EXHIBIT 4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED,
ASSIGNED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
Berkeley, California
As of March 31, 2003
Up to $15,000,000
XOMA LTD.
SECURED NOTE AGREEMENT
COMMERCIAL LAUNCH LOAN
WHEREAS, XOMA LTD., a Bermuda company having its registered office at
Clarendon House, 0 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00, Xxxxxxx (the "Company"), and
GENENTECH, INC., a Delaware corporation having its principal executive office at
0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000 (the "Lender"), desire to
further the collaboration arrangements embodied in (a) that certain Common Stock
and Convertible Note Purchase Agreement, dated as of April 22, 1996, between the
Company (then a Delaware corporation known as XOMA Corporation) and the Lender,
as amended as of April 14, 1999 (the "Purchase Agreement"), and (b) that certain
Collaboration Agreement, effective as of April 22, 1996, between the Company and
the Lender, as amended as of April 14, 1999 and as amended and restated as of
March 31, 2003 (the "Collaboration Agreement").
WHEREAS, the Lender has made loans to the Company pursuant to the
Collaboration Agreement and has agreed from time to time to make additional
loans to the Company for U.S. Commercialization Costs (as defined in the
Collaboration Agreement) pursuant to Section 8.1 of the Collaboration Agreement,
all such loans (to the extent not repaid) to be evidenced by this Secured Note
Agreement which shall, together with that certain Amended and Restated
Convertible Secured Note Agreement - Development Loan (the "Other Note"), that
certain Security Agreement (the "Security Agreement"), and that certain
Registration Rights Agreement (the "Registration Rights Agreement"), each
concurrently being entered into as of the date hereof, between the Company and
Lender, supersede any prior agreement with respect to the subject matter hereof
(this "Note Agreement" or "Note").
WHEREAS, the Company has agreed to repay any such loans in accordance with
the terms of this Note Agreement.
WHEREAS, in connection with the Collaboration Agreement, the Company and
the Lender desire to set forth in this Note the terms and conditions on which
the Company agrees to repay to the Lender loans (the "Loans") in an aggregate
principal amount not to exceed FIFTEEN MILLION DOLLARS ($15,000,000) the
"Commitment Amount") lent or to be lent
to the Company by the Lender pursuant to Section 8.1 of the Collaboration
Agreement for the purpose of financing the Company's share of marketing and
sales costs in the United States prior to the date that the receipt of
Regulatory Approval (as such term and all other capitalized terms used, but not
otherwise defined herein, are defined in Section 16 below) in the United States.
NOW, THEREFORE, FOR VALUE RECEIVED, the Company promises to repay to the
order of the Lender the principal amount of loans evidenced by this Note
together with interest thereon, all as set forth below.
1. Principal.
(a) Commitment to Make Loans. In accordance with, and subject to the terms
and conditions of, this Note and the other Note Documents, from time to time
from the date of this Note until the earliest of the date of Regulatory
Approval, April 22, 2005 or termination upon the occurrence of an Event of
Default in accordance with Section 5 below, the Lender has agreed to make Loans
to the Company, and the Company has agreed to repay such Loans, in an aggregate
principal amount not to exceed the Commitment Amount.
(b) Tranches of Loans and Entries on Exhibit B. The principal amount of
each Loan shall be recorded by the Lender and endorsed by the Lenders and the
Company on Exhibit B attached hereto, which is hereby made a part of this Note.
Each such Loan shall be treated as a separate Loan hereunder, and, as such,
shall be treated as, and designated, a separate "Tranche" hereunder. The first
Loan, made as contemplated by Section 1(c) below, is hereby designated "Tranche
A" and recorded as such on Exhibit B attached hereto. Each repayment and
subsequent Loan made hereunder as contemplated by Section 1(d) below, shall be
similarly designated with consecutive letter designations, such as "Tranche B",
"Tranche C", etc., and the applicable designation shall be recorded by the
Lender and endorsed by the Lenders and the Company on Exhibit B attached hereto
at the time any such Loan is made. Notwithstanding the foregoing, any failure of
the Lender to make any notation on Exhibit B shall not affect the obligation of
the Company to repay Loans actually made with interest in accordance with this
Note.
(c) Initial Loan. As of the date of this Note, Loans in an aggregate
principal amount of TWO MILLION NINE HUNDRED FORTY THREE THOUSAND THREE hundred
AND FIFTY NINE DOLLARS ($2,943,359) are outstanding, and the aggregate amount of
the Commitment Amount remaining available for borrowing is TWELVE MILLION FIFTY
SIX THOUSAND SIX hundred AND FORTY ONE DOLLARS ($12,056,641). The aggregate
principal amount of Loans outstanding as of the date of this Note shall be
recorded and endorsed on Exhibit B attached hereto and designated as Tranche A
thereon.
(d) Additional Loans. The Lender's obligation to make any Loan to the
Company after the date of this Note is subject to the condition that no Default
or Event of Default shall have occurred and be continuing and to the fulfillment
on or prior to the date such Loan is to be made of the following conditions (and
by requesting or accepting a Loan, the Company shall be deemed to have
represented to the Lender that such conditions have been satisfied):
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(i) Such Loan shall be legally permitted by all laws and regulations
to which the Company is subject;
(ii) Each of the representations and warranties of the Company set
forth in Exhibit A to this Note and the Other Note, Section 4 of the
Security Agreement and Section 14.1 of the Collaboration Agreement shall be
true and correct as of the date such Loan is to be made as if made on and
as of such date;
(iii) The Company shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this
Note, and the other Note Documents that are required to be performed or
complied with by it on or prior to the date of making such Loan; and
(iv) The Company shall have obtained all consents (including all
governmental and regulatory consents, approvals, or authorizations required
in connection with such Loan), permits and waivers necessary or required in
connection with such Loan.
(e) Borrowing and Funding Procedures. Not later than the last business day
of each calendar quarter, in accordance with the annual budget (the "Approved
Budget") formulated by the Joint Core Team and approved by the Joint Steering
Committee in accordance with Article 3 of the Collaboration Agreement and
subject to satisfaction or waiver of the conditions referred to in this Note,
the Lender shall make a Loan to the Company equal to the Company's budget as
represented in the Approved Budget for marketing and sales costs for Raptiva for
the next calendar quarter. The Lender and the Company shall meet not later than
each January 31st, April 30th, July 31st and October 31st to review the actual
spending by the parties in the just-completed calendar quarter in comparison to
the just completed quarter's advance, to determine any adjustments to be applied
to the outstanding Loan balance and the next quarter's loan funding, so long as
the reconciliation is consistent with those limits imposed by the Joint Steering
Committee under Section 3.1(b) of the Collaboration Agreement.
Each such Loan shall be made by wire transfer of immediately available
funds to an account in the United States designated by the Company denominated
in the currency of the United States of America.
(f) Maturity Date. Unless earlier accelerated by reason of the occurrence
of an Event of Default (as provided in Section 5 below), any unpaid principal
amount of any Tranche owed by the Company to the Lender, together with accrued
and unpaid interest thereon, shall be due and payable in full on the earlier of
(a) the later of (i) April 22, 2005 or (ii) the second anniversary of the date
of the Loan comprising such Tranche (or portion thereof) was made to the Company
or (b) the date that is ninety (90) days after the date of receipt of Regulatory
Approval in the United States.
(g) Use of Proceeds. The proceeds of the Loans shall be used and, to the
extent disbursed prior to the date of this Note, have been used by the Company
only to finance the Company's share of marketing and sales costs for Raptiva in
the United States prior to the receipt of Regulatory Approval in the United
States.
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2. Interest. Interest on the unpaid balance of the principal amount of each
Tranche hereunder and on any unpaid interest thereon from time to time
outstanding shall accrue from the date disbursed to but not including the date
repaid or converted and compound on the last day of each Interest Period at a
rate per annum equal to the applicable LIBOR Rate (as such rate may change on
the first day of each Interest Period) plus one percent (1%) (calculated on the
basis of a year of 360 days). Interest on each Loan shall be due and payable on
the earlier of the date that such Loan is repaid or matures.
3. Payment.
(a) Form of Payment. The principal amount of and accrued interest on each
Tranche hereunder when due or otherwise paid or payable hereunder shall be
payable, at the option of the Company as set forth in written notice to the
Lender in cash denominated in the currency of the United States of America.
(b) Method, Application. Payments of principal and accrued interest shall
be made at the address of the Lender set forth in the Collaboration Agreement,
or at such other place as the Lender shall have notified the Company in writing
at least five (5) business days before such payment is due. Unless an Event of
Default shall have occurred, all payments in respect of any Tranche under this
Note shall be applied first to accrued and unpaid interest thereon, and
thereafter to the unpaid principal amount thereof. After the occurrence of an
Event of Default, payments shall be applied as determined by the Lender in its
discretion.
(c) Recordation; Return of Note. All payments of interest and principal in
respect of each Tranche (or portion thereof) hereunder, as well as all
adjustments thereto based on the parties' payment of U.S. Commercialization
Costs (as such term is defined in the Collaboration Agreement), shall be
recorded by the Lender and endorsed by the Lender and the Company on Exhibit B
attached hereto, which is hereby made a part of this Note. Upon final payment in
full of all principal of and interest on this Note and each Tranche hereunder,
and termination of any commitment of the Lender to make Loans hereunder, the
Lender shall return this Note to the Company for cancellation.
(d) Prepayments. This Note and any Tranche (or portion thereof) hereunder
may be prepaid by the Company, at any time without penalty, in whole or in part,
in the manner prescribed for repayment in Section 3(a) above (which prepayment
shall be accompanied by interest on the amount so prepaid). In the event of any
prepayment of less than all of the amounts outstanding under this Note, the
Company may designate the Tranche or Tranches to which such payment shall apply.
4. Subordination. Any Excess Indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full in cash of all Senior
Indebtedness (as defined in Section 16 below) of the Company. Except for the
Excess Indebtedness, the obligations of the Company to the Lender under this
Note shall at all times be senior to or pari passu with all other obligations of
the Company to the extent they are unsecured.
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(a) Insolvency Proceedings. If there shall occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy (voluntary or
involuntary), reorganization, or arrangements with creditors (whether or not
pursuant to bankruptcy or other insolvency laws), sale of all or substantially
all of the assets (other than in the form of a merger not resulting in
insolvency), dissolution, liquidation, or any other marshaling of the assets and
liabilities of the Company, (i) the holder(s) of Senior Indebtedness shall be
entitled to receive payment in full in cash of all Senior Indebtedness then
outstanding before the Lender shall be entitled to receive any payment or
distribution, whether in cash, securities, or other property, in respect of the
Excess Indebtedness, and (ii) any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
company provided for by a plan of reorganization or readjustment, the payment of
which is subordinated, at least to the extent provided in this Section 4, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or readjustment)
which would otherwise (but for this Section 4) be payable or deliverable in
respect of Excess Indebtedness shall be paid or delivered directly to the
holder(s) of the Senior Indebtedness (ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held by each) or to a
trustee or other representative for holder(s) of Senior Indebtedness.
(b) Permitted Payments; Default on Senior Indebtedness. Subject to Section
4(a), so long as there shall not have occurred and be continuing an event of
default which as been declared in writing, or is automatically effective in the
case of bankruptcy or insolvency events, with respect to any Senior Indebtedness
(as such event of default is defined therein or in the instrument under which it
is outstanding), which event of default permits the holder or its representative
to accelerate the maturity thereof (a "Senior Default"), the Company shall be
permitted to make, and the Lender to accept and receive, payments of principal
and accrued interest under this Note, including the Excess Indebtedness.
Notwithstanding anything to the contrary contained in this Section 4, the
Company shall not make and the Lender shall not receive any payment of any
Excess Indebtedness after delivery by a holder of Senior Indebtedness to the
Company and the Lender of written notice that a Senior Default has occurred;
provided, however, that such payments may thereafter be made if such holder of
Senior Indebtedness consents to such payments in writing or agrees in writing
that such Senior Default has been cured or waived.
(c) Turnover of Payment. Except for payments permitted under Section 4(a)
or 5(b), should any payment or distribution, whether in cash, securities or
other property, be received by the Lender on account of the Excess Indebtedness
by any means, including, without limitation, set off, prior to the payment in
full in cash of the Senior Indebtedness, the Lender shall receive and hold the
same in trust, as trustee, for the benefit of the holder(s) of the Senior
Indebtedness, and shall forthwith deliver the same to the holder(s) of the
Senior Indebtedness (ratably according to the aggregate amounts remaining unpaid
on account of the Senior Indebtedness held by each) or to a trustee or other
representative for holder(s) of Senior Indebtedness in precisely the form
received for application to the Senior Indebtedness (whether or not it is then
due).
(d) Subrogation. Subject to the payment in full in cash of all Senior
Indebtedness and the termination of any commitments to lend under the agreements
or
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instruments governing such Senior Indebtedness, the Lender shall be subrogated
to the rights of the holder(s) of such Senior Indebtedness (to the extent of the
payments or distributions made to the holder(s) of such Senior Indebtedness
pursuant to the provisions of this Section 4) to receive payments and
distributions of assets of the Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between the Company and its creditors, other than the holder(s) of Senior
Indebtedness and the Lender, be deemed to be a payment by the Company to or on
account of this Note; and for purposes of such subrogation, no payments or
distributions to the holder(s) of Senior Indebtedness to which the Lender would
be entitled except for the provisions of this Section 4 shall, as between the
Company and its creditors, other than the holder(s) of Senior Indebtedness and
the Lender, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness.
(e) Continuing Subordination. The subordination effected by these
provisions is a continuing subordination and may not be modified or terminated
by the Lender until payment in full in cash of the Senior Indebtedness. At any
time and from time to time, without consent of or notice to the Lender and
without impairing or affecting the obligations of the Lender hereunder but
subject to the terms of the definition of "Senior Indebtedness": (i) the time
for the Company's performance of, or compliance with any agreement relating to
Senior Indebtedness may be modified or extended or such performance may be
waived; (ii) a holder of Senior Indebtedness may exercise or refrain from
exercising any rights under any agreement relating to the Senior Indebtedness;
(iii) any agreement relating to the Senior Indebtedness may be revised, amended
or otherwise modified for the purpose of adding or changing any provision
thereof or changing in any manner the rights of the Company, any holder of
Senior Indebtedness or any guarantor thereunder; (iv) payment of Senior
Indebtedness or any portion thereof may be accelerated or extended or refunded
or any instruments evidencing the Senior Indebtedness may be renewed in whole or
in part; (v) any person liable in any manner for payment of the Senior
Indebtedness may be released by a holder of Senior Indebtedness; (vi) a holder
of Senior Indebtedness may make loans or otherwise extend credit to the Company
whether or not any default or event of default exists with respect to such
Senior Indebtedness; and (vii) a holder of Senior Indebtedness may take and/or
release any lien at any time on any collateral now or hereafter securing the
Senior Indebtedness and take or fail to take any action to perfect any lien at
any time granted therefor, and take or fail to take any action to enforce such
liens. Notwithstanding the occurrence of any of the foregoing, these
subordination provisions shall remain in full force and effect with respect to
the Senior Indebtedness.
(f) Lender's Waivers. The Lender hereby expressly waives for the benefit of
the holder(s) of Senior Indebtedness but subject to the terms of the definition
of "Senior Indebtedness" (i) all notices not specifically required pursuant to
the terms of this Note (other than notices of the incurrence of Senior
Indebtedness, which shall be provided to the Lender substantially concurrently
with the incurrence of such Senior Indebtedness); (ii) any claim which the
Lender may now or hereafter have against a holder of Senior Indebtedness arising
out of any and all actions which a holder of Senior Indebtedness in good faith,
takes or omits to take with respect to the Senior Indebtedness (including,
without limitation, (A) actions with respect to the creation, perfection or
continuation of liens in or on any collateral security for the Senior
Indebtedness, (B) actions with respect to the occurrence of any event of default
under any Senior Indebtedness, (C) actions with respect to the foreclosure upon,
sale, release, or depreciation of, or failure to realize upon, any of the
collateral security for the Senior Indebtedness and (D)
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actions with respect to the collection of any claim for all or any part of the
Senior Indebtedness or the valuation, use, protection or release of any
collateral security for the Senior Indebtedness); and (iii) any right to require
holders of Senior Indebtedness to exhaust any collateral or marshal any assets.
(g) Reliance of Holder(s) of Senior Indebtedness. The Lender, by its
acceptance hereof, shall be deemed to acknowledge and agree that the foregoing
subordination provisions are, and are intended to be, an inducement to and a
consideration of each holder of Senior Indebtedness whether such Senior
Indebtedness was created or acquired before or after the creation of the
indebtedness evidenced by this Note, and each such holder of Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and holding, or in continuing to hold, such Senior Indebtedness.
5. Events of Default.
(a) It shall constitute a "Default" under this Note if
(i) An Insolvency Event shall occur,
(ii) A "Default" shall occur under and as defined in the Other Note,
(iii) The Collaboration Agreement shall be terminated (i) by the
Lender due to a breach thereof or default thereunder by the Company or (ii)
by the Company for reasons other than a breach thereof or default
thereunder by the Lender,
(iv) The Company shall default in any material respect in payment or
performance of its obligations under this Note or any other Note Document,
or
(v) Any representation or warranty of the Company made in this Note or
any other Note Document shall be materially inaccurate or untrue when made.
(b) It shall constitute an "Event of Default" under this Note if (i) a
Default shall have occurred and (ii) either (A) such Default is an Insolvency
Event or (B) such Default shall have occurred and be continuing for a period of
at least ten (10) business days after the Lender has provided written notice of
such Default to the General Counsel or the Chief Patent Counsel of the Company.
(c) Automatically upon the occurrence of an Insolvency Event and, at the
option of the Lender, upon the occurrence of any other Event of Default (so long
as such Event of Default shall be continuing on the date the Lender exercises
such option), all principal, interest and other amounts payable by the Company
to the Lender hereunder shall be immediately due and payable, the commitment of
the Lender to make Loans in accordance with Section 1 above shall terminate, and
the Lender may exercise such rights and remedies in respect
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thereof and the Collateral as may be provided in this Note, in any security
agreement governing the Collateral, and as are permitted by law or equity.
6. Lost Documents. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note, and indemnity
satisfactory to the Company (in the case of loss, theft or destruction) or
surrender and cancellation of the Note (in the case of mutilation), the Company
will make and deliver to the Lender a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on the
unpaid principal balance hereunder.
7. Notices. All notices and other communications required or appropriate to
be given hereunder shall be in writing and shall be delivered by hand or mailed
by certified mail, return receipt requested, or sent by facsimile (in which case
a confirming copy shall also be sent by certified mail or courier), to the
following respective addresses or to such other addresses as may be specified in
any notice delivered or mailed as above provided:
(a) If to the Lender, to:
Genentech, Inc.
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Secretary, with a copy to the Treasurer
(b) If to the Company, to:
XOMA Ltd.
0000 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Company Secretary
Any notice of other communication delivered by hand or mail shall be deemed to
have been delivered on the date on which such notice or communication is
delivered by hand, or in the case of certified mail deposited with the
appropriate postal authorities on the date when such notice of communication is
actually received, and in any other case shall be deemed to have been delivered
on the date on which such notice or communication is actually received.
8. Amendments. No provision of this Note may be waived, changed or
modified, or the discharge thereof acknowledged orally, but only by an agreement
in writing signed by the party against which the enforcement of any waiver,
change, modification or discharge is sought.
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9. Assignment.
(a) Except as set forth in this Section 9, none of the rights or
obligations of either party hereto may be assigned or transferred without the
prior written consent of the other party hereto.
(b) Neither party may assign any of its rights and obligations under this
Note in connection with a merger or similar reorganization or the sale of all or
substantially all of its assets; provided, however, that the Lender may assign
such rights and obligations under the Note to X. Xxxxxxxx-Xx Xxxxx Ltd or any of
its affiliates (the "Roche Affiliates") which are directly or indirectly
controlled by it (collectively, with the Roche Affiliates, "Roche") so long as
Roche continues to own at least a majority of the voting capital stock entitled
to participate generally in the election of directors of the Lender.
(c) The Lender may sell, assign or transfer all or a portion of its
interest herein in accordance with, and with the effect provided for in Section
6(b) of the Purchase Agreement and Section 13(a) of the Registration Rights
Agreement.
(d) This Note shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties. Any assignment not in
accordance with this Note shall be void.
10. Presentment, Demand, Etc. Except as otherwise provided herein, the
Company hereby waives presentment for payment, demand, protest and notice of
protest for nonpayment of this Note, and consents to any extension or
postponement of the time of payment or any other indulgence.
11. Governing Law. The parties have agreed that this Note will be governed
by and construed in accordance with the laws of the State of Delaware.
12. Counterparts. This Note may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
13. Titles. The titles of the Sections of this Note are inserted for
reference only, and are not to be considered as part of this Note in construing
this Note Agreement.
14. Disputes. Any disputes under this Agreement will be governed by the
provisions of Article 18 of the Collaboration Agreement.
15. Conditions to Effectiveness; Construction.
(a) This Note shall be effective upon (i) receipt by the Lender of a fully
executed copy of this Note, and (ii) receipt by the Lender of a fully executed
copy of the Security Agreement and each of the other Note Documents.
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(b) Upon effectiveness of this Note, all references to loans and notes in
the Collaboration Agreement and the other Note Documents shall be deemed to
include references to this Note.
16. Definitions. In addition to definitions contained in the Recitals to
this Note, as used in this Note, the following terms shall have the meanings set
forth below:
"Capital Lease Obligations" means the obligations of the Company under
leases of property which are capitalized on the balance sheet of the Company in
accordance with GAAP that are shown as a liability on a balance sheet of the
Company prepared in accordance with GAAP.
"Collateral" has the meaning given such term in the Security Agreement.
"Excess Indebtedness" means the amount, if any, of any obligations of the
Company to the Lender remaining due and payable after the occurrence of an Event
of Default and disposition (or receipt by the Lender of the value as determined
by a court of competent jurisdiction) of all Collateral. Unless and until an
Event of Default shall have occurred and the Lender received the proceeds of
disposition thereof (or the value thereof as determined by a court of competent
jurisdiction), there will be no Excess Indebtedness.
"GAAP" means generally accepted accounting principles in the United States
as in effect from time to time.
"Insolvency Event" means any of the following events: (1) the Company or
the Subsidiary shall have had an order for relief entered with respect to it or
shall commence a voluntary case under any applicable bankruptcy, insolvency or
similar law, or shall consent to the entry of an order for relief in an
involuntary case or to the conversion of an involuntary case to a voluntary
case, or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or the
Company or the Subsidiary shall make any assignment for the benefit of
creditors; (2) the Company or the Subsidiary shall be unable to pay its debts as
such debts become due; (3) a court of competent jurisdiction shall enter a
decree or order for relief in respect of the Company in an involuntary case
under applicable bankruptcy, insolvency or similar law, which decree or order is
not stayed; or (4) an involuntary case shall be commenced against the Company or
the Subsidiary under applicable bankruptcy, insolvency or similar law; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Company, the Subsidiary or any of their
respective property, shall have been entered; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other custodian of
the Company or the Subsidiary for all or a substantial part of its property; or
a warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of the Company or the Subsidiary,
and such event described in shall continue for 60 days without having been
dismissed, bonded or discharged.
"Interest Period" means, with respect to any Loan and subject to the custom
and practice of the London eurodollar deposit market, a period beginning on the
date such Loan is
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made and on each January 1 and July 1 thereafter and ending on the earlier of
the next January 1, July 1, or the scheduled maturity date of such Loan.
"Joint Core Team" means the Joint Core Team established in accordance with
the Collaboration Agreement.
"Joint Steering Committee" means the Joint Steering Committee established
in accordance with the Collaboration Agreement.
"LIBOR Rate" means, for each Interest Period, a rate of interest per annum
equal to the London Interbank Offered Rate (LIBOR) for eurodollar deposits made
on the applicable LIBOR Rate Determination Date for a period most closely
corresponding to such Interest Period as determined by the Lender based on
published rates from Bloomberg or The Wall Street Journal (Western Edition). The
Lender shall determine the applicable interest rate for each Interest Period as
of each LIBOR Rate Determination Date in accordance with Section 2(a) and shall
notify the Company promptly thereafter. If LIBOR Rates cease to be available as
contemplated hereby or shall fail to fairly reflect a basis for determining the
cost for the Lender to fund Loans under this Note or it shall be illegal for the
Lender to make loans on such basis, the parties agree to discuss in good faith a
comparable interest rate on each Tranche.
"LIBOR Rate Determination Date" means the first day of each Interest
Period, it being understood that, in accordance with the custom and practice of
the London eurodollar deposit market, the LIBOR Rate effective as of the LIBOR
Rate Determination Date may be based on calculations made as a result of market
conditions and quotations made two London business days prior to the LIBOR Rate
Determination Date
"Note Documents" means this Note, the Other Note, the Purchase Agreement,
the Collaboration Agreement, the Security Agreement, the Registration Rights
Agreement and each other document, agreement or instrument executed or delivered
by the Company in connection herewith or therewith.
"Regulatory Approval" has the meaning given such term in the Collaboration
Agreement.
"Senior Indebtedness" means, unless otherwise agreed by the Lender in
writing, (i) Capital Lease Obligations of the Company in effect as of the date
of this Note in an aggregate amount not to exceed $2,400,000 secured by such
equipment and (ii) other obligations of the Company incurred with the consent of
Lender, which consent shall not be unreasonably withheld.
"Subsidiary" means XOMA (US) LLC.
"Tranche" means one of the loans made from time to time under Section 1
hereof, and "Tranches" means two or more of such loans collectively.
(Signature page follows)
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IN WITNESS WHEREOF, this Note Agreement has been executed and delivered on
the date first above written by duly authorized representatives of the Company
and the Lender.
XOMA LTD.
By:
----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President and Chief
Operating Officer
GENENTECH, INC.
By:
----------------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT A
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The capitalized terms used in this Exhibit A shall have the meanings set
forth for each such term in body of the Note Agreement to which it is attached.
1. Subsidiaries. The Company has no active subsidiaries and does not
otherwise directly or indirectly control any other business entity, other than
XOMA Limited, a United Kingdom company, XOMA (US) LLC, a Delaware limited
liability company, XOMA (Bermuda) Ltd., a Bermuda company, XOMA Technology Ltd.,
a Bermuda company and XOMA Ireland Limited, an Irish company, all of which are
wholly-owned by the Company. The Company has furnished the Lender with true,
correct and complete copies of its Memorandum of Continuance and Bye-Laws,
together with any amendments thereto as of the date hereof.
2. Organization. The Company is a company duly organized, validly existing
and in good standing under the laws of the Commonwealth of Bermuda and is
qualified to do business as a foreign company in each jurisdiction where failure
to qualify would have a material adverse effect on the business or properties of
the Company. The Company has full company power and authority to own its
property, to carry on its business as presently conducted and to carry out the
transactions contemplated hereby.
3. Authorization. The Company has requisite company power to execute,
deliver and perform this Note and each of the other Note Documents, and each
such agreement has been duly executed and delivered by the Company and is the
legal, valid and, assuming due execution by the Lender as necessary, binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors generally, and to general equitable principles. The
execution, delivery and performance by the Company of this Note and each of the
other Note Documents, including the borrowing of Loans and the issuance, sale
and delivery of this Note, Series B Preference Shares and the Common Shares as
contemplated hereby and thereby have been duly and validly authorized by all
necessary company action of the Company.
4. Valid Issuance of Common Shares, Note; Series B Preference Shares. The
Series B Preference Shares and Common Shares, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly authorized, validly issued, fully paid and non-assessable, and, based in
part upon the representations of the Lender on Schedule 1 hereof, will be issued
in compliance with the Bermuda Companies Act and all applicable Bermuda, federal
and state securities laws. This Note is duly authorized and validly issued and,
based in part upon the representations of the Lender, has been issued in
compliance with the Bermuda Companies Act and all applicable Bermuda, federal
and state securities laws.
5. Governmental Approvals. Based in part on the representations made by the
Lender on Schedule 1 hereof no authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any applicable laws, rules or regulations presently in effect, is
or will be necessary to be made or obtained by the Company for, or in connection
with the execution and delivery of this Note or any Note Document or
consummation of the transactions contemplated hereby or thereby or performance
by the Company of its obligations hereunder or thereunder, except for (i) such
other filings under applicable securities laws which will be made by the Company
within the prescribed periods, including the filing by the Company of a notice
under Section 25102(f) of the California Codes, as amended, and the payment of
any fee relating thereto and (ii) any of the foregoing required in connection
with the conversion of the Series B Preference Shares.
6. Litigation. Except as disclosed in the Company's most recent report
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1943, as amended (the "Exchange Act") that calls for such
disclosure, there is no litigation or governmental proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company
which would materially and adversely affect (i) the execution and delivery of
this Note and the other Note Documents, or (ii) the performance by the Company
of its obligations hereunder or thereunder.
7. Absence of Certain Developments. Since the date of its most recent
report filed with the Securities and Exchange Commission pursuant to the
Exchange Act that calls for such disclosure, except as disclosed therein or in
Company press releases (including joint press releases) released publicly prior
to the date hereof, there has been no (i) material adverse change in the
business, properties, results of operations or financial condition of the
Company, excluding, however, any such effect caused by economic, tax, or other
matters of general applicability or by matters generally affecting the industry
in which the Company conducts business (in each case, however, only to the
extent the Company is not affected disproportionately).
8. Other Indebtedness. Except as disclosed or reflected in the financial
statements contained in its most recent report filed with the Securities and
Exchange Commission pursuant to the Exchange Act that calls for such disclosure,
the Company has no outstanding material indebtedness. For this purpose,
indebtedness means all obligations of the Company for borrowed money evidenced
by notes, bonds, debentures or similar instruments, for which interest charges
are customarily paid, other than accounts payable and accrued obligations
incurred in the ordinary course of business consistent with past practice.
9. Non-Contravention. The execution, delivery and performance by the
Company of this Note and the other Note Documents (i) do not and will not
contravene or conflict with the Memorandum of Continuance or Bye-Laws of the
Company and (ii) do not contravene or conflict with or, based in part on the
representations made by the Lender and assuming satisfaction of the requirements
referenced in the Purchase Agreement and the Registration Rights Agreement,
constitute a violation of any provision of law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company, or result
in a breach of or constitute a default under any material agreement of the
Company (whether
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upon notice or passage of time), in any manner which would materially and
adversely affect the Lender's rights or its ability to realize the intended
benefits to it under this Note or the other Note Documents.
10. Filings. The Company has filed in a timely manner the following reports
required to be filed with the Securities and Exchange Commission under the
Exchange Act: (i) the Company's annual report on Form 10-K for the most recent
fiscal year for which such filing is required by the Exchange Act and (ii) all
of its other reports (including without limitation reports on Form 8-K),
statements, schedules and registration statements filed with the Securities and
Exchange Commission. As of its filing date, no such report or statement filed
pursuant to the Exchange Act contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
SCHEDULE 1 TO EXHIBIT A
REPRESENTATIONS AND WARRANTIES OF THE LENDER
The Lender hereby makes the following representations and warranties to the
Company each time the Company makes the representations and warranties listed on
the Exhibit A to the Note Agreement (the capitalized terms used in this Schedule
1 to Exhibit A shall have the meanings set forth for each such term in the body
of the Note Agreement to which it is attached):
1. Corporate Power. The Lender is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Lender has full corporate power and authority to carry on its business as
presently conducted and to carry out the transactions contemplated hereby.
2. Authorization. The Lender has full corporate power to execute, deliver
and perform the Purchase Agreement, the Collaboration Agreement, the Note
Agreement, the Other Note, the Security Agreement and the Registration Rights
Agreement (collectively, the "Note Documents"), and each such agreement has been
duly executed and delivered by the Lender and is the legal, valid and, assuming
due execution by the Company, binding obligation of the Lender, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles. The execution, delivery and
performance by the Lender of the Note Documents, including the making of the
loans contemplated thereby, have been duly and validly authorized by all
necessary corporate action of the Lender.
3. Investment Representations.
(a) The Lender (A) has acquired and will acquire the Note and the Other Note
(including the making of each loan pursuant to Section 8.1 of the
Collaboration Agreement), (B) will acquire the Series B Preference Shares
upon conversion of the Other Note (in the event of any such conversion),
and (C) will acquire the Common Shares upon conversion of the Series B
Preference Shares (in the event of any such conversion) (the Note, the
Other Note, the Series B Preference Shares and such Common Shares,
collectively, the "Securities") for its own account for investment only and
not with a view to any resale or
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distribution thereof, except pursuant to an effective registration
statement under the Securities Act of 1933, as amended from time to time
(the "Securities Act"), covering the sale, assignment or transfer or an
opinion of counsel in form and substance satisfactory to the Company that
such registration is not required.
(b) The Lender has had the opportunity to obtain, receive and review the
Company`s reports and other filings with the U.S. Securities and Exchange
Commission and such other information as it deems necessary to understand
the business and financial condition of the Company and to make the
investment decision to purchase the Securities.
(c) As an investor in companies in the biopharmaceutical industry and a
participant in such industry, the Lender has such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of the investment represented by the Securities, and it is
able to bear the economic risk of such investment.
(d) The Lender understands that the Securities have been, are being, or will
be, sold or issued in a transaction which is exempt from the registration
requirements of the Securities Act by reason of the provisions of Section
4(2) of the Securities Act (or Section 3(a)(9) of the Securities Act in the
case of the issuance of the Series B Preference Shares and the Common
Shares upon conversion of the Other Note and the Series B Preference
Shares, respectively), and that such securities will be subject to transfer
restrictions and must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is
available.
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EXHIBIT B
LOANS AND PAYMENTS OF PRINCIPAL AND INTEREST
Principal Principal
Applicable Amount Amount Interest Amount
Tranche Date Borrowed Repaid Paid Converted Notation By
--------------------- ------------------ ---------------- -------------- --------------- -------------- --------------
A $2,943,359 March 31, 2003 $2,943,359 N/A N/A N/A
