EXHIBIT 10.34
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") dated September 16, 2005
by and among OXFORD FINANCE CORPORATION ("Oxford"); SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("SVB") (SVB and the Oxford each
individually a "Lender", and collectively the "Lenders"), and SGX
PHARMACEUTICALS, INC. (formerly known as STRUCTURAL GENOMIX, INC.), a Delaware
corporation, whose address is 00000 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000
("Borrower") provides the terms on which Lenders shall lend to Borrower and
Borrower shall repay Lenders. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document. Capitalized terms in this Agreement shall have the
meanings as set forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meanings provided by the
Code, to the extent such terms are defined therein.
2 LOANS AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower hereby unconditionally promises to pay Lenders the unpaid
principal amount of all Credit Extensions hereunder with all interest, fees and
finance charges due thereon as and when due in accordance with this Agreement.
2.1.1 EQUIPMENT ADVANCES.
(a) Availability. Subject to the terms and conditions of this Agreement,
Lenders agree, severally and not jointly, to lend to Borrower from time to time
prior to the Equipment Commitment Termination Date, advances (each an "Equipment
Advance" and collectively the "Equipment Advances") in an aggregate amount not
to exceed the Equipment Commitment Amount according to each Lender's pro rata
share of the Equipment Commitment Amount (based upon the respective Equipment
Commitment Percentage of each Lender). When repaid, the Equipment Advances may
not be re-borrowed. Lenders' obligation to make Equipment Advances shall
terminate on the earlier of (i) the occurrence and continuance of an Event of
Default, or (ii) the Equipment Commitment Termination Date. The Equipment
Advances may only be used to finance or refinance Eligible Equipment purchased
on or after 90 days before the date of each Equipment Advance (determined based
upon the applicable invoice date of such Eligible Equipment) (provided that any
Equipment Advances made on or after April 1, 2006 and before May 31, 2006 may be
used to finance or refinance Eligible Equipment purchased on or after January 1,
2006 (determined based upon the applicable invoice date of such Eligible
Equipment)) and may not exceed one hundred percent (100%) of the Original Stated
Cost of the Financed Equipment. Each Equipment Advance must be for a minimum of
One Hundred Thousand Dollars ($100,000). The number of Equipment Advances is
limited to twice per month.
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(b) Procedure. To obtain an Equipment Advance, Borrower must notify Lenders
(the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time
seven (7) Business Days before the day on which the Equipment Advance is to be
made ("Equipment Advance Funding Date"). Borrower shall deliver to Lenders a
completed supplement in substantially the form attached as Exhibit C (the "Loan
Supplement"), signed by a Responsible Officer, or his or her designee, copies of
invoices for the Financed Equipment and such additional information as Lenders
may reasonably request at least five (5) Business Days before the proposed
Equipment Advance Funding Date. In addition, the notice in the form of Exhibit B
(Payment/Advance Form) and a Note payable to each Lender in the form of Exhibit
H must be signed by a Responsible Officer or designee and include a copy of the
invoice for the Financed Equipment being financed. On the Equipment Advance
Funding Date, each Lender shall credit and/or transfer (as applicable) to
Borrower's deposit account, an amount equal to its Equipment Commitment
Percentage multiplied by the amount of the Equipment Advance. Each Lender may
make Equipment Advances under this Agreement based on instructions from a
Responsible Officer or his or her designee or without instructions if the
Equipment Advances are necessary to meet Obligations which have become due. Each
Lender may rely on any telephone notice given by a person whom such Lender
believes is a Responsible Officer or designee. Borrower shall indemnify each
Lender for any loss Lender suffers due to such reliance.
2.1.2 GROWTH CAPITAL LOAN FACILITY.
(a) Availability. Subject to the terms and conditions of this Agreement,
Lenders agree, severally and not jointly, to lend to Borrower from time to time
prior to the Growth Capital Commitment Termination Date, advances (each a
"Growth Capital Advance" and collectively the "Growth Capital Advances") in an
aggregate amount not to exceed the Growth Capital Loan Commitment according to
each Lender's pro rata share of the Growth Capital Loan Commitment (based upon
the respective Growth Capital Commitment Percentage of each Lender). When
repaid, the Growth Capital Advances may not be re-borrowed. Lenders' obligation
to lend hereunder shall terminate on the earlier of (i) the occurrence and
continuance of an Event of Default, or (ii) the Growth Capital Commitment
Termination Date. For purposes of this Section, the minimum amount of each
Growth Capital Advance is One Million Dollars ($1,000,000).
(b) Borrowing Procedure. To obtain a Growth Capital Advance, Borrower must
notify Lenders by facsimile or telephone by 12:00 p.m. Pacific Time seven (7)
Business Days prior to the date the Growth Capital Advance is to be made. If
such notification is by telephone, Borrower must promptly confirm the
notification by delivering to Lenders a completed Payment/Advance Form in the
form attached as Exhibit B. In addition, a Note payable to each Lender in the
form of Exhibit G must be signed by a Responsible Officer or designee. On the
Growth Capital Funding Date, each Lender shall credit and/or transfer (as
applicable) to Borrower's deposit account, an amount equal to its Growth Capital
Commitment Percentage multiplied by the amount of the Growth Capital Advance.
Each Lender may make Growth Capital Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Growth Capital Advances are necessary to meet Obligations
which have become due. Each Lender may rely on any telephone notice given by a
person whom such Lender believes is a Responsible Officer or designee. Borrower
shall indemnify each Lender for any loss Lender suffers due to such reliance.
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2.2 TERMINATION OF COMMITMENT TO LEND.
Each Lender's obligation to lend the undisbursed portion of the Obligations
shall terminate if, in such Lender's sole discretion made in good faith, there
has been a material adverse change in the general affairs, management, results
of operation, condition (financial or otherwise) of Borrower or the prospect of
repayment of the Obligations, or there has been any material adverse deviation
by Borrower from the most recent business plan of Borrower presented to and
accepted by Lenders prior to the execution of this Agreement.
2.3 REPAYMENT OF CREDIT EXTENSIONS ON EQUIPMENT ADVANCES AND GROWTH CAPITAL
ADVANCES.
(a) Principal and Interest Payments on Payment Dates.
(i) Equipment Advances. For each Equipment Advance, Borrower shall
make equal monthly payments of principal and interest, calculated by the Lenders
based upon: (1) the amount of the Equipment Advance, (2) the interest rate
applicable thereto as determined in accordance with Section 2.3(b) of this
Agreement, and (3) an amortization schedule equal to the Equipment Advance
Repayment Period, on the first Business Day of the month following the month in
which the Equipment Advance Funding Date occurs (or commencing on the Equipment
Advance Funding Date if the Equipment Advance Funding Date is the first Business
Day of the month) with respect to such Equipment Advance and continuing
thereafter during the Equipment Advance Repayment Period on the first Business
Day of each successive calendar month (each an "Equipment Advance Payment
Date"). All unpaid principal and accrued interest is due and payable in full on
the Equipment Advance Maturity Date with respect to such Equipment Advance. An
Equipment Advance may only be prepaid in accordance with Sections 2.3(c), 2.3(d)
and 2.3(e).
(ii) Growth Capital Advance. For each Growth Capital Advance, Borrower
shall make monthly payments of interest only commencing on the first Business
Day of the month following the month in which the Growth Capital Funding Date
occurs (or commencing on the Growth Capital Funding Date if the Growth Capital
Funding Date is the first Business Day of the month) with respect to such Growth
Capital Advance and continuing thereafter on the first Business Day of each
successive calendar month (each a "Growth Capital Interest Only Payment Date")
during the Growth Capital Interest Only Period. Commencing on the Growth Capital
Amortization Date, Borrower shall make thirty-six (36) equal monthly payments of
principal and interest which would fully amortize the outstanding Growth Capital
Advances as of the Growth Capital Amortization Date over the Growth Capital
Repayment Period (individually, the "Growth Capital Scheduled Payment", and
collectively, "Growth Capital Scheduled Payments") and on the first Business Day
of each successive month and continuing thereafter during the Growth Capital
Repayment Period on the first Business Day of each successive calendar month
(each a "Growth Capital Scheduled Payment Date "). All unpaid principal and
accrued interest is due and payable in full on the Growth Capital Maturity Date.
A Growth Capital Advance may only be prepaid in accordance with Sections 2.3(c)
and 2.3(d). Each Growth Capital Interest Only Payment Date and each Growth
Capital Scheduled Payment Date are sometimes referred to as a "Growth Capital
Payment Date."
(iii) Payments received as to an Equipment Advance or a Growth Capital
Advance after 12:00 noon Pacific time are considered received at the opening of
business on the next Business Day.
(b) Interest Rate.
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(i) Equipment Advances. Borrower shall pay interest on each Equipment
Advance Payment Date on the unpaid principal amount of each Equipment Advance
until the Equipment Advance has been paid in full, at the fixed rate equal to
the greater of: (i) ten percent (10%) per annum, or (ii) six and one-tenth
percent (6.1%) per annum in excess of the Treasury Rate as of the date of the
Equipment Advance Funding Date, determined by Lenders for each Equipment
Advance. Interest is computed on the basis of a 360 day year of twelve 30-day
months.
(ii) Growth Capital Loans. Borrower shall pay interest on each Growth
Capital Payment Date on the unpaid principal amount of each Growth Capital
Advance until the Growth Capital Advance has been paid in full, at the fixed
rate equal to the greater of: (i) ten percent (10%) per annum, or (ii) six and
one-tenth percent (6.1%) per annum in excess of the Treasury Rate as of the date
of the Growth Capital Funding Date, determined by Lenders for each Growth
Capital Advance. Interest is computed on the basis of a 360 day year of twelve
30-day months.
(iii) Default Rate. Any amounts outstanding under the Equipment
Advances, or Growth Capital Advances during the continuance of an Event of
Default shall bear interest at a per annum rate equal to the Default Rate.
(c) Mandatory Prepayment Upon an Acceleration. If the Equipment Advances
and/or the Growth Capital Advances are accelerated following the occurrence of
an Event of Default or otherwise, Borrower shall immediately pay to Lenders an
amount equal to the sum of: (i) all outstanding principal plus accrued interest,
(ii) the Prepayment Fee, plus (iii) all other sums, if any, that shall have
become due and payable, including interest at the Default Rate with respect to
any past due amounts.
(d) Permitted Prepayment of Loans. Borrower shall have the option to prepay
all, but not less than all, of the Equipment Advances or the Growth Capital
Advances advanced by Lenders under this Agreement, provided Borrower (i)
provides written notice to Lenders of its election to prepay the Equipment
Advances or the Growth Capital Advances at least thirty (30) days prior to such
prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding
principal plus accrued interest, (B) the Prepayment Fee (except as provided in
Section 7.2 or Section 7.3), plus (C) all other sums, if any, that shall have
become due and payable, including interest at the Default Rate with respect to
any past due amounts. Borrower shall have the option to prepay all, but not less
than all, of the Equipment Advances and the Growth Capital Advances advanced by
Lenders under this Agreement, if Lenders do not give the consent described in
Section 7.2 or Section 7.3 provided Borrower (i) provides written notice to
Lenders of its election to so prepay, and (ii) pays, on the date of such
prepayment (A) all outstanding principal plus accrued interest, plus (B) all
other sums, if any, that shall have become due and payable, including interest
at the Default Rate with respect to any past due amounts.
(e) Prepayment of Equipment Advances upon an Event of Loss. Borrower shall
bear the risk of any loss, theft, destruction, or damage of or to the Financed
Equipment. If during the term of this Agreement any item of Financed Equipment
becomes obsolete or is lost, stolen, destroyed, damaged beyond repair, rendered
permanently unfit for use, or seized by a governmental authority for any reason
for a period equal to at least the remainder of the term of this Agreement (an
"Event of Loss"), then in each case:
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(i) if no Event of Default has occurred or is continuing, within ten
(10) days following the Event of Loss, at Borrower's option, Borrower shall (x)
pay to Lenders on account of the Obligations an amount equal to (1) the ratio
(expressed as a percentage) of (A) the Original Stated Costs of the item(s) of
Financed Equipment subject to the Event of Loss to (B) the Equipment Advance
Loan Amount for the Equipment Advance financing such item(s) of Financed
Equipment, multiplied by (2) all accrued and unpaid interest with respect to the
applicable Equipment Advance(s) to the date of the prepayment, plus all
outstanding principal with respect to the applicable Equipment Advance(s); or
(y) repair or replace any Financed Equipment subject to an Event of Loss
provided the repaired or replaced Financed Equipment is of equal or like value
to the Financed Equipment subject to an Event of Loss and provided further that
Lenders have a first priority perfected security interest in such repaired or
replaced Financed Equipment;
(ii) if an Event of Default has occurred and is continuing (and so
long as the Equipment Advances have not been accelerated, in which case the
amounts owing shall be governed by Section 2.3(c) and 9.1(a)), within ten (10)
days following the Event of Loss, Borrower shall pay to Lenders on account of
the Obligations an amount equal to (1) the ratio (expressed as a percentage) of
(A) the Original Stated Costs of the item(s) of Financed Equipment subject to
the Event of Loss to (B) the Equipment Advance Loan Amount for the Equipment
Advance financing such item(s) of Financed Equipment, multiplied by (2) all
accrued and unpaid interest with respect to the applicable Equipment Advance(s)
to the date of the prepayment, plus all outstanding principal with respect to
the applicable Equipment Advance(s); plus (3) all other sums, if any, that shall
have become due and payable, including interest at the Default Rate with respect
to any past due amounts.
(f) Debit of Accounts. SVB may debit any of Borrower's deposit accounts
including Account Number 3300295549 for principal and interest payments or any
other amounts Borrower owes SVB hereunder. These debits shall not constitute a
set-off. Borrower shall separately set up an ACH payment structure in favor of
Oxford, satisfactory to Oxford.
2.4 FEES.
Borrower will pay to Lenders:
(a) Loan Fee. A fully earned, non-refundable Loan Fee of $20,000 (to be
shared between SVB and the Oxford pursuant to their respective Growth Capital
Commitment Percentages) is due on the Effective Date.
(b) Prepayment Fee. The Prepayment Fee, as defined herein, if and when
applicable.
(c) Lenders Expenses. All Lenders Expenses (including reasonable attorneys'
fees and reasonable expenses) incurred through and after the Effective Date,
when due. Borrower has paid Lenders a good faith deposit of $10,000 (the "Good
Faith Deposit"). Any portion of the Good Faith Deposit not utilized to pay
Lenders Expenses in connection with the documentation, negotiation and closing
of this Agreement and the Loan Documents shall be refunded to Borrower after the
determination of such Lenders Expenses.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
The Lenders' agreement to make the initial Credit Extension is subject to
the condition precedent that Lenders shall have received, in form and substance
satisfactory to Lenders, such documents and completion of such other matters, as
Lenders may reasonably deem necessary or appropriate, including, without
limitation, the following:
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(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to articles,
by-laws, incumbency and resolutions authorizing the execution and delivery of
this Agreement;
(c) Perfection Certificate by Borrower;
(d) an Intercreditor Agreement;
(e) financing statements (Forms UCC-1);
(f) GECC has released its fixture filing against certain of Borrower's
assets in San Diego County, in form acceptable to Lenders:
(g) Account Control Agreement/Investment Account Control Agreements (SVB
and other financial institutions);
(h) insurance certificate;
(i) payment of the fees and Lenders Expenses then due specified in Section
2.4 hereof;
(j) Certificate of Foreign Qualification (if applicable);
(k) Certificate of Good Standing/Legal Existence; and
(l) such other documents, and completion of such other matters, as Lenders
may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
The obligations of Lenders to make each Credit Extension, including the
initial Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form.
(b) Borrower shall have duly executed and delivered to each Lender a Note
in the amount of such Lender's Equipment Advance or Growth Capital Advance, as
applicable.
(c) with respect to an Equipment Advance only, a Loan Supplement.
(d) For each Growth Capital Advance or Equipment Advance, a Warrant to
Purchase Stock for SVB in the form of Exhibit D for the number of shares of
Series B Preferred Stock equal to 4.8% of such Growth Capital Advance or
Equipment Advance made by SVB divided by $4.71 (rounded to the nearest whole
number) duly executed and delivered by Borrower.
(e) For each Growth Capital Advance or Equipment Advance, a Warrant to
Purchase Stock for Oxford in the form of Exhibit E for the number of shares of
Series B Preferred Stock equal to 4.8% of such Growth Capital Advance or
Equipment Advance made by Oxford divided by $4.71 (rounded to the nearest whole
number) duly executed and delivered by Borrower.
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(f) the representations and warranties in Section 5 shall be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default shall have occurred and be continuing,
or result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
in Section 5 remain materially true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to each Lender, to
secure the payment and performance in full of all of the Obligations and the
performance of each of Borrower's duties under the Loan Documents, a continuing
security interest in, and pledges and assigns to each Lender the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower warrants and represents that the
security interest granted herein shall be a first priority security interest in
the Collateral. SVB may place a "hold" on any certificates of deposit or deposit
or investment accounts pledged as Collateral to secure cash management services,
corporate business credit cards or letters of credit separately issued or
supplied by SVB under separate agreements between SVB and Borrower.
Borrower agrees that any disposition of the Collateral in violation of this
Agreement, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Lenders under the Code. If the Agreement is
terminated, Lenders' lien and security interest in the Collateral shall continue
until Borrower fully satisfies its Obligations. If Borrower shall at any time,
acquire a commercial tort claim, Borrower shall promptly notify Lenders in a
writing signed by Borrower of the brief details thereof and grant to Lenders in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to Lenders.
Upon the indefeasible payment in full in cash of all Obligations under this
Agreement and the termination of any obligation of any Lender to make Credit
Extensions hereunder, Lenders shall execute and deliver to Borrower, at
Borrower's sole cost and expense, all documents and instruments as shall be
reasonably necessary to evidence termination of the security interest in the
Collateral created hereunder, including a UCC-3 Termination Statement.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS.
Borrower hereby authorizes Lenders to file financing statements, without
notice to Borrower, with all appropriate jurisdictions, in order to perfect or
protect Lenders' interest or rights hereunder.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to each Lender as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change. In connection
with this Agreement, the Borrower delivered to Lenders a certificate signed by
the Borrower and entitled "Perfection Certificate". The Borrower represents and
warrants to each Lender that: (a) the Borrower's exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof; (b)
the Borrower is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate; (c) the Perfection
Certificate accurately sets forth the Borrower's
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organizational identification number or accurately states that the Borrower has
none; (d) the Perfection Certificate accurately sets forth the Borrower 's place
of business, or, if more than one, its chief executive office as well as the
Borrower's mailing address if different, and (e) all other information set forth
on the Perfection Certificate pertaining to the Borrower is accurate and
complete. If the Borrower does not now have an organizational identification
number, but later obtains one, Borrower shall forthwith notify the Lenders of
such organizational identification number.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's organizational documents,
nor constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted
Liens. Borrower has no deposit account, other than the deposit accounts with SVB
and deposit accounts described in the Perfection Certificate delivered to
Lenders in connection herewith. The Accounts are bona fide, existing
obligations, and the service or property has been performed or delivered to the
account debtor or its agent for immediate shipment to and unconditional
acceptance by the account debtor. The Collateral is not in the possession of any
third party bailee (such as a warehouse). Except as hereafter disclosed to the
Lenders in writing by Borrower, none of the components of the Collateral shall
be maintained at locations other than as provided in the Perfection Certificate.
In the event that Borrower, after the date hereof, intends to store or otherwise
deliver any portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Lenders and such bailee must acknowledge in
writing that the bailee is holding such Collateral for the benefit of Lenders.
All Inventory is in all material respects of good and marketable quality, free
from material defects. Borrower is the sole owner of the Intellectual Property,
except for non-exclusive licenses granted to its customers in the ordinary
course of business. Each Patent is valid and enforceable and no part of the
Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and no claim has been made that any part of the Intellectual Property
violates the rights of any third party, except to the extent such claim could
not reasonably be expected to cause a Material Adverse Change.
5.3 LITIGATION.
Except as shown in the Perfection Certificate, there are no actions or
proceedings pending or, to the knowledge of Borrower's Responsible Officers,
threatened by or against Borrower or any Subsidiary in which an adverse decision
could reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL DETERIORATION IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Lenders fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Lenders, although Borrower's cash may have declined to
pay necessary and ordinary course business expenses.
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5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. 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). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary 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 Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to make such declarations, notices
or filings would not reasonably be expected to cause a Material Adverse Change.
5.7 SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in any
certificate or written statement given to any Lender (taken together with all
such written certificates and written statements given to any Lender) contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained in the certificates or statements not
misleading, it being recognized by Lenders that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results.
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following for so long as any Lender has an
obligation to make any Credit Extension, or there are outstanding Obligations:
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6.1 GOVERNMENT COMPLIANCE.
Borrower shall maintain its and all Subsidiaries' legal existence and good
standing as a Registered Organization and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a material adverse effect on Borrower's business or operations. Borrower
shall comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, noncompliance with which could have a
material adverse effect on Borrower's business or operations.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) So long as Borrower is not subject to the reporting requirements of
Sections 12 or 15 of the Securities and Exchange Act, as amended, Borrower shall
deliver to Lenders: (i) as soon as available, but no later than thirty (30) days
after the last day of each month, a company prepared consolidated balance sheet
and income statement covering Borrower's consolidated operations during the
period certified by a Responsible Officer and in a form acceptable to Lenders;
(ii) as soon as available, but no later than one hundred eighty (180) days after
the last day of Borrower's fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Lenders; (iii) annual financial
projections approved by Borrower's Board of Directors consistent in form and
detail with those provided to Borrower's venture capital investors as soon as
available, but no later than sixty (60) days after Board approval; and (iv)
budgets, sales projections, operating plans or other financial information
reasonably requested by Lenders.
(b) In the event that the Borrower's stock becomes publicly held, Borrower
shall deliver to Lenders, within five (5) days of filing, copies of or
electronic links to (in the case of electronic links being provided to Lenders,
Borrower shall still be required to submit to Lenders the applicable compliance
certificate in the form of Exhibit F) all statements, reports and notices made
available to Borrower's security holders or to any holders of Subordinated Debt
and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission.
(c) In addition, Borrower shall deliver to Lenders: (i) a prompt report of
any legal actions pending or threatened against Borrower or any Subsidiary that
could result in damages or costs to Borrower or any Subsidiary of One Hundred
Thousand Dollars ($100,000.00) or more; and (ii) such other financial
information as Lenders may reasonably request from time to time.
(d) Within thirty (30) days after the last day of each month, Borrower
shall deliver to Lenders a Compliance Certificate signed by a Responsible
Officer in the form of Exhibit F.
6.3 INVENTORY; RETURNS.
Borrower shall keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors shall follow Borrower's customary practices as they exist at the
Effective Date. Borrower must promptly notify Lenders of all returns,
recoveries, disputes and claims, which involve more than $50,000.
6.4 TAXES.
Borrower shall make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower is contesting in good faith, with adequate
reserves maintained in accordance with GAAP) and will deliver to Lenders, on
demand, appropriate certificates attesting to such payments.
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6.5 INSURANCE.
Borrower shall keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower's industry and location and as
Lenders may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Lenders. All property
policies shall have a lender's loss payable endorsement showing each Lender as
an additional loss payee and waive subrogation against Lenders, and all
liability policies shall show, or have endorsements showing, each Lender as an
additional insured. All policies (or the loss payable and additional insured
endorsements) shall provide that the insurer must give Lenders at least thirty
(30) days notice before canceling, amending, or declining to renew its policy.
At Lenders' request, Borrower shall deliver certified copies of policies and
evidence of all premium payments. Proceeds payable under any policy shall, at
Lenders' option, be payable to Lenders on account of the Obligations.
Notwithstanding the foregoing and other than with respect to Financed Equipment
which is governed by Section 2.3(e), (a) so long as no Event of Default has
occurred and is continuing, Borrower shall have the option of applying the
proceeds of any casualty policy up to $25,000, in the aggregate, toward the
replacement or repair of destroyed or damaged property; provided that any such
replaced or repaired property (i) shall be of equal or like value as the
replaced or repaired Collateral and (ii) shall be deemed Collateral in which
Lenders have been granted a first priority security interest, and (b) after the
occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Lenders, be payable
to Lenders on account of the Obligations. If Borrower fails to obtain insurance
as required under this Section 6.5 or to pay any amount or furnish any required
proof of payment to third persons and Lenders, Lenders may make all or part of
such payment or obtain such insurance policies required in this Section 6.5, and
take any action under the policies Lenders deem prudent.
6.6 ACCOUNTS.
(a) Borrower shall maintain Borrower's primary depository and operating
accounts and securities accounts with SVB, which accounts shall represent at
least 15% of the dollar value of the Borrower's accounts at all financial
institutions.
(b) Borrower shall identify to Lenders, in writing, any bank or securities
account opened by Borrower with any institution other than SVB. In addition, for
each such account that the Borrower at any time opens or maintains, Borrower
shall, at the Lenders' request and option, pursuant to an agreement in form and
substance acceptable to the Lenders cause the depository bank or securities
intermediary to agree that such account is the collateral of Lenders pursuant to
the terms hereunder. The provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of the Borrower's employees.
6.7 INTELLECTUAL PROPERTY.
Borrower shall: (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property; (ii) promptly advise Lenders in
writing of material infringements of the Intellectual Property; and (iii) not
allow any Intellectual Property material to the Borrower's business to be
abandoned, forfeited or dedicated to the public without Lenders' written
consent.
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6.8 FURTHER ASSURANCES.
Borrower shall execute any further instruments and take further action as
Lenders reasonably request to perfect or continue Lenders' security interest in
the Collateral or to effect the purposes of this Agreement.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without the Lenders' prior
written consent for so long as any Lender has an obligation to make Credit
Extensions or there are any outstanding Obligations:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively a
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of worn-out or obsolete Equipment not constituting
Financed Equipment; (iii) of licenses and similar arrangements for the use of
the Intellectual Property of Borrower or its Subsidiaries in the ordinary course
of business, including licensing of Intellectual Property to partnership in bona
fide corporate collaborations; or (iv) such other Transfers not to exceed
$50,000 in the aggregate in any fiscal year.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR LOCATIONS OF COLLATERAL.
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, or have a material change in its ownership (other than by the sale of
Borrower's equity securities in a public offering or to venture capital
investors so long as Borrower identifies to Lenders the venture capital
investors prior to the closing of the investment), or a material change in
management; provided, however, if Lenders do not consent to such material change
in ownership or material change in management, then Borrower may prepay all of
the Obligations without payment of the Prepayment Fee. Borrower shall not,
without at least thirty (30) days prior written notice to Lenders: (i) relocate
its chief executive office, or add any new offices or business locations,
including warehouses (unless such new offices or business locations contain less
than Five Thousand Dollars ($5,000) in Borrower's assets or property), or (ii)
change its jurisdiction of organization, or (iii) change its organizational
structure or type, or (iv) change its legal name, or (v) change any
organizational number (if any) assigned by its jurisdiction of organization.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person; provided, however, if Lenders do not consent to such
a transaction, then Borrower may prepay all of the Obligations without payment
of the Prepayment Fee. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
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7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
herein. The Collateral may also be subject to Permitted Liens. Except as
permitted under Section 7.1, Borrower shall not sell, transfer, assign,
mortgage, pledge, lease, grant a security interest in, or encumber, or enter
into any agreement, document, instrument or other arrangement (except with or in
favor of Lenders) with any Person which directly or indirectly prohibits or has
the effect of prohibiting Borrower from selling, transferring, assigning,
mortgaging, pledging, leasing, granting a security interest in or upon, or
encumbering any of Borrower's Intellectual Property.
7.6 DISTRIBUTIONS; INVESTMENTS.
(i) Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments or mergers or
acquisitions permitted by Section 7.3 above, or permit any of its Subsidiaries
to do so; or (ii) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock except (a) dividends and
distributions payable solely in capital stock of Borrower and (b) repurchases of
stock from former employees, consultants or directors of Borrower under the
terms of applicable repurchase agreements in an aggregate amount not to exceed
$50,000 in the aggregate in any fiscal year, provided that no Event of Default
has occurred, is continuing or would exist after giving effect to any such
repurchase.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for transactions that are in
the ordinary course of Borrower's business, upon fair and reasonable terms that
are no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Lenders' prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower's
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
7.10 INDEBTEDNESS PAYMENTS.
(i) Prepay, redeem, purchase, defease or otherwise satisfy in any manner
prior to the scheduled repayment thereof any Indebtedness for borrowed money
(other than amounts due under this Agreement or due any Lender) or lease
obligations, (ii) amend, modify or otherwise change the terms of any
Indebtedness for borrowed money or lease obligations so as to accelerate the
scheduled repayment thereof or (iii) repay any notes to officers, directors or
shareholders.
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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 within three (3) days after
their due date. During the additional period the failure to cure the default
shall not constitute an Event of Default (but no Credit Extension shall be made
during such cure period).
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7
or violates any of the covenants contained in Section 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and any Lender and as to any default under such other
term, provision, condition, covenant or agreement that can be cured, has failed
to cure such default within ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days after the end of such 10 day
period) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Credit Extensions will be made during such cure period).
8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs.
8.4 ATTACHMENT.
(i) Any material portion of Borrower's 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 ten (10) days; (ii) the service of process
upon the Borrower seeking to attach, by trustee or similar process, any funds of
the Borrower on deposit with any Lender, or any entity under the control of any
Lender (including a subsidiary); (iii) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business; (iv) a
judgment or other claim becomes a Lien on a material portion of Borrower's
assets; or (v) a notice of lien, levy, or assessment is filed against any of
Borrower's assets by any government agency and not paid within ten (10) days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions shall be
made during the cure period).
8.5 INSOLVENCY.
(i) Borrower is unable to pay its debts (including trade debts) as
they mature; (ii) Borrower begins an Insolvency Proceeding; or (iii) an
Insolvency Proceeding is begun against Borrower and not dismissed or stayed
within forty five (45) days (but no Credit Extensions shall be made before any
Insolvency Proceeding is dismissed).
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8.6 OTHER AGREEMENTS.
If there is a default in any agreement to which Borrower is a party with a
third party or parties resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness in an
amount in excess of One Hundred Thousand Dollars ($100,000) or that could result
in a Material Adverse Change.
8.7 JUDGMENTS.
If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Thousand Dollars
($200,000) shall be rendered against Borrower and shall remain unsatisfied and
unstayed for a period of ten (10) days (provided that no Credit Extensions will
be made prior to the satisfaction or stay of such judgment).
8.8 MISREPRESENTATIONS.
If Borrower 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 writing delivered to Lenders or to
induce Lenders to enter this Agreement or any Loan Document.
8.9 GUARANTY.
(i) Any guaranty of any Obligations terminates or ceases for any
reason to be in full force; or (ii) any Guarantor does not perform any
obligation under any guaranty of the Obligations; or (iii) any material
misrepresentation or material misstatement exists now or later in any warranty
or representation in any guaranty of the Obligations or in any certificate
delivered to Lenders in connection with the guaranty; or (iv) any circumstance
described in Sections 8.3, 8.4, 8.5, or 8.8 occurs to any Guarantor, or (v) the
liquidation, winding up, termination of existence, or insolvency of any
Guarantor.
8.10 INTENTIONALLY DELETED.
8.11 LIEN PRIORITY.
There is a material impairment in the priority of any Lender's security
interest in the Collateral.
9 RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Lenders 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 Lenders);
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(b) Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and any Lender;
(c) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Lenders consider advisable and notify
any Person owing Borrower money of Lenders' security interest in such funds and
verify the amount of such account. Borrower shall collect all payments in trust
for Lenders and, if requested by Lenders, immediately deliver the payments to
Lenders in the form received from the account debtor, with proper endorsements
for deposit;
(d) Make any payments and do any acts it considers necessary or reasonable
to protect their security interest in the Collateral. Borrower shall assemble
the Collateral if Lenders request and make it available as Lenders designate.
Lenders may enter premises where the Collateral is located, take and maintain
possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Lenders a license to
enter and occupy any of its premises, without charge, to exercise any of
Lenders' rights or remedies;
(e) Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by any Lender owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral. Lenders are hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lenders' exercise of their rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Lenders; and
(g) Place a "hold" on any account maintained with any Lender (provided
that, except with respect to any certificates of deposit or deposit or
investment accounts pledged as Collateral to secure cash management services,
corporate business credit cards or letters of credit separately issued or
supplied by SVB under separate agreements between SVB and Borrower, Lenders
agree not to take any of the actions described in this clause (g) unless an
Event of Default has occurred and is continuing);
(h) Deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any control agreement or similar
agreements providing control of any Collateral (provided that, Lenders agree not
to take any of the actions described in this clause (h) unless an Event of
Default has occurred and is continuing);
(i) demand and receive possession of Borrower's Books; and
(j) exercise all rights and remedies and dispose of the Collateral
according to the Code.
9.2 POWER OF ATTORNEY.
Borrower hereby irrevocably appoints each Lender as its lawful
attorney-in-fact, to be effective upon the occurrence and during the continuance
of an Event of Default, to: (i) endorse Borrower's name on any checks or other
forms of payment or security; (ii) sign Borrower's name on any invoice or xxxx
of lading for any Account or drafts against account debtors, (iii) settle and
adjust
16
disputes and claims about the Accounts directly with account debtors, for
amounts and on terms such Lender determines reasonable; (iv) make, settle, and
adjust all claims under Borrower's insurance policies; and (v) transfer the
Collateral into the name of such Lender or a third party as the Code permits.
Borrower hereby appoints each Lender as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and Lenders are under no
further obligation to make Credit Extensions hereunder. Each Lender's foregoing
appointment as Borrower's attorney in fact, and all of such Lender's rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Lenders' obligation to provide Credit
Extensions terminates.
9.3 ACCOUNTS, NOTIFICATION AND COLLECTION.
In the event that an Event of Default occurs and is continuing, Lenders may
notify any Person owing Borrower money of Lenders' security interest in the
funds and verify and/or collect the amount of the Account. After the occurrence
of an Event of Default, any amounts received by Borrower shall be held in trust
by Borrower for Lenders, and, if requested by Lenders, Borrower shall
immediately deliver such receipts to Lenders in the form received from the
account debtor, with proper endorsements for deposit.
9.4 LENDERS EXPENSES
Any amounts paid by Lenders as provided herein are Lenders Expenses and are
immediately due and payable and shall bear interest at the then applicable rate
and be secured by the Collateral. No payments by Lenders shall be deemed an
agreement to make similar payments in the future or Lenders' waiver of any Event
of Default.
9.5 LENDERS' LIABILITY FOR COLLATERAL.
So long as Lenders comply with their obligations, if any, under the Code,
neither Lender shall in any way or manner be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE.
Lenders' rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Lenders have all rights and remedies
provided under the Code, by law, or in equity. Lenders' exercise of one right or
remedy is not an election, and Lenders' waiver of any Event of Default is not a
continuing waiver. Lenders' delay is not a waiver, election, or acquiescence. No
waiver hereunder shall be effective unless signed by each Lender and then is
only effective for the specific instance and purpose for which it was given.
9.7 DEMAND WAIVER.
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 guarantees held by Lenders on which Borrower is
liable.
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10 NOTICES
Notices or demands by any party about this Agreement must be in writing and
personally delivered or sent by an overnight delivery service, or by certified
mail, postage prepaid, return receipt requested, or by telefacsimile at the
addresses listed below. A party may change its notice address by written notice
to the other party.
If to Borrower: SGX Pharmaceuticals, Inc.
00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Rotherham, Chief Financial Officer
Fax: (000) 000-0000
If to SVB: Silicon Valley Bank
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
If to Oxford: Oxford Finance Corporation
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx,
Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Oxford Finance Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Lenders each submit to the exclusive jurisdiction
of the State and Federal courts in California and Borrower accepts jurisdiction
of the courts and venue in Santa Xxxxx County, California. NOTWITHSTANDING THE
FOREGOING, THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE THE LENDERS' RIGHTS AGAINST THE BORROWER OR
ITS PROPERTY.
BORROWER AND LENDERS EACH WAIVE THEIR 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 BOTH PARTIES TO ENTER
INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
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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 rights or
Obligations under it without Lenders' prior written consent which may be granted
or withheld in Lenders' discretion. Lenders have the right, without the consent
of or notice to Borrower, to sell, transfer, assign, negotiate, or grant
participation in all or any part of, or any interest in, Lenders' obligations,
rights and benefits under this Agreement, the Loan Documents or any related
agreement, including, without limitation, an assignment to any Affiliate or
related party.
12.2 INDEMNIFICATION.
Borrower hereby indemnifies, defends and holds Lenders and their respective
officers, employees, and agents harmless against: (a) all obligations, demands,
claims, and liabilities asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Lenders
Expenses incurred, or paid by Lenders from, following, or consequential to
transactions between Lenders and Borrower (including reasonable attorneys' fees
and expenses), except as to (a) and (b), for losses caused by a Lender's gross
negligence or willful misconduct.
12.3 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and any Lender arising out of
the Loan Documents the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
12.4 RIGHT OF SET-OFF.
Borrower hereby grants to each Lender, a lien, security interest and right
of set-off as security for all Obligations to such Lender, hereunder, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of such Lender or any entity under the control of such
Lender (including a subsidiary of Lender) or in transit to any of them. At any
time after the occurrence and during the continuance of an Event of Default,
without demand or notice, a Lender may set-off the same or any part thereof and
apply the same to any liability or obligation of Borrower even though unmatured
and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
12.5 TIME OF ESSENCE.
Time is of the essence for the performance of all Obligations in this
Agreement.
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12.6 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.
12.7 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by both
Lenders and Borrower. This Agreement and the Loan Documents represent the entire
agreement about this subject matter, and supersede prior negotiations or
agreements. All prior 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.
12.8 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, constitute one Agreement.
12.9 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower to indemnify any Lender, including without limitation Section 12.2,
shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.
12.10 CONFIDENTIALITY.
In handling any confidential information of Borrower or Borrower's
Affiliates, each Lender shall exercise the same degree of care that it exercises
for its own proprietary information, but disclosure of information may be made:
(i) to a Lender's subsidiaries or affiliates in connection with their business
with Borrower; (ii) to prospective transferees or purchasers of any interest in
the Credit Extensions (provided, however, such Lender shall use commercially
reasonable efforts in obtaining such prospective transferee's or purchaser's
agreement to the terms of this provision); (iii) as required by law, regulation,
subpoena, or other order, (iv) as required in connection with a Lender's
examination or audit; and (v) as Lenders consider appropriate in exercising
remedies under this Agreement. Confidential information does not include
information that either: (a) is in the public domain or in a Lender's possession
when disclosed to Lenders, or becomes part of the public domain after disclosure
to Lenders through no fault of Lenders; or (b) is disclosed to a Lender by a
third party, if Lenders do not know that the third party is prohibited from
disclosing the information.
12.11 EFFECTIVE DATE.
Notwithstanding anything set forth in this Agreement or any Loan Document
to the contrary, this Agreement and all of the Loan Documents shall not be
effective until the date on which each Lender execute this Agreement as
indicated on the signature page to this Agreement.
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12.12 EXISTING OXFORD FACILITY.
Oxford hereby consents to the incurrence of Indebtedness by Borrower
pursuant to this Agreement and to the grant of a security interest in the
Collateral, notwithstanding anything to the contrary contained in that certain
Master Loan and Security Agreement No. 2081008 dated as of August 28, 2002 by
and between Oxford and Borrower, as amended (the "Existing Oxford Agreement"),
and agrees that the incurrence of such Indebtedness and the grant of such
security interest shall not result in or constitute a breach or violation of any
covenant contained in the Existing Oxford Agreement. Oxford further consents to
Borrower's issuance of shares of Borrower's common stock in connection with its
initial public offering, notwithstanding any covenant contained in the Existing
Oxford Agreement, and agrees that Borrower's issuance of common stock in
connection with Borrower's initial public offering shall not result in or
constitute a breach or violation of any covenant contained in the Existing
Oxford Agreement.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.
"AFFILIATE" 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 senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person's
managers and members.
"BORROWER'S BOOKS" are all 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.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
SVB is closed.
"CODE" is the Uniform Commercial Code as adopted in California as amended
and in effect from time to time.
"COLLATERAL" is any and all properties, rights and assets of the Borrower
granted by the Borrower to Lenders or arising under the Code, now, or in the
future, described on Exhibit A.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) 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; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; 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
21
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.
"COPYRIGHTS" are all copyright rights, applications or registrations and
like protections in each work or authorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.
"CREDIT EXTENSION" is each Equipment Advance, Growth Capital Advance or any
other extension of credit by any Lender for Borrower's benefit made pursuant to
this Agreement.
"DEFAULT RATE" means for each Equipment Advance and Growth Capital Advance,
five percent (5%) above the highest rate otherwise applicable thereto.
"DOLLARS" and "$" each means the lawful currency of the United States
"EFFECTIVE DATE" is the date Lenders execute this Agreement and as
indicated on the signature page hereof.
"ELIGIBLE EQUIPMENT" is Equipment, including general purpose computer
equipment, office equipment, test and laboratory equipment, furnishings, subject
to the limitations set forth herein. All Equipment financed with the proceeds of
the Equipment Advances shall be new, provided that Lenders, in their sole
discretion, may finance used equipment.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1(a).
"EQUIPMENT ADVANCE LOAN AMOUNT" in respect to each Equipment Advance is the
original principal amount of such Equipment Advance.
"EQUIPMENT ADVANCE MATURITY DATE" is, for each Equipment Advance, the
earliest of (a) the 36th Equipment Advance Payment Date for such Equipment
Advance, or (b) the occurrence of an Event of Default and acceleration of the
Obligations as a consequence thereof.
"EQUIPMENT ADVANCE PAYMENT DATE" is defined in Section 2.3(a).
"EQUIPMENT ADVANCE REPAYMENT PERIOD" is, for each Equipment Advance, is a
period of time equal to thirty six (36) consecutive months commencing on the
first Business Day of the month following the month in which the Equipment
Advance Funding Date occurs (or commencing on the Equipment Advance Funding Date
if the Equipment Advance Funding Date is the first Business Day of the month).
"EQUIPMENT COMMITMENT AMOUNT" is (a) One Million Dollars ($1,000,000)
through December 31, 2005, plus (b) an additional One Million Dollars
($1,000,000) on or after April 1, 2006, but if and only if on or before December
31, 2005 one of the following is met: (i) the Series B Closing Condition or (ii)
the IPO Condition.
"EQUIPMENT COMMITMENT PERCENTAGE" means: (i) forty percent (40%) with
respect to SVB, and sixty percent (60%) with respect to Oxford.
22
"EQUIPMENT COMMITMENT TERMINATION DATE" is December 31, 2006.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.
"EVENT OF LOSS" is defined in Section 2.3(e).
"FINANCED EQUIPMENT" is all present and future Eligible Equipment in which
Borrower has any interest, the purchase of which is financed by an Equipment
Advance.
"GAAP" is generally accepted accounting principles.
"GROWTH CAPITAL ADVANCE" or "GROWTH CAPITAL ADVANCES" is defined in Section
2.1.2.
"GROWTH CAPITAL AMORTIZATION DATE" means February 1, 2006.
"GROWTH CAPITAL COMMITMENT PERCENTAGE" means: (i) forty percent (40%) with
respect to SVB, and sixty percent (60%) with respect to Oxford.
"GROWTH CAPITAL COMMITMENT TERMINATION DATE" is (a) for the first Four
Million Dollars ($4,000,000), December 31, 2005, and (b) for the second Four
Million Dollars ($4,000,000), January 31, 2006.
"GROWTH CAPITAL FUNDING DATE" is any date on which a Growth Capital Advance
is made to or on account of Borrower.
"GROWTH CAPITAL INTEREST ONLY PERIOD" means, for each Growth Capital
Advance, the period of time commencing on its Growth Capital Funding Date
through the day before the Growth Capital Amortization Date.
"GROWTH CAPITAL LOAN COMMITMENT" is (a) Four Million Dollars ($4,000,000)
through December 31, 2005, plus (b) an additional Four Million Dollars
($4,000,000) if and only if on or before December 31, 2005 one of the following
is met: (i) the Series B Closing Condition or (ii) the IPO Condition.
"GROWTH CAPITAL MATURITY DATE" is, for each Growth Capital Advance, the
earliest of (a) January 1, 2009, the 36th Growth Capital Scheduled Payment Date
for each Growth Capital Advance, or (b) the occurrence of an Event of Default
and acceleration of the Obligations as a consequence thereof.
"GROWTH CAPITAL PAYMENT DATE" is defined in Section 2.3(a)(ii).
"GROWTH CAPITAL REPAYMENT PERIOD" is a period of time equal to thirty six
(36) consecutive months commencing on February 1, 2006.
"GUARANTOR" is any present or future guarantor of the Obligations.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price
of property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
23
"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.
"INTELLECTUAL PROPERTY" is:
(a) Copyrights, Trademarks, Patents, Know-How and Mask Works including
amendments, renewals, extensions;
(b) All licenses or other rights to use and all license fees and royalties
from the use of the intellectual property rights in (a) above and (c) and (d)
below, including without limitation, all intellectual property rights licensed
or sublicensed to Borrower under that certain Patent and Know How, License
Agreement dated July 23, 2004, between Borrower, Shire Biochem Inc., Tanaud
Ireland Inc. and Tanaud International B.V., as amended, including the related
novation agreements (the "Shire License Agreement");
(c) Any trade secrets and any intellectual property rights in methods,
processes, technologies, computer software and computer software products now or
later existing, created, acquired or held;
(d) All design rights which may be available to Borrower now or later
created, acquired or held;
(e) Any claims for damages (past, present or future) for infringement of
any of the rights above, with the right, but not the obligation, to xxx and
collect damages for use or infringement of the intellectual property rights in
(a), (b), (c) and (d) above;
(f) All Proceeds and products of the foregoing, including all insurance,
indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.
"IPO CONDITION" means the effectiveness, after the Effective Date, but on
or before December 31, 2005, of Borrower's initial public offering with Borrower
receiving at least $7.5 million net cash proceeds.
"KNOW-HOW" means all ideas, inventions, scientific information, procedures,
instructions, techniques, designs, formulas, methods, data, technical
information (including toxicological, pharmaceutical, non-clinical, clinical and
medical data, health registration data and marketing data), processing
specifications, pricing studies and market evaluation materials and all
intellectual property rights therein owned, licensed or sublicensed by Borrower.
24
"LENDERS EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"LETTER-OF-CREDIT RIGHT" means a right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is at the time
entitled to demand payment or performance.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower and any other present or future agreement
between Borrower and/or Guarantor for the benefit of Lenders in connection with
this Agreement, all as amended, extended or restated.
"LOAN SUPPLEMENT" is defined in Section 2.1.1(b) and attached as Exhibit C.
"MASK WORKS" are all mask works or similar rights available for the
protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" is: (i) a material impairment in the perfection
or priority of Lenders' security interest in the Collateral or in the value of
such Collateral; (ii) a material adverse change in the business, operations, or
condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations.
"NOTE" means: (i) for each Growth Capital Advance, one of the secured
promissory notes of Borrower substantially in the form of Exhibit G, and (ii)
for each Equipment Advance, one of the secured promissory notes of Borrower
substantially in the form of Exhibit H.
"OBLIGATIONS" are debts, principal, interest, Prepayment Fee, Lenders
Expenses, and other amounts Borrower owes either of the Lenders now or later
under or in connection with this Agreement, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Lenders.
"ORIGINAL STATED COST" is (a) the original cost to Borrower of the item of
new Eligible Equipment net of any and all freight, installation, tax, or (b) the
fair market value assigned to such item of used Eligible Equipment by mutual
agreement of Borrower and Lenders at the time of making of the Equipment
Advance.
"PATENTS" are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations in part of the same.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Lenders under this Agreement or the Loan
Documents;
(b) Indebtedness existing on the Effective Date and shown on the Perfection
Certificate, including any existing Indebtedness to any Lender;
25
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business;
(e) Indebtedness secured by Permitted Liens;
(f) Indebtedness of Borrower to any Subsidiary and Contingent Obligations
of any Subsidiary with respect to obligations of Borrower (provided that the
primary obligations are not prohibited hereby), and Indebtedness of any
Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby);
(g) Other Indebtedness not otherwise permitted by Section 7.4 not exceeding
$50,000 in the aggregate outstanding at any time; and
(h) Extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness (a) through (g) above, provided that the
then outstanding principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Perfection Certificate and existing on the
Effective Date;
(b) (i) marketable direct obligations issued or unconditionally guaranteed
by the United States or its agency or any state maturing within 1 year from its
acquisition, (ii) commercial paper maturing no more than 1 year after its
creation and having the highest rating from either Standard & Poor's Corporation
or Xxxxx'x Investors Service, Inc., (iii) SVB's certificates of deposit issued
maturing no more than 1 year after issue, (iv) any other investments
administered through the Lenders and (v) any Investments permitted by Borrower's
investment policy, as amended from time to time, provided that such investment
policy (and any such amendment thereto) has been approved by Lenders;
(c) Investments consisting of (i) travel advances and employee relocation
loans and other employee loans and advances in the ordinary course of business
and (ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower's Board of Directors; which do
not exceed $100,000 in the aggregate in any year, provided that no cash loans
under this clause (ii) may be made if an Event of Default is then occurring or
would otherwise upon the making thereof;
(d) Investments (including debt obligations) received in connection with
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;
(e) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates of
Borrower, in the ordinary course of business; provided that this paragraph (e)
shall not apply to Investments of Borrower in any Subsidiary;
26
(f) Joint ventures or strategic alliances (in the ordinary course of
Borrower's business) consisting of the non-exclusive licensing of technology,
the development of technology or the providing of technical support, provided
that any cash investments by Borrower do not exceed $50,000 in the aggregate in
any fiscal year, provided that no such cash investment may be made if an Event
of Default is then occurring or would otherwise upon the making thereof;
(g) Investments pursuant to or arising under currency agreements or
interest rate agreements entered into in the ordinary course of business;
(h) Investments consisting of deposit accounts and securities accounts of
Borrower, subject to the compliance by Borrower with the covenant set forth in
Section 6.6 hereof;
(i) Investments of Subsidiaries in or to other Subsidiaries of Borrower and
Investments by Borrower in Subsidiaries not to exceed $ 50,000 in the aggregate
in any fiscal year, provided that no Investments by Borrower in Subsidiaries may
be made if an Event of Default is then occurring or would otherwise upon the
making thereof; and
(j) Other Investments not otherwise permitted by Section 7.6 not exceeding
$50,000 in the aggregate outstanding at any time.
"PERMITTED LIENS" are:
(a) Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement or other Loan Documents, including
Liens in favor of either Lender;
(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 its Books, if they have no priority over
any of Lenders' security interests;
(c) Purchase money Liens (and including for purposes of this clause Liens
incurred in connection with capital leases) (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment securing no
more than $500,000 in the aggregate amount outstanding and provided there is no
longer any availability to borrow Equipment Advances, or (ii) existing on
equipment when acquired, if the Lien is confined to the property and
improvements and the proceeds of the equipment;
(d) Leases or subleases and licenses or sublicenses granted in the ordinary
course of Borrower's business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Lenders a security interest;
(e) materialmen's, mechanic's, repairmen's, employee's or other like Liens
arising in the ordinary course of business and which are not delinquent;
(f) banker's liens, rights of setoff and similar Liens incurred on deposits
made in the ordinary course of business subject to Borrower's compliance with
Section 6.6 hereof;
(g) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Sections 8.4 or 8.7;
(h) Liens in favor of other financial institutions arising in connection
with Borrower's deposit accounts or securities accounts held at such
institutions to secure payment of fees and similar costs and expenses subject to
Borrower's compliance with Section 6.6 hereof;
27
(i) Liens to secure payment of worker's compensation, employment insurance,
old age pensions or other social security obligations of Borrower in each case
arising in the ordinary course of business of Borrower;
(j) easements, reservations, rights-of-way, restrictions, minor defects or
irregularities in title and similar charges or encumbrances affecting real
property not constituting a material adverse effect on the business or condition
(financial or otherwise) of Borrower or otherwise materially impairing the
conduct of Borrower's business; and
(k) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described above, but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the then outstanding principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PREPAYMENT FEE" shall be, for each Growth Capital Advance or Equipment
Advance, an amount equal to: (1) if the prepayment date is on or before one year
after the Growth Capital Funding Date and/or the Equipment Advance Funding Date
(as applicable), four percent (4.0%) of the outstanding principal balance as of
the prepayment date, (2) if the prepayment date is more than one year after the
Growth Capital Funding Date and/or the Equipment Advance Funding Date (as
applicable), but on or before two years after the Growth Capital Funding Date
and/or the Equipment Advance Funding Date (as applicable), three percent (3.0%)
of the outstanding principal balance as of the prepayment date, and (3) if the
prepayment date is more than two years after the Growth Capital Funding Date
and/or the Equipment Advance Funding Date (as applicable), two percent (2.0%) of
the outstanding principal balance as of the prepayment date. The "Prepayment
Fee" for Growth Capital Advances shall be the sum of all of the "Prepayment
Fees" for every Growth Capital Advance. The "Prepayment Fee" for Equipment
Advances shall be the sum of all of the "Prepayment Fees" for every Equipment
Advance.
"PROCEEDS" has the meaning described in the Code as in effect from time to
time.
"REGISTERED ORGANIZATION" means an organization organized solely under the
law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, President,
Chief Financial Officer and the Controller of Borrower.
"SERIES B CLOSING CONDITION" means the closing, after the Effective Date
but on or before December 31, 2005, of Borrower's sale or sales of at least
$7,499,987 of its Series B Preferred Stock.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's
debt to Lenders (pursuant to a subordination agreement entered into between the
Lenders, the Borrower and the subordinated creditor), on terms acceptable to
Lenders.
28
"SUBSIDIARY" is any Person, corporation, partnership, limited liability
company, joint venture, or any other business entity of which more than 50% of
the voting stock or other equity interests is owned or controlled, directly or
indirectly, by the Person or one or more Affiliates of the Person.
"SUPPORTING OBLIGATION" means a Letter-of-Credit Right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"TRADEMARKS" are trademark and service xxxx rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of the owner or licensee of such trademark and service
xxxx rights connected with the trademarks and service xxxx rights.
"TREASURY RATE" means the U.S. Treasury note yield to maturity for a
36-month term as quoted in the Wall Street Journal on the day the Equipment
Advance Funding Date or the Growth Capital Advance Funding Date, as applicable.
(Signatures are on the following page)
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
BORROWER:
SGX PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Rotherham
------------------------------------
Name: Xxxxx X. Rotherham
Title: Chief Financial Officer
LENDERS:
OXFORD FINANCE CORPORATION
By: /s/ XX Xxxxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Manager Chief Financial Officer
SILICON VALLEY BANK
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Deal Team Leader
Effective as of September 16, 2005
30
EXHIBIT A
The Collateral consists of all right, title and interest of Borrower in and
to the following:
All goods, equipment, inventory, contract rights or rights to payment of
money, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), commercial tort claims,
securities, and all other investment property, financial assets, whether now
owned or hereafter acquired, wherever located; all Supporting Obligations and
any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and Proceeds thereof.
All Letter-Of-Credit Rights (whether or not the letter of credit is
evidenced by a writing); and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
The Collateral does not include:
(a) Any Intellectual Property. Notwithstanding the foregoing, the
Collateral shall include all accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property. To the extent a court of competent jurisdiction holds
that a security interest in any Intellectual Property is necessary to have a
security interest in any accounts, license and royalty fees and other revenues,
proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property, then the Collateral shall, effective as of the Effective
Date, include the Intellectual Property, to the extent necessary to permit
perfection of the Lenders' security interest in such accounts, license and
royalty fees and other revenues, proceeds, or income arising out of or relating
to any of the Intellectual Property (other than the Intellectual Property under
the Shire License Agreement).
(b) any contract, instrument or chattel paper in which the Borrower has any
right, title or interest if and to the extent any such contract, instrument or
chattel paper includes a provision containing a restriction on assignment such
that the creation of a security interest in the right, title or interest of
Borrower therein would be prohibited and would, in and of itself, cause or
result in a default thereunder enabling another person party to such contract,
instrument or chattel paper to enforce any remedy with respect thereto (provided
that the foregoing exclusion shall not apply if (i) such prohibition has been
waived or such person has otherwise consented to the creation hereunder of a
security interest in such contract, instrument or chattel paper or (ii) such
prohibition would be rendered ineffective pursuant to Sections 9-407(a) or
9-408(a) of the Code, as applicable and as then in effect in any relevant
jurisdiction, or any other applicable law (including the federal bankruptcy
code) or principles of equity; provided further that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and Borrower shall be deemed to have granted a security interest
in, all its rights, title and interest in and to such contract, instrument or
chattel paper as if such provision had never been in effect; and provided
further that the foregoing exclusion shall in no way be construed so as to
limit, impair or otherwise affect Lenders' unconditional continuing security
interest in and to all rights, title and interests of Borrower in or to
31
any payment obligations or other rights to receive monies due or to become due
under any such contract, instrument or chattel paper and in any such monies and
other proceeds of such contract, instrument or chattel paper), or
(c) more than 65% of the total combined voting power of all classes of stock
entitled to vote the shares of capital stock of any Subsidiary of Borrower not
incorporated or organized under the laws of one of the States or jurisdictions
of the United States.
32
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
Fax To: __________________ Date:_______________
LOAN PAYMENT:
(BORROWER)
From Account # To Account #
(Deposit Account #) (Loan Account #)
Principal $__________ and/or Interest $__________
All Borrower's representation and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects on the date of
the telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:
Authorized Signature: Phone Number:
--------------- ------------------
LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE FUNDS
FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account # To Account #
(Loan Account #) (Deposit Account #)
Amount of Advance $__________
All Borrower's representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:
Authorized Signature: Phone Number:
--------------- ------------------
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED.
Deadline for same day processing is 12:00pm, P.S.T.
Beneficiary Name: Amount of Wire: $__________
Beneficiary Bank: Account Number:
City and State:
Beneficiary Bank Transit (ABA) #: ______________ Beneficiary Bank Code (Swift,
Sort, Chip, etc.):
(FOR INTERNATIONAL WIRE ONLY)
33
Intermediary Bank: Transit (ABA) #:
For Further Credit to:
Special Instruction:
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature: _______________ 2nd Signature (If Required): ___________
Print Name/Title: ___________________ Print Name/Title: ______________________
Telephone # _________________________ Telephone # ____________________________
34
EXHIBIT C
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [ ]
LOAN AGREEMENT SUPPLEMENT No. [_____], dated _______________, 20____
("Supplement"), to the Loan and Security Agreement dated as of _______________,
20____ (as amended, restated, or otherwise modified from time to time, the "Loan
Agreement) by and among the undersigned ________________________ ("Borrower"),
Oxford Finance Corporation ("Oxford") and Silicon Valley Bank ("SVB").
Capitalized terms used herein but not otherwise defined herein are used with the
respective meanings given to such terms in the Loan Agreement.
To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Lenders, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) is attached hereto.
Borrower hereby certifies that (a) the foregoing information is true and
correct; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct in all material respects on the date hereof and
shall be true and correct in all material respects on such Equipment Advance
Funding Date. No Event of Default has occurred and is continuing under the Loan
Agreement. This Supplement may be executed by Borrower and Lenders in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
This Supplement is delivered as of this day and year first above written.
SILICON VALLEY BANK SGX PHARMACEUTICALS, INC.
By: By:
---------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
OXFORD FINANCE CORPORATION
By:
----------------------------------
Name:
-------------------------------
Title:
------------------------------
Annex A - Description of Financed Equipment
35
ANNEX A TO SUPPLEMENT
The Financed Equipment being financed with the Equipment Advance which this
Supplement is being executed is listed below. Upon the funding of such Equipment
Advance, this schedule and the property described below automatically shall be
deemed to be a part of the Collateral.
Description of Equipment Make Model Serial # Invoice #
------------------------ ---- ----- -------- ---------
36
EXHIBIT D
FORM OF SVB WARRANT
37
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Company: SGX PHARMACEUTICALS, INC. (formerly known as STRUCTURAL GENOMIX, INC.),
a Delaware corporation
Number of Shares: [INSERT NUMBER OF SHARES EQUAL TO: (A) 4.8% MULTIPLIED BY THE
TOTAL DOLLAR AMOUNT OF THE RELEVANT GROWTH CAPITAL ADVANCE OR EQUIPMENT ADVANCE
MADE BY SVB, DIVIDED BY (B) $4.71] ________________
Class of Stock: Series B Preferred
Warrant Price: $4.71 per share
Issue Date: [INSERT RELEVANT GROWTH CAPITAL ADVANCE FUNDING DATE OR EQUIPMENT
ADVANCE FUNDING DATE]
Expiration Date: The longer of (i) the 10th anniversary after the Issue Date,
and (ii) five years after the closing of the Company's initial public offering
of its Common Stock.
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the company (the "Company") at the Warrant
Price, all as set forth above and as adjusted pursuant to Article 2 of this
Warrant, subject to the provisions and upon the terms and conditions set forth
in this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering
a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising
the conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified
in Article 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Article 1.3.
38
1.3 Fair Market Value. If the Company's common stock is traded in a
public market and the Shares are common stock, the fair market value of each
Share shall be the closing price of a Share reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company (or in
the instance where the Warrant is exercised immediately prior to the
effectiveness of the Company's initial public offering, the "price to public"
per share price specified in the final prospectus relating to such offering). If
the Company's common stock is traded in a public market and the Shares are
preferred stock, the fair market value of a Share shall be the closing price of
a share of the Company's common stock reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company (or, in the
instance where the Warrant is exercised immediately prior to the effectiveness
of the Company's initial public offering, the initial "price to public" per
share price specified in the final prospectus relating to such offering), in
both cases, multiplied by the number of shares of the Company's common stock
into which a Share is convertible. If the Company's common stock is not traded
in a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant and, if applicable, the Company receives
payment of the aggregate Warrant Price, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation on surrender and cancellation of this Warrant, the
Company shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
1.6 Treatment of Warrant Upon Acquisition of Company.
1.6.1 "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity or the parent of the
surviving entity after the transaction.
1.6.2 Treatment of Warrant at Acquisition.
A) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (b) if Holder elects not to exercise the
Warrant, this Warrant will expire upon the consummation of such Acquisition. The
Company shall provide the Holder with written notice of its request relating to
the foregoing (together with such reasonable information as the Holder may
request in connection with such contemplated Acquisition giving rise to such
notice), which is to be delivered to Holder not less than ten (10) calendar days
prior to the closing of the proposed Acquisition.
39
B) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is an "arms length" sale of all or substantially all of the
Company's assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of the Company (a "True Asset Sale"), either (a) Holder shall
exercise its conversion or purchase right under this Warrant and such exercise
will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
will continue until the Expiration Date if the Company continues as a going
concern following the closing of any such True Asset Sale. The Company shall
provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
C) Notwithstanding the foregoing provisions of this Section 1.6, in the event
that the acquirer in an Acquisition does not agree to assume this Warrant at and
as of the closing thereof, this Warrant, to the extent not exercised or
converted on or prior to such closing, shall terminate and be of no further
force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquirer is subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended,
(ii) the class of stock or other security of the acquirer that would be received
by Holder in connection with such Acquisition were Holder to exercise or convert
this Warrant on or prior to the closing thereof is listed for trading on a
national securities exchange or approved for quotation on an automated
inter-dealer quotation system, (iii) the value (determined as of the closing of
such Acquisition in accordance with the definitive agreements therefor) of the
acquirer stock and/or other securities that would be received by Holder in
respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3)
times the then-effective Warrant Price, and (iv) upon the exercise or conversion
of this Warrant on or prior to the closing of such Acquisition, Holder would be
able to publicly resell all of the acquirer stock and/or other securities that
would be received by Holder in such Acquisition within 120 days following the
closing thereof pursuant to an effective registration statement covering such
acquirer stock and/or other securities or pursuant to the provisions of Rule 144
under the Act.
D) Upon the closing of any Acquisition other than those particularly described
in subsections (A), (B) and (C) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Warrant Price and/or number of Shares shall be adjusted accordingly.
As used herein "Affiliate" shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person's or entity's officers,
directors, joint venturers or partners, as applicable.
40
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on the Shares payable in common stock, or other securities, then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend occurred. If the Company subdivides the Shares by reclassification or
otherwise into a greater number of shares or takes any other action which
increases the amount of stock into which the Shares are convertible, the number
of shares purchasable hereunder shall be proportionately increased and the
Warrant Price shall be proportionately decreased. If the outstanding shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased and the number
of Shares shall be proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Certificate of
Incorporation, as such may be amended from time to time, upon the closing of a
registered public offering of the Company's common stock or as otherwise
provided therein. The Company or its successor shall promptly issue to Holder an
amendment to this Warrant setting forth the number and kind of such new
securities or other property issuable upon exercise or conversion of this
Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable
upon exercise or conversion of this Warrant. The amendment to this Warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise of the new Warrant. The provisions of this
Article 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.
2.3 Adjustments for Diluting Issuances. For so long as the Shares are
preferred stock, the number of shares of common stock issuable upon conversion
of the Shares, shall be subject to adjustment, from time to time in the manner
set forth in the Company's Certificate of Incorporation, as amended from time to
time, as if the Shares were issued and outstanding on and as of the date of any
such required adjustment. The provisions set forth for the Shares in the
Company's Certificate of Incorporation, as amended from time to time, relating
to the above in effect as of the Issue Date may not be amended, modified or
waived, without the prior written consent of Holder unless such amendment,
modification or waiver affects the rights associated with the Shares in the same
manner as such amendment, modification or waiver affects the rights associated
with all other shares of Series B Preferred Stock..
41
2.4 No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment; provided,
however, that notwithstanding the foregoing, nothing in this Section 2.4 shall
restrict or impair the Company's right to effect changes to the rights,
preferences and privileges associated with the Shares with the requisite consent
of the stockholders as may be required to amend the Certificate of Incorporation
from time to time so long as such amendment affects the rights, preferences and
privileges granted to Holder associated with the Shares in the same manner as
the other holders of Series B Preferred Stock.
2.5 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of this Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder the amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company shall promptly notify Holder in writing, and, at the
Company's expense, promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and
warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of
this Warrant is not greater than the price per share at which the Shares were
last issued in an arms-length transaction in which at least $500,000 of the
Shares were sold.
(b) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
(c) The Capitalization Table previously provided to Holder
remains true and complete in all material respects as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
to declare any dividend or distribution upon any of its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
or (b) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; then, in
42
connection with each such event, the Company shall give Holder: (1) at least 10
calendar days prior written notice of the date on which a record will be taken
for such dividend or distribution (and specifying the date on which the holders
of common stock will be entitled thereto) or for determining rights to vote, if
any, in respect of the matters referred to in (a) above; and (2) in the case of
the matters referred to in (b) above at least 10 calendar days prior written
notice of the date when the same will take place (and specifying the date on
which the holders of common stock will be entitled to exchange their common
stock for securities or other property deliverable upon the occurrence of such
event). While the Company is a private company, the Company shall send a
concurrent written notice to Holder if the Company sends any written notice to
its preferred stockholders regarding: (a) the Company offering for sale any
shares of the Company's capital stock (or other securities convertible into such
capital stock), other than (i) pursuant to the Company's stock option or other
compensatory plans, (ii) in connection with commercial credit arrangements or
equipment financings, or (iii) in connection with strategic transactions for
purposes other than capital raising; or (b) the Company proposing to effect any
reclassification or recapitalization of any of its stock. The Company shall send
concurrently to Holder the same notice as the Company gives to the holders of
registration rights if the Company proposes to offer holders of registration
rights the opportunity to participate in an underwritten public offering of the
Company's securities for cash.
3.3 Registration under Securities Act of 1933, as amended. The Company
agrees to solicit the requisite consent of the holders of the Company's
preferred stock to add the Holder as a party to the Company's Amended and
Restated Investor Rights Agreement dated as of April 21, 2005, as such may be
amended from time to time (the "Investor Rights Agreement") to provide Holder
with those certain incidental, or "Piggyback," registration rights pursuant to
and as set forth in the Company's Investor Rights Agreement; provided, however,
that if Section 5.3 or Section 5.4 of this Warrant conflicts with any provisions
of the Investor Rights Agreement, the provisions of Section 5.3 or Section 5.4
of this Warrant, as applicable, shall control until this Warrant has been fully
exercised or terminated. The provisions set forth in the Company's Investors'
Right Agreement or similar agreement relating to the above in effect as of the
Issue Date may not be amended, modified or waived without the prior written
consent of Holder unless such amendment, modification or waiver affects the
rights associated with the Shares in the same manner as such amendment,
modification, or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to the Holder.
3.4 No Shareholder Rights. Except as provided in this Warrant, the
Holder will not have any rights as a shareholder of the Company until the
exercise of this Warrant.
3.5 Information. So long as the Company is not a public company and
solely after the Company's obligations to provide financial information under
the Loan Agreement have terminated, upon the request by Holder, the Company
shall provide to the Holder: (i) the quarterly reports furnished to certain of
Company's investors under Section 3.1(c) of the Investors Rights Agreement (as
defined in Section 3.3 of this Warrant), and (ii) the annual reports furnished
to certain of Company's investors under Section 3.1(b) of the Investors Rights
Agreement..
43
ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and
warrants to the Company as follows:
4.1 Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by the Holder will be acquired for
investment for the Holder's account, not as a nominee or agent, and not with a
view to the public resale or distribution within the meaning of the Act. Holder
also represents that the Holder has not been formed for the specific purpose of
acquiring this Warrant or the Shares.
4.2 Disclosure of Information. The Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the acquisition of this Warrant and
its underlying securities. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has access.
4.3 Investment Experience. The Holder understands that the purchase of
this Warrant and its underlying securities involves substantial risk. The Holder
has experience as an investor in securities of companies in the development
stage and acknowledges that the Holder can bear the economic risk of such
Holder's investment in this Warrant and its underlying securities and has such
knowledge and experience in financial or business matters that the Holder is
capable of evaluating the merits and risks of its investment in this Warrant and
its underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Holder to be aware
of the character, business acumen and financial circumstances of such persons.
4.4 Accredited Investor Status. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act.
4.5 The Act. The Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed herein. The Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.
ARTICLE 5. MISCELLANEOUS.
5.1 Term: This Warrant is exercisable in whole or in part at any time
and from time to time on or before the Expiration Date.
5.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
44
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5
BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE
OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company) and the transferee agrees to be bound by all of the
terms and conditions of this Warrant. The Company shall not require Holder to
provide an opinion of counsel if the transfer is to Holder's parent company, SVB
Financial Group (formerly Silicon Valley Bancshares), or any other affiliate of
Holder. Additionally, the Company shall also not require an opinion of counsel
if there is no material question as to the availability of Rule 144, including
without limitation, the availability of current information as referenced in
Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder's notice of proposed
sale.
5.4 Transfer Procedure. Upon receipt by Holder of the executed
Warrant, Holder will transfer all of this Warrant to Holder's parent company,
SVB Financial Group, by execution of an Assignment substantially in the form of
Appendix 2 whereby the transferee agrees to be bound by all of the obligations
of Holder under this Warrant. Subject to the provisions of Article 5.3 and upon
providing Company with written notice, SVB Financial Group and any subsequent
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the Shares issuable directly or indirectly, upon
conversion of the Shares, if any) to any transferee, provided, however, in
connection with any such transfer, SVB Financial Group or any subsequent Holder
will give the Company notice of the portion of the Warrant being transferred
with the name, address and taxpayer identification number of the transferee and
Holder will surrender this Warrant to the Company for reissuance to the
transferee(s) (and Holder if applicable) by execution of an Assignment
substantially in the form of Appendix 2 whereby the transferee agrees to be
bound by all of the obligations of Holder under this Warrant. The Company may
refuse to transfer this Warrant or the Shares to any person who directly
competes with the Company, unless, in either case, the stock of the Company is
publicly traded.
5.5 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such
45
address as may have been furnished to the Company or the Holder, as the case may
(or on the first business day after transmission by facsimile) be, in writing by
the Company or such Holder from time to time. Effective upon receipt of the
fully executed Warrant and the initial transfer described in Article 5.4 above,
all notices to the Holder shall be addressed as follows until the Company
receives notice of a change of address in connection with a transfer or
otherwise:
SVB Financial Group
Attn: Treasury Department
0000 Xxxxxx Xxxxx, XX 000
Xxxxx Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to the Company shall be addressed as follows until the Holder receives
notice of a change in address:
SGX Pharmaceuticals, Inc.
00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
5.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.7 Attorney's Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorney's fees.
5.8 Automatic Conversion upon Expiration. In the event that, upon the
Expiration Date, the fair market value of one Share (or other security issuable
upon the exercise hereof) as determined in accordance with Section 1.3 above is
greater than the Warrant Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be converted pursuant to
Section 1.2 above as to all Shares (or such other securities) for which it shall
not previously have been exercised or converted, and the Company shall promptly
deliver a certificate representing the Shares (or such other securities) issued
upon such conversion to the Holder.
5.9 Counterparts. This Warrant may be executed in counterparts, all of
which together shall constitute one and the same agreement.
5.10 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
46
5.11 Market Stand-Off. Upon the Company adding the Holder as a party
to the Investor Rights Agreement as contemplated in Section 3.3 hereof, Holder
shall become subject to and bound by the "Market Stand-Off" provision in Section
2.13 of the Investor Rights Agreement as it may be amended from time to time.
[Remainder of page intentionally left blank; signature page follows]
47
"COMPANY"
SGX PHARMACEUTICALS, INC.
(f/k/a STRUCTURAL GENOMIX, INC.)
By:
----------------------------------------
Name: Xxxxxxx Xxxx
(Print)
Title: Chief Executive Officer and President
"HOLDER"
SILICON VALLEY BANK
By:
----------------------------------------
Name:
--------------------------------------
(Print)
Title:
-------------------------------------
48
APPENDIX 1
NOTICE OF EXERCISE
1. Holder elects to purchase ___________ shares of the Common/Series ______
Preferred [strike one] Stock of __________________ pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in
full.
[or]
1. Holder elects to convert the attached Warrant into Shares/cash [strike
one] in the manner specified in the Warrant. This conversion is exercised for
_____________________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing the shares in
the name specified below:
--------------------------------------
Holders Name
--------------------------------------
--------------------------------------
(Address)
3. By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Article 4 of the Warrant
as the date hereof.
HOLDER:
--------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
(Date):
------------------------------
49
APPENDIX 2
ASSIGNMENT
For value received, Silicon Valley Bank hereby sells, assigns and transfers
unto
Name: SVB Financial Group
Address: 0000 Xxxxxx Xxxxx (XX-000)
Xxxxx Xxxxx, XX 00000
Tax ID: 00-0000000
that certain Warrant to Purchase Stock issued by ________________________
(the "Company"), on ____________, 200_ (the "Warrant") together with all
rights, title and interest therein.
SILICON VALLEY BANK
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
---------------------------------
By its execution below, and for the benefit of the Company, SVB Financial Group
makes each of the representations and warranties set forth in Article 4 of the
Warrant and agrees to all other provisions of the Warrant as of the date hereof.
SVB Financial Group
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
50
EXHIBIT E
FORM OF OXFORD WARRANT
51
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Company: SGX PHARMACEUTICALS, INC. (formerly known as STRUCTURAL GENOMIX, INC.),
a Delaware corporation Number of Shares: [INSERT NUMBER OF SHARES EQUAL TO: (A)
4.8% MULTIPLIED BY THE TOTAL DOLLAR AMOUNT OF THE RELEVANT GROWTH CAPITAL
ADVANCE OR EQUIPMENT ADVANCE MADE BY OXFORD, DIVIDED BY (B) $4.71]
________________
Class of Stock: Series B Preferred
Warrant Price: $4.71 per share
Issue Date: [INSERT RELEVANT GROWTH CAPITAL ADVANCE FUNDING DATE OR EQUIPMENT
ADVANCE FUNDING DATE]
Expiration Date: The longer of (i) the 10th anniversary after the Issue Date,
and (ii) five years after the closing of the Company's initial public offering
of its Common Stock.
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, OXFORD FINANCE CORPORATION ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the company (the "Company") at the Warrant
Price, all as set forth above and as adjusted pursuant to Article 2 of this
Warrant, subject to the provisions and upon the terms and conditions set forth
in this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering
a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 to the principal office of the Company. Unless Holder is exercising
the conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified
in Article 1.1, Holder may from time to time convert this Warrant, in whole or
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Article 1.3.
1.3 Fair Market Value. If the Company's common stock is traded in a
public market and the Shares are common stock, the fair market value of each
Share shall be the closing price of a Share reported for the business day
immediately before
52
Holder delivers its Notice of Exercise to the Company (or in the instance where
the Warrant is exercised immediately prior to the effectiveness of the Company's
initial public offering, the "price to public" per share price specified in the
final prospectus relating to such offering). If the Company's common stock is
traded in a public market and the Shares are preferred stock, the fair market
value of a Share shall be the closing price of a share of the Company's common
stock reported for the business day immediately before Holder delivers its
Notice of Exercise to the Company (or, in the instance where the Warrant is
exercised immediately prior to the effectiveness of the Company's initial public
offering, the initial "price to public" per share price specified in the final
prospectus relating to such offering), in both cases, multiplied by the number
of shares of the Company's common stock into which a Share is convertible. If
the Company's common stock is not traded in a public market, the Board of
Directors of the Company shall determine fair market value in its reasonable
good faith judgment.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant and, if applicable, the Company receives
payment of the aggregate Warrant Price, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation on surrender and cancellation of this Warrant, the
Company shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
1.6 Treatment of Warrant Upon Acquisition of Company.
1.6.1 "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity or the parent of the
surviving entity after the transaction.
1.6.2 Treatment of Warrant at Acquisition.
A) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (b) if Holder elects not to exercise the
Warrant, this Warrant will expire upon the consummation of such Acquisition. The
Company shall provide the Holder with written notice of its request relating to
the foregoing (together with such reasonable information as the Holder may
request in connection with such contemplated Acquisition giving rise to such
notice), which is to be delivered to Holder not less than ten (10) calendar days
prior to the closing of the proposed Acquisition.
53
B) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is an "arms length" sale of all or substantially all of the
Company's assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of the Company (a "True Asset Sale"), either (a) Holder shall
exercise its conversion or purchase right under this Warrant and such exercise
will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
will continue until the Expiration Date if the Company continues as a going
concern following the closing of any such True Asset Sale. The Company shall
provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
C) Notwithstanding the foregoing provisions of this Section 1.6, in the event
that the acquirer in an Acquisition does not agree to assume this Warrant at and
as of the closing thereof, this Warrant, to the extent not exercised or
converted on or prior to such closing, shall terminate and be of no further
force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquirer is subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended,
(ii) the class of stock or other security of the acquirer that would be received
by Holder in connection with such Acquisition were Holder to exercise or convert
this Warrant on or prior to the closing thereof is listed for trading on a
national securities exchange or approved for quotation on an automated
inter-dealer quotation system, (iii) the value (determined as of the closing of
such Acquisition in accordance with the definitive agreements therefor) of the
acquirer stock and/or other securities that would be received by Holder in
respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3)
times the then-effective Warrant Price, and (iv) upon the exercise or conversion
of this Warrant on or prior to the closing of such Acquisition, Holder would be
able to publicly resell all of the acquirer stock and/or other securities that
would be received by Holder in such Acquisition within 120 days following the
closing thereof pursuant to an effective registration statement covering such
acquirer stock and/or other securities or pursuant to the provisions of Rule 144
under the Act.
D) Upon the closing of any Acquisition other than those particularly described
in subsections (A), (B) and (C) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Warrant Price and/or number of Shares shall be adjusted accordingly.
As used herein "Affiliate" shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person's or entity's officers,
directors, joint venturers or partners, as applicable.
54
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on the Shares payable in common stock, or other securities, then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend occurred. If the Company subdivides the Shares by reclassification or
otherwise into a greater number of shares or takes any other action which
increases the amount of stock into which the Shares are convertible, the number
of shares purchasable hereunder shall be proportionately increased and the
Warrant Price shall be proportionately decreased. If the outstanding shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased and the number
of Shares shall be proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Certificate of
Incorporation, as such may be amended from time to time, upon the closing of a
registered public offering of the Company's common stock or as otherwise
provided therein. The Company or its successor shall promptly issue to Holder an
amendment to this Warrant setting forth the number and kind of such new
securities or other property issuable upon exercise or conversion of this
Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable
upon exercise or conversion of this Warrant. The amendment to this Warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise of the new Warrant. The provisions of this
Article 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.
2.3 Adjustments for Diluting Issuances. For so long as the Shares are
preferred stock, the number of shares of common stock issuable upon conversion
of the Shares, shall be subject to adjustment, from time to time in the manner
set forth in the Company's Certificate of Incorporation, as amended from time to
time, as if the Shares were issued and outstanding on and as of the date of any
such required adjustment. The provisions set forth for the Shares in the
Company's Certificate of Incorporation, as amended from time to time, relating
to the above in effect as of the Issue Date may not be amended, modified or
waived, without the prior written consent of Holder unless such amendment,
modification or waiver affects the rights associated with the Shares in the same
manner as such amendment, modification or waiver affects the rights associated
with all other shares of Series B Preferred Stock..
2.4 No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in
55
good faith assist in carrying out of all the provisions of this Article 2 and in
taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment; provided, however, that
notwithstanding the foregoing, nothing in this Section 2.4 shall restrict or
impair the Company's right to effect changes to the rights, preferences and
privileges associated with the Shares with the requisite consent of the
stockholders as may be required to amend the Certificate of Incorporation from
time to time so long as such amendment affects the rights, preferences and
privileges granted to Holder associated with the Shares in the same manner as
the other holders of Series B Preferred Stock.
2.5 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of this Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder the amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company shall promptly notify Holder in writing, and, at the
Company's expense, promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and
warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of
this Warrant is not greater than the price per share at which the Shares were
last issued in an arms-length transaction in which at least $500,000 of the
Shares were sold.
(b) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
(c) The Capitalization Table previously provided to Holder
remains true and complete in all material respects as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
to declare any dividend or distribution upon any of its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
or (b) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; then, in connection with each such event, the
Company shall give Holder: (1) at least 10 calendar days prior written notice of
the date on which a record will be taken for such dividend or distribution (and
specifying the date on which the holders of common stock
56
will be entitled thereto) or for determining rights to vote, if any, in respect
of the matters referred to in (a) above; and (2) in the case of the matters
referred to in (b) above at least 10 calendar days prior written notice of the
date when the same will take place (and specifying the date on which the holders
of common stock will be entitled to exchange their common stock for securities
or other property deliverable upon the occurrence of such event). While the
Company is a private company, the Company shall send a concurrent written notice
to Holder if the Company sends any written notice to its preferred stockholders
regarding: (a) the Company offering for sale any shares of the Company's capital
stock (or other securities convertible into such capital stock), other than (i)
pursuant to the Company's stock option or other compensatory plans, (ii) in
connection with commercial credit arrangements or equipment financings, or (iii)
in connection with strategic transactions for purposes other than capital
raising; or (b) the Company proposing to effect any reclassification or
recapitalization of any of its stock. The Company shall send concurrently to
Holder the same notice as the Company gives to the holders of registration
rights if the Company proposes to offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company's
securities for cash.
3.3 Registration under Securities Act of 1933, as amended. The Company
agrees to solicit the requisite consent of the holders of the Company's
preferred stock to add the Holder as a party to the Company's Amended and
Restated Investor Rights Agreement dated as of April 21, 2005, as such may be
amended from time to time (the "Investor Rights Agreement") to provide Holder
with those certain incidental, or "Piggyback," registration rights pursuant to
and as set forth in the Company's Investor Rights Agreement; provided, however,
that if Section 5.3 or Section 5.4 of this Warrant conflicts with any provisions
of the Investor Rights Agreement, the provisions of Section 5.3 or Section 5.4
of this Warrant, as applicable, shall control until this Warrant has been fully
exercised or terminated. The provisions set forth in the Company's Investors'
Right Agreement or similar agreement relating to the above in effect as of the
Issue Date may not be amended, modified or waived without the prior written
consent of Holder unless such amendment, modification or waiver affects the
rights associated with the Shares in the same manner as such amendment,
modification, or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to the Holder.
3.4 No Shareholder Rights. Except as provided in this Warrant, the
Holder will not have any rights as a shareholder of the Company until the
exercise of this Warrant.
3.5 Information. So long as the Company is not a public company and
solely after the Company's obligations to provide financial information under
the Loan Agreement have terminated, upon the request by Holder, the Company
shall provide to the Holder: (i) the quarterly reports furnished to certain of
Company's investors under Section 3.1(c) of the Investors Rights Agreement (as
defined in Section 3.3 of this Warrant), and (ii) the annual reports furnished
to certain of Company's investors under Section 3.1(b) of the Investors Rights
Agreement..
ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and
warrants to the Company as follows:
57
4.1 Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by the Holder will be acquired for
investment for the Holder's account, not as a nominee or agent, and not with a
view to the public resale or distribution within the meaning of the Act. Holder
also represents that the Holder has not been formed for the specific purpose of
acquiring this Warrant or the Shares.
4.2 Disclosure of Information. The Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the acquisition of this Warrant and
its underlying securities. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has access.
4.3 Investment Experience. The Holder understands that the purchase of
this Warrant and its underlying securities involves substantial risk. The Holder
has experience as an investor in securities of companies in the development
stage and acknowledges that the Holder can bear the economic risk of such
Holder's investment in this Warrant and its underlying securities and has such
knowledge and experience in financial or business matters that the Holder is
capable of evaluating the merits and risks of its investment in this Warrant and
its underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables the Holder to be aware
of the character, business acumen and financial circumstances of such persons.
4.5 Accredited Investor Status. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act.
4.5 The Act. The Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed herein. The Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.
ARTICLE 5. MISCELLANEOUS.
5.1 Term: This Warrant is exercisable in whole or in part at any time
and from time to time on or before the Expiration Date.
5.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
58
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND
PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT
FROM REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company) and the transferee agrees to be bound by all of the
terms and conditions of this Warrant. The Company shall not require Holder to
provide an opinion of counsel if the transfer is to any other affiliate of
Holder. Additionally, the Company shall also not require an opinion of counsel
if there is no material question as to the availability of Rule 144, including
without limitation, the availability of current information as referenced in
Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder's notice of proposed
sale.
5.4 Transfer Procedure. Upon receipt by Holder of the executed
Warrant, Holder may transfer this Warrant to any affiliate of Holder, by
execution of an Assignment substantially in the form of Appendix 2 whereby the
transferee agrees to be bound by all of the obligations of Holder under this
Warrant. Subject to the provisions of Article 5.3 and upon providing Company
with written notice, any subsequent Holder may transfer all or part of this
Warrant or the Shares issuable upon exercise of this Warrant (or the Shares
issuable directly or indirectly, upon conversion of the Shares, if any) to any
transferee, provided, however, in connection with any such transfer, any
subsequent Holder will give the Company notice of the portion of the Warrant
being transferred with the name, address and taxpayer identification number of
the transferee and Holder will surrender this Warrant to the Company for
reissuance to the transferee(s) (and Holder if applicable) by execution of an
Assignment substantially in the form of Appendix 2 whereby the transferee agrees
to be bound by all of the obligations of Holder under this Warrant. The Company
may refuse to transfer this Warrant or the Shares to any person who directly
competes with the Company, unless, in either case, the stock of the Company is
publicly traded.
5.5 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may (or on the first business day after transmission by
facsimile) be, in writing by the Company or such Holder from time to time.
Effective upon receipt of the fully executed Warrant and the initial transfer
described in Article 5.4 above, all notices to the Holder
59
shall be addressed as follows until the Company receives notice of a change of
address in connection with a transfer or otherwise:
Oxford Finance Corporation
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx, Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notice to the Company shall be addressed as follows until the Holder receives
notice of a change in address:
SGX Pharmaceuticals, Inc.
00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
5.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.7 Attorney's Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorney's fees.
5.8 Automatic Conversion upon Expiration. In the event that, upon the
Expiration Date, the fair market value of one Share (or other security issuable
upon the exercise hereof) as determined in accordance with Section 1.3 above is
greater than the Warrant Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be converted pursuant to
Section 1.2 above as to all Shares (or such other securities) for which it shall
not previously have been exercised or converted, and the Company shall promptly
deliver a certificate representing the Shares (or such other securities) issued
upon such conversion to the Holder.
5.9 Counterparts. This Warrant may be executed in counterparts, all of
which together shall constitute one and the same agreement.
5.10 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
5.11 Market Stand-Off. Upon the Company adding the Holder as a party
to the Investor Rights Agreement as contemplated in Section 3.3 hereof, Holder
shall become subject to and bound by the "Market Stand-Off" provision in Section
2.13 of the Investor Rights Agreement as it may be amended from time to time.
[Remainder of page intentionally left blank; signature page follows]
60
"COMPANY"
SGX PHARMACEUTICALS, INC. (f/k/a
STRUCTURAL GENOMIX, INC.)
By:
---------------------------------
Name: Xxxxxxx Xxxx
(Print)
Title: Chief Executive Officer and
President
"HOLDER"
OXFORD FINANCE CORPORATION
By:
---------------------------------
Name:
--------------------------------
(Print)
Title:
------------------------------
61
APPENDIX 1
NOTICE OF EXERCISE
1. Holder elects to purchase ___________ shares of the Common/Series ______
Preferred [strike one] Stock of __________________ pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in
full.
[or]
1. Holder elects to convert the attached Warrant into Shares/cash [strike
one] in the manner specified in the Warrant. This conversion is exercised for
_____________________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing the shares in
the name specified below:
----------------------------------------
Holders Name
----------------------------------------
----------------------------------------
(Address)
3. By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Article 4 of the Warrant
as the date hereof.
HOLDER:
---------------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
(Date):
-------------------------------
62
APPENDIX 2
ASSIGNMENT
For value received, Oxford Finance Corporation hereby sells, assigns and
transfers unto
Name:
------------------------
Address:
----------------------
Tax ID:
----------------------
that certain Warrant to Purchase Stock issued by ________________________
(the "Company"), on ____________, 200_ (the "Warrant") together with all
rights, title and interest therein.
OXFORD FINANCE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
-------------------------------
By its execution below, and for the benefit of the Company, _____________ makes
each of the representations and warranties set forth in Article 4 of the Warrant
and agrees to all other provisions of the Warrant as of the date hereof.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
63
EXHIBIT F
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK and OXFORD FINANCE CORPORATION
FROM: SGX PHARMACEUTICALS, INC.
The undersigned authorized officer of SGX PHARMACEUTICALS, INC. certifies
that under the terms and conditions of the Loan and Security Agreement among
Borrower and Lenders (the "Agreement"), (i) Borrower is in complete compliance
for the period ending _______________ with all required covenants except as
noted below and (ii) all representations and warranties in the Agreement are
true and correct in all material respects on this date. Attached are the
required documents supporting the certification. In addition, the undersigned
certifies that (1) Borrower and each Subsidiary have 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 and
(ii) no liens has been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits which Borrower has
not previously notified in writing to Lenders. The Officer certifies that these
are prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
Please indicate compliance status by circling Yes/No under "Complies"
column.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Prior to the Company becoming a public company:
Monthly financial statements with CC Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 180 days Yes No
Annual projections FYE within 60 days
of Board approval Yes No
After the Company becoming a public company:
10-Q, 10-K and 8-K Within 5 days after
filing with SEC Yes No
Comments Regarding Exceptions:
See Attached. LENDER USE ONLY
Received by:
---------------------------
Sincerely, AUTHORIZED SIGNER
Date:
----------------------------------
------------------------------------- Verified:
Signature ------------------------------
AUTHORIZED SIGNER
Title Date:
------------------------------- ----------------------------------
Date Compliance Status: Yes No
-------------------------------- --- ---
64
EXHIBIT G
FORM OF GROWTH CAPITAL ADVANCE NOTE
SECURED PROMISSORY NOTE
$____________________ Dated: [Date]
FOR VALUE RECEIVED, the undersigned, SGX PHARMACEUTICALS, INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of [LENDER]
("Lender") the principal amount of ____________ Dollars ($__________) or such
lesser amount as shall equal the outstanding principal balance of the Growth
Capital Advance made to Borrower by Lender pursuant to the Loan Agreement
(defined below), and to pay all other amounts due with respect to the Growth
Capital Advance on the dates and in the amounts set forth in the Loan Agreement.
(Capitalized terms, unless defined in this Note, shall have the meaning given
such capitalized term in the Loan Agreement.)
Interest on the principal amount of this Note from the date of this Note
shall accrue at _____% per annum based on a 360-day year of twelve 30-day months
or, if applicable, the Default Rate. Borrower shall make payments of accrued
interest only on the outstanding principal amount of the Growth Capital Advance
on the first Business Day of each month ("Payment Date"), commencing __________,
2005, through and including January 1, 2006. Commencing on February 1, 2006, and
continuing on consecutive Payment Dates thereafter, Borrower shall make to
Lender thirty six (36) equal payments of principal and accrued interest on the
then outstanding principal amount in the amount of ________ Dollars ($________).
Principal, interest and all other amounts due with respect to the Growth
Capital Advance, are payable in lawful money of the United States of America to
Lender as set forth in the Loan Agreement. The principal amount of this Note and
the interest rate applicable thereto, and all payments made with respect
thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed
on the grid attached hereto which is part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan and Security Agreement, dated as of [Date], to which
Borrower and Lender are parties (the "Loan Agreement"). The Loan Agreement,
among other things, (a) provides for the making of this secured Growth Capital
Advance to Borrower, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
This Note may not be prepaid except as set forth in Section 2.3 of the Loan
Agreement. This Note and the obligation of Borrower to repay the unpaid
principal amount of the Growth Capital Advance, interest on the Growth Capital
Advance and all other amounts due Lenders under the Loan Agreement is secured
under the Loan Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lenders in the
enforcement or attempt to enforce any of Borrower's obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
SGX PHARMACEUTICALS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
65
LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL
SCHEDULED
PRINCIPAL PAYMENT
DATE AMOUNT INTEREST RATE AMOUNT NOTATION BY
---- --------- ------------- --------- -----------
66
EXHIBIT H
FORM OF EQUIPMENT ADVANCE NOTE
SECURED PROMISSORY NOTE
$____________________ Dated: [Date]
FOR VALUE RECEIVED, the undersigned, SGX PHARMACEUTICALS, INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of [LENDER]
("Lender") the principal amount of ____________ Dollars ($__________) or such
lesser amount as shall equal the outstanding principal balance of the Equipment
Advance made to Borrower by Lender pursuant to the Loan Agreement (defined
below), and to pay all other amounts due with respect to the Equipment Advance
on the dates and in the amounts set forth in the Loan Agreement. (Capitalized
terms, unless defined in this Note, shall have the meaning given such
capitalized term in the Loan Agreement.)
Interest on the principal amount of this Note from the date of this Note
shall accrue at _____% per annum based on a 360-day year of twelve 30-day months
or, if applicable, the Default Rate. Commencing on ___________, 200_, and on the
first Business Day of each month thereafter (each a "Payment Date"), Borrower
shall make to Lender thirty six (36) equal payments of principal and accrued
interest on the then outstanding principal amount in the amount of ________
Dollars ($________).
Principal, interest and all other amounts due with respect to the Equipment
Advance, are payable in lawful money of the United States of America to Lender
as set forth in the Loan Agreement. The principal amount of this Note and the
interest rate applicable thereto, and all payments made with respect thereto,
shall be recorded by Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto which is part of this Note.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan and Security Agreement, dated as of [Date], to which
Borrower and Lender are parties (the "Loan Agreement"). The Loan Agreement,
among other things, (a) provides for the making of this secured Equipment
Advance to Borrower, and (b) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.
This Note may not be prepaid except as set forth in Section 2.3 of the Loan
Agreement. This Note and the obligation of Borrower to repay the unpaid
principal amount of the Equipment Advance, interest on the Equipment Advance and
all other amounts due Lenders under the Loan Agreement is secured under the Loan
Agreement.
Presentment for payment, demand, notice of protest and all other demands
and notices of any kind in connection with the execution, delivery, performance
and enforcement of this Note are hereby waived.
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred by Lenders in the
enforcement or attempt to enforce
any of Borrower's obligations hereunder not performed when due. This Note shall
be governed by, and construed and interpreted in accordance with, the laws of
the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by
one of its officers thereunto duly authorized on the date hereof.
SGX PHARMACEUTICALS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL
SCHEDULED
PRINCIPAL PAYMENT
DATE AMOUNT INTEREST RATE AMOUNT NOTATION BY
---- --------- ------------- --------- -----------
4
