AVALON PHARMACEUTICALS, INC. AMENDED AND RESTATED LINE OF CREDIT AGREEMENT
EXHIBIT 10.45
AVALON PHARMACEUTICALS, INC.
AMENDED AND RESTATED LINE OF CREDIT AGREEMENT
This
Amended and Restated Line of Credit Agreement (this
“Agreement”) is made and
entered into as of September 8, 2005 (the “Effective Date”) by and among Avalon
pharmaceuticals, inc., a Delaware corporation (the “Company”), and the individuals and
entities listed on the Schedule of Lenders attached hereto as Exhibit A (individually, a “Lender”
and collectively the “Lenders”), and amends and restates that certain Line of Credit Agreement,
made and entered into as of August 30, 2005 (the “Original Agreement”) in accordance with Section
8.8 of the Original Agreement.
Recitals
Whereas, no borrowings have been made under the Original Agreement and the conditions
to the making of advances thereunder not yet having been met, the Company and the Majority Lenders
desire to amend and restate the Original Agreement;
Whereas, the Company has offered each of the individuals and entities listed on
Exhibit B attached hereto the opportunity to enter into the Original Agreement and this Agreement
as a Lender;
Whereas, of the individuals and entities listed on Exhibit B, each of individuals and
entities listed on Exhibit A desires to accept the Company’s offer to enter into the Original
Agreement and this Agreement as a Lender hereunder; and
Whereas, in exchange for a commitment from each Lender to loan funds to the Company
on the terms and conditions set forth herein, the Company will issue a subordinated promissory note
to each Lender.
Agreement
Now Therefore, the parties to this Agreement, for good and valuable consideration,
the receipt and sufficiency of which is acknowledged and agreed, hereby agree as follows:
1. Loan Amount; Issuance of Notes; Acknowledgment of Commitment.
1.1 Loan Amount; Issuance of Notes. Subject to the terms of this Agreement, each Lender
agrees, severally and not jointly, to lend to the Company up to the maximum amount set forth below
such Lender’s signature on the Lender’s signature page hereto. Each Lender’s loan commitment
amount, as may be adjusted pursuant to Section 1.3 hereof, shall be reflected under the heading
“Maximum Advance under Note” opposite such Lender’s name on Exhibit A (the “Loan Amount”). To
evidence the Company’s obligation to repay such advances, the Company shall issue to each Lender a
Subordinated Promissory Note for such Loan Amount in the form attached hereto as Exhibit C (the
“Note”).
1.2 Intentionally Omitted.
1.3 Acknowledgment of Commitment. Each Lender’s loan commitment amount may be accepted or
rejected, in whole or in part, by the Company, in its sole and absolute
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discretion. No commitment shall be deemed accepted until the Company has expressly accepted
such commitment by execution of the acceptance set forth on Lender’s signature page hereto.
2. Closing.
2.1 Closing. The closing hereunder (the “Closing”) shall be held on the date hereof at the
offices of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, or at such other time and place as the Company and the Lenders shall agree (the “Closing
Date”).
2.2 Delivery. At the Closing, the Company shall deliver to each Lender a duly executed Note
for such Lender’s Loan Amount, and each Lender shall duly execute and deliver to the Company an
acceptance and acknowledgment for their respective Note as contemplated by the form of Note.
2.3 Advances. Subject to the prior receipt of Requisite Stockholder Approval and the
expiration of the Stockholder Notice Period (each defined below), funds may be requested by the
Company and shall be advanced by the Lenders from time to time after the Closing on the terms and
conditions set forth in the Notes. Any such advances shall be requested and funded among the
Lenders on a Pro Rata basis. As used in this Agreement, each Lender’s “Pro Rata” share is the
ratio of (i) the total Loan Amount for such Lender to (ii) the total aggregate sum of the Loan
Amounts for all Lenders as set forth on Exhibit A hereto. Notwithstanding the foregoing, no advance
shall be made hereunder after the Termination Date (defined in Section 7).
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to each Lender as follows:
3.1 Corporate Power. Subject to the receipt of Requisite Stockholder Approval and the
expiration of the Stockholder Notice Period, the Company will have at the Closing Date all
requisite corporate power to execute and deliver this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
3.2 Authorization. Subject to the receipt of Requisite Stockholder Approval and the
expiration of the Stockholder Notice Period, all corporate action on the part of the Company, its
directors and its stockholders necessary for the authorization, execution, delivery and performance
of this Agreement and the Notes (collectively, the “Loan Documents”) by the Company and the
performance of the Company’s obligations hereunder and thereunder, including the issuance and
delivery of the Notes has been taken or will be taken prior to the issuance of such Notes. The
Loan Documents, subject to the receipt of Requisite Stockholder Approval and the expiration of the
Stockholder Notice Period, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company enforceable against the Company in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors
and, with respect to rights to indemnity, subject to federal and state securities laws. Subject to
the receipt of Requisite Stockholder Approval and the expiration of the Stockholder Notice Period,
the Notes, when issued in compliance with the provisions of the Loan Documents, will be validly
issued. The issuance of the Notes pursuant to
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the provisions of this Agreement will not violate any preemptive rights or rights of first
refusal granted by the Company that will not be validly complied with or waived. The Notes, when
issued in compliance with the provisions of the Loan Documents, will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon the Lenders through
no action of the Company; provided, however, that the Notes may be subject to restrictions on
transfer under the Company’s Bylaws, state and/or federal securities laws and other agreements to
which the Lenders are parties.
3.3 Governmental Consents. All consents, approvals, orders, or authorizations of, or
registrations, qualifications, designations, declarations, or filings with, any governmental
authority, required on the part of the Company in connection with the valid execution and delivery
of the Loan Documents, the offer, sale or issuance of the Notes, or the consummation of any other
transaction contemplated hereby shall have been obtained and will be effective at the Closing,
except for notices required or permitted to be filed with certain state and federal securities
commissions, which notices will be filed on a timely basis.
3.4 Offering. Assuming the accuracy of the representations and warranties of the Lenders
contained in Section 4 hereof, the offer, issue, and sale of the Notes are and will be exempt from
the registration and prospectus delivery requirements of the Securities Act of 1933, as amended
(the “Securities Act”), and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit, or qualification requirements of all applicable
state securities laws.
4. Representations and Warranties of the Lenders.
Each Lender, severally and not jointly, hereby represents and warrants to the Company as
follows:
4.1 Lending for Own Account. Such Lender represents that it is or will be acquiring the Notes
solely for its own account and not for sale or with a view to distribution of the Notes or any part
thereof, has no present intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the same, and does not presently have
reason to anticipate a change in such intention.
4.2 Information and Sophistication. Such Lender (i) acknowledges that it has received all the
information it has requested from the Company and it considers necessary or appropriate for
deciding whether to acquire the Notes, (ii) represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the offering
of the Notes and to obtain any additional information necessary to verify the accuracy of the
information given such Lender and (iii) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and risk
of lending funds to the Company under this Agreement. Without limiting the foregoing, such Lender
is relying on its own independent investigation of the Company and on its own respective
professional advisors in entering into this Agreement and consummating the transactions described
herein, and not on the advice or recommendation of any other Lender or of counsel or the
professional advisors for any other Lender.
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4.3 Ability to Bear Economic Risk. Such Lender acknowledges that investment in the Notes
involves a high degree of risk, and represents that it is able, without materially impairing its
financial condition, to bear the credit risk of lending to the Company on a subordinated and
unsecured basis.
4.4 Limitations on Transferability. Such Lender covenants that in no event will it dispose of
all or any portion of the Notes unless and until (a) the Lender shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition, and (b) if requested by the Company, the Lender shall have
furnished the Company with an opinion of counsel satisfactory in form and substance to the Company
and the Company’s counsel to the effect that (x) such disposition will not require registration
under the Securities Act and (y) appropriate action necessary for compliance with the Securities
Act and any applicable state, local, or foreign law has been taken; provided,
however, that notwithstanding the limitations previously set forth, (i) a Lender may
transfer Notes to its affiliates (as such term is defined in Regulation D promulgated under the
Securities Act) and (ii) if the Lender is a partnership it may transfer Notes to its constituent
partners or a retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or transfer by gift, will, or intestate succession to
any such partner’s spouse or lineal descendants or ancestors, in each case without the necessity of
registration or opinion of counsel if the transferee agrees in writing to be subject to the terms
of this Agreement to the same extent if such transferee were a Lender (the persons set forth in
clauses (i) and (ii) being referred to as “Affiliates”); provided, however, that
Lender hereby covenants not to effect such transfer if such transfer either would invalidate the
securities laws exemptions pursuant to which the Notes were originally offered and sold or would
itself require registration and/or qualification under the Securities Act or applicable state
securities laws. Each Note transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 4.5 below, except that such certificate shall not bear such legend if
the opinion of counsel referred to above is to the further effect that such legend is not required
in order to establish compliance with any provisions of the Securities Act.
4.5 Each Lender understands and agrees that all Notes to be issued to such Lender shall be
stamped or otherwise imprinted with legends substantially similar to the following (in addition to
any legend required under the Company’s Bylaws and applicable state securities laws):
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”)
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THIS NOTE IS SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN AMENDED AND RESTATED LINE OF CREDIT
AGREEMENT BY AND BETWEEN THE HOLDER AND THE
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COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.
4.6 Accredited Investor Status. Each Lender is an “accredited investor” as such term is
defined in Rule 501 under the Securities Act.
5. Further Assurances. The Company and each Lender agree and covenant that at any time
and from time to time they will promptly execute and deliver to each other such further instruments
and documents and take such further action as each of the parties hereto may reasonably require in
order to carry out the full intent and purpose of this Agreement.
6. Requisite Stockholder Approval and Notice.
(a) As soon as practicable after the date of this Agreement, the Company shall take all steps
necessary to obtain Requisite Stockholder Approval either by written consent of its stockholders or
at a duly called stockholder meeting. In the event the Company determines to obtain Requisite
Stockholder Approval at a stockholder meeting, the Company shall, as soon as practicable following
the date of this Agreement, establish a record date in connection therewith and duly call, give
notice of, convene and hold a meeting of its stockholders for the purpose of obtaining Requisite
Stockholder Approval. As used herein, the term “Requisite Stockholder Approval” means the
affirmative vote or written consent of the holders of (i) a majority of the Company’s outstanding
voting securities, on an as-converted into common stock basis, (ii) at least 60% of the Company’s
outstanding Series A Preferred Stock, and (iii) at least 60% of the Company’s outstanding Series B
Preferred Stock, to (A) amend the Company’s certificate of incorporation, as amended, to provide
for the conversion into Common Stock of any outstanding shares of Series A Preferred Stock and
Series B Preferred Stock held by individuals or entities specified on Exhibit B hereto as
“Converted Stockholders” at a conversion rate of 1 share of Series A Preferred Stock or Series B
Preferred Stock for 0.125 shares of Common Stock (as adjusted for any stock splits, combinations,
stock dividends or other similar events after the Effective Date (the “Charter Amendment”), and (B)
to approve the transactions contemplated hereby, including the creation, authorization and issuance
of the Notes. Promptly following the Company’s receipt of Requisite Stockholder Approval, subject
to the expiration of the Stockholder Notice Period, the Company shall file and effect the Charter
Amendment with the Secretary of State of the State of Delaware.
(b) As soon as practicable after the date of this Agreement, to the extent not previously
provided by the Company, the Company shall provide written notice (the “Stockholder Notice”) to
each holder of its Series A Preferred Stock and Series B Preferred Stock, by first class mail,
postage prepaid, addressed to such holder at the last address of such holder as shown by the
records of the corporation of the Company’s intention to file the Charter Amendment. Prior to the
expiration of 30 days following the delivery of the Stockholder Notice to holders of the Company’s
Series A Preferred Stock and Series B Preferred Stock (the “Stockholder Notice Period”), the
Company shall refrain from filing the Charter Amendment.
(c) At any meeting of stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the Lender’s vote, consent or other approval is sought
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(including by written consent), the Lender shall vote (or cause to be voted) all shares of the
Company’s voting securities held of record or beneficially owned by Lender in favor of the Charter
Amendment.
7. Termination of Advances. For purposes hereof, the “Termination Date” after which no
further advances may be made shall be the first to occur of:
(a) April 30, 2006;
(b) the date of closing of the Company’s first firm commitment underwritten public
offering of its Common Stock registered under the Securities Act (the “Initial Offering”);
(c) the date of closing of the first equity financing after the date of this Agreement,
other than an Initial Offering, pursuant to which the Company raises in a single or series
of related transactions at least $10 million in aggregate cash proceeds (not including the
proceeds raised pursuant to this Agreement) (the “Next Equity Financing”);
(d) the date of a Liquidity Event. “Liquidity Event” means a liquidation, dissolution
or winding up of the Company, as defined in the Company’s Amended and Restated Certificate
of Incorporation, as amended, but excluding from such definition of a liquidation,
dissolution or winding up of the Company the right of holders of at least sixty percent
(60%) of the Company’s then outstanding Series B Preferred Stock to determine not to treat
an event otherwise constituting a liquidation, dissolution or winding up of the Company as
such under the Company’s Amended and Restated Certificate of Incorporation, as amended; or
(e) the date on which the Company delivers a written notice to the Lenders that it does
not intend to request any further advances under this Agreement.
8. Miscellaneous.
8.1 Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any third party any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.
8.2 Governing Law. This Agreement shall be governed by and construed under the laws of the
State of Delaware excluding conflict of laws principles that would cause the application of laws of
any other jurisdiction. Any claim, cause of action, suit or demand allegedly arising out of or
related to this Agreement, or the relationship of the parties, shall be brought exclusively in the
state courts of Maryland or federal courts located in the State of Maryland, and the parties
irrevocably consent to the exclusive jurisdiction and venue of such courts and waive any objections
they may have at any time to such exclusive jurisdiction and venue.
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8.3 Waiver of Preemptive Rights under Stockholders’ Agreement. Pursuant to Section 12 of that
certain Stockholder’s Agreement, dated October 26, 2001, as amended, by and among the Company and
certain of the Company’s stockholders (the “Stockholders’ Agreement”), the Company and Lenders,
constituting the requisite parties to the Stockholders’ Agreement necessary to waive the observance
of certain provisions of the Stockholders Agreement implicated by this Agreement, hereby waive any
obligation of the Company under Section 7 of the Stockholders Agreement to offer each Stockholder
(as defined in the Stockholders’ Agreement”) the right to participate in the sale of the Notes
pursuant to this Agreement.
8.4 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument. Facsimile signatures shall be as effective as original signatures.
8.5 Expenses. Each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of the Agreement and the transactions contemplated
by the Agreement.
8.6 Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.
8.7 Notices. All notices required or permitted hereunder or under the Notes shall be in
writing (including facsimile, electronic mail or similar electronic transmissions), and shall be
deemed effectively given: (a) when received by the addressee, if delivered by hand, facsimile,
electronic mail or similar form of electronic transmission, (b) five days after mailing, if mailed
by registered or certified mail, return receipt requested, postage prepaid or (c) one day after
deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent (i) to the Company at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President or Chief Financial Officer or (ii) to a
Lender at its address shown on Exhibit A, or at such other address as such party may designate by
written notice to the other party.
8.8 Amendment; Waiver. No amendment or waiver of any provision of this Agreement shall be
effective unless in writing and approved by the Company and (i) if any principal or interest is
then outstanding under the Notes, Lenders then holding greater than 50% of the outstanding unpaid
principal and interest under all of the Notes or (ii) if no principal or interest is then
outstanding under the Notes, Lenders who as of the Closing hold Notes having an aggregate Loan
Amount representing greater than 50% of the total aggregate sum of the Loan Amounts for all Lenders
as of the Closing as set forth on Exhibit A hereto (in the case of (i) and (ii) above, the
“Majority Lenders”).
8.9 Entire Agreement. This Agreement and the Exhibits hereto constitute the full and entire
understanding and agreement between the Company and the Lenders with regard to the subjects hereof
and no party shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein. This Agreement and
the Exhibits hereto supersedes and replaces all prior oral or written
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agreements, commitments or understandings (including the Original Agreement) with respect to
the matters provide for herein among the Company and the Lenders.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, the undersigned Lender has executed this Amended and Restated
Line of Credit Agreement as of the date first written above.
Lender:
| If you are an individual, print your name and sign below. | If you are signing on behalf of an entity, please print the name of the entity and your name and sign below indicating your title. | |||
| Name of Individual (Please Print) | Name of Entity (Please Print) | |||
| By: | ||||
Signature
|
Print Name of Authorized Person | |||
| Signature | ||||
| Title | ||||
Loan Commitment: U.S. $
Acceptance of Loan Commitment
In Witness Whereof, the Company has executed this Line of Credit Agreement
as of the date first written above and hereby accepts the above loan commitment by Lender in the
amount of U.S. $ .
Company:
Avalon Pharmaceuticals, Inc.
By:
|
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| Print Name of Authorized Person | ||||
| Signature | ||||
| Title | ||||
LIST OF EXHIBITS
Exhibit A: Schedule of Lenders
Exhibit B: Schedule of Offered Individuals and Entities
Exhibit C: Form of Subordinated Promissory Note
Exhibit A
SCHEDULE OF LENDERS
| Name & Address | Maximum Advance under Note | |||
AIG Horizon Partners Fund, L.P. |
$ | 133,910 | ||
AIG Horizon Side-by-Side Fund, L.P. |
$ | 109,563 | ||
AIG Private Equity Partners I, L.P. |
$ | 51,646 | ||
c/o AIG Global Investment Group |
||||
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ |
$ | 55,335 | ||
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ |
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▇▇▇▇▇▇▇▇, ▇▇ |
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
$ | 6,940 | ||
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
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Catalytix, LDC |
$ | 98,433 | ||
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
$ | 10,000 | ||
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇▇▇ ▇▇▇ |
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
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EuclidSR Partners, L.P. |
$ | 295,200 | ||
EuclidSR Biotechnology Partners, L.P. |
$ | 295,200 | ||
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
||||
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
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Forward Ventures IV, L.P. |
$ | 589,452 | ||
Forward Ventures IV, B, L.P. |
$ | 49,971 | ||
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ |
||||
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇ |
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▇▇▇ ▇▇▇▇▇, C A 92121 |
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A-1
| Name & Address | Maximum Advance under Note | |||
GeneChem Therapeutics Venture Fund L.P. |
$ | 300,000 | ||
c/o GeneChem Management, Inc. |
||||
Attention: Martial Lacroix, Ph.D. |
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▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ |
||||
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ |
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▇▇▇▇▇▇ ▇▇▇ ▇▇▇ |
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GeneLogic, Inc. |
$ | 73,779 | ||
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
GIMV N.V. |
$ | 840,411 | ||
Adviesbeheer GIMV Life Sciences N.V. |
$ | 148,308 | ||
Attention: ▇▇▇▇▇▇▇ Van Beneden |
||||
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ |
||||
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
||||
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ |
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H&Q Healthcare Investors |
$ | 295,118 | ||
H&Q Life Science Investors |
$ | 196,746 | ||
c/o H&Q Capital Management, Inc. |
||||
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||||
▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇ |
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ |
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KBL Healthcare, L.P. |
$ | 179,487 | ||
KBL Partnership, L.P. I |
$ | 21,367 | ||
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
MDS Life Sciences Technology Fund Limited Partnership |
$ | 177,678 | ||
SC Biotechnology Development Fund, L.P. |
$ | 110,669 | ||
MDS Life Sciences Technology Fund USA, L.P. |
$ | 42,010 | ||
MDS Life Sciences Technology Fund Canadian Unit
Trust |
$ | 38,541 | ||
MDS Life Sciences Technology Barbados Investment Trust |
$ | 27,545 | ||
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. |
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇ |
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▇▇▇▇▇▇▇▇ BioCapital AG |
$ | 16,800 | ||
Attention: ▇▇▇▇ ▇▇▇▇▇ |
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▇▇▇▇▇▇▇▇▇▇ ▇ |
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▇▇▇▇▇ ▇▇▇▇▇▇▇ |
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▇▇▇▇▇▇▇ |
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A-2
| Name & Address | Maximum Advance under Note | |||
Novartis BioVentures Ltd. |
$ | 39,349 | ||
c/o Novartis Services, Inc. |
||||
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
||||
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ |
||||
OrbiMed Associates, LLC |
$ | 3,087 | ||
Caduceus Private Investments, L.P. |
$ | 148,289 | ||
PW Juniper Crossover Fund, LLP |
$ | 69,963 | ||
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ |
||||
▇▇▇▇ ▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
Oxford Bioscience Partners, III L.P. |
$ | 594,468 | ||
Oxford Bioscience Partners (Bermuda), III, L.P. |
$ | 84,725 | ||
Oxford Bioscience Partners (Adjunct), III, L.P. |
$ | 63,750 | ||
mRNA Fund L.P. |
$ | 7,057 | ||
c/o Oxford Bioscience Partners |
||||
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D. |
||||
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ |
||||
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust |
$ | 7,397 | ||
c/o Chroma Technology Group |
||||
▇.▇. ▇▇▇ ▇▇▇ |
||||
▇▇ ▇▇▇▇▇ ▇▇▇▇ |
||||
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
Royal Bank of Canada |
$ | 490,000 | ||
2001 RBCP Canadian GP Limited |
$ | 0 | ||
c/o RBC Capital Partners |
||||
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Partner |
||||
▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇ |
||||
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Wing |
||||
Montreal, Quebec |
||||
▇▇▇ ▇▇▇ |
||||
▇▇▇▇▇▇ |
||||
A-3
| Name & Address | Maximum Advance under Note | |||
Sofinov Société Financière D’Innovation |
$ | 590,600 | ||
c/o CDP Capital-Technology Ventures (Sofinov) |
||||
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||||
VantagePoint Venture Partners |
||||
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇ |
||||
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
||||
A-4
Exhibit B
SCHEDULE OF OFFERED INDIVIDUALS AND ENTITIES
| Name of Offered Individuals and Entities | Converted Stockholder 1 | |||
| Yes | No | |||
AIG Horizon Partners Fund, L.P.
|
X | |||
AIG Horizon Side-by-Side Fund, L.P.
|
X | |||
AIG Private Equity Partners I, L.P.
|
X | |||
Alexandria Real Estate Equities, L.P.
|
X | |||
Ariane Health Ltd. LDC
|
X | |||
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
X | |||
Catalytix, LDC
|
X | |||
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
X | |||
▇▇▇▇▇ ▇. ▇▇▇▇▇
|
X | |||
ETP/FBR Venture Capital, LLC as Nominee
|
X | |||
EuclidSR Partners, L.P.
|
X | |||
EuclidSR Biotechnology Partners, L.P.
|
X | |||
Forward Ventures IV, L.P.
|
X | |||
Forward Ventures IV, B, L.P.
|
X | |||
GATX Ventures, Inc.
|
X | |||
GeneChem Therapeutics Venture Fund L.P.
|
X | |||
GeneLogic, Inc.
|
X | |||
GIMV N.V.
|
X | |||
Adviesbeheer GIMV Life Sciences N.V.
|
X | |||
H&Q Healthcare Investors
|
X | |||
H&Q Life Science Investors
|
X | |||
JAFCO L-2 Venture Capital Investment Limited Partnership |
X | |||
B-1
| Name of Offered Individuals and Entities | Converted Stockholder 1 | |||
| Yes | No | |||
JAFCO GC-1 Investment Enterprise Partnership
|
X | |||
▇▇▇▇▇▇▇▇ Cool
|
X | |||
KBL Healthcare, L.P.
|
X | |||
KBL Partnership, L.P. I
|
X | |||
MDS Life Sciences Technology Fund Limited Partnership |
||||
SC Biotechnology Development Fund, L.P. |
||||
MDS Life Sciences Technology Fund USA, L.P.
|
X | |||
MDS Life Sciences Technology Fund Canadian Unit Trust |
X X |
|||
MDS Life Sciences Technology Barbados Investment Trust |
▇ ▇ |
|||
▇▇▇▇▇▇▇▇ BioCapital AG
|
X | |||
National Bank Trust for Altamira Equity Fund |
||||
National Bank Trust for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sciences Fund (formerly Mac & Co.)
|
X X |
|||
Novartis BioVentures Ltd.
|
X | |||
OrbiMed Associates, LLC
|
X | |||
Caduceus Private Investments, L.P.
|
X | |||
PW Juniper Crossover Fund, LLP
|
X | |||
Oxford Bioscience Partners, III L.P.
|
X | |||
Oxford Bioscience Partners (Bermuda), III, L.P.
|
X | |||
Oxford Bioscience Partners (Adjunct), III, L.P.
|
X | |||
mRNA Fund L.P.
|
X | |||
▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust
|
X | |||
Rock Castle Ventures, L.P.
|
X | |||
Royal Bank of Canada
|
X | |||
2001 RBCP Canadian GP Limited
|
X | |||
Sofinov Société Financière D’Innovation
|
X | |||
▇▇▇▇▇ ▇▇▇▇▇▇▇ Gruhin & ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. TEN.
|
X | |||
▇▇▇▇-▇▇▇ ▇▇▇ and ▇▇▇-▇▇▇▇▇ Yu
|
X | |||
| 1 | “X” ▇▇▇▇ indicates whether the offered individual’s/entity’s shares of Series A Preferred Stock and/or Series B Preferred Stock are to be converted into Common Stock pursuant to the Charter Amendment described above. |
B-2
Exhibit C
FORM OF SUBORDINATED PROMISSORY NOTE
C-1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF
A CERTAIN LINE OF CREDIT AGREEMENT BY AND BETWEEN THE LENDER AND THE COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
AVALON PHARMACEUTICALS, INC.
AMENDED AND RESTATED SUBORDINATED PROMISSORY NOTE
| Up to $ | September 8, 20▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ |
For Value Received, Avalon Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), hereby promises to pay to
the order of
[___]
(the “Lender”),
the principal sum of up to ___($___) (the “Maximum Principal
Amount”), or such aggregate lesser amount as may have been advanced and be outstanding hereunder as
set forth on Exhibit A hereto, as amended from time to time, together with accrued and unpaid
interest thereon, each due and payable on September 30, 2006 (“Maturity” and such date the
“Maturity Date”) and in the manner set forth below.
This Note is issued pursuant to the Amended and Restated Line of Credit Agreement dated
September ___, 2005 among the Company and the Lenders listed on the Schedule of Lenders attached
thereto as Exhibit A (the “Credit
Agreement”) and replaces the original note (the
“Original Note”),
if any, issued to Lender pursuant to the Line of Credit Agreement dated August 30, 2005 among the
Company and the Lenders listed on the Schedule of Lenders attached thereto as Exhibit A (the
“Original Agreement”) in accordance with Section 8.8 of the Original Agreement and Section 3.3 of
the Original Note. Additional rights and obligations of the Lender are set forth in the Credit
Agreement. Capitalized terms used and not otherwise defined herein shall have the meanings given
them in the Credit Agreement.
5. Interest. Interest shall accrue on the outstanding principal amount advanced hereunder from the
date of each Cash Advance (as defined below) under this Note until payment or conversion in full,
which interest shall be payable at eight percent (8%) per annum, or the maximum rate permissible by
law (which under the laws of the State of Delaware shall be deemed to be the laws relating to
permissible rates of interest on commercial loans), whichever is less. Interest shall be due and
payable on the Maturity Date, and shall be calculated on the basis of a 365-day year for the actual
number of days elapsed.
C-2
6. Intentionally Omitted.
7. Payment. Payment shall be made in lawful money of the United States to the Lender at the
Company’s principal offices or, at the option of the Lender, at such other place in the United
States as Lender shall have designated by written notice to the Company. The Company reserves the
right to prepay all or any portion of the principal amount of this Note at any time without penalty
or premium. All payments shall be applied first to accrued interest and thereafter to principal
and shall be made pro rata to all holders of Notes on the basis of the amount of all unpaid
principal and accrued interest then outstanding under each Note relative to the aggregate unpaid
principal and accrued interest then outstanding under all the Notes.
8. Cash Advances.
8.1 Cash Advances. Subject to the receipt of Requisite Stockholder Approval and expiration of
the Stockholder Notice Period and the other terms and conditions contained herein, at any time and
from time to time while this Note is outstanding and prior to the Termination Date, the Company
may, upon the unanimous approval of its Board of Directors, request to borrow from the Lender an
amount, as determined by the Board of Directors, up to the remainder of the Maximum Principal
Amount that has not theretofore been advanced to the Company by such Lender; provided, that any
such request (i) may not be made more frequently than once each month while this Note is
outstanding and (ii) must pertain to a drawdown of an aggregate amount of at least $1 million (or,
if lesser, the Maximum Principal Amount then remaining unborrowed). Each amount actually advanced
to the Company under this Note is herein called a “Cash
Advance(s)” and shall be listed on Exhibit
A hereto.
8.2 Requests for Cash Advance. Each request made by the Company for a Cash Advance (a “Cash
Advance Request”) shall be substantially in the form of Exhibit B attached hereto and delivered to
the Lender at the Lender’s address indicated in the Credit Agreement, or at such other address as
the Lender shall have designated by written notice to the Company. Subject to the terms and
conditions contained herein, the Lender shall, within 14 days after receipt of a Cash Advance
Request, deliver to the Company the amount of the requested Cash Advance by check or wire transfer,
in accordance with the Company’s instructions.
9. Payment in Event of Liquidity Event. In the event there shall occur a Liquidity Event prior to
the Maturity Date, subject to the subordination provisions of Section 15 hereof, this Note shall
accelerate and shall be immediately due and payable in an amount equal to (i) if no Initial
Offering has occurred prior thereto, 400% of the principal amount of this Note plus accrued and
unpaid interest thereon and (ii) if an Initial Offering has occurred prior thereto, 100% of the
principal amount of this Note plus accrued and unpaid interest thereon.
10. Termination of Rights. All rights with respect to this Note shall terminate upon the payment
of all outstanding principal and accrued interest outstanding under this Note, whether or not this
Note has been surrendered.
11. Intentionally Omitted.
12. No Impairment. Except and to the extent as waived or consented to in accordance with Section
13 below, the Company will not, by amendment of its certificate of incorporation
C-3
or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of any debt or equity securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in the carrying out of all the provisions of this Note
in order to protect the rights of Lender hereunder against impairment.
13. Highest Lawful Rate. Anything herein to the contrary notwithstanding, if during any period for
which interest is computed hereunder, the amount of interest computed on the basis provided for in
this Note, together with all fees, charges, and other payments or rights which are treated as
interest under applicable law, as provided for herein or in any other document executed in
connection herewith, would exceed the amount of such interest computed on the basis of the Highest
Lawful Rate (as defined below), the Company shall not be obligated to pay, and the Lender shall not
be entitled to charge, collect, receive, reserve, or take, interest in excess of the Highest Lawful
Rate, and during any such period the interest payable hereunder shall be computed on the basis of
the Highest Lawful Rate. “Highest Lawful Rate” means the maximum non-usurious rate of interest, as
in effect from time to time, which may be charged, contracted for, reserved, received, or collected
by the Lender in connection with this Note under applicable law. In accordance with this section,
any amounts received in excess of the Highest Lawful Rate shall be applied towards the prepayment
of principal then outstanding.
14. Waiver. Subject to any other provision herein or in the other Loan Documents, the Company
hereby waives demand, notice, presentment, protest and notice of dishonor.
15. Governing Law. This Note shall be governed by, and construed and enforced in accordance with,
the laws of Delaware, excluding conflict of laws principles that would cause the application of
laws of any other jurisdiction. Any claim, cause of action, suit or demand allegedly arising out
of or related to this Note, or the relationship of the parties, shall be brought exclusively in the
state courts of Maryland or federal courts located in the State of Maryland, and the parties
irrevocably consent to the exclusive jurisdiction and venue of such courts and waive any objections
they may have at any time to such exclusive jurisdiction and venue. The Company promises to pay all
costs of collection, including reasonable attorney fees, upon default in the payment of the
principal of this Note or interest hereon when due, whether at maturity, as herein provided, or by
reason of acceleration of maturity under the terms hereof, whether suit be brought or not.
16. Successors and Assigns. Neither this Note nor any rights hereunder shall be transferable by
the Lender without the prior written consent of the Company, except to an Affiliate of the Lender
that agrees in writing to be subject to the terms of this Note to the same extent as if such
Affiliate were an original Lender hereunder. Subject to the foregoing, the provisions of this Note
shall inure to the benefit of and be binding on any successor to the Company and shall extend to
any holder hereof.
17. Amendment; Waiver. Any term of this Note may be amended or waived with the written consent of
the Company and the Majority Lenders; provided, however, that any amendment to Exhibit A to reflect
any additional Cash Advances made pursuant to Section 4 hereof may be made without further action
by the Company or any of the Lenders.
C-4
18. Counterparts; Facsimile. This Note may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument. Facsimile signatures shall be as effective as original signatures.
19. Subordination. The Company covenants and agrees, and the Lender, by its acceptance of this
Note, hereby covenants and agrees as follows:
(a) The indebtedness evidenced by this Note, as it may be amended, modified, extended, renewed
or substituted from time to time, and all obligations of the Company to pay the principal of and
interest on this Note, and all other amounts and liabilities under this Note, whether such
indebtedness, obligations and liabilities are now existing or hereafter arising (collectively, the
“Subordinated Obligations”) are hereby expressly subordinated to and in favor of the indefeasible
and full payment in cash of all of the Senior Indebtedness, as hereinafter defined, to the extent
and in the manner hereinafter set forth.
(b) As used herein, the term Senior Indebtedness shall mean indebtedness, liabilities and
obligations of the Company to Manufacturers and Traders Trust Company
(“Bank”) of every kind and
nature whatsoever, whether now existing or hereafter arising or created any time, including
without limitation, all indebtedness, liabilities and obligations of the Company to the Bank which
are direct, indirect, contingent, primary, secondary, alone, jointly with others, due, to become
due, unsecured, secured, or future advances and including, without limitation, all liabilities,
indebtedness and obligations of the Company to the Bank.
(c) Until the Senior Indebtedness has been fully and indefeasibly paid in cash, the Lender
shall not, without prior written consent of the Bank, ask for, demand, accelerate, declare a
default under, ▇▇▇ for, set off, accept or receive any payment of all or any part of the
Subordinated Obligations except that the Lender may receive securities that are subordinate to the
Senior Indebtedness to at least the same extent as the Subordinated Obligations.
(d) The Lender and the Company agree, represent and warrant that the Subordinated Obligations
are not secured in any way, directly or indirectly, including, without limitation, by security
agreement, pledge agreement, guaranty agreement, mortgage, deed of trust, or any other document,
lien, encumbrance or otherwise.
(e) In the event of any distribution, division or application, partial or complete, voluntary
or involuntary, by operation of law or otherwise, of all or any part of the assets of the Company
or the proceeds thereof to creditors of the Company or to any indebtedness, liabilities and
obligations of the Company, by reason of the liquidation, dissolution or other winding up of the
Company or the Company’s business, or in the event of any sale, receivership, insolvency or
bankruptcy proceeding, or assignment for the benefit of creditors, or any proceeding by or against
the Company for any relief under any bankruptcy or insolvency law, then any payment or
distributions of any kind or character, either in cash, securities or other property, which shall
be payable or deliverable upon or with respect to all or any part of the Subordinated Obligations
shall be paid or delivered directly to the Bank for application to the Senior Indebtedness (whether
due or not due and in such order and manner as the Bank may elect; and including, without
limitation, any interest accruing subsequent to
C-5
the commencement of any such event or proceeding) until the Senior Indebtedness shall have
been fully paid and satisfied. The Lender hereby irrevocably authorizes and empowers the Bank, and
irrevocably appoints the Bank the Attorneys-in fact for the Lender to demand, ▇▇▇ for, collect and
receive every such payment or distribution and give acquittance therefor and to file claims and
take such other proceedings in the name of the Bank or in the names of the Lender or otherwise, as
the Bank may deem necessary or advisable to carry out the provisions hereof.
(f) The Company and the Lender agrees that the Bank is a third-party beneficiary of the
subordination provisions of any Subordinated Obligations and shall be entitled to enforce such
provisions by proceedings at law or in equity or otherwise. If any of the Senior Indebtedness
should be transferred or assigned by the Bank, the provisions of this Note (or any other note
evidencing any Subordinated Obligations) will inure to the benefit of the transferee and assignee
to the extent of such transfer or assignment, provided that the Bank shall continue to have the
unimpaired right to enforce the provisions of this Note (or any other note evidencing any
Subordinated Obligations) as to any of the Senior Indebtedness not so transferred or assigned. The
subordinate provisions of any Subordinated Obligations shall be binding upon the Lender and the
Company and their respective successors and assigns. None of the subordinate provisions of any
Subordinated Obligations may be waived, modified or amended without the prior written consent of
the Bank, or if any of the Senior Indebtedness has then been transferred or assigned, by the then
holders or obliges of all of the Senior Indebtedness.
(g) The Company shall provide written notice to the Lender as to any additional Senior
Indebtedness incurred by or agreed to by the Company after the date hereof and during such time
that any amounts are outstanding under any Subordinated Obligations.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
C-6
In Witness Whereof, the Company has caused this Amended and Restated Subordinated
Promissory Note to be executed by its duly authorized officer as of the date first written
above.
| Avalon Pharmaceuticals, Inc. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to Amended and Restated Subordinated Promissory Note]
C-7
Acknowledged and Accepted:
Lender: |
||||||
| If you are an individual, print your name and sign below. | If you are signing on behalf of an entity, please print the name of the entity and your name and sign below indicating your title. | |||||
| Name of Individual (Please Print) | Name of Entity (Please Print) | |||||
| By: | ||||||
Signature
|
Print Name of Authorized Person | |||||
| Signature | ||||||
| Title | ||||||
[Signature Page to Amended and Restated Subordinated Promissory Note]
C-8
EXHIBIT A
LIST OF CASH ADVANCES
| Date of Request | Amount of Cash Advance | |||
Cash Advance on
|
$[ ] | |||
| TOTAL: | $[ ] |
C-9
EXHIBIT B
FORM
OF CASH ADVANCE REQUEST
, 200_
To:
|
[Lender] | |
| Attn: |
Dear Sir:
We refer to the Amended and Restated Subordinated Promissory Note dated as of September ___,
2006 (called the “Note”) between and [Lender]. Terms defined in
the Note have the same meanings in this Cash Advance Request.
We hereby request pursuant to the Note and on , 20___[date of proposed Advance]
a Cash Advance of $ , payable by [ ] your check or [ ] wire transfer, in accordance with
our instructions.
Concurrently herewith, we are requesting the following amounts from the other holders of
Notes, which together with the amount requested hereunder are being requested on a Pro Rata basis
in accordance with Section 2.3 of the Credit Agreement:
$
$
$
| Very truly yours, | ||||
| Avalon Pharmaceuticals, Inc. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
C-10