EXHIBIT 10.42

LOAN AGREEMENT

(CONSULTANT LOAN)

 

This Loan Agreement (the “Agreement”) is entered into this 1st day of May, 2002
by and between TULARIK INC. (the “Company”) and STEVEN L. MCKNIGHT, PH.D.
(“Consultant”).

 

WHEREAS, the Company has agreed to provide Consultant with the loan in exchange
for Consultant’s future consulting services to the Company over a three year
period and other valuable consideration;

 

NOW THEREFORE, the parties hereto agree as follows:

 

1.             Loan.  The Company shall loan Consultant a total of Two Hundred
Thousand Dollars ($200,000.00) while he is actively providing consulting
services to the Company (“Loan”). 

 

2.             Interest.  The Loan shall bear interest at a rate of three and
twenty-one hundredths percent (3.21%) per annum.

 

3.             Promissory Note.  The Loan shall be made pursuant to a promissory
note in the form attached hereto as Exhibit A (the “Note”).  Consultant shall
execute the Note concurrently with the execution of this Agreement.  The Loan
and all repayments of principal with respect to the Loan shall be evidenced by
notations made by the Company on the Note; provided, however, that the failure
by the Company to make such notations shall not limit or otherwise affect the
obligations of Consultant with respect to the repayments of principal or
payments of interest on the Loan.

 

4.             Taxes.  All taxes resulting from this Agreement are to be the
sole responsibility of Consultant, and Consultant agrees to pay to the Company
in cash or check an amount equal to any withholding obligation imposed on the
Company by reason of this Agreement.

 

5.             Repayment of Loan.  All principal and interest on the Loan shall
become due and payable immediately upon the occurrence of any one or more of the
following:

 

(a)           Expiration Date.  May 1, 2005; or

 

(b)           Termination of Consultancy.  The thirtieth (30th) day following
the date of termination of the Consultant’s consulting services; or

 

(c)           Insolvency.  In the event of the insolvency of Consultant,
including but not limited to a bankruptcy or insolvency proceeding having been
instituted by or against him, or a receiver is appointed for his property, or if
he makes an assignment for the benefit of creditors.

 

6.             Forgiveness of Loan.  Provided that no default under this
Agreement or the Note has occurred and is continuing, principal (but not the
accrued interest) on the Loan will be forgiven at a rate of:  (a) thirty percent
(30%) of the original principal amount of the Loan on

 

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May 1, 2003; (b) thirty five percent (35%) of the original principal amount of
the Loan on May 1, 2004; and (c) thirty five percent (35%) of the original
principal amount of the Loan on May 1, 2005; if (i) the Loan has not become due
and payable pursuant to Section 5(c) above and (ii) Consultant has provided
continuous consulting services to the Company since the date first above written
through the date of such forgiveness.

 

7.             Prepayment.  Consultant may prepay the unpaid principal in whole
or in part, without penalty, at any time, upon the payment of all unpaid
interest accrued to the date of such prepayment.

 

8.             Non-Transferable.  The right of Consultant to request and receive
the Loan hereunder, as well as the benefits of the interest arrangement under
this Agreement, shall not be assignable or otherwise transferable by Consultant.

 

9.             General Provisions.

 

(a)           This Agreement shall be governed by the laws of the State of
California applicable to contracts made and performed in such state, without
regard to principles of conflicts of laws.

 

(b)           This Agreement and its Exhibits contains the entire agreement
between Consultant and the Company, and is the complete, final and exclusive
embodiment of their agreement with regard to this subject matter.  Consultant
and the Company each acknowledge and represent that this Agreement is entered
without reliance on any promise or representation other than those expressly
contained herein and that this Agreement cannot be modified except in a writing
signed by both parties.

 

(c)           Except as otherwise specified herein, any notice, demand or
request required or permitted to be given by either the Company or Consultant
pursuant to the terms of this Agreement shall be in writing and shall be deemed
given when delivered personally or deposited in the U.S. Mail, First Class with
postage prepaid, and addressed to the Company at its then current principal
office and to Consultant at the address listed for him In the Company’s records.

 

(d)           Either party’s failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement.  The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party’s right
to assert all other legal remedies available to it under the circumstances.

 

(e)           Consultant agrees upon request to execute any further documents or
instruments necessary or desirable to carry out the purpose or intent of this
Agreement. 

 

(f)            In the event of any litigation concerning this Agreement, the
prevailing party

 

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shall be entitled to a reasonable sum for attorneys’ fees, costs and litigation
expenses, whether or not such action is prosecuted to judgment.  “Prevailing
Party” includes without limitation a party who agrees to dismiss an action upon
payment by the other party of sums allegedly due or performance of the covenants
allegedly breached, or who obtains substantially the relief sought by that
party.  In the event that the Company is the prevailing Party, the Company shall
also be entitled to reasonable costs associated with the collection of the
Loan. 

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first set forth above.

 

 

TULARIK INC.

 

CONSULTANT

a Delaware corporation

 

 

 

 

By:

/s/  William J. Rieflin

 

/s/  Steven L. McKnight

 

Steven L. McKnight, Ph.D.

Title:

 EVP

 

 

 

Address:

Two Corporate Drive

Address:

UTSW

 

South San Francisco, CA  94080

 

Room L3.124

 

 

 

Dallas, TX  75390-9152

 

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EXHIBIT A

 

PROMISSORY NOTE

(CONSULTANT LOAN)

 

$200,000

 

South San Francisco, California

 

 

May 1, 2002

 

For value received, I promise to pay to Tularik Inc., a Delaware corporation
(the “Company”), at its principal office at Two Corporate Drive, South San
Francisco, California 94080, or at such other place as the Company shall
designate in writing, the aggregate principal amount of all advances made
hereunder as set forth on Schedule A attached hereto and incorporated herein by
reference, as the same may from time to time be amended, together with interest
thereon at the rate of three and twenty-one hundredths percent (3.21%) per
annum, payable at the times and in the manner set forth in that certain Loan
Agreement (Consultant Loan) dated as of May 1, 2002 by and between the
undersigned and the Company, the terms of which are incorporated herein by
reference.  The undersigned hereby authorizes the holder of this Note to note on
Schedule A all advances made by the holder hereunder, which notations shall, in
the absence of manifest error, be conclusive; provided, however, that the
failure to make a notation or the inaccuracy of the notation shall not limit or
otherwise affect the obligations of Borrower under this Note.

 

Principal and interest are payable in lawful money of the United States of
America.  THE PRIVILEGE IS RESERVED TO PREPAY ANY PORTION OF THIS NOTE AT ANY
TIME WITHOUT PENALTY, UPON THE PAYMENT OF ALL UNPAID INTEREST ACCRUED ON THE
ENTIRE OUTSTANDING LOAN BALANCE.  All payments under this Note shall be credited
first to accrued interest and then to principal.

 

I hereby waive presentment for payment, protest, notice of protest and notice of
non-payment of this Note.

 

The undersigned hereby represents and agrees that the amounts due under this
Note are not consumer debt and are not incurred primarily for personal, family
or household purposes, but are for business and commercial purposes only. 

 

This Note shall be governed by, and construed and enforced in accordance with,
the laws of the State of California, excluding conflict of laws principles.

 

 

/s/ Steven L. McKnight

 

 

Steven L. McKnight, Ph.D.

 

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Schedule A

 

TRANSACTIONS ON NOTE

 

Date

 

Advances

 

Interest
Paid To

 

Interest
Paid

 

Payments

 

Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

5/6/02

 

$

200,000

 

 

 

 

 

 

 

$

200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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