Exhibit 10.14
SENIOR SECURED CONVERTIBLE
ACQUISITION NOTE
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U.S.$13,000,000
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Dated: December 23,
2005
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FOR VALUE RECEIVED, the undersigned,
TARGANTA THERAPEUTICS CORPORATION, a Delaware corporation (together
with its permitted successors and assigns, the “
Purchaser ”), hereby executes this Senior Secured
Convertible Acquisition Note (the “ Note ”) and
unconditionally promises to pay to the order of INTERMUNE, INC., a
Delaware corporation (together with its permitted successors and
assigns, the “ Holder ”), the principal sum of
THIRTEEN MILLION U.S. DOLLARS (U.S. $13,000,000), subject to
adjustment as set forth herein, on the Maturity Date (as defined
below), unless earlier paid or converted in accordance with the
terms hereof and as specified in Section 2.01 of that certain
Note Issuance Agreement dated as of the date hereof (the “
Note Issuance Agreement ”) by and between Purchaser
and Holder. Capitalized terms used herein and not otherwise defined
shall have the meanings they were assigned to have in the Note
Issuance Agreement.
1. Interest; Default Interest;
Maturity; Events of Default .
(a) Except as set forth below,
interest shall not accrue on the principal amount outstanding under
this Note on any unpaid principal amount outstanding hereunder. In
the event that any amount of principal, or any other amount payable
hereunder, is not paid in full when due (whether on the Maturity
Date, by acceleration or otherwise), Purchaser agrees to pay
interest on such unpaid principal or other amount, from the date
such amount becomes due until the date such amount is paid in full,
payable on demand, at a rate per annum equal at all times to the
lesser of (i) eight percent (8%) per annum and
(ii) the highest lawful rate. All computations of interest
shall be made on the basis of a year of 365 or 366 days, as the
case may be, for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such
interest is payable.
(b) Anything herein to the contrary
notwithstanding, if during any period for which interest in
computed hereunder, the amount of interest computed on the basis
provided for in this Note, together with all fees, charges and
other payments that are treated as interest under applicable law,
as provided for herein or in any other Acquisition Document, would
exceed the amount of such interest computed on the basis of the
Maximum Rate, Purchaser shall not be obligated to pay, and the
Holder shall not be entitled to charge, collect, receive, reserve
or take, interest in excess of the Maximum Rate, and during any
such period the interest payable hereunder shall be computed on the
basis of the Maximum Rate.
(c) Unless the outstanding principal
amount has already been converted into New Equity Shares,
Subsequent Equity Shares or Series B Preferred Stock of Purchaser
pursuant to Section 9, or paid in full pursuant to
Section 10, or earlier due and payable upon acceleration of
this Note after an Event of Default, Purchaser shall pay the
outstanding principal amount of this Note on the fifth anniversary
of the issuance date of this Note (the “ Maturity Date
”).
(d) Upon the occurrence of an Event
of Default, the principal amount then outstanding under this Note,
together with all accrued interest thereon, if any, will be due and
payable, as set forth in the Note Issuance Agreement.
2. Payment . All payments
hereunder shall be made in lawful money of the United States of
America and in same day or immediately available funds, to Holder
at the address specified in the Note Issuance Agreement, or at such
other place or to such account as the Holder from time to time
shall designate in a written notice to Purchaser sent to Purchaser
not fewer than 30 days before the date any payment is due to Holder
hereunder.
3. Prepayment . Purchaser may
not prepay the outstanding amount hereof in whole or in part at any
time.
4. Expenses . Purchaser
agrees to pay on demand all the losses, costs and expenses
(including, without limitation, reasonable attorneys’ fees
and disbursements) which the Holder incurs in connection with
enforcement or attempted enforcement of this Note, whether by
judicial proceedings or otherwise. Such losses, costs and expenses
include, without limitation, those incurred in connection with any
workout or refinancing, or any bankruptcy, insolvency, liquidation
or similar proceedings.
5. Waiver of Presentment, etc
.
(a) Purchaser hereby waives
diligence, demand, presentment, protest or further notice of any
kind. Purchaser agrees to make all payments under this Note without
setoff or deduction and regardless of any counterclaim or defense
(except for such set-off payments expressly permitted pursuant to
the Asset Purchase Agreement).
(b) No single or partial exercise of
any power under this Note shall preclude any other or further
exercise of such power or exercise of any other power. No delay or
omission on the part of the Holder in exercising any right under
this Note shall operate as a waiver of such right or any other
right hereunder.
6. Assignment . Purchaser may
assign or transfer this Note in accordance with Section 7.08
of the Note Issuance Agreement. This Note shall be binding on
Purchaser and its permitted successors and assigns (as determined
pursuant to Section 7.08 of the Note Issuance Agreement), and
shall be binding upon and inure to the benefit of the Holder any
future holder of this Note and their respective permitted
successors and assigns (as determined pursuant to Section 7.08
of the Note Issuance Agreement).
7. Security Interest . This
Note is secured by the Collateral pursuant to and subject to the
Collateral Documents executed in connection herewith. This Security
Interest will terminate as provided in the Note Issuance Agreement
and the Collateral Documents.
8. Adjustments in Principal
Amount of Note .
(a) On the date Purchaser completes
the Preferred Equity Financing, the principal amount of this Note
shall automatically decrease by Three Million U.S. Dollars
(U.S.$3,000,000) to Ten Million U.S. Dollars (U.S.$10,000,000);
provided , that if Purchaser
completes the Preferred Equity Financing after
the occurrence of either the First Milestone (as defined in the
Asset Purchase Agreement) or the Second Milestone (but not both),
then the principal amount of this Note shall instead automatically
decrease by One Million Five Hundred Thousand U.S. Dollars
(U.S.$1,500,000); provided further , that if
Purchaser completes the Preferred Equity Financing after the
occurrence of both the First Milestone and the Second Milestone (as
defined in the Asset Purchase Agreement), then there shall be no
decrease in the principal amount of this Note as a result of the
completion of the Preferred Equity Financing.
(b) Subject to the satisfaction of
the conditions set forth in Section 3.02 of the Note Issuance
Agreement, upon the occurrence of the First Milestone, the
principal amount of this Note shall automatically increase by Six
Million U.S. Dollars (U.S.$6,000,000) without any further action by
Holder; provided that, if Purchaser has completed the
Preferred Equity Financing at the time such First Milestone occurs,
then this Note shall automatically increase by Seven Million Five
Hundred Thousand U.S. Dollars (U.S.$7,500,000).
(c) Subject to the satisfaction of
the conditions set forth in Section 3.02 of the Note Issuance
Agreement, upon the occurrence of the Second Milestone, the
principal amount of this Note shall automatically increase by Six
Million U.S. Dollars (U.S.$6,000,000) without any further action by
Holder; provided that, if Purchaser has completed the
Preferred Equity Financing at the time such Second Milestone
occurs, then this Note shall automatically increase by Seven
Million Five Hundred Thousand U.S. Dollars
(U.S.$7,500,000).
(d) If Purchaser is unable to
satisfy any of the conditions precedent set forth in
Section 3.02 of the Note Issuance Agreement on the date of the
First Milestone or the Second Milestone, then unless such condition
is waived in writing by Holder, Purchaser shall be required to pay
to Holder the Acquisition Installment Payment due on such date, as
applicable, in cash.
(e) Upon occurrence of any of the
events set forth in Sections 8(a), (b) or (c) above, the
Purchaser shall provide a certificate, executed by its chief
financial officer, certifying as to the principal balance of the
Note that is then outstanding. If the Holder shall disagree with
the principal balance of the Note set forth in the certificate, it
shall notify Purchaser of such disagreement in writing, setting
forth in reasonable detail the particulars of such disagreement,
within fifteen (15) calendar days after its receipt of the
certificate. In the event that the Holder does not provide such a
notice of disagreement to Purchaser within such 15-day period, the
Holder shall be deemed
