Exhibit 10.37

 

 

    GE CAPITAL CORPORATION    

Barbara Kaiser

 

  Life Science Finance

   

SVP, Sales

 

  2050 Martin Avenue

       

  Santa Clara, CA 95050

   

October 6, 2004

  408-986-6886 ph./ 408-980-7722 fax    

Revised:  October 22, 2004

   

Revised:  October 27, 2004

   

 

 

 

 

 

 

 

 

 

 

CONFIDENTIAL LOAN PROPOSAL FOR

 

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Vical Incorporated

 

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Vical Incorporated

 

Mr. Vijay B. Samant

President and CEO

Ms. Jill M. Church

Vice President, Chief Financial Officer

Mr. Glen E. Medwid

Executive Director and Controller

Vical Incorporated

10390 Pacific Center Court

San Diego, CA 92121

 

 

Dear Vijay, Jill, and Glen:

 

General Electric Capital Corporation (“GE Capital”) has reviewed the information
provided by you in connection with the requested financing for Vical
Incorporated (referred to as “Vical” or the “Company”). Based on the review to
date and subject to the timely receipt of a signed copy of this proposal letter
as indicated below, GE Capital is pleased to consider arranging and providing a
$8,500,000 financing (the “Financing”) as outlined in the attached Term Sheet
incorporated herein by reference, subject to the general terms and conditions in
this proposal letter and the Term Sheet.

 

GE Capital is one of the largest and most diversified financial service
companies in the world with assets exceeding $300 billion and operations in over
45 countries. We have been actively providing equipment financing for Life
Science companies for over a decade. It is our privilege to be a financial
partner to hundreds of Life Science companies.

 

This proposal letter, including the attached Term Sheet, is being provided to
the Company on a confidential basis and is merely an indication of interest
regarding the Financing transaction on the general terms and conditions outlined
herein and should not be construed as a commitment. GE Capital may change the
terms of this proposal or cease future consideration of the Financing at any
time without liability to GE Capital. The attached Term Sheet does not purport
to summarize all of the terms and conditions upon which the overall facilities
are to be based, which terms and conditions would be contained fully in final
documentation, and indicates only the principal terms and conditions under which
the overall financing will be considered.

 

Company agrees not to utilize this proposal to solicit other offers or to
modify, renegotiate or otherwise improve the terms and conditions of any other
offer heretofore or hereafter received by the Company. Notwithstanding the
foregoing, there is no restriction (either express or implied) on any disclosure
or dissemination of the United States federal income tax structure or aspects of
the transactions contemplated by this proposal or of any documents executed
pursuant hereto. Further, each party hereto acknowledges that it has no
proprietary rights to any United States federal income tax elements of this
proposal or of the structure contemplated hereby. In addition, none of such
persons shall, except as required by law, use the name of, or refer to GE
Capital, in any correspondence, discussions, advertisement, press release or
disclosure made in connection with the financing without the prior written
consent of GE Capital.

 

By signing below, the Company acknowledges the terms and conditions of this
proposal and agrees to pay a Good Faith Deposit of $42,500. Upon receipt of the
executed proposal letter and accompanying Deposit, GE Capital shall commence the
investment and credit approval process. If this proposal is approved and
accepted by GE Capital, the Good Faith Deposit will be applied to the first
rental payment for each funding on a pro rata basis with any unutilized Deposit
remaining at the end of the Anticipated Funding Period to be retained by GE
Capital as a non-utilization fee. In the

 

 

CONFIDENTIAL

 

2

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

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Vical Incorporated

 

event the transaction represented by this proposal and any amendment to it is
not approved by GE Capital, the Good Faith Deposit (less the cost of credit
verification and investigation and any out of pocket expenses incurred such as
appraisal fees, legal fees, etc.) shall be promptly returned. Before funding can
take place, all proper documentation of title and UCC release from other lenders
must be in place and approved by GE Capital.

 

We thank you for your consideration and look forward to working with you toward
completing this transaction.

 

    

Term Sheet

    

Transaction:

  

Loan

    

Borrower:

  

Vical Incorporated

    

Lender:

  

General Electric Capital Corporation, its affiliates or its assignee (“GE
Capital”)

    

Loan Amount:

  

Up to $8,500,000.

    

Equipment:

  

Lab, scientific, and computer equipment, FF&E, and soft cost, per the Company’s
equipment lists and the attached Addendum A. All equipment must be acceptable to
GE Capital and located at Company owned or leased facilities within the
continental United States. All equipment will be free and clear of other liens,
claims, and encumbrances.

    

Loan Term and Payment:

  

Equipment previously-financed by Bank of America (1/1/04 and subsequent) (~
$2.2MM): To be combined on one schedule. 33 monthly payments of Principal and
Interest @ 3.16081% of financed cost, paid monthly in arrears for each loan
schedule, full payout. (3.00% all-in rate)

         

Newly-purchased Computer equipment and soft cost (~ $2.4MM): 36 payments of
Principal and Interest @ 2.90812% of financed cost, paid monthly in arrears for
each loan schedule, full payout. (3.00% all-in rate)

         

All other newly-purchased equipment (~ $3.9MM): 48 payments of Principal and
Interest @ 2.22229% of financed cost, paid monthly in arrears for each loan
schedule. (3.20% all-in rate.)

    

Anticipated Funding Period:

  

November 1, 1004 through October 31, 2005.

    

Line Mechanics:

  

Minimum loan fundings will be $100,000 with no more than one funding per month.
(Equipment with different terms may be combined on any schedule.)

    

 

 

 

CONFIDENTIAL

 

3

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

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Vical Incorporated

    

With the exception of the previously-financed equipment, all equipment with
invoice dates older than 90 days will be financed at appropriate discount.

         

Amortization begins on the first of the month start date. Interim interest will
be charged for the period between the funding date and the start date.

    

Security Deposit:

  

The Company will provide GE Capital with a non-interest-bearing cash security
deposit equivalent to 60% of the financed cost on each schedule. This deposit
will be reduced semi-annually (starting 1/1/05) to an amount equivalent to 60%
of the remaining principal balance, with appropriate refunds made to the
Company.

    

Covenant:

  

The financial covenant agreement (12/02) already in place (To wit: Company must
maintain unrestricted cash, as defined, of the greater of $45,000,000 or 12
months’ cash needs) will be amended so that Company must maintain the greater of
$25,000,000 or 12 months’ cash needs.

         

The covenant will be additionally amended so that marketable securities with
maturities of up to 36 months (subject to acceptable investment quality) will be
considered ‘unrestricted cash’.

    

 

 

GENERAL TERMS AND CONDITIONS

 

Our proposal contains the following provisions and the Loan Payments we propose
are specifically based upon these provisions and our assumptions.

 

1.

MAINTENANCE AND INSURANCE:  All maintenance and insurance (fire and theft,
extended coverage and liability) are the responsibility of the Company. Company
will be responsible for maintaining in force, all risk damage, and liability
insurance in amounts and coverages satisfactory to GE Capital.

 

2.

DOCUMENTATION:  GE Capital’s current standard loan documentation for this type
of collateralized loan will be used. Any requested changes will be negotiated
with GE Capital’s internal counsel. (Most of the Company’s master documents are
already in place.)

 

3.

INDEXING:  The Interest Rate, Payment Factor and corresponding Loan Payments are
based on the Federal Reserve 24-, 36- and imputed 48-month Constant Maturities
Rate (H.15/ “Treasury Rates”) for October 4, 2004 (2.65%, 2.93%, and 3.185%,
respectively) and will be adjusted effective as of the date of funding of any
Financing. The adjustment will be basis-point-for-basis-point for any increase
in comparable term treasuries and for any decrease after a 50 basis-point
decline.

 

4.

TRANSACTION COSTS:  By execution and return of this proposal letter, the Company
will be responsible for (i) all of its closing costs, (ii) all out of pocket
fees and expenses incurred by GE

 

CONFIDENTIAL

 

4

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

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Vical Incorporated

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Capital in connection with the Financing under consideration including, without
limitation, actual out-of-pocket expenses associated with engagement of outside
counsel, UCC searches and filings costs, inspection and appraisal fees and
similar costs, (iii) the Company will indemnify and hold harmless GE Capital and
its affiliates, officers, directors, employees and agents (each an “Indemnified
Person”) against all claims, costs, damages, liabilities and expenses (each a
“Claim”) which may be incurred by or asserted against any of them in connection
with this letter, the Financing, or the matters contemplated in this proposal
letter, and will reimburse each Indemnified Person, upon demand, for any legal
or other expenses incurred in connection with investigating, defending or
participating in any Claim, or any action proceeding relating to such Claim, and
(iv) the Company waives any right to a jury trial in any action or proceeding
brought against GE Capital.

 

5.

ELECTRONIC PAYMENT SYSTEM:  GE Capital’s standard payment collection method is
through an electronic payment system. An enrollment form will be provided with
Loan documentation. (Optional)

 

6.

CONFIDENTIALITY:  This proposal letter is being provided to the Company on a
confidential basis. Except as required by law, neither this proposal nor its
contents may be disclosed, except to individuals who are the Company’s officers,
employees or advisors who have a need to know of such matters and then only on
the condition that such matters remain confidential. In addition, none of such
persons shall, except as required by law, use the name of, or refer to GE
Capital, in any correspondence, discussions, advertisement, press release or
disclosure made in connection with the Financing without the prior written
consent of GE Capital.

 

7

EXPIRATION:  This proposal will expire 11/05/04 if not accepted prior to that
date.

 

This proposal expresses GE Capital’s willingness to seek internal approval for
the transaction contemplated herein. By signing and returning this letter both
parties acknowledge that: The above proposed terms and conditions do not
constitute a commitment by GE Capital, (ii) GE Capital’s senior management may
seek changes to the above terms and conditions, and (iii) GE Capital may decline
further consideration of this transaction at any point in the approval process.
If a commitment were to be given it would be subject to and preceded by a
completion of a legal and business due diligence, as well as collateral and
credit review and analysis, all with results satisfactory to GE Capital and the
closing of any financing would be conditioned upon the prior execution and
delivery of final legal documentation and all conditions precedent acceptable to
GE Capital and its counsel and no material adverse change in the business
condition or prospects of the Company.

 

I would appreciate the opportunity to discuss this proposal with you at your
earliest convenience. Please do not hesitate to contact me at (408) 986-6886 if
you have any questions or if I can be of other assistance.

 

Sincerely,

 

PROPOSAL ACCEPTED BY:

   

Vical Incorporated

Barbara Kaiser

SVP, Sales

 

Name:

 

/s/ Vijay B. Samant

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Title:

 

Vijay B. Samant

President and CEO

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Date:

 

 

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CONFIDENTIAL

 

5

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

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Vical Incorporated

 

 

Addendum A

 

Expected Equipment Composition (by end of term):

 

Category

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Amount

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Percentage

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Lab, scientific, & manufacturing equipment

  ³     $ 4,380,000   ³   52%  

Computer and networking equipment

  £       525,000   £   6%  

Lab and office furniture, office equipment & similar

  £       70,000   £   1%  

Soft Cost (TIs, software, GMP validation, tax, freight, & similar, as below):

  £       3,525,000   £   41%            

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Total

        $ 8,500,000       100 %

 

 

 

a)

Soft Cost to include remaining TIs for the manufacturing facility (~ $1.5MM);
software and implementation (~ $570K), external costs of GMP validation of
facility and equipment (~ $1.1MM), tax, freight, and similar (~ $355K).

 

 

b)

All other equipment is represented to be “off-the-shelf, non-custom equipment”.

 

 

CONFIDENTIAL

 

6

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

 

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Vical Incorporated

 

 

AUTHORIZATION FOR RELEASE

 

OF INFORMATION

 

The undersigned hereby authorizes past and present depositing institutions,
creditors, vendors and suppliers of the undersigned to provide such information
pertaining to any loans, leases, lines of credit, account balances, and payment
histories of the undersigned to General Electric Capital Corporation as it may
request.

 

Vical Incorporated

By:

 

/s/ Vijay B. Samant

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Vijay B. Samant

Title:

 

President and CEO

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Date:

 

11/5/04

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CONFIDENTIAL

 

7

  10/27/04

GE Capital Corporation

       

Life Science Finance

       

 

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11/98

 

MASTER SECURITY AGREEMENT

dated as of December 15, 2000 (“Agreement”)

 

THIS AGREEMENT is between General Electric Capital Corporation (together with
its successors and assigns, if any, “Secured Party”), and VICAL INCORPORATED
(“Debtor”). Secured Party has an office at 5150 EI Camino Real, Suite B-21, Los
Altos, CA 94022. Debtor is a corporation organized and existing under the laws
of the state of Delaware. Debtor’s mailing address and chief place of business
is 9373 Towne Centre Drive, Suite 100, San Diego, CA 92121.

 

 

1.

CREATION OF SECURITY INTEREST.

 

Debtor grants to Secured Party, its successors and assigns, a security interest
in and against all property listed on any collateral schedule now or in the
future annexed to or made a part of this Agreement (“Collateral Schedule”), and
in and against all additions, attachments, accessories and accessions to such
property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the “Collateral”). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively “Notes” and each a “Note”), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the “Indebtedness”). Notwithstanding
anything to the contrary contained in this Agreement, to the extent that Secured
Party asserts a purchase money security interest in any items of Collateral
(“PMSI Collateral”): (i) the PMSI Collateral shall secure only that portion of
the Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the “PMSI
Indebtedness”), and (ii) no other Collateral shall secure the PMSI Indebtedness.

 

 

2.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

 

Debtor represents, warrants and covenants as of the date of this Agreement and
as of the date of each Collateral Schedule that;

 

(a) Debtor is, and will remain, duly organized, existing and in good standing
under the laws of the State set forth in the preamble of this Agreement, has its
chief executive offices at the location specified in the preamble, and is, and
will remain, duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations;

 

(b) Debtor has adequate power and capacity to enter into, and to perform its
obligations under this Agreement, each Note and any other documents evidencing,
or given in connection with, any of the Indebtedness (all of the foregoing are
called the “Debt Documents”);

 

(c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable in accordance with their terms, except to the extent that
the enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws;

 

(d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any at the Debt Documents, except any already obtained;

 

(e) The entry into, and performance by, Debtor of the Debt Documents will not
(i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of
or constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

 

(f) There are no suits or proceedings pending in court or before any commission,
board or other administrative agency against or affecting Debtor which could, in
the aggregate, have a material adverse effect on Debtor, its business or
operations, or its ability to perform its obligations under the Debt Documents,
nor does Debtor have reason in believe that any such suits or proceedings are
threatened;

 

(g) All financial statements delivered to Secured Party in connection with the
Indebtedness have been prepared in accordance with generally accepted accounting
principles, and since the date of the most recent financial statement, there has
been no material adverse change in Debtors financial condition;

 

(h) The Collateral is not, and will not be, used by Debtor for personal, family
or household purposes;

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(i) The Collateral is, and will remain, in good condition and repair and Debtor
will not be negligent in its care and use;

 

(j) Debtor is, and will remain, the sole and lawful owner, and in possession of,
the Collateral, and has the sole right and lawful authority to grant the
security interest described in this Agreement; and

 

(k) The Collateral is, and will remain, free and clear of all liens, claims and
encumbrances of any kind whatsoever, except for (i) liens in favor of Secured
Party, (ii) liens for taxes not yet due or for taxes being contested in good
faith and which do not involve, in the judgment of Secured Party, any risk of
the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called “Permitted Liens”).

 

 

3.

COLLATERAL.

 

(a) Until the declaration of any default, Debtor shall remain in possession of
the Collateral; except that Secured Party shall have the right to possess (i)
any chattel paper or instrument that constitutes a part of the Collateral, and
(ii) any other Collateral in which Secured Party’s security interest may be
perfected only by possession. Secured Party may inspect any of the Collateral
during normal business hours after giving Debtor reasonable prior notice. If
Secured Party asks, Debtor will promptly notify Secured Party in writing of the
location of any Collateral.

 

(b) Debtor shall (i) use the Collateral only in its trade or business, (ii)
maintain all of the Collateral in good operating order and repair, normal wear
and tear excepted, (iii) use and maintain the Collateral only in compliance with
manufacturers recommendations and all applicable laws, and (iv) keep all of the
Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

 

(c) Debtor shall not, without the prior written consent of Secured Parry, (i)
part with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, grant a security interest
in or otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral.

 

(d) Debtor shall pay promptly when due all taxes, license fees, assessments and
public and private charges levied or assessed on any of the Collateral, on its
use, or on this Agreement or any of the other Debt Documents. At its option,
Secured Party may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral and may pay for the
maintenance, insurance and preservation of the Collateral and effect compliance
with the terms of this Agreement or any of the other Debt Documents. Debtor
agrees to reimburse Secured Party, on demand, all costs and expenses incurred by
Secured Party in connection with such payment or performance and agrees that
such reimbursement obligation shall constitute Indebtedness.

 

(e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party shall have the right to inspect and make copies of
all of Debtor’s books and records relating to the Collateral during normal
business hours, after giving Debtor reasonable prior notice.

 

(f) Debtor agrees and acknowledges that any third person who may at any time
possess all or any portion of the Collateral shall be deemed to hold, and shall
hold, the Collateral as the agent of, and as pledge holder for, Secured Party.
Secured Party may at any time give notice to any third person described in the
preceding sentence that such third person is holding the Collateral as the agent
of, and as pledge holder for, the Secured Party.

 

 

4.

INSURANCE.

 

(a) Debtor shall at all times bear the entire risk of any loss, theft, damage
to, or destruction of, any of the Collateral from any cause whatsoever.

 

(b) Debtor agrees to keep the Collateral insured against loss or damage by fire
and extended coverage perils, theft, burglary, and for any or all Collateral
which are vehicles, for risk of loss by collision, and if requested by Secured
Party, against such other risks as Secured Party may reasonably require. The
insurance coverage shall be in an amount no less than the full replacement value
of the Collateral, and deductible amounts, insurers and policies shall be
acceptable to Secured Party. Debtor shall deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy shall name
Secured Party as a loss payee, shall provide for coverage to Secured Party
regardless of the breach by Debtor of any warranty or representation made
therein, shall not be subject to co-insurance, and shall provide that coverage
may not be canceled or altered by the insurer except upon thirty (30) days prior
written notice to Secured Party. Debtor appoints Secured Party as its
attorney-in-fact to make proof of loss, claim for insurance and adjustments with
insurers, and to receive payment of and execute or endorse all documents, checks
or drafts in connection with insurance payments. Secured Party shall not act as
Debtors attorney-in-fact unless Debtor is in default. Proceeds of insurance
shall be applied, at the option of Secured Party, to repair or replace the
Collateral or to reduce any of the Indebtedness.

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5.

REPORTS.

 

(a) Debtor shall promptly notify Secured Party of (i) any change in the name of
Debtor, (ii) any relocation of its chief executive offices, (iii) any relocation
of any of the Collateral, (iv) any of the Collateral being lost, stolen,
missing, destroyed, materially damaged or worn out, or (v) any lien, claim or
encumbrance other than Permitted Liens attaching to or being made against any of
the Collateral.

 

(b) Debtor will deliver to Secured Party Debtors complete financial statements,
certified by a recognized firm of certified public accountants, within ninety
(90) days of the close of each fiscal year of Debtor. If Secured Party requests,
Debtor will deliver to Secured Party copies of Debtors quarterly financial
reports certified by Debtors chief financial officer, within ninety (90) days
after the close of each of Debtors fiscal quarter. Debtor will deliver to
Secured Party copies of all Forms 10-K and 10-Q, if any, within 30 days after
the dates on which they are filed with the Securities and Exchange Commission.

 

 

6.

FURTHER ASSURANCES.

 

(a) Debtor shall, upon request of Secured Party, furnish to Secured Party such
further information, execute and deliver to Secured Party such documents and
instruments (including, without limitation, Uniform Commercial Code financing
statements) and shall do such other acts and things as Secured Party may at any
time reasonably request relating to the perfection or protection of the security
interest created by this Agreement or for the purpose of carrying out the intent
of this Agreement. Without limiting the foregoing, Debtor shall cooperate and do
all acts deemed necessary or advisable by Secured Party to continue in Secured
Party a perfected first security interest in the Collateral, and shall obtain
and furnish to Secured Party any subordinations, releases, landlord, lessor, or
mortgagee waivers, and similar documents as may be from time to time requested
by, and in form and substance satisfactory to, Secured Party.

 

(b) Debtor irrevocably grants to Secured Party the power to sign Debtor’s name
and generally to act on behalf of Debtor to execute and file applications for
title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral; this power is coupled with
Secured Party’s interest in the Collateral. Debtor shall, if any certificate of
title be required or permitted by law for any of the Collateral, obtain and
promptly deliver to Secured Party such certificate showing the lien of this
Agreement with respect to the Collateral.

 

(c) Debtor shall indemnify and defend the Secured Party, its successors and
assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys’ fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

 

 

7.

DEFAULT AND REMEDIES.

 

(a) Debtor shall be in default under this Agreement and each of the other Debt
Documents if:

 

(i) Debtor breaches its obligation to pay when due any installment or other
amount due or coming due under any of the Debt Documents;

 

(ii) Debtor, without the prior written consent of Secured Party, attempts to or
does sell, rent, lease, mortgage, grant a security interest in, or otherwise
transfer or encumber (except for Permitted Liens) any of the Collateral;

 

(iii) Debtor breaches any of its insurance obligations under Section 4;

 

(iv) Debtor breaches any of its other obligations under any of the Debt
Documents and fails to cure that breach within thirty (30) days after written
notice from Secured Party;

 

(v) Any warranty, representation or statement made by Debtor in any of the Debt
Documents or otherwise in connection with any of the Indebtedness shall be false
or misleading in any material respect;

 

(vi) Any of the Collateral is subjected to attachment, execution, levy, seizure
or confiscation in any legal proceeding or otherwise, or if any legal or
administrative proceeding is commenced against Debtor or any of the Collateral,
which in the good faith judgment of Secured Party subjects any of the Collateral
to a material risk of attachment, execution, levy, seizure or confiscation and
no bond is posted or protective order obtained to negate such risk;

 

(vii) Debtor breaches or is in default under any other agreement between Debtor
and Secured Party;

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(viii) Debtor or any guarantor or other obligor for any of the Indebtedness
(collectively “Guarantor”) dissolves, terminates its existence, becomes
insolvent or ceases to do business as a going concern;

 

(ix) If Debtor or any Guarantor is a natural person, Debtor or any such
Guarantor dies or becomes incompetent;

 

(x) A receiver is appointed for all or of any part of the property of Debtor or
any Guarantor, or Debtor or any Guarantor makes any assignment for the benefit
of creditors; or

 

(xi) Debtor or any Guarantor files a petition under any bankruptcy, insolvency
or similar law, or any such petition is filed against Debtor or any Guarantor
and is not dismissed within forty-five (45) days.

 

(b) If Debtor is in default, the Secured Party, at its option, may declare any
or all of the Indebtedness to be immediately due and payable, without demand or
notice to Debtor or any Guarantor. The accelerated obligations and liabilities
shall bear interest (both before and after any judgment) until paid in full at
the lower of eighteen percent (18%) per annum or the maximum rate not prohibited
by applicable law.

 

(c) After default, Secured Party shall have all of the rights and remedies of a
Secured Party under the Uniform Commercial Code, and under any other applicable
law. Without limiting the foregoing, Secured Party shall have the right to (i)
notify any account debtor of Debtor or any obligor on any instrument which
constitutes part of the Collateral to make payment to the Secured Party, (ii)
with or without legal process, enter any premises where the Collateral may be
and take possession of and remove the Collateral from the premises or store it
on the premises, (iii) sell the Collateral at public or private sale, in whole
or in part, and have the right to bid and purchase at said sale, or (iv) lease
or otherwise dispose of all or part of the Collateral, applying proceeds from
such disposition to the obligations then in default. If requested by Secured
Party, Debtor shall promptly assemble the Collateral and make it available to
Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor’s premises and may dispose of such Collateral
on such premises without liability for rent or costs. Any notice that Secured
Party is required to give to Debtor under the Uniform Commercial Code of the
time and place of any public sale or the time after which any private sale or
other intended disposition of the Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address
of Debtor at least five (5) days prior to such action.

 

(d) Proceeds from any sale or lease or other disposition shall be applied:
first, to all costs of repossession, storage, and disposition including without
limitation attorneys’, appraisers’, and auctioneers’ fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
Debtor to Secured Party, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.

 

(e) Debtor agrees to pay all reasonable attorneys’ fees and other costs incurred
by Secured Party in connection with the enforcement, assertion, defense or
preservation of Secured Party’s rights and remedies under this Agreement, or if
prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

 

(f) Secured Party’s rights and remedies under this Agreement or otherwise
arising are cumulative and may be exercised singularly or concurrently. Neither
the failure nor any delay on the part of the Secured Party to exercise any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise of that or any other right, power or privilege.
SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED PARTY. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.

 

(g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY
OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY
DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. ANY OTHER DEBT
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION
OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.

--------------------------------------------------------------------------------

 

8.

MISCELLANEOUS.

 

(a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee’s assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
assignee.

 

(b) All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term “business day” shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

 

(c) Secured Party may correct patent errors and fill in all blanks in this
Agreement or in any Collateral Schedule consistent with the agreement of the
parties.

 

(d) Time is of the essence of this Agreement. This Agreement shall be binding,
jointly and severally, upon all parties described as the “Debtor” and their
respective heirs, executors, representatives, successors and assigns, and shall
inure to the benefit of Secured Party, its successors and assigns.

 

(e) This Agreement and its Collateral Schedules constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersede all prior understandings (whether written, verbal or implied) with
respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL SCHEDULES
SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY A
WRITING SIGNED BY BOTH PARTIES. Section headings contained in this Agreement
have been included for convenience only, and shall not affect the construction
or interpretation of this Agreement.

 

(f) This Agreement shall continue in full force and effect until all of the
Indebtedness has been indefeasibly paid in full to Secured Party. The surrender,
upon payment or otherwise, of any Note or any of the other documents evidencing
any of the Indebtedness shall not affect the right of Secured Party to retain
the Collateral for such other Indebtedness as may then exist or as it may be
reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to return or
restore the payment of all or any portion of the Indebtedness (all as though
such payment had never been made).

 

(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

 

IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound
hereby, have duly executed this Agreement in one or more counterparts, each of
which shall be deemed to be an original, as of the day and year first aforesaid.

 

 

   

SECURED PARTY:

 

DEBTOR:

   

General Electric Capital Corporation

 

VICAL INCORPORATED

   

By:

 

/s/ Barbara B. Kaiser

--------------------------------------------------------------------------------

 

By:

 

/s/ MARTHA J. DEMSKI

--------------------------------------------------------------------------------

   

Name:

 

Barbara B. Kaiser

--------------------------------------------------------------------------------

 

Name:

 

MARTHA J. DEMSKI

--------------------------------------------------------------------------------

   

Title:

 

EVP/General Manager

--------------------------------------------------------------------------------

 

Title:

 

VICE PRESIDENT/CFO

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

CROSS-COLLATERAL AND CROSS-DEFAULT AGREEMENT

 

General Electric Capital Corporation and

LMSI Venture Finance, a division of Phoenixcor, Inc.

5150 El Camino Real, Suite B-21

Los Altos, CA 94022

 

Ladies and Gentlemen:

 

Reference is made to the following (collectively, the “Accounts”): (a) Master
Security Agreement dated December 15, 2000 between V1CAL INCORPORATED (“Debtor”)
and General Electric Capital Corporation and all related promissory notes,
collateral schedules and other documents and (b) Equipment Financing Agreement #
10711 dated October 23, 1900 between Debtor and LMSI Venture Finance, a division
of Phoenixcor, Inc. and all related schedules and other documents, all of the
foregoing whether now existing or hereafter created. General Electric Capital
Corporation and LMSI Venture Finance, a division of Phoenixcor, Inc. are herein
individually and collectively referenced to as “Secured Party”. Reference is
further made to the equipment and other property (the “Collateral”) described in
or securing the Accounts. In consideration of Secured Party extending additional
credit or other consideration to Debtor, the receipt of which is hereby
acknowledged. Debtor agrees that all Accounts shall be cross-defaulted and
cross-collateralized to the maximum extent possible. Accordingly:

 

1. Debtor agrees that a default by Debtor under any Account which continues
beyond the period of grace, if any, provided therein unless such default has
been waived shall constitute an additional event of default under all other
Accounts.

 

2. All presently existing and hereafter acquired Collateral shall secure the
payment and performance of all of Debtor’s liabilities and obligations to
Secured Party of every kind and character, whether joint or several, direct or
indirect, absolute or contingent, due or to become due, and whether under
presently existing or hereafter created Accounts or otherwise. Debtor further
agrees that Secured Party’s security interest in the Collateral covered by any
Account now held or hereafter acquired by Secured Party shall not be terminated
in whole or in part until and unless all indebtedness of every kind, due or to
become due, owed by Debtor to Secured Party is fully paid and satisfied. It is
further agreed that Secured Party is to retain Secured Party’s security interest
in all Collateral covered by all Accounts held or acquired by Secured Party, as
security for payment and performance under each such Account, notwithstanding
the fact that one or more of such Accounts may become fully paid.

 

3. All rights granted to Secured Party hereunder shall be in addition to and
shall in no manner impair or affect Debtor’s obligations and Secured Party’s
rights and remedies under any existing Account, agreement, statute or rule of
law.

 

This Agreement shall run to the benefit of Secured Party’s successors and
assigns.

 

Anything above to the contrary notwithstanding, the benefit of the foregoing
cross collateral provisions shall apply to the benefit of the Secured Party and
any successors or assigns holding an Account (or one or more schedules
referenced therein) only to the extent that the Secured Party or such successor
or assign is also the holder of another Account (or schedule).

 

IN WITNESS WHEREOF, this Agreement is executed this 12th day of December, 2000

 

VICAL INCORPORATED

By:

 

/s/ MARTHA J. DEMSKI

--------------------------------------------------------------------------------

   

MARTHA J. DEMSKI

Title:

 

VICE PRESIDENT/CFO

--------------------------------------------------------------------------------

 

Acknowledged and Agreed this 12th day of December, 2000:

 

General Electric Capital Corporation

By:

 

/s/ Barbara B. Kaiser

--------------------------------------------------------------------------------

Title:

 

EVP/ General Manager

--------------------------------------------------------------------------------

LMSI Venture Finance, a division of Phoenixcor, Inc.

By:

 

/s/ Barbara B. Kaiser

--------------------------------------------------------------------------------

Title:

 

EVP/General Manager

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

ADDITIONAL COLLATERAL RIDER

 

 

This Additional Collateral Rider (this “Rider”) is part of that certain Master
Security Agreement dated December 15, 2000, and all Collateral Schedules thereto
(collectively the “Contract”) between GENERAL ELECTRIC CAPITAL CORPORATION (the
“Secured Party”) and VICAL INCORPORATED (“Debtor”). Unless otherwise defined
herein, all capitalized terms used in this Rider have the meanings set forth in
the Contract.

 

1.         As security for the full and faithful performance by Debtor of all of
the Indebtedness as defined in the Contract and all other obligations of Debtor
to Secured Party now or hereafter in existence, Debtor does hereby grant to
Secured Party a security interest in all of Debtor’s right, title and interest
in and to the following (all hereinafter collectively called the “Additional
Collateral”):

 

Ø

 

All equipment (except computer equipment) and other personal property previously
financed under Equipment Financing Agreement #10711, Schedules #20 and
subsequent, between Debtor and LMSI Venture Finance, a division of Phoenixcor,
Inc., together with all accessories, parts, upgrades, renewals and replacements
of, and repairs, improvements and accessions to the equipment assets and any
insurance proceeds or revenue derived from the sale or other disposition of the
equipment. The foregoing property also secures Secured Party. This lien will
stay in effect until all of Debtor’s obligations under this new financing are
fulfilled.

 

 

2.         In the event of a default by Debtor under the Contract or under any
other obligation to Secured Party, Secured Party shall have all of the rights
and remedies of a secured party under the Code with respect to the Additional
Collateral in addition to any other rights which it may have under the Contract.
Debtor shall have the same obligations with respect to the portion of the
Additional Collateral constituting Equipment as it has under the Contract with
respect to the Collateral financed under the Contract, including but not limited
to the restrictions on moving, transferring, encumbering or giving up possession
of, and the obligation to insure, such Additional Collateral constituting
Equipment.

 

3.         This agreement shall run to the benefit of Secured Party’s successors
and assigns. Except as expressly modified hereby, all of the terms and
provisions of the Contract shall remain in full force and effect.

 

IN WITNESS WHEROF, the parties have executed this Rider simultaneously with the
Master Security Agreement.

 

Dated: 12/12/00        

 

 

GENERAL ELECTRIC CAPITAL

CORPORATION

 

VICAL INCORPORATED

BY:

 

/s/ Barbara B. Kaiser

--------------------------------------------------------------------------------

 

BY:

 

/s/ MARTHA J. DEMSKI

--------------------------------------------------------------------------------

           

MARTHA J. DEMSKI

TITLE::

 

EVP/General Manager

--------------------------------------------------------------------------------

 

TITLE::

 

VICE PRESIDENT/CFO

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

AMENDMENT

 

 

THIS AMENDMENT is made as of the 15th day of December, 2000, between General
Electric Capital Corporation (“Secured Party”) and VICAL INCORPORATED (“Debtor”)
in connection with that certain Master Security Agreement, dated or dated as of
December 15, 2000 (“Agreement”). The terms of this Amendment are hereby
incorporated into the Agreement as though fully set forth therein. Section
references below refer to the section numbers of the Agreement. The Agreement is
hereby amended as follows:

 

 

 

3.

COLLATERAL.

 

Subsection (c) is hereby amended and replaced with the following:

 

“(c)        Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from the
address specified in the Collateral Schedule, or (iii) sell, rent, lease,
mortgage, grant a security interest in or otherwise transfer or encumber (except
for Permitted Liens) any of the Collateral.”

 

 

 

5.

REPORTS.

 

Section 5 is hereby amended and replaced with the following:

 

 

5.

REPORTS.

 

(a)        Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any relocation of its chief executive offices or its state
of organization, (iii) any relocation of any of the Collateral, which relocation
may not be made unless Debtor has obtained the prior written consent of Secured
Party, (iv) any of the Collateral being lost, stolen, missing, destroyed,
materially damaged or worn out, or (v) any lien, claim or encumbrance other than
Permitted Liens attaching to or being made against any of the Collateral.

 

(b)        Debtor will deliver to Secured Party financial statements as follows.
If Debtor is a privately held company, then Debtor agrees to provide monthly
financial statements, certified by Debtor’s president or chief financial officer
including a balance sheet, statement of operations and cash flow statement
within 30 days of each month end and its complete audited annual financial
statements, certified by a recognized firm of certified public accountants,
within 120 days of fiscal year end or at such time as Debtor’s Board of
Directors receives the audit. If Debtor is a publicly held company, then Debtor
agrees to provide quarterly and annual audited statements, certified by a
recognized firm of certified public accountants, within 10 days after the
statements are provided to the Securities and Exchange Commission (“SEC”). All
such statements are to be prepared using generally accepted accounting
principles (“GAAP”) and, if Debtor is a publicly held company, are to be in
compliance with SEC requirements.”

 

 

7.

DEFAULT AND REMEDIES.

 

Section 7(a)(viii) is hereby amended and replaced with the following:

 

(viii)        Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively “Guarantor”) dissolves. Terminates its existence,
becomes insolvent, ceases to do business as a going concern, or, without the
prior written consent of Secured Party, (A) Debtor sells all or substantially
all of its assets, or sells assets which constitute, or are an integral part of,
the primary intellectual property of Debtor, or sells all or substantially all
of the assets of the division of Debtor purchasing or using the Collateral, if
applicable, or (B) Debtor becomes a party to any consolidation or merger where
the Debtor is not the surviving entity, or (C) the current stockholders of
Debtor sell or transfer more than 50% of the outstanding voting stock of Debtor,
or, (D) if Debtor is a publicly held company, any person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Exchange Act) of 20% or more of the outstanding voting stock of Debtor:

 

 

--------------------------------------------------------------------------------

TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE PROVISIONS
OF THE AGREEMENT AND THIS AMENDMENT, THEN THIS AMENDMENT SHALL CONTROL.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment
simultaneously with the Agreement by signature of their respective authorized
representative set forth below.

 

General Electric Capital Corporation

 

VICAL INCORPORATED

By:

 

/s/ Barbara B. Kaiser

--------------------------------------------------------------------------------

 

By:

 

/s/ MARTHA J. DEMSKI

--------------------------------------------------------------------------------

Name:

 

Barbara B. Kaiser

--------------------------------------------------------------------------------

 

Name:

 

MARTHA J. DEMSKI

--------------------------------------------------------------------------------

Title:

 

EVP/General Manager

--------------------------------------------------------------------------------

 

Title:

 

VICE PRESIDENT/CFO

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Compliance Report Due Monthly

 

FINANCIAL COVENANTS

ADDENDUM NO. 001

TO MASTER SECURITY AGREEMENT

DATED AS OF December 15, 2000

 

THIS ADDENDUM (this “Addendum”) amends and supplements the above referenced
agreement (the “Agreement”), between General Electric Capital Corporation
(together with its successors and assigns, if any, “Secured Party”) and Vical
Incorporated (“Debtor”) and is hereby incorporated into the Agreement as though
fully set forth therein. Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Note and Security Agreement.

 

The Agreement is hereby amended by adding the following:

 

FINANCIAL COVENANTS.

 

(a) Debtor shall, at all times during the term of the Agreement, comply with the
following:

 

Maintain minimum Unrestricted Cash (as defined below) at the greater of (1)
$45,000,000 or (2) an amount equal to twelve (12) months of Cash Needs (as
defined below). If this covenant is violated, Debtor will provide Secured Party
within ten (10) days of such occurrence an irrevocable letter of credit equal to
100% of the remaining principal balance under the new line of credit approved in
November 2002 and the extended portion of the prior line of credit with the
exception of up to $400,000 to be funded prior to December 31,2002. The form of
letter of credit and the bank upon which it is drawn must be acceptable to
Secured Party.

 

Unrestricted Cash shall be defined as cash on hand plus investments in
marketable securities with maturities of less than fourteen (14) months,
excluding (i) cash pledged to other parties and any contingent liability
associated with similar cash covenants under leases, loans or other financial
arrangements and (ii) all long-term debt not owed to or subordinated to Secured
Party.

 

Cash Needs shall be defined as cash burn for the immediately preceding three (3)
months multiplied by a factor of 4.0

 

(b) COMPLIANCE REPORTS. Debtor’s Authorized Representative shall certify that
Debtor is in compliance with the requirements of subsection (a) above. Such
notification and certification shall be provided within thirty (30) days after
the end of each fiscal month (the “Compliance Date”), reflecting such
information as of the end of such fiscal month. If Debtor fails timely to
provide such notification and compliance certificates, within fifteen (15) days
after the Compliance Date, such failure shall automatically be deemed a default
under the Agreement without notice or other act by Secured Party. The reports
required under this section are in addition to and not a substitute for the
reports required under the REPORTS Section of the Agreement.

 

Except as expressly modified hereby, all terms and provisions of the Note and
Security Agreement shall remain in full force and effect. This Addendum is not
binding nor effective with respect to the Note and Security Agreement until
executed on behalf of Secured Party and Debtor by authorized representatives of
Secured Party and Debtor.

 

IN WITNESS WHEREOF, Debtor and Secured Party have caused this Addendum to be
executed by their duly authorized representatives as of the date first above
written.

 

Secured Party:

 

Debtor:

General Electric Capital Corporation

 

Vical Incorporated

By:

 

/s/ Diane Hernandez

--------------------------------------------------------------------------------

 

By:

 

/s/ MARTHA J. DEMSKI

--------------------------------------------------------------------------------

Name:

 

Diane Hernandez

--------------------------------------------------------------------------------

 

Name:

 

MARTHA J. DEMSKI

--------------------------------------------------------------------------------

Title:

 

Vice President

--------------------------------------------------------------------------------

 

Title:

 

VICE PRESIDENT/CFO

--------------------------------------------------------------------------------

   

Attest

   

By:

 

/s/ Janilyn Cullins

--------------------------------------------------------------------------------

   

Name:

 

Janilyn Cullins

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

AMENDMENT NO. 1

to

FINANCIAL COVENANTS ADDENDUM NO. 001

TO MASTER SECURITY AGREEMENT

DATED AS OF DECEMBER 15, 2000

 

THIS AMENDMENT NO. 1 is made as of the 9th day of December 2004, between General
Electric Capital Corporation (“Secured Party”) and Vical Incorporated (“Debtor”)
in connection with that Financial Covenants Addendum No. 001 (“Addendum”) to
that certain Master Security Agreement, dated as of December 15, 2000
(“Agreement”). The terms of this Amendment No. 1 are hereby incorporated into
the Addendum as though fully set forth therein. Secured Party and Debtor
mutually desire to amend the Agreement as set forth below. Section references
below refer to the section numbers of the Addendum. The Addendum is hereby
amended as follows:

 

Section (a) is hereby amended and replaced with the following:

 

“(a)    Debtor shall, at all times during the term of the Agreement, comply with
the following:

 

Maintain minimum Unrestricted Cash (as defined below) at the greater of (i)
$25,000,000 or (ii) an amount equal to twelve (12) months of Cash Needs (as
defined below). If this covenant is violated, Debtor will provide Secured Party
within ten (10) days of such occurrence an irrevocable letter of credit equal to
100% of the remaining principal balance of all financings subsequent to 1/1/03.
The form of letter of credit and the bank upon which it is drawn must be
acceptable to Secured Party.

 

Unrestricted Cash shall be defined as cash on hand plus investments in
marketable securities with maturities of less than or equal to thirty-six (36)
months, subject to investment quality satisfactory to Secured Party, excluding
(i) cash pledged to other parties and any contingent liability associated with
similar cash covenants under leases, loans or other financial arrangements and
(ii) all long-term debt not owed to or subordinated to Secured Party.

 

Cash Needs shall be defined as Cash Burn (as defined below) for the immediately
preceding three (3) months multiplied by a factor of 4.0.

 

Cash Burn is defined as the sum of net income plus non-cash charges for the most
recent 3 months ended divided by 3, minus current portions of long-term debt
divided by 12.”

 

 

TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE ADDENDUM AND THE FINANCING AGREEMENT. EXCEPT AS EXPRESSLY AMENDED
HEREBY, THE ADDENDUM SHALL REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY
CONFLICT BETWEEN THE PROVISIONS OF THE ADDENDUM AND THIS AMENDMENT NO. 1, THEN
THIS AMENDMENT NO. 1 SHALL CONTROL.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 on
December 16, 2004.

 

GENERAL ELECTRIC CAPITAL CORPORATION

         

VICAL INCORPORATED

By:

 

/s/ Diane Earle

--------------------------------------------------------------------------------

         

By:

 

/s/ Jill M. Church

--------------------------------------------------------------------------------

Name:

 

Diane Earle

--------------------------------------------------------------------------------

         

Name:

 

Jill M. Church

--------------------------------------------------------------------------------

Title:

 

Senior Vice President

--------------------------------------------------------------------------------

         

Title:

 

VP and CFO

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

SECURITY DEPOSIT PLEDGE AGREEMENT

(Loan)

 

 

This Security Deposit Pledge Agreement (this “Agreement”) is made and entered
into as of the 9th day of December 2004, by and between Vical Incorporated, a
Delaware corporation with its principal place of business at 10390 Pacific
Center Court, San Diego, CA 92121 (“Debtor”) and General Electric Capital
Corporation, a Delaware corporation, with its principal place of business at 83
Wooster Heights Road, Danbury, CT 06810 (“Secured Party”).

 

In consideration of, and as an inducement for Secured Party to lend funds to
Debtor under the Master Security Agreement, dated as of December 15, 2000, and
Collateral Schedule and Promissory Note #4124419-028 and subsequent, thereunder
(the “Master Security Agreement and all Collateral Schedules and Promissory
Notes thereto being referred to as the “Loan”), and to secure the payment and
performance of all of Debtor’s obligations under the Loan, Debtor hereby
deposits and pledges with Secured Party a security deposit in the amount of
sixty- percent (60.00%) of the loan amount financed on each Promissory Note (the
“Deposit”). Such pledge to be upon the terms and conditions set forth below:

 

1. Debtor delivers the Deposit to Secured Party to secure Debtor’s performance
of its obligations under the Loan.

 

2. The Deposit deposited with Secured Party will not accrue interest. Secured
Party may commingle the Deposit with its other funds.

 

3. Provided there has been no material adverse change in Debtor’s operations
that impacts its financial condition, Secured Party shall continuously reduce
the security deposit to sixty percent (60.00%) of the aggregate outstanding
principal balance of the associated Promissory Notes on a semi-annual basis,
commencing January 1, 2005. Notwithstanding the foregoing, the Deposit shall not
exceed the aggregate outstanding principal balance of the associated Promissory
Notes at any time.

 

4. After any default by Debtor under the Loan and while the same is continuing,
upon, or at any time after said default, Secured Party may apply the Deposit
towards the satisfaction of Debtor’s obligations under the Loan and the payment
of all reasonable costs and expenses incurred by Secured Party as a result of
such default, including but not limited to, reasonable costs of repossessing
equipment and reasonable attorneys’ fees. Such application shall not excuse the
performance at the time and in the manner prescribed of any obligation of Debtor
or cure a default of Debtor. Upon the application by Secured Party of any amount
of the Deposit pursuant to the terms of this paragraph, Debtor shall be
obligated to immediately deposit with Secured Party an amount sufficient to
cause the Deposit to equal the amount first set forth above.

 

5. Secured Party shall have no duty to first commence an action against or seek
recourse from Debtor, in the event of a default under the Loan, before enforcing
the provisions of, and proceedings under the provisions of this Agreement. The
obligations of Debtor under this Agreement shall be absolute and unconditional
and shall remain in full force and effect without regard to, and shall not be
released or discharged or in any way affected by:

 

 

(a)

any amendment or modification of or supplement to the Loan;

--------------------------------------------------------------------------------

 

(b)

any exercise or non-exercise of any right, remedy or privilege under or in
respect to this Agreement, the Loan, or any other instrument provided for in the
Loan, or any waiver, consent, explanation, indulgence or actions or inaction
with respect to any such instrument; or

 

 

(c)

any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceeding of Debtor.

 

6.  Upon the termination of the Loan and the satisfaction of all of the
obligations of Debtor thereunder, Secured Party shall promptly and without
further request or action on the part of any party deliver to Debtor the Deposit
(less any portion of same cashed, sold, assigned or delivered pursuant to and
under the conditions specified in paragraph 4 hereof), and this Agreement shall
thereupon be without further effect.

 

7.  Secured Party may with written notice to Debtor, assign this Agreement.
Debtor agrees that if Debtor receives written notice of an assignment from
Secured Party, Debtor will pay all amounts due hereunder to such assignee or as
instructed by Secured Party. Debtor also agrees to confirm in writing receipt of
the notice of assignment as may be reasonably requested by assignee. Debtor
hereby waives and agrees not to assert against any such assignee any defense,
set-off, recoupment claim or counterclaim which Debtor has or may at any time
have against Secured Party for any reason whatsoever.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

   

SECURED PARTY:

 

DEBTOR:

   

 

General Electric Capital Corporation

 

Vical Incorporated

   

By:

 

/s/ Diane Earle

--------------------------------------------------------------------------------

 

By:

 

/s/ Jill M. Church

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Name:

 

Diane Earle

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Name:

 

Jill M. Church

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Title:

 

Senior Vice President

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Title:

 

VP and CFO

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