EXHIBIT 5
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF SERIES B PREFERRED COMMON
STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT
TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT,
DATED JANUARY 7/th/, 2000, BY AND BETWEEN RIBOZYME PHARMACEUTICALS, INC. AND
ELAN INTERNATIONAL SERVICES, LTD.
RIBOZYME PHARMACEUTICALS, INC.
CONVERTIBLE PROMISSORY NOTE
U.S. $12,015,000
January 7/th/, 2000
New York, New York
The undersigned, Ribozyme Pharmaceuticals, Inc., a Delaware
corporation with offices at 2950 Wilderness Place, Boulder, Colorado 80301 (the
"Company"), unconditionally promises to pay to Elan International Services,
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Ltd., a Bermuda exempted limited liability company ("EIS"), or its permitted
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assigns, transferees and successors as provided herein (collectively with EIS,
the "Holder"), on January 7/th/, 2006 (the "Maturity Date"), at such place as
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may be designated by the Holder to the Company, the principal amount outstanding
hereunder (not to exceed U.S.$12,015,000), together with interest thereon
accrued at a rate per annum equal to 12%, from and after the date of the initial
disbursement of funds hereunder (the "Original Issue Date"), compounded on a
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semi-annual basis, the first compounding to commence six months from the date
hereof (each such date, a "Compounding Date").
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SECTION 1. SECURITIES PURCHASE AGREEMENT AND FUNDING AGREEMENT.
This Note is issued pursuant to a Securities Purchase Agreement dated
as of the date hereof, by and between the Company and EIS (as amended at any
time, the "Securities Purchase Agreement"), and the Holder hereof is intended to
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be afforded the benefits thereof,
including the representations and warranties set forth therein. The Company
shall use the proceeds of the issuance and sale of this Note solely in
accordance with the provisions set forth therein and as required therein and in
a certain Funding Agreement, dated as of the date hereof (as amended at any
time, the "Funding Agreement"), by and among Elan Corporation, plc, EIS and the
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Company, and as described in Section 6 below. Capitalized terms used but not
otherwise defined herein shall, unless otherwise indicated, have the meanings
given such terms in the Securities Purchase Agreement.
SECTION 2. DISBURSEMENTS.
(a) From time to time after the Initial Closing Date (as defined in the
Securities Purchase Agreement), disbursements shall be made by EIS to the
Company, at the Company's request and as provided for in the Securities Purchase
Agreement and the Funding Agreement, in accordance with the following terms and
conditions:
(i) Disbursements shall not exceed the aggregate amount of funding
provided by the Company to Newco that shall have been determined by Newco's
shareholders to be required under the JDOA (as defined in the Securities
Purchase Agreement), in accordance with and as permitted by the terms
thereof, including funding requirements for Newco shall have provided
written notice thereof to EIS and to the Company; provided, that the
Company shall have, prior to each such disbursement, delivered a written
request therefor to the Holder in the form attached hereto as Exhibit A.
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(ii) Disbursements shall be made by EIS to the Company hereunder in
minimum increments of U.S.$250,000 (except in the event that an amount less
than $250,000 shall be remaining and available for funding hereunder, in
which case such lesser amount may be funded hereunder.
(iii) A condition to each such disbursement shall be (A) that such
disbursement shall occur during the Development Period (as defined in the
JDOA) and (B) that there is no material breach or default by the Company
hereunder or under the JDOA or the Funding Agreement and the
representations in the Securities Purchase Agreement shall be true and
correct in all material respects as of the date made and as of the proposed
funding date (updated as to SEC Filings and similar matters) and (c) all
appropriate and applicable regulatory approvals shall have been obtained;
and
(b) The Holder shall not be required to disburse more than the maximum
principal amount hereunder, excluding accruals of interest, of U.S.$12,015,000.
(c) Each disbursement shall accrue interest at the rate set forth in
Section 1 from the date of disbursement through the date of payment.
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SECTION 3. PAYMENTS AND COVENANTS.
(a) Unless earlier converted in accordance with the terms of Section 4
below, or prepaid in accordance with the terms hereof, the entire outstanding
principal amount of this Note, together with any accrued and unpaid interest
thereon, shall be due and payable on the Maturity Date.
(b) Accrued interest hereon shall not be paid in cash, but shall be
capitalized and added to the principal amount outstanding hereunder on each
Compounding Date.
SECTION 4. CONVERSION.
(a) Conversion Right.
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(i) From and after the Original Issue Date and until this Note is
repaid in full, the Holder shall have the right from time to time, in its sole
discretion, to convert all or any portion of the outstanding principal amount
and accrued and unpaid interest then-outstanding hereunder, (the "Conversion
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Right"), into such number of shares of Series B Preferred Stock that shall be
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obtained by dividing the sum of the outstanding principal amount and all accrued
and unpaid interest by $1,000, subject to adjustment as provided below in this
Section (the "Conversion Price").
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(ii) The Holder shall be entitled to exercise the Conversion Right
from time to time as to the uncoverted portion of this Note upon at least five
days' prior written notice to the Company, such notice to be in the form
attached hereto as Exhibit B. Within 10 days of the conversion date specified
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in such notice, the Company shall issue appropriate stock certificates to EIS
representing the aggregate number of shares of Series B Preferred Stock due to
EIS as a result of such conversion.
(b) Reclassification, Etc. In case of (i) any reclassification,
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reorganization, change or conversion of securities of the class issuable upon
conversion of the outstanding principal amount and accrued and unpaid interest
then-outstanding hereunder (other than a change in par value, or from par value
to no par value), or (ii) any consolidation of the Company with or into another
entity (other than a merger or consolidation with another entity in which the
Company is the surviving entity and that does not result in any reclassification
or change of the class of securities issuable upon the conversion of the
outstanding principal amount and accrued and unpaid interest then-outstanding
hereunder), or (iii) any sale of all or substantially all the assets of the
Company, then the Company, or such successor or purchasing entity, as the case
may be, shall duly execute and deliver to the Holder a new Note or a supplement
hereto (in form and substance reasonably satisfactory to the Holder of this
Note), so that the Holder shall have the right to receive, in lieu of the shares
of Series B Preferred Stock otherwise issuable upon the conversion of such
outstanding principal amount and accrued and unpaid interest then-outstanding
hereunder, the kind and amount of shares of stock and other securities, money
and
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property receivable upon such reclassification, reorganization, change, merger,
consolidation or conversion by a holder of the number of shares of Series B
Preferred Stock then issuable under this Note. Such new Note shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this Section 4(b)
shall similarly attach to successive reclassifications, reorganizations,
changes, mergers, consolidations, transfers or conversions.
(c) No Impairment. The Company will not, by amendment of its Certificate
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of Incorporation or bylaws or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
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 Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of EIS against
impairment. This provision shall not restrict the Company from otherwise
amending and/or restating its Certificate of Incorporation in accordance with
the laws of the State of Delaware.
(d) Notice of Adjustments. Whenever the consideration issuable upon a
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conversion hereunder shall be changed pursuant to this Section 4, the Company
shall prepare a certificate setting forth, in reasonable detail, the event
requiring the change and the kind and amount of shares of stock and other
securities, money and property subsequently issuable upon a conversion hereof.
Such certificate shall be signed by its chief financial officer and shall be
delivered to EIS.
(e) Fractional Shares; Rounding. No fractional shares of Series B
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Preferred Stock will be issued in connection with any exercise hereunder, but in
lieu of such fractional shares the Company shall make a cash payment therefor
based on the applicable Conversion Price. All calculations under this Section 4
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
SECTION 5. EXCHANGE RIGHT.
In the event that EIS shall exercise the EIS Exchange Right during the
period during which this Note is outstanding, EIS shall, at its option, (i)
cause to be paid to the Company, within 30 days of such exercise, an amount
equal to 30.1% of the aggregate amount (including any accrued and unpaid
interest thereon) of the Development Funding (as such term is defined in the
Funding Agreement) through the date of such exercise provided by each of the
parties to Newco, in accordance with the terms of the Funding Agreement, from
and after the date hereof and until the date of such exercise, and/or (ii)
offset against the amount payable under this Note an amount equal to 30.1% of
the total amount (including any accrued and unpaid interest in respect of any
debt, including the Note thereon) of Development Funding provided by each of the
parties to Newco, in accordance with the terms of the Funding Agreement, from
and after the date hereof and until the date of the exercise of the Exchange
Right, against the principal amount outstanding
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hereunder, if any, or (iii) effect a combination of the provisions described in
clauses (i) and (ii) above, if applicable.
SECTION 6. USE OF PROCEEDS.
The Company shall use the proceeds of this Note solely for
developmental funding of Newco; provided, that Newco's shareholders (as provided
for in the JDOA) shall have determined that such developmental funding is
necessary and that the parties thereto are in continuing agreement as to the
Business Plan. Accordingly, total disbursements hereunder shall not in any
event exceed the amount of Development Funding funded by the Company to Newco
pursuant to the Funding Agreement.
SECTION 7. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an
event of default (an "Event of Default"):
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(a) a default in the payment of the principal amount of this Note, when
and as the same shall become due and payable;
(b) a default in the payment of any accrued and unpaid interest on this
Note, when and as the same shall become due and payable;
(c) a breach by the Company of its obligations under any of the
Transaction Documents, which breach remains uncured 10 days after written notice
thereof by EIS;
(d) a distress, execution, sequestration or other process is levied or
enforced upon the Company or sued out against a material part of its property
which is not discharged or challenged within 60 days;
(e) the Company is unable to pay its debts in the normal course of
business;
(f) the Company ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or amalgamation, without the
prior written consent of the EIS (such consent not to be unreasonably withheld);
(g) the appointment of a liquidator, receiver, administrator, examiner,
trustee or similar officer of the Company or over all or substantially all of
its assets under the law; or
(h) any other termination of the JDOA.
SECTION 8. REMEDIES IN THE EVENT OF DEFAULT.
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(a) In the case of any Event of Default by the Company, the Holder may, in
its sole discretion, demand that the aggregate amount of funds advanced to the
Company under this Note and outstanding hereunder and accrued and unpaid
interest thereon shall, in addition to all other rights and remedies of the
Holder hereunder and under applicable law, be and become immediately due and
payable upon written notice delivered by the Holder to the Company.
Notwithstanding the preceding sentence, the rights of the Holder as set forth in
Sections 4 and 5 hereunder shall survive any such acceleration and payment. If
the Holder shall accelerate and be paid and thereafter elect to exercise the
Conversion Right, the Holder shall reimburse to the Company an amount in respect
of the shares of Series B Preferred Stock issued under such Conversion Right
equal to the principal amount of this Note attributable thereto as calculated in
accordance with Section 4 above. If the Holder shall accelerate and be paid and
thereafter elect to exercise the Exchange Right, the Holder shall cause to be
paid to the Company an amount as calculated in accordance with Section 5(i)
above.
(b) The Company hereby waives demand and presentment for payment, notice
of nonpayment, protest and notice of protest, diligence, filing suit, and all
other notice and promises to pay the Holder its costs of collection of all
amounts due hereunder, including reasonable attorneys' fees.
(c) In the case of any Event of Default under this Note by the Company
this Note shall continue to bear interest after such default at the interest
rate otherwise in effect hereunder plus 3% per annum (but in any event not in
excess of the maximum rate of interest permitted by applicable law).
SECTION 9. MISCELLANEOUS.
(a) EIS may assign this Note to its affiliates and subsidiaries, as well
as any special purpose financing or similar vehicle established by EIS or its
affiliates. This Note and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided, however, that EIS and the Company shall remain
liable for their respective obligations hereunder after any such assignment.
(b) All notices, demands and requests of any kind to be delivered to any
party in connection with this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by nationally-
recognized overnight courier or by registered or certified mail, return receipt
requested and postage prepaid, or by facsimile transmission, addressed as
follows:
(i) if to the Company:
Ribozyme Pharmaceuticals, Inc.
2950 Wilderness Place
Boulder, Colorado 80301
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Attention: Chief Executive Officer
Facsimile: (303) 449-6995
with a copy to:
Rothgerber Johnson & Lyons LLC
1200 17/th/ Street, Suite 3000
Denver, Colorado 80202
Attention: Woody Davis
Facsimile: (303) 623-9222
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda FL04
Attention: President
Fax: (441) 292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Attention: David Robbins, Esq.
Fax: (212) 371-5500
Each party, by written notice given to the other in accordance with this Section
9(b) may change the address to which notices, other communication or documents
are to be sent to such party. All notices, other communications or documents
shall be deemed to have been duly given when received. Any such notice or
communication shall be deemed to have been effectively given, (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of nationally-
recognized overnight courier, on the second business day after the date when
sent, (c) in the case of mailing, on the fifth business day following that day
on which the piece of mail containing such communication is posted, and (d) in
the case of facsimile transmission, on the date of transmission.
(a) This Note may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Company and EIS.
(b) This Note shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles thereof
relating to conflicts of laws.
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(c) This Note may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute one note. The Note may be signed and
delivered to the other party by a facsimile transmission; such transmission
shall be deemed a valid signature.
(d) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
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EXHIBIT A
NOTICE OF REQUEST FOR DISBURSEMENT
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Date:
To: Elan International Services, Ltd.
From: Ribozyme Pharmaceuticals, Inc.
Re: Disbursement Request
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Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Ribozyme Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ______, ______, the Company hereby notifies EIS of
its request for a disbursement thereunder in the amount of $_________. Please
provide funding in the requested amount to the Company in accordance with the
following wire instructions
[
]
Sincerely,
RIBOZYME PHARMACEUTICALS, INC.
By: ___________________________
Name:
Title:
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EXHIBIT B
NOTICE OF ELECTION TO EXERCISE A CONVERSION RIGHT
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Date:
To: Ribozyme Pharmaceuticals, Inc.
From: Elan International Services, Ltd.
Re: Exercise of a Conversion Right
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Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Ribozyme Pharmaceuticals, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ___________, _____, specifically Section 4
thereof, EIS hereby notifies the Company of its intention to exercise a right of
conversion.
Pursuant to Section 4 of the Note, EIS hereby elects to convert
[$__________]/*/ in aggregate principal amount and all accrued and unpaid
interest thereon for shares of the Company's Series B Preferred Stock, effective
[__________, ____]
We have instructed our attorneys to contact the Company to discuss the
timing and documentation of the conversion.
Sincerely,
ELAN INTERNATIONAL SERVICES, LTD.
By: ___________________________
Name:
Title:
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/*/ Amount must represent one or more tranches drawn down by the Company under
the Note.
IN WITNESS WHEREOF, the Company and EIS have executed this Note on the
date first above written.
RIBOZYME PHARMACEUTICALS, INC.
By:/s/ Ralph E. Christoffersen
___________________________
Name:Ralph E. Christoffersen
Title: Chief Executive Officer
ELAN INTERNATIONAL SERVICES, LTD.
By:___________________________
Name:
Title:
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