EXHIBIT 10.3
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXECUTION COPY
SECURED LOAN AGREEMENT
by and between
NEUROCRINE BIOSCIENCES, INC.
a Delaware corporation
as Borrower
and
PFIZER INC.
a Delaware corporation
as Lender
$175,000,000
CREDIT FACILITY
DECEMBER 18, 2002
SECURED LOAN AGREEMENT
THIS SECURED LOAN AGREEMENT (this "Agreement") is dated as of December 18,
2002, by and between PFIZER INC., a Delaware corporation, having an address at
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender") and NEUROCRINE
BIOSCIENCES, INC., a Delaware corporation having an address at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Borrower").
WHEREAS, Borrower and Lender have entered into that certain Collaboration
Agreement (the "Collaboration Agreement") and License Agreement (the "License
Agreement"), each dated on or about the date hereof relating to Neurocrine's
compound generically known as indiplon;
WHEREAS, Borrower wishes to obtain and Lender is willing, in consideration
for Borrower entering into the Collaboration Agreement and the License
Agreement, to provide a secured loan facility on the terms and subject to the
conditions contained herein;
THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties, intending to be legally bound hereby, agree
as follows.
1. ACCOUNTING AND OTHER TERMS
Accounting terms not otherwise defined in this Agreement will be construed
in accordance with GAAP. Calculations and determinations must be made in
accordance with GAAP. The term "financial statements" includes the notes and
schedules thereto. The terms "including" and "includes" always mean "including
(or includes) without limitation" in this or any Loan Document. Capitalized
terms not otherwise defined herein (including in Section 13) shall have the same
meanings as in the Collaboration Agreement and the License Agreement and in the
case of conflict between the capitalized terms in the License Agreement and the
Collaboration Agreement, the capitalized terms in the Collaboration Agreement
shall control.
2. LOAN AND TERMS OF PAYMENT
2.1. ADVANCES.
(a) Subject to the terms and conditions contained herein, Lender
agrees during the Loan Period to make Advances to Borrower, and Borrower may
request Advances from Lender in an aggregate amount not exceeding the applicable
Committed Line at any given time. The Advances shall be used by Borrower for
general corporate purposes. Any amount borrowed under this Agreement that is
repaid (other than a repayment pursuant to Section 2.6 or 7.1 hereof) may be
reborrowed in accordance with the terms and conditions hereof. Each Advance
shall be evidenced by a Promissory Note to be executed and delivered by Borrower
to Lender on the date hereof and shall be repaid in accordance with the terms of
this Agreement and the Promissory Note.
(b) To obtain an Advance, Borrower must deliver to Lender no later
than fifteen (15) Business Days prior to the date such Advance is requested a
Notice of Borrowing duly signed by a Responsible Officer in the form attached as
EXHIBIT B. Notwithstanding anything to the contrary contained herein, Lender may
decline to make any Advance in the event that Lender determines, in its
reasonable discretion, that the conditions set forth in Sections 3.1 and 3.2 in
the case of the first Advance hereunder and Section 3.2 in the case of all other
Advances hereunder are not satisfied as of the date of the Notice of Borrowing
or as of the date the Advance is requested to be made. Lender will pay Advances
in US dollars into a US dollar bank account located in the United States in
which Lender has a first priority perfected security interest pursuant to the
terms of an Account Control Agreement in accordance with the payment
instructions set forth on each Notice of Borrowing.
(c) Borrower must repay all Advances together with all accrued but
unpaid interest and any other Obligation hereunder then due on or before the
Maturity Date.
2.2. INTEREST RATE; PAYMENTS.
(a) Except as otherwise provided in Section 2.3, Advances shall bear
interest at a per annum rate (the "Base Rate") equal to [***].
(b) Interest shall accrue daily based on a year of 360 days based on
twelve months of thirty days each.
(c) Interest shall be payable in same day funds on the last day of
each Interest Period, unless such day is not a Business Day in which case it
shall be payable on the next Business Day.
2.3. DEFAULT INTEREST. After an Event of Default has occurred and while it is
continuing, all Obligations shall accrue interest at a rate equal to [***].
2.4. LENDER EXPENSES. Borrower will pay to Lender immediately upon demand
therefor all Lender Expenses incurred after the execution hereof.
2.5. USURY. Notwithstanding anything to the contrary contained in any Loan
Document, the interest and fees paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable law (the "Maximum Rate"). If Lender shall receive interest or a
fee in an amount that exceeds the Maximum Rate, the excessive interest or fee
shall be applied to the principal of the Obligations or, if it exceeds the
*** Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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unpaid principal, refunded to Borrower. In determining whether the interest or a
fee contracted for, charged, or received by Lender exceeds the Maximum Rate,
such Person may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations.
2.6. MANDATORY PREPAYMENTS.
(a) Equity Issuance. Upon the completion of any Equity Issuance,
Borrower shall immediately apply (or cause to be applied) to permanently prepay
any outstanding Advances the lesser of: (i) an amount equal to 25% of the Net
Cash Equity Issuance Proceeds of Borrower or any of its Subsidiaries or any
holding company of Borrower from such Equity Issuance; (ii) an amount equal to
50% of the average of the amount of outstanding Advances on each day over the
180 days immediately preceding the completion of such Equity Issuance; and (iii)
$75,000,000.
(b) CHANGE IN CONTROL. Upon and following the occurrence of a Change
in Control (the date on which a Change in Control occurs being the "Change in
Control Date"), Lender shall have the right, in its sole discretion, to require
the prepayment of all outstanding Advances in whole or in part at a repayment
price equal to 100% of the amount of all outstanding Advances plus accrued but
unpaid interest to the date of repayment plus all other Obligations. Not later
than thirty (30) days prior to any proposed, expected or contemplated Change in
Control Date, Borrower shall give a written notice to Lender stating that a
Change in Control is proposed or anticipated and such notice shall contain all
relevant information regarding the terms of such Change in Control and the
intentions of any acquirer with respect to the Borrower and its Subsidiaries, to
the extent known by Borrower. In the event that a Change in Control occurs
without the prior knowledge of Borrower, Borrower shall notify Lender the
Business Day after Borrower becomes aware that a Change in Control has occurred.
2.7. VOLUNTARY PREPAYMENT OR TERMINATION BY BORROWER. Borrower shall have
the right at any time and from time to time to prepay any Advance in whole or in
part, without premium or penalty. In addition, at any time at which no Advances
are outstanding hereunder and Borrower has not delivered any Notice of Borrowing
requesting an Advance which has not yet been made, Borrower may terminate this
Agreement on five (5) Business Days' prior written notice to Lender.
3. CONDITIONS OF LOANS
3.1. CONDITIONS PRECEDENT TO INITIAL ADVANCE. Lender's obligation to make
the first Advance hereunder is subject to the satisfaction, as determined by
Lender in its reasonable discretion, of the following conditions:
(a) Borrower shall have executed and delivered to Lender the
Security Agreement in the form of EXHIBIT C (THE "SECURITY AGREEMENT");
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(b) Borrower shall have executed and delivered to Lender the
Borrower Patent and Trademark Security Agreement for filing in the U.S. Patent
and Trademark Office in the form of EXHIBIT D;
(c) Borrower and Lender shall have entered into an Account Control
Agreement with each bank, Securities Intermediary or other financial institution
with whom Borrower or its Subsidiaries have an Account substantially in the form
of EXHIBIT E together with such changes requested by the bank, Securities
Intermediary or other financial institution and which changes are acceptable to
Lender and Borrower;
(d) Borrower shall have executed and delivered to Lender a duly
executed Promissory Note in the form of EXHIBIT A;
(e) receipt by Lender of an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for
Borrower (or such other nationally recognized counsel reasonably acceptable to
Lender), dated as of the date the first Advance is made, substantially in the
form of EXHIBIT F hereto and covering such additional matters relating to the
transactions contemplated hereby as Lender may reasonably request;
(f) Borrower and each of its Subsidiaries shall have executed and
delivered to Lender a duly executed Perfection Certificate in the form of
EXHIBIT B and (x) if such Perfection Certificate demonstrates that any
Collateral is owned by any Subsidiary, then, to the extent necessary for
Borrower to comply with its obligations under Section 6.13 hereof, such
Subsidiary of Borrower shall grant a first priority perfected security interest
in such Collateral to Lender and (y) if such Perfection Certificate demonstrates
that any Subsidiary organized in the U.S. of Borrower owns assets worth in
excess of $1,000,000 then such Subsidiary shall have executed and delivered to
Lender a guaranty of the Loan Documents in customary form reasonably
satisfactory to Lender;
(g) Borrower and each of its Subsidiaries shall have executed and
delivered to Lender a certificate, dated as of the date hereof and the date the
first Advance is made, duly executed by its Secretary or an Assistant Secretary
certifying as to: (A) a true and correct copy of its certificate of
incorporation or certificate of formation attached thereto, as certified by the
secretary of state of its jurisdiction of organization as of a date no earlier
than ten (10) days prior to the date hereof and the date the first Advance is
made, and stating that such certificate of incorporation or certificate of
formation is in full force and effect and that there have been no amendments,
alteration or modifications of such certificate (B) a true and correct copy of
its bylaws or operating agreement, attached thereto, and stating that such
bylaws or operating agreement are in full force and effect as of the date hereof
and the date of the first Advance, (C) the good standing certificate attached
thereto from each jurisdiction where it is qualified to do business, (D) the
copy of the resolutions attached thereto of the Board of Directors authorizing
and approving the execution, delivery and performance of, and the consummation
of the transactions contemplated by, this Agreement, the other Loan Documents
and any other documents or instruments contemplated hereby, and stating that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded; and (E) the incumbency, authority and
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specimen signature of each officer executing this Agreement, the Loan Documents
or any other document or instrument contemplated hereby;
(h) no event specified in Section 2.6(b) shall have occurred;
(i) no injunctive or equitable relief has been obtained in favor of
any Person other than Borrower or Lender due to the infringement of any third
party rights by the Products;
(j) the License Agreement shall not have been terminated and shall
be in full force and effect, and Borrower is not at such time in default or
breach (x) (other than a de minimis breach) of any provision of the License
Agreement or (y) of any of payment obligations under Section 5.3(a) or 6A.7 of
the Collaboration Agreement or any obligation to comply with law under Section
2.2 or 6A.3(a)(i) of the Collaboration Agreement;
(k) termination of any outstanding Liens on any assets or properties
of Borrower and its Subsidiaries other than Permitted Liens;
(l) Borrower and the Subsidiaries shall have no outstanding
Indebtedness other than Permitted Indebtedness;
(m) the US Launch Date shall have occurred on or prior to [***]; and
(n) development of the MR Product shall not have been terminated.
3.2. CONDITIONS PRECEDENT TO ALL ADVANCES. Lender's obligations to make
each Advance, including the first Advance, are subject to the satisfaction, as
determined by Lender in its reasonable discretion, of the further following
conditions:
(a) Lender shall have timely received any Notice of Borrowing;
(b) the representations and warranties of Borrower contained in
Section 5 hereof and contained in the License Agreement must be true, complete
and correct if qualified by any concept of materiality, in all respects, and if
not qualified by any concept of materiality in all material respects on the date
of the Notice of Borrowing and on the date any Advance is to be made as if made
with reference to and as of such date unless such representation speaks of a
particular date;
(c) the receipt of all consents, approvals, qualifications or
authorizations of, or registrations, designations, declarations or filings with,
any local, state, federal or foreign Governmental Authority or any third party
required in connection with the valid execution, delivery or performance by the
Borrower and its Subsidiaries of the Loan Documents, or the consummation of any
transaction contemplated thereby or the making of any Advance;
(d) no Event of Default or Potential Event of Default shall have
occurred and be continuing or result from the proposed Advance;
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(e) if the Borrower shall have established or acquired any
Subsidiaries, an equivalent certificate to the certificates described in
Sections 3.1(f) and (g) with reference to such Subsidiary, to the extent
applicable, dated as of the date the Advance is proposed to be made and if any
Subsidiary organized in the U.S. of Borrower owns assets worth in $1,000,000
such Subsidiary shall have executed and delivered to Lender a guaranty in
customary form of the Loan Documents reasonably satisfactory to Lender;
(f) no event specified in Section 2.6(b) has occurred;
(g) the License Agreement shall not have been terminated and shall
be in full force and effect, and Borrower is not at such time in default or
breach (x) (other than a de minimis breach) of any provision of the License
Agreement or (y) of any of payment obligations under Section 5.3(a) or 6A.7 of
the Collaboration Agreement or any obligation to comply with law under Section
2.2 or 6A.3(a)(i) of the Collaboration Agreement; after making the requested
Advance the amount of all outstanding Advances shall not exceed the Committed
Line;
(h) Borrower, and, to the extent necessary for Borrower to comply
with its obligations under Section 6.13 hereof, each Subsidiary organized in the
U.S. of Borrower which owns cash and Securities having an aggregate value in
excess of $100,000 and each Subsidiary organized outside the U.S. of Borrower
which owns cash and Securities having an aggregate value in excess of $250,000,
and Lender shall have entered into an Account Control Agreement with each bank,
Securities Intermediary or other financial institution with whom Borrower or
such Subsidiaries have an Account substantially in the form of EXHIBIT E
together with such changes requested by the bank, Securities Intermediary or
other financial institution and which are acceptable to Lender and Borrower.
4. SECURITY INTEREST All Obligations of Borrower hereunder shall be secured by a
first priority perfected security interest in the Collateral subject to
Permitted Liens described in clauses (b), (e), (g), (i) and (j) of the
definition of "Permitted Liens."
5. REPRESENTATIONS AND WARRANTIES
Borrower hereby makes all of the representations and warranties set forth
below to Lender as of the date hereof, the date of each Notice of Borrowing and
the date each Advance is made:
5.1. ORGANIZATION AND STANDING. Borrower is a corporation duly organized,
validly existing under, and by virtue of, the laws of the State of Delaware, and
is in good standing under such laws. Borrower has all requisite corporate power
and authority to own and operate its properties and assets, and to carry on its
business as presently conducted and as proposed to be conducted. Borrower is
duly qualified and authorized to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the failure so to qualify
could reasonably be expected to have a Material Adverse Effect.
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5.2. CORPORATE POWER. Borrower has all requisite legal and corporate power
and authority to execute and deliver this Agreement and the Loan Documents and
to carry out and perform its obligations under the terms of this Agreement and
the Loan Documents and the transactions contemplated hereby and thereby.
5.3. SUBSIDIARIES. As of the date hereof, other than as listed on Schedule
5.3 Borrower has no Subsidiaries and does not otherwise own or control, directly
or indirectly, any equity interest in any corporation, association or other
business entity. As of the date hereof, except as set forth in Schedule 5.3,
Borrower is not a participant in any joint venture, partnership or similar
arrangement. Each existing Subsidiary, and if on any day this representation and
warranty is repeated any new Subsidiary of Borrower has been formed or acquired
such new Subsidiary, is duly organized and validly existing under the laws of
its jurisdiction of organization and is in good standing under such laws. Each
Subsidiary is duly qualified and authorized to transact business and is in good
standing as a foreign corporation in each jurisdiction in which the failure so
to qualify could reasonably be expected to have a Material Adverse Effect.
5.4. AUTHORIZATION. All corporate action on the part of Borrower, its
officers, directors and stockholders necessary for the authorization of the
execution, delivery and performance of this Agreement and the Loan Documents by
Borrower, and as applicable its Subsidiaries, the authorization, issuance, and
delivery of the Promissory Note and the performance of all of Borrower's, and as
applicable its Subsidiaries', obligations hereunder and under the other Loan
Documents has been taken. This Agreement has been duly executed and delivered.
This Agreement is, and each of the other Loan Documents to be executed
subsequent to the date hereof when executed and delivered will be, a valid and
legally binding obligations of Borrower or its Subsidiary, as applicable,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
5.5. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Each of Borrower and its
Subsidiaries has good and marketable title to all of its properties and assets
or holds valid leasehold interests in the properties which it leases, in each
case, free and clear of any Liens other than Permitted Liens. Neither Borrower
nor any Subsidiary is in default under or in breach of any provision of any
leases or other agreement governing the lease of any property or assets, except
where such default or breach could not reasonably be expected to have a Material
Adverse Effect. All properties and assets of Borrower and its Subsidiaries are
in good condition and repair, normal wear and tear excepted.
5.6. INTELLECTUAL PROPERTY. Each of Borrower and its Subsidiaries owns or
possesses sufficient legal rights to all patents, patent applications,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
know-how, concepts, computer programs, technical data, proprietary rights,
proprietary processes and other information necessary for its business as now
conducted and as proposed to be conducted (including pursuant to the
Collaboration Agreement) (each such item "Borrower Intellectual Property")
without any conflict with or infringement of
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the rights of others except as could not reasonably be expected to cause a
Material Adverse Effect. Neither Borrower nor any Subsidiary has received any
communications alleging, nor does Borrower have reason to believe, that Borrower
or any Subsidiary has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights,
trade secrets, or other proprietary rights or processes of any other person or
entity except as could not reasonably be expected to have a Material Adverse
Effect and is not aware, based on reasonable investigation, of any reasonable
basis therefor or threat thereof. Borrower is not aware that any of its or any
Subsidiary's employees, agents, consultants or contractors is obligated under
any contract (including licenses, covenants, or commitments of any nature) or
other agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such Person's best
efforts to promote the interests of Borrower or any Subsidiary, or that would
conflict with Borrower's business or any Subsidiary's business as proposed to be
conducted. Neither Borrower nor any Subsidiary is aware of any violation or
infringement by a third party of any of the Borrower Intellectual Property.
Neither the execution nor the delivery of this Agreement or the Loan Documents,
nor the carrying on of Borrower's business or any Subsidiary's business by the
employees, agents, consultants or contractors of Borrower and its Subsidiaries,
nor the conduct of Borrower's business or any Subsidiary's business as currently
proposed, will conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant, or
instrument under which Borrower or any Subsidiary or any of such employees,
agents, consultants or contractors is now obligated except as could not
reasonably be expected to have a Material Adverse Effect. Neither Borrower nor
any Subsidiary has any plan to utilize, and does not believe it is or will be
necessary to utilize, any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment or engagement by
Borrower or any Subsidiary.
5.7. CONSENTS. No consent, approval, qualification or authorization of, or
registration, designation, declaration or filing (other than the filing of
financing statements or patent or trademark assignments and other than
notifications and other filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder) with, any local, state, federal or foreign Governmental Authority or
any third party on the part of Borrower and its Subsidiaries is required in
connection with the valid execution, delivery or performance of this Agreement
or the Loan Documents, or the consummation of any transaction contemplated
hereby or thereby or the making of any Advance.
5.8. COMPLIANCE WITH OTHER INSTRUMENTS. Neither Borrower nor any
Subsidiary is in violation or default of any provisions of its respective
organizational documents, or of any mortgage, indenture, agreement, instrument,
judgment, order, writ, decree or contract to which it is a party or by which it
or any of its assets is bound, or any provision of any federal, state or foreign
statute, rule or regulation applicable to Borrower or its Subsidiaries, except
for such violations or defaults which could not reasonably be expected to have a
Material Adverse Effect, and the execution and delivery of this Agreement and
any Loan Document and making of any Advance will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time or giving of notice, either a default under any such provision, instrument,
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judgment, order, writ, decree or contract or an event which results in the
creation of any Lien on any asset or property of Borrower or any Subsidiary or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to Borrower or
any of its Subsidiaries, their respective businesses, operations, properties or
assets, except for such violations, defaults or Liens which could not reasonably
be expected to have a Material Adverse Effect.
5.9. CAPITALIZATION AND INDEBTEDNESS.
(a) The authorized, issued and treasury capital stock of Borrower is
as reported in the most recent SEC Report required to contain or otherwise
containing such information. A sufficient number of shares of Common Stock are
reserved in the aggregate for issuance pursuant to all currently outstanding
obligations. All of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and are
not subject to preemptive rights.
(b) Except as set forth in the most recent SEC Report required to
contain or otherwise containing such information (or as expressly contemplated
by this Agreement), there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Borrower is a party or by which it is bound obligating Borrower to
issue, deliver or sell, or cause to be issued, delivered or sold, directly or
indirectly, additional shares of Capital Stock of Borrower, or obligating
Borrower to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. Except
for shares of Capital Stock of each Subsidiary of Borrower that are owned by
Borrower free and clear of Liens, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Borrower or any Subsidiary of Borrower is a party or by
which Borrower or any such Subsidiary is bound obligating Borrower or any such
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
directly or indirectly, additional shares of Capital Stock of any Subsidiary of
Borrower, or obligating Borrower or any such Subsidiary to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as set forth in the most recent
SEC Report required to contain or otherwise containing such information or on
Schedule 5.9(b), there are not any outstanding contractual obligations of
Borrower or any of its Subsidiaries to repurchase, redeem or otherwise acquire,
or providing preemptive or registration rights with respect to, any shares of
Capital Stock of Borrower or any of its Subsidiaries. Except as set forth in the
most recent SEC Report required to contain or otherwise containing such
information, there are no anti-dilution or price adjustment provisions contained
in any security issued by Borrower (or in any agreement providing rights to
security holders) that will be triggered by the issuance of any Promissory Note
or making of any Advance. Except as set forth in the most recent SEC Report
required to contain or otherwise containing such information, Borrower and its
Subsidiaries do not have outstanding any loans to any person in respect of the
purchase of securities issued by Borrower and its Subsidiaries.
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(c) Except as set forth in the most recent SEC Report required to
contain or otherwise containing such information or in any Schedule 13D (or
successor form thereto) filed under the Exchange Act to report beneficial
ownership of Borrower's securities and except for pledge of shares by officers
of Borrower to secure personal loans or margin accounts, there are no voting
trusts or agreements, stockholders agreements, pledge agreements, buy-sell
agreements, rights of first refusal, preemptive rights or proxies relating to
any securities of Borrower or any of its Subsidiaries to which Borrower or a
Subsidiary is a party, or, to its knowledge, any of such instruments to which it
is not a party. All of the outstanding securities of Borrower were issued in
compliance with all applicable federal and state securities laws, including the
Securities Act of 1933, as amended (the "Securities Act").
(d) Other than Permitted Indebtedness Borrower and its Subsidiaries
have no Indebtedness and no obligations to incur any Indebtedness.
5.10. LITIGATION. There are no actions or proceedings pending or, to
Borrower's knowledge, threatened by or against Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
5.11. SEC REPORTS AND FINANCIAL STATEMENTS. Borrower and its Subsidiaries
have timely filed all forms, reports (annual, quarterly or periodic), schedules,
registration statements, proxy statements, certifications and other documents
(together with all amendments thereof and supplements thereto) (as such
documents have since the time of their filing been amended or supplemented, the
"SEC Reports") which Borrower and its Subsidiaries have been required to file
with the Securities and Exchange Commission ("SEC"). As of their respective
dates, the SEC Reports (i) complied as to form with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the SEC Reports filed with the SEC (the "Financial
Statements") complied as to form with the rules and regulations of the SEC with
respect thereto, were in accordance with the books and records of Borrower and
its Subsidiaries, were prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments (which are not individually or in the aggregate,
material)) the consolidated assets, liabilities and financial position of the
Borrower and its consolidated Subsidiaries as of the last day of the periods
reported and the consolidated results of their operations and cash flows and
changes in financial position for the respective periods reported.
5.12. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the most
recently audited financial statements contained in an SEC Report, there has not
been any change, event or
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development having, or that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
5.13. REGULATORY COMPLIANCE. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company Act
of 1940, as amended. Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations T and U of the Federal
Reserve Board of Governors). Each of Borrower and its Subsidiaries has complied
in all material respects with the Federal Fair Labor Standards Act and the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Neither Borrower nor any of its Subsidiaries has violated
any laws, ordinances or rules, the violation of which could reasonably be
expected to have a Material Adverse Effect. None of Borrower's or any of its
Subsidiaries' properties or assets has been used by Borrower or any of its
Subsidiaries or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances. Borrower and each of its Subsidiaries has timely filed all
required tax returns and paid, or made adequate provision to pay, all material
taxes, except those being contested in good faith with adequate reserves under
GAAP. Borrower and each of its Subsidiaries have obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Governmental Authorities that are necessary to
continue its business as currently conducted except where the failure to do so
could not reasonably be expected to cause a Material Adverse Effect.
5.14. FULL DISCLOSURE. Borrower has provided Lender with all of the
information which Lender has requested in connection with the execution of this
and any Loan Document. No representation or warranty of Borrower contained in
this Agreement, the Loan Documents, or any certificate furnished or to be
furnished to Lender at the Closing or prior to making any Advance (when read
together) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
5.15. OUTSTANDING LIENS. As of the Closing Date, no property or asset of
Borrower or any Subsidiary of Borrower is subject to any Liens other than
Permitted Liens.
5.16. LEGAL STATUS. Borrower and each of its Subsidiaries that are
requested by Lender to execute and deliver the Perfection Certificate have
delivered to Lender a certificate signed by Borrower and each of its
Subsidiaries and entitled "Perfection Certificate" on or before the date
required. Borrower and each of its Subsidiaries that are requested by Lender to
execute and deliver the Perfection Certificate represent and warrant to Lender
as follows: (a) Borrower's and each of the Subsidiary's exact legal names are
those indicated on the Perfection Certificate and on the signature page hereof,
(b) Borrower and each of the relevant Subsidiaries are organizations of the
type, and are organized in the jurisdictions, set forth in the Perfection
Certificates, (c) the Perfection Certificates accurately set forth Borrower's
and each of the
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relevant Subsidiaries' organizational identification numbers or accurately state
that that Borrower and each of the relevant Subsidiaries have none, (d) the
Perfection Certificates accurately sets forth Borrower's and each of the
Subsidiary's chief executive office, as well as the mailing addresses, if
different, (e) all other information set forth on the Perfection Certificate
pertaining to Borrower and each of the relevant Subsidiaries is accurate and
complete and (f) there has been no change in any of such information since the
date on which the Perfection Certificate was signed by Borrower and each of the
relevant Subsidiaries, except to the extent that Borrower and each of the
relevant Subsidiaries notifies Lender of such change pursuant to the terms
hereof.
6. AFFIRMATIVE COVENANTS
Commencing on the date the first Advance is made hereunder and until all
Obligations (other than any contingent reimbursement and indemnification
Obligations that are not due and payable at or prior to the time that all
Advances have been paid in full) have been paid in full, Borrower will, and will
cause its Subsidiaries, to do all of the following:
6.1. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. Borrower and
each of its Subsidiaries will maintain its existence and good standing in its
jurisdiction of incorporation and maintain qualification in each jurisdiction in
which the failure to so qualify could have a Material Adverse Effect. Borrower
will, and will cause each of its Subsidiaries to, comply with (a) the applicable
laws, rules, ordinances and regulations wherever its business is conducted
including applicable reporting requirements of the SEC, (b) the provisions of
its certificate or articles of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
capital stock, (c) all agreements and instruments by which it or any of its
properties may be bound including any agreement evidencing Indebtedness and (d)
all applicable decrees, orders, and judgments, except in each case where the
failure to comply could not cause a Material Adverse Effect and shall promptly
notify Lender of any such noncompliance. If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
Governmental Authority shall become necessary or required in order that Borrower
or any of its Subsidiaries may fulfill any of its obligations hereunder or any
of the other Loan Documents to which Borrower or such Subsidiary is a party,
Borrower will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
Borrower or such Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Lender with evidence thereof.
6.2. FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower shall furnish to
Lender: promptly after filing with the SEC all SEC Reports which are not
available to the public on the SEC's ▇▇▇▇▇ system as soon as available, and in
any event, within thirty (30) days after the end of each month of each fiscal
year of Borrower, its monthly consolidated financial statements, prepared in
accordance with GAAP.
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6.3. REPORTS. Borrower shall provide Lender with a prompt report of any
legal actions pending or threatened against Borrower or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect.
6.4. MAINTENANCE OF LEGAL STATUS. Borrower, on behalf of itself and its
Subsidiaries, covenants with Lender as follows: (a) without providing at least
thirty (30) days prior written notice to Lender, Borrower and its Subsidiaries
will not change its name or its organizational identification number if it has
one, (b) if each of Borrower and its Subsidiaries does not have an
organizational identification number and later obtains one, Borrower will
forthwith notify Lender of such organizational identification number, (c)
without providing at least thirty (30) days prior written notice to Lender,
Borrower will not change and will not permit its Subsidiaries to change its type
of organization, jurisdiction or organization, certificate or articles of
incorporation, by-laws or other legal structure and (d) without providing
reasonable written notice to Lender, Borrower and its Subsidiaries will not form
or acquire any Subsidiaries.
6.5. TAXES. Borrower will make, and cause each of its Subsidiaries to
make, timely payment of all material federal, state, local and foreign taxes or
assessments and will deliver to Lender, on demand, appropriate certificates
attesting to the payment, other than those taxes being contested in good faith
with adequate reserves under GAAP.
6.6. INSURANCE. Borrower will keep, and will cause each of its
Subsidiaries to keep, its business and assets insured for risks and in amounts
customary for companies similar to Borrower. Insurance policies will be in a
form, with companies, and in amounts that are reasonably satisfactory to Lender.
6.7. INTELLECTUAL PROPERTY RIGHTS. Borrower will, and will cause its
Subsidiaries to: (i) protect, defend and maintain the validity and
enforceability of the Borrower Intellectual Property that constitutes Collateral
(except as otherwise explicitly required by the License Agreement and except to
the extent Borrower's power to do so is explicitly limited by the License
Agreement); (ii) protect, defend and maintain the validity and enforceability of
the Borrower Intellectual Property that does not constitute Collateral unless
Borrower determines, in the exercise of reasonable business judgment, in good
faith that doing so is not in Borrower's best interests; (iii) promptly advise
Lender in writing of material infringements of the Borrower Intellectual
Property; (iv) not allow any Borrower Intellectual Property that constitutes
Collateral to be abandoned, forfeited or dedicated to the public without
Lender's written consent and (v) without Lender's written consent, not allow any
Borrower Intellectual Property that does not constitute Collateral to be
abandoned, forfeited or dedicated to the public unless Borrower determines, in
the exercise of reasonable business judgment, in good faith that doing so is in
Borrower's best interests.
6.8. BOOKS AND RECORDS; INSPECTIONS. Borrower shall, and shall cause each
of its Subsidiaries to, keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP and any applicable law,
rule and regulation. Borrower shall provide Lender and its agents access to its
premises and the premises of its Subsidiaries at any time and from time to time,
during normal business hours and upon reasonable notice under the
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circumstances, and at any time on and after the occurrence of an Event of
Default or Potential Event of Default, for the purposes of (i) inspecting and
verifying any Collateral, (ii) inspecting and copying any and all records
pertaining thereto, and (iii) discussing the affairs, finances and business of
Borrower and its Subsidiaries with any officer or employee of Borrower or with
its accountants. Borrower shall reimburse Lender for the reasonable travel and
related expenses of Lender's employees or, at Lender's option, of such outside
accountants or examiners as may be retained by Lender to verify or inspect
Collateral, records or documents of Borrower up to once per year after the date
of the initial Advance hereunder unless an Event of Default or a Potential Event
of Default has occurred in which case Borrower shall reimburse Lender with
respect to one or more special inspections if Lender deems the same appropriate.
6.9. NOTICE OF DEFAULT. As soon as possible and in any event within three
(3) Business Days after Borrower obtains knowledge of the occurrence of an Event
of Default or a Potential Event of Default, Borrower shall provide to Lender the
written statement of a Responsible Officer setting forth the details of such
Event of Default or Potential Event of Default and the action which Borrower
proposes to take with respect thereto.
6.10. FURTHER ASSURANCES. Borrower will execute any further instruments
and take further action as Lender reasonably requests to perfect or continue
Lender's security interest in the Collateral or to effect the purposes of this
Agreement or any Loan Document.
6.11. NET WORTH. Borrower will maintain a Net Worth at least equal to the
amount of outstanding Advances from time to time.
6.12. NEW ACCOUNTS. Within thirty (30) calendar days of opening or
establishing any Account, to the extent required to comply with Section 6.13
hereof, Borrower shall, and shall cause each of its Subsidiaries to, create in
favor of the Lender a first priority perfected security interest in such Account
and unless Lender agrees in writing that Lender already has "control" (as
defined in the Code) over such Account by virtue of an existing Account Control
Agreement, Borrower shall and shall cause the bank, Securities Intermediary,
Financial Intermediary or other financial institution with whom such Account is
held or established to enter into an Account Control Agreement in the form of
EXHIBIT E together with such changes requested by the bank, Securities
Intermediary, or other financial institution as are agreed to by Lender and
Borrower.
6.13. CASH AND INVESTMENTS. Borrower shall at all times keep all cash and
Securities owned by it or its Subsidiaries in an Account over which the Lender
has been granted a first priority perfected security interest pursuant to an
Account Control Agreement, except for (i) cash and Securities having a value up
to an aggregate of $100,000 held by Subsidiaries organized in the U.S.; (ii)
cash and Securities having a value up to an aggregate of $250,000 held by
Subsidiaries organized outside the U.S.; (iii) restricted cash placed on
deposit, placed into an escrow account or otherwise restricted which cash, in
each case, is prohibited from being pledged by Borrower and its Subsidiaries, in
each case in the ordinary course of Borrower's business consistent with past
practice and (iv) cash and securities having an aggregate value not to exceed
$100,000.
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7. NEGATIVE COVENANTS
Commencing on the date the first Advance is made hereunder and until all
Obligations (other than any contingent reimbursement and indemnification
Obligations that are not due and payable at or prior to the time that all
Advances have been paid in full) have been paid in full, Borrower will not, and
will cause its Subsidiaries to not, do any of the following without Lender's
prior written consent:
7.1. DISPOSITIONS. Borrower shall not convey, sell, lease, transfer or
otherwise dispose of (other than pursuant to the License Agreement or a license
of Borrower Intellectual Property in the ordinary course of business)
(collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or any material part of its business or property, other than a Transfer (i) of
inventory in the ordinary course of business; (ii) of worn-out or obsolete
equipment; (iii) of assets by a Subsidiary of Borrower to Borrower or another
wholly-owned Subsidiary of Borrower; or (iv) of assets other than those
contemplated by clauses (i)-(iii) so long as (A) Borrower demonstrates to the
satisfaction of Lender that, after giving effect to such Transfer, Borrower and
its Subsidiaries remain in compliance with the terms and covenants of this
Agreement, (B) no part of any asset Transferred consists of any Collateral, (C)
Borrower receives consideration at the time of such Transfer at least equal to
the fair market value, as determined in good faith by Borrower's board of
directors, of the assets Transferred, (D) not less than 80% of the consideration
received by Borrower is in the form of cash or Cash Equivalents, and (E)
Borrower within 180 days of the date of such Transfer either (x) reinvests the
proceeds of such Transfer in similar or replacement assets to be used in the
business of Borrower or its Subsidiaries or (y) uses the net proceeds of such
Transfer to permanently repay any Advances outstanding hereunder.
7.2. CHANGES IN BUSINESS, DOCUMENTS OR MANAGEMENT. Borrower shall not (i)
engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower or reasonably related thereto;
(ii) amend its Certificate of Incorporation, or similar formation document;
(iii) amend its bylaws or similar operating document in a manner adverse to
Lender; or (iv) change its chief executive officer other than to fill vacancies
in such positions caused by death, permanent disability or voluntary
resignation.
7.3. ACQUISITIONS. Borrower shall not (i) acquire, or permit any of its
Subsidiaries to acquire, all or any portion of the Capital Stock or property or
assets of another Person or establish or enter into any joint venture agreement
unless (x) the aggregate of all consideration paid for acquisitions of all or
any portion of the Capital Stock or property or assets of another Person and the
aggregate of Borrower's investments in all joint ventures, in each case
completed at any time after the date hereof (whether before or after the Closing
Date), is less than $125,000,000 and (y) in the case of an acquisition of
Capital Stock, either (A) Borrower and its Subsidiaries acquire at least all or
substantially all of the Capital Stock of an acquired Person or (B) the
acquisition of less than all or substantially all of the Capital Stock of a
Person is accomplished pursuant to or in connection with a co-promotion,
licensing or collaboration agreement with a Person engaged in the pharmaceutical
industry and Borrower or its Subsidiaries grants a first priority perfected
security interest in such Capital Stock acquired to
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Lender or (ii) agree to or effect any capital expenditure (including acquiring
any material assets outside of the ordinary course of business and inconsistent
with past practice) other than Approved Capital Expenditures. In the event that
the consideration for any acquisition described in clause (i) of the preceding
sentence is comprised in whole or in part of non-cash consideration, such
non-cash consideration shall be valued as follows: (x) if the consideration
consists of securities which are traded on a recognized national stock exchange
or market, the securities shall be valued at the last reported sale price (or
the average of the last reported bid and ask price in the absence of any last
reported sale price) on the last date on which such exchange or market was open
for trading preceding the date such securities are delivered as consideration
and (y) if the consideration is in a form other than as described in clause (x),
such consideration shall be valued at its fair market value as of the date such
consideration is paid and as determined by the board of directors of the
Borrower acting reasonably and in good faith. The value of Borrower's investment
in any joint venture shall be determined by the board of directors of the
Borrower acting reasonably and in good faith based upon any valuations produced
by the parties to such joint venture in connection with the establishment of
such joint venture.
7.4. INDEBTEDNESS. Borrower shall not create, incur, assume, permit to
exist, or be liable for any Indebtedness, or permit any of its Subsidiaries to
do so, other than Permitted Indebtedness.
7.5. ENCUMBRANCE. Borrower shall not create, incur, or allow to exist any
Lien on any of its property or assets, or assign or convey any right to receive
income, including the sale of any accounts receivable, or permit any of its
Subsidiaries to do so, except for Permitted Liens, or permit Lender's first
priority security interest in the Collateral to change.
7.6. INVESTMENTS; DISTRIBUTIONS. Borrower shall not (i) directly or
indirectly make or hold any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment on Capital Stock (except for
dividends or stock splits payable solely in Capital Stock and dividends payable
solely to Borrower or a wholly-owned Subsidiary of Borrower) or redeem, retire
or purchase any Capital Stock (except for restricted shares of Capital Stock
issued to officers, directors, or employees pursuant to the terms for
repurchases thereof upon a termination of employment or directorship).
7.7. TRANSACTIONS WITH AFFILIATES. Borrower and its Subsidiaries shall not
directly or indirectly enter into or permit any material transaction with any
Affiliate of Borrower, except (i) transactions that are in the ordinary course
of Borrower's business, on terms no less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person, (ii)
transactions under agreements existing as of the date of this Agreement with
officers and directors that Borrower is legally obligated to perform and which
are disclosed in the SEC Reports filed prior to the date hereof, (iii) any
employment agreement entered into by Borrower or any of its Subsidiaries in the
ordinary course of business, consistent with the past practice of Borrower or
such Subsidiary and approved by the compensation committee of Borrower's board
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of directors, and (iv) transactions between or among Borrower and one or more of
its Subsidiaries or among Subsidiaries.
7.8. COMPLIANCE. Borrower and its Subsidiaries shall not undertake as one
of its important activities extending credit to purchase or carry margin stock,
or use the proceeds of any Advance for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, each as defined in ERISA, to occur; fail to comply with the Federal
Fair Labor Standards Act, the Securities Act, the Exchange Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act or violate any other law or regulation, unless such failure
to comply or violation could not reasonably be expected to have a Material
Adverse Effect.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1. PAYMENT DEFAULT. Borrower fails to pay any of the Obligations when
due and payable within five (5) days of its due date.
8.2. COVENANT DEFAULT. Borrower does not perform any obligation in Section
6 or violates any covenant in Section 7 or does not perform or observe any other
term, condition or covenant in this Agreement, any Loan Documents and as to any
default under a term, condition or covenant that can be cured, has not cured the
default within thirty (30) days after Borrower becomes aware of such occurrence
(but no Advances will be made during such cure period).
8.3. MATERIAL ADVERSE CHANGE. (i) A material impairment in the perfection
or priority of Lender's security interest in the Collateral or in the value of
such Collateral which is not covered by adequate insurance occurs; or (ii) an
event having a Material Adverse Effect shall occur.
8.4. ATTACHMENT. (i) Any material portion of Borrower's or any of its
Subsidiaries' assets is attached, seized, levied on, or comes into possession of
a trustee or receiver and the attachment, seizure or levy is not removed in five
(5) days (but no Advance will be made during such period); (ii) Borrower or any
of its Subsidiaries are enjoined, restrained, or prevented by court order from
conducting a material part of its business; (iii) a judgment or other claim
becomes a Lien on Borrower's or any of its Subsidiaries' assets of an aggregate
value in excess of $100,000; or (iv) a notice of lien, levy, or assessment is
filed against any of Borrower's or its Subsidiaries' assets of an aggregate
value in excess of $100,000 by any Governmental Authority and not paid within
ten (10) days after Borrower or any of its Subsidiaries receive notice thereof.
8.5. INSOLVENCY. (i) Borrower or any of its Subsidiaries begins an
Insolvency Proceeding; or (ii) an Insolvency Proceeding is begun against
Borrower or any of its Subsidiaries and not dismissed or stayed within sixty
(60) days (but no Advances will be made before such Insolvency Proceeding is
dismissed).
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8.6. MISREPRESENTATIONS. Borrower, any of its Subsidiaries, or any
Person acting for Borrower makes any material misrepresentation or material
misstatement now or later in any warranty or representation in this Agreement or
in any communication delivered to Lender pursuant to or in connection with this
Agreement or to induce Lender to enter this Agreement or any Loan Document or to
make any Advance; provided that such misrepresentation or misstatement shall not
be an Event of Default if such misrepresentation or misstatement is capable of
being remedied and is remedied within ten (10) days of Borrower becoming aware
of such misrepresentation or misstatement.
8.7. CROSS DEFAULT. Borrower or any Subsidiary fails to pay any
Indebtedness in excess of $250,000 when due and payable beyond the period of
grace (not to exceed thirty (30) days), if any, provided in the instrument or
agreement under which such indebtedness was created.
8.8. [***]
8.9. LICENSE AGREEMENT. (i) The License Agreement shall have been
terminated or (ii) Borrower is in default or breach (x) (other than a de minimis
breach) of any provision of the License Agreement or (y) of any payment
obligations under Section 5.3(a) or 6A.7 of the Collaboration Agreement or any
obligation to comply with law under Section 2.2 or 6A.3(a)(i) of the
Collaboration Agreement.
9. LENDER'S RIGHTS AND REMEDIES
9.1. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default,
Lender may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but
if an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Lender);
(b) Stop advancing money or extending credit for Borrower's
benefit under this Agreement or any Loan Document;
(c) Make any payments and do any acts it considers necessary
or reasonable to protect its security interest in the Collateral and take any
action permitted under the Loan Documents, the Code or other applicable law; or
(d) Apply to the Obligations any amount held by Lender owing
to or for the credit or the account of Borrower, including amounts under the
License Agreement or the Collaboration Agreement.
9.2. LENDER EXPENSES. If Borrower fails to pay any amount or furnish
any required proof of payment to third persons Lender may make all or part of
the payment or obtain
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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insurance policies required by any Loan Document, and take any action under the
policies Lender deems prudent. Any amounts paid by Lender are Lender Expenses
and immediately due and payable, bearing interest at the then applicable Base
Rate and secured by the Collateral. No payments by Lender are deemed an
agreement to make similar payments in the future or Lender's waiver of any Event
of Default.
9.3. REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative. Lender
has all rights and remedies provided under the Code, by law, or in equity.
Lender's exercise of one right or remedy is not an election, and Lender's waiver
of any Event of Default is not a continuing waiver. Lender's delay is not a
waiver, election, or acquiescence. No waiver is effective unless signed by
Lender and then is only effective for the specific instance and purpose for
which it was given.
9.4. DEMAND WAIVER. Except for notices explicitly required under any
Loan Document, Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guaranties held by Lender on which Borrower is
liable.
10. NOTICES
All notices or demands by any party to this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile at the addresses listed below each parties'
signature hereto. A party may change its notice address by giving the other
party written notice.
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
This Agreement shall be governed and construed in accordance with the
internal law of the State of New York without regard to principles of conflicts
of law. Borrower submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the city of New York, New York.
BORROWER WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS
AGREEMENT. BORROWER HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1. SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may not
assign this Agreement or any
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rights or Obligations under it without Lender's prior written consent which may
be granted or withheld in Lender's discretion. Lender has the right, without the
consent of or notice to Borrower, to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Lender's obligations,
rights and benefits under this Agreement, the Loan Documents or any related
agreement to any Affiliate of Lender and following the occurrence of an Event of
Default to any Person other than to one of Borrower's competitors listed on
Schedule 12.1 hereto.
12.2. INDEMNIFICATION. Borrower will indemnify, defend and hold
harmless Lender and its officers, employees and agents against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; (b) all
losses or Lender Expenses incurred, or paid by Lender from, following, or
consequential to transactions between Lender and Borrower pursuant to or in
connection with any Loan Document (including reasonable attorneys' fees and
expenses), except in the case of clauses (a) and (b) any amounts caused by
Lender's gross negligence or willful misconduct and (c) any and all Taxes
payable or which must be withheld in respect of all payments by Borrower to
Lender hereunder other than Taxes on Lender's net income or gross receipts and
Lender's franchise taxes.
12.3. TIME OF ESSENCE. Time is of the essence for the performance of
all Obligations in this Agreement.
12.4. SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.5. AMENDMENTS IN WRITING, INTEGRATION. All amendments to this
Agreement must be in writing signed by both Lender and Borrower. This Agreement
and the Loan Documents together with the definitions specifically incorporated
from the License Agreement and the Collaboration Agreement in accordance with
Section 1 hereof represent the entire agreement about this subject matter, and
supersedes prior or contemporaneous negotiations or agreements. All prior or
contemporaneous agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.
12.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, are one
Agreement.
12.7. SURVIVAL. All covenants, representations and warranties made in
this Agreement continue in full force while any Obligations remain outstanding.
The obligations of Borrower in Section 12.2 to indemnify Lender will survive
until all statutes of limitations for actions that may be brought against Lender
have run.
12.8. CONFIDENTIALITY. Borrower and Lender each agree to keep the
contents of the Loan Documents and any other information about the other party
or its business, assets, liabilities or properties which they receive in
connection with the Loan Documents (the
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"Confidential Information") confidential and not to disclose such information to
any other Person except as required by applicable law, rule, regulation, stock
exchange rule or legal process; provided, however, that if a party hereto is
required so to disclose any Confidential Information it will use its reasonable
best efforts to obtain confidential treatment, redaction, an in camera review or
other methods to limit to the maximum extent possible the content and scope of
the disclosure required and each party shall to the extent practicable permit
the other party and its counsel to review any such request and participate in
the process of prosecuting such request.
13. DEFINITIONS
13.1. DEFINITIONS.
"ACCOUNTS" shall mean all existing and later arising deposit accounts
(as defined in the Code), securities accounts (as defined in the Code) and any
other account in which cash or Securities or the proceeds thereof are held.
"ACCOUNT CONTROL AGREEMENT" shall mean any Account Control Agreement
entered into pursuant to the terms hereof which grants the Lender "control" as
defined in the Code over any Account in the form of EXHIBIT E together with such
changes requested by the bank, Securities Intermediary or other financial
institution party thereto which changes have been agreed to by Lender and
Borrower.
"ADVANCE" means an advance made or to be made under the terms and
subject to the conditions of this Agreement or the principal amount outstanding
for the time being of that advance.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's executive officers,
directors, partners and, for any Person that is a limited liability company,
that Person's managers and members.
"APPROVED CAPITAL EXPENDITURES" means any capital expenditures (x) to
purchase or construct one headquarters campus containing a laboratory facility
and (y) capital expenditures for the purchase, construction or reconstruction of
equipment or other capital assets not exceeding, in the aggregate, $25,000,000
in any fiscal year of Borrower.
"BORROWER'S BOOKS" are all of Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BORROWER PATENT AND TRADEMARK SECURITY AGREEMENT" means the Patent and
Trademark Security Agreement substantially in the form of EXHIBIT D attached
hereto.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which banks in New York, NY are generally not open for business.
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"CAPITAL STOCK" shall mean all shares of stock (whether or not common
or preferred) or other securities or rights to acquire or which are convertible
or exchangeable into such shares of stock or any other securities entitling the
holder to participate in the profits of a Person or entitling the holder thereof
to vote on any matter.
A "CHANGE IN CONTROL" shall mean (a) a sale of all or substantially all
of the assets of Borrower and its Subsidiaries taken as a whole, (b) any merger,
consolidation, recapitalization, reclassification, share exchange or other
business combination involving the Borrower or its Subsidiaries (a "Business
Combination") in which either (x) Borrower is not the continuing or surviving
entity and the holders of the Capital Stock of Borrower outstanding immediately
prior to the Business Combination do not hold, directly or indirectly, at least
a majority of the Capital Stock and the combined voting power of the surviving
entity immediately after such Business Combination, or (y) Borrower is the
continuing or surviving entity and the holders of the Capital Stock of Borrower
outstanding immediately prior to the Business Combination do not hold, directly
or indirectly, at least a majority of the Capital Stock and the combined voting
power of Borrower immediately after such Business Combination, and (c) any
Person or group of Persons (as defined in Rule 13d-3 under the Exchange Act)
becomes the beneficial owner (determined in accordance with Rule 13d-3 under the
Exchange Act) of more than 35% (calculated in accordance with Rule 13d-3 under
the Exchange Act) of the Capital Stock or the combined voting power of the
Borrower.
"CLOSING DATE" shall mean the date the first Advance is made hereunder.
"CODE" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York, provided that to the extent that by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral or the availability of
any remedy is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy.
"COLLATERAL" shall mean the property described in the Security
Agreement, any Account Control Agreement and the Borrower Patent and Trademark
Security Agreement or in any other Loan Document as being subject to a Lien in
favor of Lender.
"COMMITTED LINE" shall mean the maximum aggregate amount of all
Advances which may be outstanding hereunder which is equal to: (x) during the
Initial Loan Period $75,000,000 minus any amount which has been repaid pursuant
to Section 2.6 or 7.1 hereof and (y) during the Second Loan Period $175,000,000
minus any amount which has been repaid pursuant to Section 2.6 or 7.1 hereof.
"CONSOLIDATED EBITDA" shall mean for any period, the sum of
Consolidated Net Income, plus the following to the extent deducted or not
included in calculating such Consolidated Net Income: (a) all income tax
expense; (b) Consolidated Interest Expense; (c) depreciation and amortization
expense (excluding amortization expense attributable to a prepaid
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operating activity item that was paid in cash on a prior period); and (d) all
other non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future period);
in each case for such period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean the ratio of the
aggregate amount of Consolidated EBITDA for the most recent four full fiscal
quarters (such four full fiscal quarter period being referred to herein as the
"Prior Quarters") for which financial statements contained in an SEC Report have
been filed with the SEC preceding the date of the incurrence of such
Indebtedness (the "Transaction Date") to the aggregate amount of Consolidated
Fixed Charges of such Person for the Prior Quarters. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated
EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect
on a pro forma basis for the period of such calculation to, without duplication,
(a) the incurrence of any Indebtedness of Borrower or any of its Subsidiaries
(and the application of the net proceeds thereof) and the repayment of any
Indebtedness of Borrower and its Subsidiaries during the period commencing on
the first day of the Prior Quarters to and including the Transaction Date (the
"Reference Period"), including, without limitation, the incurrence of the
Indebtedness giving rise to the need to make such calculation (and the
application of the net proceeds thereof), as if such incurrence (and
application) or repayment, as the case may be, occurred on the first day of the
Reference Period, and (b) any sales or acquisitions of assets outside the
ordinary course of business (including, without limitation, any acquisition
giving rise to the need to make such calculation as a result of Borrower or one
of its Subsidiaries (including any Person who becomes a Subsidiary as a result
of the acquisition) incurring, assuming or otherwise being liable for
Indebtedness) occurring during the Reference Period, as if such sale of assets
or acquisition occurred on the first day of the Reference Period. Furthermore,
in calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (i) interest on outstanding Indebtedness determined on a fluctuating
basis as at the Transaction Date and that will continue to be so determined
thereafter shall be deemed to have accrued at a fixed or floating rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; and (ii) if interest on any Indebtedness actually incurred on the
Transaction Date may optionally be determined at an interest rate based upon a
factor of a prime, LIBOR, or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate in effect on the Transaction Date
will be deemed to have been in effect during the Reference Period. If Borrower
or any of its Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the above clause shall give effect to the incurrence of such
guaranteed Indebtedness as if Borrower or such Subsidiary had directly incurred
or otherwise assumed such guaranteed Indebtedness.
"CONSOLIDATED FIXED CHARGES" shall mean, with respect to Borrower and
its Subsidiaries for any period, the sum of, without duplication, (a)
Consolidated Interest Expense for such period; (b) scheduled mandatory principal
payments of Indebtedness; (c) the principal component of any capitalized lease
obligations paid by such Person during such period, (d) cash dividends on
Capital Stock paid by such Person during such period (excluding dividends paid
to
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the Borrower or any wholly-owned Subsidiary), all as determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean for any period, without
duplication, the sum of (a) the interest expense of Borrower and its
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization or accretion of
debt discount, (ii) the net cost under any Hedge, (iii) the interest portion of
any deferred payment obligation, and (iv) all accrued interest; (b) the interest
component of capitalized lease obligations paid, accrued and/or scheduled to be
paid or accrued by Borrower and its Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP; (c) that portion of
all operating lease rentals representative of an interest factor (which shall be
deemed to be equal to 1/3 of all operating lease rentals); (d) the amount of
interest expense recorded by a Person whose Indebtedness is guaranteed by the
Borrower or its Subsidiaries which relates to the Indebtedness of such Person
which is so guaranteed; (e) the amount of any dividends on any Capital Stock
which by it terms entitles the holder thereof to specified accruing dividends.
"CONSOLIDATED NET INCOME" shall mean for any period, the consolidated
net income (or loss) of Borrower and its Subsidiaries for such period, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (a) all extraordinary gains or losses, (b) the portion of net
income (but not losses) of Borrower and its Subsidiaries allocable to minority
interests in unconsolidated Persons to the extent that cash dividends or
distributions have not actually been received by Borrower or its wholly-owned
Subsidiaries, (c) any gain or loss realized upon the termination of any employee
pension benefit plan, on an after-tax basis, (d) gains or losses in respect of
any asset sales by Borrower or its Subsidiaries, and (e) the net income of any
Subsidiary of Borrower to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted, directly or indirectly, by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, law, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders. All
amounts and determinations under this definition shall be in accordance with
GAAP.
"CONTINGENT OBLIGATION" means, for any Person, any direct or indirect
liability, contingent or not, of that Person for any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; but "Contingent Obligation" does not include endorsements in the
ordinary course of business. The amount of a Contingent Obligation is the stated
or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under the guarantee or other support
arrangement.
"EQUITY ISSUANCE" means the sale or issuance by Borrower or any of its
Subsidiaries or a holding company of Borrower of any of its Capital Stock for
cash in a public or private offering
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other than (w) in connection with entering into any co-promotion, collaboration
or other agreement relating to the joint development, marketing or sale of any
products of Borrower if such Capital Stock is issued to one or more of the
parties to such Agreement (other than the Borrower or its Subsidiaries) or one
of their Affiliates; (x) the sale or issuance of Capital Stock to any employee
or director of Borrower or its Subsidiaries pursuant to any stock option plan
approved by the board of directors of Borrower prior to the date hereof or any
plan adopted after the date hereof containing substantially similar terms; or
(y) the sale or issuance of shares of Capital Stock upon the exercise of any
warrants or upon the conversion of any convertible preferred stock or other
convertible securities outstanding on the date hereof and disclosed in the SEC
Reports filed prior to the date hereof or in any schedule hereto; or (z) the
sale of Capital Stock by Borrower or any of its Subsidiaries to Borrower, a
wholly owned Subsidiary of Borrower or a holding company of Borrower as the case
may be; provided that following such transaction, the beneficial owners of the
Capital Stock of Borrower own in the same proportion as prior to the transaction
the Capital Stock of Borrower or a holding company of Borrower.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"EVENT OF DEFAULT" shall mean the occurrence of any event specified in
Section 8 hereof.
"EXCHANGE ACT" shall mean the US Securities Exchange Act of 1934, as
amended.
"FINANCIAL ASSET" shall have the same meaning as in the Code.
"GAAP" shall mean generally accepted accounting principles in the
United States as consistently applied by Borrower together with the applicable
provisions of all accounting rules, regulations, bulletins and requirements
(including Regulation S-X) promulgated by the SEC or any division or part
thereof.
"GOVERNMENTAL AUTHORITY" shall mean any government and any authority,
agency, department, subdivision or instrumentality of any government.
"INDEBTEDNESS" shall mean:
(a) indebtedness for borrowed money;
(b) the deferred price of property or services;
(c) obligations evidenced by notes, bonds, debentures, mortgages
or similar instruments;
(d) capital or finance lease obligations or hire purchase
arrangements;
(e) Contingent Obligations;
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(f) any documentary or standby letter of credit facility or
performance bond facility;
(g) Any derivative (as defined in Accounting for Derivative
Instruments and Hedging Activities - FASB Statement No. 133 as amended and
interpreted, incorporating FASB Statement No. 138 and certain Statement No. 133
implementation issues, and Derivatives Implementation Group Issues);
(h) any amount under bankers acceptances;
(i) any amount raised pursuant to any issue of shares which are
expressed to be redeemable;
(j) receivables sold or discounted (other than on a non-recourse
basis);
(k) any agreement or option to re-acquire an asset if one of the
primary reasons for entering into such agreement or option is to raise finance;
(l) any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect of a borrowing;
and
(m) the amount of any liability in respect of any guarantee or
indemnity for any of the items referred to in paragraphs (a) to (l) above.
"INITIAL LOAN PERIOD" shall mean the period commencing on the calendar
day immediately following the US Launch Date and ending on the first anniversary
of the US Launch Date.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTEREST PERIOD" shall mean the three month period ended March 31,
June 30, September 30 or December 31 except for the first Interest Period which
shall commence on the Closing Date and end on the first of the foregoing dates
to occur.
"INVESTMENT" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of guarantee
or similar arrangement; but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the balance sheet of the Borrower or its Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person.
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"LENDER EXPENSES" shall mean all costs, fees and expenses (including
reasonable attorneys' fees and expenses) for administering, defending and
enforcing the Loan Documents (including appeals or Insolvency Proceedings)).
"LIEN" shall mean a mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance or imposition.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Promissory Note, the Security Agreement, any Account Control Agreement, the
Borrower Patent and Trademark Security Agreement, any note, or notes or
guaranties executed by Borrower in favor of Lender, and any other present or
future agreement between Borrower and, or for the benefit of, Lender in
connection with this Agreement other than the License Agreement or the
Collaboration Agreement, all as amended, extended or restated.
"LOAN PERIOD" shall mean the Initial Loan Period and the Second Loan
Period collectively.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (x)
the business, assets, liabilities, condition (financial or otherwise) or results
of operations of Borrower and its Subsidiaries taken as a whole or (y) the
validity or enforceability of, or the ability of Borrower to perform its
obligations under this Agreement or any of the other Loan Documents.
"MATURITY DATE" shall mean the third anniversary of the US Launch Date.
"NET CASH EQUITY ISSUANCE PROCEEDS" means, with respect to any Equity
Issuance, the excess of the gross cash proceeds received by such Person for such
Equity Issuance after deduction of all reasonable and customary transaction
expenses (including, without limitation, underwriting discounts and commissions
and/or placement agent fees) actually and directly incurred in connection with
such Equity Issuance.
"NET WORTH" means the assets minus the liabilities of the Borrower and
its Subsidiaries on a consolidated basis as determined in accordance with GAAP.
"NOTICE OF BORROWING" is the Notice of Borrowing substantially in the
form of EXHIBIT B attached hereto.
"OBLIGATIONS" shall mean debts, penalties, principal, interest, Lender
Expenses and other amounts Borrower owes Lender pursuant to the Loan Documents
now or later, including interest accruing after Insolvency Proceedings have
begun.
"PERFECTION CERTIFICATE" is the Perfection Certificate substantially in
the form of EXHIBIT G attached hereto.
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"PERMITTED INDEBTEDNESS" is:
(a) Borrower's Obligations to Lender under this Agreement
or the Loan Documents;
(b) Indebtedness existing on the date hereof which is
reflected in the most recent financial statements of Borrower filed in an SEC
Report;
(c) Indebtedness to trade creditors incurred in the
ordinary course of business consistent with past practices so long as either (x)
payment is made within ninety (90) days of the date payment is first due or (y)
the payment is the subject of a bona fide dispute being pursued in good faith
with a trade creditor that is a contract research organization;
(d) Indebtedness incurred directly to finance Approved
Capital Expenditures;
(e) Indebtedness of Borrower to any of its Subsidiaries
and Contingent Obligations of any Subsidiary of Borrower with respect to
obligations of Borrower (provided that the primary obligations are not
prohibited hereby), and Indebtedness of any Subsidiary of Borrower to any other
Subsidiary of Borrower and Contingent Obligations of any Subsidiary of Borrower
with respect to obligations of any other Subsidiary of Borrower (provided that
the primary obligations are not prohibited hereby);
(f) additional Indebtedness incurred by Borrower or any
of its Subsidiaries in an aggregate principal amount at any one time outstanding
not to exceed $10,000,000;
(g) Any derivative that qualifies as hedge under U.S.
Generally Accepted Accounting Principles currently set forth in Accounting for
Derivative Instruments and Hedging Activities - FASB Statement No. 133, as
amended and interpreted, and incorporating FASB Statement No. 138 and Statement
No. 133 implementation issues and, Derivatives Implementation Group issues as
promulgated by the FASB Derivatives Implementation Group from time to time;
(h) Indebtedness incurred prior to the Closing Date in
the form of capital leases obligations not to exceed $10,000,000 in the
aggregate; and
(i) any other Indebtedness not described in clauses (a)
to (h) if such Indebtedness is Subordinated Indebtedness and if immediately
after giving effect to the incurrence of such Indebtedness and giving pro forma
effect to the incurrence of such Indebtedness (x) the Consolidated Fixed Charge
Coverage Ratio is at least equal to 3.5:1 and (y) Borrower shall have Tangible
Net Worth in excess of an amount equal to 75% of all Indebtedness of Borrower
(including any amount of outstanding Advances hereunder) immediately after
giving effect to the incurrence of such Indebtedness and giving pro forma effect
to the incurrence of such Indebtedness.
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"PERMITTED INVESTMENTS" are (i) Investments in any Subsidiary which is
wholly owned, directly or indirectly, by Borrower; and (ii) Investments by
Borrower in any one or more of the following:
(a) United States treasury bills which are backed by the full
faith and credit of the US federal government;
(b) United States federal government coupon issues which are
backed by the full faith and credit of the US federal government;
(c) obligations of agencies of the United States federal
government which are backed by the full faith and credit of the US federal
government;
(d) deposits, certificates of deposit or bankers acceptances
denominated in US dollars or Euro of any bank or trust company organized under
the laws of the United States of America (or any state thereof) or any member
state of the European Union, having combined capital and surplus and undivided
profits of not less than $100,000,000 or its equivalent and has outstanding debt
which is rated `A' (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act);
(e) debt obligations (including master notes, medium term notes or
commercial paper) of any corporation;
(f) collateralized mortgage obligations;
(g) repurchase agreements;
(h) asset backed securities;
(i) Capital Stock, or securities (A) received in the settlement of
debts which were created in the ordinary course of business of the Borrower and
were owing to Borrower or any of its Subsidiaries if such settlement is pursuant
to a bankruptcy, reorganization or other similar general settlements or
compromise or arrangement of debts with the creditors of a Person other than the
Borrower or its Subsidiaries or (B) received pursuant to any judgment of a court
or arbitral tribunal;
(j) other Investments in any Person having at any time an
aggregate fair market value, when taken together with all other Investments made
pursuant to this clause (j), not to exceed $2,500,000;
(k) Investments in all or a portion of the Capital Stock of a
Person or in joint ventures if (i) the aggregate consideration for all
acquisitions of Capital Stock or property or assets by Borrower and its
Subsidiaries and the aggregate of Borrower's and its Subsidiaries' investments
in such joint ventures completed after the date hereof (whether before or after
the
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Closing Date) does not exceed $125,000,000 (the value of the consideration paid
or investment is to be determined in the same manner as under Section 7.3); (ii)
either (A) Borrower and its Subsidiaries together own at least all or
substantially all of the Capital Stock of such acquired Person or (B) the
acquisition of less than all or substantially all of the Capital Stock of a
Person was accomplished pursuant to, or in connection with, a co-promotion,
licensing or collaboration agreement with a Person engaged in the pharmaceutical
industry and Borrower or its Subsidiaries grant a first priority perfected
security interest in such Capital Stock to Lender upon the later of (x) the
completion of such acquisition or (y) the Closing Date; and (iii) such
acquisition or joint venture was not completed in violation of Section 7.3
hereof; and
(l) Investments existing on the date hereof and listed on Schedule
13.1; provided that with respect to clauses (a) to (h):
(a) such Investments are rated at least A2/P2 or A by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act);
(b) all asset backed securities are rated at least AA+ by at least
one nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act);
(c) the maximum maturity of any single Investment shall not exceed
44 months;
(d) the maximum average maturity of all Permitted Investments must
not exceed 40 months;
(e) all Permitted Investments in any one Person (other than the US
federal government or any agency thereof) with a rating of at least AA by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) at time the time such Permitted Investment is
made shall not exceed 10% of the market value of all Permitted Investments at
any time;
(f) all Permitted Investments in any one Person (other than the US
federal government or any agency thereof) with a rating less than AA by at least
one nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act) at the time such Permitted Investment is made
shall not exceed 5% of the market value of all Permitted Investments at any
time;
(g) the market value of Investments in collateralized mortgage
obligations shall not exceed 5% of the market value of all Permitted Investments
at any time.
"PERMITTED LIENS" shall mean:
(a) Liens arising under this Agreement or other Loan Documents;
-30-
(b) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on Borrower's Books;
(c) Purchase money Liens securing Indebtedness described in
clauses (d) and (h) of the definition of "Permitted Indebtedness" if the Lien is
confined solely to the subject property and improvements;
(d) Landlord and materialman's liens and inchoate liens arising by
operation of law to secure claims for the purchase of labor, services,
materials, equipment or supplies to the extent that payment thereof shall not at
the time be required to be made;
(e) Liens created by or resulting from any litigation or legal
proceeding which is being contested in good faith by appropriate proceedings;
provided that adequate reserves with respect thereto are maintained on
Borrower's Books;
(f) easements, rights of way or other such Liens incidental to the
normal conduct of the business of Borrower or its Subsidiaries which do not
secure Indebtedness and which do not in the aggregate materially impair the use
of such property in the operation of the business of the Borrower and its
Subsidiaries taken as a whole or the value of such property for the purposes of
such business;
(g) other Liens incidental to the normal conduct of the business
of Borrower or its Subsidiaries which do not secure Indebtedness and which do
not in the aggregate materially impair the use of such property in the operation
of the business of the Borrower and its Subsidiaries or the value of such
property;
(h) subject to compliance with or a waiver of Section 7.3, (i) any
Lien on property existing on such property at the time of acquisition thereof,
whether or not the Indebtedness secured thereby is assumed by Borrower or any
Subsidiary thereof; provided that such Lien does not attach to any other
property of Borrower or its Subsidiaries other than the specific property so
acquired, or (ii) any Lien existing on the property of a Person at the time such
Person is merged into or consolidated with Borrower or any Subsidiary thereof;
provided that such Lien does not attach to any existing or after acquired
property of Borrower or any of its Subsidiaries but only to the actual property
of such Person at the time of such merger or consolidation; provided further
that in the case of both (i) and (ii) such Lien was not created in anticipation
of or in connection with such acquisition, merger or consolidation;
(i) pledges and deposits made in the ordinary course of business
in connection with workers compensation, unemployment insurance and other social
security laws or regulations;
(j) deposits to secure the performance of bids, trade contracts,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like manner,
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and Liens of assets relating to customer deposits and advances (including
progress payments) in each case in the ordinary course of business; and
(k) Liens existing on the date hereof and disclosed on Schedule
13.2 hereto.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or Governmental Authority.
"POTENTIAL EVENT OF DEFAULT" shall mean any event, circumstance,
situation or omission which could with the giving of notice, lapse of time or
otherwise become an Event of Default.
"PRIME RATE" shall mean the variable per annum rate of interest equal
at all times to the rate of interest established and quoted by Citibank N.A. as
its prime rate, such Prime Rate to change contemporaneously with each change in
such established and quoted rate by Citibank N.A. In the event that Citibank
N.A. shall abolish or abandon its practice of establishing and quoting a prime
rate, or should the same or any Replacement Prime Rate (as defined below) become
unavailable or unascertainable, the Lender shall select any alternative rate
which in its reasonable judgment is substantially equivalent to the Prime Rate
(or Replacement Prime Rate, as the case may be) being replaced, expressed as a
per annum rate, and effective as of the date the Lender notifies the Borrower of
its selection such selected alternative rate of interest (the "Replacement Prime
Rate") shall become the Prime Rate.
"PROMISSORY NOTE" means a Promissory Note from Borrower in favor of
Lender substantially in the form of EXHIBIT A attached hereto, dated as of the
Closing Date, together with all renewals, amendments, modifications and
substitutions, therefor.
"RESPONSIBLE OFFICER" shall mean each of the Chief Executive Officer
and the Chief Financial Officer of the Borrower.
"SECOND LOAN PERIOD" shall mean the period commencing on the calendar
day immediately following the last day of the Initial Loan Period and ending on
that date which is one (1) day prior to the Maturity Date.
"SECURITIES" shall mean financial assets and investment property each
as defined in the Code.
"SECURITIES ACCOUNT" shall have the same meaning as in the Code.
"SECURITIES INTERMEDIARY" shall have the same meaning as in the Code.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness (x) the maturity
date of which or the earliest date upon which repayment can be demanded is after
the Maturity Date and (y) which has been subordinated in right of payment to the
Obligations owing to Lender hereunder
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pursuant to a subordination agreement providing that the holder thereof (i) may
not exercise any remedies against Borrower or its Subsidiaries without the
consent of Lender and (ii) will pay over to Lender any amounts it receives which
it is not entitled to receive under the terms of such subordination agreement or
pursuant to a subordination agreement containing terms otherwise acceptable to
Lender.
"SUBSIDIARY" shall mean for any Person, joint venture, or any other
business entity of which more than fifty percent (50%) of the stock or other
equity interests is owned or controlled, directly or indirectly, by the Person
or one or more Affiliates of the Person.
"TANGIBLE NET WORTH" shall mean, as of any date, (a) the amount of any
capital stock, paid-in capital and similar equity accounts (other than with
respect to any Capital Stock which by its terms is mandatorily redeemable) plus
(or minus in the case of a deficit) the capital surplus and retained earnings of
Borrower on a consolidated basis and the amount of any foreign currency
translation adjustment account shown as a capital account of Borrower, less (b)
the net book value of all items of the following character which are included in
the assets of Borrower: (i) goodwill, including without limitation, the excess
of cost over book value of any asset, (ii) organization or experimental
expenses, (iii) unamortized debt discount and expense, (iv) patents, trademarks,
trade names and copyrights, (v) treasury stock, (vi) deferred taxes (but only to
the extent that the deferred taxes shown as an asset on the Borrower's
consolidated balance sheet exceeds the deferred taxes shown as a liability on
the Borrower's consolidated balance sheet) and deferred charges, (vii)
franchises, licenses and permits, and (viii) other assets which are deemed
intangible assets under GAAP; provided that "Tangible Net Worth" shall not
include any positive amount attributable to any revaluation of any asset after
the date hereof.
"TAX" (and, with correlative meaning, "Taxes") shall mean any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding, alternative or
added minimum, ad valorem, value added, inventory, transfer or excise tax, or
any other tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty.
"US", "U.S." OR "UNITED STATES" shall mean the geographic territory of
any state of the United States of America or any territory or possession of the
federal government of the United States of America.
"US LAUNCH DATE" shall mean the first date on which a Product is first
shipped in commercial quantities for commercial sale to unaffiliated third
parties located in the United States.
[SIGNATURES ARE ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
BORROWER:
NEUROCRINE BIOSCIENCES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
Address and Fax Number for Notices:
LENDER:
PFIZER INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
Address and Fax Number for Notices:
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