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
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 communications 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/
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Chairman
AGREED TO:
(SEAL)
INHIBITEX, INC.
Attest:
By: /s/ /s/
-------------------------------- --------------------------------------
President Secretary
(SEAL)
Attest:
/s/
-----------------------------------
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
