[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Exhibit 10.38
LOAN AND SECURITY AGREEMENT
BETWEEN
SMITHKLINE BEECHAM CORPORATION
AND
EXELIXIS, INC.
DATED AS OF
OCTOBER 28, 2002
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Biotechnology Company. . . . . . . . . . . . . . . . . . . . . . . . . 2
Borrowing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Capital Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change in Control Rate of Interest . . . . . . . . . . . . . . . . . . 2
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contract Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Default Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . 2
Deposit Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Development Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 2
Development Candidate. . . . . . . . . . . . . . . . . . . . . . . . . 2
Development Candidate Inventory. . . . . . . . . . . . . . . . . . . . 3
Development Compound . . . . . . . . . . . . . . . . . . . . . . . . . 3
Development Expiration Date. . . . . . . . . . . . . . . . . . . . . . 3
Development Program. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Development Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DWAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Expanded Program Option. . . . . . . . . . . . . . . . . . . . . . . . 3
Extension Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General Advance(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Governmental Entity. . . . . . . . . . . . . . . . . . . . . . . . . . 4
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Included Compounds . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Initial Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 4
Legal Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LIBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Limited Program Option . . . . . . . . . . . . . . . . . . . . . . . . 4
Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Major Pharmaceutical Company . . . . . . . . . . . . . . . . . . . . . 5
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maximum Loan Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 5
National Securities Market . . . . . . . . . . . . . . . . . . . . . . 5
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Operating Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 5
OSHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Patent Office Filing . . . . . . . . . . . . . . . . . . . . . . . . . 5
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Product Specific Advance(s). . . . . . . . . . . . . . . . . . . . . . 6
Repayment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SEC Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities Account Control Agreement . . . . . . . . . . . . . . . . . 6
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Repayment Amount . . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Repayment Closing Date(s). . . . . . . . . . . . . . . . . . . . 6
Stock Repayment Notice . . . . . . . . . . . . . . . . . . . . . . . . 6
Stock Repayment Shares . . . . . . . . . . . . . . . . . . . . . . . . 6
Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Total Advance Amount . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trading Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . 7
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
UCC Financing Statement(s) . . . . . . . . . . . . . . . . . . . . . . 7
United States or U.S.. . . . . . . . . . . . . . . . . . . . . . . . . 7
Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2 AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . . . . . 8
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Product Specific Advances. . . . . . . . . . . . . . . . . . . . . . 8
Borrowing Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Disbursement of Advances . . . . . . . . . . . . . . . . . . . . . . . 9
SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . 9
Development Patents. . . . . . . . . . . . . . . . . . . . . . . . . 9
Other Intellectual Property. . . . . . . . . . . . . . . . . . . . . 9
Deposit Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Development Candidate Inventory. . . . . . . . . . . . . . . . . . . 9
Capital Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Default Rate of Interest . . . . . . . . . . . . . . . . . . . . . . 10
Change of Control Rate of Interest . . . . . . . . . . . . . . . . . 10
Interest Computations. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 5 REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Payments on Non-Business Day . . . . . . . . . . . . . . . . . . . . . 10
Cash Payment Procedures. . . . . . . . . . . . . . . . . . . . . . . . 10
Milestone Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Optional Cash Prepayments. . . . . . . . . . . . . . . . . . . . . . . 11
Repayment By Common Stock. . . . . . . . . . . . . . . . . . . . . . . 11
Exercise of Issuance Rights. . . . . . . . . . . . . . . . . . . . . 11
Limitation on Ownership. . . . . . . . . . . . . . . . . . . . . . . 11
Stock Repayment Notice . . . . . . . . . . . . . . . . . . . . . . . 11
Delivery of Stock Repayment Shares . . . . . . . . . . . . . . . . . 12
Conditions Precedent to Each Issuance of Stock Repayment Shares. . . 12
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . 13
Conditions Precedent to Initial Advance. . . . . . . . . . . . . . . . 13
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Supporting Documents . . . . . . . . . . . . . . . . . . . . . . . . 13
Perfection of Liens. . . . . . . . . . . . . . . . . . . . . . . . . 13
Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . 13
Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 14
No Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . 14
No Termination under the Development Agreement . . . . . . . . . . . 14
Correctness of Representations . . . . . . . . . . . . . . . . . . . 14
No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 14
Limitations Not Exceeded . . . . . . . . . . . . . . . . . . . . . . 14
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . 14
CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Condition Precedent to Disbursement of Second General Advance. . . . . 14
Exelixis Expenditures. . . . . . . . . . . . . . . . . . . . . . . . 14
Conditions Precedent to Disbursement of All Product Specific Advances. 15
Exelixis' Selection of a Development Candidate . . . . . . . . . . . 15
Marketable Title to Development Candidate Intellectual Property. . . 15
REPRESENTATIONS AND WARRANTIES OF EXELIXIS . . .. . . . . . . . . . . . . . 15
Organization, Good Standing and Qualification. . . . . . . . . . . . . 15
Authorization; Due Execution . . . . . . . . . . . . . . . . . . . . . 16
Valid Issuance of Stock. . . . . . . . . . . . . . . . . . . . . . . . 16
SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . . . 16
No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Title to the Collateral. . . . . . . . . . . . . . . . . . . . . . . . 17
No Event of Default/Breach . . . . . . . . . . . . . . . . . . . . . . 17
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 17
Effect of Representations and Warranties . . . . . . . . . . . . . . . 18
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF GSK . . . . . . . . . . . . . . 18
Authorization; Due Execution . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 9 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Keeping of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SEC Reporting Requirem . . . . . . . . . . . . . . . . . . . . . . . . 19
Maintenance of Rights and Existence. . . . . . . . . . . . . . . . . . 19
Governmental and Other Approvals . . . . . . . . . . . . . . . . . . . 19
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Compliance with the Laws . . . . . . . . . . . . . . . . . . . . . . . 19
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Access to Records and Property . . . . . . . . . . . . . . . . . . . . 20
Preservation of Title to Collateral. . . . . . . . . . . . . . . . . . 20
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 20
Fees and Expenses in Protecting Rights . . . . . . . . . . . . . . . . 21
Capital Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Deposit Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Duration of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 10 COVENANTS REGARDING PROHIBITED TRANSACTIONS. . . . . . . . . . . 21
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Impairment of Title to Collateral. . . . . . . . . . . . . . . . . . . 22
Settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Change of Location or Name . . . . . . . . . . . . . . . . . . . . . . 22
Inconsistent Agreement . . . . . . . . . . . . . . . . . . . . . . . . 22
Violation of Representations, Warranties and Covenants . . . . . . . . 22
ARTICLE 11 FINANCIAL COVENANTS . . .. . . . . . . . . . . . . . . . . . . . 22
Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 12 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 23
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Failure to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Other Defaults under the Loan Documents. . . . . . . . . . . . . . . 23
Termination of Development Agreement . . . . . . . . . . . . . . . . 23
Other Specific Events. . . . . . . . . . . . . . . . . . . . . . . . 23
Insolvency; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 13 GSKRIGHTS AND REMEDIES UPON DEFAULT. . . . . . . . . . . . . . . 24
Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Application of Proceeds of Disposition of Collateral . . . . . . . . . 25
Notice of Disposition of Collateral. . . . . . . . . . . . . . . . . . 25
Marshalling of Assets. . . . . . . . . . . . . . . . . . . . . . . . . 25
Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 14 GSKRIGHTS AND REMEDIES EXCLUSIVE OF DEFAULT. . . . . . . . . . . 26
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Preservation of Collateral . . . . . . . . . . . . . . . . . . . . . . 26
Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 15 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 27
Indemnification of GSK . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 16 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Use of Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 30
Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Construction of Agreement. . . . . . . . . . . . . . . . . . . . . . . 30
No Liability for GSK . . . . . . . . . . . . . . . . . . . . . . . . . 30
Survival of Representations. . . . . . . . . . . . . . . . . . . . . . 30
No Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBIT A PROMISSORY NOTE . . . . . . . . . . . . . . . . . . . . . . . . . 1-A
SCHEDULE 1-PROMISSORY NOTE. . . . . . . . . . . . . . . . . . . . . . . . . 1-B
SCHEDULE OF GENERAL ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . 1-B
SCHEDULE OF PRODUCT SPECIFIC ADVANCES . . . . . . . . . . . . . . . . . . . 1-B
EXHIBIT B FORM OF PATENT OFFICE FILING. . . . . . . . . . . . . . . . . . . 1-C
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-C
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-C
CAPITAL EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
DEPOSIT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Development Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 2-C
DEVELOPMENT CANDIDATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
DEVELOPMENT CANDIDATE INVENTORY . . . . . . . . . . . . . . . . . . . . . . 2-C
DEVELOPMENT COMPOUND . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Included Compounds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 2-C
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Patent Office Filing . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Stock Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . 3-C
Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . 3-C
United States or U.S.. . . . . . . . . . . . . . . . . . . . . . . . . 3-C
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-C
UCC Financing Statement(s) . . . . . . . . . . . . . . . . . . . . . . 3-C
Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . 3-C
ARTICLE 2 GRANT OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . . 3-C
ARTICLE 3 REPRESENTATIONS, WARRANTIES and covenants OF EXELIXIS . . . . . . 4-C
Title to the Collateral. . . . . . . . . . . . . . . . . . . . . . . . 4-C
Infringement of the Collateral . . . . . . . . . . . . . . . . . . . . 5-C
Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 5-C
Fees and Expenses in Protecting Rights . . . . . . . . . . . . . . . . 5-C
Pledge of Additional Collateral. . . . . . . . . . . . . . . . . . . . 6-C
Impairment of Title to Collateral. . . . . . . . . . . . . . . . . . . 6-C
Preservation of Title to Collateral. . . . . . . . . . . . . . . . . . 6-C
ARTICLE 4 GSK'S APPOINTMENT AS ATTORNEY-IN-FACT. . . . . . . . . . . . . . 6-C
APPOINTMENT OF GSK AS ATTORNEY-IN-FACT. . . . . . . . . . . . . . . . . . . 6-C
ARTICLE 5 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 7-C
ARTICLE 6 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-C
ARTICLE 7 EXECUTION OF SPECIAL POWER OF ATTORNEY. . . . . . . . . . . . . . 7-C
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Amendments and Modification. . . . . . . . . . . . . . . . . . . . . . 8-C
Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Acknowledgment of Receipt. . . . . . . . . . . . . . . . . . . . . . . 8-C
No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-C
Interest Granted to GSK. . . . . . . . . . . . . . . . . . . . . . . . 9-C
WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 9-C
Schedule 2.1.1 of the Patent Agreement. . . . . . . . . . . . . . . . . . . 1-D
PATENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-D
Pending Patent Applications. . . . . . . . . . . . . . . . . . . . . . 1-D
EXHIBIT A OF THE PATENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . 1-E
FORM OF SPECIAL POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . 1-E
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT . . . . . . . . . . . . . 1-F
EXHIBIT D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-G
FORM OF BORROWING NOTICE . . . . . . . . . . . . . . . . . . . . . . . 1-G
EXHIBIT E. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 1-H
FORM OF STOCK REPAYMENT NOTICE . . . . . . . . . . . . . . . . . . . . 1-H
SCHEDULE 3.1.1 PATENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1-I
SCHEDULE 3.1.3 DEPOSIT ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . 1-J
SCHEDULE 9.1 LOCATION OF THE COLLATERAL . . . . . . . . . . . . . . . . . . 1-K
SCHEDULE 9.16 PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . . 1-L
SCHEDULE 16.4 INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . 1-M
LIST OF EXHIBITS
EXHIBIT A NOTE
EXHIBIT B PATENT OFFICE FILING
EXHIBIT C SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D BORROWING NOTICE
EXHIBIT E STOCK REPAYMENT NOTICE
LIST OF SCHEDULES
SCHEDULE 3.1.1 PATENTS
SCHEDULE 3.1.3 DEPOSIT ACCOUNT
SCHEDULE 9.1 LOCATION OF THE COLLATERAL
SCHEDULE 9.16 PERMITTED INVESTMENTS
SCHEDULE 16.4 INDEBTEDNESS
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Loan Agreement") is executed as of
the 28th day of October, 2002 (the "Effective Date") by and between Exelixis,
Inc., a Delaware corporation ("Exelixis"), and SmithKline Beecham Corporation, a
Pennsylvania corporation, doing business as GlaxoSmithKline ("GSK"). Exelixis
and GSK are each referred to herein by name or as a "Party" or, collectively, as
"Parties".
RECITALS
A. Exelixis and GSK have entered into that certain Product Development
and Commercialization Agreement of even date herewith (the "Development
Agreement") and that certain Stock Purchase and Stock Issuance Agreement of even
date herewith (the "Stock Purchase Agreement");
B. In connection with, and as a condition of, Exelixis and GSK entering
into the Development Agreement and the Stock Purchase Agreement, Exelixis and
GSK have agreed to enter into this Loan Agreement pursuant to which Exelixis may
obtain during the Development Term (as defined below), from time to time,
certain loans from GSK, subject to the terms and conditions stated herein for
amounts up to the Maximum Loan Amount (as defined below); and
C. GSK is willing to provide such loans to, and in favor of, Exelixis,
subject to the terms and conditions of this Loan Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined in this Loan Agreement, all capitalized terms
shall have the meanings given them in the Development Agreement or the Stock
Purchase Agreement, as applicable. As used in this Loan Agreement, the
following terms shall have the following respective meanings:
1.1 "Advance" shall mean a loan made, or to be made, pursuant to
Article 2, which may be in the form of a General Advance or a Product Specific
Advance.
1.2 "Affiliate" shall mean any Person, whether de jure or de facto, which
directly or indirectly through one (1) or more intermediaries controls, is
controlled by, or is under common control with, a Party to the Loan Documents.
A Person shall be deemed to "control" another Person if it (a) owns, directly or
indirectly, beneficially or legally, at least fifty percent (50%) of the
outstanding voting securities or capital stock (or such lesser percentage which
is the maximum allowed to be owned by a Person in a particular jurisdiction) of
such other Person, or has other comparable ownership interest with respect to
any Person other than a corporation; or (b) has the power, whether pursuant to
contract, ownership of securities or otherwise, to direct the management and
policies of the Person.
1.3 "Biotechnology Company" shall mean any Person other than a Major
Pharmaceutical Company.
1.4 "Borrowing Date" shall mean any Business Day on which an Advance
occurs.
1.5 "Borrowing Notice" shall have the meaning assigned to such term in
Section 2.2.
1.6 "Business Day" shall mean any day, other than a Saturday, Sunday or
other day in which commercial banks are authorized or required in the United
States to be closed.
1.7 "Capital Equipment" shall have the meaning assigned to such term in
Section 3.1.5.
1.8 "Change in Control" shall mean a transaction in which [ * ].
1.9 "Change in Control Rate of Interest" shall mean the fixed rate of
interest per annum equal to [*].
1.10 "Collateral" shall have the meaning assigned to such term in Section
3.1.
1.11 "Common Stock" shall mean the common stock of Exelixis, par value
$0.001 per share.
1.12 "Contract Year" shall mean a year of 365 days (or 366 in a leap year)
beginning on the Effective Date and ending one (1) year thereafter and so on
year-by-year during the Term. "Contract Year One" shall mean the first such
year; "Contract Year Two" shall mean the second such year, and so on,
year-by-year.
1.13 "Default Rate of Interest" shall mean the fixed rate of interest per
annum equal to [*].
1.14 "Deposit Account" shall have the meaning assigned to such term in
Section 3.1.3.
1.15 "Development Agreement" shall have the meaning assigned to such term
in the Recitals.
1.16 "Development Candidate" shall have the meaning assigned to such term
in the Development Agreement.
1.17 "Development Candidate Inventory" shall have the meaning assigned to
such term in Section 3.1.4.
1.18 "Development Compound" shall have the meaning assigned to such term in
the Development Agreement.
1.19 "Development Expiration Date" shall mean the earliest of the
following: [*]
1.20 "Development Program" shall have the meaning assigned to such term in
the Development Agreement.
1.21 "Development Term" shall have the meaning assigned to such term in the
Development Agreement.
1.22 "Dollars" and the sign "$" shall mean the lawful money of the United
States.
1.23 "DWAC" shall have the meaning assigned to such term in Section
5.6.4(a).
1.24 "Effective Date" shall mean the date of this Loan Agreement set forth
in the Preamble.
1.25 "Environmental Laws" shall mean any federal, state, county, municipal
or other laws, ordinances or regulations pertaining to health or the
environment.
1.26 "ERISA" shall mean the Employee Retirement Income Security Act of
1974,
as amended.
1.27 "Event of Default" shall mean any of those conditions or events listed
in Article 12.
1.28 "Exchange Act" shall have the meaning assigned to such term in Section
7.4.
1.29 "Excluded Collateral" shall mean [*].
1.30 "Executive Officers" shall mean the Chief Executive Officer of
Exelixis, or such other person holding a similar position designated by Exelixis
from time to time, and the Chairman, Research and Development, Pharmaceuticals
of GSK, or such other person holding a similar position designated by GSK from
time to time.
1.31 "Expanded Program Option" shall have the meaning assigned to such term
in the Development Agreement.
1.32 "Extension Period" shall have the meaning assigned to such term in the
Development Agreement.
1.33 "Fair Market Value" shall have the meaning assigned to such term in
Section 5.6.1.
1.34 "GAAP" shall mean United States generally accepted accounting
principles (including principles of consolidation), in effect from time to time,
consistently applied.
1.35 "General Advance(s)" shall mean a loan pursuant to the terms of
Section
2.1.1 that GSK agrees to provide to Exelixis solely for research and development
activities pursuant to the terms and conditions of the Development Agreement.
1.36 "Governmental Entity" shall mean any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
1.37 "HSR Act" shall mean the Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended.
1.38 "Included Compounds" shall have the meaning assigned to such term in
the Development Agreement.
1.39 "Initial Advance" shall have the meaning assigned to such term in
Section 6.1.
1.40 "Intellectual Property" shall have the meaning assigned to such term
in Section 3.1.2.
1.41 "Legal Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
governmental or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Entity or any arbitrator or
arbitration panel.
1.42 "LIBOR" shall mean, with respect to the Default Rate of Interest or
Change in Control Rate of Interest, the London inter-bank offered rate at which
United States Dollar deposits for a period equal to six (6) months are offered
as such rate is published in The Wall Street Journal on the date an Event of
Default or Change in Control occurs.
1.43 "Limited Program Option" shall have the meaning assigned to such term
in the Development Agreement.
1.44 "Loan Agreement" shall mean this loan and security agreement together
with all recitals and exhibits, schedules and attachments hereto, as each of
them may be amended, modified, supplemented, or restated from time to time.
1.45 "Loan Documents" shall mean collectively, this Loan Agreement, the
Note, the UCC Financing Statement(s), the Patent Office Filing(s), the
Securities Account Control Agreement and any other agreements, certificates or
instruments executed now or hereafter evidencing, describing, certifying or
securing the Obligations, as such documents may be amended, modified,
supplemented or restated from time to time.
1.46 "Major Pharmaceutical Company" shall mean any Person that, together
with its Affiliates, has annual worldwide pharmaceutical sales of [*] or more.
1.47 "Material Adverse Effect" shall mean any material adverse effect (a)
upon the validity, or enforceability of the Loan Documents (b) on any of the
transactions contemplated by the Loan Documents, (c) on the business,
operations, condition (financial or otherwise), performance or properties of
Exelixis taken as a whole, or (d) upon the ability of Exelixis to fulfill any
Obligations.
1.48 "Maturity Date" shall mean the date that is three (3) years from the
Development Expiration Date.
1.49 "Maximum Loan Amount" shall mean the maximum principal loan amount of
either (a) Eighty-Five Million Dollars ($85,000,000) if GSK does not select the
Expanded Program Option or [*].
1.50 "National Securities Market" shall mean the Nasdaq National Market
System, the Nasdaq Small Cap Market and any other national public securities
exchange.
1.51 "Note" shall mean the promissory note together with all recitals and
exhibits, schedules and attachments thereto, executed by Exelixis in favor of
GSK, substantially in the form of Exhibit A attached hereto, as may be amended,
modified, supplemented or restated from time to time.
1.52 "Obligations" shall mean all Advances, Total Advance Amount,
liabilities, obligations, covenants and duties arising under the Loan Documents
owed by Exelixis to GSK whether direct or indirect, absolute or contingent.
1.53 "Operating Documents" shall mean Exelixis' amended and restated
certificate of incorporation, as currently filed with the State of Delaware and
its amended and restated bylaws in current form, each with all future
modifications and amendments thereto.
1.54 "OSHA" shall mean the federal Occupational Safety and Health Act, as
amended.
1.55 "Party" or "Parties" shall have the meaning assigned to such term in
the Preamble.
1.56 "Patents" shall have the meaning assigned to such term in Section
3.1.1.
1.57 "Patent Office Filing" shall mean any and all patent collateral
mortgage agreements and cover sheets between GSK and Exelixis and its Affiliates
which grant GSK a security interest, first in priority, in the Patents by filing
such patent collateral mortgage agreements with the United States and foreign
Patent and Trademark Offices, substantially in the form of Exhibit B attached
hereto, as may be amended, modified, supplemented or restated from time to time.
1.58 "Payment Date" shall mean any of the dates on which payment of the
Advances and accrued interest is due as set forth in Section 5.1.
1.59 "Person" shall mean any individual, corporation, firm, partnership or
other entity.
1.60 "Proceeds" shall have the meaning assigned to such term in the UCC.
1.61 "Product Specific Advance(s)" shall mean a loan pursuant the terms set
forth in Section 2.1.2 that GSK agrees to advance to Exelixis solely for
research and development activities with respect to a particular Development
Compound that Exelixis elects to become a Development Candidate pursuant to the
terms and conditions of the Development Agreement.
1.62 "Repayment Period" shall mean the [*] period immediately following the
Development Expiration Date.
1.63 "SEC" shall mean the United States Securities and Exchange Commission.
1.64 "SEC Affiliate" shall have the meaning ascribed to the term
"affiliate" under Rule 144 of the Securities Act.
1.65 "SEC Filings" shall have the meaning assigned to such term in Section
7.4.
1.66 "Securities Account Control Agreement" shall mean [*], as such
securities account control agreement may be amended, modified, supplemented or
restated from time to time.
1.67 "Securities Act" shall have the meaning assigned to such term in
Section 7.4.
1.68 "Stock Purchase Agreement" shall have the meaning assigned to such
term in the Recitals.
1.69 "Stock Repayment" shall have the meaning assigned to such term in
Section 5.6.1.
1.70 "Stock Repayment Amount" shall have the meaning assigned to such term
in Section 5.6.1.
1.71 "Stock Repayment Closing Date(s)" shall mean the Business Day set
forth in the Stock Repayment Notice as the stock repayment closing date;
provided that each such stock repayment closing date shall be no later than the
applicable Payment Date.
1.72 "Stock Repayment Notice" shall have the meaning assigned to such term
in Section 5.6.1.
1.73 "Stock Repayment Shares" shall mean the shares of Common Stock
issuable by Exelixis to GSK to pay all or any portion of the then outstanding
principal balance of the Advances and all accrued interest thereon pursuant to
Section 5.6.
1.74 "Tangible Net Worth" shall have the meaning assigned to such term in
Section 11.2.
1.75 "Term" shall mean the period from the Effective Date until the later
of (a) the Maturity Date or (b) when the aggregate principal balance of all
Advances outstanding and any interest accrued thereon has been paid.
1.76 "Third Party" shall mean any entity other than Exelixis or GSK or an
Affiliate of Exelixis or GSK.
1.77 "Total Advance Amount" shall have the meaning assigned to such term in
Section 5.1 hereof.
1.78 "Trading Day" shall mean a day in which the National Securities
Markets are open for trading.
1.79 "Transaction Documents" shall mean this Loan Agreement, the
Development Agreement and the Stock Purchase Agreement, as such documents may be
amended, modified, supplemented or restated from time to time.
1.80 "UCC" shall mean the Uniform Commercial Code as the same may from time
to time be in effect in Exelixis' state of incorporation; provided, however, in
the event that, by reason of mandatory provisions of law, such as may be the
case with the Deposit Account, any or all of the attachment, perfection or
priority of GSK's security interest in any Collateral shall be governed by the
Uniform Commercial Code as in effect in a jurisdiction other than Exelixis'
state of incorporation, in which case, the term "UCC" shall mean the Uniform
Commercial Code as in effect at such time in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
1.81 "UCC Financing Statement(s)" shall mean a record or records composed
of an initial financing statement and any filed record relating to the initial
financing statement filed in Exelixis' state of incorporation or elsewhere to
perfect GSK's lien on the Collateral.
1.82 "United States" or "U.S." shall mean the United States of America.
1.83 "Working Capital" shall have the meaning assigned to such term in
Section 11.2.
Accounting Terms. All accounting terms not specifically defined in the
Loan Documents shall be determined and construed in accordance with GAAP.
Other Definitional Provisions. Where the context herein requires, the
singular number shall be deemed to include the plural, the masculine gender
shall include the feminine and neuter genders, and vice versa. The words
"hereof," "herein" and words of similar import when used in this Loan Agreement
shall refer to this Loan Agreement as a whole and not to any particular
provision of this Loan Agreement. All section, schedule or exhibit references
are to this Loan Agreement unless otherwise specified. All terms used herein and
defined in the UCC shall have the meaning given therein unless otherwise defined
herein.
ARTICLE 2
AMOUNT AND TERMS OF CREDIT
2.1 Commitment. Subject to Exelixis' observance of, and performance
with, all terms, conditions, warranties, representations and covenants of the
Loan Documents, in the absence of an Event of Default, GSK agrees to make
Advances to Exelixis up to the Maximum Loan Amount, in increments of Five
Million Dollars ($5,000,000) or greater, from time to time, from the Effective
Date until the Development Expiration Date; provided, however, GSK has no
obligation whatsoever to make Advances to Exelixis which exceed Eighty-Five
Million Dollars ($85,000,000) prior to such time as GSK selects the Expanded
Program Option and, if GSK fails to select the Expanded Program Option, then GSK
shall not be obligated to make any further Advances to Exelixis after Contract
Year Two; [*]. Exelixis hereby irrevocably authorizes GSK to make (or cause to
be made) appropriate notations regarding (a) the Borrowing Date, (b) the amount
and type (i.e., General or Product Specific) of the Advance and (c) the total
Product Specific Advances advanced as of the Borrowing Date for each Development
Candidate or the total General Advances advanced as of the Borrowing Date, as
the case may be, and in substantially the form set forth on Schedule 1 attached
to the Note, which notations, if made, shall be rebuttably presumptive evidence
of, inter alia, such information set forth therein. The aggregate amount of all
Advances made from time to time from the Effective Date to the Development
Expiration Date shall not at any time exceed the applicable Maximum Loan Amount.
If Advances are prepaid pursuant to Section 5.5 or if milestone payments are
credited against Advances pursuant to Section 5.4, such sums shall not be
available for future Advances. Subject to Article 6, Advances shall be made as
follows:
2.1.1 General Advances. Subject to Section 2.1, commencing on the
Effective Date and prior to January 1, 2003, GSK agrees to make available
General Advances to Exelixis in an amount up to Twenty-Five Million Dollars
($25,000,000) and, after the First Contract Year and prior to the Development
Expiration Date, GSK agrees to make available additional General Advances to
Exelixis in amounts up to Twenty Million Dollars ($20,000,000);[*]; and
2.1.2 Product Specific Advances. Subject to Section 2.1, upon, or at
any time after, a Development Compound is selected by Exelixis as a Development
Candidate pursuant to Section 3.3.2 of the Development Agreement, GSK agrees to
make available to Exelixis one or more Product Specific Advances with respect to
such Development Candidate[*].
2.2 Borrowing Notices. Subject to this Article 2, Exelixis may notify
GSK to make available an Advance (each such notice, a "Borrowing Notice") by
delivering to GSK a written request substantially in the form of Exhibit D
attached hereto. The Borrowing Notice shall state the amount, the Borrowing
Date of such Advance (which Borrowing Date must be a Business Day not earlier
than fifteen (15) Business Days after the Borrowing Notice is effective pursuant
to Section 16.5) and all other documents and instruments required pursuant to
the terms and conditions of the Loan Documents. GSK is entitled to rely upon
the Borrowing Notice and the covenants of Exelixis' officers who sign such
Borrowing Notices. If GSK requires additional documentation pursuant to Section
6.2.8, GSK shall provide a list to Exelixis not less than five (5) Business Days
prior to the Borrowing Date.
2.3 Disbursement of Advances. Subject to the terms and conditions of the
Loan Documents, GSK shall make available to Exelixis the Advance requested by
Exelixis on the Borrowing Date specified in each applicable Borrowing Notice by
wire transfer to the Deposit Account.
ARTICLE 3
SECURITY INTEREST
3.1 Grant of Security Interest. To secure the payment and performance
by Exelixis of the Obligations to GSK, Exelixis and, to the extent applicable,
its Affiliates hereby pledge, set over, assign, deliver and grant a first and
only priority security interest to GSK in all of Exelixis' and, to the extent
applicable, its Affiliates' right, title and interest in the following assets,
wherever located and whether now existing or hereafter created and whether now
owned or hereafter acquired, of every description, tangible and intangible (the
"Collateral"):
3.1.1 [*];
3.1.2 [*];
3.1.3 Deposit Account. That certain deposit account with a mutually
agreed upon bank or financial institution, initially [*], more particularly
described on Schedule 3.1.3 (the "Deposit Account") maintained by Exelixis into
which the proceeds of the Advances, including without limitation investment
property, shall be deposited and, subject to Section 9.5, maintained, with all
dividends and distributions, whether payable in cash, securities or other
investment property accruing on the balance therein, all of which are described
and governed by the Control Agreement;
3.1.4 [*];
3.1.5 Capital Equipment. All capital equipment (currently defined as
equipment with a purchase price per item in excess of Five Thousand Dollars
($5,000)), purchased by Exelixis with the proceeds of the Advances, having a
specific use solely to perform the activities contemplated under the Development
Agreement, in all cases however and wherever arising (the "Capital Equipment");
and
3.1.6 Proceeds. All Proceeds and products of the Intellectual
Property, the
Deposit Account, the Development Candidate Inventory and/or the Capital
Equipment.
ARTICLE 4
INTEREST
4.1 Interest
4.1.1 Advances Each Advance shall bear interest on the sum of the
unpaid principal balance thereof outstanding on each day until repaid, at a rate
per annum equal to four percent (4.0%).
4.1.2 Default Rate of Interest. Notwithstanding the rate of interest
specified in Section 4.1.1, effective immediately upon the occurrence of an
Event of Default under Article 12, and for so long thereafter as any such Event
of Default shall be continuing and to the extent permitted by law, the aggregate
principal balance of all Advances then outstanding and, to the extent permitted
by applicable law, any accrued interest thereon, shall bear interest at the
Default Rate of Interest. Exelixis hereby acknowledges that (a) such Default
Rate of Interest is a material inducement to GSK to make Advances available to
Exelixis; (b) GSK would not have made the Advances available to Exelixis in the
absence of the agreement of Exelixis to pay such Default Rate of Interest; (c)
such Default Rate of Interest represents compensation for increased risk to GSK
that the Advances will not be repaid and (d) such Default Rate of Interest is
not a penalty and represents a reasonable estimate of (i) the cost to GSK in
allocating its resources (both personnel and financial) to the administration
and collection of the Advances and (ii) compensation to GSK for losses that are
difficult to ascertain.
4.1.3 Change of Control Rate of Interest. In the event of termination
of the Development Agreement as provided in Sections 13.1.2(d)(i) or
13.1.2(d)(ii) of the Development Agreement, the aggregate principal balance of
all Advances then outstanding and, to the extent permitted by applicable law,
any accrued interest thereon, shall bear interest at the Change of Control Rate
of Interest from and after the date of such termination.
4.1.4 Interest Computations. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
ARTICLE 5
REPAYMENT
5.1 Repayment. Payment hereunder may be made by Exelixis in cash
pursuant to Section 5.3, Common Stock pursuant to Section 5.6, or by a
combination of the foregoing. Unless earlier paid through offsets pursuant to
Section 5.4 or pursuant to Section 5.5 below, all Advances made hereunder,
together with all accrued and unpaid interest, shall be due and payable to GSK
on the earlier of [*], or (b) demand made in accordance with Section 13.1.
5.2 Payments on Non-Business Day. In the event that any payment of
principal, interest, fees or any other amounts payable by Exelixis pursuant to
the Loan Documents shall become due on any day which is not a Business Day, such
due date shall be extended to the next succeeding Business Day, and, to the
extent applicable, interest shall continue to accrue and be payable at the
applicable rate for and during any such extension.
5.3 Cash Payment Procedures. All sums payable by Exelixis to GSK in cash
under the Loan Documents, whether principal, interest, or otherwise, shall be
paid in lawful money of the United States and payable in immediately available
funds, when due, by wire transfer to an account of GSK as GSK may reasonably
direct, without setoff, deduction or counterclaim (except as provided in Section
5.4 below).
5.4 Milestone Payments. Upon the satisfaction of the conditions set forth
therein, GSK is obligated to make certain milestone payments to Exelixis
pursuant to the terms of the Development Agreement. All Product Acceptance
Milestone payments under Section 6.2.1 of the Development Agreement and
commercialization milestone payments under Section 6.2.3 of the Development
Agreement to be made to Exelixis may, at GSK's option, be immediately credited
against the Advances and accrued interest then outstanding under the Note, by
direct offset. All such credits shall be applied first to expenses or charges,
then to accrued interest, and then to principal on the date such milestone
payments are first due and payable. Any such credits to the Total Advanced
Amount shall not entitle Exelixis to obtain any additional Advances. During the
Repayment Period, milestone payments shall be applied to payments due in the
direct order of maturity. GSK shall promptly provide Exelixis in writing a
reconciliation of the amount of each such credit and its application to the
amounts payable under the Note.
5.5 Optional Cash Prepayments. Exelixis may prepay, in cash, the unpaid
principal amount of any Advance in whole or in part without penalty or premium
at any time and from time to time, in cash only, and as provided for in Section
5.3. Partial prepayments shall be applied first to expenses and charges, then
to interest and then to principal, and during the Repayment Period, to payments
due in direct order of maturity.
5.6 Repayment By Common Stock.
5.6.1 Exercise of Issuance Rights. Subject to Section 5.6.6, prior to
a Payment Date, upon notice to GSK pursuant to Section 5.6.3 (a "Stock Repayment
Notice"), Exelixis shall have the option to issue to GSK the Stock Repayment
Shares in payment of all or any portion of the then outstanding principal amount
of any Advance, and all accrued interest relating thereto up to and including
the Payment Date (the "Stock Repayment Amount") (each such instance being
hereinafter referred to as "Stock Repayment"). The number of shares of Common
Stock comprising the Stock Repayment Shares issuable in connection with Stock
Repayments shall be equal to the quotient of the applicable Stock Repayment
Amount divided by the Fair Market Value (as defined below) of one share of
Common Stock. No fractional shares shall be issued in connection with a Stock
Repayment. The "Fair Market Value" of the Common Stock shall be deemed to be
the average of the opening and closing sale prices of the Common Stock as
reported by the National Securities Market on which the Common Stock trades or
is listed for the first twenty (20) consecutive Trading Days immediately
following the date which is two (2) Trading Days after Exelixis filed its most
recent periodic disclosure on Form 10-Q or Form 10-K prior to the date of each
Stock Repayment Notice.
5.6.2 Limitation on Ownership. Notwithstanding anything to the
contrary contained in this Loan Agreement, the total number of shares of Common
Stock owned by GSK that have been acquired pursuant to the Transaction Documents
shall at all times be less than twenty percent (20%) of Exelixis' then
outstanding Common Stock, as reported in the most recent quarterly or annual
report form of Exelixis filed with the SEC. In the event that any purchase of
Option Shares (as defined in the Stock Purchase Agreement) or Stock Repayment
Shares would cause GSK to be a holder of twenty percent (20%) or more of
Exelixis' then outstanding Common Stock, GSK shall be relieved of its
obligations to make such purchase(s) or from accepting such repayment in lieu of
cash, to the extent of the overage.
5.6.3 Stock Repayment Notice. A Stock Repayment Notice substantially
in the form attached hereto as Exhibit E shall be delivered pursuant to the
notice provisions set forth in Section 16.5 not later than thirty (30) days
prior to a Stock Repayment Closing Date. Each such Stock Repayment Notice shall
state the Stock Repayment Amount applicable to the Stock Repayment.
5.6.4 Delivery of Stock Repayment Shares. At least three (3) Trading
Days in advance of any Stock Repayment Closing Date, Exelixis shall issue
instructions as follows:
(a) If GSK is not an SEC Affiliate of Exelixis, then Exelixis
shall issue instructions to Exelixis' stock transfer agent directing Exelixis'
transfer agent to prepare and deliver to the account of GSK by an automated
share transfer through the Depository Trust Company system ("DWAC"), that number
of shares of Common Stock representing the applicable Stock Repayment Shares no
later than the Stock Repayment Closing Date;
(b) If GSK is an SEC Affiliate of Exelixis as of the applicable
Stock Repayment Closing Date, then Exelixis shall issue instructions to
Exelixis' stock transfer agent, directing the transfer agent to prepare and
deliver to Exelixis a stock certificate representing that number of shares of
Common Stock representing the applicable Stock Repayment Shares, as soon as
possible, but in no event later than one (1) Trading Day prior to the applicable
Stock Repayment Closing Date, which stock certificate shall be delivered by
Exelixis to GSK on the applicable Stock Repayment Closing Date; provided
however, that Exelixis may only issue Stock Repayment Shares in accordance with
this Section 5.6; or
c) Subject to GSK's receipt of the stock certificate or
DWAC transfer, as the case may be, for the Stock Repayment Shares, the
outstanding Obligations prior to such Stock Repayment shall be deemed repaid to
the extent of the applicable Stock Repayment Amount.
5.6.5 No Rights as Stockholders. GSK shall not be entitled to any
voting rights or other rights as a stockholder of Exelixis except as otherwise
provided in the Stock Purchase Agreement.
5.6.6 Conditions Precedent to Each Issuance of Stock Repayment
Shares. The right of Exelixis to issue Stock Repayment Shares shall be subject
to the following conditions precedent and if Exelixis is unable to satisfy such
conditions precedent on the date of the Stock Repayment Notice, then Exelixis
shall make such payment due in cash pursuant to Section 5.3:
(a) satisfaction of each of the conditions set forth in Sections
5.6.1, 5.6.2 and 5.6.3;
(b) no Event of Default shall have occurred and be continuing or
would reasonably be likely to be caused by the making of such Stock Repayment;
(c) satisfaction of each of the conditions set forth in Section
6.1 of the Stock Purchase Agreement;
(d) no Change of Control as described in Section 13.1 of the
Development Agreement shall have occurred; and
(e) no termination of the Development Agreement shall have
occurred; provided, however, if the Development Agreement is terminated by
Exelixis pursuant to Section 12.2.1 of the Development Agreement for a Material
Breach (as defined in the Development Agreement) by GSK or by GSK pursuant to
Section 12.3.2 then this Section 5.6.6(e) shall not be a condition precedent to
Exelixis' right to issue Stock Repayment Shares.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Initial Advance. In addition to all of the
obligations set forth in the Loan Documents, GSK will not make the initial
Advance (the "Initial Advance") under and pursuant to this Loan Agreement unless
and until the following conditions and obligations have been satisfied, all in
form and substance satisfactory to GSK:
6.1.1 Loan Documents. Exelixis shall have duly executed and delivered
the Loan Documents, all in form and substance satisfactory to GSK.
6.1.2 Supporting Documents. Exelixis shall deliver or cause to be
delivered to GSK the following documents:
(a) a copy of the Operating Documents and a good standing
certificate of Exelixis from the State of Delaware and for each jurisdiction in
which it is qualified to transact business;
(b) an incumbency certificate with certified resolutions of the
board of directors of Exelixis, signed by an authorized officer of Exelixis,
authorizing the execution, delivery and performance of the Loan Documents
(including Borrowing Notices);
(c) a legal opinion of counsel to Exelixis addressed to GSK
regarding such matters as GSK and its counsel may reasonably request; and
(d) UCC searches, federal, state and local judgment searches,
federal and state tax lien searches, bankruptcy searches, pending suit searches,
searches with the United States and foreign Patent & Trademark Offices, and all
other applicable lien searches showing no existing security interests in or
liens on the Collateral other than liens permitted pursuant to Section 10.1.
6.1.3 Perfection of Liens. UCC Financing Statements, the Control
Agreement, and filings with the United States and foreign Patent & Trademark
Offices covering the Collateral shall have been duly executed, recorded or filed
with the appropriate parties in the manner and places required by law to
establish, preserve, protect and perfect the interests and rights created or
intended to be created by the Loan Documents; and all taxes, fees and other
charges in connection with the execution, delivery and filing of the Loan
Documents shall have been duly paid.
6.2 Conditions Precedent to All Advances. The following conditions, in
addition to any other requirements, including those for the Initial Advance
hereunder, shall have been met or performed by the Borrowing Date and each
Borrowing Notice shall be deemed to be a representation that all such conditions
have been satisfied:
6.2.1 Borrowing Notice. Exelixis shall have delivered to GSK a
Borrowing Notice;
6.2.2 No Event of Default. No Event of Default, and no event which,
with the passage of time, or the giving of notice, or both, would be reasonably
likely to give rise to an Event of Default, shall have occurred and be
continuing, or be reasonably likely to be caused by the making of the Advance in
question, and Exelixis shall have delivered an officer's certification to such
effect, which may be incorporated in the Borrowing Notice;
6.2.3 No Termination under the Development Agreement. There has been
no termination of the Development Agreement;
6.2.4 Correctness of Representations. All representations and
warranties made by Exelixis herein shall be true and correct in all material
respects with the same effect as though the representations and warranties had
been made on and as of the proposed Borrowing Date, and Exelixis has delivered
an officer's certificate to such effect, which may be incorporated in the
Borrowing Notice;
6.2.5 No Material Adverse Effect. There has been no event which would
be reasonably be likely to have a Material Adverse Effect;
6.2.6 Limitations Not Exceeded. The proposed Advance shall not cause
the outstanding Total Advance Amount to exceed the applicable Maximum Loan
Amount and/or the limits specified in Sections 2.1.1 and 2.1.2;
6.2.7 Use of Proceeds. Exelixis shall have delivered to GSK a
certification from an officer of Exelixis that the proceeds of the Advance are
to be utilized by Exelixis solely in furtherance of the obligations of Exelixis
under the Development Agreement over the course of the Term, which certification
may be incorporated in the Borrowing Notice;
6.2.8 Additional Documents. Exelixis shall have delivered to GSK all
additional opinions, documents, certificates and other assurances that GSK or
its counsel may reasonably request pursuant to Section 2.2; and
6.2.9 Change of Control. There shall have been no Change of Control as
described in Section 13.1 of the Development Agreement.
6.3 Condition Precedent to Disbursement of Second General Advance. The
obligation of GSK to make any second General Advance shall be subject to the
satisfaction of the following condition precedent on or before any such second
General Advance:
6.3.1 Exelixis Expenditures. Exelixis shall have delivered to GSK a
certification from an officer of Exelixis that Exelixis has spent not less than
Twenty Million Dollars ($20,000,000) in furtherance of Exelixis' obligations
under the Development Agreement from sources other than GSK to Exelixis under
the Development Agreement, the Stock Purchase Agreement and this Loan Agreement,
which certification may be incorporated in the Borrowing Notice.
6.4 Conditions Precedent to Disbursement of All Product Specific
Advances. The obligation of GSK to make any Product Specific Advance shall be
further subject to the satisfaction of the following conditions precedent on or
before any such Product Specific Advance:
6.4.1 Exelixis' Selection of a Development Candidate. In the event
that a Development Candidate meets and continues to meet the Developability
Criteria established by the Collaboration Committee for the advancement to
Development Candidate status and Exelixis selects Development Compound to become
a Development Candidate under the Development Program, Exelixis shall notify
GSK, in writing of such selection, which notification shall be within no more
than thirty (30) days after such selection; and
6.4.2 Marketable Title to Development Candidate Intellectual Property.
Exelixis shall provide a representation in the Borrowing Notice for each Product
Specific Advance that, other than the security interest of GSK, the title to the
Intellectual Property pertaining to such Development Candidate is free and clear
of all assignments, mortgages, pledges, liens, security interests, leases,
claims or any other encumbrances.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF EXELIXIS
Exelixis hereby represents and warrants to GSK as of the Effective Date and
as of each Borrowing Date that:
7.1 Organization, Good Standing and Qualification. Exelixis is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business. The spelling and the identification of Exelixis on the
signature page hereof are accurate in all respects and consistent with Exelixis'
registration. Exelixis is duly qualified to transact business as a corporation
and is in good standing in each jurisdiction in which qualification is required
by law. Exelixis has full corporate power and authority to own its property and
to carry on business in all jurisdictions where it is doing business. Exelixis
possesses all licenses, permits, franchises, patents, copyrights, trademarks,
and trade names, or rights thereto, to conduct its business substantially as now
conducted and as presently proposed to be conducted, and is not in violation of
rights of others with respect to the foregoing. GSK has been provided with a
true copy of Exelixis' Operating Documents which are in full force and effect.
GSK may rely on the accuracy and the integrity of the Operating Documents filed
with the SEC and all amendments thereto which have not been filed with the SEC
as of each Borrowing Date shall be certified to GSK by a duly authorized officer
of Exelixis in the Borrowing Notice. There has been no certificate of
dissolution filed or cancellation filed on the behalf of Exelixis nor has
Exelixis been dissolved by any event such as death, retirement, resignation,
expulsion, bankruptcy or dissolution of any shareholder, partner or member or
event which would cause the dissolution of Exelixis pursuant to applicable law.
7.2 Authorization; Due Execution. Exelixis has the requisite corporate
power and authority to execute, deliver and carry out the Loan Documents and to
perform its obligations under the terms of the Loan Documents and, at the time
of a Stock Repayment pursuant to Section 5.6, will have the requisite corporate
power to issue Stock Repayment Shares. All corporate action on the part of
Exelixis, its officers, directors and stockholders necessary for the
authorization, execution and delivery of the Loan Documents has been taken. The
Loan Documents have been and shall be duly authorized, executed and delivered by
Exelixis and, upon due execution and delivery by GSK of the Loan Documents (as
applicable) will each be a valid and binding agreement of Exelixis, enforceable
in accordance with its respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles.
7.3 Valid Issuance of Stock. The Stock Repayment Shares, when issued, sold
and delivered in accordance with the terms of Section 5.6, will be duly and
validly authorized and issued, fully paid, and nonassessable and will be issued
in compliance with all applicable federal and state securities laws.
7.4 SEC Filings. Exelixis has timely filed with the SEC all reports,
registration statements and other documents required to be filed by it (the "SEC
Filings") under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"). The SEC Filings were prepared in accordance
and, as of the date on which each such SEC Filing was filed with the SEC,
complied in all material respects, with the applicable requirements of the
Securities Act, the Exchange Act, and, to the best of its knowledge, the
Sarbanes-Oxley Act of 2002, as the case may be. None of such SEC Filings,
including, without limitation, any financial statements, exhibits and schedules
included therein and documents incorporated therein by reference, at the time
filed, declared effective or mailed, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent information contained in any of the SEC Filings has been revised,
corrected or superseded by a later filing of any such form, report or document,
none of the SEC Filings currently contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
7.5 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial Governmental Entity on the part of Exelixis
is required in connection with the consummation of the transactions contemplated
by the Loan Documents, except for such approvals or consents required under the
HSR Act and such other notices required or permitted to be filed with certain
state and federal securities commissions after the Effective Date, which notices
will be filed on a timely basis.
7.6 No Conflict. Exelixis' execution, delivery and performance of the Loan
Documents does not violate any provision of Exelixis' Operating Documents, as
amended, any provision of any Third Party agreement, order, writ, judgment,
injunction, decree, determination or award to which Exelixis is a party or by
which it is bound, or, to Exelixis' knowledge, any law, rule or regulation
currently in effect having applicability to Exelixis.
7.7 Litigation. Except as disclosed in the SEC Filings, there are no
judgments, lawsuits, judicial proceedings, investigations or complaints pending
or overtly threatened against Exelixis, by any Third Party or Governmental
Entity, for amounts in excess of Five Million Dollars ($5,000,000) relating to
any aspect of Exelixis' business or properties or its ability to consummate the
transactions contemplated by the Loan Documents.
7.8 Compliance with Law. Exelixis is in compliance with all material
respects with all laws, including, without limitation ERISA, OSHA, Environmental
Laws and the other governmental rules and regulations applicable to its business
and properties. Exelixis is in compliance with all requirements of the
Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq., including, but
not limited to, those regulations promulgated by the Architectural and
Transportation Barrier Compliance Board at 36 CFR 1191 et seq. and by the
Department of Justice at 28 CFR 36 et seq.
7.9 Title to the Collateral. To its knowledge, Exelixis has good and
marketable title and rights to the Intellectual Property, except for the
security interest granted to GSK by Exelixis pursuant to the Loan Documents.
Exelixis has good and marketable title and rights to the Development Candidate
Inventory, Capital Equipment and Deposit Account except for the security
interest granted to GSK by Exelixis pursuant to the Loan Documents. As of the
Effective Date, title to the Collateral and all rights thereunder shall be
exclusively vested in Exelixis with no rights whatsoever to the Collateral
vested in any Affiliate. Exelixis has the right and corporate power to grant
the security interests in and to the Collateral provided by or referred to in
the Loan Documents. Except as herein provided, none of the Collateral is or is
about to become subject to any other assignment, mortgage, pledge, lien,
security interest, lease or encumbrance by virtue of the execution or
performance of the Loan Documents. No lien or claim has been attached to or
made against the Collateral for: (a) tax liabilities which have been assessed
against Exelixis which remain unpaid; or (b) damages or cleanup and removal
costs, as those terms are defined by any Environmental Laws arising from an
intentional or unintentional act or omission of Exelixis or any previous owner
or operator of its real or personal property resulting in the releasing,
spilling, pumping, pouring, emitting, emptying, discharging or dumping of
hazardous substances, hazardous wastes, pollutants or other related substances
as those terms are defined by any Environmental Laws which would create a
Material Adverse Effect.
7.10 No Event of Default/Breach. Exelixis has reviewed the Transaction
Documents and represents that no Event of Default has occurred and is continuing
under the Loan Documents and no breach by Exelixis has occurred and is
continuing under the Development Agreement.
7.11 Intellectual Property. To the best of the knowledge of Exelixis and
its majority-owned subsidiaries (other than Artemis Pharmaceuticals GmbH),
respectively, Exelixis, and such majority-owned subsidiaries (other than Artemis
Pharmaceuticals GmbH): (i) own, or have obtained licenses or rights to use, all
of the Intellectual Property necessary to carry out Exelixis' and its
majority-owned subsidiaries (other than Artemis Pharmaceuticals GmbH) respective
businesses as currently conducted or as Exelixis contemplates conducting its
business from time to time in the future and as contemplated by the Transaction
Documents; (ii) are not aware of any notice asserting any ownership rights to
the Intellectual Property; (iii) are not aware of sales of any products that
would constitute an infringement by Third Parties of the Intellectual Property;
(iv) are aware of no pending or threatened action, suit, proceeding or claim by
a Third Party challenging the ownership rights in, validity or scope of, the
Intellectual Property; and (v) are not aware of any pending or threatened
action, suit, proceeding or claim by a Third Party asserting that Exelixis or
its majority-owned subsidiaries (other than Artemis Pharmaceuticals GmbH)
infringe or otherwise violate any patent, trademark, copyright, trade secret or
other proprietary right of any Third Party as would reasonably be expected to
result in a Material Adverse Effect.
7.12 Effect of Representations and Warranties. None of the representations,
warranties or statements made to GSK in the Loan Documents or in connection with
the Loan Documents contain any untrue statement of a material fact, or omit to
state a material fact necessary in order to make the statements made not
misleading.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF GSK
GSK hereby represents and warrants to Exelixis as of the Effective Date
that:
8.1 Authorization; Due Execution. GSK has the requisite corporate
power and authority to enter into this Loan Agreement and to perform its
obligations under the terms of the Loan Documents and, at the time of each Stock
Repayment pursuant to Section 5.6, will have the requisite corporate power to
accept the Stock Repayment Shares. All corporate action on the part of GSK, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of the Loan Documents have been taken. The Loan Documents have
been duly authorized, executed and delivered by GSK, and, upon due execution and
delivery by Exelixis, the Loan Documents will be a valid and binding agreement
of GSK, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by equitable principles.
ARTICLE 9
COVENANTS
Exelixis covenants and agrees to comply with the following covenants at all
times during which Advances are outstanding:
9.1 Keeping of Books. Keep proper books of record and account in which
full and correct entries shall be made of all of its financial transactions and
its assets and businesses in accordance with GAAP so as to permit the filing of
its financial information with the SEC in accordance with all applicable SEC
rules and regulations. Exelixis shall keep accurate records of the Collateral,
which records are at all times to be physically located at the address of
Exelixis or its Affiliates set forth on the signature page hereto or on Schedule
9.1. All tangible Collateral shall be physically located at the address set
forth on the signature page hereto or on Schedule 9.1, and Exelixis agrees to
promptly inform GSK of all changes to the location of the tangible Collateral.
9.2 SEC Reporting Requirements. Furnish to GSK, or cause to be furnished to
GSK, as soon as available and in no event later than three (3) Business Days
after they are sent, made available or filed, copies of all SEC Filings.
9.3 Maintenance of Rights and Existence. Maintain and preserve in full
force and effect all rights, contracts, licenses, leases, privileges, franchises
and other authority necessary for the proper conduct of its business except
where the lapsing of any of the foregoing would not cause or result in a
Material Adverse Effect. Exelixis shall continue to be duly licensed or
qualified to do business in each jurisdiction in which qualification is required
by law except where such lack of qualification would not have a Material Adverse
Effect, and to continue to be in good standing and to preserve its legal
existence.
9.4 Governmental and Other Approvals. Apply for, obtain, and maintain in
effect, as applicable, all authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations (whether
with any court, governmental agency, regulatory authority, National Securities
Market or otherwise) which are necessary in connection with the execution,
delivery and performance by Exelixis of the Loan Documents and the transactions
consummated or to be consummated thereunder.
9.5 Use of Proceeds. Use the proceeds of the Advances hereunder in
furtherance of the obligations of Exelixis under the Development Agreement over
the course of the Term.
9.6 Further Assurances. In addition to the obligations and documents which
the Loan Documents expressly requires Exelixis and, to the extent applicable,
its Affiliates to execute, acknowledge, deliver and perform, Exelixis shall
execute and acknowledge (or cause to be executed and acknowledged) and deliver
to GSK all documents, and take all actions, that may be reasonably requested by
GSK from time to time to confirm the rights created or now or hereafter intended
to be created under the Loan Documents or otherwise to carry out the purposes of
the Loan Documents and the transactions contemplated hereunder and thereunder.
Exelixis hereby agrees to execute, file and/or deliver (or cause its Affiliates,
as applicable, to execute, file and/or deliver) to GSK the Patent Office Filings
and such other security agreements as GSK shall deem necessary or appropriate
from time to time. The security interest pledged, set over, assigned and
granted by Exelixis and, to the extent applicable, its Affiliates to GSK shall
be a first and only priority security interest pursuant to applicable law, and
Exelixis shall take all such action (or cause its Affiliates to take all such
action) to create and perfect for the benefit of GSK a first priority security
interest in the Collateral; and in the case of Capital Equipment being
purchased, a purchase-money security interest pursuant to Section 9.15.
9.7 Compliance with the Laws. Exelixis shall comply with all laws,
including without limitation, Environmental Laws, ordinances, rules and
regulations, now or hereafter in effect, applicable to it, of any Governmental
Entity applicable to its business and properties, the noncompliance with which
would reasonably be expected to cause a Material Adverse Effect.
9.8 Litigation. Exelixis shall promptly notify GSK (a) of any litigation,
actions, proceedings, claims or investigations pending or threatened against
Exelixis, wherein claimant seeks to recover [*], (b) of the entry of any
judgment [*] against Exelixis; (c) the entry of any liens, other than the
permitted liens (as set forth in Section 10.1) against the Collateral; or (d)
upon learning of any circumstances or transactions that would reasonably be
expected to be a violation of any Environmental Laws.
9.9 Payment of Taxes. Exelixis shall pay and discharge, as they become due,
all taxes, assessments, debts, claims and other governmental or non-governmental
charges lawfully imposed upon it or incurred by it or its properties and assets,
except taxes, assessments, debts, claims and charges contested in good faith in
appropriate proceedings, and provide GSK, if reasonably requested, with evidence
of said taxes, assessments, debts, claims, and charges, and of payment thereof.
9.10 Access to Records and Property. Upon reasonable prior written notice,
Exelixis shall give any representatives of GSK or independent contractors
selected by GSK reasonable access during normal business hours (and after an
Event of Default and while it is continuing at any time) to examine, audit, copy
or make extracts from, any and all books, records and documents in its
possession relating to the Collateral and to inspect any of its properties
wherever located.
9.11 Preservation of Title to Collateral. Exelixis agrees to immediately
notify GSK of any material loss or damage to, or any occurrence which would
materially and adversely affect the security interest of GSK in and to the
Collateral. The Collateral shall be free and clear of all assignments,
mortgages, pledges, liens, security interests, leases, or encumbrances, except
as otherwise provided in this Loan Agreement. Exelixis shall continue to
maintain good and marketable title to the Collateral, except as otherwise
provided in the Loan Documents, at the sole expense of Exelixis.
9.12 Insurance. Exelixis shall maintain, at its cost, adequate
insurance (a) against liability and other risks associated with the activities
contemplated under the Development Agreement and (b) to protect the value of the
Collateral, in such amounts and on such terms as are reasonably customary in the
biotechnology industry for the activities to be conducted by it under the
Development Agreement. Such insurance policy shall name GSK as an additional
insured party as its interest may appear in such insurance policies. At a
minimum, Exelixis shall maintain, at its cost, a general liability policy
providing coverage of at least One Million Dollars ($1,000,000) per occurrence,
Two Million Dollars ($2,000,000) in the aggregate and Five Million Dollars
($5,000,000) excess. Exelixis shall provide to GSK evidence of such insurance
policy, upon request.
9.13 Intellectual Property. To the extent the Collateral consists of
Intellectual Property, Exelixis shall be required to (and shall cause, to the
extent applicable, its Affiliates to): (a) comply with all applicable laws from
any applicable Governmental Entity regulating the maintenance and quality of the
Intellectual Property; (b) execute such documents and take such other actions
necessary to extend the Collateral to any now existing or newly issued
Intellectual Property, including, without limitation, promptly disclosing to GSK
the existence of any new Intellectual Property created by any Affiliate and
causing such Affiliate to become a party to this Loan Agreement solely for the
purposes of the requirements, restrictions and limitations set forth in Sections
3.1.1, 3.1.2, 3.1.6, 9.11, and 9.13 of this Loan Agreement; (c) maintain the
rights to use the Intellectual Property consistent with the Development
Agreement; and (d) execute such documents to permanently assign to GSK all of
Exelixis' rights to the Intellectual Property upon the occurrence of an Event of
a Default. Among other things, Exelixis shall (and shall cause its Affiliates
to) execute assignments to GSK following an Event of Default.
9.14 Fees and Expenses in Protecting Rights. If in the Event of Default,
GSK employs counsel or any other professionals or consultants for advice or
other representation: (a) with respect to the Collateral, the Obligations of
Exelixis to GSK or the Loan Documents; (b) to represent GSK in any litigation,
contest, dispute, suit or proceeding or to commence, defend or intervene or to
take any other action in or with respect to any litigation, contest, dispute,
suit or proceeding (whether instituted by GSK, Exelixis or any other Third
Party) in any way or respect relating to the Collateral, the Obligations of the
Exelixis to GSK, the Loan Documents; (c) to protect, collect, sell, liquidate or
otherwise dispose of the Collateral; (d) to attempt to or to enforce GSK's liens
and security interests in the Collateral; and/or (e) in otherwise protecting,
enforcing or exercising its interests, rights or remedies created by, connected
with or provided in the Loan Documents, or performance pursuant to the Loan
Documents; then, the reasonable attorneys' fees, costs and expenses arising from
such services, and all other expenses, costs, charges and other fees of GSK in
any way or respect arising in connection with or relating to any of the events
described in this Section 9.14 shall be added to the amount of the Obligations
of Exelixis to GSK, and shall be payable on demand. Any amounts due hereunder
not paid on demand shall bear interest from the date of demand at the Default
Rate of Interest. Any of the amounts payable hereunder by Exelixis may be paid
by GSK, and if and when so paid, shall be deemed to be a General Advance.
9.15 Capital Equipment. If at any time Exelixis purchases Capital
Equipment, Exelixis shall promptly, and in any event no later than ten (10) days
after such purchase, notify GSK so that GSK may file any and all necessary
documentation including a UCC Financing Statement within twenty (20) days after
the acquisition of such Capital Equipment, and take all other reasonably
necessary steps to perfect a purchase-money security interest in the Capital
Equipment. Exelixis agrees to execute all necessary documentation and to
cooperate with GSK in perfecting GSK's security interest in such Capital
Equipment.
9.16 Deposit Account and Investment Property. Exelixis shall maintain (a)
the Deposit Account for the General and Product Specific Advances and (b) the
money in the Deposit Account as invested in the permitted types of securities
set forth on Schedule 9.16 attached hereto and made a part hereof. The Deposit
Account shall be maintained at a mutually agreed upon bank or financial
institution pursuant to the Control Agreement.
9.17 Duration of Covenants. The covenants made in this Article 9 are to be
true, accurate and complete for the duration of the Term of the Loan Documents,
including, without limitation, at the time of each Advance.
ARTICLE 10
COVENANTS REGARDING PROHIBITED TRANSACTIONS
In order to induce GSK to execute the Loan Documents, Exelixis makes the
following negative covenants at all times in which there are outstanding
Advances:
10.1 Permitted Liens. Neither Exelixis nor it Affiliates shall incur,
create or permit to exist any mortgage, assignment, pledge, hypothecation,
security interest, lien or other encumbrance on any of the Collateral, whether
now owned or hereafter acquired, except (a) liens for taxes not delinquent; (b)
those liens in favor of GSK created by the Loan Documents; and (c) those liens,
such as carrier, warehousemen, unemployment or retirement liens, arising by
operation of law in the ordinary course of business if subordinated on terms
acceptable to GSK or reserves are established to the satisfaction of GSK.
10.2 Impairment of Title to Collateral. Neither Exelixis nor its Affiliates
shall sell, conditionally sell, sell on approval, consign, lease, encumber,
transfer, remove from its premises any Collateral without the prior written
consent of GSK.
10.3 Settlements. Exelixis shall not compromise, settle or adjust any
claims in a material amount relating to the Intellectual Property, without the
prior written consent of GSK.
10.4 Change of Location or Name. Exelixis' taxpayer identification and
organizational identification numbers are set forth on the signature page.
Exelixis' chief executive office and principal place of business are presently
located at the address set forth on the signature page. Exelixis shall not
change the place where its books and records are maintained, change its name,
change its state of incorporation, change the location of its chief executive
office or principal place of business, as such terms are now or hereafter
defined in the UCC, or transact business under any other name without prior
written notice to GSK. Within four (4) months of any permitted change, Exelixis
shall authenticate or otherwise cooperate in any action deemed necessary by GSK
to maintain its rights and security interests as provided in the Loan Documents.
10.5 Inconsistent Agreement. Neither Exelixis nor its Affiliates shall
enter into any agreement containing any provision that would be violated by the
performance of Exelixis' obligations under the Loan Documents.
10.6 Violation of Representations, Warranties and Covenants. Exelixis shall
not take any action or omit to take any action which is reasonably likely to
render any of its representations, warranties or covenants to be untrue or
incapable of performance.
ARTICLE 11
FINANCIAL COVENANTS
Exelixis covenants and agrees to comply with the following financial
covenants during the Term:
11.1 Working Capital. Exelixis shall not cause or permit Working
Capital to be less than [*], the term "Working Capital" meaning, as of the time
of any determination thereof, the amount determined in accordance with GAAP, by
which the current assets of Exelixis exceed its current liabilities.
11.2 Tangible Net Worth. Exelixis shall not cause or permit Tangible
Net Worth to be less than [*], the term "Tangible Net Worth" meaning, as of the
time of any determination thereof, total stockholder equity less good will and
other intangible assets as reported by Exelixis in its SEC Filings prepared in
accordance with GAAP.
ARTICLE 12
EVENTS OF DEFAULT
12.1 Events of Default. The occurrence or existence of any of the
following conditions or events shall constitute an "Event of Default" hereunder:
12.1.1 Failure to Pay. Exelixis shall fail to pay (a) within three (3)
Business Days following the date due under Article 5 or (b) within ten (10)
Business Days of any demand pursuant to Section 13.1.1 of any principal,
interest or other sums due to GSK;
12.1.2 Other Defaults under the Loan Documents. Any default or breach
in the observance or performance of any of the other conditions,
representations, warranties, covenants or agreements of Exelixis set forth in
the Loan Documents, and continuance thereof for a period of thirty (30) days;
12.1.3 Termination of Development Agreement. GSK or Exelixis, as the
case may be, shall terminate the Development Agreement pursuant to Sections
12.2.1, 12.3.1, 12.3.2, or 12.4 thereof;
12.1.4 Other Specific Events.
(a) [*];
(b) the submission to GSK of any materially false or fraudulent
statement by Exelixis, in connection with this Loan Agreement;
(c) upon any Material Adverse Effect;
(d) [*]; or
(e) a reportable event under ERISA which continues for ten (10)
days after such occurrence; or
12.1.5 Insolvency; Bankruptcy. If (i) Exelixis becomes insolvent or
generally fails to pay, or admits in writing its inability to pay, its debts as
they mature, or applies for, consents to, or acquiesces in the appointment of a
trustee, receiver, liquidator, conservator or other custodian for itself, or a
substantial part of its property, or makes a general assignment for the benefit
of creditors; (ii) Exelixis files a voluntary petition in bankruptcy or a
trustee, receiver, liquidator, conservator or other custodian is appointed for
Exelixis or for a substantial part of its property, and the same is not
discharged within sixty (60) days; (iii) any bankruptcy, reorganization, debt
arrangement, or other proceedings under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or against Exelixis, and
the same is consented to or acquiesced by Exelixis, or otherwise remains
undismissed for sixty (60) days; or (iv) any warrant of attachment is issued
against any substantial part of the property of Exelixis which is not released
within sixty (60) days of service thereof.
ARTICLE 13
GSK'S RIGHTS AND REMEDIES UPON DEFAULT
13.1 Rights and Remedies. Upon the occurrence of, and during the
continuance of, an Event of Default, GSK may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Exelixis:
13.1.1 declare all Obligations, evidenced by the Loan Documents,
immediately due and payable (provided, that upon the occurrence of an Event of
Default described in Section 12.1.5, all Obligations shall become immediately
due and payable without any action by GSK);
13.1.2 cease advancing money or extending credit to or for the benefit
of Exelixis under this Loan Agreement;
13.1.3 cease accepting Stock Repayments pursuant to Section 5.6;
13.1.4 institute legal or deficiency proceedings or otherwise enforce
its rights to collect the Total Advance Amount with all accrued interest thereon
against Exelixis which becomes immediately due and payable. If a judgment is
entered in favor of GSK, the lien of the judgment relates back to the earliest
date of perfection of GSK's security interests hereunder;
13.1.5 charge, setoff and withdraw from any credit balance which
Exelixis may then have with GSK or with any Affiliate thereof, such amounts as
may be necessary to satisfy the Total Advance Amount with all accrued interest
thereon;
13.1.6 terminate and cancel any existing commitment to Exelixis for
future Advances;
13.1.7 with or without judicial process, to the extent permitted by
law, and subject to the final sentence of this Section 13.1.7, (i) to seize the
Collateral or to require Exelixis to assemble the Collateral or (ii) to render
the Collateral unusable without need for GSK to post a bond or security or (iii)
demand Exelixis to make the Collateral available at a GSK designated place for
sale, license or other disposition by GSK (and if such disposition is to GSK, at
a public auction unless the Collateral is that customarily sold on a recognized
market or the subject of widely distributed standard price quotations) (iv)
exercise its rights to seize the Collateral and any remedies set forth under the
Control Agreement and/or the Patent Office Filing to satisfy the Obligations
with all accrued interest thereon without any right of Exelixis to adjourn such
disposition. Any such sale, license or other disposition may be made of the
Collateral in its present condition or following any commercially reasonable
preparation or processing at the expense of Exelixis. Notwithstanding anything
contained herein, GSK shall have no immediate right to proceed against any of
the Excluded Collateral if GSK alleges an Event of Default pursuant to Sections
12.1.2, 12.1.4(b) or 12.1.4(c), prior to the completion of the dispute
resolution process in accordance with Section 16.2, undertaken to determine the
existence of such alleged Event of Default pursuant to such sections, and if
such dispute resolution process conclusively determines the existence of an
Event of Default by Exelixis under such sections, then, GSK shall be entitled to
proceed against the Excluded Collateral; or
13.1.8 to effectuate collection of any Collateral comprising accounts,
GSK may reassign any such account, to Exelixis (without recourse to GSK) and
require Exelixis to proceed with such legal or other action, at Exelixis' sole
liability, cost and expense, in which event all amounts collected by Exelixis on
such items are to, nevertheless, be treated as Proceeds of Collateral. In
furtherance of GSK's rights and remedies hereunder, Exelixis hereby grants a
power of attorney to GSK to endorse Exelixis' name on checks, notes,
acceptances, drafts and any other documents or instruments requiring Exelixis'
endorsement, to change the address where Exelixis' mail should be sent and to
open all mail and to do such other acts and things necessary to effectuate the
purposes of the Loan Documents when so permitted by the terms of the Loan
Documents.
13.2 Application of Proceeds of Disposition of Collateral. The
proceeds of any sale, license or other disposition of the Collateral are to be
applied to satisfy the following items in the following order:
13.2.1 First, to GSK's expenses in preserving its interests and rights
hereunder, to expenses incurred by GSK in realizing upon security interests
created or referred to herein, and expenses of GSK in enforcing and defending
its rights as set forth in Article 14;
13.2.2 Second, to the Total Advance Amount with all accrued interest
thereon and any expenses not satisfied under Section 13.2.1;
13.2.3 Third, any excess or amounts remaining are to be paid to any
subordinate security interest or lien if the holder thereof supplies proof of
its interest or lien and if the holder thereof makes an authenticated demand
therefor before distribution and any balance thereafter shall be paid to
Exelixis unless GSK reasonably determines that reserves are warranted to
implement the indemnification provisions in Article 15; and
13.2.4 Fourth, a transferee who purchases, licenses or otherwise
receives the benefits of a disposition of Collateral after an Event of Default
takes free of all Exelixis' rights and the rights of any subordinate security
interest or lien. A transferee is entitled to the recording of a transfer
statement to document public notice of such disposition.
13.3 Notice of Disposition of Collateral. GSK shall give authenticated
reasonable notice to Exelixis and any other party entitled thereto under
applicable law of the time and place of a public sale, license or other
disposition of the Collateral. Authenticated notice is presumed to be
reasonable (a) if given ten (10) days prior to such disposition, (b) if sent to
the chief executive officer and, if none, to the address of Exelixis set forth
in Section 16.5 and (c) if it contains a statement of the Collateral and its
intended disposition, the time and place of disposition and a statement that
Exelixis is entitled to an accounting of such disposition. GSK may disclaim any
warranties that may apply to any sale, lease, license or other disposition of
the Collateral.
13.4 Marshalling of Assets. GSK has no obligation whatsoever to proceed
first against any of the Collateral before proceeding against any other of the
Collateral. It is expressly understood and agreed that all of the Collateral
stands as equal security for Obligations and any interest accrued thereon and
that GSK has the right to proceed against or dispose of any/or all of the
Collateral or other collateral in any order as GSK, in its sole discretion,
determines.
13.5 Waiver of Defaults. No Event of Default shall be waived by GSK except
in a written instrument specifying the scope and terms of such waiver and signed
by an authorized officer of GSK, and such waiver shall be effective only for the
specific times and purposes given. No single or partial exercise of any right,
power or privilege hereunder, nor any delay in the exercise thereof, shall
preclude other or further exercise of GSK's rights. No waiver of any Event of
Default shall extend to any other or further Event of Default. No forbearance
on the part of GSK in enforcing any of GSK's rights or remedies hereunder or any
of the Transaction Documents shall constitute a waiver of any of its rights or
remedies.
13.6 Remedies Cumulative. GSK's rights and remedies under the Loan
Documents and all other Transaction Documents shall be cumulative. GSK shall
have all other rights and remedies not expressly set forth herein as provided
under applicable law, or in equity. No exercise by GSK of one right or remedy
shall be deemed an election, and no waiver by GSK of any Event of Default on
Exelixis' part shall be deemed a continuing waiver. No delay by GSK shall
constitute a waiver, election, or acquiescence by it. No waiver by GSK shall be
effective unless made in a written document signed on behalf of GSK and then
shall be effective only in the specific instance and for the specific purpose
for which it was given.
13.7 Waiver. Exelixis 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 GSK on which Exelixis may in any way be liable.
ARTICLE 14
GSK'S RIGHTS AND REMEDIES EXCLUSIVE OF DEFAULT
Exclusive of an Event of Default, GSK possesses the following rights and
remedies:
14.1 UCC. At all times prior to and following an Event of Default, GSK
is entitled to all the rights and remedies of a secured party under the UCC as
now or hereafter enacted;
14.2 Preservation of Collateral. At any time prior to and following an
Event of Default, GSK, without notice, in its sole reasonable discretion, may
take any and all action which, in its sole reasonable discretion, is necessary
and proper to preserve the Collateral, or GSK's interests under this Loan
Agreement, including without limitation, those duties of Exelixis imposed by
this Loan Agreement. Any sums so expended by GSK are to be secured by the
Collateral and treated as though additional Advances for purposes of calculating
the Total Advance Amount. Such sums (including reasonable attorneys' fees) are
to be payable on demand with interest at the Default Rate of Interest repaid by
Exelixis. GSK may also demand that escrow accounts be established to fund
anticipated future expenditures; or
14.3 Power of Attorney. GSK is hereby irrevocably appointed and
authenticated by Exelixis as its lawful attorney and agent in fact to file,
authenticate or execute financing statements and other documents and agreements
as GSK may deem necessary for the purpose of perfecting any security interests,
or liens under any applicable law. All acts by GSK or its designee are hereby
ratified and approved, and neither GSK, nor its designee, shall be liable for
any acts of omission or commission, or for any error of judgment or mistake
unless the result of gross negligence of willful misconduct. The powers of
attorney granted to GSK in this Loan Agreement are coupled with an interest and
are irrevocable during the Term.
ARTICLE 15
INDEMNIFICATION
15.1 Indemnification of GSK. Exelixis agrees to and hereby indemnify
and hold GSK harmless from and against, and to reimburse GSK with respect to,
any and all claims, demands, causes of action, losses, damages, liabilities,
costs and expenses (including consequential damages, attorneys' fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by GSK at any time and from time to
time by reason of or arising out of:
15.1.1 the breach of any representation, warranty or covenant of
Exelixis set forth in the Loan Documents;
15.1.2 the failure of Exelixis to perform any obligation herein
required to be performed by Exelixis; or
15.1.3 the ownership, construction, operation, use and maintenance of
the Collateral other than by GSK.
15.1.4 Duration of Indemnity. This covenant survives for the Term
notwithstanding whether Exelixis has been released and discharged or whether GSK
becomes the owner of the Collateral.
ARTICLE 16
MISCELLANEOUS
16.1 Publicity. Neither Party shall originate any written publicity,
news release or other announcement or statement relating to the announcement or
terms of this Loan Agreement except as otherwise provided in Section 14.1 of the
Development Agreement.
16.2 Dispute Resolution. Prior to the commencement of any litigation under
this Loan Agreement, the Executive Officer of the Party considering commencement
of such litigation shall notify the Executive Officer of the other Party that
such litigation is being contemplated. For at least [*] following the delivery
of such notice, the Parties' Executive Officers shall use good faith efforts to
make themselves available to discuss the dispute and attempt to resolve the
matter. If the dispute is not resolved within such [*], the Parties agree to
submit the dispute for non-binding mediation (with the understanding that the
role of the mediator shall not be to render a decision but to assist the Parties
in reaching a mutually acceptable resolution), which shall occur within a period
of not more than [*]. If the dispute is not resolved within such [*], either
Party may commence litigation with respect to the subject matter of the dispute
and with respect to any other claims it may have and thereafter neither Party
hereto shall have any further obligation under this Section 16.2.
16.3 Choice of Law. This Loan Agreement and any dispute arising from the
performance or breach hereof shall be governed by and construed and enforced in
accordance with the laws of State of New York, U.S.A., unless such dispute is
governed under the laws of the UCC in which case the UCC shall apply, without
reference to conflicts of laws principles.
16.4 Subordination. The Obligations are expressly made subordinate in right
of payment to all other obligations and indebtedness of Exelixis existing as of
the Effective Date and listed on Schedule 16.4 and all refinancings (in an
amount equal to or less than the original indebtedness), extensions, and
renewals thereof. For the sake of clarity, this Section 16.4 applies only to
GSK rights and remedies under Section 13.1.4 and not to GSK's rights under
Section 13.1.7.
16.5 Notices. Any notice or request required or permitted to be given under
or in connection with this Loan Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered or sent by certified
mail (return receipt requested), facsimile transmission (receipt verified), or
overnight express courier service (signature required), prepaid, to the Party
for which such notice is intended, at the address set forth for such Party
below:
If to Exelixis, addressed to: Exelixis, Inc.
170 Harbor Way
PO Box 511
South San Francisco, CA 94083
Attention: Chief Financial Officer
Telephone: [ * ]
Telecopy: [ * ]
with a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert Jones, Esq.
Telephone: [ * ]
Telecopy: [ * ]
If to GSK, addressed to: SmithKline Beecham Corporation,
doing business as GlaxoSmithKline
2301 Renaissance Blvd. (Bldg #510)
King of Prussia, Pennsylvania 19406
Attention: Vice President, Alliance
and Joint Venture Management
Telephone: [ * ]
Telecopy: [ * ]
with a copy to: GlaxoSmithKline
Corporate Legal Department
One Franklin Plaza
200 N. 16th Street / FP 2355 (DP)
Philadelphia, PA 19103
Attention: Senior Vice President and
Associate General Counsel
Telephone: [ * ]
Telecopy: [ * ]
or to such other address for such Party as it shall have specified by like
notice to the other Parties, provided that notices of a change of address shall
be effective only upon receipt thereof. If delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given. If sent by overnight express courier service, the
date of delivery shall be deemed to be the next business day after such notice
or request was deposited with such service. If sent by certified mail, the date
of delivery shall be deemed to be the third business day after such notice or
request was deposited with the U.S. Postal Service.
16.6 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the Parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction.
16.7 Entire Agreement. This Loan Agreement, including the schedules and
exhibits hereto, together with the Stock Purchase Agreement and the Development
Agreement set forth all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto and
supersede and terminate all prior agreements and understanding between the
Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Loan Agreement shall be
binding upon the Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties.
16.8 Headings. Headings used herein are for convenience only and shall not
in any way affect the construction of or be taken into consideration in
interpreting this Loan Agreement.
16.9 Use of Name. Except as otherwise provided herein, no Party shall have
any right, express or implied, to use in any manner the name or other
designation of the other Parties or any other trade name, trademark or logos of
the other Parties for any purpose in connection with the performance of this
Loan Agreement.
16.10 Further Actions. Each Party shall execute, acknowledge and deliver
such further instruments, and do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Loan
Agreement.
16.11 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS LOAN AGREEMENT. EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THAT FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LOAN AGREEMENT AND ANY
RELATED INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 16.11.
16.12 Parties in Interest. All of the terms and provisions of this Loan
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.
16.13 Construction of Agreement. The terms and provisions of this Loan
Agreement represent the results of negotiations between the Parties and their
representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Loan Agreement shall be interpreted and construed in accordance with their usual
and customary meanings, and each of the Parties hereto hereby waives the
application in connection with the interpretation and construction of this Loan
Agreement of any rule of law to the effect that ambiguous or conflicting terms
or provisions contained in this Loan Agreement shall be interpreted or construed
against the Party whose attorney prepared the executed draft or any earlier
draft of this Loan Agreement.
16.14 No Liability for GSK. Other than fulfilling its obligations under the
Development Agreement, GSK has no duty to preserve or protect the Collateral, to
preserve the rights of Exelixis against Third Parties, or to sell, lease or
otherwise dispose of any or all of the Collateral, or its proceeds, in any
priority, unless it elects to do so as provided in this Loan Agreement. Except
as expressly provided, this Section 16.14 shall be deemed an express waiver of
the defense of impairment of Collateral.
16.15 Survival of Representations. All representations and warranties made
herein shall survive the making of the Advances hereunder and the delivery of
the Note, and shall continue in full force and effect so long as any
indebtedness is outstanding, there exists any commitment by GSK to Exelixis and
until this Loan Agreement terminates or expires.
16.16 No Usury. Regardless of any other provision of this Loan Agreement,
the Note or in any other Loan Document, if for any reason the effective interest
should exceed the maximum lawful interest, the effective interest shall be
deemed reduced to, and shall be, such maximum lawful interest, and (a) the
amount which would be excessive interest shall be deemed applied to the
reduction of the principal balance of the Note and not to the payment of
interest, and (b) if the loan evidenced by the Note has been or is thereby paid
in full, the excess shall be returned to the party paying same, such application
to the principal balance of the Note or the refunding of excess to be a complete
settlement and acquittance thereof.
16.17 Assignment. This Loan Agreement may be assigned by GSK to an
Affiliate without the written consent of Exelixis; but shall not be assignable
by Exelixis, to an Affiliate, or by either Party to any Third Party, without the
prior written consent of the other Party hereto. Notwithstanding the foregoing,
either Party may assign this Loan Agreement, without the written consent of the
other Party, to an Affiliate or to an entity that acquires all or substantially
all of the business or assets of such Party (whether by merger, reorganization,
acquisition, sale or otherwise), and agrees in writing to be bound by the terms
and conditions of the Loan Agreement. No assignment and transfer shall be valid
and effective unless and until (a) the assignee/transferee shall agree in
writing to be bound by the provisions of the Loan Documents, (b) with respect to
an assignment or transfer by Exelixis, the Stock Purchase Agreement is
assigned/transferred to the same assignee/transferee concurrently with this Loan
Agreement, and (c) with respect to an assignment or transfer by Exelixis, the
assignee or transferee shall have executed and recorded such documents as may be
required in the reasonable judgment of GSK to perfect GSK's interest in the
Collateral. The terms and conditions of the Loan Agreement shall be binding on
and inure to the benefit of the permitted successors and assigns of the Parties.
16.18 Counterparts. This Loan Agreement may be signed in counterparts, each
and every one of which shall be deemed an original, notwithstanding variations
in format or file designation which may result from the electronic transmission,
storage and printing of copies of this Loan Agreement from separate computers or
printers. Facsimile signatures shall be treated as original signatures.
* - * - * - *
In Witness Whereof, each of the Party's has caused this Loan Agreement to be
executed and delivered by its duly authorized officer on the date first set
forth above.
Address of Exelixis: Exelixis, Inc.
170 Harbor Way By: /s/ Glen Y. Sato
P.O. Box 511 ----------------------------
South San Francisco, CA 94083 Printed Name: Glen Y. Sato
Attention: Chief Executive Officer ------------------
Telephone: [*] Title: CFO & VP of Legal Affairs
Telecopy: [*] -------------------------
Taxpayer Identification Number of Jurisdiction of Organization of
Grantor: Grantor:
[*] Delaware
- ----------------------------------
SmithKline Beecham Corporation
By: /s/ Donald F. Parman
----------------------------
Printed Name: Donald F. Parman
---------------------
Title: Vice President & Secretary
-----------------------------
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
EXHIBIT A
PROMISSORY NOTE
[*]
_____________, 2002
Exelixis, Inc., a Delaware corporation ("Exelixis"), for value received, hereby
promises to pay to the order of SmithKline Beecham Corporation, doing business
as GlaxoSmithKline ("GSK"), the principal amount of [*] (the "Maximum Loan
Amount"), together with interest as provided for below, payable on the dates, in
the amounts and in the manner set forth below.
1. Loan Agreement. This Promissory Note (this "Note") is the note
referred to in that certain Loan and Security Agreement, dated as of the date
hereof, by and between Exelixis and GSK (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein without definitions shall have the
meanings given to such terms in the Loan Agreement.
2. Advances. Exelixis may obtain an Advance by delivering to GSK a
Borrowing Notice pursuant to Section 2.2 of the Loan Agreement.
3. Principal Payments. Subject to the terms and conditions of the Loan
Agreement, the total outstanding principal balance of all Advances shall be due
and payable on the Payment Dates set forth in Section 5.1 of the Loan Agreement,
and may be paid in cash or Common Stock in accordance with the terms of Sections
5.3 and 5.6 of the Loan Agreement.
4. Interest. The sum of the daily unpaid principal balance of all
outstanding Advances shall accrue interest on each day from the date the Advance
is made until paid at the rate per annum set forth in the Loan Agreement.
5. Payment on Non-Business Day. In the event that any payment of
principal, interest, fees or any other amounts payable by Exelixis under or
pursuant to this Note shall become due on any day which is not a Business Day,
such due date shall be extended to the next succeeding Business Day, and, to the
extent applicable, interest shall continue to accrue and be payable at the
applicable rate for and during any such extension.
6. Default. Exelixis' failure to pay timely any of the principal
amount due under this Note when the same becomes due and payable or failure to
pay timely any accrued interest or other amounts due under this Note on the date
the same becomes due and payable thereafter shall constitute a default under
this Note. Upon the occurrence of a default hereunder or an Event of Default
under the Loan Agreement or any of the other Loan Documents, all unpaid
principal, accrued interest at the Default Rate of Interest and other amounts
owing hereunder shall be collectible by GSK pursuant to the Loan Documents and
applicable law.
7. Waivers. Exelixis hereby waives presentment, demand, protest,
notice of dishonor, notice of demand or intent to demand, notice of acceleration
or intent to accelerate, and all other notices, and Exelixis agrees that no
extension or indulgence to Exelixis or the release, substitution or
nonenforcement of any security, or the release or substitution of Exelixis,
whether with or without notice, shall affect the obligations of Exelixis. The
right to plead any and all statutes of limitation as a defense to any demands
hereunder is hereby waived by Exelixis to the full extent permitted by law.
8. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York without reference to conflicts
of law principles.
9. Successors and Assigns. The provisions of this Note shall inure to
the benefit of and be binding on any successor to Exelixis and shall extend to
any holder hereof.
In Witness Whereof, the undersigned has caused this Note to be executed the
day and year aforesaid.
Witness/Attest: Exelixis, Inc.
By: ________________________________
Name: ______________________________
Title: ______________________________
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended
SCHEDULE 1-PROMISSORY NOTE
SCHEDULE OF GENERAL ADVANCES
-------------- ----------------- --------------------
Borrowing Date Amount of Advance Total Advance Amount
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
SCHEDULE OF PRODUCT SPECIFIC ADVANCES
FOR THE SPECIFIC DEVELOPMENT CANDIDATE [ ]
Borrowing Date Amount of Advance Total Advance Amount
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
-------------- ----------------- --------------------
EXHIBIT B
FORM OF PATENT OFFICE FILING
PATENT SECURITY AGREEMENT AND MORTGAGE
THIS PATENT SECURITY AGREEMENT AND MORTGAGE (the "Patent Agreement") is
executed as of the _____ day of _____________ , 2002, by and between Exelixis,
Inc., a Delaware corporation ("Exelixis") and SmithKline Beecham Corporation, a
Pennsylvania corporation, doing business as GlaxoSmithKline ("GSK"). Exelixis
and GSK are each referred to herein by name or as a "Party" or, collectively, as
"Parties".
RECITALS
A. Exelixis is the owner and holder of the Patents listed on Schedule 2.1.1
annexed hereto and made a part hereof, together with all right, title and
interest in and to the related inventions and any U.S. and foreign patents
which have been or may be issued thereon;
B. Contemporaneously with the execution of this Patent Agreement, the Parties
have executed: (i) a Product Development and Commercialization Agreement
(the "Development Agreement"); (ii) a Stock Purchase and Stock Issuance
Agreement (the "Stock Purchase Agreement"); and (iii) a Loan and Security
Agreement (the "Loan Agreement"), as such documents may be amended,
modified, supplemented or restated from time to time (collectively, the
"Transaction Documents"); and
C. To induce GSK to enter into the Transaction Documents, Exelixis has offered
to execute and deliver this Patent Agreement to GSK, granting and conveying
to GSK a security interest, first and only in priority, upon the Collateral
(as such term is defined in Article 2).
NOW, THEREFORE, in consideration of the foregoing, in consideration of the
premises set forth in the Loan Agreement and in order to induce GSK to grant the
Advances to Exelixis in accordance with the Loan Agreement, Exelixis hereby
agrees with GSK for its benefit as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined in this Patent Agreement, all capitalized terms
shall have the meanings given them in the Transaction Documents. As used in
this Patent Agreement, the following terms shall have the following respective
meanings:
1.1 "Affiliate" shall mean any Person, whether de jure or de facto,
which directly or indirectly through one (1) or more intermediaries controls, is
controlled by, or is under common control with, a Party to the Loan Documents.
A Person shall be deemed to "control" another Person if it (a) owns, directly or
indirectly, beneficially or legally, at least fifty percent (50%) of the
outstanding voting securities or capital stock (or such lesser percentage which
is the maximum allowed to be owned by a Person in a particular jurisdiction) of
such other Person, or has other comparable ownership interest with respect to
any Person other than a corporation; or (b) has the power, whether pursuant to
contract, ownership of securities or otherwise, to direct the management and
policies of the Person.
1.2 "Capital Equipment" shall have the meaning assigned to such term in
Section 2.1.5.
1.3 "Collateral" shall have the meaning assigned to such term in Article 2.
1.4 "Deposit Account" shall have the meaning assigned to such term in
Section 2.1.3.
1.5 'Development Agreement" shall have the meaning assigned to such term in
the Recitals.
1.6 "Development Candidate" shall have the meaning assigned to such term in
the Development Agreement.
1.7 "Development Candidate Inventory" shall have the meaning assigned to
such term in Section 2.1.4.
1.8 "Development Compound" shall have the meaning assigned to such term in
the Development Agreement.
1.9 "Environmental Laws" shall mean any federal, state, county, municipal
or other laws, ordinances or regulations pertaining to health or the
environment.
1.10 "Event of Default" shall mean any of those conditions or events listed
in Article 12 of the Loan Agreement or Section 5.1 hereof.
1.11 "Included Compounds" shall have the meaning assigned to such term in
the Development Agreement.
1.12 "Intellectual Property" shall have the meaning assigned to such term
in Section 2.1.2.
1.13 "Loan Agreement" shall have the meaning assigned to such term in the
Recitals.
1.14 "Loan Documents" shall mean collectively, the Loan Agreement, the
Note, the UCC Financing Statement(s), the Patent Office Filing(s), the Control
Agreement and any other agreements, certificates or instruments executed now or
hereafter evidencing, describing, certifying or securing the Obligations, as
such documents may be amended, modified, supplemented or restated from time to
time.
1.15 "Material Adverse Effect" shall mean any material adverse effect (a)
upon the validity, or enforceability of the Loan Documents (b) on any of the
transactions contemplated by the Loan Documents, (c) on the business,
operations, condition (financial or otherwise), performance or properties of
Exelixis taken as a whole, or (d) upon the ability of Exelixis to fulfill any
Obligations.
1.16 "Obligations" shall mean all Advances, Total Advance Amount,
liabilities, obligations, covenants and duties arising under the Loan Documents
owed by Exelixis to GSK whether direct or indirect, absolute or contingent.
1.17 "Patents" shall have the meaning assigned to such term in Section
2.1.1.
1.18 "Patent Office Filing" shall mean this Patent Agreement and any and
all other patent collateral mortgage agreements between GSK and Exelixis and its
Affiliates which grant to GSK a security interest, first and only in priority,
in the Collateral, as such agreements may be amended, modified, supplemented or
restated from time to time.
1.19 "Person" shall mean any individual, corporation, firm, partnership
or other entity.
1.20 "Proceeds" shall have the meaning assigned to such term in the UCC.
1.21 "Stock Purchase Agreement" shall have the meaning assigned to such
term in the Recitals.
1.22 "Third Party" shall mean any entity other than Exelixis or GSK or an
Affiliate of Exelixis or GSK.
1.23 "Transaction Documents" shall have the meaning assigned to such
terms in the Recitals.
1.24 "United States or "U.S." shall mean the United States of America.
1.25 "UCC" shall mean the Uniform Commercial Code as the same may from time
to time be in effect in Exelixis' state of incorporation.
1.26 "UCC Financing Statement(s)" shall mean a record or records composed
of an initial financing statement and any filed record relating to the initial
financing statement filed in Exelixis' state of incorporation or elsewhere to
perfect GSK's lien on the Collateral.
Other Definitional Provisions. Where the context herein requires, the
singular number shall be deemed to include the plural, the masculine gender
shall include the feminine and neuter genders, and vice versa. The words
"hereof," "herein" and words of similar import when used in this Patent
Agreement shall refer to this Patent Agreement as a whole and not to any
particular provision of this Patent Agreement and section, schedule or exhibit
references are to this Patent Agreement unless otherwise specified.
ARTICLE 2
GRANT OF SECURITY
2.1 Grant of Security Interest. To secure the payment and performance
by Exelixis of the Obligations to GSK, Exelixis and, to the extent applicable,
its Affiliates hereby pledge, set over, assign, deliver and grant a first and
only priority security interest to GSK in all of Exelixis' and, to the extent
applicable, its Affiliates' right, title and interest in the following assets,
wherever located and whether now existing or hereafter created and whether now
owned or hereafter acquired, of every description, tangible and intangible (the
"Collateral"):
2.1.1 Development Patents. [*];
2.1.2 Other Intellectual Property. [*];
2.1.3 Deposit Account. That certain deposit account with a mutually
agreed upon bank or financial institution, initially [*], more
particularly described in the Loan Agreement (the "Deposit Account") maintained
by Exelixis into which the proceeds of the Advances shall be deposited and,
subject to Section 9.5 of the Loan Agreement, maintained, with all dividends and
distributions, whether payable in cash, securities or other property accruing on
the balance therein;
2.1.4 Development Candidate Inventory. [*];
2.1.5 Capital Equipment. All capital equipment (currently defined as
equipment with a purchase price per item in excess of Five Thousand Dollars
($5,000)), purchased by Exelixis with the proceeds of the Advances, having a
specific use solely to perform the activities contemplated under the Development
Agreement (the "Capital Equipment"); and
2.1.6 Proceeds. All Proceeds of the Intellectual Property, the Deposit
Account, the Development Candidate Inventory and/or the Capital Equipment.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF EXELIXIS
Exelixis hereby represents, warrants, covenants and agrees as follows:
3.1 Title to the Collateral. To its knowledge, Exelixis has good and
marketable title and rights to the Intellectual Property, except for the
security interest granted to GSK by Exelixis pursuant to the Loan Documents.
Exelixis has good and marketable title and rights to the Development Candidate
Inventory, Capital Equipment and Deposit Account except for the security
interest granted to GSK by Exelixis pursuant to the Loan Documents. Exelixis
has the right and corporate power to grant the security interests in and to the
Collateral provided by or referred to in the Loan Documents. Except as provided
in the Loan Agreement and herein, none of the Collateral is or is about to
become subject to any other assignment, mortgage, pledge, lien, security
interest, lease or encumbrance by virtue of the execution or performance of the
Loan Documents. No lien or claim has been attached to or made against the
Collateral for: (a) tax liabilities which have been assessed against Exelixis
which remain unpaid; or (b) damages or cleanup and removal costs, as those terms
are defined by any Environmental Laws arising from an intentional or
unintentional act or omission of Exelixis or any previous owner or operator of
its real or personal property resulting in the releasing, spilling, pumping,
pouring, emitting, emptying, discharging or dumping of hazardous substances,
hazardous wastes, pollutants or other related substances as those terms are
defined by any Environmental Laws which would create a Material Adverse Effect.
3.2 Infringement of the Collateral. To the best of the knowledge of
Exelixis and its majority-owned subsidiaries (other than Artemis Pharmaceuticals
GmbH), respectively, Exelixis and such majority-owned subsidiaries (other than
Artemis Pharmaceuticals GmbH): (i) own, or have obtained licenses or rights to
use, all of the Collateral necessary to carry out Exelixis' and its
majority-owned subsidiaries (other than Artemis Pharmaceuticals GmbH) respective
businesses as currently conducted or as Exelixis contemplates conducting its
business from time to time in the future and as contemplated by the Transaction
Documents; (ii) are not aware of any notice asserting any ownership rights to
the Collateral; (iii) are not aware of sales of any products that would
constitute an infringement by Third Parties of the Collateral; (iv) are aware of
no pending or threatened action, suit, proceeding or claim by a Third Party
challenging the ownership rights in, validity or scope of, the Collateral; and
(v) are not aware of any pending or threatened action, suit, proceeding or claim
by a Third Party asserting that and its majority-owned subsidiaries (other than
Artemis Pharmaceuticals GmbH) infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of any Third Party
as would reasonably be expected to result in a Material Adverse Effect.
3.3 Further Assurances. In addition to the obligations and documents which
the Loan Documents expressly requires Exelixis and, to the extent applicable,
its Affiliates to execute, acknowledge, deliver and perform, Exelixis shall
execute and acknowledge (or cause to be executed and acknowledged) and deliver
to GSK all documents, and take all actions, that may be reasonably requested by
GSK from time to time to confirm the rights created or now or hereafter intended
to be created under the Loan Documents or otherwise to carry out the purposes of
the Loan Documents and the transactions contemplated hereunder and thereunder.
Exelixis hereby agrees to execute, file and/or deliver (or cause its Affiliates,
as applicable, to execute, file and/or deliver) to GSK the Patent Office Filings
and such other security agreements as GSK shall deem necessary or appropriate
from time to time. The security interest pledged, set over, assigned and
granted by Exelixis and, to the extent applicable, its Affiliates to GSK shall
be a first and only priority security interest pursuant to applicable law, and
Exelixis shall take all such action (or cause its Affiliates to take all such
action) to create and perfect for the benefit of GSK a first priority security
interest in the Collateral; and in the case of Capital Equipment being
purchased, a purchase-money security interest pursuant to Section 9.15 of the
Loan Agreement.
3.4 Fees and Expenses in Protecting Rights. If in the Event of Default, GSK
employs counsel or any other professionals or consultants for advice or other
representation: (a) with respect to the Collateral, the Obligations of Exelixis
to GSK or the Loan Documents; (b) to represent GSK in any litigation, contest,
dispute, suit or proceeding or to commence, defend or intervene or to take any
other action in or with respect to any litigation, contest, dispute, suit or
proceeding (whether instituted by GSK, Exelixis or any other Third Party) in any
way or respect relating to the Collateral, the Obligations of the Exelixis to
GSK, the Loan Documents; (c) to protect, collect, sell, liquidate or otherwise
dispose of the Collateral; (d) to attempt to or to enforce GSK's liens and
security interests in the Collateral; and/or (e) in otherwise protecting,
enforcing or exercising its interests, rights or remedies created by, connected
with or provided in the Loan Documents, or performance pursuant to the Loan
Documents; then, the reasonable attorneys' fees, costs and expenses arising from
such services, and all other expenses, costs, charges and other fees of GSK in
any way or respect arising in connection with or relating to any of the events
described in this Section 3.4 shall be added to the amount of the Obligations of
Exelixis to GSK, and shall be payable on demand. Any amounts due hereunder not
paid on demand shall bear interest from the date of demand at the Default Rate
of Interest. Any of the amounts payable hereunder by Exelixis may be paid by
GSK, and if and when so paid, shall be deemed to be a General Advance.
3.5 Pledge of Additional Collateral. Pursuant to Section 8 of the
Development Agreement, in the event Exelixis, either itself or through any
Affiliate shall:
3.5.1 file or record an application for the registration of any Patent
with the United States Patent and Trademark Office or any similar office or
agency of the United States, any State thereof, or any other country or any
political subdivision thereof; or
3.5.2 file or record any assignment of any Patent which Exelixis may
acquire, own or license from a Third Party, with the United States Patent and
Trademark Office or any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof;
Exelixis shall promptly, but in no event more than fifteen (15) days subsequent
to such filing, notify GSK thereof, and, upon request of GSK shall promptly, but
in no event more than twenty (20) days subsequent to such notice, execute and
deliver any and all assignments, agreements, instruments, documents and papers
as GSK may reasonably request to evidence GSK's interest in such Collateral, and
the general intangibles of Exelixis relating thereto or represented thereby.
Exelixis hereby grants GSK a power of attorney, irrevocable until the
Obligations of Exelixis to GSK are fully paid and satisfied, to modify this
Patent Agreement by amending Schedule 2.1.1 to include any future Collateral,
including, without limitation, registrations or applications appurtenant
thereto, covered by this Patent Agreement.
3.6 Impairment of Title to Collateral. Neither Exelixis nor its
Affiliates shall sell, conditionally sell, sell on approval, consign, lease,
encumber, transfer, remove from its premises any Collateral without the prior
written consent of GSK.
3.7 Preservation of Title to Collateral. Exelixis agrees to immediately
notify GSK of any material loss or damage to, or any occurrence which would
materially and adversely affect the security interest of GSK in and to the
Collateral. The Collateral shall be free and clear of all assignments,
mortgages, pledges, liens, security interests, leases, or encumbrances, except
as otherwise provided in the Loan Documents. Exelixis shall continue to
maintain good and marketable title to the Collateral, except as otherwise
provided in the Loan Documents, at the sole expense of Exelixis.
ARTICLE 4
GSK'S APPOINTMENT AS ATTORNEY-IN-FACT
4.1 Appointment of GSK as Attorney-In-Fact. GSK is hereby irrevocably
appointed and authenticated by Exelixis as its lawful attorney and agent in fact
to file, authenticate or execute financing statements and other documents and
agreements as GSK may deem necessary for the purpose of perfecting any security
interests, or liens under any applicable law. All acts by GSK or its designee
are hereby ratified and approved, and neither GSK, nor its designee, shall be
liable for any acts of omission or commission, or for any error of judgment or
mistake unless the result of gross negligence of willful misconduct. The powers
of attorney granted to GSK in this Patent Agreement are coupled with an interest
and are irrevocable during the Term.
ARTICLE 5
EVENTS OF DEFAULT
5.1 Events of Default enumerated in Article 12 of the Loan Agreement
shall constitute Events of Default under this Patent Agreement.
ARTICLE 6
REMEDIES
6.1 Upon the occurrence of an Event of Default, in addition to all
other rights and remedies of GSK, whether under law, in equity or otherwise (all
such rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently) GSK shall have all of the rights
and remedies set forth in Article 13 of the Loan Agreement.
6.2 Notwithstanding anything contained in this Patent Agreement to the
contrary, GSK shall not foreclose upon, dispose of or be deemed the owner of any
Collateral unless and until GSK has provided Exelixis with advance written
notice of its intent to foreclose upon, dispose of or take an ownership interest
in any Collateral. Any writing given by GSK to Exelixis under this Article 6
must make explicit reference to this Patent Agreement and of GSK's intent to
exercise its rights and remedies hereunder.
ARTICLE 7
EXECUTION OF SPECIAL POWER OF ATTORNEY
Concurrently with the execution and delivery of this Patent Agreement,
Exelixis is executing and delivering to GSK a certain Special Power of Attorney,
substantially in the form attached hereto and made a part hereof as Exhibit A
(such authority becoming effective on the occurrence of an Event of Default
pursuant to Article 12 of the Loan Agreement; provided, however, if there is an
Event of Default alleged pursuant to Sections 12.1.2, 12.1.4(b) or 12.1.4(c) of
the Loan Agreement, a dispute resolution process in accordance with Section 16.2
of the Loan Agreement shall be undertaken to determine the existence of such
alleged Event of Default pursuant to such sections, and if such dispute
resolution process conclusively determines the existence of an Event of Default
by Exelixis under such sections, then such authority shall become effective only
upon such resolution) for the implementation of the sale, assignment, licensing
or other disposition of the Collateral pursuant to this Patent Agreement.
Exelixis agrees to pay when due all reasonable costs and expenses incurred in
any such transfer of the Collateral, including any taxes, fees and reasonable
attorneys' fees, and all such costs shall be added to the Obligations of
Exelixis to GSK. GSK may apply the Proceeds actually received from any such
license, assignment, sale or other disposition to the payment of the Obligations
of Exelixis to GSK as provided for in the Loan Agreement. Exelixis shall remain
liable for any deficiency with respect to the Obligations of Exelixis to GSK,
which shall bear interest and be payable at the Default Rate of Interest under
the Loan Agreement. The rights of Exelixis to receive any surplus shall be
subject to any duty of GSK imposed by law to the holder of any subordinate
security interest in the Collateral known to GSK. Nothing contained herein
shall be construed as requiring GSK to take any such action at any time.
ARTICLE 8
MISCELLANEOUS
8.1 Amendments and Modification. No provision hereof shall be
modified, altered, waived or limited except by a written instrument expressly
referring to this Patent Agreement and executed by the Party to be charged.
8.2 Parties in Interest. All of the terms of this Patent Agreement shall be
binding upon, inure to the benefit of, and be enforceable by all Parties hereto
and their respective permitted successors and assigns.
8.3 Governing Law. This Patent Agreement shall be construed in accordance
with and governed by the laws of the State of New York, unless such dispute is
governed under the laws of the UCC in which case the UCC shall apply, without
giving effect to the conflict of law principles thereof.
8.4 Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing (unless otherwise expressly provided
herein) and shall be sent and deemed to have been received as set forth in
Section 16.5 of the Loan Agreement.
8.5 Counterparts. This Patent Agreement may be executed in counterparts
each and every one of which shall be deemed an original, notwithstanding
variations in format or file designation which may result from the electronic
transmission, storage and printing of copies of this Loan Agreement from
separate computers or printers. Facsimile signatures shall be treated as
original signatures.
8.6 Headings. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Patent Agreement for any
other purpose.
8.7 Acknowledgment of Receipt. Exelixis acknowledges receipt of a copy of
this Patent Agreement.
8.8 No Waiver. No course of dealing between Exelixis and GSK, and no delay
or omission of GSK in exercising or enforcing any of GSK's rights and remedies
hereunder shall constitute a waiver thereof; and no waiver by GSK of any Event
of Default shall operate as a waiver of any other Event of Default.
8.9 Severability. If any provision hereof should be held invalid, illegal
or unenforceable in any jurisdiction, the Parties shall negotiate in good faith
a valid, legal and enforceable substitute provision that most nearly reflects
the original intent of the Parties and all other provisions hereof shall remain
in full force and effect in such jurisdiction and shall be liberally construed
in order to carry out the intentions of the Parties hereto as nearly as may be
possible. Such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of such provision in any other
jurisdiction.
8.10 Interest Granted to GSK. Notwithstanding any provision of this Patent
Agreement to the contrary, the interest granted to GSK under this Patent
Agreement is intended to be a pledge and a security interest only, and the
execution of this Patent Agreement is not intended to create an assignment or a
transfer of title or any other property rights to the Patents.
8.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS PATENT AGREEMENT. EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THAT FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS PATENT AGREEMENT AND ANY
RELATED INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.11.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Exelixis has caused this Patent Agreement to be duty
executed as of the day and year first above written.
WITNESS: EXELIXIS, INC.
By: ________________________________
Name: ______________________________
Title: ______________________________
CORPORATE ACKNOWLEDGMENT
STATE OF _____________)
:ss.
COUNTY OF ___________)
I certify that on _____________, 2002, __________________ personally came
before me and this person acknowledged under oath, to my satisfaction, that:
(a) this person signed and delivered this document as
of Exelixis, Inc., the corporation named in this document; and
(b) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board of Directors.
______________________________
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
Amended
Schedule 2.1.1 of the Patent Agreement
PATENTS
Issued Patents
--------------
Country Patent No./Title Issue Date
------- ---------------- ----------
Pending Patent Applications
---------------------------
[*]
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended
Exhibit A of the Patent Agreement
FORM OF SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that as of this ______ day of _________,
2002, Exelixis, Inc., a Delaware corporation with its principal place of
business located at 170 Harbor Way, P.O. Box 511, South San Francisco, CA 94083
("Exelixis"), pursuant to a certain Patent Security Agreement and Mortgage of
even date herewith (the "Patent Agreement") by Exelixis in favor of SmithKline
Beecham Corporation, a Pennsylvania corporation, doing business as
GlaxoSmithKline, with an office located at 709 Swedeland Road, King of Prussia,
PA 19406 ("GSK"), hereby appoints and constitutes GSK as its true and lawful
attorney, with full power of substitution, and with full power and authority to
perform the following acts on behalf of Exelixis, in accordance with, and
subject to, the terms and provisions of the Patent Agreement:
1. Assigning, selling or otherwise disposing or all right, title and
interest of Exelixis in and to the Patents, as such term is defined in the
Patent Agreement, including, without limitation, those Patents listed on
Schedule 2.1.1 annexed to the Patent Agreement, any Patents that Exelixis may
now or hereafter acquire, and any Patents which may be added to Schedule 2.1.1
annexed to the Patent Agreement subsequent to the date of this Special Power of
Attorney, and all registrations and recordings of any of the foregoing, and for
the purpose of the recording, registering and filing of, or accomplishing any
other formality with respect to the foregoing, and to execute and deliver any
and all other agreements, documents, instruments or assignment or other papers
necessary or advisable to effect such purpose, in each case, in accordance with
the terms and provisions of the Patent Agreement; and
2. To execute any and all documents, statements, certificates or other
papers necessary or advisable in order to obtain the purposes described above or
any other remedies that GSK may have under the Loan Documents as GSK may in its
sole discretion determine.
This Special Power of Attorney is made pursuant to the Patent Agreement and
may not be revoked until the Obligations, as such term is defined in the Patent
Agreement, of Exelixis to GSK is fully paid and satisfied.
IN WITNESS WHEREOF, Exelixis has caused this Special Power of Attorney to
be duly executed as of the day and year first above written.
WITNESS: EXELIXIS, INC.
By: ________________________________
Name: ______________________________
Title: ______________________________
CORPORATE ACKNOWLEDGMENT
STATE OF _____________)
:ss.
COUNTY OF ___________)
I certify that on __________, _________________ personally came before me
and this person acknowledged under oath, to my satisfaction, that:
(a) this person signed and delivered this document as _____________
of Exelixis, Inc., the corporation named in this document; and
(b) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board of Directors.
______________________________
Exhibit C
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT
CUSTOMER:
---------------------
CREDITOR:
---------------------
DATE:
---------------------
This Securities Account Control Agreement entered into as of the above date
(this "Agreement") is among SVB Securities, A Division of Alliant Partners
("SVBS"), Banc of America BrokerDealer Services, a division of Banc of America
Securities LLC ("BA-BDS" or "Clearing Broker"), the Customer identified above
("Customer"), and the Creditor identified above ("Creditor").
RECITALS
--------
A. Customer has established a securities account or securities accounts
("Account") with and/or through SVBS and BA-BDS pursuant to a SVB Securities
Client Agreement ("Client Agreement"). The account number and title for the
Account (or Accounts) are identified in EXHIBIT A to this Agreement. SVBS acts
as the introducing broker. BA-BDS acts as the clearing broker. Both SVBS and
Clearing Broker are securities intermediaries pursuant to Article 8 of the
California Uniform Commercial Code ("CUCC"). Customer maintains in the Account
securities, financial assets and other investment property as defined under
Article 8 and 9 of the CUCC (collectively, the "Securities").
B. Pursuant to a security agreement or similar agreement identified in
EXHIBIT A hereto(the "Security Agreement"), Customer has granted to Creditor a
security interest in certain personal property of Customer, including without
limitation (i) the Account; (ii) the Securities, (iii) all dividends and
distributions, whether payable in cash, securities, or other property, in
respect of the Securities, (iv) all of Customer's rights in respect of the
Securities and Account, and (iv) all products, proceeds and revenues of and from
any of the foregoing personal property in sections (i) through (iv)
(collectively, the "Collateral").
C. SVBS, Clearing Broker, Customer and Creditor are entering into this
Agreement in order to perfect Creditor's security interest in the Collateral and
the Account by means of control pursuant to Article 8 of the CUCC.
AGREEMENT
---------
The parties hereto hereby agree as follows:
1. Defined Terms. All terms used in this Agreement which are defined in the
--------------
CUCC but are not otherwise defined herein shall have the meanings assigned to
such terms in the CUCC, as in effect as of the date of this Agreement. While in
the Account, all property credited to the Securities will be treated as
financial assets under Article 8 of the CUCC. By this Agreement. Customer grants
to Creditor "control" over the Securities within the meaning of Section 8106 of
the CUCC.
2. The Securities. SVBS and Clearing Broker represent to Creditor that, on
---------------
behalf of Customer, Customer maintains the Securities in the Account.
3. Acknowledgement of Security Interest. SVBS and Clearing Broker
---------------------------------------
hereby acknowledge the security interest granted in the Collateral to Creditor
by Customer. Creditor hereby acknowledges the security interest granted in the
Collateral to SVBS and Clearing Broker by Customer pursuant to the Client
Agreement.
4. Other Control Agreements. SVBS represents and warrants that, other than
-------------------------
any account control agreement listed in EXHIBIT A hereto, SVBS has executed no
other account control agreement with any other party and SVBS is not presently
obligated to accept any entitlement order from any person other than the
Customer with respect to the Collateral. Clearing Broker represents and warrants
that, other than any account control agreement listed in EXHIBIT A hereto,
Clearing Broker has executed no other account control agreement with any other
party and Clearing Broker is not presently obligated to accept any entitlement
order from any person other than the Customer with respect to the Collateral.
5. Future Control Agreements. Customer covenants and agrees that it will
---------------------------
not enter an account control agreement with any other party without Creditor's
prior written consent. SVBS agrees that it will not enter into a control
agreement with any other party with respect to the Account without Creditor's
prior written consent. Clearing Broker agrees that it will not enter into a
control agreement with any other party with respect to the Account without
Creditor's prior written consent.
6. Limitation on SVBS' and Clearing Broker's Rights in the Collateral. SVBS
------------------------------------------------------------------
and Clearing Broker will not attempt to assert control and does not claim and
will not accept any security or other interest in any part of the Collateral,
and SVBS and Clearing Broker will not exercise, enforce or attempt to enforce on
their own behalves any right of setoff against the Collateral, or otherwise
charge or deduct from the Collateral on SVBS' or Clearing Broker's behalves any
amount whatsoever, other than for: security interests, liens, encumbrances,
-----------
claims or rights of setoff for the payment of any amounts owed by Customer to
SVBS and/or Clearing Broker arising in connection with SVBS' and Clearing
Broker's customary fees and commissions pursuant to their agreement with
Customer or for the payment for financial assets and securities purchased for
the Account (the "Account Claims"). Customer and Creditor hereby acknowledge
that any security interests, liens, encumbrances, claims or rights of setoff for
the payment of any amounts owed by Customer to SVBS and Clearing Broker arising
in connection with the Account Claims shall at all times be prior to the rights
of Creditor in the Collateral and Securities whether or not Creditor sends to
SVBS a Notice of Exclusive Control described below.
7. Agreement for Control.
-----------------------
(a) SVBS and Clearing Broker will comply with all entitlement orders
(including requests to withdraw Collateral from the Account) originated by
Customer with respect to the Collateral, or any portion of the Collateral,
without further consent by Creditor until such time as SVBS receives from
Creditor (in accordance with Section 17 below) a written notice to SVBS that
Creditor is thereby exercising exclusive control over the Account (a "Notice of
Exclusive Control."). The Notice of Exclusive Control must be in the form set
forth in EXHIBIT B hereto. SVBS or Clearing Broker have no obligation whatsoever
to confirm that Creditor is entitled to send a Notice of Exclusive Control in
connection with the Account or that the Creditor's representative who signs any
Notice of Exclusive Control is authorized to do so. SVBS and Clearing Broker
(upon instruction from SVBS) will, upon SVBS' receipt of such Notice of
Exclusive Control, proceed in accordance with the remainder of this Section 7
even if Creditor's instructions are contrary to any instructions or demands that
Customer may give to SVBS or Clearing Broker. After SVBS receives a Notice of
Exclusive Control and has had reasonable opportunity to comply with it, but no
later than two (2) Business Days ("Business Days" means days which SVBS is open
to the public for business and are measured in 24 hour increments) after receipt
of the Notice of Exclusive Control (in accordance with Section 17 below), SVBS
and Customer agree that SVBS and Clearing Broker will: (i) cease complying with
entitlement orders or other directions concerning the Account and Collateral
that are originated by Customer or its representatives until such time as SVBS
receives a written notice from Creditor rescinding the Notice of Exclusive
Control; and (ii) comply with the entitlement orders and instructions provided
to SVBS by Creditor without investigating: the reason for any action taken by
Creditor; the amount of any obligations of Customer to Creditor; the validity of
any of Creditor's agreements with Customer; or the existence of any defaults
under such agreements.
(b) Notwithstanding the foregoing, Creditor agrees that upon receipt of
Creditor's Notice of Exclusive Control, SVBS and Clearing Broker may take all
steps necessary to satisfy or settle any Account Claims, may respond as required
pursuant to the terms of any other account control agreement with respect to
which SVBS believes it previously received a Notice of Exclusive Control or
similar notice, and may respond as required by law to any court or government
order, writ or other legal process received by SVBS or Clearing Broker. Creditor
also agrees that, before SVBS' receipt of Creditor's Notice of Exclusive
Control, SVBS and Clearing Broker may be required to and may respond to (i)
Notices of Exclusive Control or similar notices sent to SVBS by other parties
and (ii) a writ or other similar legal process served on SVBS or Clearing Broker
in connection with the Account and Collateral. SVBS and Clearing Broker agree to
use good faith efforts to promptly notify Creditor if any other party delivers
to SVBS a notice of exclusive control or any party other than Creditor or SVBS
asserts a claim against the Collateral by means of a writ or other similar legal
process, but failure to provide such notice does not constitute a breach of this
Agreement. Customer expressly agrees that SVBS, Clearing Broker and Creditor may
act in accordance with the terms of this Section 7.
8. Customer Waiver and Authorization. Customer hereby waives any rights
------------------------------------
that Customer may have under the Client Agreement to the extent such rights are
inconsistent with the provisions of this Agreement, and hereby authorizes SVBS
and Clearing Broker to comply with all instructions and entitlement orders
delivered by Creditor to SVBS in accordance with the terms of this Agreement.
9. Amendments to and Termination of Client Agreement. SVBS, Clearing Broker
-------------------------------------------------
and Customer shall not amend, supplement or otherwise modify the Client
Agreement insofar as it pertains to the Collateral without prior written notice
to Creditor. Customer may not terminate the Client Agreement insofar as it
pertains to the Collateral without consent of Creditor. SVBS and Clearing Broker
agree to use good faith efforts to notify Creditor if SVBS or Clearing Broker
terminate the Client Agreement, but SVBS' or Clearing Broker's failure to notify
Creditor shall not be a breach of this Agreement.
10. Termination of this Agreement. Creditor may terminate this Agreement by
--------------------------------
giving SVBS and Customer written notice of termination; provided that, by giving
such notice, Creditor acknowledges that it will thereby be confirming that, as
of the termination date, it will no longer have a perfected security interest in
the Account and Securities in the Collateral which is perfected by control via
this Agreement, although Creditor may continue to have a perfected security
interest in the Account by other means. SVBS and Clearing Broker may terminate
this Agreement by giving Creditor and Customer 30 days prior written notice of
termination (unless a shorter notice period is mandated by applicable law).
Customer may only terminate this Agreement with the written consent of Creditor;
provided that, by giving such notice with Creditor's written consent, both
Customer and Creditor acknowledge that they will thereby be confirming that, as
of the termination date, Creditor will no longer have a perfected security
interest in the Collateral which is perfected by control pursuant to this
Agreement, although Creditor may continue to have a perfected security interest
in the Collateral by other means.
11 Delivery of Account Statements. SVBS and Clearing Broker are hereby
---------------------------------
authorized by Customer and agree to send to Creditor at its address for notices
set forth below Creditor's signature block at the end of this Agreement,
concurrently with the sending thereof to Customer, duplicate copies of any and
all monthly statements or reports issued or sent to Customer with respect to the
Collateral and the Account. Until this Agreement is terminated, Customer
authorizes SVBS to disclose to Creditor at Creditor's request any information
concerning Customer's Account and the Securities in the Account, including but
not limited to the identity of any other party with which Customer and SVBS and
Clearing Broker have executed account control agreements or similar agreements.
12. Responsibility of SVBS, Clearing Broker and Creditor. This Agreement
------------------------------------------------------
does not create any obligation or duty on the part of SVBS, Clearing Broker or
Creditor other than those expressly set forth herein.
13. No Waiver. Any forbearance or failure or delay by SVBS, Clearing Broker
----------
or Creditor in exercising any right hereunder shall not be deemed a waiver
thereof and any single or partial exercise of any right shall not preclude the
further exercise thereof.
14. Amendments. This Agreement and all exhibits attached hereto may be
----------
amended only in writing signed by all parties hereto.
15. Governing Law. Notwithstanding the terms of any other agreement, the
--------------
parties hereto agree that this Agreement shall be governed under and in
accordance with the laws of the State of California. All parties hereto each
submit to the exclusive jurisdiction of the State and Federal courts in Santa
Clara County, California.
16. Integration Provision. This Agreement constitutes the entire agreement
---------------------
among SVBS, Clearing Broker, Customer and Creditor with respect to Creditor's
control over the Collateral and Securities and matters specifically set forth
herein, and all prior communications, whether verbal or written, between any of
the parties hereto with respect to the subject matter hereof shall be of no
further effect or evidentiary value.
17. Notices.
-------
(a) Any notice, other than a Notice of Exclusive Control, or other
communication provided for or allowed hereunder shall be in writing and shall be
considered to have been validly given (a) when actually received by the
recipient at the address or facsimile number, if delivered personally (whether
by messenger, air courier service or otherwise) or sent by facsimile to the
address or facsimile number identified below the signature of the applicable
party's signature below and addressed to the addressee identified below the
signature of the applicable party's signature below; or (b) 72 hours after being
deposited in the United States mail, registered or certified, postage prepaid,
return receipt requested, if sent to the address and addressee as set forth
below the signature of the applicable party hereto. The addresses to which
notices or other communications are to be given may be changed from time to time
by notice served as provided herein.
(b) A Notice of Exclusive Control shall be in writing, must be in the form
---------------------------
set forth in EXHIBIT B hereto, must be delivered to the address listed below
SVBS' signature block at the end of this Agreement, must be delivered to SVBS
via hand delivery, messenger, overnight delivery or facsimile and shall be
considered to have been validly given when actually received, except that a
------
facsimile will be considered to have been validly given only when acknowledged
in writing by SVBS (SVBS agrees that it will use its good faith effort to
promptly acknowledge receipt of such facsimile). Creditor acknowledges that SVBS
may not be able to respond to a Notice of Exclusive Control pursuant to section
7 above, and Creditor agrees that SVBS will not be held liable for any failure
to respond to a Notice of Exclusive Control, if the Creditor does not deliver
the Notice of Exclusive Control as set forth in this Section 17 or to the
address listed below SVBS' signature block at the end of this Agreement.
18. Indemnification and Hold Harmless of SVBS and Clearing Broker by
----------------------------------------------------------------------
Customer.
- --------
Customer hereby agrees to indemnify and hold harmless SVBS and Clearing Broker,
and their respective affiliates and their respective directors, officers, agents
and employees (each, an "Indemnified Person") against any and all claims, causes
------------------
of action, liabilities, lawsuits, demands and damages (each, a "Claim") asserted
by Creditor or any other party, including without limitation, any and all court
costs and reasonable attorneys' fees, in any way related to or arising out of or
in connection with this Agreement or any action taken or not taken pursuant
hereto, including any claims arising as a result of SVBS' and Clearing Broker's
adherence (or alleged failure of adherence) to the foregoing instructions
including, without limitation, Claims that allegedly result from SVBS' and/or
Clearing Broker's ceasing, based on this Agreement, to permit withdrawals of or
from the Collateral or resulting from SVBS' and/or Clearing Broker's paying over
or delivering all or any part of the Collateral pursuant to the directions of
Creditor; provided that no Indemnified Person shall be entitled to be
--------
indemnified to the extent that such Claims arise from the Indemnified Person's
own gross negligence or willful misconduct. Customer agrees that SVBS and/or
Clearing Broker shall not be liable for delays or errors occurring by reason of
circumstances beyond the control of SVBS or Clearing Broker, including, without
limitation, acts of civil, military, or banking authorities, national
emergencies, market disorder, labor difficulties, fire, flood or other
catastrophes, acts of God, terrorism, insurrection, war, riots, failure of
transportation or equipment, or failure of vendors, communication or power
supply. Clearing Broker shall have no responsibility or liability under this
Agreement to Customer for any acts or omissions by SVBS, its officers, employees
or agents; and SVBS shall have no responsibility or liability under this
Agreement to Customer for any acts or omissions by Clearing Broker, its
officers, employees or agents.
19. Indemnification and Hold Harmless of SVBS and Clearing Broker by
----------------------------------------------------------------------
Creditor.
- --------
Creditor hereby agrees to indemnify Indemnified Persons against any and all
Claims asserted by Customer or any other party (including, without limitation,
any and all court costs and reasonable attorneys' fees) arising directly out of
SVBS' and/or Clearing Broker's adherence or failure of adherence to Creditor's
instructions in its Notice of Exclusive Control, including, without limitation,
any Claim that arises directly out of SVBS' and/or Clearing Broker's ceasing,
based on this Agreement, to permit withdrawals of or from the Collateral or
resulting from SVBS' and/or Clearing Broker's paying over or delivering all or
any part of the Collateral pursuant to Creditor's instructions in its Notice of
Exclusive Control; provided, that no Indemnified Person shall be entitled to be
--------
indemnified (a) to the extent that such Claim results from an Indemnified
Person's gross negligence or willful misconduct; or (b) for any special,
indirect, consequential or punitive damages asserted by Customer if the waiver
in Section 21 of this Agreement is enforceable. Creditor agrees that it will not
hold Indemnified Persons liable for any Claim arising out of or relating to any
Indemnified Person's performance or failure of performance under this Agreement
other than those Claims that result directly from the acts or omissions of the
Indemnified Person which are deemed gross negligence or willful misconduct by a
civil court or other similar judicial body. Clearing Broker shall have no
responsibility or liability under this Agreement to Creditor for any acts or
omissions by SVBS, its officers, employees or agents; and SVBS shall have no
responsibility or liability under this Agreement to Creditor for any acts or
omissions by Clearing Broker, its officers, employees or agents.
20. JURY TRIAL WAIVER. CUSTOMER, CREDITOR, SVBS AND CLEARING BROKER EACH
-------------------
WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, OR ANY CONTEMPLATED TRANSACTION, INCLUDING
CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL
INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED
THIS WAIVER WITH ITS COUNSEL.
21. WAIVER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
------
AGREEMENT OR ANYWHERE ELSE, CUSTOMER WAIVES AND AGREES THAT IT SHALL NOT SEEK
FROM SVBS, CLEARING BROKER OR CREDITOR UNDER ANY THEORY OF LIABILITY (INCLUDING
WITHOUT LIMITATION ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES.
22. Unpaid Account Claims. Before Creditor exercises exclusive control over
---------------------
the Account, SVBS and/or Clearing Broker may, in the ordinary course of
business, debit from the Account any unpaid Account Claims. After Creditor
exercises exclusive control over the Account, if (a) funds are not available in
the Account to pay SVBS and/or Clearing Broker for any Account Claims, and (b)
Customer fails to pay such Account Claims within fifteen (15) Business days of
SVBS' and/or Clearing Broker's written demand therefore, Creditor will pay to
SVBS and/or Clearing Broker, within ten (10) Business days of a written demand
by SVBS and/or Clearing Broker, any amounts owed for an Account Claim and that
is not paid in full by Customer up to the amount of the proceeds received by
Creditor from the Account.
23. Attorneys' Fees, Costs and Expenses. In any action or proceeding
---------------------------------------
between Customer and SVBS, between Customer and Clearing Broker, between
Creditor and SVBS, or between Creditor and Clearing Broker, arising out of this
Agreement, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other costs and expenses incurred, in addition to any other
relief to which it may be entitled, whether or not a lawsuit is filed.
24. No Conflict. To the extent that the terms or conditions of this
------------
Agreement are inconsistent with the Client Agreement or any other document,
instrument or agreement between SVBS, Clearing Broker and Customer, the terms
and conditions of this Agreement shall prevail.
25. Successors. The terms of this Agreement shall be binding upon, and
----------
shall inure to the benefit of, the parties hereto and to each party's respective
successors or heirs and personal representatives. The parties may assign this
Agreement and any rights under the Agreement only if that party's successor or
assign assume all obligations under this Agreement.
26. 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, are an original, and all taken together, are one
Agreement.
27. Survival. Sections 15 and 18 through 25 shall survive the termination
--------
of this Agreement.
[The rest of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
CUSTOMER:
-------------------------------
By
----------------------------
Name:
-------------------------
Title:
-------------------------
Address for Notices:
---------------------
---------------------
---------------------
---------------------
Telephone:
Facsimile:
CREDITOR:
-------------------------------
By
----------------------------
Name:
-------------------------
Title:
-------------------------
Address for Notices:
---------------------
---------------------
---------------------
---------------------
Telephone:
Facsimile:
SVBS: SVB SECURITIES
By
----------------------------
Name:
-------------------------
Title: Operations Manager
Address for Notices:
---------------------
SVB Securities
3003 Tasman Drive
Mail Sort HG250
Santa Clara, CA 95054
Attn: Operations Manager
Telephone: [*]
Facsimile: [*]
CLEARING BROKER: BANC OF AMERICA SECURITIES LLC
By
----------------------------
Name:
-------------------------
Title:
-------------------------
SVB SECURITIES
SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT A
1. ACCOUNT TITLE AND NUMBER:
ACCOUNT TITLE:
--------------------------------------------
ACCOUNT NUMBER:
--------------------------------------------
2. "SECURITY AGREEMENT" (THIS SECTION TO BE COMPLETED BY CREDITOR):
---------
3. ACCOUNT CONTROL AGREEMENTS PREVIOUSLY EXECUTED BY SVB SECURITIES AND
CLEARING BROKER WITH OTHER PARTIES ASSERTING AN INTEREST IN THE ACCOUNT
(THIS SECTION TO BE COMPLETED BY SVBS):
----
SVB SECURITIES
SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT B
NOTICE OF EXCLUSIVE CONTROL
To: SVB SECURITIES ("SVBS")
From: ("Creditor")
---------------------
Re: ("Customer")
-----------------------
Date:
----------------------------
Pursuant to the Securities Account Control Agreement dated ("Agreement")
---------
entered among SVBS, Clearing Broker (as defined in the Agreement) Customer and
Creditor, Creditor hereby notifies SVBS of Creditor's exercise of Creditor's
rights under the Agreement and directs SVBS to cease complying with trading
instructions or any entitlement orders originated by Customer or its agents.
Creditor understands and agrees that SVBS and Clearing Broker shall have no duty
or obligation whatsoever of any kind or character to determine the validity of
Creditor's exercise of its rights under the Agreement or the certification
above, to determine if SVBS and/or Clearing Broker is/are obligated to take
further instructions from Customer, or to determine whether Creditor has a right
to all or part of the Collateral. Creditor hereby agrees to indemnify and hold
harmless SVBS and Clearing Broker, their respective affiliates, and their
respective directors, officers, employees and agents pursuant to the terms of
Section 19 of the Agreement.
Creditor agrees that upon receipt of Creditor's Notice of Exclusive Control,
SVBS and Clearing Broker may exercise their rights and remedies as permitted
under the Agreement.
Creditor hereby certifies that the person executing this Notice of Exclusive
Control is an officer, representative or agent of Creditor authorized to act on
the behalf of Creditor and to make the representations and agreements contained
in this Notice of Exclusive Control.
CREDITOR:
----------------------------
By
----------------------------
Title:
ACKNOWLEDGED BY: SVB SECURITIES
(for facsimile only)
By:
----------------------------
Name:
Title:
Date:
Time:
EXHIBIT D
FORM OF BORROWING NOTICE
VIA FACSIMILE TRANSMISSION
SmithKline Beecham Corporation, doing business as Fax: [*]
GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attention: Vice President, R&D Structuring
Re: Exelixis, Inc.
Ladies and Gentlemen:
This Borrowing Notice is delivered to you pursuant to Section 2.2 of that
certain Loan and Security Agreement, dated as of October ___, 2002 (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
----
Agreement"), by and between Exelixis, Inc., a Delaware corporation ("Exelixis"),
--- --------
and SmithKline Beecham Corporation, a Pennsylvania corporation, doing business
as GlaxoSmithKline ("GSK"). Unless otherwise defined herein or the context
---
otherwise requires, terms used herein have the meanings assigned to such terms
in the Loan Agreement.
1. Exelixis hereby requests a [General Advance] [Product Specific
Advance] be made in the aggregate principal amount of $____________ on
____________, 20_______ (the "Borrowing Date"), which Borrowing Date shall be a
----------------
Business Day not earlier than fifteen (15) Business Days from the date of this
Borrowing Notice, or, if this Borrowing Notice is delivered to you other than by
facsimile transmission, the Borrowing Date is not earlier than fifteen (15)
Business Days from the date of delivery as determined pursuant to Section 16.5
of the Loan Agreement. The proceeds from such requested Advance should be
transferred by wire transfer of funds to the Deposit Account.
2. The undersigned hereby represents that he/she is a duly authorized
officer of Exelixis, and acknowledges that, each of the delivery of this
Borrowing Notice and the acceptance by Exelixis of the proceeds from the Advance
requested hereby constitutes a representation by Exelixis that, on the Borrowing
Date, each of the applicable conditions precedent to Advances pursuant to
Article 6 of the Loan Agreement, have been met or performed.
3. The undersigned further represents that pursuant to Section 6.2.2 and
6.2.4 of the Loan Agreement, respectively, each of the delivery of this
Borrowing Notice and the acceptance by Exelixis of the proceeds from the Advance
requested hereby constitutes a representation and warranty by Exelixis that, on
the Borrowing Date, (i) no Event of Default has occurred and is continuing or
would reasonably be likely to be caused by the making of the Advance requested
hereby, and (ii) the representations and warranties set forth in Article 7 of
the Loan Agreement remain true and correct in all material respects.
4. The undersigned further represents that, pursuant to Section 6.2.7 of
the Loan Agreement, the proceeds from the requested Advance will be utilized by
Exelixis solely in furtherance of the obligations of Exelixis under the
Development Agreement over the course of the Term.
5. [The undersigned further represents that, pursuant to Section 7.1 of the
Loan Agreement, attached hereto are true and correct copies of all amendments to
the Operating Documents not yet filed with the SEC.]
6. [With respect to this Product Specific Advance, Exelixis represents that
it has title to the Intellectual Property pertaining to such Development
Candidate selected as contemplated by Section 6.4.1 of the Loan Agreement, free
and clear of all assignments, mortgages, pledges, liens, security interests,
leases, claims or any other encumbrances, other than liens in favor of GSK.]
In the event you require additional documentation in connection with this
requested Advance, in accordance with Section 6.2.8 of the Loan Agreement,
please provide a list of such requested documentation to Exelixis not less than
five (5) Business Days prior to the proposed Borrowing Date.
IN WITNESS WHEREOF, Exelixis has caused this Borrowing Notice to be executed and
delivered, and the certification and representations and warranties contained
herein to be made by its duly authorized officer, this ___day of ____________,
200__.
EXELIXIS, INC.
By___________________________
Name:
Title:
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
EXHIBIT E
FORM OF STOCK REPAYMENT NOTICE
VIA FACSIMILE TRANSMISSION
SmithKline Beecham Corporation, doing business as Fax: [*]
GlaxoSmithKline
709 Swedeland Road
King of Prussia, Pennsylvania 19406
Attention: Vice President, R&D Structuring
Re: Exelixis, Inc.
Ladies and Gentlemen:
This Stock Repayment Notice is delivered to you pursuant to Section 5.6.3 of
that certain Loan and Security Agreement, dated as of October ___, 2002 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), by and between Exelixis, Inc., a Delaware corporation
-------------
("Exelixis"), and SmithKline Beecham Corporation, a Pennsylvania corporation,
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doing business as GlaxoSmithKline ("GSK"). Unless otherwise defined herein or
---
the context otherwise requires, terms used herein shall have the meanings
assigned to such terms in the Loan Agreement.
1. Pursuant to Section 5.6.1 of the Loan Agreement and Section 3.4.1 of
the Stock Purchase Agreement, Exelixis hereby exercises the option to issue to
GSK Stock Repayment Shares to pay $_____________ of the current outstanding
principal balance of the Advances, and all accrued interest relating thereto
(the "Stock Repayment") on the ____ day of ______, 20__ (the "Stock Repayment
---------------- ---------------
Closing Date"), which Payment Date shall not be earlier than thirty (30) days
-----------
from the date of this Stock Repayment Notice, or, if this Stock Repayment Notice
is delivered to GSK other than by facsimile transmission, the Payment Date is
not earlier than thirty (30) Business Days from the date of delivery as
determined pursuant to Section 16.5 of the Loan Agreement.
2. The undersigned hereby represents that he/she is a duly authorized
officer of Exelixis, and acknowledges that, the delivery of this Stock Repayment
Notice hereby constitutes a representation and warranty by Exelixis that,
pursuant to Section 5.6.2 of the Loan Agreement and Section 2.5 of the Stock
Purchase Agreement, such Stock Repayment will not require GSK to acquire twenty
percent (20%) or more of Exelixis' outstanding Common Stock, as reported in the
most recent quarterly or annual report form of Exelixis filed with the SEC and,
in the event that any purchase of Stock Repayment Shares would cause GSK to be a
holder of more than twenty percent (20%) of Exelixis' outstanding Common Stock,
GSK shall be relieved of its obligations to make such purchase(s), to the extent
of the overage.
3. The undersigned further represents that pursuant to Section 5.6.4 of the
Loan Agreement, the delivery of this Stock Repayment Notice hereby constitutes a
representation and warranty by Exelixis that, on the Stock Repayment Closing
Date, each of the conditions precedent to the issuance of Stock Repayment Shares
pursuant to Section 5.6.6 of the Loan Agreement, have been met or performed.
4. [The undersigned further represents that, pursuant to Section 5.6.4(a)
of the Loan Agreement and Section 3.4.3(a) of the Stock Purchase Agreement, if
GSK is not an SEC Affiliate of Exelixis, at least three (3) Trading Days in
advance of the Stock Repayment Closing Date, Exelixis will issue instructions to
Exelixis' stock transfer agent directing Exelixis' transfer agent to prepare and
deliver to the account of GSK by an automated share transfer through the
Depository Trust Company system ("DWAC"), that number of shares of Exelixis
representing the applicable Stock Repayment Shares no later than the Stock
Repayment Closing Date.]
5. [The undersigned further represents that, pursuant to Section 5.6.4(b)
of the Loan Agreement and Section 3.4.3(b) of the Stock Purchase Agreement, if
GSK is an SEC Affiliate of Exelixis as of the Stock Repayment Closing Date, at
least three (3) Trading Days in advance of the Stock Repayment Closing Date,
Exelixis will issue instructions to Exelixis' stock transfer agent, directing
the transfer agent to prepare and deliver to Exelixis a stock certificate
representing the number of shares evidencing the applicable Stock Repayment
Shares, as soon as possible, but in no event no later than one (1) Trading Day
prior to the Stock Repayment Closing Date, which stock certificate will be
delivered by Exelixis to GSK on the Stock Repayment Closing Date.]
IN WITNESS WHEREOF, Exelixis has caused this Stock Repayment Notice to be
executed and delivered, and the certification and representations and warranties
contained herein to be made by its duly authorized officer, this ___day of
____________, 200__.
EXELIXIS, INC.
By___________________________
Name:
Title:
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.1-I
SCHEDULE 3.1.1
PATENTS
Issued Patents
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Country Patent No./Title Issue Date
------- ---------------- ----------
Pending Patent Applications
---------------------------
[*]
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
Schedule 3.1.3
DEPOSIT ACCOUNT
[*]
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
SCHEDULE 9.1
LOCATION OF THE COLLATERAL
LOCATION OF THE RECORDS OF THE COLLATERAL:
Exelixis, Inc.
170 Harbor Way
PO Box 511
South San Francisco, CA 94083
LOCATION OF THE TANGIBLE COLLATERAL:
Exelixis, Inc., 170 Harbor Way, South San Francisco, CA
Exelixis, Inc., 169 Harbor Way, South San Francisco, CA
Exelixis, Inc., 260 Littlefield Avenue, South San Francisco, CA
SCHEDULE 9.16
PERMITTED INVESTMENTS
[*]
[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
SCHEDULE 16.4
INDEBTEDNESS
The Obligations are expressly made subordinate in right of payment to the
following obligations:
1. Ordinary trade payables incurred in ordinary course of business.
2. Loan and Security Agreement dated May 22, 2002, between Exelixis and
Silicon Valley Bank for a maximum loan amount of Sixteen Million Dollars
($16,000,000), as modified by that certain Loan Modification Agreement
dated October 1, 2002 between Exelixis and Silicon Valley Bank.
3. Master Lease Agreement dated April 9, 2001, between Exelixis and General
Electric Capital Corporation for a maximum loan amount of Twelve Million
Dollars ($12,000,000).
4. Convertible Note and Note Purchase Agreement dated May 22, 2002, between
Exelixis and Protein Design Labs, Inc. for a maximum loan amount of Thirty
Million Dollars ($30,000,000).
5. Master Lease Agreement dated August 2, 2000, as amended, between Exelixis
and General Electric Capital Corporation (formerly Comdisco, Inc.) for a
maximum loan amount of Thirteen Million One Hundred Thousand Dollars
($13,100,000).
6. Master Loan and Security Agreement dated August 3, 1998, as amended,
between Exelixis and Transamerica Technology Finance Corporation for a
maximum loan amount of Three Million Dollars ($3,000,000).