EXHIBIT 10.37
PROMISSORY NOTE
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$750,000.00 Palo Alto, California
June 21, 2002
FOR VALUE RECEIVED, the undersigned, Xxxxxx X. Xxxxx ("Employee") and Xxxx
X. Xxxxx, each an individual (collectively, "Borrower"), hereby promise to pay
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to the order of Incyte Genomics, Inc., a Delaware corporation ("Lender"), the
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principal sum of seven hundred fifty thousand dollars ($750,000.00), without
interest (except as otherwise provided below), to be repaid as set forth below.
1. REPAYMENT. The entire outstanding principal balance of this promissory
note (this "Note") shall be due and payable on November 27, 2005. Borrower may
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repay all or any portion of this Note at any time, without penalty, prior to its
maturity date. Subject to all of the other provisions and terms of this Note,
and provided Borrower is not then in default under this Note, that certain Deed
of Trust from Borrower, as Trustor, to North American Title, as Trustee, for the
benefit of Lender, as Beneficiary, of even date herewith (the "Deed of Trust")
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or any other deed of trust, mortgage or security instrument that secures this
Note or encumbers the Property (as defined below), then: on November 26, 2004
fifty percent (50%) of the outstanding principal balance of this Note shall be
forgiven; and the remaining outstanding principal balance of this Note shall be
forgiven on November 26, 2005; provided, however, Employee is still employed
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with Lender on such dates (each a "Forgiveness Date").
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Any acceleration of this Note or termination of Employee's employment
relationship with Lender prior to the then-applicable Forgiveness Date shall
terminate and void any remaining right of Borrower to receive any forgiveness of
the then-outstanding principal balance of this Note. Notwithstanding the
foregoing, payment of the outstanding principal balance of this Note upon
termination of Employee's employment relationship with Lender shall be governed
by Sections 4(g) and 4(h) hereof.
2. PURPOSE OF NOTE. Borrower acknowledges that it is a requirement of the
loan evidenced by this Note (the "Loan") that the proceeds of the Loan be used
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only to purchase Borrower's new principal residence located at the address set
forth on Schedule 1 hereto (the "Property") and that the purpose of the Loan is
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to induce Employee to accept an offer for employment principally in California.
3. SECURITY. This Note is the promissory note referred to in the Deed of
Trust and is secured by the Deed of Trust. Reference is made to the Deed of
Trust for a description of the nature and extent of the security afforded
thereby, the rights of Lender in respect of such security, and the terms and
conditions upon which this Note is secured. Xxxxxx is entitled to the benefits
of the Deed of Trust and Lender may enforce the agreements of Borrower contained
therein and exercise the remedies provided therein or otherwise in respect
thereof, all in accordance with the Deed of Trust.
In the event that the Property or any part thereof or any interest therein
is sold, agreed to be sold, conveyed, encumbered, alienated or otherwise
transferred by Borrower (except for the Permitted Liens, as defined in the Deed
of Trust), whether by operation of law or otherwise, this Note, irrespective of
the due date expressed herein, at the option of Lender and without demand or
notice, shall immediately become due and payable. This provision shall apply to
each and
every sale, transfer, encumbrance or conveyance, regardless whether or not
Lender has consented to, or waived, Xxxxxx's rights hereunder, whether by action
or non-action in connection with any previous sale, transfer or conveyance.
Notwithstanding the foregoing, as provided in section 9 hereof, if Borrower
purchases a New Property (as defined in section 9) within the time period
specified in section 9, then Lender may re-loan certain amounts to Borrower,
which amounts shall be evidenced by a new promissory note executed by Xxxxxxxx.
Payment of this Note shall be secured by the Deed of Trust. Borrower,
however, shall remain personally liable for payment of this Note, and assets of
Xxxxxxxx, in addition to the collateral under the Deed of Trust, may be applied
to the satisfaction of Xxxxxxxx's obligations hereunder. Nothing contained in
this Note shall limit the rights of Lender to proceed against Borrower for any
losses, claims, suits, judgments, liabilities, penalties, damages, costs or
expenses (including, without limitation, the reasonable fees and disbursements
of Xxxxxx's legal counsel) due to the fraud, intentional misrepresentation or
intentional waste committed by Borrower under this Note, the Deed of Trust or
the transactions contemplated hereby or thereby.
4. ACCELERATION OF DUE DATE.
The entire unpaid principal balance of this Note, together with all accrued
and unpaid interest thereon, if any, shall, at the election of Xxxxxx, become
immediately due and payable upon the occurrence of any of the following,
irrespective of the repayment schedule set forth in paragraph 1 of this Note:
a. Any failure on the part of Borrower to make any payment under this
Note when the same is due or to perform any other material obligation imposed
upon Borrower under this Note, including, without limitation, the payment of
applicable withholding taxes;
b. Any failure on the part of Borrower to perform or observe any of
his obligations under the Deed of Trust or any other deed of trust, mortgage or
security instrument that secures this Note or encumbers the Property as and when
performance is due;
c. Any failure by Borrower to apply any portion of the proceeds of the
Loan to purchase the Property;
d. If at any time Borrower shall fail to certify to Lender, pursuant
to Section 6 hereof or upon request by Xxxxxx, that Borrower reasonably expects
to be entitled to and will in fact itemize its deductions for federal income tax
purposes for each calendar year that any portion of the principal balance of
this Note remains outstanding;
e. If Borrower shall sell the Property;
f. If at any time Borrower shall admit in writing its inability to pay
its debts as they become due, or shall make any assignment for the benefit of
any creditors, or shall file a petition seeking any reorganization, arrangement,
composition, readjustment or similar release under any present or future
statute, law or regulation, or upon the filing or commencement by or against
Borrower of any petition, action, case or proceeding, voluntary or involuntary,
under any state or Federal law regarding bankruptcy or insolvency;
g. Thirty (30) days after: the date that Employee's employment is
terminated for Cause (as defined in that certain Employment Agreement dated
November 26, 2001, by and between Employee and Lender (the "Employment
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Agreement")); or Employee leaves
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employment of Lender on his own volition without Good Reason or Change in
Control Good Reason (as each such term is defined in the Employment Agreement);
provided, however, that in addition to the unpaid balance of this Note, Borrower
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shall also be personally liable for payment of interest on the principal amount
of this Note at the rate determined by Lender as necessary to avoid the
imputation of income to Borrower for Federal income tax purposes; or
h. One year after the date that Employee's employment is terminated
without Cause or Employee leaves employment of Lender with Good Reason or Change
in Control Good Reason or due to death or Disability (as each such term is
defined in the Employment Agreement).
5. OFFSET TO COMPENSATION. To the fullest extent permitted by law, Borrower
hereby authorizes Lender to offset any unpaid principal balance or accrued
interest that is not paid when due under this Note, and any applicable
withholding taxes, against any amounts owed by Lender to Borrower, including,
without limitation, any wages, salary, bonuses, accrued vacation or sick pay,
compensation from stock option exercises, and any other employment or consulting
compensation or restricted stock unit payments. Lender shall promptly notify
Borrower in writing of any such offset, including an itemization of the amounts
offset and the balance, if any, due and payable pursuant to this Note.
Notwithstanding the foregoing, Lender shall have no right to withhold payment of
any amount pursuant to this provision if collection is sought pursuant to
Section 4(g) and Borrower disputes the occurrence of a termination for cause or
without Good Reason or Change in Control Good Reason thereunder.
6. CERTIFICATION REGARDING DEDUCTIBILITY OF INTEREST. Xxxxxxxx shall
deliver in writing to Lender no later than January 31 of each year that any
portion of the principal amount of this Note remains outstanding Borrower's
certification that Borrower reasonably expects to be entitled to and will in
fact itemize its deductions for Federal income tax purposes for the prior
calendar year.
7. SURVIVING OBLIGATIONS; TAXES. Any reduction in, or forgiveness of, the
principal amount outstanding under this Note shall not limit Borrower's
obligations to Lender for payment of any collection costs incurred by Lender
pursuant to the terms of this Note. Borrower acknowledges that it is aware that
a reduction or forgiveness of amounts due to Lender under this Note, as well as
any waiver by Lender of receipt of interest charged on the principal amount of
this Note, may result in adverse tax consequences for Borrower. Borrower assumes
all risk, cost and responsibility for such tax consequences and releases Lender
from any and all claims or liabilities arising therefrom. Notwithstanding the
foregoing, if Lender determines that under applicable law and regulations Lender
could be liable for the withholding of any Federal or state tax with respect to
the Loan, Borrower shall pay the amount of such withholding tax obligation to
Lender in cash or make other arrangements satisfactory to Lender for the
satisfaction of such withholding tax obligations, including, without limitation,
increasing the principal amount due under this Note equal to the amounts of such
obligations. Lender shall not be required to forgive any portion of the
outstanding principal balance of this Note unless and until such obligations are
satisfied.
8. COLLECTION COST BORNE BY BORROWER. Xxxxxxxx agrees to pay all costs and
expenses, including, but not limited to, reasonable attorneys' fees, incurred by
Xxxxxx in any action brought to enforce the terms of this Note and/or to collect
his Note, and any appeal thereof, unless it is determined, in such enforcement
action or appeal, that the amounts sought to be collected in such action were
not properly due and payable. At Lender's option, such costs and expenses may be
added to the principal amount of this Note. Notwithstanding the foregoing,
Lender shall have no right to require payment of costs and expenses, including
attorney's fees, during the pendency of a collection action brought by Lender
pursuant to Section 4(g) if Borrower disputes the occurrence of a termination
for Cause or without Good Reason or Change in Control Good Reason thereunder,
provided that payment may be required upon resolution of such dispute if it is
determined that the amounts sought in such collection were properly due and
payable.
9. PURCHASE OF SUBSEQUENT RESIDENCE.
In the event Borrower shall sell the Property, this Note shall immediately
become due and payable and Xxxxxxxx agrees to pay the outstanding balance of
this Note with proceeds from such sale. If Xxxxxxxx purchases another home in
the Palo Alto, California area or in another area to which the Board of
Directors of Lender requests Borrower to relocate of equal or greater value
within three (3) months of the sale of the Property (the "New Property"), Lender
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agrees to re-loan up to seven hundred fifty thousand dollars ($750,000.00) to
Borrower and Borrower agrees to execute a new promissory note upon substantially
the same terms and conditions contained herein (the "New Note"), which shall be
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secured by the New Property under a deed of trust with substantially the same
terms and conditions contained in the Deed of Trust; provided, however, that the
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proceeds of the loan evidenced by the New Note shall be directly deposited in
the escrow account established for the New Property.
10. MISCELLANEOUS.
a. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Borrower:
at Xxxxxxxx's current address as shown on the records of Xxxxxx.
If to Lender:
Incyte Genomics, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
b. Borrower waives presentment, demand, protest, notice of protest,
notice of dishonor and notice of nonpayment.
c. Borrower consents to any extension of time for the payment of this
Note. Any such extension or release may be made without notice to Borrower and
shall not discharge the liability of Borrower. Failure to accelerate the
maturity of the indebtedness evidenced by this Note upon default by Borrower, or
acceptance of any past due installment, or failure to demand strict performance
by Borrower shall not constitute a waiver of any provision of this Note by
Xxxxxx.
d. This Note shall be governed by and construed in accordance with the
laws of the State of California without regard to principles of conflict of
laws.
e. In the event of any inconsistencies between the terms of this Note
and the terms of any other document related to the Loan, the terms of this Note
shall prevail.
f. This Note shall be binding upon Xxxxxxxx and the personal
representative, heir, successors and assigns of Xxxxxxxx.
g. The benefit of the interest arrangements of the Loan are personal
to Xxxxxxxx and not transferable. Lender reserves the right to charge a default
interest rate of five percent (5%) above the prime rate quoted in the Wall
Street Journal to Borrower or any of Xxxxxxxx's successors or assigns if the
entire unpaid principal balance of this Note, together with all accrued and
unpaid interest thereon, if any, is not paid when due.
h. If any part of this Note is determined to be illegal or
unenforceable, all other parts shall remain in full force and effect.
IN WITNESS WHEREOF, Xxxxxxxx has executed this Note as of the date first
hereinabove written.
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
