Exhibit 10.3

 

SECURED BRIDGE NOTE

 

 

$[NUMBER] June 28, 2019

 

For value received, the undersigned, Humanigen, Inc., a Delaware corporation
(“Borrower”), promises to pay to the order of [HOLDER NAME], and its successors
and assigns (together with its successors and assigns, “Lender”), in lawful
money of the United States of America, the principal sum of $[NUMBER] with
interest thereon to be computed from the date of disbursement under this
promissory note (the “Note”) at the rate of 7% (the “Interest Rate”).

 

Borrower shall pay all outstanding principal and accrued interest at the
Interest Rate and all other amounts owed pursuant to this Note and the other
Credit Documents on October 1, 2019 (the “Maturity Date”), unless earlier
accelerated pursuant to the terms of this Note or any other Credit Document.

 

Borrower shall make all payments payable in cash under this Note in lawful money
of the United States. All payments paid by Borrower to Lender under this Note
and under the other Credit Documents shall be applied in the following order of
priority: (i) to amounts, other than principal and interest, due to Lender
pursuant to this Note or the other Credit Documents; (ii) to accrued but unpaid
interest on this Note; and (iii) to the unpaid principal balance of this Note.
Borrower irrevocably waives the right to direct the application of any and all
payments at any time hereafter received by Lender from or on behalf of Borrower,
and Borrower irrevocably agrees that Lender shall have the continuing exclusive
right to apply any and all such payments against the then due and owing
obligations of Borrower in such order of priority as Lender may deem advisable.
If Borrower makes any payment of principal, interest or other amounts upon the
indebtedness by check, draft, or other remittance, Lender shall not be deemed to
have received such payment until Lender actually receives the payment
instrument.

 

1.       Interest. Interest shall accrue at the Interest Rate on the outstanding
principal balance at the end of each day on which any amount is outstanding
under this Note. Interest shall be calculated on a daily basis (computed on the
actual number of days elapsed over a year of 360 days), commencing on the date
of this Note, and shall be based upon the outstanding principal balance at the
end of each day.

 

2.       Default Interest. Upon the occurrence of an Event of Default (as
hereinafter defined), including the failure of Borrower to make full payment on
the Maturity Date, Lender shall be entitled to receive, and Borrower shall pay,
interest on the then outstanding principal balance due and payable under this
Note at the rate of 3.0% per annum above the Interest Rate (“Default Rate”) but
in no event greater than the maximum rate permitted by applicable law. Interest
shall accrue and be payable at the Default Rate from the occurrence of an Event
of Default until all Events of Default have been fully cured. Such accrued
interest shall be secured by the Liens (as hereinafter defined) in favor of
Lender under the Credit Documents (as hereinafter defined). Borrower agrees that
Lender’s right to collect interest at the Default Rate is given for the purpose
of compensating Lender at reasonable amounts for Lender’s added costs and
expenses that occur as a result of Borrower’s default and that are difficult to
predict in amount, such as increased general overhead, concentration of
management resources on problem loans, and increased cost of funds. Lender and
Borrower agree that Lender’s collection of interest at the Default Rate is not a
fine or penalty, but is intended to be and shall be deemed to be reasonable
compensation to Lender for increased costs and expenses that Lender will incur
if an Event of Default occurs hereunder. Collection of interest at the Default
Rate shall not be construed as an agreement or privilege to extend the Maturity
Date or to limit or impair any rights and remedies of Lender under any Credit
Document. If judgment is entered on this Note, interest shall continue to accrue
post-judgment at the greater of (a) the Default Rate or (b) the applicable
statutory judgment rate.

 

  

 

 

3.             Security; Definitions; and Construction.

 

(a)       This Note is and shall be secured by, and Lender is entitled to the
benefits of, the Liens granted by Borrower to Agent under the Credit Documents
and all other related filings, instruments, agreements and documents providing
Collateral for the Loan and the other Obligations (as hereinafter defined),
whether now or hereafter in existence.

 

(b)       When used herein, the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):

 

“Agent” means Black Horse Capital Master Fund Ltd., in its capacity as agent for
the Lender and the other Holders, and any successors or assigns thereof in such
capacity.

 

“Change in Control” means (i) any reorganization, merger or consolidation of
Borrower, other than a transaction or series of related transactions in which
the holders of the voting securities of Borrower outstanding immediately prior
to such transaction or series of related transactions retain, immediately after
such transaction or series of related transactions, at least a majority of the
total voting power represented by the outstanding voting securities of Borrower
or such other surviving or resulting entity or (ii) a sale, lease or other
disposition of all or substantially all of the assets of Borrower.

 

“Code” means the Uniform Commercial Code as in effect in the State of Delaware
from time to time.

 

“Collateral” means all personal and real property with respect to which a Lien
has been granted to or for the benefit of Agent pursuant to the Credit
Documents, or which otherwise secures the payment or performance of any
Obligation.

 

“Credit Documents” means, collectively, the Security Agreement, this Note, and
any and all guaranties, security agreements, pledge agreements, and other
instruments, agreements and documents delivered to Agent from time to time that
evidence, secure or otherwise relate to any of the transactions described in or
contemplated thereby, and any amendments, renewals, restatements, replacements
or other modifications of the foregoing from time to time.

 

“Financing” means a bona fide transaction or series of related transactions with
the principal purpose of raising capital, pursuant to which Borrower raises
aggregate gross proceeds of not less than THREE MILLION DOLLARS ($3,000,000.00).

 

“Holders” has the meaning ascribed to such term in the Security Agreement.

 

“Lien” means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, lien (statutory or other), or
preference, priority, or other security agreement or preferential arrangement,
charge or encumbrance of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Code or comparable law of any jurisdiction
to evidence any of the foregoing).

 

“Loan” means the loan evidenced by this Note.

 

“Loan Parties” means, collectively, Borrower and any other party who may from
time to time be obligated under this Note.

 

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“Obligations” means this Loan and all other term loans and revolving credit
loans and all other advances, debts, liabilities, obligations, covenants and
duties owing, arising, due or payable from Borrower to Lender of any kind or
nature, existing or future, whether or not evidenced by any note, letter of
credit, reimbursement agreement, guaranty or other instrument or document,
whether arising under or issued pursuant to this Note, the Credit Documents or
otherwise and whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to become due,
existing on or after the date hereof and however acquired or extended, and
whether or not of the same kind or quality or that relate to the same
transactions or series of transactions, and all amendments, renewals,
restatements, replacements, consolidations or other modifications of the
foregoing from time to time. The term includes all principal, interest, fees,
expenses and any other amounts chargeable to Borrower or any other person or
entity under any of the Credit Documents.

 

“Security Agreement” means the Security Agreement dated as of the date hereof by
and between Agent, as agent for the Holders, and Borrower, as it may be amended,
modified, supplemented, or replaced from time to time.

 

“Usury Law” means any law or regulation of any governmental authority having
jurisdiction, limiting the amount of interest that may be paid for the loan, use
or detention of money.

 

(c)           The terms “include”, “including” and similar terms shall be
construed as if followed by the phrase “without being limited to.” The term “or”
has, except where otherwise indicated, the inclusive meaning represented by the
phrase “or.” Words of masculine, feminine or neuter gender shall mean and
include the correlative words of the other genders, and words importing the
singular number shall mean and include the plural number, and vice versa. All
article, section, schedule, and exhibit captions are used for convenient
reference only and in no way define, limit or describe the scope or intent of,
or in any way affect, any such article, section, schedule, or exhibit. Unless
the context of this Note clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural. Any
reference in this Note or in the Credit Documents to this Note or to any of the
Credit Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements thereto
and thereof, as applicable.

 

(d)          An Event of Default shall “continue” or be “continuing” until such
Event of Default has been waived in writing by Lender.

 

4.             Usury. All agreements contained in the Credit Documents are
expressly limited so that in no event whatsoever, whether by reason of the
making of advances on account of the Loan, or under any of the Credit Documents,
or acceleration of maturity of the unpaid principal balance of the Loan or
otherwise, shall the amount paid or agreed to be paid by or on behalf of
Borrower to Lender for the use, forbearance or detention of money exceed the
highest lawful rate permissible under any applicable Usury Law. If, from any
circumstances whatsoever, compliance with any of the Credit Documents, at the
time performance thereunder shall be due, shall involve transcending the limit
of validity prescribed by law which a court of competent jurisdiction may deem
applicable thereto, then, ipso facto, the obligations to be fulfilled shall be
reduced to the limit of such validity. If from any circumstance, Lender shall
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the unpaid principal balance due hereunder and not to the payment of
interest. This provision shall control every other provision of all agreements
between any Borrower and Lender; provided, however, that there shall be no
automatic reduction of such payments or obligations as to any party barred by
law from availing itself in any action or proceeding of the defense of usury, or
any party barred or exempted from the operation of any Usury Law, or in the
event and to the extent the Loan, because of its amount or purpose or for any
other reason, is exempt from the operation of the Usury Law.

 

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5.             Prepayment.

 

(a)       This Note may be prepaid in whole or in part at any time after the
date hereof.

 

(b)       This Note shall be prepaid in whole concurrently with the completion
of a Financing or upon a Change in Control.

 

(c)       Any prepayment of principal shall be accompanied by a payment of
interest accrued to date thereon.

 

6.             Default.

 

6.1          Events of Default. Any one or more of the following events shall
constitute an event of default (each, an “Event of Default”) under this Note:

 

(a)       Borrower fails to timely pay any monetary obligation under this Note
in accordance with the terms hereof; or

 

(b)       Borrower fails or neglects to timely perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this Note
and such failure or neglect continues more than fifteen (15) days after Agent
sends written notice to Borrower of such failure or neglect (provided that
Borrower shall not be entitled to a cure period hereunder if Agent determines in
good faith that such failure or neglect is not capable of being cured or is not
capable of being cured within such 15-day period); or

 

(c)       any Loan Party fails to timely pay any monetary obligation or fails or
neglects to timely perform, keep, or observe any term, provision, condition,
covenant or agreement under any other Credit Document in accordance with the
terms thereof and such failure or neglect continues beyond any applicable notice
and cure period provided in such Credit Document; or

 

(d)       an “Event of Default” under any other Credit Document shall have
occurred; or

 

(e)       Borrower is unable to pay its debts generally as they become due,
makes an assignment for the benefit of creditors, or an order, judgment, decree
or injunction is entered adjudicating Borrower bankrupt or insolvent or
requiring the dissolution or split up of Borrower or preventing Borrower from
conducting all or any part of its business; or any order for relief with respect
to Borrower is entered under the Federal Bankruptcy Code; or Borrower petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator of Borrower, or of any substantial part of the assets of Borrower,
or commences any proceeding relating to Borrower under any bankruptcy
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar laws of any jurisdiction now or hereafter in effect; or
any such petition or application is filed, or any such proceeding is commenced,
against Borrower and either (i) Borrower by any act indicates its approval
thereof, consent thereto or acquiescence therein or (ii) such petition,
application or proceeding is not dismissed within sixty (60) days.

 

6.2          Acceleration upon Event of Default. Upon the occurrence of any
Event of Default (whether or not Lender has knowledge that such Event of Default
exists), then the Loan and all other Obligations of Borrower and the other Loan
Parties to Lender under this Note and the other Credit Documents shall, (a) at
the option of Agent, or (b) upon an Event of Default under Section 6.1(e) above,
and notwithstanding any cure period allowed in any other Credit Document,
immediately become due and payable without demand and without notice to
Borrower, any other Loan Party, or any other person or entity.

 

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7.            Agent’s Rights and Remedies.

 

7.1       Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default: (a) Agent shall have all rights and remedies available
to it at law or equity for collection of the amounts due under this Note; (b)
Agent shall have all rights, powers and remedies set forth in the other Credit
Documents relating to the Collateral as security for the Loan and the other
Obligations, as well as any and all rights and remedies available to it under
any applicable law or as otherwise provided at law or in equity; (c) Borrower
shall pay to Agent, in addition to the sums stated above, the reasonable costs
of collection, regardless of whether litigation is commenced, including any
reasonable attorneys’ (and any other consultants’ or experts’) fees, expenses
and other costs, to the extent not prohibited by law; and (d) notwithstanding
any other provision of this Note, during the period of existence of such Event
of Default, interest on the Loan evidenced by this Note shall accrue and be paid
at the Default Rate.

 

7.2       Remedies Cumulative. Agent’s rights and remedies under this Note, the
Credit Documents and all other agreements related to the transactions described
in the Credit Documents shall be cumulative. Agent shall have all other rights
and remedies not inconsistent herewith as provided under the Code, by law or in
equity. No exercise by Agent of one right or remedy shall be deemed an election,
and no waiver by Agent of any Event of Default shall be deemed a continuing
waiver. No delay by Agent shall constitute a waiver, election, or acquiescence
by it.

 

7.3          Borrower’s Approvals, Ratifications, and Waivers.

 

(a)       Except as expressly set forth herein, to the fullest extent permitted
by applicable law, Borrower, for itself, and its successors and assigns,
expressly waives presentment, demand, protest, notice of dishonor, protest,
notice of protest, notice of intent to accelerate, notice of acceleration, and
any and all other notices, demands and consents in connection with the delivery,
acceptance, performance, default or enforcement of this Note, and hereby further
waives stay of execution and all suretyship defenses to payment generally. No
release of any security held for the payment of this Note, or extension of any
time periods for any payments due hereunder, or release of Collateral that may
be granted by Agent from time to time, and no alteration, amendment or waiver of
any provision of this Note or of any of the other Credit Documents, shall
modify, waive, extend, change, discharge, terminate or affect the liability of
Borrower or any other Loan Party under this Note or the other Credit Documents.

 

(b)       No failure or delay of Agent in exercising any right or remedy
hereunder will operate as a waiver thereof, nor will any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such right or power, or any course of conduct, preclude any
other or further exercise thereof or the exercise of any other right or power,
or operate as, or be construed to constitute, a waiver of any subsequent breach
of the same or other provision hereof.

 

(c)       Borrower covenants and agrees that it is liable with respect to all of
the Obligations, including the Loan. Upon the occurrence of any Event of Default
and at any time thereafter, Borrower covenants and agrees that Agent may, in its
sole and absolute discretion, proceed directly against Borrower, any other Loan
Party, or any other person or entity liable for the payment or performance of
the Obligations, or any or all of the Collateral, or other security for the
Obligations, or any combination of the foregoing, in one or more claims, actions
or proceedings, whether or not any such claims, actions or proceedings are
instituted simultaneously or at different times.

 

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8.       Authority. Borrower warrants and represents that the persons or
officers who are executing this Note and the other Credit Documents on behalf of
Borrower have full right, power and authority to do so, and that this Note and
the other Credit Documents constitute valid and binding documents, enforceable
against Borrower in accordance with their terms, and that no other person,
entity, or party is required to sign, approve, or consent to, this Note.

 

9.       Governing Law. The laws of the State of Delaware shall govern all
questions concerning the construction, validity, interpretation and
enforceability of this Note, and the performance of the obligations imposed by
this Note, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware.

 

10.       Notices. All notices, demands and other communications required or
permitted to be given hereunder shall be in writing and may be delivered by
hand, by email in .pdf format or similar format, by nationally recognized
private courier, or by United States mail. Notices delivered by mail shall be
deemed given three business days after being deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt requested.
Notices delivered by hand shall be deemed delivered when actually delivered.
Notices given by nationally recognized private courier shall be deemed delivered
on the date delivery is promised by the courier. Notices given by email with a
confirmation or acknowledgment of transmission (including any response to such
transmission) shall be deemed given when transmitted. Notices, demands and
communications to each Party shall be sent to the following address and other
information applicable for the method of notice used:

 

If to Borrower:

Humanigen, Inc.

533 Airport Blvd., #400

Burlingame, CA 94010

Attn: Dr. Cameron Durrant

E-mail: cdurrant@humanigen.com

 

    If to Lender:

[NAME]

[ADDRESS LINE 1]

[ADDRESS LINE 2]

Attn:

E-mail:

 

or to such other respective addresses or fax numbers as each Party may designate
by notice given in accordance with the foregoing provisions of this Section 10.

 

11.       WAIVER OF JURY TRIAL AND COUNTERCLAIMS. TO THE FULLEST EXTENT
PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO LENDER,
BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH LENDER ALSO WAIVES) IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
OTHERWISE RELATING TO ANY OF THE CREDIT DOCUMENTS, THE OBLIGATIONS, THE
COLLATERAL, OR LENDER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING. TO
EFFECTUATE THE FOREGOING, AGENT IS HEREBY GRANTED AN IRREVOCABLE POWER OF
ATTORNEY TO FILE, AS ATTORNEY-IN-FACT FOR BORROWER, A COPY OF THIS NOTE IN ANY
DELAWARE COURT, AND THE COPY OF THIS NOTE SO FILED SHALL CONCLUSIVELY BE DEEMED
TO CONSTITUTE BORROWER’S WAIVER OF TRIAL BY JURY IN ANY PROCEEDING ARISING OUT
OF OR OTHERWISE RELATING TO ANY OF THE CREDIT DOCUMENTS, THE OBLIGATIONS, THE
COLLATERAL OR LENDER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

 

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12.          Appointment of Agent. The Lender hereby designates the Agent to act
as the contractual representative for the Lender with respect to this Note and
the Security Agreement. The Lender hereby authorizes the Agent to take such
action on its behalf under the provisions of this Note and the Security
Agreement, and to exercise such powers and perform such duties hereunder and
thereunder as are specifically delegated to it hereunder or under the Security
Agreement or required of the Agent by the terms hereof or thereof, together with
such other powers as are reasonably incidental thereto.

 

13.          Miscellaneous.

 

(a)       Time is of the essence in this Note.

 

(b)       The provisions of this Note shall be deemed severable and if any
portion shall be held invalid, illegal or unenforceable for any reason, the
remainder of this Note shall be effective and binding upon the Parties, and
interpreted in a manner consistent with the parties’ original intent prior to
the severance of this Note, to the extent reasonably practicable.

 

(c)       This Note and the other Credit Documents collectively: (i) constitute
the final expression of the agreement between Borrower and Lender concerning the
Loan; (ii) contain the entire agreement between Borrower and Lender respecting
the matters set forth herein and in such other Credit Documents; and (iii) may
not be contradicted by evidence of any prior or contemporaneous oral agreements
or understandings between Borrower and Lender. Neither this Note nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing executed by the party against which
enforcement of the termination, amendment, supplement, waiver or modification is
sought.

 

(d)       If there is a conflict between or among the terms, covenants,
conditions or provisions of this Note and the other Credit Documents, any term,
covenant, condition or provision that Lender may elect to enforce from time to
time so as to enlarge the interest of Lender in its security for the
Obligations, afford Lender the maximum financial benefits or security for the
Obligations, or provide Lender the maximum assurance of payment of the Loan and
the Obligations in full shall control. BORROWER ACKNOWLEDGES AND AGREES THAT IT
HAS BEEN PROVIDED WITH SUFFICIENT AND NECESSARY TIME AND OPPORTUNITY TO REVIEW
THE TERMS OF THIS NOTE AND EACH OF THE CREDIT DOCUMENTS WITH ANY AND ALL COUNSEL
IT DEEMS APPROPRIATE, AND THAT NO INFERENCE IN FAVOR OF, OR AGAINST, LENDER OR
BORROWER SHALL BE DRAWN FROM THE FACT THAT EITHER SUCH PARTY HAS DRAFTED ANY
PORTION OF THIS NOTE OR ANY OF THE CREDIT DOCUMENTS.

 

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, Borrower has executed and delivered this Note to Lender and
Lender has accepted this Note from Borrower as of the day and year first above
written.

 

 

  Humanigen, Inc.,   a Delaware corporation                     By: /s/ Greg
Jester   Name: Greg Jester   Title: Chief Financial Officer

 

 

[SIGNATURE PAGE TO SECURED PROMISSORY NOTE]