EXHIBIT 10.11
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT NO. 3861 (this "Agreement") is entered
into as of March 26, 2004, by and between LIGHTHOUSE CAPITAL PARTNERS V, L.P.
("Lender") and ALNYLAM PHARMACEUTICALS, INC., a Delaware corporation
("Borrower").
RECITALS
Borrower wishes to borrow money from time to time from Lender and Lender
desires to lend money to Borrower. This Agreement sets forth the terms on which
Lender will lend to Borrower and Borrower will repay the loan to Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"ACH" means the nationwide Automated Clearing House electronic
funds transfer system that processes electronically originated batches of credit
and debit transfers.
"ACH Authorization Form" means the ACH Authorization Form in
substantially the form of that attached here to as EXHIBIT E.
"Affiliate" means a Person that directly or indirectly,
through one of more intermediaries, controls or is controlled by, or is under
common control with the Borrower.
"Available Softcost Allowance" means an amount not to exceed
Four Million Dollars ($4,000,000) such amount to be used for software, soft
costs (including tangible assets located outside of the continental United
States), taxes, insurance, freight and installation expenses, soft costs
associated with the SVB Obligations, and general corporate purposes
(collectively, "Soft Costs").
"Basic Rate" means a per annum rate of interest (based on a
year of three hundred and sixty (360) days and actual days elapsed) equal to the
Prime Rate as quoted in the western edition of The Wall Street Journal on the
Funding Date plus 300 basis points.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the Commonwealth of Massachusetts are authorized
or required to close.
"Change in Control" means any transaction, or series of
related transactions whereby the shareholders of the Borrower owning at least
fifty percent (50%) of the outstanding voting securities of the Borrower
immediately prior to such transaction(s) own less than fifty percent (50%) of
the outstanding voting securities of the Borrower as a result of such
transaction(s); provided that a Change of Control shall not include the initial
public offering of the Borrower's securities in an underwritten registration and
sale.
"Code" means the Uniform Commercial Code as adopted and in
effect in the Commonwealth of Massachusetts, as amended from time to time.
"Collateral" means the Property described on EXHIBIT A
attached hereto.
"Commitment" means Ten Million Dollars ($10,000,000).
"Commitment Fee" means Twenty-five Thousand Dollars ($25,000).
"Commitment Termination Date" means June 30, 2005.
"Confidential Disclosure Agreement" means the Confidential
Disclosure Agreement in the form of EXHIBIT G attached hereto.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another, including any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable.
The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
"Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default hereunder.
"Default Rate" means the per annum rate of interest equal to
three percent (3%) above the Basic Rate, but such rate shall in no event be more
than the highest rate permitted by applicable law to be charged on commercial
loans.
"Event of Default" has the meaning given to such term in
SECTION 8.
"Event of Loss" has the meaning given to that term in SECTION
6.10.
"Final Payment" means, with respect to each Loan, a payment
(in addition to and not in substitution for the regular monthly payments of
principal and accrued interest) due on the Maturity Date, equal to the Loan
Amount for such Loan at such time multiplied by the Final Payment Percentage.
"Final Payment Percentage" means Eleven and one half per cent
(11.5%).
"Funding Date" means any date on which a Loan is made to or on
account of Borrower under this Agreement.
"Governmental Authority" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, (c) any court or administrative
tribunal or (d) with respect to any Person, any arbitration tribunal or other
non-governmental authority to whose jurisdiction that Person has consented.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of Property or services, including reimbursement
and other obligations with respect to surety bonds and letters of credit, (b)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(c) all capital lease obligations, and (d) all Contingent Obligations.
"Lender's Expenses" means all reasonable costs or expenses
(including reasonable attorneys' fees and expenses and Lender's out of pocket
costs) incurred in connection with the preparation and negotiation,
administration, and enforcement of the Loan Documents; and Lender's reasonable
attorneys' fees and expenses incurred in amending, modifying, enforcing or
defending the Loan Documents, including in the exercise of any rights or
remedies afforded hereunder or under applicable law, whether or not suit is
brought; provided, however, that Lender's Expenses shall not exceed $20,000 for
the preparation and negotiation of the initial set of Loan Documents.
"Lien" means any pledge, bailment, lease, mortgage,
hypothecation, conditional sales and title retention agreement, charge, claim,
encumbrance or other lien in favor of any Person.
"Liquidation Event" means any of the following: (i) a merger
of Borrower with another entity; or (ii) the sale of all or substantially all of
Borrower's assets; or (iii) a transaction in which the shareholders
immediately prior to such transaction own less than 50% of the equity securities
of Borrower immediately after such transaction; or (iv) the initial public
offering of any of Borrower's equity securities.
"Loan" means each advance of credit by Lender to Borrower
under this Agreement.
"Loan Agreement Supplement" means a supplement to this
Agreement in substantially the form of EXHIBIT C.
"Loan Amount" means, with respect to each Loan, as of any
date, the original principal amount of such Loan less the aggregate of all
Prepayment Amounts relating to prepayments of such Loan paid prior to such date.
"Loan Commencement Date" means July 1, 2005.
"Loan Documents" means, collectively, this Agreement, the
Warrants, and all other documents, instruments and agreements entered into
between Borrower and Lender in connection with this Agreement, all as amended or
extended from time to time.
"Loan Factor" means, with respect to each Loan, the amount set
forth as a percentage in the Summary of Loan Agreement Supplement with respect
to such Loan, calculated using the Basic Rate applicable to such Loan.
"Maturity Date" means June 30, 2009, or if earlier, the date
of prepayment under SECTION 2.5.
"Minimum Funding Amount" means Five Hundred Thousand Dollars
($500,000).
"Negative Pledge Agreement" means an agreement in the form of
EXHIBIT F or such other form as Lender may agree to accept.
"Obligations" means all debt, principal, interest, fees,
charges, expenses and attorneys' fees and costs and other amounts, obligations,
covenants, and duties owing by Borrower to Lender of any kind and description
(whether pursuant to or evidenced by the Loan Documents (other than the
Warrants), or by any other agreement between Lender and Borrower, and whether or
not for the payment of money), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including
the principal, interest and Final Payment due with respect to the Loans, and
including any debt, liability, or obligation owing from Borrower to others that
Lender may have obtained by assignment or otherwise, and further including all
interest not paid when due and all Lender's Expenses that Borrower is required
to pay or reimburse by the Loan Documents (other than the Warrants), by law, or
otherwise.
"Payment Date" has the meaning given to that term in SECTION
2.4(A).
"Permitted Liens" means the following:
(A) The Lien created by this Agreement;
(B) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested
in good faith by appropriate proceedings, provided the same have no
superior priority over Lender's Lien in the Collateral; and
(C) Liens to secure payment of worker's compensation,
employment insurance, old age pensions or other social security
obligations of Borrower in the ordinary course of business of Borrower.
"Person" means and includes any individual, any partnership,
any corporation, any business trust, any joint stock company, any limited
liability company, any unincorporated association or any other entity and any
domestic or foreign national, state or local government, any political
subdivision thereof, and any department, agency, authority or bureau of any of
the foregoing.
"Prepayment Amount" means in the case of a mandatory
prepayment pursuant to SECTIONS 2.5(A) and 6.10, the original Stated Cost of the
item of Collateral with respect to which such prepayment relates.
"Prepayment Fee" means an amount equal to (a) six percent
(6.0%) of the principal amount prepaid during the 2006 calendar year, (b) four
percent (4.0%) of the principal amount prepaid during the 2007 calendar year,
(c) two percent (2.0%) of the principal amount prepaid during the 2008 calendar
year and (d) zero percent (0.0%) of the principal amount prepaid during the 2009
calendar year.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, whether tangible or intangible.
"Repayment Period" means the period beginning on the first
Payment Date and continuing for forty-eight (48) calendar months.
"Responsible Officer" means each of the Chief Executive
Officer and the Chief Financial Officer of Borrower.
"Scheduled Payments" has the meaning given to such term in
SECTION 2.4(A).
"Stated Cost" means with respect to an item of Collateral, the
original cost to Borrower of the item of Collateral net of any and all freight,
installation, tax and other soft costs.
"Stipulated Loan Value" means, with respect to each Loan, the
percentages set forth in ANNEXB to the Loan Agreement Supplement for such Loan.
"Subsidiary" means any corporation of which a majority of the
outstanding capital stock entitled to vote for the election of directors
(otherwise than as the result of a default) is owned by Borrower directly or
indirectly through Subsidiaries.
"Summary of Loan Agreement Supplement" means, with respect to
each Loan, the "Summary of Loan Agreement Supplement" attached as ANNEX C to the
Loan Agreement Supplement prepared by Lender in connection with such Loan.
"SVB Obligations" means, Borrower's existing facility under
that certain Loan and Security Agreement with Silicon Valley Bank dated December
18, 2002, as amended.
"Term" means the period from and after the date hereof until
termination of the Commitment and the payment in full of all Obligations,
including amounts and liabilities payable under this Agreement and the other
Loan Documents, including principal and interest on the Loans and the Final
Payment with respect to each Loan.
"Warrants" means the Warrants in favor of Lender and
Lighthouse Capital Partners IV, L.P. to purchase securities of Borrower
substantially in the form of EXHIBITS B-1 AND B-2.
1.2 OTHER INTERPRETIVE PROVISIONS. References in this Agreement to
"Articles," "Sections," "Exhibits," "Schedules" and "Annexes" are to recitals,
articles, sections, exhibits, schedules and annexes herein and hereto unless
otherwise indicated. References in this Agreement and each of the other Loan
Documents to any document, instrument or agreement shall include (a) all
exhibits, schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c)
such document, instrument or agreement, or replacement or predecessor thereto,
as amended, modified and supplemented from time to time and in effect at any
given time. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement or any other Loan Document shall refer to
this Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular provision of this Agreement or such other Loan Document,
as the case may be. The words "include" and "including" and words or similar
import when used in this Agreement or any other Loan Document shall not be
construed to be limiting or exclusive. Unless otherwise indicated in this
Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all
accounting and financial computations hereunder or thereunder shall be computed,
in accordance with generally accepted accounting principles as in effect in the
United States of America from time to time.
2. LOAN AND TERMS OF PAYMENT
2.1 COMMITMENT. Subject to the terms and conditions of this
Agreement and relying upon the representations and warranties herein set forth
as and when made or deemed to be made, Lender agrees to lend to Borrower the
Loans; provided that the aggregate principal amount of the Loans shall not
exceed the Commitment at such time; provided further, that the aggregate
principal amount of the Loans on the Commitment Termination Date shall not
exceed the Stated Cost of the Tangible Assets (as defined in SECTION 2.2)
financed with such Loan plus the Available Softcost Allowance; provided further
that such financed items are delivered (to the extent delivery is necessary), to
Borrower within ninety (90) days of the Funding Date. With respect to the first
Loan only, provided that the Funding Date of such Loan is within forty-five (45)
days of the closing date of this Agreement, Lender agrees to finance Tangible
Assets delivered (to the extent delivery is necessary) to Borrower in the period
since July 1, 2003 at an amount equal to its Stated Cost. If prepaid, the
principal of the Loans may not be re-borrowed.
2.2 USE OF PROCEEDS; THE LOAN.
(A) USE OF PROCEEDS. The proceeds of the Loans shall be used
solely for the acquisition of new and used computers, peripherals, analytical
and test equipment, laboratory equipment and furniture, office furniture and
equipment and costs for similar items associated with the SVB Obligations
(collectively, the "Tangible Assets"), soft costs (including all tangible assets
located outside of the continental United States, soft costs associated with the
SVB Obligations, taxes, insurance, freight and installation expenses) and
general corporate purposes, subject however to the limits set forth in SECTION
2.1. Each invoice for such equipment shall have a minimum value of One Thousand
Dollars ($1,000) or such lesser amount as Lender may from time to time allow.
(B) THE LOANS. The Loans shall be repayable in consecutive
monthly installments in accordance with the terms of SECTION 2.4. Lender may,
and is hereby authorized by Borrower to, endorse in its books and records
appropriate notations regarding Lender's interest in the Loans; provided,
however, that the failure to make, or an error in making, any such notation
shall not limit or otherwise affect the Obligations of Borrower hereunder.
2.3 PROCEDURE FOR MAKING LOAN.
(A) NOTICE. Whenever Borrower desires that Lender make a Loan,
Borrower shall so notify Lender in writing (or by telephone with prompt
confirmation in writing) at least fifteen (15) Business Days in advance of the
desired Funding Date, which notice shall be irrevocable. Lender's obligation to
make Loans shall be expressly subject to the satisfaction of the conditions set
forth in SECTIONS 3.1 and 3.2. Lender shall have the right, exercisable at any
time, to request that Borrower furnish Lender with such additional information
with respect to the Loans as Lender shall reasonably request.
(B) LOAN INTEREST RATE. Borrower shall pay interest on each
Loan from the Funding Date until such Loan has been paid in full, at a per annum
rate of interest equal to the Basic Rate. The Basic Rate applicable to each Loan
shall be fixed on the Loan Commencement Date and shall not be subject to change
in the absence of a manifest error. All computations of interest on each Loan
shall be based on a year of three hundred and sixty (360) days for actual days
elapsed. Notwithstanding any other provision hereof, the amount of interest
payable hereunder shall not in any event exceed the maximum amount permitted by
the law applicable to interest charged on commercial loans.
(C) LOAN FACTOR AND STIPULATED LOAN VALUE CALCULATION. On the
Loan Commencement Date, Lender shall establish the Loan Factor and a schedule of
Stipulated Loan Values with respect to the applicable Loan. The Loan Factor
shall be calculated in a manner to fully amortize the Loan over the Repayment
Period applicable to such Loan in equal periodic installments of principal and
interest. The Loan Factor and schedule of Stipulated Loan Values applicable to
such Loan shall be set forth in the Loan Agreement Supplement prepared by Lender
with respect to such Loan and shall be conclusive in the absence of a manifest
error.
(D) DISBURSEMENT. Subject to the satisfaction of the
conditions set forth in SECTIONS 3.1 and 3.2 with
respect to the initial Loan and the satisfaction of the conditions set forth in
SECTION 3.2 with respect to each subsequent Loan, Lender shall at its election,
disburse the Loans either through an ACH funds transfer arrangement or via wire
transfer of funds, in each case to an account designated by Borrower.
(E) TERMINATION OF COMMITMENT TO LEND. Notwithstanding
anything in the Loan Documents, Lender's obligation to lend the undisbursed
portion of the Commitment to Borrower hereunder shall terminate on the earlier
of (i) at the Lender's sole election, the occurrence and continuance of any
Default or Event of Default hereunder, and (ii) the Commitment Termination Date.
Notwithstanding the foregoing, Lender's obligation to lend the undisbursed
portion of the Commitment to Borrower shall terminate if, in Lender's sole
judgment, there has been a material adverse change in the general affairs,
management, results of operations, condition (financial or otherwise) or
prospects of Borrower, whether or not arising from transactions in the ordinary
course of business, or there has been any material adverse deviation by Borrower
from the business plan of Borrower presented to and not disapproved by Lender,
since the date of this Agreement.
2.4 AMORTIZATION OF PRINCIPAL AND INTEREST; INTERIM PAYMENT; FINAL
PAYMENT.
(A) PRINCIPAL AND INTEREST PAYMENTS ON PAYMENT DATES. Borrower
shall make payments of principal and accrued interest in advance for each Loan
(collectively, "Scheduled Payments"), commencing on the Loan Commencement Date
with respect to such Loan and continuing thereafter during the Repayment Period
on the first Business Day of each calendar month (each a "Payment Date"), in an
amount equal to the Loan Factor multiplied by the Loan Amount for such Loan as
of such Payment Date. In any event, all unpaid principal and accrued interest
shall be due and payable in full on the last Payment Date with respect to such
Loan.
(B) INTERIM PAYMENT. In addition to the Scheduled Payments,
Borrower shall pay to Lender, monthly in advance, an amount (the "Interim
Payment") equal to accrued interest on the principal amount of each Loan
calculated at the Basic Rate with respect to such Loan from the Funding Date
(and thereafter recalculated on the first Business Day of each calendar month
during which an Interim Payment is due), until commencement of the Repayment
Period with respect to the Loan.
(C) FINAL PAYMENT. On the Maturity Date, Borrower shall pay,
in addition to the unpaid principal and accrued interest and all other amounts
due on such date with respect to such Loan, an amount equal to the Final Payment
with respect to such Loan.
(D) COMMITMENT FEE. The Commitment Fee shall be applied to the
expenses (including documentation and legal expenses), interim payments, the
first month's payment and every subsequent payment until fully applied.
(E) LATE FEE. A late charge on any Scheduled Payments or other
sums due hereunder which are past due, in an amount equal to two percent (2%) of
the past due amount, payable on demand.
2.5 PREPAYMENTS.
(A) PREPAYMENT UPON AN EVENT OF LOSS. If any Collateral is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Loans with respect to such Collateral pursuant to SECTION 6.10, then the Loans
shall be prepaid to the extent and in the manner provided in such section.
(B) MANDATORY PREPAYMENT UPON AN ACCELERATION. If the Loans
are accelerated following the occurrence of an Event of Default or otherwise
(other than following an Event of Loss), then Borrower shall immediately pay to
Lender (i) all unpaid Scheduled Payments with respect to the Loans due prior to
the date of prepayment, (ii) the Stipulated Loan Value with respect to each Loan
multiplied by the Loan Amount of such Loan, and (iii) all other sums, if any,
that shall have become due and payable hereunder with respect to such Loan.
(C) VOLUNTARY PREPAYMENT. Borrower may voluntarily prepay the
Loans, provided that each of the following conditions is satisfied: Borrower
pays to Lender (i) all unpaid Interim and Scheduled Payments with respect to the
Loans due prior to the date of prepayment, plus (ii)(a) in the event the Loans
are prepaid in calendar year 2004 or 2005, the aggregate payments remaining
under the Loans plus any accrued interest, or (b) if the Loans are prepaid
subsequent to calendar year 2005, the outstanding principal amount of the Loans,
any unpaid accrued interest and the applicable Prepayment Fee, plus (iii) the
Final Payment, plus (iv) all other sums, if any, that shall have become due and
payable hereunder with respect to the Loans.
(D) NO OTHER PREPAYMENT. Borrower may not prepay any Loan
except upon the occurrence of an event described in SECTION 2.5(A), (B) OR (C)
above in which event the prepayment shall be made as described in such sections.
2.6 OTHER PAYMENT TERMS.
(A) PLACE AND MANNER. Borrower shall authorize Lender to cause
all payments due to Lender hereunder, whether such payments are on account of
the Loans, expenses, fees or other payments due Lender, to be made through an
ACH funds transfer arrangement reasonably acceptable to Lender, in lawful money
of the United States, in good same day or immediately available funds to an
account designated by Lender. Borrower shall execute and deliver the ACH
Authorization Form substantially in the form of EXHIBIT E hereto, which shall
authorize Lender to take all steps necessary or desirable to cause payments due
Lender by Borrower hereunder to be made via an ACH system. In the event the ACH
payment arrangement is terminated for any reason, Borrower shall make all
payments due to Lender by payments to Lender at the address specified in SECTION
11, in lawful money of the United States and in good same day or immediately
available funds.
(B) DATE. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.
(C) DEFAULT RATE. If either (i) any amounts required to be
paid by Borrower under this Agreement or the other Loan Documents (including
principal, interest, the Final Payment payable with respect to any Loan, and any
fees or other amounts) remain unpaid after such amounts are due, or (ii) an
Event of Default has occurred and is continuing, Borrower shall pay interest on
the aggregate, outstanding balance hereunder from the date due or from the date
of the Event of Default, as applicable, until such past due amounts are paid in
full or until all Events of Default are cured, as applicable, at a per annum
rate equal to the Default Rate. All computations of such interest shall be based
on a year of three hundred sixty (360) days for actual days elapsed.
2.7 MINIMUM FUNDING AMOUNT. Except with the prior consent of Lender,
in Lender's sole discretion, the amount of any requested Loan shall not be less
than the Minimum Funding Amount.
2.8 CREDITING PAYMENTS. The receipt by Lender of any wire transfer
of funds, funds transfer, check, or other item of payment shall be immediately
applied conditionally to reduce Obligations, but shall not be considered a
payment on account unless such wire transfer is of immediately available federal
funds and is made to the appropriate deposit account of Lender or unless and
until such check or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein, any wire transfer or
other payment received by Lender after 1:00 p.m. California time shall be deemed
to have been received by Lender as of the opening of business on the immediately
following Business Day.
2.9 TERM. This Agreement shall become effective upon acceptance by
Lender and shall continue in full force and effect during the Term.
Notwithstanding the foregoing, Lender shall have the right to terminate this
Agreement immediately and without notice upon the occurrence and continuance of
an Event of Default.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of Lender
to make the initial Loan is subject to the condition precedent that Lender shall
have received, in form and substance reasonably satisfactory to Lender, all of
the following:
(A) This Agreement duly executed by Borrower.
(B) The Warrants to be issued to Lender and Lighthouse Capital
Partners IV, L.P. duly executed by Borrower.
(C) The Negative Pledge Agreement in the form of EXHIBIT F to
be issued to Lender duly executed by Borrower.
(D) Borrower shall have delivered to Lender a payoff letter in
form and substance reasonably satisfactory to Lender with respect to the SVB
Obligations and provide evidence of the full release of any and all liens
related to the SVB Obligations.
(E) The ACH Authorization Form in the form of EXHIBIT E
attached hereto duly executed and delivered by Borrower.
(F) Copies of the contracts and agreements referenced in
SECTION 5.14, and any third party consents required by Borrower thereunder for
the execution, delivery and performance of the Loan Documents.
(G) An officer's certificate of Borrower with copies of the
following documents attached: (i) the certificate of incorporation and by-laws
of Borrower certified by Borrower as being in full force and effect on the
Funding Date, (ii) incumbency and representative signatures, and (iii)
resolutions authorizing the execution and delivery of this Agreement and each of
the other Loan Documents.
(H) A good standing certificate from Borrower's state of
incorporation and the state in which Borrower's principal place of business is
located, together with certificates of the applicable governmental authorities
stating that Borrower is in compliance with the franchise tax laws of each such
state, each dated as of a recent date.
(I) The insurance coverage required by SECTION 6.9 of this
Agreement.
(J) All necessary consents of shareholders and other third
parties with respect to the execution, delivery and performance of this
Agreement, the Warrants and the other Loan Documents.
(K) Payment of any unreimbursed Lender's Expenses.
(L) Such other documents, and completion of such other
matters, as Lender may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of Lender to
make each Loan, including the initial Loan, is further subject to the following
conditions:
(A) Evidence that no Default or Event of Default shall have
occurred and be continuing.
(B) Borrower shall have provided to Lender with respect to the
Collateral, vendor invoices, bills of sale, receipts, agreements, proof of
payment, and other documents as Lender shall reasonably request to evidence the
ownership by Borrower of, and the payment in full of the purchase price of, such
Collateral, each in form and substance reasonably satisfactory to Lender.
(C) Borrower and Lender shall have executed a Loan Agreement
Supplement with respect to the proposed Loan.
(D) Lender shall have received such documents, instruments and
agreements, including UCC financing statements or amendments to UCC financing
statements, as Lender shall reasonably request to evidence the perfection and
priority of the security interests granted to Lender pursuant to SECTION 4.
(E) Borrower shall have delivered to Lender a subordination
agreement, release, or estoppel letter, as appropriate, from any Person having
an existing Lien superior to the Lien of Lender on any item of Collateral.
(F) Such other documents, and completion of such other
matters, as Lender may reasonably deem necessary or appropriate.
3.3 COVENANT TO DELIVER. Borrower agrees (not as a condition but as
a covenant) to deliver to Lender each item required to be delivered to Lender as
a condition to the Loan, if such Loan is advanced. Borrower
expressly agrees that the extension of such Loan prior to the receipt by Lender
of any such item shall not constitute a waiver by Lender of Borrower's
obligation to deliver such item.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants to Lender a valid,
first priority, continuing security interest in all presently existing and
hereafter acquired or arising Collateral in order to secure prompt, full and
complete payment of any and all Obligations and in order to secure prompt, full
and complete performance by Borrower of each of its covenants and duties under
each of the Loan Documents.
4.2 DURATION OF SECURITY INTEREST. Lender's security interest in the
Collateral shall continue until the payment in full and the satisfaction of all
Obligations, whereupon such security interest shall terminate; provided,
however, if any item of Collateral is subject to an Event of Loss, then
following the prepayment of the Loan with respect to such item pursuant to
SECTION 2.5, Lender shall release its security interest in such item of
Collateral. Lender shall, at Borrower's sole cost and expense, execute such
further documents and take such further actions as may be necessary to effect
the release contemplated by this SECTION 4.2, including duly executing and
delivering termination statements for filing in all relevant jurisdictions under
the Code.
4.3 POSSESSION OF COLLATERAL. So long as no Event of Default has
occurred and is continuing, Borrower shall remain in full possession, enjoyment
and control of the Collateral (except only as may be otherwise required by
Lender for perfection of their security interest therein) and shall be entitled
to manage, operate and use the same and each part thereof with the rights and
franchises appertaining thereto; provided, however, that the possession,
enjoyment, control and use of the Collateral shall at all times be subject to
the observance and performance of the terms of this Agreement.
4.4 MARKINGS ON THE COLLATERAL. At Lender's reasonable request at
any time during the Term of the Loan (including any extension thereof), Borrower
shall place in a conspicuous location on each item of Collateral a plaque or
other marking to be supplied by Lender which reads substantially as follows:
Lighthouse Capital Partners V, L.P. has a first priority security
interest in this item of equipment.
Such plaque or other marking shall not be removed (or if removed or damaged such
plaque or other marking shall be replaced) until the security interest in favor
of Lender in such item of Collateral is terminated pursuant to this Agreement.
4.5 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Lender, all financing statements and
other documents such Lender may reasonably request, in form reasonably
satisfactory to Lender, to perfect and continue Lender's perfected security
interests in the Collateral and in order to consummate fully all of the
transactions contemplated under the Loan Documents.
4.6 RIGHT TO INSPECT. So long as no Event of Default has occurred
and is continuing, Lender (through any of its officers, employees, or agents)
shall have the right, up to two (2) times each calendar year, upon reasonable
prior notice, from time to time during Borrower's usual business hours, to
check, test, and appraise the Collateral, and to review such records as are kept
by the Borrower in the ordinary course of its business relating to ownership,
repair, and insurance of the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower is a corporation
duly existing and in corporate good standing under the laws of its state of
incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
Property requires that it be so qualified or in which the Collateral is located,
except for such states as to which any failure so to qualify would not have a
material adverse effect on Borrower.
5.2 AUTHORITY. Borrower has all necessary power and authority to
execute, deliver, and perform in accordance with the terms thereof, the Loan
Documents to which it is a party. Borrower has all requisite power and authority
to own and operate its properties and to carry on its businesses as now
conducted.
5.3 SUBSIDIARIES. Borrower has no Subsidiaries, except those listed
in SCHEDULE 2 hereto.
5.4 CONFLICT WITH OTHER INSTRUMENTS, ETC. Neither the execution and
delivery of any Loan Document to which Borrower is a party nor the consummation
of the transactions therein contemplated nor compliance with the terms,
conditions and provisions thereof will conflict with or result in a breach of
any of the terms, conditions or provisions of the certificate of incorporation
and the by-laws, or other organizational documents of Borrower, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental instrumentality specifically naming Borrower or its
Subsidiaries, or any material agreement or instrument to which Borrower is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject, or constitute a default thereunder or result in the
creation or imposition of any Lien, other than Permitted Liens.
5.5 AUTHORIZATION; ENFORCEABILITY. The execution and delivery of
this Agreement, the granting of the security interest in the Collateral, the
incurring of the Loans, the execution and delivery of the other Loan Documents
to which Borrower is a party and the consummation of the transactions herein and
therein contemplated have each been duly authorized by all necessary action on
the part of Borrower. The Loan Documents have been duly executed and delivered
and constitute legal, valid and binding obligations of Borrower, enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency or other similar laws of general
application relating to or affecting the enforcement of creditors' rights or by
general principles of equity.
5.6 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of liens, claims, security interests, or
encumbrances, except as listed on Schedule 5.6 and except for the first priority
lien held by the Lender and except for other Permitted Liens. Borrower has not
acquired any part of the Collateral from an assignor outside the ordinary course
of such assignor's business.
5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF
BUSINESS AND COLLATERAL. Borrower has not done business under any name other
than that specified on the signature page hereof, except as listed on SCHEDULE
5.7. The chief executive office, principal place of business, and the place
where Borrower maintains its records concerning the Collateral are presently
located at the address set forth in SECTION 11. The Collateral is presently
located at the addresses set forth in SCHEDULE 3 or as listed on each Loan
Agreement Supplement.
5.8 LITIGATION. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency in which an adverse
decision could have a material adverse effect on Borrower or the aggregate value
of the Collateral. Borrower does not have knowledge of any such pending or
threatened actions or proceedings. Borrower will promptly notify Lender in
writing if any action, proceeding or governmental investigation involving
Borrower is commenced that may reasonably be expected to result in damages or
costs to Borrower of One Hundred Thousand Dollars ($100,000) or more.
5.9 FINANCIAL STATEMENTS. All financial statements relating to
Borrower or any Affiliate that have been or may hereafter be delivered by
Borrower to Lender present fairly in all material respects Borrower's financial
condition as of the date thereof and Borrower's results of operations for the
period then ended.
5.10 SOLVENCY. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.11 TAXES. Borrower has filed or caused to be filed all franchise,
income, sales and use tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all such taxes that are due and
payable, except for such taxes that are being contested in good faith by
appropriate proceedings and for which adequate reserves have been created in
accordance with generally accepted accounting principles.
5.12 CONSENTS AND APPROVALS. No approval, authorization or consent
of any trustee or holder of any material indebtedness or obligation of Borrower
or of any other Person under any such material agreement, contract, lease or
license or similar document or instrument to which Borrower is a party or by
which Borrower is bound, is required to be obtained by Borrower in order to make
or consummate the transactions contemplated under the Loan
Documents. All consents and approvals of, filings and registrations with, and
other actions in respect of, all Governmental Authorities required to be
obtained by Borrower in order to make or consummate the transactions
contemplated under the Loan Documents have been, or prior to the time when
required will have been, obtained, given, filed or taken and are or will be in
full force and effect.
5.13 TRADEMARKS, PATENTS, COPYRIGHTS, FRANCHISES AND LICENSES.
Borrower owns, licenses, or otherwise controls all necessary trademarks, trade
names, copyrights, patents, patent rights, franchises and licenses which are
material to the conduct of its business as now operated.
5.14 MATERIAL CONTRACTS. Borrower has disclosed to Lender in writing
all currently effective contracts and agreements (whether written or oral) to
which Borrower is a party that are material to the conduct of its business as
now operated. There are no material defaults under any such contract or
agreement by Borrower. Borrower has delivered to Lender true and correct copies
of all such contracts or agreements (or, with respect to oral contracts or
agreements, written descriptions of the material terms thereof).
5.15 FULL DISCLOSURE. No representation, warranty or other statement
made by Borrower in any Loan Document, certificate or written statement
furnished to Lender contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in
such certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until the full and complete
payment of the Obligations and the termination of the Commitments, Borrower
shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its corporate existence
and its corporate good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. Borrower shall maintain in force
all governmental licenses, approvals and agreements, the loss of which could
have a material adverse effect on its financial condition, operations or
business.
6.2 GOVERNMENT COMPLIANCE. Borrower shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to materially adversely
affect the financial condition, operations or business of Borrower.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver or make available to Lender (which may include filing with the
Securities and Exchange Commission): (a) as soon as available, but in any event
within forty-five (45) days after the end of each of Borrower's fiscal quarters,
a company prepared balance sheet, income statement and cash flow statement
covering Borrower's operations during such period, certified by a Responsible
Officer; (b) as soon as available, but in any event within ninety (90) days
after the end of Borrower's fiscal year, audited financial statements of
Borrower prepared in accordance with generally accepted accounting principles,
consistently applied, together with an unqualified opinion on such financial
statements of a nationally recognized or other independent public accounting
firm reasonably acceptable to Lender; and (c) promptly upon becoming available,
copies of all statements, reports and notices required by applicable securities
laws to be sent or made available generally by Borrower to its security holders.
6.4 CERTIFICATES OF COMPLIANCE. Each time financial statements are
furnished pursuant to SECTION 6.3 above, there shall be delivered to Lender a
certificate signed by a Responsible Officer (each an "Officer's Certificate")
with respect to such financial reports to the effect that: (i) no Event of
Default or Default has occurred and is continuing hereunder since the date of
this Agreement or, if later, since the date of the prior Officer's Certificate
or, if such an event or condition has occurred and is continuing, the nature and
extent thereof and the action Borrower proposes to take with respect thereto,
and (ii) Borrower is in compliance with the provisions of SECTIONS 6 AND 7.
6.5 NOTICE OF EVENT OF LOSS. As soon as possible, and in any event
within twenty (20) days thereafter, Borrower shall notify Lender in writing in
reasonable detail of any Event of Loss resulting in the loss of Collateral with
a Stated Cost exceeding Three Percent (3.0%) of the outstanding principal amount
of the Loans.
6.6 NOTICE OF DEFAULTS. As soon as possible, and in any event within
five (5) days after the discovery of a Default or an Event of Default provide
Lender with an Officer's Certificate of Borrower setting forth the facts
relating to or giving rise to such Default or Event of Default and the action
which Borrower proposes to take with respect thereto.
6.7 TAXES. Borrower shall make due and timely payment or deposit of
all material federal, state, and local taxes, assessments, or contributions
required of it by law or imposed upon any properties belonging to it, and will
execute and deliver to Lender, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make timely payment or deposit
of all material tax payments and withholding taxes required of it by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Lender
with proof satisfactory to Lender indicating that Borrower has made such
payments or deposits; provided that Borrower need not make any payment if the
amount or validity of such payment is contested in good faith by appropriate
proceedings and is adequately reserved against by Borrower.
6.8 USE; MAINTENANCE.
(A) Borrower, at its expense, shall make all necessary site
preparations and cause the Collateral to be operated materially in accordance
with any applicable manufacturer's manuals or instructions. So long as no
Default or Event of Default has occurred and is continuing, Borrower shall have
the right to quietly possess and use the Collateral as provided herein without
interference by Lender (except as necessary to protect Lender's security
interest in the Collateral).
(B) Borrower, at its expense, shall maintain the Collateral,
taken as a whole, in good condition, reasonable wear and tear excepted, and will
comply in all material respects with all laws, rules and regulations to which
the use and operation of the Collateral may be or become subject. Such
obligation shall extend to repair and replacement of any partial loss or damage
to the Collateral, taken as a whole, regardless of the cause. All parts
furnished in connection with such maintenance or repair shall immediately become
part of the Collateral. All such maintenance, repair and replacement services
shall be immediately paid for and discharged by Borrower with the result that no
Lien will attach to the Collateral.
6.9 INSURANCE.
(A) Borrower, at its own expense, shall obtain and maintain in
amounts and coverages reasonably satisfactory to Lender (i) insurance against
loss or damage to the Collateral, and (ii) such other insurance with respect to
the conduct of its business against loss from such risks and in such amounts as
is customary for companies engaged in similar businesses with similar scope of
operations. The amount of insurance covering loss or damage to the Collateral
shall be the lesser of (i) the Stipulated Loan Value (as defined in SECTION 1.1)
of all Collateral outstanding under the Loan Documents, or (ii) Ten Million
Dollars ($10,000,000).
(B) Each such insurance policy shall: (i) name Lender loss
payee or additional insured, as appropriate, (ii) provide for insurer's waiver
of its right of subrogation against Lender and Borrower, (iii) provide that such
insurance shall not be invalidated by any action of, or breach of warranty by,
Borrower and waive set-off, counterclaim or offset against Lender, (iv) provide
that Borrower's insurance shall be primary without a right of contribution of
Lender's insurance, if any, or any obligation on the part of Lender to pay
premiums of Borrower, and (v) require the insurer to give Lender at least thirty
(30) days prior written notice of cancellation. Borrower shall, on or prior to
the first disbursement of funds hereunder and prior to each policy renewal,
furnish to Lender certificates of insurance. Borrower shall give Lender prompt
notice of any damage to, or loss of, any Collateral.
6.10 LOSS; DAMAGE; DESTRUCTION AND SEIZURE.
(A) Borrower shall bear the risk of the Collateral being lost,
stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or
seized by a governmental authority for any reason whatsoever at any time until
the expiration or termination of the Term.
(B) If during the Term any item of Collateral becomes obsolete
or is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit
for use, or seized by a governmental authority for any reason whatsoever for a
period equal to at least the remainder of the Term (an "Event of Loss"), then in
each case Lender shall receive from the proceeds of insurance maintained
pursuant to SECTION 6.9, from any award paid by the seizing
governmental authority or, to the extent not received from the proceeds of
insurance or award or both, from Borrower, on or before the Payment Date next
succeeding such Event of Loss, an amount equal to the sum of: (i) all accrued
and unpaid Scheduled Payments with respect to such Loan due prior to the next
such Payment Date, (ii) a prepayment in an amount equal to the Stipulated Loan
Value with respect to such Loan multiplied by the Prepayment Amount of each
affected item of Collateral and (iii) all other sums, if any, that shall have
become due and payable hereunder with respect to such Loan, including interest
at the Default Rate with respect to any past due amounts. On the date of receipt
by Lender of the amount specified above with respect to each such item of
Collateral subject to an Event of Loss, this Agreement shall terminate as to
such Collateral. Except as provided in SECTION 6.10(C), any proceeds of
insurance maintained by Borrower pursuant to SECTION 6.9 and received by
Borrower shall be paid to Lender promptly upon their receipt by Borrower. If any
proceeds of insurance or awards received from governmental authorities are in
excess of the amount owed under this SECTION 6.10, Lender shall promptly remit
to Borrower the amount in excess of the amount owed to Lender.
(C) So long as no Event of Default has occurred and is
continuing, any proceeds of insurance maintained pursuant to SECTION 6.9
received by Lender or Borrower with respect to an item of Collateral, the repair
of which is practicable, shall, at the election of Borrower, be applied either
to the repair or replacement of such Collateral or, upon Lender's receipt of
evidence of the repair or replacement of the Collateral reasonably satisfactory
to Lender, to the reimbursement of Borrower for the cost of such repair or
replacement. All replacement parts and equipment acquired by Borrower in
replacement of Collateral pursuant to this SECTION 6.10(C) shall immediately
become part of the Collateral upon acquisition by Borrower. Borrower shall take
such actions and provide such documentation as may be reasonably requested by
Lender to protect and preserve their first priority security interest and
otherwise to avoid any impairment of Lender's rights under the Loan Documents in
connection with such repair or replacement.
6.11 CONSULTATION RIGHTS. Up and until a Liquidation Event and
subject to the limitations set forth in subsections (b) and (c) of this SECTION
6.11, Lender shall have the following consultation rights:
(A) Lender shall be entitled to consult with and advise
Borrower's management on significant business issues, including management's
proposed annual operating plans, and one or more members of management will meet
with Lender regularly during each year at mutually agreeable times (at least
twice per calendar year) for such consultation and advice and to review progress
and operating results.
(B) In addition to its rights under SECTION 4.6, Lender may
request information at reasonable times and intervals concerning Borrower's
financial condition and operations, provided that access to highly confidential
information need not be provided unless otherwise required or consented to under
this Agreement.
(C) Upon Lender's request at reasonable times and intervals,
Borrower shall provide Lender's designated representative copies of all notices,
minutes, consents and other material that Borrower provides to its board of
directors. The representative may be excluded from access to any material or
meeting or portion thereof if Borrower believes, upon advice of counsel, that
such exclusion is reasonably necessary to preserve the attorney-client
privilege, to protect highly confidential information or for other similar
reasons, provided that access is not otherwise required pursuant to another
provision of this Agreement. Upon reasonable notice and at a scheduled meeting
of the Board of Directors or such other time, if any, as the Board of Directors
may determine in its sole discretion, such representative may address the Board
of Directors with respect to Lender's concerns regarding significant business
issues facing Borrower.
(D) The rights of Lender under this SECTION 6.11 to consult
with and advise Borrower concerning significant business issues shall not be
deemed or urged by Borrower to vest Lender with the power or right to control
the conduct of management of Borrower. Borrower and Lender agree that nothing in
this SECTION 6.11 impairs, vitiates, or limits in any fashion the exercise by
Borrower's management of its fiduciary duties.
Notwithstanding the foregoing provisions of this SECTION 6.11, Lender's rights
granted herein shall not extend to, and Borrower agrees that Lender has no
control, management or influence over Borrower of any kind respecting, any
matter concerning: (i) the payment of any vendor or creditor of the Borrower
other than Lender, (ii) the content of any document filed with the Securities
and Exchange Commission or any other state or federal regulatory body or agency,
(iii) the transport, handling or storage of any material or waste designated as
hazardous or otherwise regulated or controlled under any law, regulation or
ordinance, (iv) payroll tax, (v) pension plans, or (vi) the termination of
non-executive employees.
6.12 ACH FURTHER ASSURANCES. In addition to and without limitation
of SECTION 6.13, Borrower agrees that it shall provide Lender with not less than
thirty (30) days prior written notice of the closure or planned depletion of any
account designated as an account for ACH debits and/or credits on the ACH
Authorization Form executed and delivered by Borrower to Lender. Borrower
further agrees that should it establish any other accounts in substitution for
such closed or depleted accounts, or shall otherwise establish any new deposit
or operating accounts from which payments hereunder may be made, it shall notify
Lender of the same and at Lender's request, Borrower shall execute a new ACH
Authorization Form in favor of Lender granting Lender authority to create ACH
debit and/or credit entries in such accounts for the purposes of effecting
payments under SECTION 2.6(A). Borrower shall take all steps reasonably
requested by Lender to maintain an ACH payment arrangement with Lender for so
long as any Obligations remain outstanding.
6.13 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that until the full and complete
payment of the Obligations and termination of the Commitments, Borrower will not
do any of the following:
7.1 CERTAIN CORPORATE CHANGES. During the continuance of this
Agreement, without thirty (30) days prior written notice to Lender, change the
state of incorporation, chief executive office or principal place of business,
name of the Borrower, or remove or cause to be removed, except in the ordinary
course of Borrower's business, the Collateral or the records concerning the
Collateral from the premises listed on the cover page.
7.2 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter into
any transaction not in the ordinary and usual course of Borrower's business,
involving the sale, lease, license or other disposition of, moving, relocation,
or transfer, whether by sale or otherwise, of all or a material portion of the
Collateral.
Notwithstanding anything contained in this SECTION 7.2, the Borrower may do any
of the following: (i) grant and transfer licenses and similar arrangements for
use of its intellectual property, in arm's length transactions, in the ordinary
course of its business for adequate consideration (ii) declare and make any
dividend payment payable in its equity securities, (iii) convert any of its
convertible securities into other securities pursuant to the terms of such
convertible securities or otherwise in exchange therefor, (iv) repurchase stock
from former employees of Borrower in accordance with the terms of transfer
restriction, repurchase, vesting or similar agreements between Borrower and such
employees in its ordinary course of business, (v) repurchase equity securities
with the proceeds from the issuance of equity securities, (vi) repurchase,
redeem, retire, defease or otherwise acquire for value equity securities in
connection with or pursuant to any employees benefit plan or stock option plan
of the Borrower, (vii) issue securities for adequate consideration, provided
that no Change in Control results from such issuance, (viii) provided no Event
of Default has occurred and is continuing or is not caused thereby, mergers,
consolidations or acquisitions, which after giving effect thereto, either (A)
Borrower is the surviving entity (and no Change in Control has occurred) and (B)
Lender's security interests in the Collateral are otherwise not materially
impaired and (ix) sell, transfer or dispose of Collateral which has become worn
out or has become obsolete with respect to Borrower's business.
7.3 RESTRUCTURE. Make any material change in Borrower's corporate
structure or suspend operation of Borrower's business.
7.4 LIENS. Create, incur, assume or suffer to exist any Lien or any
other encumbrance of any kind with respect to any of its Collateral, whether now
owned or hereafter acquired, except for Permitted Liens.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay when due and payable
or when declared due and payable in accordance with the Loan Documents, any
portion of the Obligations. Notwithstanding the foregoing, to the extent such
failure to pay is solely the result of Lender's error to properly deduct
payments with respect to ACH, an Event of Default will not take effect until
five (5) days after notice by Lender.
8.2 CERTAIN COVENANT DEFAULTS. If Borrower fails to perform any
obligation under SECTIONS 6.9, 6.10 or 6.11, or violates any of the covenants
contained in SECTION 7 of this Agreement.
8.3 OTHER COVENANT DEFAULTS. If Borrower fails or neglects to
perform, keep, or observe any other material term, provision, condition,
covenant, or agreement contained in this Agreement, in any of the other Loan
Documents, or in any other present or future agreement between Borrower and
Lender and as to any default under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure such default within
fifteen (15) days after the occurrence of such default.
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or Person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by Borrower.
8.5 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any material Indebtedness.
8.6 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Two Hundred Fifty
Thousand Dollars ($250,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days.
8.7 REDEMPTION OR REPURCHASE. Unless expressly permitted by the
second paragraph of SECTION 7.2, Borrower shall not, after the date of this
Agreement, redeem or repurchase (a) any shares of any class or series of its
preferred stock, except in accordance with the terms of transfer restriction,
repurchase, vesting or similar agreements between Borrower and such
securityholders in its ordinary course of business or (b) more than Two Hundred
Thousand Dollars ($200,000) in the aggregate annually of shares of its common
stock, in each case whether pursuant to a mandatory redemption or otherwise,
absent Lender's prior consent, which consent will not be unreasonably withheld.
8.8 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty, representation,
statement, or report made to Lender by Borrower or any officer, employee, agent,
or director of Borrower.
8.9 BREACH OF WARRANTS. If Borrower shall materially breach the
terms of the Warrants.
8.10 ENFORCEABILITY. If any Loan Document shall in any material
respect cease to be, or Borrower shall assert that any Loan Document is not, a
legal, valid and binding obligation of Borrower enforceable in accordance with
its terms.
8.11 INVOLUNTARY BANKRUPTCY OR INSOLVENCY. If a proceeding shall
have been instituted in a court having jurisdiction in the premises seeking a
decree or order for relief in respect of Borrower in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee (or similar official) of Borrower or for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
forty-five (45) consecutive days or such court shall enter a decree or order
granting the relief sought in such proceeding.
8.12 VOLUNTARY BANKRUPTCY OR INSOLVENCY. If Borrower shall commence
a voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian (or other similar official) of Borrower or for any
substantial part of its property, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action in furtherance of any of the foregoing.
9. LENDER'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and continuance of any
Default or Event of Default, Lender shall have no further obligation to advance
money or extend credit to or for the benefit of Borrower. In addition, upon the
occurrence and during the continuance of an Event Of Default, Lender shall have
the rights, options, duties and remedies of a secured party as permitted by law
and, in addition to and without limitation of the foregoing, Lender may, at
their election, without notice of election and without demand, do any one or
more of the following, all of which are authorized by Borrower:
(A) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, including the
Stipulated Loan Value of the Loan Amount of each Loan, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
SECTION 8.11 or 8.12 all Obligations shall become immediately due and payable
without any action by Lender);
(B) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender consider necessary or reasonable to protect
their security interest in the Collateral. Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
as Lender may designate. Borrower authorizes Lender to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lender's determination appears to be prior or superior
to their security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's owned premises, Borrower hereby
grants Lender a license to enter into possession of such premises and to occupy
the same, without charge, for up to one hundred twenty (120) days in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(C) Without notice to Borrower, set off and apply to the
Obligations any and all indebtedness at any time owing to or for the credit or
the account of Borrower;
(D) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this SECTION 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of their rights under this SECTION 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
(E) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Lender
determines are commercially reasonable;
(F) Lender may credit bid and purchase at any public sale; and
(G) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 WAIVER BY BORROWER. Upon the occurrence of an Event of Default,
to the extent permitted by law, Borrower covenants that it will not at any time
insist upon or plead, or in any manner whatever claim or take any benefit or
advantage of, any stay or extension of law now or at any time hereafter in
force, nor claim, take nor insist upon any benefit or advantage of or from any
law now or hereafter in force providing for the valuation or appraisement of the
Collateral or any part thereof prior to any sale or sales thereof to be made
pursuant to any provision herein contained, or to the decree, judgment or order
of any court of competent jurisdiction; nor, after such sale or sales, claim or
exercise
any right under any statute now or hereafter made or enacted by any state or
otherwise to redeem the Property so sold or any part thereof, and, to the full
extent legally permitted, except as to rights expressly provided herein, hereby
expressly waives for itself and on behalf of each and every Person, except
decree or judgment creditors of Borrower acquiring any interest in or title to
the Collateral or any part thereof subsequent to the date of this Agreement, all
benefit and advantage of any such law or laws, and covenants that it will not
invoke or utilize any such law or laws or otherwise hinder, delay or impede the
execution of any power herein granted and delegated to Lender, but will suffer
and permit the execution of every such power as though no such power, law or
laws had been made or enacted.
9.3 EFFECT OF SALE. Any sale, whether under any power of sale hereby
given or by virtue of judicial proceedings, shall operate to divest all right,
title, interest, claim and demand whatsoever, either at law or in equity, of
Borrower in and to the Property sold, and shall be a perpetual bar, both at law
and in equity, against Borrower, its successors and assigns, and against any and
all Persons claiming the Property sold or any part thereof under, by or through
Borrower, its successors or assigns.
9.4 POWER OF ATTORNEY IN RESPECT OF THE COLLATERAL. Borrower does
hereby irrevocably appoint Lender (which appointment is coupled with an
interest) on the occurrence and continuance of a Default or an Event of Default,
the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name: (a) to ask, demand, collect, receive,
receipt for, xxx for, compound and give acquittance for any and all rents,
issues, profits, avails, distributions, income, payment draws and other sums in
which a security interest is granted under SECTION 4 with full power to settle,
adjust or compromise any claim thereunder as fully as if Lender were Borrowers
themselves, (b) to receive payment of and to endorse the name of Borrower to any
items of Collateral (including checks, drafts and other orders for the payment
of money) that come into such Lender's possession or under such Lender's
control, (c) to make all demands, consents and waivers, or take any other action
with respect to, the Collateral, (d) in Lender's discretion to file any claim or
take any other action or proceedings, either in its own name or in the name of
Borrower or otherwise, which Lender may reasonably deem necessary or appropriate
to protect and preserve the right, title and interest of Lender in and to the
Collateral, or (e) to otherwise act with respect thereto as though Lender were
the outright owner of the Collateral.
9.5 LENDER'S EXPENSES. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following: (a) make payment of the same or any part thereof; (b) set up such
reserves in Borrower's loan account as Lender deems necessary to protect Lender
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in SECTION 6.9(A)(I) of this Agreement, and take
any action with respect to such policies as Lender deem prudent. Any amounts
paid or deposited by Lender shall constitute Lender's Expenses, shall be
immediately due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments made
by Lender shall not constitute an agreement by Lender to make similar payments
in the future or a waiver by Lender of any Event of Default under this
Agreement.
9.6 REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it.
9.7 APPLICATION OF COLLATERAL PROCEEDS. The proceeds and/or avails
of the Collateral, or any part thereof, and the proceeds and the avails of any
remedy hereunder (as well as any other amounts of any kind held by Lender at the
time of or received by Lender after, the occurrence of an Event of Default
hereunder) shall be paid to and applied as follows:
(A) First, to the payment of out-of-pocket costs and expenses,
including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other
rights or remedies, and of all proper fees, expenses, liability and advances,
including reasonable legal expenses and attorneys' fees, incurred or made
hereunder by Lender;
(B) Second, to the payment to Lender of the amount then owing
or unpaid on the Loans for Scheduled Payments, the Stipulated Loan Value of the
Loan Amount, and all other Obligations with respect to all Loans, and in case
such proceeds shall be insufficient to pay in full the whole amount so due,
owing or unpaid upon the Loans, then to the unpaid interest thereon, then to
unpaid principal thereof, then to the Stipulated Loan Value of the
Loan Amount with respect to the Loan, and then to the payment of other amounts
then payable to Lender under any of the Loan Documents; and
(C) Third, to the payment of the surplus, if any, to Borrower,
its successors and assigns, or to whomsoever may be lawfully entitled to receive
the same.
9.8 REINSTATEMENT OF RIGHTS. If Lender shall have proceeded to
enforce any right under this Agreement or any other Loan Document by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case (unless otherwise ordered by a court of
competent jurisdiction), Lender shall be restored to their former position and
rights hereunder with respect to the Property subject to the security interest
created under this Agreement.
10. WAIVERS; INDEMNIFICATION
10.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Lender on which Borrower may in any way be
liable.
10.2 LENDER'S LIABILITY FOR COLLATERAL. So long as Lender complies
with its obligations, if any, under the Code, Lender shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other Person
whomsoever. All risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.
10.3 INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated:
(A) GENERAL INDEMNITY. Borrower shall pay, indemnify, and hold
Lender and each of its officers, directors, employees, general counsel, limited
partners, agents and attorneys-in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including Lender's Expenses and reasonable attorney's fees and the allocated
cost of in-house counsel) of any kind or nature whatsoever arising from
Borrower's breach or any representation or warranty or failure to perform any
covenant or obligation contained in the Loan Documents (including any case,
action or proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding) related to this Agreement or the Loans)
(all the foregoing, collectively, the "Indemnified Liabilities"); provided, that
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person.
(B) SURVIVAL; DEFENSE. The obligations in this SECTION 10.3
shall survive payment of all other Obligations. At the election of any
Indemnified Person, Borrower shall defend such Indemnified Person using legal
counsel reasonably satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of Borrower. All amounts owing under
this SECTION 10.3 shall be paid within thirty (30) days after written demand.
11. NOTICES
Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by certified mail, postage
prepaid, return receipt requested, or by prepaid facsimile to Borrower or to
Lender, as the case may be, at their respective addresses set forth below:
If to Borrower: Alnylam Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
FAX: (000) 000-0000
With a copy to: The Helix Law Group, P.C.
Xxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
FAX: (000) 000-0000
If to Lender: Lighthouse Capital Partners V, L.P.
000 Xxxxx'x Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Contract Administration
FAX: (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower (except by operation of law with respect to
permitted transactions hereunder) without Lender's prior written consent, which
consent may be granted or withheld in Lender's sole discretion. Lender shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participations in all or any part of, or any interest in
such Lender's rights and benefits hereunder.
12.2 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.3 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.4 ENTIRE AGREEMENT; CONSTRUCTION; AMENDMENTS AND WAIVERS.
(A) This Agreement and each of the other Loan Documents dated
as of the date hereof, taken together, constitute and contain the entire
agreement between Borrower and Lender and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof.
(B) This Agreement is the result of negotiations between and
has been reviewed by each of Borrower and Lender executing this Agreement as of
the date hereof and their respective counsel; accordingly, this Agreement shall
be deemed to be the product of the parties hereto, and no ambiguity shall be
construed in favor of or against Borrower or Lender. Borrower and Lender agree
that they intend the literal words of this Agreement and the other Loan
Documents and that no parol evidence shall be necessary or appropriate to
establish Borrower's or Lender's actual intentions.
(C) Any and all amendments, modifications, discharges or
waivers of, or consents to any departures from any provision of this Agreement
or of any of the other Loan Documents shall not be effective without the written
consent of Lender. Any waiver or consent with respect to any provision of the
Loan Documents shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Borrower in
any case shall entitle Borrower to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, waiver or consent
effected in accordance with this SECTION 12.4 shall be binding upon Lender and
on Borrower.
12.5 RELIANCE BY LENDER. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by Lender, be deemed to be material to and to have been relied upon by Lender.
12.6 NO SET-OFFS BY BORROWER. All sums payable by Borrower pursuant
to this Agreement or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.8 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lender
with respect to the expenses, damages, losses, costs and liabilities described
in SECTION 10.3 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Lender have run.
13. RELATIONSHIP OF PARTIES. Borrower and Lender acknowledge, understand
and agree that the relationship between the Borrower, on the one hand, and
Lender, on the other, is, and at all times shall remain solely that of a
borrower and lender. Lender shall not under any circumstances be construed to be
a partner or joint venturer of Borrower or any of its Affiliates; nor shall the
Lender under any circumstances be deemed to be in a relationship of confidence
or trust or a fiduciary relationship with Borrower or any of its Affiliates, or
to owe any fiduciary duty to Borrower or any of its Affiliates. Lender do not
undertake or assume any responsibility or duty to Borrower or any of its
Affiliates to select, review, inspect, supervise, pass judgment upon or
otherwise inform the Borrower or any of its Affiliates of any matter in
connection with its or their Property, any Collateral held by Lender or the
operations of Borrower or any of its Affiliates. Borrower and each of its
Affiliates shall rely entirely on their own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by Lender in connection with such matters
is solely for the protection of Lender and neither Borrower nor any Affiliate is
entitled to rely thereon.
14. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF BORROWER
AND LENDER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF SANTA XXXXX, STATE OF CALIFORNIA. BORROWER AND
LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
15. CONFIDENTIAL DISCLOSURE. Upon execution and delivery of this
Agreement, Lender shall also execute and deliver to Borrower the Confidential
Disclosure Agreement. Notwithstanding any provision in this Agreement to the
contrary, Borrower's obligations under this Agreement to furnish, disclose or
make available to Lender non-public information are conditioned on the
Confidential Disclosure Agreement remaining in full force and effect, and on
Lender being and having been in compliance with all provisions in the
Confidential Disclosure Agreement. Notwithstanding any provision in this
Agreement to the contrary, prior to an Event of Default, Lender need not
furnish, disclose or make available to Lender portions of documents if and to
the extent that furnishing, disclosing or making available such portions would
cause Borrower to breach an obligation of confidentiality to a third party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
BORROWER: LENDER:
ALNYLAM PHARMACEUTICALS, INC. LIGHTHOUSE CAPITAL PARTNERS V, L.P.
By: /s/ Xxxxx Xxxxxx By: LIGHTHOUSE MANAGEMENT PARTNERS V,
-------------------------------- L.L.C., its general partner
Name: Xxxxx Xxxxxx
------------------------------
Title: Interim VP Finance By: /s/ Xxxxxx Xxxxxxxx
----------------------------- ----------------------------------
Name: Xxxxxx Xxxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Exhibit A Collateral
Exhibit B-1 and B-2 Warrants
Exhibit C Loan Agreement Supplement
Exhibit D Ancillary Documents
Exhibit E ACH Authorization Form
Exhibit F Negative Pledge Agreement
Exhibit G Confidential Disclosure Agreement
Schedule 2 Subsidiaries
Schedule 3 Equipment Location Report
Schedule 5.6 Encumbrances
Schedule 5.7 Prior Names of Borrower
NEGATIVE PLEDGE AGREEMENT
THIS NEGATIVE PLEDGE AGREEMENT is made as of March 26, 2004, by and
between ALNYLAM PHARMACEUTICALS, INC. ("Borrower") and LIGHTHOUSE CAPITAL
PARTNERS V, L.P. ("Lender").
In connection with the Loan Documents being concurrently executed between
Borrower and Lender, Borrower agrees as follows:
Except as otherwise permitted in the Loan Documents or pursuant to a
licensing, development or other partnering transaction or other business
relationship related to the use or development of Borrower's intellectual
property (a) that is in the Borrower's ordinary course of business, or (b) that
is not material to the financial condition or results of operations of the
Borrower and in which the Borrower receives adequate consideration, or (c) that
is approved by the Borrower's Board of Directors consistent with the Delaware
General Corporation Law, Borrower shall not sell, transfer, assign, mortgage,
pledge, lease, grant a security interest in, or encumber any of Borrower's
intellectual property, including, without limitation, the following:
1) Any and all copyright rights, copyright applications, copyright
registration and like protection in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same
also constitutes a trade secret, now or hereafter existing, created,
acquired or held (collectively, the "Copyrights");
2) Any and all trade secrets, and any and all intellectual property rights
in computer software and computer software products now or hereafter
existing, created, acquired or held;
3) Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;
4) All patents, patent applications and like protections, including, without
limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including, without
limitation, the patents and patent applications (collectively, the
"Patents");
5) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected
with and symbolized by such trademarks (collectively, the "Trademarks");
6) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks and all license fees and royalties arising from such use to the
extent permitted by such license or rights; and
7) All amendments, extensions, renewals and extensions of any of the
Copyrights, Patents or Trademarks; and
It shall be an Event of Default under the Loan Documents between
Borrower and Lender if there is a breach of any term of this Negative Pledge
Agreement.
Capitalized items used herein without definition shall have the same
meanings as set forth in the Loan and Security Agreement of even date herewith.
BORROWER: LENDER:
ALNYLAM PHARMACEUTICALS, INC. LIGHTHOUSE CAPITAL PARTNERS V, L.P.
By: /s/ Xxxxx Xxxxxx By: LIGHTHOUSE MANAGEMENT
--------------------------- PARTNERS V, L.L.C., its general partner
Name: Xxxxx Xxxxxx
-------------------------
Title: Interim VP Finance By: /s/ Xxxxxx Xxxxxxxx
------------------------ ----------------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------------
Title: Vice President
-------------------------------
