AGREEMENT FOR PROGRESS PAYMENTS
THIS AGREEMENT, made and entered into as of the 6 day of June, 1996, by and
between CARGILL LEASING CORPORATION (hereinafter "CLC"), a Delaware corporation,
with its principal place of business at P.O. Box 5627, Minneapolis, Minnesota
55440, and GalaGen Inc., a Delaware corporation with its principal place of
business at 4001 Lexington Avenue North, Arden Hills, MN 55126 (hereinafter
"GalaGen").
WITNESSETH:
WHEREAS, GalaGen has agreed to lease the equipment described in Exhibit 1
attached hereto (hereinafter "the Equipment") from CLC pursuant to Master
Equipment Lease No. 04983 (hereinafter "the Lease"):
WHEREAS, CLC has agreed to purchase the Equipment from the manufacturer of
the Equipment (the "Manufacturer) and lease the Equipment to GalaGen subject to
the completion of all the terms and conditions of that certain Commitment Letter
dated June 5, 1996, between the parties hereto (hereinafter "the Commitment
Letter");
WHEREAS, CLC has agreed to make progress payments to the Manufacturer of
the Equipment prior to the Effective Date of the Lease (as defined in paragraph
6) which progress payments will be less than 100% of the purchase price;
WHEREAS, GalaGen is willing to pay CLC interest on the progress payments
and/or reimburse CLC for all payments to the Manufacturer pursuant to the terms
and conditions stated in this Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein shall have the
meaning set forth in the Lease.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. GalaGen acknowledges that CLC has no obligation to purchase the
Equipment or lease it to GalaGen unless GalaGen complies with all of
the terms and conditions of the Commitment Letter to the complete
satisfaction of CLC by November 30, 1996. In addition to the
conditions set forth in the Commitment Letter, GalaGen hereby also
agrees that if it fails to timely pay any interest payments due CLC
pursuant to Section 4 below, CLC shall have no obligation to purchase
the Equipment or lease it to GalaGen notwithstanding GalaGen's
performance of all of the Commitment Letter's conditions. If GalaGen
fails to perform all conditions of the Commitment Letter as of
November 30, 1996 or if GalaGen fails to timely pay all Section 4
interest payments as of the Effective Date, CLC shall have the right
to refuse to execute the Lease as a result thereof. If CLC refuses to
execute the Lease it shall so notify GalaGen and GalaGen shall
promptly reimburse CLC for all progress payment funds paid to the
Manufacturer. The reimbursable amount due CLC shall accrue interest
at Chase Manhattan Bank's prime rate plus 2% as applicable on a
day-to-day basis until paid. Furthermore, GalaGen agrees to pay all
of CLC's expenses including attorneys' fees incurred by CLC to collect
the foregoing reimbursable amount. GalaGen agrees that its obligation
to reimburse CLC is unconditional and that it shall not be necessary
that CLC first attempt to collect the funds from the Manufacturer or
that it exhaust all of its rights or remedies against the
Manufacturer. GalaGen agrees that its obligations to reimburse CLC
hereunder shall be primary and direct. Upon payment of such
reimbursable amount to CLC GalaGen shall be subrogated to all rights
and remedies that CLC may have against the Manufacturer. GalaGen
further agrees to assume all obligations of CLC with respect to all
legal requirements regarding the acceptance and/or rejection of the
Equipment including all such laws set forth in the Uniform Commercial
Code.
2. Any payments for which GalaGen becomes obligated to pay pursuant to
paragraph 1 shall be due and payable in immediately available funds in
Minneapolis upon demand by CLC.
1
3. GalaGen agrees to indemnify, protect, and hold CLC harmless from and
against all losses, damages, injuries, liabilities, claims, and
demands of whatsoever nature and all expenses in connection therewith
including, but not limited to, reasonable attorneys' fees arising out
of or as a result of CLC's refusal to purchase the Equipment or lease
it to GalaGen as a result of GalaGen's failure to perform its
obligations hereunder. This indemnification includes, but is not
limited to, all losses, damages, injuries, liabilities, claims, and
demands made by the Manufacturer.
4. GalaGen agrees to pay interest to CLC at Chase Manhattans Bank's prime
rate plus 2% as applicable on a day-to-day basis for all monies paid
by CLC to the Manufacturer prior to the Effective Date. CLC will
calculate the amount owing and give GalaGen telephonic and telegraphic
notice thereof on the last day of every calendar month commencing with
the expiration of the month during which CLC makes its initial advance
of funds to the Manufacturer. Payment shall be due from GalaGen
within five (5) days after receipt of telephonic and telegraphic
notice of the amount then due and owing. GalaGen agrees that any
amount which has been accrued through the Effective Date but is not
yet due and owing shall be paid in full by GalaGen on the Effective
Date and delivered to CLC in conjunction with the Delivery and
Acceptance Certificate. Such payment shall be calculated as otherwise
provided in this paragraph 4 except that CLC will give GalaGen
telephonic and telegraphic notice of the amount to be paid five (5)
days prior to the Effective Date and shall calculate the amount due on
each of such five (5) days at Chase Manhattan Bank's prime rate on the
day such notice in given plus 2%.
5. Lessee shall insure at its expense all Equipment once received at
Lessee's dock, stored at its plant, or otherwise within its possession
pursuant to the terms of the Lease.
6. For purposes of this Agreement, the Effective Date of the Lease shall
be the date upon which all of the requirements set out in Section 10
of the Commitment Letter are completed to CLC's satisfaction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day, month, and year first above written.
CARGILL LEASING CORPORATION
By:
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Title:
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GALAGEN INC.
WITNESS/
ATTEST: /s/ SUSAN SKOGLUND By: /s/ GREGG A. WALDON
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Title: CFO
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