Exhibit 10.20
PENINSULA PHARMACEUTICALS, INC.
NOTE PURCHASE AGREEMENT
DECEMBER 23, 2004
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.
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TABLE OF CONTENTS
PAGE
1. Amount and Terms of the Loan(s)...................................................... 1
1.1 The Loan(s)................................................................... 1
2. Closing, Drawdown, Delivery And Payment.............................................. 2
2.1 Closing....................................................................... 2
2.2 Drawdown Notice............................................................... 2
2.3 Delivery...................................................................... 2
3. Representations And Warranties Of The Company........................................ 2
3.1 Organization, Good Standing and Qualification................................. 2
3.2 Subsidiaries.................................................................. 2
3.3 Capitalization; Voting Rights................................................. 3
3.4 Authorization; Binding Obligations............................................ 4
3.5 Financial Statements.......................................................... 4
3.6 Agreements; Action............................................................ 5
3.7 Obligations to Related Parties................................................ 6
3.8 Changes....................................................................... 6
3.9 Title to Properties and Assets; Liens, Etc.................................... 7
3.10 Intellectual Property......................................................... 7
3.11 Compliance with Other Instruments............................................. 8
3.12 Litigation.................................................................... 8
3.13 Tax Returns and Payments...................................................... 8
3.14 Employees..................................................................... 9
3.15 Registration Rights and Voting Rights......................................... 9
3.16 Compliance with Laws; Permits................................................. 9
3.17 Offering Valid................................................................ 10
3.18 Environmental and Safety Laws................................................. 10
3.19 Full Disclosure............................................................... 10
3.20 Minute Books.................................................................. 10
3.21 Insurance..................................................................... 10
3.22 Real Property Holding Corporation............................................. 10
3.23 Section 83(b) Elections....................................................... 10
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.24 Product Regulatory Review..................................................... 10
3.25 Use of Proceeds............................................................... 11
4. Representations And Warranties Of Purchasers......................................... 11
4.1 Requisite Power and Authority................................................. 11
4.2 Investment Representations.................................................... 11
4.3 Transfer Restrictions......................................................... 13
5. Conditions To Closing................................................................ 13
5.1 Conditions to Purchasers' Obligations at the Closing.......................... 13
5.2 Conditions to Obligations of the Company...................................... 14
6. Miscellaneous........................................................................ 14
6.1 Governing Law................................................................. 14
6.2 Survival...................................................................... 14
6.3 Successors and Assigns........................................................ 14
6.4 Entire Agreement.............................................................. 14
6.5 Severability.................................................................. 15
6.6 Amendment and Waiver.......................................................... 15
6.7 Delays or Omissions........................................................... 15
6.8 Waiver of Conflicts........................................................... 15
6.9 Notices....................................................................... 15
6.10 Expenses...................................................................... 16
6.11 Attorneys' Fees............................................................... 16
6.12 Titles and Subtitles.......................................................... 16
6.13 Counterparts.................................................................. 16
6.14 Broker's Fees................................................................. 16
6.15 Exculpation Among Purchasers.................................................. 16
6.16 Pronouns...................................................................... 16
6.17 California Corporate Securities Law........................................... 17
ii.
LIST OF EXHIBITS
Schedule of Purchasers Exhibit A
Form of Convertible Promissory Note Exhibit B
iii.
PENINSULA PHARMACEUTICALS, INC.
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as
of December 23, 2004, by and among Peninsula Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY") and each of those persons and entities, severally
and not jointly, who have executed this Agreement and whose names are set forth
on the Schedule of Purchasers attached hereto as EXHIBIT A (which persons and
entities are hereinafter collectively referred to as "PURCHASERS" and each
individually as a "PURCHASER").
RECITALS
WHEREAS, to provide the Company with additional resources to conduct its
business, the Purchasers are willing to loan to the Company up to an aggregate
amount of twelve million dollars ($12,000,000) (the "MAXIMUM COMMITMENT
AMOUNT"), subject to the conditions specified herein; and
WHEREAS, the Purchasers desire to purchase, and the Company desires to
sell, the Notes (as defined below) on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties, and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF THE LOAN(S).
1.1 THE LOAN(S).
(A) Subject to the terms of this Agreement, each Purchaser
agrees to make available to the Company, subject to the terms and conditions
hereof, the amount set forth opposite each such Purchaser's name on the Schedule
of Purchasers attached hereto (each, a "COMMITMENT AMOUNT") under which the
Company may, at any time (i) following the date hereof and (ii) prior to the
Expiration Date (as defined below), request (a "DRAWDOWN NOTICE"), and the
Purchasers agree to make, loans to the Company in the aggregate amount specified
in the Drawdown Notice (the "TOTAL LOAN AMOUNT") against the issuance and
delivery by the Company of convertible promissory notes in substantially the
form attached hereto as EXHIBIT B (each, a "NOTE" and collectively, the
"NOTES").
(B) Following delivery of the Drawdown Notice pursuant to
Section 2.1, each Purchaser shall be obligated to purchase, and the Company
shall be obligated to sell and issue, on the Drawdown Date (as defined below) a
Note in the principal amount equal to the product of (i) such Purchaser's Pro
Rata Share (as defined below) and (ii) the Total Loan Amount requested in the
Drawdown Notice (each, a "LOAN AMOUNT" and collectively, the "LOANS"). For the
purposes of this Agreement, a Purchaser's "PRO RATA SHARE" shall be equal
1.
to (i) such Purchaser's Commitment Amount divided by (ii) the Maximum Commitment
Amount. Each Note shall be convertible into equity securities of the Company
upon the terms and conditions set forth in the Notes.
2. CLOSING, DRAWDOWN, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the obligations contemplated hereby
(the "CLOSING") shall take place at 1:00 p.m. on the date hereof, at the offices
of ▇▇▇▇▇▇ Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇, ▇▇▇▇▇-▇▇▇▇ or at such other time or place as the Company and the Purchasers
may mutually agree (the "CLOSING DATE").
2.2 DRAWDOWN NOTICE. The Drawdown Notice may be given at any time,
in the sole discretion of the Company, (i) following the Closing Date and (ii)
prior to the earlier to occur of (A) the closing of the Company's first firmly
underwritten primary offering of the Company's common stock to the public or (B)
June 30, 2005 (the "EXPIRATION DATE"). All Loans made pursuant to the Drawdown
Notice shall not exceed the Maximum Commitment Amount. The Drawdown Notice shall
(i) be in writing signed by the Chief Executive Officer or the Chief Financial
Officer of the Company, (ii) specify the Total Loan Amount, and (iii) specify
the date that said loan is to be made, which date shall be three (3) days
following the delivery of such Drawdown Notice or at such other time as the
Company and the Purchasers may mutually agree.
2.3 DELIVERY. The delivery of the Notes against receipt of the
Total Loan Amount shall be held within three (3) days following delivery of the
Drawdown Notice by the Company as set forth in Section 2.2 above, or at such
other time as the Company and the Purchasers may mutually agree (the "DRAWDOWN
DATE"). On the Drawdown Date (i) each Purchaser will deliver to the Company a
check or wire transfer funds in the amount of such Purchaser's Loan Amount; and
(ii) the Company shall issue and deliver to each Purchaser a Note in favor of
such Purchaser payable in the principal amount of such Purchaser's Loan Amount.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions delivered by the
Company to Purchasers at the Closing, the Company hereby represents and warrants
to each Purchaser as of the Closing as set forth below.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to issue the Notes (together, with this Agreement, the "LOAN
DOCUMENTS") and the equity securities issuable upon conversion of the Notes (the
"CONVERSION SECURITIES"), and to carry out and perform its obligations under the
terms of the Loan Documents and to carry on its business as presently conducted.
The Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or its business.
2.
3.2 SUBSIDIARIES. The Company does not own or control any equity
security or other interest of any other corporation, limited partnership or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement. Since its inception, the Company has not
consolidated or merged with, acquired all or substantially all of the assets of,
or acquired the stock or any interest in any corporation, partnership,
association, or other business entity.
3.3 CAPITALIZATION; VOTING RIGHTS.
(A) The authorized capital stock of the Company, immediately
prior to the Closing, consists of: (i) one hundred million (100,000,000) shares
of Common Stock, par value $0.0001 per share, two million one hundred thirty-six
thousand six hundred nine (2,136,609) shares of which are issued and outstanding
(including the shares reflected in Section 3.3(b)(i) hereof); and (ii)
forty-nine million eight hundred ninety-six thousand nine hundred forty-two
(49,896,942) shares of Preferred Stock, par value $0.01 per share, nine hundred
ninety thousand (990,000) shares of which are designated Series A Preferred
Stock, three hundred twenty-nine thousand nine hundred ninety-six (329,996) of
which are issued and outstanding, thirteen million nine hundred six thousand
nine hundred forty-two (13,906,942) shares of which are designated Series B
Preferred Stock, four million six hundred thirty-five thousand six hundred
forty-three (4,635,643) of which are issued and outstanding, and thirty-five
million (35,000,000) shares of which are designated Series C Preferred Stock,
ten million three hundred forty thousand nine hundred two (10,340,902) shares of
which are issued and outstanding.
(B) Under the Company' Amended and Restated 2001 Equity
Inventive Plan (the "PLAN"), (i) three hundred ninety-six thousand four hundred
thirty-one (396,431) shares of Common Stock have been issued pursuant to
restricted stock purchase agreements and/or the exercise of outstanding options,
(ii) options to purchase two million eight hundred forty-nine thousand five
hundred fifty-four (2,849,554) shares of Common Stock have been granted and are
currently outstanding, and (iii) one million one hundred twelve thousand two
hundred forty (1,067,240) shares of Common Stock remain available for future
issuance to officers, directors, employees and consultants of the Company.
(C) Other than the shares reserved for issuance under the
Plan and except as may be granted pursuant to the Loan Documents and that
certain Amended and Restated Investor Rights Agreement dated as of December 11,
2003 (the "INVESTOR RIGHTS AGREEMENT"), there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. All such
preemptive rights have been properly waived or complied with respect to all
prior issuances of capital stock and with respect to the issuance of the Notes
and the Conversion Securities.
(D) All issued and outstanding shares of the Company's
Common Stock and Preferred Stock (i) have been duly authorized and validly
issued and are fully paid and nonassessable, and (ii) were issued in compliance
with all applicable state and federal laws concerning the issuance of
securities.
3.
(E) Each series of Preferred Stock is convertible into
Common Stock on a one-for-one basis as of the date hereof. When issued in
compliance with the provisions of the Loan Documents, the Notes and the
Conversion Securities will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances other than (i) liens and encumbrances
created by or imposed upon Purchasers and (ii) any right of first refusal set
forth in the Company's Bylaws; provided, however, that the Notes and the
Conversion Securities may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed.
(F) The Company has no obligation (contingent or other) to
purchase, redeem or otherwise acquire any of its securities or any interest
therein or to pay any dividend or make any other distribution in respect
thereof. Except for the Investor Rights Agreement, the Amended and Restated
Co-Sale Agreement dated as of December 11, 2003 and the Amended and Restated
Voting Agreement dated as of December 11, 2003 (the "VOTING AGREEMENT"), to the
best of the Company's knowledge there are no voting trusts or agreements,
stockholders' agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of the Company or any
subsidiary of the Company (whether or not the Company or any such subsidiaries
is a party thereto).
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on
the part of the Company, its officers, directors and stockholders necessary for
the authorization of the Loan Documents, the performance of all obligations of
the Company hereunder and thereunder at the Closing and the authorization, sale,
issuance and delivery of the Notes pursuant hereto. The Loan Documents, when
executed and delivered, will be valid and binding obligations of the Company
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (b) general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions in the Investor
Rights Agreement may be limited by applicable laws. The issuance of the Notes
and the subsequent conversion of the Notes into Conversion Securities are not
and will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.
3.5 FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser its unaudited balance sheet as at September 30, 2004 (the "STATEMENT
DATE") and unaudited consolidated statement of income and cash flows for the
nine-month period ending on the Statement Date (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements, together with the notes thereto, present
fairly the financial condition and position of the Company as of the Statement
Date; provided, however, that the unaudited financial statements are subject to
normal recurring year-end audit adjustments (which are not expected to be
material either individually or in the aggregate), and do not contain all
footnotes required under generally accepted accounting principles. All
liabilities (whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due) ("LIABILITIES") of the Company and other obligations of
the Company, whether absolute, accrued, contingent or otherwise, whether direct
or indirect, and whether due or to become due, that existed at the Statement
Date have been disclosed in the balance sheet included in the Financial
Statements (the "BALANCE SHEET") to the extent such Liabilities and
4.
obligations were required, under generally accepted accounting principles, to be
so disclosed. The Company has not (a) made a general assignment for the benefit
of its creditors, (b) filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition in bankruptcy by its creditors, (c) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets or properties, (d) suffered the attachment or other judicial seizure
of all or substantially all of its assets or (e) admitted in writing its
inability to pay its debts as they come due. After giving effect to the
transactions contemplated hereby, the Company will have tangible and intangible
assets having a fair value in excess of the amount required to pay its probable
Liabilities on its existing debts as they become absolute and matured. To the
Company's knowledge, there are no Liabilities of the Company of any kind
whatsoever, and there is no existing condition, situation or set of
circumstances that could reasonably be expected to result in a Liability of the
Company, other than (a) Liabilities reflected in the Financial Statements, (b)
Liabilities that have arisen after the date of the Balance Sheet in the ordinary
course of business (none of which is a Liability for breach of contract, breach
of warranty, tort, infringement claim or lawsuit) and that, in the aggregate, do
not exceed $25,000, and (c) Liabilities that have arisen after the date of the
Balance Sheet in connection with the preparation, execution and negotiation of
the Loan Documents and the transactions contemplated hereby and thereby.
3.6 AGREEMENTS; ACTION.
(A) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $50,000 (other than obligations of, or payments to, the
Company arising from purchase or sale agreements entered into in the ordinary
course of business), or (ii) the transfer or license of any patent, copyright,
trade secret or other proprietary right to or from the Company (other than
licenses arising from the purchase of "off the shelf" or other standard
products), (iii) indemnification by the Company with respect to infringements of
proprietary rights (other than indemnification obligations arising from purchase
or sale or license agreements entered into in the ordinary course of business),
or (iv) employment or labor matters (including, without limitation, any
severance, "change of control" or other similar payments, obligations or
matters).
(B) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred or guaranteed any indebtedness for
money borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in the
ordinary course of business or as disclosed in the Financial Statements)
individually in excess of $50,000 or, in the case of indebtedness and/or
liabilities individually less than $50,000, in excess of $200,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(C) The Company has delivered to the Purchasers or their
counsel copies of all contracts, agreements, instruments and transactions listed
in the Schedule of
5.
Exceptions. To the Company's knowledge, all such contracts, agreements and
instruments to which the Company is a party or by which it is bound
("CONTRACTS") are valid, binding and in full force and effect in all material
respects and enforceable by the Company in accordance with their respective
terms in all material respects, subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. The Company
is not in material default under any of such Contracts. To the Company's
knowledge, no other party to any of the Contracts is in material default
thereunder.
(D) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations of
the Company to officers, directors, stockholders, or employees of the Company
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable expenses incurred on behalf of the Company and (c) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company).
3.8 CHANGES. Since the Statement Date, other than pursuant to the
Loan Documents, there has not been to the Company's knowledge:
(A) Any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had a material adverse effect on such
assets, liabilities, financial condition or operations of the Company;
(B) Any resignation or termination of any officer, key
employee or group of employees of the Company;
(C) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(D) Any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(E) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(F) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(G) Any labor organization activity related to the Company;
6.
(H) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(I) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(J) Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company;
(K) Any other event or condition of any character that,
either individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition or operations of the Company;
or
(L) Any arrangement or commitment by the Company to do any
of the acts described in subsection (a) through (k) above.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, including the properties
and assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of business. The Company
is in compliance with all material terms of each lease to which it is a party or
is otherwise bound.
3.10 INTELLECTUAL PROPERTY.
(A) To the best of its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing proprietary rights, nor is the Company bound
by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products.
(B) The Company has not received any communications alleging
that the Company has violated or, by conducting its business as presently
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity.
(C) The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other
7.
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
that would conflict with the Company's business as proposed to be conducted.
Each employee, officer and consultant of the Company has executed a proprietary
information and inventions agreement in the form(s) as delivered to Purchasers.
No employee, officer or consultant of the Company has excluded works or
inventions made prior to his or her employment with the Company from his or her
assignment of inventions pursuant to such employee, officer or consultant's
proprietary information and inventions agreement and, to the Company's
knowledge, none of its present or former employees, officers or consultants are
in violation thereof.
(D) The Company is not subject to any "open source" or
"copyleft" obligations or otherwise required to make any public disclosure or
general availability of source code either used or developed by the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its charter documents, each as amended, or
of any provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order or writ other than any such violation that would not have a
material adverse effect on the Company. The execution, delivery, and performance
of and compliance with the Loan Documents, and the issuance of the Notes
pursuant hereto and the consummation of the transactions contemplated hereby or
thereby, will not, with or without the passage of time or giving of notice,
result in any such material violation, or be in conflict with or constitute a
material default under any such term, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
3.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened in
writing against the Company that questions the validity of the Loan Documents,
or the right of the Company to enter into any of such agreements, or to
consummate the transactions contemplated hereby or thereby, or which would
reasonably be expected to result, either individually or in the aggregate, in
any material adverse change in the assets, condition, affairs or prospects of
the Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
any of the foregoing. The Company is not a party or, to its knowledge, subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.13 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing, have been paid or will be paid prior to the time they become
delinquent. The Company has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for. The Company has not elected pursuant to the
Internal Revenue Code of 1986, as
8.
amended (the "CODE") to be treated as a Subchapter "S" corporation or a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) thereof.
The Company has withheld and paid all taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
3.14 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. The
Company is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement, nor has the Company ever maintained or contributed to any employee
benefit plan subject to the Employee Retirement Income Security Act of 1974
("ERISA"). The Company has never contributed to any "multi-employer plan" as
such term is defined in ERISA. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company; and to the Company's knowledge
the continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer, key employee or group of employees intends to
terminate his, her or their employment with the Company, nor does the Company
have a present intention to terminate the employment of any officer, key
employee or group of employees. There are no actions pending, or to the
Company's knowledge, threatened, by any former or current employee concerning
such person's employment by the Company.
3.15 REGISTRATION RIGHTS AND VOTING RIGHTS. Except as required
pursuant to the Investor Rights Agreement, the Company is presently not under
any obligation, and has not granted any rights, to register (as defined in
Section 1.1 of the Investor Rights Agreement) any of the Company's presently
outstanding securities or any of its securities that may hereafter be issued. To
the Company's knowledge, except as provided for in the Voting Agreement, no
stockholder of the Company has entered into any agreement with respect to the
voting of equity securities of the Company.
3.16 COMPLIANCE WITH LAWS; PERMITS. To the best of its knowledge,
the Company is not in violation of any applicable statute, rule, regulation,
order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of the Loan Documents or the issuance of the Notes, except such as have
been duly and validly obtained or filed, or with respect to any filings that
must be made after the Closing, as will be filed in a timely manner. The Company
has all franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being
9.
conducted by it, the lack of which could materially and adversely affect the
business, properties or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted.
3.17 OFFERING VALID. Assuming the accuracy of the representations
and warranties of Purchasers contained in Section 4.2 hereof, the issuance of
the Notes and the Conversion Securities will be exempt from the registration
requirements of the Securities Act, and will have been registered or qualified
(or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws.
3.18 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge,
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation.
3.19 FULL DISCLOSURE. The Company has provided Purchasers with all
information requested by the Purchasers in connection with their decision to
loan the Loan Amounts, including all information the Company believes is
reasonably necessary to make such investment decision. To the Company's
knowledge, neither this Agreement, the exhibits hereto, the Notes, nor any other
document delivered by the Company to Purchasers or their attorneys or agents in
connection herewith or therewith or with the transactions contemplated hereby or
thereby, contain any untrue statement of a material fact nor, to the Company's
knowledge, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.20 MINUTE BOOKS. The minute books of the Company heretofore made
available to Purchasers or their counsel for inspection contain a complete and
accurate summary of all meetings and other corporate actions taken by the
directors and stockholders of the Company.
3.21 INSURANCE. The Company has or will obtain promptly following
the Closing general commercial, product liability, fire and casualty insurance
policies with coverage customary for companies similarly situated to the
Company.
3.22 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Code Section 897(c)(2) and
any regulations promulgated thereunder.
3.23 SECTION 83(B) ELECTIONS. To the Company's knowledge, all
individuals who have purchased unvested shares of the Company's Common Stock
have timely filed elections under Section 83(b) of the Code and any analogous
provisions of applicable tax laws.
3.24 PRODUCT REGULATORY REVIEW. To the Company's knowledge, as to
each of the products of the Company, including, without limitation, products or
compounds currently under research and/or development by the Company, subject to
the jurisdiction of the United States Food and Drug Administration ("FDA") under
the Federal Food, Drug and Cosmetic Act and the regulations thereunder ("FDCA")
each such product, a "LIFE SCIENCE PRODUCT"), such Life Science Product is being
researched, developed, manufactured, tested, distributed and/or
10.
marketed in compliance in all material respects with all applicable requirements
under the FDCA and similar laws and regulations applicable to such Life Science
Product, including those relating to investigational use, premarket approval,
good manufacturing practices, labeling, advertising, record keeping, filing of
reports and security. To the Company's knowledge, the Company has not received
any notice or other communication from the FDA or any other federal, state or
foreign governmental entity (a) contesting the premarket approval of, the uses
of or the labeling and promotion of any Life Science Product or (b) otherwise
alleging any violation by the Company of any law, regulation or other legal
provision applicable to a Life Science Product. To the Company's knowledge,
neither the Company, nor any officer, employee or agent of the Company has made
an untrue statement of a material fact or fraudulent statement to the FDA or
other Federal, state or foreign governmental entity performing similar functions
or failed to disclose a material fact required to be disclosed to the FDA or
such other Federal, state or foreign governmental entity.
3.25 USE OF PROCEEDS. The Company shall use the cash proceeds from
the issuance of the Notes solely for working capital, capital expenses and
general corporate purposes and shall not be used to satisfy or repay any
indebtedness except as contemplated by the Loan Documents.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each Purchaser hereby represents and warrants to the Company,
severally and not jointly, as follows (provided that such representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority to execute and deliver this Agreement and to carry out the
provisions herein. All action on Purchaser's part required for the lawful
execution and delivery of this Agreement has been taken. Upon execution and
delivery, this Agreement will be a valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (b) as limited by
general principles of equity that restrict the availability of equitable
remedies.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Notes nor the Conversion Securities have been registered under the
Securities Act. Purchaser also understands that the Notes are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants as follows:
(A) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Notes and/or the Conversion Securities
are registered pursuant to the Securities Act, or an exemption from registration
is available. Purchaser understands that the Company has no present intention of
registering the
11.
Notes or the Conversion Securities. Purchaser also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Purchaser to
transfer all or any portion of the Securities under the circumstances, in the
amounts or at the times Purchaser might propose.
(B) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Notes and the Conversion Securities issuable upon conversion of the Notes for
Purchaser's own account for investment only, and not with a view towards their
distribution.
(C) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in the Loan Documents. Further, Purchaser is aware of
no publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(D) QUALIFIED INSTITUTIONAL BUYER OR INSTITUTIONAL
ACCREDITED INVESTOR. Canaan Equity III L.P., Caduceus Private Investments II,
L.P., Caduceus Private Investments II (QP), L.P., UBS Juniper Crossover Fund,
LLC and Bay Area Equity Fund I, L.P. each represents, severally and not jointly,
that it is a "qualified institutional buyer" as defined in Rule 144A promulgated
under the Securities Act. Each such other Purchaser represents, severally and
not jointly, that it is an institutional accredited investor as defined in Rule
501(a)(1),(2),(3),(7) or (8) of Regulation D promulgated under the Securities
Act.
(E) COMPANY INFORMATION. Purchaser has received and read the
Financial Statements and has had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(F) RULE 144. Purchaser acknowledges and agrees that the
Notes, and, if issued, the Conversion Securities are "restricted securities" as
defined in Rule 144 promulgated under the Securities Act as in effect from time
to time and must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions.
(G) RESIDENCE. If Purchaser is an individual, then Purchaser
resides in the state or province identified in the address of Purchaser set
forth on EXHIBIT A; if Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of Purchaser in
which its investment decision was made is located at the address or addresses of
Purchaser set forth on EXHIBIT A.
(H) FOREIGN INVESTORS. If Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Code), Purchaser hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to
12.
subscribe for the Securities or any use of the Loan Documents, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
government or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Purchaser's
subscription and payment for and continued beneficial ownership of the
Securities will not violate any applicable securities or other laws of
Purchaser's jurisdiction.
4.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees
that the Notes and, if issued, the Conversion Securities are subject to
restrictions on transfer as set forth in the Investor Rights Agreement.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligations under Section 2 of this Agreement, at or prior to the
Closing Date, of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Company in Section 3 hereof shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as if they had been made on and as of the Closing Date.
(B) PERFORMANCE OF OBLIGATIONS. The Company shall have
performed all obligations and conditions herein required to be performed or
observed by it on or prior to the Closing and shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Loan Documents (except as may be properly
obtained subsequent to the Closing).
(C) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company as
Purchasers shall reasonably request.
(D) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchasers a Compliance Certificate, executed by the President of the
Company, dated the Closing Date, to the effect that the conditions specified in
subsections (a) and (b) of this Section 5.1 have been satisfied.
(E) SECRETARY'S CERTIFICATE. Purchasers shall have received
from the Company's Secretary, a certificate having attached thereto (i) the
Company's Certificate of Incorporation as in effect at the time of the Closing,
(ii) the Company's Bylaws as in effect at the time of the Closing, (iii)
resolutions approved by the Board of Directors authorizing the transactions
contemplated hereby, and (iv) good standing certificates (including tax good
standing) with respect to the Company from the applicable authority(ies) in
Delaware and any other jurisdiction in which the Company is qualified to do
business, dated a recent date before the Closing.
13.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligations under Section 2 of this Agreement are subject to the satisfaction or
waiver, on or prior to the Closing Date, of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties in Section 4 made by those Purchasers acquiring Shares hereof
shall be true and correct in all material respects as of the Closing Date, with
the same force and effect as if they had been made on and as of the Closing
Date.
(B) PERFORMANCE OF OBLIGATIONS. Such Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by such Purchasers on or before the Closing.
(C) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Loan Documents (except for
such as may be properly obtained subsequent to the Closing).
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California in all respects as such laws
are applied to agreements among California residents entered into and performed
entirely within California. The parties agree that any action brought by either
party under or in relation to this Agreement, including without limitation to
interpret or enforce any provision of this Agreement, shall be brought in, and
each party agrees to and does hereby submit to the jurisdiction and venue of,
any state or federal court located in the County of San Mateo, California.
6.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon
the parties hereto and their respective successors, assigns, heirs, executors
and administrators. The Company may not assign, hypothecate or transfer any of
its rights, duties or obligations under the Loan Documents.
6.4 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules
hereto, and the Notes constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any oral or written
representations, warranties, covenants and agreements except as specifically set
forth herein and therein. Each party expressly represents and warrants that it
is not relying on any oral or written representations, warranties, covenants or
agreements outside of the Loan Documents.
14.
6.5 SEVERABILITY. In the event one or more of the provisions of
this Agreement or any other Loan Document should, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement or any
other Loan Document, and this Agreement and any other Loan Document shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
6.6 AMENDMENT AND WAIVER. This Agreement and the Notes may be
amended or modified only upon the written consent of the Company and Purchasers
holding Notes equal to or greater than fifty percent (50%) of the outstanding
principal amount of all outstanding Notes issued under this Agreement (the
"MAJORITY HOLDERS"). PURCHASER ACKNOWLEDGES THAT THIS AGREEMENT AND THE NOTES
MAY BE AMENDED WITH THE CONSENT OF THE "MAJORITY HOLDERS," AND PURCHASER'S
RIGHTS HEREUNDER AND THEREUNDER MAY BE AMENDED OR WAIVED WITHOUT PURCHASER'S
CONSENT.
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under the Loan Documents, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any party's part of any breach, default or noncompliance under this Agreement,
or any waiver on such party's part of any provisions or conditions of the
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
6.8 WAIVER OF CONFLICTS. Each party to this Agreement acknowledges
that ▇▇▇▇▇▇ Godward LLP ("▇▇▇▇▇▇ GODWARD"), outside general counsel to the
Company, has in the past performed and is or may now or in the future represent
one or more Purchasers or their affiliates in matters unrelated to the
transactions contemplated by this Agreement (the "BRIDGE FINANCING"), including
representation of such Purchasers or their affiliates in matters of a similar
nature to the Bridge Financing. The applicable rules of professional conduct
require that ▇▇▇▇▇▇ Godward inform the parties hereunder of this representation
and obtain their consent. Cooley has served as outside general counsel to the
Company and has negotiated the terms of the Bridge Financing solely on behalf of
the Company. The Company and each Purchaser hereby (a) acknowledge that they
have had an opportunity to ask for and have obtained information relevant to
such representation, including disclosure of the reasonably foreseeable adverse
consequences of such representation; (b) acknowledge that with respect to the
Bridge Financing, Cooley Godward has represented solely the Company, and not any
Purchaser or any stockholder, director or employee of the Company or any
Purchaser; and (c) gives its informed consent to ▇▇▇▇▇▇ Godward's representation
of the Company in the Bridge Financing.
6.9 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed electronic mail, telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, or (c) one (1) day after deposit with a
15.
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to Purchaser at the
address set forth on EXHIBIT A attached hereto or at such other address or
electronic mail address as the Company or Purchaser may designate by ten (10)
days advance written notice to the other parties hereto.
6.10 EXPENSES. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement and the transactions contemplated herein; provided, however, that
the Company shall, at the Closing, reimburse the reasonable fees of and expenses
of one special counsel to the Purchasers, not to exceed $15,000.
6.11 ATTORNEYS' FEES. In the event that any suit or action is
instituted under or in relation to this Agreement, including without limitation
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.12 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
6.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.14 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.14 being untrue.
6.15 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm, or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Notes and Conversion Securities.
6.16 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
6.17 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
16.
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN
EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH
CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING AVAILABLE.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17.
IN WITNESS WHEREOF, the parties hereto have executed this NOTE PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
PENINSULA PHARMACEUTICALS, INC. DOMAIN PARTNERS V, L.P.
By: One ▇▇▇▇▇▇ Square Associates V, L.L.C.
Its: General Partner
By: By:
------------------------------------- -------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President and Chief Executive Officer Managing Member
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
CANAAN EQUITY III L.P.
By: Canaan Equity Partners III LLC
By:
------------------------------
Member/Manager:
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
EGS PRIVATE HEALTHCARE PARTNERSHIP II, L.P.
By: EGS Private Healthcare Investments,
L.L.C.,
Its: General Partner
By:
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Member of Board of Managers
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
CADUCEUS PRIVATE INVESTMENTS II, L.P.
By: OrbiMed Capital II LLC
Its: General Partner
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
CADUCEUS PRIVATE INVESTMENTS II (QP), L.P.
By: OrbiMed Capital II LLC
Its: General Partner
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
UBS JUNIPER CROSSOVER FUND, LLC
By: OrbiMed Advisors LLC
Member of UBS Juniper Management, L.L.C.,
Managing Member
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
BAY AREA EQUITY FUND I, L.P.
By: Bay Area Equity Fund Managers I, L.L.C.,
its General Partner
By: H&Q Venture Management L.L.C.,
its Managing Member
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
A. M. ▇▇▇▇▇▇ LIFE SCIENCE VENTURES II, L.P.
By: AMP&A Management II, LLC
Its: General Partner
By:
---------------------------------------
Ford S. Worthy
Partner
NOTE PURCHASE AGREEMENT
SIGNATURE PAGE
EXHIBIT A
SCHEDULE OF PURCHASERS
COMMITMENT PRO RATA
NAME AND ADDRESS AMOUNT PERCENTAGE
--------------------------------------------- --------------- ------------
Domain Partners V, L.P. $4,000,000.00 33.33%
c/o Domain Associates, L.L.C.
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Canaan Equity III L.P. $3,300,000.00 27.50%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
EGS Private Healthcare Partnership II, L.P. $2,000,000.00 16.67%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Caduceus Private Investments II, L.P. $ 667,389.15 5.56%
Caduceus Private Investments II (QP), L.P. $ 249,884.18 2.08%
UBS Juniper Crossover Fund, LLC $ 82,726.67 0.69%
OrbiMed Advisors LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Bay Area Equity Fund I, LP $1,000,000.00 8.33%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A. M. ▇▇▇▇▇▇ Life Science Ventures II, L.P. $700,000.00 5.84%
Emerging Technologies Center
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P.O. Box 110287
Research ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL: $12,000,000.00 100.00%
============== ============
EXHIBIT B
FORM OF CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN
COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
CONVERTIBLE PROMISSORY NOTE
$__________ ____________, 200_
ALAMEDA, CALIFORNIA
For value received PENINSULA PHARMACEUTICALS, INC., a Delaware corporation
("PAYOR" or the "COMPANY") promises to pay to __________ or its assigns
("HOLDER") the principal sum of $__________ with simple interest on the
outstanding principal amount at the rate of 8% per annum. Interest shall
commence with the date hereof and shall continue on the outstanding principal
until paid in full or converted. Interest shall be computed on the basis of a
year of 365 days for the actual number of days elapsed.
1. This note (the "NOTE") is issued as part of a series of similar
notes (collectively, the "NOTES") to be issued pursuant to the terms of that
certain Note Purchase Agreement (the "AGREEMENT") dated as of December 23, 2004
to the persons or entities listed on the Schedule of Purchasers thereof
(collectively, the "HOLDERS").
2. All payments of interest and principal under this Note shall be in
lawful money of the United States of America at such place as Holder may from
time to time designate in writing to the Company. All payments shall be applied
first to accrued interest, and thereafter to principal.
3. The entire outstanding principal balance of this Note plus all
accrued interest thereon, if any, shall be due and payable in full immediately
upon the earlier of the following (the "MATURITY DATE"): (i) five (5) years from
the date of this Note, or (ii) any Event of Default (as defined in Section 9
below).
4. At any time prior to the Maturity Date, the principal balance and
accrued and unpaid interest of this Note shall automatically convert in whole
without any further action by the Holders as follows:
(A) upon the closing of the first firmly underwritten primary
offering of the Company's common stock (the "COMMON STOCK") to the public (the
"IPO"), into shares of Common Stock at a conversion price equal to eighty
percent (80%) of the price per share of the Common Stock issued in the IPO; or
(B) upon the closing of the Company's next round of private equity
financing with total proceeds to the Company of not less than $10,000,000 (the
"FINANCING"), into shares of the Company's preferred stock (the "PREFERRED
STOCK") issued in the Financing at a conversion price equal to eighty percent
(80%) of the price per share of the Preferred Stock issued in the Financing and
on the same terms and conditions extended to all other investors in the
Financing.
5. At any time prior to the Maturity Date, the principal balance and
accrued and unpaid interest of this Note may be converted, at the option of the
Holder, as follows:
(A) upon the closing of the Company's next round of private equity
financing with total proceeds to the Company of less than $10,000,000 (the
"ALTERNATE FINANCING"), into shares of Preferred Stock issued in the Alternate
Financing at a conversion price equal to eighty percent (80%) of the price per
share of the Preferred Stock issued in the Alternate Financing and on the same
terms and conditions extended to all other investors in the Alternate Financing;
or
(B) in the event of a corporate transaction that would trigger the
liquidation rights or asset transfer or acquisition rights in the Company's then
current Certificate of Incorporation (a "CORPORATE TRANSACTION"), into shares of
the Company's Series C Preferred Stock at a conversion price equal to $5.61 per
share (as adjusted for stock splits, stock dividends, recapitalizations,
combinations or the like); provided, however, if the Company enters into a
definitive agreement or a non-binding letter of intent on or before March 1,
2005 regarding a Corporate Transaction, this Note may not be converted and shall
be repaid immediately following the closing of such Corporate Transaction in an
amount equal to the sum of (a) one hundred twenty-five percent (125%) of the
principal amount of the Note and (b) all accrued and unpaid interest under the
Note.
6. No fractional shares of Common Stock or Preferred Stock will be
issued upon conversion of this Note. In lieu of any fractional share to which
Holder would otherwise be entitled, Payor will pay to Holder in cash the amount
of the unconverted principal balance of this Note that would otherwise be
converted into such fractional share. Upon conversion of this Note pursuant to
Section 4 or Section 5 above, Holder shall surrender this Note, duly endorsed,
at the principal offices of Payor. At its expense, Payor will, as soon as
practicable thereafter, issue and deliver to Holder a certificate or
certificates for the number of shares to which Holder is entitled upon such
conversion, together with any other securities and property to which Holder is
entitled upon such conversion under the terms of this Note, including a check
payable to Holder for any cash amounts payable as described herein.
7. Unless this Note has been converted in accordance with the terms of
Section 4 or Section 5 above, or repaid in accordance with the terms of Section
5 above, the entire outstanding principal balance and all unpaid accrued
interest shall become fully due and payable on the Maturity Date.
8. Payor may not prepay this Note prior to the Maturity Date.
9. If there shall be any Event of Default hereunder, at the option and
upon the declaration of Holder of this Note and upon written notice to Payor
(which election and notice shall not be required in the case of an Event of
Default under Section 9(b) or 9(c)), this Note
shall accelerate and all principal and unpaid accrued interest shall become due
and payable. The occurrence of any one or more of the following shall constitute
an Event of Default:
A. Payor fails to pay timely any of the principal amount due
under this Note on the date the same becomes due and payable or any accrued
interest or other amounts due under this Note on the date the same becomes due
and payable;
B. Payor files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any
assignment for the benefit of creditors or takes any corporate action in
furtherance of any of the foregoing; or
C. An involuntary petition is filed against Payor (unless such
petition is dismissed or discharged within sixty (60) days) under any bankruptcy
statute now or hereafter in effect, or a custodian, receiver, trustee, assignee
for the benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property of Payor.
10. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
11. This Note shall be governed by construed and under the laws of the
State of California, as applied to agreements among California residents, made
and to be performed entirely within the State of California, without giving
effect to conflicts of laws principles.
12. Any term of this Note may be amended or waived with the written
consent of Payor and the Holders of a majority in interest of the outstanding
principal amount of all Notes, as provided in the Agreement. Holder acknowledges
that because this Note may be amended with the consent of such majority in
interest of the outstanding principal amount of the Notes, Holder's rights
hereunder (including, without limitation, Holder's right to receive principal
and interest as due) may be amended or waived without Holder's consent.
13. All notices or other communications required or given hereunder
shall be in writing and shall be deemed effectively given when presented
personally or on the date of receipt (or refusal of delivery) if sent by courier
service or U.S. Mail (certified or registered, postage prepaid, return receipt
requested) to the parties at the addresses given below or such other addresses
as the parties may hereafter designate in writing. The date shown on the
courier's confirmation of delivery or return receipt shall be conclusive as to
the date of receipt.
PAYOR: Peninsula Pharmaceuticals, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
HOLDER:
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Attn:
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14. This Note may be transferred only upon its surrender to the Company
for registration of transfer, duly endorsed, or accompanied by a duly executed
written instrument of
transfer in form satisfactory to the Company. Thereupon, this Note shall be
reissued to, and registered in the name of, the transferee, or a new Note for
like principal amount and interest shall be issued to, and registered in the
name of, the transferee. Interest and principal shall be paid solely to the
registered holder of this Note. Such payment shall constitute full discharge of
the Company's obligation to pay such interest and principal.
PENINSULA PHARMACEUTICALS, INC.
By:
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer