Exhibit 10.1
LOAN AGREEMENT
This Loan Agreement, dated as of November 12, 2007, (this "Agreement") is
entered into by and between Raven biotechnologies, inc., a Delaware corporation
(the "Company"), and VaxGen, Inc., a Delaware corporation (the "Lender").
RECITALS
A. The Company and Lender are in the process of negotiating a merger
transaction pursuant to which the Company would become a wholly-owned subsidiary
of Lender (the "Merger Transaction"), pursuant to an Agreement and Plan of
Merger dated as of November 12, 2007 (the "Merger Agreement").
B. On the terms and subject to the conditions set forth herein, Lender is
willing to purchase from the Company, and the Company is willing to sell to
Lender the promissory note described below.
D. Capitalized terms not otherwise defined herein shall have the meaning
set forth in the form of Note (as defined below) attached hereto as Exhibit A.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. The Loan.
(a) Issuance of Note. The Lender has agreed to lend to the Company up
to Six Million Dollars ($6,000,000.00) in principal (the "Total Loan Amount") in
return for a secured promissory note in the form of Exhibit A hereto (the
"Note") and a Security Agreement in the form of Exhibit B hereto (the "Security
Agreement"). As more fully set forth in Section 4(e) below, the Lender and the
Company have agreed that the Lender may pay off and discharge the VLL Loan (as
defined below). The Total Loan Amount shall be increased by the amount, if any,
the Lender pays to VLL (as defined below).
(b) Advances. Subject to and upon the terms and conditions set forth
below, the Company may request advances of funds under the Note (each, an
"Advance") in accordance with Schedule 1 attached hereto (the "Schedule of
Advances") in an aggregate outstanding amount not to exceed the Total Loan
Amount, commencing on December 1, 2007. As further described on Schedule 1 and
in accordance with the terms of Schedule 1, a portion of each Advance may be
made in the form of services provided to Company by Lender. Each Advance to the
Company under the Note shall be subject to the satisfaction of the following
conditions precedent (unless waived in writing by the Lender): (i) each of the
representations and warranties contained in this
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Agreement and the Security Agreement must be true and accurate in all material
respects as of the date of such advance, and (ii) the Company must have
performed all of its obligations under this Agreement, the Merger Agreement, the
Note and the Security Agreement. The Lender's obligation to make any Advances
shall terminate upon the earliest of: (1) consummation of Merger I (as defined
in the Merger Agreement), (2) April 1, 2008, provided that, if Lender reasonably
determines in good faith that the Merger Agreement will not be consummated on or
before April 15, 2008, due to the SEC requiring either Lender or the Company to
file audited fiscal year financial statements for the period ended December 31,
2007, and which financial statements are not reasonably expected to be completed
prior to April 15, 2008, then the Lender's obligation to make further Advances
shall terminate March 31, 2008, (3) 30 days following termination of the Merger
Agreement for any reason other than a breach by the Company of its obligations
under the Merger Agreement or the Company's determination to pursue a Razor
Alternative Transaction (as defined in the Merger Agreement), or (4) the date of
termination of the Merger Agreement by the Lender due to the breach by the
Company of its obligations under the Merger Agreement, or as a result of the
Lender's determination to pursue a Panther Alternative Transaction in which the
Lender pays the breakup fee as set forth in the Merger Agreement.
(c) Use of Proceeds. The proceeds of each Advance shall be used solely
for operating expenses of the Company as set forth on Schedule 2 hereto, and
shall not be used for any fees, expenses or costs of the Company or any
affiliate of the Company relating to the Merger Transaction or with respect to
any compensation, retention and/or severance obligations of the Company. The
Company hereby authorizes the Lender and its designated representatives during
normal business hours and upon reasonable notice, to conduct a review of the
Company's books and records sufficient to reasonably satisfy the Lender that the
proceeds of the Advances were used as set forth in the first sentence of this
Section 1(c).
(d) Payments of Advances. The Lender will make all advances to the
Company in immediately available funds by 11:00 a.m. Pacific time on the date
such advancement is due pursuant to Schedule 1 hereto to the account for the
benefit of the Company as set forth on Schedule 1 hereto
2. Representations and Warranties of the Company. Except as set forth on
Schedule 3 hereto, the Company represents and warrants to the Lender that:
(a) Due Incorporation, Qualification, etc. The Company (i) is a
corporation validly existing and in good standing under the laws of the state of
Delaware; (ii) has the power to carry on its business as now conducted; and
(iii) is duly qualified, licensed to do business and in good standing as a
foreign corporation in each jurisdiction where the failure to be so qualified or
licensed could reasonably be expected to have a material adverse effect on the
Company's business, properties, assets, liabilities, prospects, financial
condition, operations or otherwise (a "Material Adverse Effect").
(b) Authority. The execution, delivery and performance by the Company
of each Transaction Document (as defined in Section 5 below) to be executed by
the Company and the consummation of the transactions contemplated thereby (i)
are within the power of the Company and (ii) have been duly authorized by all
necessary actions on the part of the Company.
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(c) Enforceability. Each Transaction Document executed, or to be
executed, by the Company has been, or will be, duly executed and delivered by
the Company and constitutes, or will constitute, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by the Company of the
Transaction Documents executed by the Company and the performance and
consummation of the transactions contemplated thereby do not and will not (i)
violate the Certificate or Bylaws ("Charter Documents") or any material
judgment, order, writ, decree, statute, rule or regulation applicable to the
Company; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other person or entity to accelerate (whether
after the giving of notice or lapse of time or both), any material mortgage,
indenture, agreement, instrument or contract to which the Company is a party or
by which it is bound; or (iii) result in the creation or imposition of any Lien
upon any property, asset or revenue of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or
operations, or any of its assets or properties.
(e) Approvals and Filings. Except for applicable federal and state
securities filings, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any person or entity)
is required in connection with the execution and delivery of the Transaction
Documents executed by the Company and the performance and consummation of the
transactions contemplated thereby.
(f) Valid Issuance. The Note, when issued, sold and delivered in
compliance with the provisions of this Agreement, will be duly and validly
issued and will be free of any liens or encumbrances; provided, however, that
the Note may be subject to restrictions on transfer under state and/or federal
securities laws and under the Transaction Documents.
(g) No Violation or Default. The Company is not in violation of or in
default with respect to (i) its Charter Documents or any material judgment,
order, writ, decree, statute, rule or regulation applicable to the Company; or
(ii) any material mortgage, indenture, agreement, instrument or contract to
which such Person is a party or by which it is bound (nor is there any waiver in
effect which, if not in effect, would result in such a violation or default),
where, in each case, such violation or default, individually, or together with
all such violations or defaults, would reasonably be expected to have a Material
Adverse Effect.
(h) Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened before any court,
administrative agency, or other governmental body (nor, to the Company's
knowledge, is there any basis for any such action, suit, proceeding or
investigation) that might result, either individually or in the aggregate, in
any Material Adverse Effect. The Company is not a party or subject to, and none
of its assets is bound by, the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit or proceeding by the Company currently pending or that the
Company intends to initiate.
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(i) Title to Property and Assets. The Company has good and marketable
title to all of its properties, intangible and tangible assets that it owns free
and clear of all mortgages, liens, loans, claims and encumbrances, except liens
for current taxes and assessments not yet due and minor liens and encumbrances
which arise in the ordinary course of business and which do not, in any case, in
the aggregate, materially detract from the value or use of the property subject
thereto or materially impair the operations of the Company. With respect to the
property and assets it leases, the Company is in compliance with such leases and
holds a valid leasehold interest free of all liens, claims or encumbrances.
3. Representations and Warranties of The Lender. The Lender hereby
represents and warrants to the Company as follows:
(a) Binding Obligation. The Lender has full legal capacity, power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Each of this Agreement and the Note issued to the Lender is a valid
and binding obligation of the Lender, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and
general principles of equity.
(b) Securities Law Compliance. The Lender has been advised that the
Note has not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws and, therefore, cannot be resold
unless it is registered under the Securities Act and applicable state securities
laws or unless an exemption from such registration requirements is available.
The Lender is an "accredited investor" as such term is defined in Rule 501 of
Regulation D under the Securities Act.
4. Covenants of the Company.
(a) No New Indebtedness. Prior to the earliest of: (i) the Maturity
Date (as set forth in the Note) or (ii) the payment in full of all obligations
pursuant to the Note, the Company shall not without the consent of the Lender
create, incur, assume or suffer to exist new indebtedness which is senior in
priority of payment to the Note; provided, however, that such limitation shall
not apply to unsecured trade debt incurred in the ordinary course of the
Company's business.
(b) Monthly and Quarterly Financials. The Company shall forward, or
cause to be forwarded to the Lender by electronic mail, followed promptly by a
version in writing, (a) the Company's monthly financial statements prepared in
accordance with GAAP (subject to normal year-end adjustments) as soon as
available, and in any event within twenty-eight (28) days after the end of each
month; and (b) the Company's quarterly consolidated and consolidating financial
statements prepared in accordance with GAAP (including a quarterly balance
sheet, profit and loss statement and cash flow statement for such quarter) as
soon as available, and in any event within forty-five (45) days from the end of
each quarter.
(c) Payments and Obligations to the Lender. The Company shall make all
payments of principal, interest and other charges as and when due under the
Note, shall perform or comply with, as the case may be, all of the other
obligation under the Note and the Security
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Agreement, and shall perform and comply in all respects with all applicable
terms, conditions and covenants of this Agreement, the Note and the Security
Agreement.
(d) Other Debts; Taxes. The Company shall promptly make all payments of
principal and interest as and when due under any other indebtedness of the
Company and shall make payment of all other payment obligations of the Company
in excess of $10,000 individually within fifteen (15) days of such payment
obligations coming due and shall make payment of all other payment obligations
of the Company within 30 days of such payments coming due; provided, however,
that this covenant shall not be construed as permitting any other debt
obligations of the Company or as permitting the making of any payments on
account of any other debt obligations of the Company that are not otherwise
permitted by the terms and conditions of this Agreement. The Company will pay
and discharge all material taxes, assessments and governmental charges or levies
imposed upon them or upon their income or profits, or upon any properties
belonging to them, prior to the date on which material penalties attach thereto,
and all lawful claims which, if unpaid, might reasonably be expected to become a
lien or charge upon any properties of the Company or cause a failure or
forfeiture of title thereto; provided, however, that the Company shall not be
required to pay any such tax, assessment, charge, levy or claim that is being
contested in good faith and by proper proceedings timely instituted and
diligently conducted if they have maintained adequate reserves with respect
thereto in accordance with GAAP.
(e) Matters Concerning VLL Indebtedness. Prior to any Advance being
made, the Company shall obtain the agreement of Venture Lending and Leasing
("VLL") in form and substance satisfactory to the Lender permitting the Lender
to cure any monetary default by the Company with respect to the Company's
indebtedness and other obligations to VLL under that certain Loan and Security
Agreement, dated as of October 14, 2004, as amended (the "VLL Loan") and
permitting the Lender to pay off and discharge the VLL Loan at any time the Note
is outstanding, and that upon such pay off, all obligations to VLL by the
Company under the VLL Loan shall be satisfied and discharged; provided, however,
that this requirement shall not, however, be deemed to or construed as imposing
any duty upon the Lender to cure any such defaults or any rights of any third
parties with respect to any such defaults, or to make any payment to pay off and
discharge the VLL Loan. Any funds made available by the Lender to the Company to
permit the Company to cure any monetary default under, or to pay off and
discharge, the VLL Loan shall immediately and automatically become indebtedness
under the Note and the Total Loan Amount shall automatically be increased such
amount without any further act or notice by either the Company or the Lender.
(f) Protection of Collateral. The Lender shall take or cause to be
taken all steps and perform or cause to be performed all actions reasonably
necessary or appropriate to administer, supervise, preserve and protect the
Collateral (as defined in the Security Agreement), and to maintain the Lenders'
perfected security interest in the Collateral once such security interest is
perfected. If the Company files with the United States Patent and Trademark
Office any applications or other documents relating to the Company's
Intellectual Property (as defined in the Security Agreement), then the Company
shall, no later than ten (10) days thereafter, notify the Lender in writing of
any such action, and, at any time following the effectiveness of the security
interest, upon the request of the Lender, the Company shall execute and file
such collateral assignments and related documents in favor of the Lender, and
otherwise cooperate with the Lender, to provide the Lender a valid and perfected
priority security interest in and to all of Seller's Intellectual Property.
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(g) Insurance. The Company shall maintain, in full force and effect its
existing insurance policies, with a lender loss payee clause in favor of the
Lender.
(h) No Distributions. Unless otherwise agreed in writing by Lender in
advance or in connection with severance or retention payments in connection with
the Merger Transaction, the Company shall not make any distributions of cash,
securities or other property of the Company to any of its equityholders, whether
such distribution would be characterized as a dividend or otherwise.
(i) No Encumbrances. The Company shall not permit to exist against any
of the Collateral or any of its other material assets (if any) any lien,
mortgage, pledge, security interest, title retention device, or other
encumbrance (collectively, "Liens"), except for those (i) Liens arising pursuant
to this Agreement, the Note and the Security Agreement; (ii) Liens in existence
as of the date hereof under the VLL Loan; (iii) Liens incurred with respect to
the Note Purchase Agreement which are junior in terms of priority to the Liens
in favor of the Lender; (iv) Liens for taxes and assessments not delinquent or
actively being contested in good faith by the Company and for which the Company
has adequate reserves; (v) deposits or pledges for goods or services made in the
ordinary course of the Company's business; (vi) mechanics liens; (vii) liens
that are junior in right of payment and collection and expressly subordinated to
the Liens arising pursuant to this Agreement and the Security Agreement and
(viii) statutory liens affecting real property of landlords of the Company
Seller (collectively such Liens permitted by clauses (i) through (viii) hereof,
"Permitted Liens").
(j) No Payments of Junior Debt. The Company shall not make any payments
with respect to the indebtedness created or incurred under the Note Purchase
Agreement unless all obligations then owing to the Lender under this Agreement,
the Note and the Security Agreement shall have been first paid and discharged
and the Note shall have been terminated and discharged in full.
(k) No Sale, License or Other Disposal of Assets. The Company shall not
in any manner sell, convey, lease, license, transfer or dispose of any
equitable, beneficial or legal interest in any of the Collateral or any of the
Company's other material assets (if any), except for equipment disposed of in
the ordinary course of business for at least the estimated fair market value of
such equipment as determined in good faith by the Company's board of directors
(l) No Transactions Outside the Ordinary Course. The Company shall not
enter into any agreements, obligations or commitments of any type, except in the
ordinary course of business consistent with past practice and except for
agreements, contracts or commitments which involve payment by the Company which
individually do not exceed $10,000, and which collectively do not exceed
$50,000.
(m) Compensation Matters. The Company shall not increase or commit to
increase the compensation payable or to become payable to its officers or
employees except for increases in salary or wages in accordance with past
practices or agreements listed on Schedule (m)
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and in effect as of the date of this Agreement, in amounts not to exceed for any
individual 20% of the current salary or hourly wage of such individual, which
are first discussed with the Lender.
5. Certain Default Agreements. In addition to each of the Events of
Default set forth in the Note, if the Company shall commit a breach of the
Merger Agreement such that the Merger Agreement may be terminated by the Lender
pursuant to Section 7.1(e) of the Merger Agreement, whether or not the Merger
Agreement is in fact so terminated, then the Note shall be in default and
subject to acceleration and all other remedies available to the Lender;
provided, however, the Lender agrees that until the Merger Agreement is either
terminated or consummated by its terms, the Lender shall forbear from its right
to require the payment of all outstanding indebtedness under the Note for a
period of 60 days from the date of termination of the Merger Agreement. For the
avoidance of doubt, if the Merger is consummated no repayment shall be due under
the Note.
6. Miscellaneous.
(a) Waivers and Amendments. Any provision of this Agreement may be
amended, waived or modified only upon the written consent of the Company and the
Lender.
(b) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of law
provisions of the State of Delaware or of any other state.
(c) Survival. The representations, warranties, covenants and agreements
made herein shall survive the execution and delivery of this Agreement.
(d) Successors and Assigns. Subject to the restrictions on transfer
described in Sections 6(e) and 6(f) below, the rights and obligations of the
Company and the Lender shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
(e) Assignment by the Company. Other than as contemplated in connection
with the Merger 2 (as defined in the Merger Agreement), the rights, interests or
obligations hereunder may not be assigned, by operation of law or otherwise, in
whole or in part, by the Company without the prior written consent of the
Lender.
(f) Entire Agreement. This Agreement together with Note, the Security
Agreement, and each instrument or other agreement executed and delivered in
connection therewith (collectively, "Transaction Documents") constitute and
contain the entire agreement among the Company and the Lenders with regard to
the subject matter hereof, and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof.
(g) Notices. All notices, requests, demands, consents, instructions or
other communications required or permitted hereunder shall in writing and faxed,
mailed or delivered to each party as follows: (i) if to the Lender, at 349
Oyster Point Blvd., South San Francisco, CA 94080, or at such other address as
the Lender shall have furnished the Company in writing, or (ii) if to the
Company, at One Corporate Drive, South San Francisco, CA, 94080, or at such
other
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address or facsimile number as the Company shall have furnished to the Lender in
writing. All such notices and communications will be deemed effectively given
the earlier of (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate
confirmation), (iv) one business day after being deposited with an overnight
courier service of recognized standing or (v) four days after being deposited in
the U.S. mail, first class with postage prepaid.
(h) Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement. Facsimile copies of signed
signature pages will be deemed binding originals.
[Signatures on following page]
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The parties have caused this Loan Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the date and year
first written above.
COMPANY:
RAVEN BIOTECHNOLOGIES, INC.
By: /s/ George F. Schreiner
-----------------------------------
Name: George F. Schreiner
Title: Chief Executive Officer
LENDER:
VAXGEN, INC.
By: /s/ James P. Panek
------------------------------------
Name: James P. Panek
Title: President and CEO
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SCHEDULE 1
SCHEDULE OF ADVANCES UNDER THE NOTE
o For each month, the Advance provided will reflect planned expenditure for
the month ahead. Company shall provide a budget for each month prior to the
drawdown date. Surplus amounts at the end of each month shall be credited
against the following month's Advance.
o For each month, the Advance may be provided in both cash and in-kind
services provided by Lender to Company, as may be agreed upon by Lender and
Company pursuant to a Master Services Agreement ("MSA") to be negotiated in
good faith prior to Closing. Under such MSA, the in-kind portion of such
Advance shall consist of services provided by Lender technical personnel to
Company, charged at actual salary for such personnel plus 90% to cover
fringe benefits and overhead.
o The figures below represent good-faith estimates as to total amount of each
Advance. These amounts will be corrected to reflect actual experience
following that date of this Agreement, provided that, under no circumstances
shall Lender be obligated to loan Company more than $6 million.
Schedule of Advances: indicative amounts:
($k) Date Total
12.1.07 1,332
1.1.08 1,355
2.1.08 1,355
3.1.08 1,310
4.1.08 655
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SCHEDULE 2
USE OF PROCEEDS
o Each Advance shall be used to cover normal operating expenses of Lender.
o No amount of any Advance may be used to cover severance expenses, bonus
payments or transaction expenses of Lender or its stockholders.
o No amount of any Advance may be used to pre-pay any amount of the VLL Loan
and no Advance shall be adjusted in amount for Lender to pre-pay any amount
of the VLL Loan. In the event Lender determines at its sole election to
pre-pay any amount of the VLL Loan, Lender shall so notify Company and VLL
in accordance with the VLL Side Letter of even date herewith among VLL,
Company and Lender, which amount when so paid by Lender shall be added to
the Total Loan Amount and be evidenced by the Note and secured under the
Security Agreement.
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SCHEDULE 3
None.
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EXHIBIT A
FORM OF NOTE
SECURED PROMISSORY NOTE
$6,000,000 November __, 2007
For value received RAVEN BIOTECHNOLOGIES, INC., a Delaware corporation
(the "Company") promises to pay to VAXGEN, INC., a Delaware corporation
("Lender") the principal sum of up to SIX MILLION DOLLARS ($6,000,000.00), plus
any amounts paid to Venture Lending & Leasing IV, Inc. by the Lender on behalf
of the Company to pay off and discharge the VLL Loan (as defined in the Loan
Agreement), or such lesser amount as may be advanced hereunder (the "Commitment
Amount"), together with simple interest on the outstanding principal amount from
time to time outstanding hereunder at the rate of 8% per annum. Interest shall
commence with the date hereof and shall continue on the outstanding principal
until paid in full or converted. Interest shall be computed on the basis of a
year of 365 days for the actual number of days elapsed.
1. Loan Agreement. This note (the "Note") is issued to Lender pursuant to
the terms of that certain Loan Agreement dated as of November __, 2007 (the
"Loan Agreement") by and between the Company and Lender.
2. Currency. All payments of interest and principal shall be in lawful
money of the United States of America and shall be made pro rata among all
Holders. All payments shall be applied first to accrued interest, and thereafter
to principal.
3. Secured Note. The obligations under this Note shall be secured by the
Collateral, as defined in the Security Agreement attached hereto as Exhibit A.
4. Payment on Maturity Date. Subject to Section 5 of the Loan Agreement,
the entire outstanding principal balance and all unpaid accrued interest shall
become fully due and payable on the Maturity Date. As used herein, "Maturity
Date" means the earliest of: (i) June 1, 2009, in the event the Merger has not
closed by April 15, 2008 or such later date as the parties may have agreed to
extend the time for closing the Merger under the Merger Agreement (the "Trigger
Date") other than as a result of a breach by the Company under the Merger
Agreement as provided in Section 7.1(e) of the Merger Agreement, a termination
of the Merger Agreement as provided in Section 7.1(f) of the Merger Agreement,
or the Company's termination of the Merger Agreement pursuant to Section 7.1(j)
of the Merger Agreement, (ii) at Lender's election, within 10 days following
termination of the Merger Agreement by the Company as provided in Section 7.1(j)
of the Merger Agreement, (iii) upon the closing of a Razor Acquisition
Transaction (as defined in the Merger Agreement), or (iv) immediately upon an
Event of Default as set forth below.
5. Mandatory Prepayments. If the Merger has not closed by the Trigger
Date, then the Company shall pay Lender (i) 10% of any proceeds received by the
Company up to $5 million in the aggregate from any equity or debt financing or
from any business development transaction, and (ii) 20% of any proceeds received
by the Company in excess of $5 million until all outstanding amounts owing under
the Note shall have been paid in full. For the avoidance of doubt, by way of
example only, in the event the Company receives $7 million in an equity
financing, the Company shall pay the Lender $900,000.
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6. Fees. In the event of any default hereunder, Company shall pay all
reasonable attorneys' fees and court costs incurred by Lender in enforcing and
collecting this Note.
7. Prepayment. The Company may prepay this Note at any time.
8. Event of Default. The occurrence of any one or more of the following
shall constitute an "Event of Default":
(a) Company fails to pay timely any of the principal amount due under
this Note on the date the same becomes due and payable or any accrued interest
or other amounts due under this Note on the date the same becomes due and
payable;
(b) Company shall materially default in its performance of any covenant
under Section 4 of the Agreement;
(c) Company shall materially default in its performance of any other
covenant under the Agreement, or under this Note or the Security Agreement, in
each case which breach is not cured within 15 days after receipt of notice of
such breach from Lender;
(d) Company shall commit a breach of the Merger Agreement which would
permit the termination of the Merger Agreement by Lender pursuant to Section
7.1(e) of the Merger Agreement, whether or not the Merger Agreement is in fact
so terminated;
(e) Company files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any
assignment for the benefit of creditors or takes any corporate action in
furtherance of any of the foregoing; or
(f) An involuntary petition is filed against Company (unless such
petition is dismissed or discharged within sixty (60) days under any bankruptcy
statute now or hereafter in effect) or a custodian, receiver, trustee, assignee
for the benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property of Company.
9. Waivers. Company hereby waives demand, notice, presentment, protest and
notice of dishonor.
10. Governing Law. This Note shall be governed by and construed under the
laws of the State of Delaware, as applied to agreements among Delaware
residents, made and to be performed entirely within the State of Delaware,
without giving effect to conflicts of laws principles.
11. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full in cash of all of the Company's
obligations to Venture Lending and Leasing pursuant that certain Loan and
Security Agreement, dated as of October 14, 2004, as amended, in an amount not
to exceed $1,500,000 (the "VLL Loan").
A-2
(a) Acceleration; Enforcement Rights. Prior to the payment in full in
cash of the VLL Loan, Lender shall have no right to accelerate the maturity of
the amounts due under this Note or otherwise demand payment thereof, or enforce
any claim with respect to the amounts due under this Note.
(b) Other Indebtedness. No indebtedness other than that arising under
the VLL Loan shall be senior in any respect to the indebtedness represented by
this Note.
(c) No Impairment. Subject to the rights, if any, of VLL with respect
to the VLL Loan, under this Section 11 to receive cash, securities or other
properties otherwise payable or deliverable to Lender and the other restrictions
set forth in this Section 11, nothing contained in this Section 11 shall impair,
as between Company and Lender, the obligation of Company, subject to the terms
and conditions hereof, to pay to Lender the principal hereof and interest hereon
as and when the same become due and payable or shall prevent Lender, upon the
occurrence of an Event of Default hereunder from exercising all rights, powers
and remedies provided herein or by applicable law.
(d) Lien Subordination. Any lien of Lender on any assets or property of
Company or any proceeds or revenues therefrom which Lender may have at any time
as security for any amounts due and obligations under this Note shall be
subordinate to all liens granted to VLL with respect to the VLL Loan or by law,
notwithstanding the date or order of attachment or perfection of any such lien
or the provisions of any applicable law. Until payment in full in cash of all
amounts owing under the VLL Loan, Lender agrees that VLL may dispose of any or
all of the collateral for the VLL Loan held and perfected by VLL free and clear
of any and all liens in favor of Lender in accordance with applicable law
including taking title to such collateral after notice to Lender.
[Remainder of page intentionally blank]
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The Company has caused this Note to be executed and delivered as of the
date first set forth above.
RAVEN BIOTECHNOLOGIES, INC.
By:
------------------------------------
Name:
--------------------------------
Title:
-------------------------------
A-4
EXHIBIT B
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
This Security Agreement, dated as of November ___, 2007, ("Security
Agreement"), is made by and among Raven biotechnologies, Inc., a Delaware
corporation ("Grantor") and VaxGen, Inc., a Delaware corporation ("Secured
Party").
RECITALS
A. Secured Party has made and may in the future make certain advances of
money and extend certain financial accommodation to Grantor (collectively, the
"Loan") as evidenced by that certain Secured Promissory Note executed by Grantor
in favor of Secured Party ("Note") issued pursuant to that certain Loan
Agreement dated November __, 2007 by and between Grantor and Secured Party (the
"Loan Agreement").
B. Secured Party is willing to make the Loan to Grantor, but only upon the
condition, among others, that Grantor shall have executed and delivered to the
Secured Party this Security Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce the Secured Party to make the Loan and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Grantor hereby
represents, warrants, covenants and agrees as follows:
1. Defined Terms. When used in this Security Agreement the following terms
shall have the following meanings (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
"Bankruptcy Code" means Title 11 of the United States Code.
"Collateral" shall have the meaning assigned to such term in Section 2 of
this Security Agreement.
"Copyright License" means any agreement, whether in written or electronic
form, in which Grantor now holds or hereafter acquires any interest, granting
any right in or to any Copyright or Copyright registration (whether Grantor is
the licensee or the licensor thereunder) including, without limitation, licenses
pursuant to which Grantor has obtained the exclusive right to use a copyright
owned by a third party.
"Copyrights" means all of the following now owned or hereafter acquired or
created (as a work for hire for the benefit of Grantor) by Grantor or in which
Grantor now holds or hereafter acquires or receives any right or interest, in
whole or in part: (a) all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof or any other
country; (b) registrations, applications, recordings and proceedings in the
United States Copyright Office or in any similar office or agency of the United
States, any State thereof or any other country; (c) any continuations, renewals
or extensions thereof; (d) any registrations to be issued in any pending
applications, and shall include any right or interest in and to work protectable
by any of
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the foregoing which are presently or in the future owned, created or authorized
(as a work for hire for the benefit of Grantor) or acquired by Grantor, in whole
or in part; (e) prior versions of works covered by copyright and all works based
upon, derived from or incorporating such works; (f) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to
copyrights, including, without limitation, damages, claims and recoveries for
past, present or future infringement; (g) rights to sue for past, present and
future infringements of any copyright; and (h) any other rights corresponding to
any of the foregoing rights throughout the world.
"Event of Default" means (i) any failure by Grantor forthwith to pay or
perform any of the Secured Obligations, or (ii) any material misrepresentation
by Grantor when made or deemed made in any representation or warranty in this
Security Agreement or any material breach by Grantor of any covenant set forth
in Section 5 hereof, provided that Grantor has been given notice of such breach
and has not cured such breach, if curable, within thirty days of such notice.
"Intellectual Property" means any intellectual property, in any medium, of
any kind or nature whatsoever, now or hereafter owned or acquired or received by
Grantor or in which Grantor now holds or hereafter acquires or receives any
right or interest, and shall include, in any event, any Copyright, Trademark,
Patent, trade secret, customer list, internet domain name (including any right
related to the registration thereof), proprietary or confidential information,
mask work, source, object or other programming code, invention (whether or not
patented or patentable), technical information, procedure, design, knowledge,
know-how, software, data base, data, skill, expertise, recipe, experience,
process, model, drawing, material or record.
"License" means any Copyright License, Patent License, Trademark License
or other license of rights or interests, whether in-bound or out-bound, whether
in written or electronic form, now or hereafter owned or acquired or received by
Grantor or in which Grantor now holds or hereafter acquires or receives any
right or interest, and shall include any renewals or extensions of any of the
foregoing thereof.
"Lien" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"Loan Documents" shall have the meaning set forth in Section 6(a) below.
"Patent License" means any agreement, whether in written or electronic
form, in which Grantor now holds or hereafter acquires any interest, granting
any right with respect to any invention on which a Patent is in existence
(whether Grantor is the licensee or the licensor thereunder).
"Patents" means all of the following in which Grantor now holds or
hereafter acquires any interest: (a) all patents of the United States or any
other country, all registrations and recordings thereof and all applications for
patents of the United States or any other country, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country; (b) all patents to issue from
any such applications; (c) all reissues, divisions, continuations, renewals,
continuations-in-part or extensions thereof; (d) all petty patents, divisionals
and patents of addition; (e) income, royalties, damages, claims and payments now
and hereafter due and/or
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payable with respect to patents, including, without limitation, damages, claims
and recoveries for past, present or future infringement; and (f) rights to sue
for past, present and future infringements of any patent.
"Permitted Lien" shall have the meaning set forth in the Loan Agreement.
"Proceeds" means and includes any "proceeds," as such term is defined in
Article 9 of the UCC, now or hereafter owned or acquired or received by Grantor
or in which Grantor now holds or hereafter acquires or receives any right or
interest, and shall include, in any event, any and all (a) Accounts, Chattel
Paper, Instruments, Investment Property, cash or other forms of money, currency
or funds or other property of any nature, type or land whatsoever payable to or
renewable by Grantor from time to time in respect of the Collateral, including
upon the sale, lease, license, exchange or other disposition of any Collateral,
(b) claims of Grantor against third parties arising out of the infringements of
rights in any of the Collateral, including any claim (i) for past, present or
future infringement of any Patent or Patent License, Copyright or Copyright
License or (ii) for past, present or future infringement or dilution of any
Trademark or Trademark License or for injury to the goodwill associated with any
Trademark, Trademark registration or Trademark licensed under any Trademark
License, (c) rights arising out of any of the Collateral, and (d) other property
of any nature, type or kind whatsoever from time to time paid or payable under
or in connection with, collected on, or distributed on account of, any of the
Collateral.
"Secured Obligations" means (a) the obligation of Grantor to repay Secured
Party all of the unpaid principal amount of, and accrued interest on (including
any interest that accrues after the commencement of bankruptcy) the Note, and
(b) the obligation of Grantor to pay any fees, costs or expenses of the Secured
Party under the Note, the Loan Agreement or this Security Agreement.
"Security Agreement" means this Security Agreement and all Schedules
hereto, as the same may from time to time be amended, modified, supplemented or
restated.
"Trademark License" means any agreement, whether in written or electronic
form, in which Grantor now holds or hereafter acquires any interest, granting
any right in and to any Trademark or Trademark registration (whether Grantor is
the licensee or the licensor thereunder).
"Trademarks" means any of the following in which Grantor now holds or
hereafter acquires any interest: (a) any trademarks, tradenames, corporate
names, company names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof and any applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country (collectively, the "Marks"); (b)
any reissues, extensions or renewals thereof; (c) the goodwill of the business
symbolized by or associated with the Marks; (d) income, royalties, damages,
claims and payments now and hereafter due and/or payable with respect to the
Marks, including, without limitation, damages, claims and recoveries for past,
present or future infringement; and (e) rights to sue for past, present and
future infringements of the Marks.
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"UCC" means the Uniform Commercial Code as the same may from time to time
be in effect in the State of California (and each reference in this Security
Agreement to an Article thereof (denoted as a Division of the UCC as adopted and
in effect in the State of California) shall refer to that Article (or Division,
as applicable) as from time to time in effect, which in the case of Article 9
shall include and refer to Revised Article 9 from and after the date Revised
Article 9 shall become effective in the State of California; provided, however,
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Secured Party's security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term "UCC" shall mean the
Uniform Commercial Code (including the Articles thereof) as in effect at such
time in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
In addition, the following terms shall be defined terms having the meaning
set forth for such terms in the UCC: "Account", "Chattel Paper" (including
tangible and electronic chattel paper), "Equipment" (including all accessions
and additions thereto), "Instrument" and "Investment Property" (including
securities and securities entitlements). Each of the foregoing defined terms
shall include all of such items now owned, or hereafter acquired, by Grantor.
2. Grant of Security Interest. As collateral security for the full,
prompt, complete and final payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all the Secured Obligations and in
order to induce the Secured Party to cause the Loan to be made, Grantor, upon
the termination of that certain Loan and Security Agreement and the Supplement
thereto, both dated as of October 14, 2004, by and between Venture Lending &
Leasing IV, Inc. and Grantor, assigns, conveys, mortgages, pledges, hypothecates
and transfers to the Secured Party a continued, first priority security interest
in all of Grantor's right, title and interest in, to and under the following,
whether now owned or hereafter acquired, (all of which being collectively
referred to herein as the "Collateral"):
(a) All Intellectual Property of Grantor;
(b) All Licenses of the Grantor related to the Intellectual Property
of the Grantor; and
(c) To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for and profits
of each of the foregoing.
Notwithstanding the foregoing provisions of this Section 2, the grant,
assignment and transfer of a security interest as provided herein shall not
extend to, and the term "Collateral" shall not include any License in which
Grantor has any right, title or interest if and to the extent (a) such security
interest is prohibited by or in violation of any law, rule or regulation
applicable to Grantor or (b) such License includes a provision containing a
restriction on assignment such that the creation of a security interest in the
right, title or interest of Grantor therein would be prohibited and would, in
and of itself, cause or result in a default thereunder enabling another person
party to such License to enforce any remedy with respect thereto; provided that
the foregoing exclusion shall not apply if (i) such prohibition has been waived
or such other person has otherwise consented to the creation hereunder of a
security interest in such License or (ii) such prohibition would be rendered
ineffective pursuant to Sections 9-407(a) or 9-408(a) of the UCC, as applicable
and as then in effect
B-4
in any relevant jurisdiction, or any other applicable law (including the
Bankruptcy Code) or principles of equity); provided further that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all its rights, title and interests in and to such License as if
such provision had never been in effect; and provided further that the foregoing
exclusion shall in no way be construed so as to limit, impair or otherwise
affect the Secured Party's unconditional continuing security interest in and to
all rights, title and interests of Grantor in or to any payment obligations or
other rights to receive monies due or to become due under any such License and
in any such monies and other proceeds of such License.
3. Rights Of Secured Party; Collection Of Accounts.
(a) Notwithstanding anything contained in this Security Agreement to
the contrary, Grantor expressly agrees that it shall remain liable under each of
its Licenses to observe and perform all the conditions and obligations to be
observed and performed by it thereunder and that it shall perform all of its
duties and obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such License. Secured Party shall not have any
obligation or liability under any License by reason of or arising out of this
Security Agreement or the granting to the Secured Party of a lien therein or the
receipt by Secured Party of any payment relating to any License pursuant hereto,
nor shall Secured Party be required or obligated in any manner to perform or
fulfill any of the obligations of Grantor under or pursuant to any License, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any License, or to present or file any claim, or to take any action to
collect or enforce any performance or the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
(b) Secured Party may at any time, solely upon the occurrence and
during the continuance of any Event of Default, notify parties to the Licenses
of Grantor that the right, title and interest of Grantor in and under such
Licenses have been assigned to the Secured Party and that payments shall be made
directly to the Secured Party. Upon the request of the Secured Party, Grantor
shall so notify such parties to such Licenses. Upon the occurrence and during
the continuance of any Event of Default, the Secured Party may communicate with
such parties to such Licenses to verify with such parties, to the Secured
Party's satisfaction, the existence of, amounts payable under and terms of any
such License.
4. Representations And Warranties. Grantor hereby represents and warrants
to the Secured Party that:
(a) Except for the security interest granted to the Secured Party
under this Security Agreement and Permitted Liens, Grantor is the sole legal and
equitable owner of or has rights in each item of the Collateral.
(b) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral exists, except such as may have been filed by Grantor in favor
of the Secured Party pursuant to this Security Agreement and except for
Permitted Liens.
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(c) Upon the effectiveness of the grant in Section 2, this Security
Agreement creates a legal and valid security interest on and in all of the
Collateral in which Grantor now has rights.
(d) Grantor's organizational identification number is, and the chief
executive office and the place where Grantor maintains its records concerning
the Collateral are presently located at the address set forth on the signature
page hereof. If Grantor is a corporation, limited liability company, limited
partnership, corporate trust or other registered organization, the State (or if
not a state, the other jurisdiction) under whose law such registered
organization was organized is set forth on the signature page hereof.
(e) All Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks and Trademark Licenses now owned, held or in which Grantor otherwise
has any interest are listed on Schedule B attached hereto. Grantor shall amend
Schedule B from time to time within twenty (20) business days after the filing
of any application for a Patent, Trademark or Copyright or the issuance of any
Patent or registration of any Trademark or Copyright to reflect any additions to
or deletions from this list. Except as set forth on Schedule B, none of the
Patents, Trademarks or Copyrights has been licensed to any third party.
5. Covenants. Unless the Secured Party otherwise consents in writing,
Grantor covenants and agrees with the Secured Party that from and after the date
of this Security Agreement and until the Secured Obligations have been performed
and paid in full:
5.1 Disposition of Collateral. Grantor shall not sell, transfer or
otherwise dispose of any of the Collateral, or attempt or contract to do so,
other than the granting of non-exclusive Licenses in the ordinary course of
Grantor's business.
5.2 Change of Jurisdiction of Organization, Relocation of Business or
Collateral. Grantor shall not change its jurisdiction of organization or
relocate its chief executive office (except as allowed pursuant to Section 5.1
immediately above) from such address provided to the Secured Party pursuant to
Section 4(d) above without twenty (20) calendar days' prior written notice to
the Secured Party.
5.3 Limitation on Liens on Collateral. Grantor shall not, directly or
indirectly, create, permit or suffer to exist, and shall defend the Collateral
against and take such other action as is necessary to remove, any Lien on the
Collateral, except (a) Permitted Liens and (b) the Lien granted to the Secured
Party under this Security Agreement.
5.4 Registration of Intellectual Property Rights. Grantor shall
promptly register or cause to be registered any Copyright, Patent or Trademark
developed or acquired by Grantor after the date of this Security Agreement
which, individually or in the aggregate, is material to the conduct of Grantor's
business, with the United States Copyright Office or Patent and Trademark
Office, as applicable, including, without limitation, any additions to the
rights and interests of Grantor listed on Schedule B hereto, prior to the sale
or licensing of any product containing such rights and interests.
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5.5 Notification Regarding Changes in Intellectual Property. Grantor
shall:
(a) promptly advise the Secured Party of any subsequent ownership
right or interest of the Grantor in or to any Copyright, Patent, Trademark or
License not specified on Schedule B hereto and shall permit the Secured Party to
amend such Schedule, as necessary, to reflect any addition or deletion to such
ownership rights;
(b) promptly give Secured Party written notice of any applications or
registrations of Intellectual Property rights filed with the United States
Patent and Trademark Office, including the date of such filing and the
registration or application numbers, if any; and
(c) (i) give Secured Party not less than twenty (20) calendar days
prior written notice of the filing of any applications or registrations with the
United States Copyright Office, including the title of such Intellectual
Property rights to be registered, as such title will appear on such applications
or registrations, and the date such applications or registrations will be filed,
and (ii) prior to the filing of any such applications or registrations, shall
execute such documents as Secured Party may reasonably request for Secured Party
to maintain its perfection and priority in such intellectual property rights to
be registered by Grantor, and upon the request of Secured Party, shall file such
documents simultaneously with the filing of any such applications or
registrations. Upon filing any such applications or registrations with the
United States Copyright Office, Grantor shall promptly provide Secured Party
with (x) a copy of such applications or registrations, without the exhibits, if
any, thereto, (y) evidence of the filing of any documents requested by Secured
Party to be filed for Secured Party to maintain the perfection and priority of
its security interest in such intellectual property rights, and (z) the date of
such filing.
(d) Secured Party may audit Grantor's Intellectual Property to confirm
compliance with this Section 5.5, provided such audit may not occur more often
than once per year, unless an Event of Default has occurred and is continuing.
If an Event of Default has occurred and is continuing, Secured Party shall have
the right, but not the obligation, to take, at Grantor's sole expense, any
actions that Grantor is required under this Section 5.5 to take but which
Grantor fails to take, after ten (10) calendar days' notice to Grantor. Grantor
shall reimburse and indemnify Secured Party for all reasonable costs and
reasonable expenses incurred in the exercise of its rights under this Section
5.6.
5.6 Defense of Intellectual Property. Grantor shall: (i) use
commercially reasonable efforts to protect, defend and maintain the validity and
enforceability of the Copyrights, Patents and Trademarks, (ii) use its best
efforts to detect infringements of the Copyrights, Patents and Trademarks and
promptly advise the Secured Party in writing of material infringements detected
and (iii) use its best efforts to not allow any Copyrights, Patents or
Trademarks to be abandoned, forfeited or dedicated to the public without the
written consent of the Secured Party unless reasonable business practice would
determine that any such abandonment is appropriate.
5.7 Further Assurances; Pledge of Instruments. At any time and from
time to time, upon the written request of the Secured Party, and at the sole
expense of Grantor, Grantor shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further action as the
Secured Party may deem necessary or desirable to obtain the full benefits of
this Security Agreement, including, without limitation, (a) executing,
delivering and
B-7
causing to be filed any financing or continuation statements under the UCC with
respect to the security interests granted hereby and (b) at the Secured Party's
request, filing or cooperating with the Secured Party in filing any forms or
other documents required to be recorded with the United States Patent and
Trademark Office, United States Copyright Office. The Secured Party may at any
time and from time to time file financing statements, continuation statements
and amendments thereto that describe the Collateral as described herein or words
of similar effect to continue to perfect the security interest granted hereunder
with respect to all or any of the Collateral in accordance with the grant
hereof. Any such financing statements, continuation statements or amendments may
be signed by the Secured Party on behalf of Grantor and may be filed at any time
in any jurisdiction. Grantor also hereby authorizes the Secured Party to file
any such financing or continuation statement without the signature of Grantor.
6. Rights And Remedies Upon Default. Beginning on the date which is five
(5) calendar days after any Event of Default shall have occurred and while such
Event of Default is continuing:
(a) The Secured Party may exercise all rights and remedies granted to
the Secured Party under this Security Agreement, the Note, the Loan Agreement
and under any other instrument or agreement securing, evidencing or relating to
the Secured Obligations (collectively, the "Loan Documents"), and all other
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Grantor expressly agrees that in any such event the
Secured Party without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may (i) prepare
for sale, advertise for sale and sell (in the manner provided herein) the
Collateral, and in connection with the liquidation of the Collateral, use any
Intellectual Property used or owned by Grantor and (ii) forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, assign, give an option or options to purchase or sell or
otherwise dispose of said Collateral (or contract to do so), or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange or broker's board or at any Secured Party's offices or elsewhere at
such prices as it may deem commercially reasonable, for cash or on credit or for
future delivery without assumption of any credit risk. The Secured Party shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption, which
equity of redemption Grantor hereby releases. The Secured Party shall apply the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale as provided in Section 6(d), below and only after so paying
over such net proceeds and after the payment by the Secured Party of any other
amount required by any provision of law, the Secured Party shall account for the
surplus, if any, to Grantor. Grantor agrees that the Secured Party need not give
more than twenty (20) calendar days' notice of the time and place of any public
sale or of the time after which a private sale may take place and that such
notice is reasonable notification of such matters. Grantor shall remain liable
for any deficiency if the proceeds of any sale or disposition of its Collateral
are insufficient to pay all amounts to which the Secured Party is entitled from
Grantor, Grantor also being liable for the attorney costs of any attorneys
employed by the Secured Party to collect such deficiency.
B-8
(b) Grantor also agrees to pay all fees, costs and expenses of the
Secured Party, including, without limitation, reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.
(c) Grantor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by the Secured Party in
the following order of priorities:
First, to the Secured Party in an amount sufficient to pay in full the
reasonable costs of the Secured Party in connection with such sale, disposition
or other realization, including all fees, costs, expenses, liabilities and
advances incurred or made by the Secured Party in connection therewith,
including, without limitation, reasonable attorneys' fees;
Second, to the Secured Party in an amount equal to then unpaid Secured
Obligations; and
Finally, upon payment in full of the Secured Obligations, to Grantor
or its representatives, in accordance with the UCC or as a court of competent
jurisdiction may direct.
7. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's property and assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
8. Miscellaneous.
8.1 Waivers; Amendments. None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Grantor and the Secured Party.
8.2 Termination of this Security Agreement. Subject to Section 7
hereof, this Security Agreement shall terminate upon the payment and performance
in full of the Secured Obligations, and all security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Grantor.
Upon the termination of this Security Agreement, Secured Party shall execute and
deliver to Grantor such documents (including UCC-3 termination statements and/or
the authorization to file such UCC-3 termination statements) as the Grantor
shall reasonably request to evidence such termination.
B-9
8.3 Successor and Assigns. This Security Agreement and all obligations
of Grantor hereunder shall be binding upon the successors and assigns of
Grantor, and shall, together with the rights and remedies of the Secured Party
hereunder, inure to the benefit of the Secured Party, any future holder of any
of the indebtedness under the Note and their respective successors and assigns.
No sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the Secured
Obligations or any portion thereof or interest therein shall in any manner
affect the lien granted to the Secured Party hereunder.
8.4 Governing Law. In all respects, including all matters of
construction, validity and performance, this Security Agreement and the Secured
Obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of California applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflict of laws, except to the extent that the UCC provides for the
application of the law of Grantor's State.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.
RAVEN BIOTECHNOLOGIES, INC., as
Grantor
ADDRESS OF GRANTOR
By:_____________________________
One Corporate Drive
Printed Name:___________________
South San Francisco, CA 94080
Title:__________________________
ORGANIZATIONAL IDENTIFICATION JURISDICTION OF ORGANIZATION OF
NUMBER OF GRANTOR GRANTOR
________________________ Delaware________________________
VAXGEN, INC., as Secured Party
By:_____________________________
Printed Name:___________________
Title:__________________________
B-11
SCHEDULE A
LIENS EXISTING ON THE DATE OF THIS SECURITY AGREEMENT
B-12
SCHEDULE B
INTELLECTUAL PROPERTY
B-13