EXHIBIT 10.40
LOAN AGREEMENT
DECEMBER 28, 2004
Inhibitex, Inc.
Alpharetta, Georgia
Ladies and Gentlemen:
This letter constitutes the agreement (this "AGREEMENT") between the
Borrower and the Lender named below with respect to the Loan described below:
1. BORROWER -- Inhibitex, Inc., a Georgia corporation (the
"BORROWER").
2. LENDER -- Development Authority of Xxxxxx County, a Georgia
public corporation (the "LENDER").
3. BACKGROUND -- The State of Georgia Department of Community
Affairs (the "GRANT PROVIDER") has awarded to the Lender a Regional Economic
Business Assistance Grant (the "GRANT") in the amount of $2,500,000 pursuant to
a Statement of XXXX Award (the "GRANT AGREEMENT"), dated March 30, 2004,
between the Grant Provider and the Lender, for the purpose of providing funds
to loan to the Borrower to finance the costs of acquiring, constructing, and
installing laboratory space (the "PROJECT") to be located within the research
and headquarters facility (the "FACILITY") to be located on Westside Parkway in
Alpharetta, Georgia and to be leased to the Borrower by Cousins Properties
Incorporated (the "LESSOR") pursuant to a Lease Agreement (the "LEASE"), dated
December 31, 2003, between the Lessor and the Borrower. The Grant is
reimbursable by the Lender to the Grant Provider on the dates and in the
amounts that the hereinafter described loan is repayable by the Borrower to the
Lender. The Grant will be held by the Grant Provider for disbursement to the
Lender, for further disbursement to Borrower, to pay the costs of acquiring,
constructing, and installing the Project, and the Borrower has furnished to the
Grant Provider the detailed plans and specifications (the "PLANS AND
SPECIFICATIONS") for the Project prepared by the design architect (the
"ARCHITECT") for the Facility, which may be amended from time to time by the
Borrower. In order to secure the obligation of the Lender to reimburse the
Grant, the Lender will assign and grant a security interest in its right,
title, and interest in this Agreement to the Grant Provider, pursuant to the
terms of an Assignment and Security Agreement (the "Assignment"), dated the
date hereof, between the Lender and the Grant Provider.
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THE RIGHTS AND INTEREST OF THE LENDER IN THIS LOAN AGREEMENT AND THE REVENUES
AND RECEIPTS DERIVED HEREFROM, EXCEPT FOR ITS UNASSIGNED RIGHTS, AS DEFINED
HEREIN, HAVE BEEN ASSIGNED AND ARE THE SUBJECT OF A GRANT OF A SECURITY
INTEREST TO THE GRANT PROVIDER, UNDER AN ASSIGNMENT AND SECURITY AGREEMENT
DATED THE DATE HEREOF.
4. LOAN -- Subject to the terms and conditions of this Agreement, the
Lender agrees to make the following loan or loans (collectively, the "LOAN")
available to the Borrower:
(a) The Lender agrees to advance to the Borrower, on or prior to
December 31, 2005, the Loan in a principal amount of up to $2,500,000, which
Loan may be disbursed in one or more advances but each such disbursement shall
reduce the Lender's loan commitment hereunder and any sums advanced hereunder
may not be repaid and then re-borrowed.
(b) The Lender's commitment in paragraph (a) above to make
advances to the Borrower shall be a limited obligation of the Lender, to be
funded solely from the Grant and from no other source of funds, including other
funds of the Lender.
(c) The Borrower's obligation to repay the Loan shall be
evidenced by the records of the Grant Provider.
5. LOAN REPAYMENTS AND OTHER AMOUNTS PAYABLE -- (a) Loan Repayments
related to the Grant: The Loan shall not bear interest. The Borrower shall
repay the Loan in equal quarterly installments and shall pay to the Grant
Provider for the account of the Lender as repayments of the Loan, on or before
the first day of the calendar quarter immediately following the later of (1)
the last advance made pursuant to Section 4(a) hereof or (2) the issuance of a
certificate of occupancy for the Facility, but not later than the first day of
the calendar quarter immediately following the first anniversary of the first
advance made pursuant to Section 4(a) hereof, and on or before the first day of
each calendar quarter thereafter, to and including the date the Loan is fully
repaid, a sum equal to the principal amount of the Loan disbursed to the
Borrower pursuant to Section 4(a) hereof, divided by 40; provided, however,
that if the Borrower sells its common stock in a firm commitment underwritten
public offering pursuant to a registration statement on Form S-1 under the
Securities Act of 1933, as amended, the public offering price of which is not
less than $35,000,000 in the aggregate (a "PUBLIC OFFERING"), before the
seventh (7th) anniversary of the first quarterly installment payment due
hereunder, the quarterly installment amount shall thereafter be a sum equal to
the then unpaid principal amount of the Loan, divided by 12.
(b) Additional Loan Payments: Except as otherwise may be agreed by
and among Lender, Borrower and Grant Provider, the Borrower agrees to pay all
reasonable out-of-pocket costs and expenses of the Lender incurred in connection
with its negotiation, structuring, documenting, and closing the Loan and the
Grant, including, without limitation, the reasonable fees and disbursements of
counsel for the Lender. The Borrower agrees to pay all reasonable out-of-pocket
costs and expenses of the Lender incurred in connection with its administration
or modification of, or in connection with the preservation of its rights under,
enforcement of, or any refinancing, renegotiation, restructuring, or
termination of, any Credit Document (as hereinafter defined) or any instruments
referred to therein or any amendment, waiver, or consent relating thereto,
including, without limitation, the reasonable fees and disbursements of counsel
for the Lender. Such Additional Loan Payments shall be billed to the Borrower
by the Lender from time to time, together with a statement certifying that the
amount billed has been incurred or paid by the Lender for one or more of the
above items. Amounts so billed shall be paid by the Borrower within thirty
(30) days after receipt of the xxxx by the Borrower.
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(c) Place of Loan Payments: The Loan Repayments provided for
in paragraph (a) above shall be paid in lawful money of the United States of
America directly to the Grant Provider for the account of the Lender. The
payment of the Additional Loan Payments to be made to the Lender pursuant to
paragraph (b) above shall be paid directly to the Lender for its own use.
6. PREPAYMENT - (a) The Borrower shall have the obligation to
prepay the Loan in whole upon the occurrence of any of the following events:
(1) the termination of the Lease; or
(2) (A) the acquisition of the Borrower by another entity
by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger, or
consolidation but excluding any merger effected exclusively for the
purpose of changing the domicile of the Borrower); or (B) a sale of all
or substantially all of the assets of the Borrower; unless the
Borrower's shareholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or
sale (by virtue of securities issued as consideration for the
Borrower's acquisition or sale or otherwise) hold at least 50% of the
voting power of the surviving or acquiring entity.
(b) The Borrower may at its option prepay the principal balance of the
Loan in whole or in part at any time without premium or penalty.
7. COLLATERAL - The Lender shall receive a security interest in
or other lien on the following collateral and all proceeds thereof in order to
secure the repayment of the Loan: the real and personal property financed by
the Loan (collectively, the "COLLATERAL"). The Lender's security interest in or
other lien on the Collateral shall be granted pursuant to one or more security
agreements, pledge agreements, security deeds, or other similar documents as
may be acceptable to the Lender (collectively, the "COLLATERAL DOCUMENTS,"
which term shall include any modifications or replacements thereof). The
Borrower also shall execute and deliver to the Lender (or cause to be executed
and delivered to the Lender) any and all financing statements, fixture filings,
and other similar documents as the Lender may reasonably request from time to
time in order to perfect or maintain the perfection of the Lender's security
interest in or other lien on the Collateral under the Collateral Documents.
8. ASSIGNMENT - The Borrower hereby assents to the assignment
and grant of a first priority security interest in the Lender's rights under
this Agreement, made by the Lender to the Grant Provider in the Assignment, and
hereby agrees that its obligations to make all payments under this Agreement
shall be absolute and shall not be subject to any defense, except payment, or
to any right of setoff, counterclaim, or recoupment arising out of any breach
by the Lender of any obligation to the Borrower, whether hereunder or
otherwise, or arising out of any indebtedness or liability at any time owing
to the Borrower by the Lender. The Borrower further agrees that all payments
required to be made under this Agreement, except for those arising out of
Unassigned Rights, as hereinafter defined, shall be paid directly to the Grant
Provider for the account of the Lender. The Grant Provider shall have all
rights and remedies herein accorded to the Lender (except for Unassigned
Rights), and any reference herein to the Lender shall be
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deemed, with the necessary changes in detail, to include the Grant Provider,
and the Grant Provider is deemed to be and is a third party beneficiary of the
representations, covenants, and agreements of the Borrower herein contained.
"UNASSIGNED RIGHTS" means all of the rights of the Lender to receive
reimbursements and payments pursuant to Section 5(b) hereof and to be held
harmless and indemnified pursuant to Section 11(c) hereof.
9. CONDITIONS TO THE LOAN -- At the time of the making of each advance
under the Loan by the Lender to the Borrower under this Agreement, the
following conditions shall have been fulfilled to the Grant Provider's and
Lender's satisfaction:
(a) This Agreement and the Collateral Documents (if any) shall have
been duly executed and delivered by all required parties thereto and in
form and substance satisfactory to the Lender.
(b) There shall then exist no Event of Default under this Agreement
(or other event which, with the giving of notice or passage of time, or
both, would constitute such an Event of Default).
(c) All representations and warranties by the Borrower in this
Agreement or any of the Collateral Documents (collectively the "CREDIT
DOCUMENTS") shall be true and correct in all material respects with the
same effect as if such representations and warranties had been made on and
as of the date of such advance.
(d) The advance to be made and the use of the proceeds thereof shall
not violate any applicable law, regulation, injunction, or order of any
government or court.
(e) There shall be filed with the Lender and the Grant Provider:
(1) A requisition for such advance, in form and substance
satisfactory to the Grant Provider, stating each amount to be paid and
the name of the person to whom payment is due.
(2) A certificate executed by the Borrower attached to the
requisition and certifying:
(A) that an obligation in the stated amount has been
incurred by the Borrower and that the same is a cost of the
Project and is presently due and payable or has been paid by the
Borrower and is reimbursable hereunder and stating that the xxxx
or statement of account for such obligation, or a copy thereof,
is on file in the office of the Borrower;
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(B) that the Borrower has no notice of any vendor's, mechanic's,
or other liens or rights to liens, chattel mortgages, or conditional
sales contracts that should be satisfied or discharged before such
payment is made; and
(C) that each item on such requisition has not been the subject
of a previous requisition, and such requisition contains no item
representing payment on account of any retained percentages that the
Borrower is, at the date of any such certificate, entitled to retain.
(3) If the requisition for payment is for amounts due under the
construction contract for the Facility, an application for payment in the
form of American Institute of Architects Document G702, Application and
Certificate for Payment, and American Institute of Architects Form G702A,
Continuation Sheets, showing by trade the cost of work on the Project and
the cost of materials incorporated into the Project or stored at the
Facility, all to the date stated in the Application and Certificate for
Payment. The Application and Certificate for Payment must be signed by an
officer of the Borrower, the appropriate contractor under the construction
contract, and the Architect. The cost breakdown included in the Application
and Certificate for Payment shall show the percentage of completion of each
line item on the Borrower's detailed estimate of Project costs as submitted
to the Grant Provider, and the accuracy of the cost breakdown shall be
certified by the Borrower and the appropriate contractor under the
construction contract. The completed construction on the Project shall be
reviewed (at the time each Application and Certificate for Payment is
submitted) by the Architect, and the Architect shall certify to the Lender
and the Grant Provider as to (A) the cost of completed construction, (B)
the percentage of completion, and (C) compliance with the Plans and
Specifications.
(f) All applicable special conditions attached to the Grant Agreement
shall be met to the reasonable satisfaction of the Grant Provider prior to the
first advance of the Loan.
10. REPRESENTATIONS AND WARRANTIES - The Borrower hereby represents and
warrants to the Lender:
(a) The Borrower is a corporation duly organized and validly
existing and in good standing under the laws of the jurisdiction of its
incorporation as shown above and has all requisite power and authority to
execute and deliver the Credit Documents and to perform its obligations
thereunder.
(b) Except as identified in Schedule 10(b), attached hereto and
incorporated herein, there are no actions, suits, proceedings, inquiries, or
investigations pending or, to the knowledge of the Borrower, after making due
inquiry with respect thereto, threatened against or affecting the Borrower in
any court or by or before any governmental authority or arbitration board or
tribunal, which involve the possibility of materially and adversely affecting
the properties, activities, prospects, profits, operations, or condition
(financial or otherwise) of the Borrower, or the ability of the Borrower to
perform its obligations under the Credit Documents, or the transactions
contemplated by the Credit Documents or which, in any way, would adversely
affect the validity or enforceability of the Credit Documents or any agreement
or instrument to which
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the Borrower is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby, nor is the
Borrower aware of any facts or circumstances presently existing that would form
the basis for any such actions, suits, or proceedings. Except as disclosed in
writing to the Lender and the Grant Provider, the Borrower is not in default
with respect to any judgment, order, writ, injunction, decree, demand, rule, or
regulation of any court, governmental authority, or arbitration board or
tribunal.
(c) Neither this Agreement nor any other document furnished to the
Lender by or on behalf of the Borrower in connection with the Loan contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein not materially misleading.
(d) Each request by the Borrower for an advance under the Loan shall
constitute a representation and warranty by the Borrower to the Lender that the
foregoing statements are true and correct on the date of the request and after
giving effect to such advance.
11. BORROWER COVENANTS - The Borrower agrees to comply with the following
covenants so long as this Agreement is in effect:
(a) The Borrower shall, upon occupying the Facility, exercise
reasonable efforts to employ at least 60 full-time employees at the Facility on
an average monthly basis and, within five years of occupying the Facility,
exercise reasonable efforts to employ at least 125 full-time employees at the
Facility on an average monthly basis, provided that no unfavorable event occurs
that may have a material adverse effect on the Borrower, such as the termination
of the development of its investigational new drugs. The Borrower shall also
exercise reasonable efforts to expend or cause to be expended at least
$2,000,000 from sources other than the Loan on the costs of acquiring,
constructing, and installing the Facility.
(b) The Borrower shall promptly provide the Lender with such
non-confidential information relating to the Borrower and the Collateral as the
Lender may reasonably request from time to time in order to ascertain compliance
with the Credit Documents. Without limiting the foregoing, the Borrower shall
provide the Lender (a) immediately upon becoming aware that the Lessor has given
notice or taken any other action with respect to a claimed default or event of
default with respect to the Lease or event that, with the giving of notice or
passage of time, or both, would constitute a default with respect to the Lease,
a certificate specifying the notice given or action taken by the Lessor and the
nature of the claimed default or event and what action the Borrower is taking or
proposes to take with respect thereto, (b) promptly after the occurrence
thereof, notice of a Public Offering, the issuance of a certificate of occupancy
for the Facility, or any event described in Section 6(a) hereof.
(c) (1) In addition to the other amounts payable by the Borrower under
this Agreement (including, without limitation, Section 5 hereof), the Borrower
hereby agrees to pay and indemnify the Lender and the Grant Provider from and
against all claims, liabilities, losses, costs, and expenses (including, without
limitation, reasonable attorneys' fees and expenses) that the Lender and the
Grant Provider may (other than as a result of the gross negligence or willful
misconduct of the Lender or the Grant Provider) incur or be subjected to as a
consequence, directly or indirectly, of (i) any actual or proposed use of any
proceeds of the Loan or the
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Borrower's entering into or performing under any Credit Document, (ii) any
breach by the Borrower of any representation, warranty, covenant, or condition
in, or the occurrence of any other default under, any of the Credit Documents,
including without limitation all reasonable attorneys' fees or expenses
resulting from the settlement or defense of any claims or liabilities arising as
a result of any such breach or default, (iii) allegations of participation or
interference by the Lender or the Grant Provider in the management, contractual
relations, or other affairs of the Borrower, (iv) allegations that the Lender or
the Grant Provider has joint liability with the Borrower to any third party as a
result of the transactions contemplated by the Credit Documents, or (v) any
suit, investigation, or proceeding as to which the Lender or the Grant Provider
is involved as a consequence, directly or indirectly, of its execution of any of
the Credit Documents, the making of the Loan, or any other event or transaction
contemplated by any of the Credit Documents.
(2) Nothing contained in this Section 11(c) shall require the Borrower to
indemnify the Lender or the Grant Provider for any claim or liability that the
Borrower was not given any opportunity to contest or for any settlement of any
such action effected without the Borrower's consent. The indemnity of the Lender
and the Grant Provider contained in this Section 11(c) shall survive the
termination of this Agreement.
12. EVENTS OF DEFAULT AND REMEDIES - (a) Each of the following events shall
constitute an Event of Default under this Agreement:
(1) Failure by the Borrower to make any payment with respect to the
Loan (whether principal, fees, or other amounts) when and as the same becomes
due and payable (whether at maturity, on demand, or otherwise); or
(2) The Borrower shall (A) apply for or consent to the appointment of
or the taking of possession by a receiver, custodian, trustee, or liquidator of
the Borrower or of all or a substantial part of the property of the Borrower,
(B) admit in writing the inability of the Borrower, or be generally unable, to
pay the debts of the Borrower as such debts become due, (C) make a general
assignment for the benefit of the creditors of the Borrower, (D) commence a
voluntary case under the Bankruptcy Code (as now or hereafter in effect), (E)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, (F) fail to controvert in a timely or appropriate manner, or acquiesce
in writing to, any petition filed against the Borrower in an involuntary case
under the Bankruptcy Code, or (G) take any action for the purpose of effecting
any of the foregoing; or
(3) A proceeding or case shall be commenced, without the application of
the Borrower, in any court of competent jurisdiction, seeking (A) the
liquidation, reorganization, dissolution, winding-up, or composition or
readjustment of debts of the Borrower, (B) the appointment of a trustee,
receiver, custodian, liquidator, or the like of the Borrower or of all or any
substantial part of the assets of the Borrower, or (C) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition and adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment, or decree
approving or ordering any of the foregoing shall be entered and continue in
effect, for a period of sixty (60) days from commencement of such proceeding or
case or the date
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of such order, judgment, or decree, or any order for relief against the Borrower
shall be entered in an involuntary case or proceeding under the Bankruptcy Code;
or
(4) Any representation or warranty made by the Borrower in any Credit
Document shall be false or misleading in any material respect on the date as of
which made (or deemed made); or
(5) Any default by the Borrower shall occur in the performance or
observance of any term, condition, or provision contained in any Credit Document
and not referred to in clauses (1) through (4) above, which default shall
continue for thirty (30) days after the Lender gives the Borrower written notice
thereof; or
(6) Any material provision of any Credit Document shall at any time for
any reason cease to be valid and binding in accordance with its terms on the
Borrower, or the validity or enforceability thereof shall be contested by the
Borrower, or the Borrower shall terminate or repudiate (or attempt to terminate
or repudiate) any Credit Document; or
(7) The occurrence of an event of default under the Lease.
(b) Upon the occurrence of an Event of Default, the Lender, at its option,
without demand or notice of any kind, may declare the Loan immediately due and
payable, whereupon all outstanding principal shall become immediately due and
payable.
(c) Upon the occurrence of an Event of Default, the Lender, without notice
or demand of any kind, may from time to time take whatever action at law or in
equity or under the terms of the Credit Documents may appear necessary or
desirable to collect the Loan then due or thereafter to become due, or to
enforce performance and observance of any obligation, agreement, or covenant of
the Borrower under the Credit Documents.
13. MISCELLANEOUS - (a) This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Georgia.
(b) This Agreement shall be binding upon and shall inure to the benefit of
the Borrower, the Lender, and their respective heirs, legal representatives,
successors, and assigns, but the Borrower may not assign or transfer any of its
rights or obligations hereunder without the express prior written consent of the
Lender and the Grant Provider.
(c) This Agreement may not be waived or amended except by a writing signed
by the Lender and the Borrower, consented to in writing by the Grant Provider.
(d) This Agreement shall be effective on the date on which the Borrower and
the Lender have signed one or more counterparts of it and the Lender shall have
received the same. At such time as the Lender is no longer obligated under this
Agreement to make any further advances under the Loan and all principal or other
amounts owing with respect to the Loan have been finally and irrevocably repaid
by the Borrower to the Lender, this Agreement shall terminate.
(e) This Agreement and the other Credit Documents constitute the entire
agreement between the Borrower and the Lender with respect to the Loan and the
Collateral and supersede
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all prior agreements, negotiations, representations, or understandings between
such parties with respect to such matters.
(f) This Agreement may be executed in one or more counterparts.
(g) All pronouns used herein include all genders and all singular terms
used herein include the plural (and vice versa).
(h) All notices, certificates, requests, demands, or other communications
hereunder shall be sufficiently given and shall be deemed given upon receipt, by
hand delivery, mail, overnight delivery, telecopy, or other electronic means,
addressed as follows:
If to the Lender: Development Authority of Xxxxxx County
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
If to the Borrower: Inhibitex, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000)000-0000
Attention: Xxxxxxx X. Xxxxx, Chief Financial
Officer
If to the Grant Provider: Georgia Department of Community Affairs
Office of Economic Development
00 Xxxxxxxxx Xxxx Xxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000)000-0000
Attention: Program Manager, Strategic
Industries Loan Fund
A duplicate copy of each notice, certificate, or other communication given
hereunder shall also be given to the Grant Provider. Any party named in this
paragraph (h) may, by notice given to all other parties named in this Agreement,
designate any additional or different addresses to which subsequent notices,
certificates, or other communications shall be sent. For purposes of this
paragraph (h), "electronic means" shall mean telecopy or facsimile transmission
or other similar electronic means of communication that produces evidence of
transmission.
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If the Borrower is in agreement with the terms and conditions for the Loan
set forth in this Agreement, please so signify by signing the enclosed copy of
this Agreement in the space indicated below and returning it to the Lender by
the close of the Lender's business on ________________________, 2004. This
Agreement shall not become effective unless and until it is so signed and
returned by the Borrower by such deadline.
Very truly yours,
DEVELOPMENT AUTHORITY OF
XXXXXX COUNTY
By: /s/ [ILLEGIBLE]
-----------------------------------------
Chairman
AGREED TO: (SEAL)
INHIBITEX, INC.
Attest:
By: /s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
-------------------------- -------------------------------------
President Secretary
(SEAL)
Attest:
/s/ [ILLEGIBLE]
-----------------------------
Secretary
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Schedule 10(b)
Actions, Suits, Proceedings, Inquiries, or Investigations Pending or,
to the Knowledge of Borrower, Threatened Against or Affecting Borrower
