Contract
Exhibit 10.31
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO XXXX THERAPEUTICS, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.
FOR VALUE RECEIVED, XXXX THERAPEUTICS, INC., a California corporation (the “Parent”), promises
to pay to CALLIOPE CAPITAL CORPORATION, c/o United Corporate Services, Inc. 000 Xxxxxx Xxxx, Xxxxx
X Xxxxx Xxxxxxxx 00000 (the “Holder”) or its registered assigns or successors in interest, the sum
of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000), or, if different, the aggregate
principal amount of all Loans (as defined in the Security Agreement referred to below), together
with any accrued and unpaid interest hereon, on July 30, 2010 (the “Maturity Date”) if not sooner
indefeasibly paid in full.
Capitalized terms used herein without definition shall have the meanings ascribed to such
terms in the Security Agreement between the Parent and the Holder dated as of the date hereof (as
amended, modified and/or supplemented from time to time, the “Security Agreement”).
The following terms shall apply to this Secured Revolving Note (this “Note”):
ARTICLE I
CONTRACT RATE
CONTRACT RATE
1.1 Contract Rate. Subject to Sections 2.2 and 3.9, interest payable on the
outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum
equal to the “prime rate” published in The Wall Street Journal from time to time (the
“Prime Rate”), plus one and one half percent (1.50%) (the “Contract Rate”). The Contract Rate
shall be increased or decreased as the case may be for each increase or decrease in the Prime Rate
in an amount equal to such increase or decrease in the Prime Rate; each change to be effective as
of the day of the change in the Prime Rate. The Contract Rate shall not at any time be less than
nine percent (9.0%) per annum and no more than twelve and one half percent (12.5%) per annum.
Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in
arrears, commencing on September 1, 2007 on the first business day of each consecutive calendar
month thereafter through and including the Maturity Date, and on the Maturity Date, whether by
acceleration or otherwise.
1.2 Contract Rate Payments. The Contract Rate shall be calculated on the last
business day of each calendar month hereafter (other than for increases or decreases in the Prime
Rate which shall be calculated and become effective in accordance with the terms of Section 1.1)
until the Maturity Date and shall be subject to adjustment as set forth herein.
ARTICLE II
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
2.1 Events of Default. The occurrence of an Event of Default under the Security
Agreement shall constitute an event of default (“Event of Default”) hereunder.
2.2 Default Interest. Following the occurrence and during the continuance of an Event
of Default, the Parent shall pay additional interest on the outstanding principal balance of this
Note in an amount equal to one percent (1%) per month, and all outstanding Obligations, including
unpaid interest, shall continue to accrue interest at such additional interest rate from the date
of such Event of Default until the date such Event of Default is cured or waived.
2.3 Default Payment. Following the occurrence and during the continuance of an Event
of Default, the Holder, at its option, may elect, in addition to all rights and remedies of the
Holder under the Security Agreement and the other Ancillary Agreements and all obligations and
liabilities of the Parent under the Security Agreement and the other Ancillary Agreements, to
accelerate the maturity of all amounts due hereunder and to require payment in full of such amounts
within thirty (30) days (“Default Payment”). The Default Payment shall be one hundred twenty
percent (120%) of the outstanding principal amount of the Note, plus accrued but unpaid interest
and all other fees then remaining unpaid, and all amounts payable hereunder, under the Security
Agreement or any other Ancillary Agreement. The Default Payment shall be applied first to any fees
due and payable to the Holder pursuant to the Note, the Security Agreement and/or the Ancillary
Agreements, then to accrued and unpaid interest due on the Notes and then to the outstanding
principal balance of the Note. The Default Payment shall be due and payable immediately on the
date that the Holder has demanded payment of the Default Payment pursuant to this Section 2.3.
ARTICLE III
MISCELLANEOUS
MISCELLANEOUS
3.1 Issuance of New Note. Upon any partial redemption of this Note, a new Note
containing the same date and provisions of this Note shall, at the request of the Holder, be issued
by the Parent to the Holder for the principal balance of this Note and interest which shall not
have been paid. Subject to the provisions of Article II of this Note, the Parent shall not pay any
costs, fees or any other consideration to the Holder for the production and issuance of a new Note.
3.2 Cumulative Remedies. The remedies under this Note shall be cumulative.
3.3 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude
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other or further exercise thereof or of any other right, power or privilege. All rights
and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
3.4 Notices. Any notice herein required or permitted to be given shall be in writing
and shall be deemed effective given (a) upon personal delivery to the party notified, (b) when sent
by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then
on the next business day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Parent at the address provided in the Security Agreement
executed in connection herewith, and to the Holder at the address provided in the Security
Agreement for the Holder, with a copy to Laurus Capital Management, LLC, Attn: Portfolio Services,
000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000)
000-0000, or at such other address as the respective Parent or the Holder may designate by ten days
advance written notice to the other parties hereto.
3.5 Amendment Provision. The term “Note” and all references thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, and any successor instrument as such successor
instrument may be amended or supplemented.
3.6 Assignability. This Note shall be binding upon the Parent and its subsidiaries,
successors and assigns, and shall inure to the benefit of the Holder and its successors and
assigns, and may be assigned by the Holder in accordance with the requirements of the Security
Agreement. The Parent may not assign any of its obligations under this Note without the prior
written consent of the Holder, any such purported assignment without such consent being null and
void.
3.7 Cost of Collection. In case of an occurrence of an Event of Default under this
Note, the Parent shall pay the Holder the Holder’s reasonable costs of collection, including
reasonable attorneys’ fees.
3.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
(b) THE PARENT HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE PARENT, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS; PROVIDED,
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THAT, EACH
PARENT ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED,
THAT, NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE HOLDER. THE PARENT EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE PARENT HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS. THE PARENT HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PARENT AT THE ADDRESS
SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF THE PARENT’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS,
PROPER POSTAGE PREPAID
(c) THE PARENT DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARENT HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE HOLDER, AND/OR THE PARENT ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY
OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
3.9 Severability. In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note.
3.10 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Parent to the Holder and thus refunded to the
Companies.
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3.11 Security Interest. The Holder has been granted a security interest in certain
assets of the Parent as more fully described in the Security Agreement.
3.12 Construction. Each party acknowledges that its legal counsel participated in the
preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.
3.13 Registered Obligation. This Note is intended to be a registered obligation within
the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Parent (or its agent) shall
register this Note (and thereafter shall maintain such registration) as to both principal and any
stated interest. Notwithstanding any document, instrument or agreement relating to this Note to
the contrary, transfer of this Note (or the right to any payments of principal or stated interest
thereunder) may only be effected by (i) surrender of this Note and either the reissuance by the
Parent of this Note to the new holder or the issuance by the Parent of a new instrument to the new
holder, or (ii) transfer through a book entry system maintained by the Parent (or its agent),
within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
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IN WITNESS WHEREOF, the Parent has caused this Secured Revolving Note to be signed in its name
effective as of this 30th day of July, 2007.
| XXXX THERAPEUTICS, INC. |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Chief Executive Officer | |||
WITNESS:
/s/ Xxxxx X. Xxxx |
||
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