.1 EVENTS OF DEFAULT
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for the Event of Default, whether it shall relate to
one or more of the parties hereto, and whether it shall be voluntary or
involuntary or be pursuant to or affected by operation of Applicable Law):
(a) If Borrower fails to pay the principal of or interest on the Note,
within ten (10) Business Days after the Payment Date and after written notice to
Borrower from Lender of such failure to pay; or
(b) If any representation or warranty made by Borrower in this
Agreement is breached or is false or misleading; or
(c) If Borrower fails to observe or perform any other term, covenant,
or agreement to be performed or observed pursuant to the provisions of the Loan
Documents and such default either (i) cannot be cured within thirty (30) days of
written notice to Borrower from Lender of such default or (ii), if it is capable
of being cured within such period, is not cured within thirty (30) days of
written notice to Borrower from Lender of such default or, so long as Borrower
is diligently pursuing a cure, such longer period of time, not to exceed an
additional thirty (30) days, as is reasonably necessary to cure such default; or
(d) If custody or control of any substantial part of the property of
Borrower is assumed by any Governmental Authority; or
(e) If Borrower is generally not able to, or admits in writing its
inability to, pay its debts as they become due, or if Borrower suspends or
discontinues its business or operations or a substantial part thereof, or if
Borrower makes an assignment for the benefit of creditors or a composition with
creditors, is unable or admits in writing its inability to pay its debts as they
mature, files a petition in bankruptcy, becomes insolvent (howsoever such
insolvency may be evidenced), is adjudicated insolvent or bankrupt, petitions or
applies to any tribunal for the
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appointment of any receiver, liquidator, or trustee of or for it or any
substantial part of its property or assets, commences any proceeding relating to
it under any Applicable Law of any jurisdiction whether now or hereafter in
effect relating to bankruptcy, reorganization, arrangement, readjustment of
debt, receivership, dissolution, or liquidation; or if there is commenced
against Borrower any such proceeding that remains undismissed for a period of
sixty (60) days or more, or an order, judgment, or decree approving the petition
in any such proceeding is entered; or if Borrower by any act or failure to act
indicates its consent to, approval of, or acquiescence in, any such proceeding
or any appointment of any receiver, liquidator, or trustee of or for it or for
any substantial part of its property or assets, suffers any such appointment to
continue undischarged or unstayed for a period of sixty (60) days or more, or
takes any corporate action for the purpose of effecting any of the foregoing; or
if any court of competent jurisdiction assumes jurisdiction with respect to any
such proceeding, or if a receiver or a trustee or other officer or
representative of a court or of creditors, or if any Governmental Authority,
under color of legal authority, takes and holds possession of all or
substantially all of the assets of Borrower; or
(f) If an Event of Default shall occur under any of the other Loan
Documents or a default shall occur under any of the other Transaction Documents
or if Borrower fails to pay when due any other indebtedness with a principal
amount in excess of US$500,000 or if an event of default occurs thereunder such
that the lender thereof may accelerate the payments due thereunder; or
(g) If one or more judgments, decrees or orders for the payment of
money in excess of US$100,000 in the aggregate in excess of amounts covered by
insurance is rendered against Borrower and such judgments, decrees or orders
continue unsatisfied and in effect for a period of thirty (30) consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending appeal;
or
(h) If Borrower fails to complete construction of the Manufacturing
Facility or commence production of Bulk Licensed Product within ninety (90) days
after the scheduled dates for such completion or production as set forth in the
Development Plan.
7.2 ACCELERATION; REMEDIES
Upon the occurrence of any Event of Default or at any time thereafter, if
any Event of Default is then continuing, Lender may, by written notice to
Borrower, declare the entire unpaid principal balance or any portion of the
principal balance of the Note and interest accrued thereon to be immediately due
and payable by the maker thereof; and such principal and interest shall
thereupon become and be immediately due and payable, without presentation,
demand, protest, notice of protest, or other
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notice of dishonor of any kind, all of which are hereby expressly waived by
Borrower. Lender may proceed to protect and enforce its rights hereunder in any
manner or order it deems expedient without regard to any equitable principles of
marshaling or otherwise. All rights and remedies given by the Loan Documents are
cumulative and not exclusive of any thereof or of any other rights or remedies
available to Lender; no course of dealing between Borrower and Lender or any
delay or omission in exercising any right or remedy shall operate as a waiver of
any right or remedy; and every right and remedy may be exercised from time to
time and as often as deemed appropriate by Lender. Lender shall apply any
proceeds received by it in connection with its exercise of rights or remedies
first to the payment of reasonable costs and expenses incurred by it in
- -----
connection with such exercise, including, without limitation (to the extent
permitted by law), reasonable attorneys' fees and legal expenses, and second to
------
the payment of the outstanding Loan amount (and accrued interest), as Lender in
its sole discretion may elect. Borrower shall remain liable to Lender for and
shall pay to Lender any deficiency which may remain between the amount of
proceeds received and the sum owed to Lender. Upon the occurrence and during the
continuance of any Event of Default, Lender or any of its Affiliates may at any
time, and from time to time, without notice to Borrower, set-off and apply any
and all amounts at any time owing by Lender or any of its Affiliates to or for
the credit of Borrower against any and all obligations of Borrower now or
hereafter existing under the Loan Documents, irrespective of whether or not
Lender shall have made any demand under the Loan Documents or the obligations
thereunder remain unmatured. Although Borrower waives any right to receive
notice of Lender's actions under this Section, Lender agrees to notify Borrower
promptly after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
Lender's rights hereunder are in addition to any of Lender's other rights or
remedies.
8. MISCELLANEOUS
8.1 NOTICES
All notices required or permitted to be given under this Agreement shall be
governed by the terms of Section 8.6 of the Master Agreement.
8.2 PAYMENT OF EXPENSES
If there shall occur any Event of Default, Lender shall be entitled to
recover any costs and expenses incurred by Lender in connection with the
preservation of rights under, and enforcement of, the Loan Documents, whether or
not any lawsuit is commenced, in all such cases, including, without limitation,
reasonable attorneys' fees and costs. Reasonable attorneys' fees shall include,
without limitation, attorneys' fees
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and costs incurred in connection with any bankruptcy case or other insolvency
proceeding commenced by or against Borrower, including all fees incurred in
connection with (a) moving for relief from the automatic stay, to convert or
dismiss the case or proceeding, or to appoint a trustee or examiner, or (b)
proposing or opposing confirmation of a plan of reorganization or liquidation,
in any case without regard to the identity of the prevailing party.
8.3 NO WAIVER
No failure or delay on the part of Lender or the holder of the Note in
exercising any right, power, or privilege hereunder and no course of dealing
between Borrower and Lender or the holder of the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any right, power, or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
that Lender or any subsequent holder of the Note would otherwise have. No
notice to or demand on Borrower in any case shall entitle Borrower to any other
or further notice or demand in similar or other circumstances or shall
constitute a waiver of the right of Lender to any other or further action in any
circumstances without notice or demand.
8.4 ENTIRE AGREEMENT AND AMENDMENTS
This Agreement, the other Loan Documents and the Transaction Documents
represent the entire agreement between the parties hereto with respect to the
Loan and the transactions contemplated hereunder and, except as expressly
provided herein, shall not be affected by reference to any other documents.
This Agreement and the other Loan Documents, or any provision hereof or thereof,
may not be changed, waived, discharged, or terminated orally, but only by an
instrument in writing, signed by the party against whom enforcement of the
change, waiver, discharge, or termination is sought.
8.5 BENEFIT OF AGREEMENT
This Agreement is binding upon and inures to the benefit of Borrower and
Lender and their successors. Notwithstanding the foregoing, Borrower and Lender
are precluded from assigning any of their respective rights or delegating any of
their respective obligations hereunder or under any of the other Loan Documents
without the prior written consent of the other party, except that Lender may
assign and delegate its rights and obligations hereunder to an Affiliate so long
as Lender remains primarily liable hereunder.
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8.6 SEVERABILITY
If any provision of the Loan Documents is held invalid under any Applicable
Laws, such invalidity shall not affect any other provision of the Loan Documents
that can be given an effect without the invalid provision, and, to this end, the
provisions hereof are severable.
8.7 DESCRIPTIVE HEADINGS
The descriptive headings of the several sections of this Agreement are
inserted for convenience only and do not affect the meaning or construction of
any of the provisions hereof.
8.8 COURTS OF LAW
The state and federal courts situated in the County of New York, State of
New York, United States of America, shall have sole jurisdiction and venue to
resolve all disputes arising hereunder between the parties and initiated by
Borrower. The state and federal courts situated in King County, State of
Washington, United States of America, shall have sole jurisdiction and venue to
resolve all disputes arising hereunder between the Parties and initiated by
Lender. The Parties irrevocably submit to such jurisdiction and venue, waive
any claim to an inconvenient forum posed by such venue, and agree that process
may be served in any manner permitted by such court before which a dispute is
pending.
8.9 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall constitute an original agreement, but all of which together shall
constitute one and the same instrument.
8.10 GOVERNING LAW
This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and shall be governed by the laws of the
State of New York.
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IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed by the respective, duly authorized signatories as of the date
first above written.
TARGETED GENETICS CORPORATION
By /s/ H. Stewart Parker
--------------------------------------
Title President, Chief Executive Officer
-----------------------------------
MEDEVA PLC
By /s/ G. Watts
------------------------------------
Title Finance Director
-----------------
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EXHIBIT 2.3
TO CREDIT AGREEMENT
PROMISSORY NOTE
US $2,000,000 ___________, 1998
For value received, the undersigned, TARGETED GENETICS CORPORATION
("Borrower"), promises to pay to the order of MEDEVA PLC ("Lender"), at 10 St.
James's Street, London, United Kingdom SW1A 1EF, or such other place or places
as the holder hereof may designate in writing, the principal sum of Two Million
United States Dollars (US $2,000,000) or so much thereof as advanced by Lender,
in accordance with the terms and conditions of that certain credit agreement of
even date herewith by and between Borrower and Lender (together with all
supplements, exhibits, amendments and modifications thereto, the "Credit
Agreement"). Borrower also promises to pay interest on the unpaid principal
balance hereof, commencing as of the first date of an advance hereunder, in like
money in accordance with the terms and conditions, and at the rate or rates
provided in the Credit Agreement. All such interest is payable annually,
commencing one year from the first date of an advance hereunder. All principal,
is due and payable in full on the Payment Date (as defined in the Credit
Agreement) or such earlier date as provided in the Credit Agreement.
Borrower waives presentment for payment, demand, notice of nonpayment,
notice of protest, and protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default, dishonor, or enforcement of
the payment of this Note except such notices as are specifically required by
this Note or by the Credit Agreement, and agrees that its liability shall be
unconditional without regard to the liability of any other party and shall not
be in any manner affected by any indulgence, extension of time, renewal, waiver,
or modification granted or consented to by Lender. Borrower consents to any and
all extensions of time, renewals, waivers, or modifications that may be granted
by Lender with respect to the payment or other provisions of this Note and the
Credit Agreement.
This Note is the Note referred to in the Credit Agreement and as such is
entitled to all of the benefits and obligations specified in the Credit
Agreement. Reference is made to the Credit Agreement for provisions for the
repayment of this Note and the acceleration of the maturity hereof.
TARGETED GENETICS CORPORATION
By
---------------------------------------
Title
------------------------------------
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EXHIBIT 3(d)
TO CREDIT AGREEMENT
OPINION OF COUNSEL
November 23, 1998
Medeva PLC
10 St. James's Street
London, United Kingdom SW1A 1EF
RE: CREDIT AGREEMENT, DATED AS OF NOVEMBER 23, 1998, BY AND BETWEEN TARGETED
GENETICS CORPORATION AND MEDEVA PLC
Ladies and Gentlemen:
We have acted as counsel to Targeted Genetics Corporation, a Washington
corporation (the "Company"), in connection with the transactions contemplated by
the Credit Agreement dated as of November 23, 1998 (the "Credit Agreement") by
and between the Company and Medeva PLC, a public limited liability company
organized under the laws of England ("Lender"). We are rendering this opinion
letter to you at the request of the Company pursuant to Section 3(d) of the
Credit Agreement. Except as otherwise indicated herein, capitalized terms used
and not otherwise defined in this opinion letter have the meanings assigned to
such terms in the Credit Agreement.
For purposes of the opinions set forth below, we have examined copies only
of (a) the Credit Agreement and the Note between the Company and the Lender,
(collectively, the "Transaction Documents"), (b) the Company's Articles of
Incorporation, as amended and filed with the Washington Secretary of State (the
"Company's Articles of Incorporation") and Bylaws, as amended (the "Company's
Bylaws"), (c) certificates of government officials, corporate officers and other
representatives of persons referred to herein, (d) certificates provided to us
in connection with delivery of this letter by the Chief Financial Officer and
the Secretary of the Company ("Officer's Certificates"), and (e) such other
documents as we have deemed necessary for purposes of the opinions expressed
below.
As to matters of fact bearing upon the opinions set forth below, we have,
with your consent, relied solely upon, and have not independently verified the
accuracy of, the representations, warranties and other statements of all parties
contained in the Transaction Documents and matters of fact set forth in
certificates of government
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officials, corporate officers and other representatives of persons referred to
herein. During the course of our representation of the Company, nothing came to
our attention that has led us to believe that the representations, warranties or
statements upon which we have relied for the purposes of rendering these
opinions are inaccurate in any material respect.
In rendering such opinions, we have further relied upon the following
assumptions, the accuracy of which we have not independently verified:
(i) Each signature is genuine; each document submitted to us as an
original is authentic; and each document submitted to us as a
copy conforms to the original.
(ii) All natural persons who executed or delivered the Transaction
Documents on behalf of the Company have sufficient legal capacity
to perform such acts.
(iii) The factual representations and warranties in the Transaction
Documents of each of the parties thereto are true, and the facts
and circumstances contemplated pursuant to the Transaction
Documents are as contemplated therein.
(iv) Each certificate provided by a governmental official reviewed
by us for the purpose of rendering this opinion letter is
accurate, complete and authentic, and all official public records
(including their proper indexing and filing) are accurate and
complete.
(v) All statutes, judicial and administrative decisions, and rules
and regulations of governmental agencies, constituting the law
examined by us, are generally available (i.e., in terms of access
and distribution following publication or other release) to
lawyers practicing in such jurisdiction, and are in a format that
makes legal research reasonably feasible.
(vi) The constitutionality or validity of the relevant statute,
rule, regulation or agency action is not in issue unless a
reported decision in the opining jurisdiction has specifically
addressed but not resolved, or has established, its
unconstitutionality or invalidity.
(vii) The directors of the Company are Jack L. Bowman, H. Stewart
Parker, Jeremy Curnock Cook, Mark P. Richmond, Martin P. Sutter,
James D. Grant, and Louis P. Lacasse and there are
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presently no vacancies on the Board of Directors of the Company.
Based upon the examinations, assumptions, qualifications and exceptions
stated herein, we are of the opinion that:
1. The Company is a corporation validly existing under the laws of the
state of Washington.
2. The Company has the requisite corporate power and corporate authority
to execute, deliver and perform its obligations under the Transaction Documents
and, to the extent material to the Company's respective performance of its
obligations thereunder, to own its properties and to carry on its business as it
is now conducted.
3. The Company has authorized, by all necessary corporate action on the
part of the Company, the execution, delivery and performance of each of the
Transaction Documents.
4. The execution, delivery and performance by the Company of the
Transaction Documents do not conflict with or result in a violation of the
Company's Articles of Incorporation or Bylaws or any agreement listed as an
Exhibit to the Company's most recent Form 10-K, as filed with the Securities and
Exchange Commission.
5. The execution, delivery and performance by the Company of the
Transaction Documents are not prohibited by, nor do they result in the
imposition of a fine, penalty or other similar sanction for a violation under,
the provisions of the laws of the state of Washington.
6. Except as disclosed in the Credit Agreement, the execution and delivery
to Lender by the Company of the Transaction Documents and the performance by the
Company of its obligations thereunder do not require under present law any
filing or registration by the Company with, or approval or consent to the
Company of, any governmental agency or authority in the state of Washington that
has not been made or obtained.
7. The Common Stock that may be issued by the Company as repayment or
prepayment of all or any part of the Loan pursuant to Section 2.8 of the Credit
Agreement has been duly reserved for issuance and when issued in accordance with
the Credit Agreement it will be duly and validly issued, fully paid and
nonassessable.
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8. The Transaction Documents have been duly and validly executed.
The opinions expressed above are subject to the following exclusions and
qualifications:
a. Our opinions are as of the date hereof, and we have no
responsibility to update this opinion for events and circumstances occurring
after the date hereof or as to facts relating to prior events that are
subsequently brought to our attention. We do not undertake to advise you of any
changes in law.
b. We are qualified to practice law in the state of Washington and do
not express any opinions in this letter concerning any laws other than
Washington state law; and we express no opinion with respect to the laws,
regulations or ordinances of any county, municipality, or governmental
subdivision or agency of whatever description or character, or with respect to
matters that may be affected by the laws of any other jurisdiction or that may
be affected by pending or proposed legislation.
c. Notwithstanding that the opinions expressed herein may refer to
any party other than the Company, we are not representing, and do not purport to
represent, such party in connection with the transaction described herein.
d. In giving the opinion that the Company is validly existing under
the laws of the state of Washington, we have relied solely upon a certificate to
that effect issued by the Secretary of State of the state of Washington.
This opinion is rendered only to you and is solely for your benefit in
connection with the above transaction. This opinion may not be relied upon by
or disclosed to any other person for any purpose without our prior written
consent.
Very truly yours,
PERKINS COIE LLP
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