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EXHIBIT 10.3
UNION
BANK OF PROMISSORY NOTE
CALIFORNIA TRADE FINANCE - BASE RATE
D. CHRISTENSEN/N/18992
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Borrower Name GENETRONICS, INC.
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Borrower Address Office Loan Number
02297 3116638944
11199 SORRENTO VALLEY ROAD Maturity Date Amount
SAN DIEGO, CA 92121 JUNE 30, 2000 $2,000,000.00
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Date AUGUST 6, 1999 $2,000,000.00
FOR VALUE RECEIVED, on JUNE 30, 2000 the undersigned ("Debtor") promises to pay
to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of TWO MILLION AND NO/100 Dollars ($2,000,000.00), or so much
thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at a per annum rate or rates and at
the times set forth below.
1. PAYMENTS. PRINCIPAL PAYMENTS. Debtor shall pay principal as to each advance
under this note, the full amount of the advance on the earlier of: 90 days after
the advance is made; 90 days after release of documents relating to the advance
or SEPTEMBER 28, 2000 INTEREST PAYMENTS. Debtor shall pay interest MONTHLY.
Should interest not be paid when due, it shall become a part of the principal
and thereafter bear interest as herein provided. All computations of interest
under this note shall be made on the basis of a year of 360 days, for actual
days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder in
minimum amounts of at least $100,000.00 shall bear interest at a rate, based
on an index selected by Debtor, which is 1.750% per annum in excess of
Bank's LIBOR Rate for the Interest Period selected by Debtor, acceptable to
Bank.
No Base Interest Rate may be changed, altered or otherwise modified until
the expiration of the Interest Period selected by Debtor. The exercise of
interest rate options by Debtor shall be as recorded in Bank's records,
which records shall be prima facie evidence of the amount borrowed under
either interest option and the interest rate; provided, however, the failure
of Bank to make any such notation in its records shall not discharge Debtor
from its obligations to repay in full with interest all amounts borrowed. In
no event shall any Interest Period extend beyond the maturity date of this
note except as set forth in the TRADE CREDIT AGREEMENT as may be amended
from time to time.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing, and on
the expiration of any Interest Period with respect to principal outstanding
on which a Base Interest Rate has been accruing, select an index offered by
Bank for a Base Interest Rate Loan and an Interest Period by telephoning an
authorized lending officer of Bank located at the banking office identified
below prior to 10:00 a.m., Pacific time, on any Business Day and advising
that officer of the selected index, the Interest Period and the Origination
Date selected (which Origination Date, for a Base Interest Rate Loan based
on the LIBOR Rate, shall follow the date of such selection by no more than
two (2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the rate
selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves the
right to fund the principal from any source of funds notwithstanding any
Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is not
bearing interest at a Base interest Rate shall bear interest at a rate per
annum of 1.000% less than the Reference Rate, which rate shall vary as and
when the Reference Rate changes.
If any interest rate defined in this note ceases to be available from Bank
for any reason, then said interest rate shall be replaced by the rate then
offered by Bank, which, in the sole discretion of Bank, most closely
approximates the unavailable rate.
At any time prior to the maturity of this note, subject to the provisions of
paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed the
principal amount of this note. Debtor shall pay all amounts due under this
note in lawful money of the United States at Bank's SOUTH COUNTY SAN DIEGO
BBC Office, or such other office as may be designated by Bank, from time to
time.
2. LATE PAYMENTS. If any payment required by the terms of this note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to FIVE AND
NO/1000 percent (5.000%) in excess of the interest rate specified in paragraph
1.b, above, calculated from the date of default until all amounts payable under
this note are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based on the
Reference Rate may be prepaid in whole or in part at any time, without penalty
or premium. Debtor may prepay amounts outstanding under this note bearing
interest at a Base Interest Rate in whole or in part provided Debtor has given
Bank not less than five (5) Business Days prior written notice of Debtor's
intention to make such prepayment and pays to Bank the liquidated damages due
as a result. Liquidated Damages shall also be paid, if Bank, for any other
reason, including acceleration or foreclosure, receives all or any portion of
principal bearing interest at a Base Interest Rate prior to its scheduled
payment date. Liquidation Damages shall be an amount equal to the present
value of the product of: (i) the difference (but not less than zero) between
(a) the Base Interest Rate applicable to the principal amount which is being
prepaid, and (b) the return to which Bank could obtain if it used the amount of
such prepayment of principal to purchase at bid price regularly quoted
securities issued by the United States having a maturity date most closely
coinciding with the relevant Base Rate Maturity Date and such securities were
held by Bank until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a
fraction, the numerator of which is the number of days in the period between
the date of prepayment and the relevant Base Rate Maturity Date and the
denominator of which is 360; and (iii) the amount of the principal so prepaid
(except in the event that principal payments are required and have been made as
scheduled under the terms of the Base Interest Rate Loan being prepaid, then an
amount equal to the lesser of (A) the amount prepaid or (B) 50% of the sum of
(1) the amount prepaid and (2) the amount of principal scheduled under the
terms of the Base Interest Rate Loan being prepaid to be outstanding at the
relevant Base Rate Maturity Date). Present value under this note is determined
by discounting the above product to present value using the Yield Rate is the
annual discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim against Bank,
should the return which Bank could obtain under this prepayment formula exceed
the interest that Bank would have received if no prepayment had occurred. All
prepayments shall include payment of accrued interest on the principal amount
so prepaid and shall be applied to payment of interest before application to
principal. A determination by Bank as to the prepayment fee amount, if any,
shall be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on account of
prepayment. Debtor acknowledges that (i) Bank establishes a Base Interest Rate
upon the understanding that it apply to the Base Interest Rate Loan for the
entire Interest Period, and (ii) any prepayment may result in Bank incurring
additional costs, expenses or liabilities; and Debtor agrees to pay these
liquidated damages as a reasonable estimate of the costs, expenses and
liabilities of Bank associated with such prepayment.
DEBTOR INITIAL HERE: VMN V_____
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement [illegible] (c) the insolvency of any
Obligor or the failure of any Obligor generally to pay such Obligor's debts as
such [illegible] as to any Obligor of any voluntary or involuntary [illegible]
or debtor
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relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy; notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this
note immediately due and payable; however, upon the occurrence of an event of
default under d, e, f, or g, all principal and interest shall automatically
become immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are
not paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement
of this note. Debtor and any endorsers of this note, for the maximum period of
time and the full extent permitted by law, (a) waive diligence, presentment,
demand, notice of nonpayment, protest, notice of protest, and notice of every
kind; (b) waive the right to assert the defense of any statute of limitations
to any debt or obligation hereunder; and (c) consent to renewals and extensions
of time for the payment of any amounts due under this note. If this note is
signed by more than one party, the term "Debtor" includes each of the
undersigned and any successors in interest thereof; all of whose liability
shall be joint and several. Any married person who signs this note agrees that
recourse may be had against the separate property of that person for any
obligations hereunder. The receipt of any check or other item of payment by
Bank, at its option, shall not be considered a payment on account until such
check or their item of payment is honored when presented for payment at the
drawee bank. Bank may delay the credit of such payment based upon Bank's
schedule of funds availability, and interest under this note shall accrue until
the funds are deemed collected. In any action brought under or arising out of
this note, Debtor and any Obligor, including their successors and assigns,
hereby consent to the jurisdiction of any competent court within the State of
California, as provided in any alternative dispute resolution agreement
executed between Debtor and Bank, and consent to service of process by any
means authorized by said state's law. The term "Bank" includes, without
limitation, any holder of this note. This note shall be construed in accordance
with and governed by the laws of the State of California. This note hereby
incorporates any alternative dispute resolution agreement previously,
concurrently or hereafter executed between Debtor and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "BASE INTEREST RATE" means a rate of interest
based on the LIBOR Rate. "BASE INTEREST RATE LOAN" means amounts outstanding
under this note that bear interest at a Base Interest Rate. "BASE RATE MATURITY
DATE" means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. "BUSINESS DAY" means a day on
which Bank is open for business for the funding of corporate loans, and, with
respect to the rate of interest based on the LIBOR Rate, on which dealings in
U.S. dollar deposits outside of the United States may be carried on by Bank.
"INTEREST PERIOD" means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of one, three, six, nine or twelve
months. In determining an Interest Period, a month means a period that starts
on one Business Day in a monthly and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there
is no such numerically corresponding day, then as to that month, such day shall
be deemed to be the last calendar day of such month. Any Interest Period which
would otherwise end on a non-Business Day shall end on the next succeeding
Business Day unless that is the first day of a month, in which event such
Interest Period shall end on the next preceding Business Day. "LIBOR RATE"
means a per annum rate of interest (rounded upward, if necessary, to the
nearest 1/100 of 1%) at which dollar deposits, in immediately available funds
and in lawful money of the United States would be offered to Bank, outside of
the United States, for a term coinciding with the Interest Period selected by
Debtor and for an amount equal to the amount of principal covered by Debtor's
interest rate selection, plus Bank's costs, including the cost, if any, of
reserve requirements. "ORIGINATION DATE" means the first day of the Interest
Period. "REFERENCE RATE" means the rate announced by Bank from time to time at
its corporate headquarters as its Reference Rate. The Reference Rate is an
index rate determined by Bank from time to time as a means of pricing certain
extensions of credit and is neither directly tied to any external rate of
interest or index not necessarily the lowest rate of interest charged by Bank
at any given time.
GENETRONICS, INC.
BY: /s/ MARTIN NASH CFO
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