[*] = 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 10.40

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (as the same may from time to time be amended,
modified, supplemented or restated, this “Agreement”) dated as of October 19,
2015 (the “Effective Date”) among OXFORD FINANCE LLC, a Delaware limited
liability company with an office located at 133 North Fairfax Street,
Alexandria, Virginia 22314 (“Oxford”), as collateral agent (in such capacity,
“Collateral Agent”), the Lenders listed on Schedule 1.1 hereof or otherwise a
party hereto from time to time including Oxford in its capacity as a Lender and
SILICON VALLEY BANK, a California corporation with an office located at 3003
Tasman Drive, Santa Clara, CA 95054 (“Bank” or “SVB”) (each a “Lender” and
collectively, the “Lenders”), and CYTOKINETICS, INCORPORATED, a Delaware
corporation with offices located at 280 East Grand Avenue, South San Francisco,
CA 94080 (“Borrower”), provides the terms on which the Lenders shall lend to
Borrower and Borrower shall repay the Lenders. The parties agree as follows:

 

1. ACCOUNTING AND OTHER TERMS

1.1 Accounting terms not defined in this Agreement shall be construed in
accordance with GAAP. Calculations and determinations must be made in accordance
with GAAP. Capitalized terms not otherwise defined in this Agreement shall have
the meanings set forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein. All references to “Dollars”
or “$” are United States Dollars, unless otherwise noted.

 

2. LOANS AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay each Lender,
the outstanding principal amount of all Term Loans advanced to Borrower by such
Lender and accrued and unpaid interest thereon and any other amounts due
hereunder as and when due in accordance with this Agreement.

2.2 Term Loans.

(a) Availability. (i) Subject to the terms and conditions of this Agreement, the
Lenders agree, severally and not jointly, to make term loans to Borrower on the
Effective Date in an aggregate amount of Fifteen Million Dollars
($15,000,000.00) according to each Lender’s Term A Loan Commitment as set forth
on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a
“Term A Loan”, and collectively as the “Term A Loans”). After repayment, no Term
A Loan may be re-borrowed.

(ii) Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, during the Second Draw Period, to make term loans to
Borrower in an aggregate amount up to Fifteen Million Dollars ($15,000,000.00)
according to each Lender’s Term B Loan Commitment as set forth on Schedule 1.1
hereto (such term loans are hereinafter referred to singly as a “Term B Loan”,
and collectively as the “Term B Loans”). After repayment, no Term B Loan may be
re-borrowed.

(iii) Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, during the Third Draw Period, to make term loans to
Borrower in an aggregate amount up to Ten Million Dollars ($10,000,000.00)
according to each Lender’s Term C Loan Commitment as set forth on Schedule 1.1
hereto (such term loans are hereinafter referred to singly as a “Term C Loan”,
and collectively as the “Term C Loans”; each Term A Loan, Term B Loan or Term C
Loan is hereinafter referred to singly as a “Term Loan” and the Term A Loans,
the Term B Loans and the Term C Loans are hereinafter referred to collectively
as the “Term Loans”). After repayment, no Term C Loan may be re-borrowed.

 

1

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(b) Repayment. Borrower shall make monthly payments of interest only commencing
on the first (1st) Payment Date following the Funding Date of each Term Loan,
and continuing on the Payment Date of each successive month thereafter through
and including the Payment Date immediately preceding the Amortization Date.
Borrower agrees to pay, on the Funding Date of each Term Loan, any initial
partial monthly interest payment otherwise due for the period between the
Funding Date of such Term Loan and the first Payment Date thereof. Commencing on
the Amortization Date, and continuing on the Payment Date of each month
thereafter, Borrower shall make equal monthly payments of principal, together
with applicable interest, in arrears, to each Lender, as calculated by
Collateral Agent (which calculations shall be deemed correct absent manifest
error) based upon: (1) the amount of such Lender’s Term Loan, (2) the effective
rate of interest, as determined in Section 2.3(a), and (3) a repayment schedule
equal to thirty-six (36) months. All unpaid principal and accrued and unpaid
interest with respect to each Term Loan is due and payable in full on the
Maturity Date. Each Term Loan may only be prepaid in accordance with Sections
2.2(c) and 2.2(d).

(c) Mandatory Prepayments. If the Term Loans are accelerated following the
occurrence of an Event of Default, Borrower shall immediately pay to Lenders,
payable to each Lender in accordance with its respective Pro Rata Share, an
amount equal to the sum of: (i) all outstanding principal of the Term Loans plus
accrued and unpaid interest thereon through the prepayment date, (ii) the Final
Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due
and payable, including Lenders’ Expenses and interest at the Default Rate with
respect to any past due amounts. Notwithstanding (but without duplication with)
the foregoing, on the Maturity Date, if the Final Payment had not previously
been paid in full in connection with the prepayment of the Term Loans in full,
Borrower shall pay to Collateral Agent, for payment to each Lender in accordance
with its respective Pro Rata Share, the Final Payment in respect of the Term
Loan(s).

(d) Permitted Prepayment of Term Loans.

(i) Borrower shall have the option to prepay all, but not less than all, of the
Term Loans advanced by the Lenders under this Agreement, provided Borrower
(i) provides written notice to Collateral Agent of its election to prepay the
Term Loans at least ten (10) days prior to such prepayment, and (ii) pays to the
Lenders on the date of such prepayment, payable to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of (A) all
outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (B) the Final Payment, (C) the Prepayment Fee, plus
(D) all other Obligations that are due and payable, including Lenders’ Expenses
and interest at the Default Rate with respect to any past due amounts.

(ii) Notwithstanding anything herein to the contrary, Borrower shall also have
the option to prepay part of Term Loans advanced by the Lenders under this
Agreement, provided Borrower (i) provides written notice to Collateral Agent of
its election to prepay the Term Loans at least ten (10) days prior to such
prepayment, (ii) prepays such part of the Term Loans in a denomination that is a
whole number multiple of Four Million Dollars ($4,000,000.00), and (iii) pays to
the Lenders on the date of such prepayment, payable to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of (A) the
portion of outstanding principal of such Term Loans plus all accrued and unpaid
interest thereon through the prepayment date, (B) the applicable Final Payment,
and (C) all other Obligations that are then due and payable, including Lenders’
Expenses and interest at the Default Rate with respect to any past due amounts,
and (D) the applicable Prepayment Fee with respect to the portion of such Term
Loans being prepaid. For the purposes of clarity, any partial prepayment shall
be applied pro-rata to all outstanding amounts under each Term Loan, and shall
be applied pro-rata within each Term Loan tranche to reduce amortization
payments under Section 2.2(b) on a pro-rata basis.

2.3 Payment of Interest on the Credit Extensions.

(a) Interest Rate. Subject to Section 2.3(b), the principal amount outstanding
under the Term Loans shall accrue interest at a floating per annum rate (which
rate shall be floating for the duration of the applicable Term Loan) equal to
the Basic Rate, determined by Collateral Agent on the Funding Date of the
applicable Term Loan, which interest shall be payable monthly in arrears in
accordance with Sections 2.2(b) and 2.3(e). Interest shall accrue on each Term
Loan commencing on, and including, the Funding Date of such Term Loan, and shall
accrue on the principal amount outstanding under such Term Loan through and
including the day on which such Term Loan is paid in full.

 

[*] = 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

 

2

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(b) Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall accrue interest at a floating per annum
rate equal to the rate that is otherwise applicable thereto plus [*] (the
“Default Rate”). Payment or acceptance of the increased interest rate provided
in this Section 2.3(b) is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of Collateral Agent.

(c) 360-Day Year. Interest shall be computed on the basis of a three hundred
sixty (360) day year, and the actual number of days elapsed.

(d) Debit of Accounts. Collateral Agent and each Lender may debit (or ACH) any
deposit accounts, maintained by Borrower or any Loan Party, including the
Designated Deposit Account, for principal and interest payments or any other
amounts Borrower owes the Lenders under the Loan Documents when due. Any such
debits (or ACH activity) shall not constitute a set-off.

(e) Payments. Except as otherwise expressly provided herein, all payments by
Borrower under the Loan Documents shall be made to the respective Lender to
which such payments are owed, at such Lender’s office in immediately available
funds on the date specified herein. Unless otherwise provided, interest is
payable monthly on the Payment Date of each month. Payments of principal and/or
interest received after 12:00 noon Eastern time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue until paid.
All payments to be made by Borrower hereunder or under any other Loan Document,
including payments of principal and interest, and all fees, expenses,
indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available
funds.

2.4 Secured Promissory Notes. The Term Loans shall be evidenced by a Secured
Promissory Note or Notes in the form attached as Exhibit D hereto (each a
“Secured Promissory Note”), and shall be repayable as set forth in this
Agreement. Borrower irrevocably authorizes each Lender to make or cause to be
made, on or about the Funding Date of any Term Loan or at the time of receipt of
any payment of principal on such Lender’s Secured Promissory Note, an
appropriate notation on such Lender’s Secured Promissory Note Record reflecting
the making of such Term Loan or (as the case may be) the receipt of such
payment. The outstanding amount of each Term Loan set forth on such Lender’s
Secured Promissory Note Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Lender, but the failure to record, or
any error in so recording, any such amount on such Lender’s Secured Promissory
Note Record shall not limit or otherwise affect the obligations of Borrower
under any Secured Promissory Note or any other Loan Document to make payments of
principal of or interest on any Secured Promissory Note when due. Upon receipt
of an affidavit of an officer of a Lender as to the loss, theft, destruction, or
mutilation of its Secured Promissory Note, Borrower shall issue, in lieu
thereof, a replacement Secured Promissory Note in the same principal amount
thereof and of like tenor.

2.5 Fees. Borrower shall pay to Collateral Agent:

(a) Facility Fee. [waived];

(b) Final Payment. The Final Payment, when due hereunder, to be shared between
the Lenders in accordance with their respective Pro Rata Shares;

(c) Prepayment Fee. The Prepayment Fee, when due hereunder, to be shared between
the Lenders in accordance with their respective Pro Rata Shares; and

(d) Lenders’ Expenses. All Lenders’ Expenses (including reasonable attorneys’
fees and expenses for documentation and negotiation of this Agreement) incurred
through and after the Effective Date, when due.

2.6 Withholding. Payments received by the Lenders from Borrower hereunder will
be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, duties, deductions,

 

[*] = 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

 

3

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withholdings, assessments, fees or other charges imposed by any governmental
authority (including any interest, additions to tax or penalties applicable
thereto). Specifically, however, if at any time any Governmental Authority,
applicable law, regulation or international agreement requires Borrower to make
any withholding or deduction from any such payment or other sum payable
hereunder to the Lenders, Borrower hereby covenants and agrees that the amount
due from Borrower with respect to such payment or other sum payable hereunder
[*] such required withholding or deduction, [*] and Borrower shall pay the full
amount withheld or deducted to the relevant Governmental Authority. Borrower
will, upon request, furnish the Lenders with proof reasonably satisfactory to
the Lenders indicating that Borrower has made such withholding payment;
provided, however, that Borrower need not make any withholding payment if the
amount or validity of such withholding payment is contested in good faith by
appropriate and timely proceedings [*]. The agreements and obligations of
Borrower contained in this Section 2.6 shall survive the termination of this
Agreement.

 

3. CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension. Each Lender’s obligation
to make a Term A Loan is subject to the condition precedent that Collateral
Agent and each Lender shall consent to or shall have received, in form and
substance satisfactory to Collateral Agent and each Lender, such documents, and
completion of such other matters, as Collateral Agent and each Lender may
reasonably deem necessary or appropriate, including, without limitation:

(a) original Loan Documents, each duly executed by Borrower and each Subsidiary,
as applicable, that is a Loan Party;

(b) duly executed original Control Agreements with respect to any Collateral
Accounts maintained by Borrower or any of its Subsidiaries that are Loan
Parties;

(c) duly executed original Secured Promissory Notes in favor of each Lender
according to its Term A Loan Commitment Percentage;

(d) the Operating Documents and good standing certificates of Borrower and its
Subsidiaries that are Loan Parties certified by the Secretary of State (or
equivalent agency) of Borrower’s and such Subsidiaries’ jurisdiction of
organization or formation and each jurisdiction in which Borrower and each
Subsidiary is qualified to conduct business, each as of a date no earlier than
thirty (30) days prior to the Effective Date;

(e) a completed Perfection Certificate for Borrower and each of its
Subsidiaries;

(f) the Annual Projections, for the current calendar year;

(g) duly executed original officer’s certificate for Borrower and each
Subsidiary that is a party to the Loan Documents, in a form acceptable to
Collateral Agent and the Lenders;

(h) certified copies, dated as of date no earlier than thirty (30) days prior to
the Effective Date, of financing statement searches, as Collateral Agent shall
request, accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial
Credit Extension, will be terminated or released;

(i) a landlord’s consent executed in favor of Collateral Agent in respect of all
of Borrower’s and each Loan Party’s headquarter locations and each additional
location, other than contract manufacturers and clinical sites which hold
non-commercial inventory with assets having a book value of less than [*];

(j) a duly executed legal opinion of counsel to Borrower dated as of the
Effective Date;

(k) evidence satisfactory to Collateral Agent and the Lenders that the insurance
policies required by Section 6.5 hereof are in full force and effect, together
with appropriate evidence showing loss payable and/or additional insured clauses
or endorsements in favor of Collateral Agent, for the ratable benefit of the
Lenders; and

(l) payment of the fees and Lenders’ Expenses then due as specified in
Section 2.5 hereof.

 

[*] = 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

 

4

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3.2 Conditions Precedent to all Credit Extensions. The obligation of each Lender
to make each Credit Extension, including the initial Credit Extension, is
subject to the following conditions precedent:

(a) receipt by (i) the Lenders of an executed Disbursement Letter in the form of
Exhibit B-1 attached hereto; and (ii) SVB of an executed Loan Payment/Advance
Request Form in the form of Exhibit B-2 attached hereto;

(b) the representations and warranties in Section 5 hereof shall be true,
accurate and complete in all material respects on the date of the Disbursement
Letter (and the Loan Payment/Advance Request Form) and on the Funding Date of
each Credit Extension; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date,
and no Event of Default shall have occurred and be continuing or result from the
Credit Extension. Each Credit Extension is Borrower’s representation and
warranty on that date that the representations and warranties in Section 5
hereof are true, accurate and complete in all material respects; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;

(c) in such Lender’s sole discretion, there has not been any Material Adverse
Change or any material adverse deviation by Borrower from the Annual Projections
of Borrower presented to and accepted by Collateral Agent and each Lender;

(d) to the extent not delivered at the Effective Date, duly executed original
Secured Promissory Notes and Warrants, in number, form and content acceptable to
each Lender, and in favor of each Lender according to its Commitment Percentage,
with respect to each Credit Extension made by such Lender after the Effective
Date; and

(e) payment of the fees and Lenders’ Expenses then due as specified in
Section 2.5 hereof.

3.3 Covenant to Deliver. Borrower agrees to deliver to Collateral Agent and the
Lenders each item required to be delivered to Collateral Agent under this
Agreement as a condition precedent to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by Collateral Agent or
any Lender of any such item shall not constitute a waiver by Collateral Agent or
any Lender of Borrower’s obligation to deliver such item, and any such Credit
Extension in the absence of a required item shall be made in each Lender’s sole
discretion.

3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement,
to obtain a Term Loan, Borrower shall notify the Lenders (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 12:00 noon Eastern
time three (3) Business Days prior to the date the Term Loan is to be made.
Together with any such electronic, facsimile or telephonic notification,
Borrower shall deliver to the Lenders by electronic mail or facsimile a
completed Disbursement Letter (and the Loan Payment/Advance Request Form, with
respect to SVB) executed by a Responsible Officer or his or her designee. The
Lenders may rely on any telephone notice given by a person whom a Lender
reasonably believes is a Responsible Officer or designee. On the Funding Date,
each Lender shall credit and/or transfer (as applicable) to the Designated
Deposit Account, an amount equal to its Term Loan Commitment.

 

[*] = 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

 

5

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4. CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Collateral Agent, for the
ratable benefit of the Lenders, to secure the payment and performance in full of
all of the Obligations, a continuing security interest in, and pledges to
Collateral Agent, for the ratable benefit of the Lenders, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants, and covenants that
the security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral, subject only to
Permitted Liens that are permitted by the terms of this Agreement to have
priority to Collateral Agent’s Lien. If Borrower shall acquire a commercial tort
claim (as defined in the Code), Borrower, shall promptly notify Collateral Agent
in a writing signed by Borrower, as the case may be, of the general details
thereof (and further details as may be required by Collateral Agent) and grant
to Collateral Agent, for the ratable benefit of the Lenders, in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to Collateral Agent.

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank. Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (subject only to
Permitted Liens that may have superior priority to Bank’s Lien in this
Agreement).

If this Agreement is terminated, Collateral Agent’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and at such time as the Lenders’ obligation
to make Credit Extensions has terminated, Collateral Agent shall, at the sole
cost and expense of Borrower, release its Liens in the Collateral and all rights
therein shall revert to Borrower. In the event (x) all Obligations (other than
inchoate indemnity obligations), except for Bank Services, are satisfied in
full, and (y) this Agreement is terminated, Bank shall terminate the security
interest granted herein upon Borrower providing cash collateral acceptable to
Bank in its good faith business judgment for Bank Services, if any. In the event
such Bank Services consist of outstanding Letters of Credit, Borrower shall
provide to Bank cash collateral in an amount equal to (x) if such Letters of
Credit are denominated in Dollars, then [*]; and (y) if such Letters of Credit
are denominated in a Foreign Currency, then [*], of the Dollar Equivalent of the
face amount of all such Letters of Credit plus all interest, fees, and costs due
or to become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to such Letters of
Credit.

4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Collateral Agent to file financing statements or take any other action required
to perfect Collateral Agent’s security interests in the Collateral, without
notice to Borrower, with all appropriate jurisdictions to perfect or protect
Collateral Agent’s interest or rights under the Loan Documents, including a
notice that any disposition of the Collateral, except to the extent permitted by
the terms of this Agreement, by Borrower, or any other Person, shall be deemed
to violate the rights of Collateral Agent under the Code.

4.3 Pledge of Collateral. Borrower hereby pledges, assigns and grants to
Collateral Agent, for the ratable benefit of the Lenders, a security interest in
all the Shares, together with all proceeds and substitutions thereof, all cash,
stock and other moneys and property paid thereon, all rights to subscribe for
securities declared or granted in connection therewith, and all other cash and
noncash proceeds of the foregoing, as security for the performance of the
Obligations. On the Effective Date, or, to the extent not certificated as of the
Effective Date, within ten (10) days of the certification of any Shares, the
certificate or certificates for the Shares will be delivered to Collateral
Agent, accompanied by an instrument of assignment duly executed in blank by
Borrower. To the extent required by the terms and conditions governing the
Shares, Borrower shall cause the books of each entity whose Shares are part of
the Collateral and any transfer agent to reflect the pledge of the Shares. Upon
the occurrence and during the continuance of an Event of Default hereunder,
Collateral Agent may effect the transfer of any securities included in the
Collateral (including but not limited to the Shares) into the name of Collateral
Agent and cause new (as applicable) certificates representing such securities to
be issued in the name of Collateral Agent or its transferee. Borrower will
execute and deliver such documents, and take or cause to be taken such actions,
as Collateral Agent may reasonably request to perfect or continue the perfection
of Collateral Agent’s security interest in the Shares. Unless an Event of
Default shall have occurred and be continuing, Borrower shall be entitled to

 

[*] = 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

 

6

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exercise any voting rights with respect to the Shares and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights to vote and give
consents, waivers and ratifications shall terminate upon the occurrence and
continuance of an Event of Default.

 

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Collateral Agent and the Lenders as follows:

5.1 Due Organization, Authorization: Power and Authority. Borrower and each of
its Subsidiaries is duly existing and in good standing as a Registered
Organization in its jurisdictions of organization or formation and Borrower and
each of its Subsidiaries is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its businesses or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a Material Adverse Change. In
connection with this Agreement, Borrower and each of its Subsidiaries has
delivered to Collateral Agent a completed perfection certificate signed by an
officer of Borrower or such Subsidiary (each a “Perfection Certificate” and
collectively, the “Perfection Certificates”). Borrower represents and warrants
that (a) Borrower and each of its Subsidiaries’ exact legal name is that which
is indicated on its respective Perfection Certificate and on the signature page
of each Loan Document to which it is a party; (b) Borrower and each of its
Subsidiaries is an organization of the type and is organized in the jurisdiction
set forth on its respective Perfection Certificate; (c) each Perfection
Certificate accurately sets forth each of Borrower’s and its Subsidiaries’
organizational identification number or accurately states that Borrower or such
Subsidiary has none; (d) each Perfection Certificate accurately sets forth
Borrower’s and each of its Subsidiaries’ place of business, or, if more than
one, its chief executive office as well as Borrower’s and each of its
Subsidiaries’ mailing address (if different than its chief executive office);
(e) Borrower and each of its Subsidiaries (and each of its respective
predecessors) have not, in the past five (5) years, changed its jurisdiction of
organization, organizational structure or type, or any organizational number
assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificates pertaining to Borrower and each of its Subsidiaries, is
accurate and complete (it being understood and agreed that Borrower and each of
its Subsidiaries may from time to time update certain information in the
Perfection Certificates (including the information set forth in clause
(d) above) after the Effective Date to the extent permitted by one or more
specific provisions in this Agreement); such updated Perfection Certificates
subject to the review and approval of Collateral Agent. If Borrower or any of
its Subsidiaries is not now a Registered Organization but later becomes one,
Borrower shall notify Collateral Agent of such occurrence and provide Collateral
Agent with such Person’s organizational identification number within five
(5) Business Days of receiving such organizational identification number.

The execution, delivery and performance by Borrower and each of its Subsidiaries
of the Loan Documents to which it is a party have been duly authorized, and do
not (i) conflict with any of Borrower’s or such Subsidiaries’ organizational
documents, including its respective Operating Documents, (ii) contravene,
conflict with, constitute a default under or violate any material Requirement of
Law applicable thereto, (iii) contravene, conflict or violate any applicable
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority by which Borrower or such Subsidiary, or any of their
property or assets may be bound or affected, (iv) require any action by, filing,
registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already
been obtained and are in full force and effect) or are being obtained pursuant
to Section 6.1(b), or (v) constitute an event of default under any material
agreement by which Borrower or any of such Subsidiaries, or their respective
properties, is bound. Neither Borrower nor any of its Subsidiaries is in default
under any agreement to which it is a party or by which it or any of its assets
is bound in which such default could reasonably be expected to have a Material
Adverse Change.

5.2 Collateral.

(a) Borrower and each its Subsidiaries have good title to, have rights in, and
the power to transfer each item of the Collateral upon which it purports to
grant a Lien under the Loan Documents, free and clear of any and all Liens
except Permitted Liens, and neither Borrower nor any of its Subsidiaries have
any Deposit Accounts, Securities Accounts, Commodity Accounts or other
investment accounts other than the Collateral

 

[*] = 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

 

7

--------------------------------------------------------------------------------

Accounts or the other investment accounts, if any, described in the Perfection
Certificates delivered to Collateral Agent in connection herewith with respect
of which Borrower or such Subsidiary has given Collateral Agent notice and taken
such actions as are necessary to give Collateral Agent a perfected security
interest therein. The Accounts are bona fide, existing obligations of the
Account Debtors.

(b) On the Effective Date, and except as disclosed on the Perfection Certificate
and except with respect to Collateral at clinical sites and with contract
manufacturers which hold non-commercial inventory (i) the Collateral is not in
the possession of any third party bailee (such as a warehouse), and (ii) no such
third party bailee possesses components of the Collateral in excess of [*]. None
of the components of the Collateral shall be maintained at locations other than
as disclosed in the Perfection Certificates on the Effective Date, with contract
manufacturers or at clinical sites which hold non-commercial inventory, or as
permitted pursuant to Section 6.11.

(c) All Inventory is in all material respects of good and marketable quality,
free from material defects.

(d) Borrower and each of its Subsidiaries is the sole owner of the Intellectual
Property each respectively purports to own, free and clear of all Liens other
than Permitted Liens. Except as noted on the Perfection Certificates, neither
Borrower nor any of its Subsidiaries is a party to, nor is bound by, any
material license or other material agreement with respect to which Borrower or
such Subsidiary is the licensee that (i) prohibits or otherwise restricts
Borrower or its Subsidiaries from granting a security interest in Borrower’s or
such Subsidiaries’ interest in such material license or material agreement or
any other property, or (ii) for which a default under or termination of could
interfere with Collateral Agent’s or any Lender’s right to sell any Collateral.
Borrower shall provide written notice to Collateral Agent and each Lender within
ten (10) days of Borrower or any of its Subsidiaries entering into or becoming
bound by any license or agreement with respect to which Borrower or any
Subsidiary is the licensee (other than over-the-counter software that is
commercially available to the public).

5.3 Litigation. Except as disclosed (i) on the Perfection Certificates, or
(ii) in accordance with Section 6.9 hereof, there are no actions, suits,
investigations, or proceedings pending or, to the knowledge of the Responsible
Officers, threatened in writing by or against Borrower or any of its
Subsidiaries involving more than [*].

5.4 No Material Deterioration in Financial Condition; Financial Statements. All
consolidated financial statements for Borrower and its Subsidiaries, delivered
to Collateral Agent fairly present, in conformity with GAAP, in all material
respects the consolidated financial condition of Borrower and its Subsidiaries,
and the consolidated results of operations of Borrower and its Subsidiaries.
There has not been any material deterioration in the consolidated financial
condition of Borrower and its Subsidiaries since the date of the most recent
financial statements submitted to any Lender.

5.5 Solvency. Borrower and each of its Subsidiaries is Solvent.

5.6 Regulatory Compliance. Neither Borrower nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company” under
the Investment Company Act of 1940, as amended. Neither Borrower nor any of its
Subsidiaries is engaged as one of its important activities in extending credit
for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower and each of its Subsidiaries has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of
its Subsidiaries is a “holding company” or an “affiliate” of a “holding company”
or a “subsidiary company” of a “holding company” as each term is defined and
used in the Public Utility Holding Company Act of 2005. Neither Borrower nor any
of its Subsidiaries has violated any laws, ordinances or rules, the violation of
which could reasonably be expected to have a Material Adverse Change. Neither
Borrower’s nor any of its Subsidiaries’ properties or assets has been used by
Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than in material compliance with applicable laws. Borrower and each of its
Subsidiaries has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all Governmental
Authorities that are necessary to continue their respective businesses as
currently conducted.

 

[*] = 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

 

8

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None of Borrower, any of its Subsidiaries, or any of Borrower’s or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of
Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of
their Affiliates or agents, acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise
engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or
other Anti-Terrorism Law.

5.7 Investments. Neither Borrower nor any of its Subsidiaries owns any stock,
shares, partnership interests or other equity securities except for Permitted
Investments.

5.8 Tax Returns and Payments; Pension Contributions. Borrower and each of its
Subsidiaries has timely filed all required tax returns and reports or extensions
thereof, and Borrower and each of its Subsidiaries, has timely paid all foreign,
federal, state, and local taxes, assessments, deposits and contributions owed by
Borrower and such Subsidiaries, in all jurisdictions in which Borrower or any
such Subsidiary is subject to taxes, including the United States, unless such
taxes are being contested in accordance with the following sentence. Borrower
and each of its Subsidiaries, may defer payment of any contested taxes, provided
that Borrower or such Subsidiary, (a) in good faith contests its obligation to
pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Collateral Agent in writing of the commencement of, and
any material development in, the proceedings, and (c) posts bonds or takes any
other steps required to prevent the Governmental Authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a “Permitted Lien.” Neither Borrower nor any of its Subsidiaries is aware
of any claims or adjustments proposed for any of Borrower’s or such
Subsidiaries’, prior tax years which could result in additional taxes becoming
due and payable by Borrower or its Subsidiaries. Borrower and each of its
Subsidiaries have paid all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms, and
neither Borrower nor any of its Subsidiaries have, withdrawn from participation
in, and have not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could
reasonably be expected to result in any liability of Borrower or its
Subsidiaries, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other Governmental Authority.

5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions
solely as working capital and to fund its general business requirements in
accordance with the provisions of this Agreement, and not for personal, family,
household or agricultural purposes.

5.10 Shares. Borrower has full power and authority to create a first lien on the
Shares and no disability or contractual obligation exists that would prohibit
Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s
knowledge, there are no subscriptions, warrants, rights of first refusal or
other restrictions on transfer relative to, or options exercisable with respect
to the Shares. The Shares have been and will be duly authorized and validly
issued, and are fully paid and non-assessable. To Borrower’s knowledge, the
Shares are not the subject of any present or threatened suit, action,
arbitration, administrative or other proceeding, and Borrower knows of no
reasonable grounds for the institution of any such proceedings.

5.11 Full Disclosure. No written representation, warranty or other statement of
Borrower or any of its Subsidiaries in any certificate or written statement
given to Collateral Agent or any Lender, as of the date such representation,
warranty, or other statement was made, taken together with all such written
certificates and written statements given to Collateral Agent or any Lender,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).

 

[*] = 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

 

9

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5.12 Definition of “Knowledge.” For purposes of the Loan Documents, whenever a
representation or warranty is made to Borrower’s knowledge or awareness, to the
“best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of the
Responsible Officers.

 

6. AFFIRMATIVE COVENANTS

Borrower shall, and shall cause each of its Subsidiaries to, do all of the
following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of organization and maintain qualification in
each jurisdiction in which the failure to so qualify could reasonably be
expected to have a Material Adverse Change. Comply with all laws, ordinances and
regulations to which Borrower or any of its Subsidiaries is subject, the
noncompliance with which could reasonably be expected to have a Material Adverse
Change.

(b) Obtain and keep in full force and effect, all of the material Governmental
Approvals necessary for the performance by Borrower and its Subsidiaries of
their respective businesses and obligations under the Loan Documents and the
grant of a security interest to Collateral Agent for the ratable benefit of the
Lenders, in all of the Collateral. Borrower shall promptly provide copies to
Collateral Agent of any material Governmental Approvals obtained by Borrower or
any of its Subsidiaries.

6.2 Financial Statements, Reports, Certificates.

(a) Deliver to each Lender:

(i) as soon as available, but no later than forty-five (45) days after the last
day of each fiscal quarter, a company prepared consolidated balance sheet,
income statement and cash flow statement covering the consolidated operations of
Borrower and its Subsidiaries for such quarter certified by a Responsible
Officer and in a form reasonably acceptable to Collateral Agent;

(ii) as soon as available, but no later than ninety-five (95) days after the
last day of Borrower’s fiscal year or within five (5) days of filing with the
SEC, audited consolidated financial statements prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial statements from
PriceWaterhouseCoopers or another independent certified public accounting firm
reasonably acceptable to Collateral Agent in its reasonable discretion;

(iii) as soon as available after approval thereof by Borrower’s Board of
Directors, but no later than sixty (60) days after the last day of each of
Borrower’s fiscal years, Borrower’s annual financial projections for the entire
current fiscal year as approved by Borrower’s Board of Directors, which such
annual financial projections shall be set forth in a quarter by quarter format
(such annual financial projections as originally delivered to Collateral Agent
and the Lenders are referred to herein as the “Annual Projections”; provided
that, any revisions of the Annual Projections approved by Borrower’s Board of
Directors shall be delivered to Collateral Agent and the Lenders no later than
seven (7) days after such approval);

(iv) within five (5) days of delivery, copies of all statements, reports and
notices made available to Borrower’s security holders or holders of Subordinated
Debt;

(v) within five (5) days of filing, all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission,

 

[*] = 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

 

10

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(vi) prompt notice of any amendments of or other changes to the capitalization
table of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries, together with any copies reflecting such amendments or changes
with respect thereto;

(vii) prompt notice of any event that could reasonably be expected to materially
and adversely affect the value of the Intellectual Property;

(viii) as soon as available, but no later than thirty (30) days after the last
day of each month, (i) copies of the month-end account statements for each
Collateral Account maintained by Borrower or its Subsidiaries, which statements
may be provided to Collateral Agent and each Lender by Borrower or directly from
the applicable institution(s); and (ii) a monthly cash certificate, in the form
attached hereto as Annex I; and

(ix) other information as reasonably requested by Collateral Agent or any
Lender.

Notwithstanding the foregoing, documents required to be delivered pursuant to
the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower
posts such documents, or provides a link thereto, on Borrower’s website on the
internet at Borrower’s website address.

(b) Concurrently with the delivery of the financial statements specified in
Section 6.2(a)(i) above but no later than forty-five (45) days after the last
day of each quarter, deliver to each Lender, a duly completed Compliance
Certificate signed by a Responsible Officer.

(c) Keep proper books of record and account in accordance with GAAP in all
material respects, in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities. Borrower
shall, and shall cause each of its Subsidiaries to, allow, at the sole cost of
Borrower, Collateral Agent or any Lender, during regular business hours upon
reasonable prior written notice (provided that no notice shall be required when
an Event of Default has occurred and is continuing), to visit and inspect any of
its properties, to examine and make abstracts or copies from any of its books
and records, and to conduct a collateral audit and analysis of its operations
and the Collateral. Such audits shall be conducted no more often than twice
every year unless (and more frequently if) an Event of Default has occurred and
is continuing.

6.3 Inventory; Returns. Keep all Inventory in good and marketable condition,
free from material defects. Returns and allowances between Borrower, or any of
its Subsidiaries, and their respective Account Debtors shall follow Borrower’s,
or such Subsidiary’s, customary practices as they exist at the Effective Date.
Borrower must promptly notify Collateral Agent and the Lenders of all returns,
recoveries, disputes and claims that involve more than [*] individually or in
the aggregate in any calendar year.

6.4 Taxes; Pensions. Timely file and require each of its Subsidiaries to timely
file, all required tax returns and reports or extensions thereof and timely pay,
and require each of its Subsidiaries to timely file, all foreign, federal,
state, and local taxes, assessments, deposits and contributions owed by Borrower
or its Subsidiaries, except for deferred payment of any taxes contested pursuant
to the terms of Section 5.8 hereof, and shall deliver to Lenders, on demand,
appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with the terms of such plans.

6.5 Insurance. Keep Borrower’s and its Subsidiaries’ business and the Collateral
insured for risks and in amounts standard for companies in Borrower’s and its
Subsidiaries’ industry and location and as Collateral Agent may reasonably
request. Insurance policies shall be in a form, with companies, and in amounts
that are reasonably satisfactory to Collateral Agent and Lenders. All property
policies shall have a lender’s loss payable endorsement showing Collateral Agent
as lender loss payee and waive subrogation against Collateral Agent, and all
liability policies shall show, or have endorsements showing, Collateral Agent,
as additional insured. The Collateral Agent shall be named as lender loss payee
and/or additional insured with respect to any such insurance providing coverage
in respect of any Collateral, and each provider of any such insurance shall
agree, by endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Collateral Agent, that it will give the Collateral
Agent thirty (30) days prior written notice before any such policy or policies
shall be materially altered or

 

[*] = 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

 

11

--------------------------------------------------------------------------------

canceled. At Collateral Agent’s request, Borrower shall deliver certified copies
of policies and evidence of all premium payments. Proceeds payable under any
policy shall, at Collateral Agent’s option, be payable to Collateral Agent, for
the ratable benefit of the Lenders, on account of the Obligations.
Notwithstanding the foregoing, (a) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy up to [*] with respect to any loss, but not exceeding [*],
in the aggregate for all losses under all casualty policies in any one year,
toward the replacement or repair of destroyed or damaged property; provided that
any such replaced or repaired property (i) shall be of equal or like value as
the replaced or repaired Collateral and (ii) shall be deemed Collateral in which
Collateral Agent has been granted a first priority security interest, and
(b) after the occurrence and during the continuance of an Event of Default, all
proceeds payable under such casualty policy shall, at the option of Collateral
Agent, be payable to Collateral Agent, for the ratable benefit of the Lenders,
on account of the Obligations. If Borrower or any of its Subsidiaries fails to
obtain insurance as required under this Section 6.5 or to pay any amount or
furnish any required proof of payment to third persons, Collateral Agent and/or
any Lender may make, at Borrower’s expense, all or part of such payment or
obtain such insurance policies required in this Section 6.5, and take any action
under the policies Collateral Agent or such Lender deems prudent.

6.6 Operating Accounts.

(a) Maintain (i) all of Borrower’s and each Loan Party’s primary operating
Deposit Accounts, Letters of Credit and foreign exchange with Bank or its
Affiliates in accounts which are subject to a Control Agreement in favor of
Collateral Agent; and (ii) at least [*] of Borrower’s and its Affiliates’
investment balances with Bank or its Affiliates in accounts which are subject to
a Control Agreement in favor of Collateral Agent. Notwithstanding the foregoing,
no Foreign Subsidiary which is a Loan Party shall be required to deliver to
Collateral Agent a Control Agreement to the extent perfection via a Control
Agreement is not recognized under local laws, as reasonably determined by
Collateral Agent. Notwithstanding anything herein to the contrary, Borrower
shall have ninety (90) days from the Closing date to transfer [*] of its
investment balances to Bank or its Affiliates, during which interim period, such
amount in accounts outside of Bank or its Affiliates shall be subject to a
Control Agreement in favor of Collateral Agent. Furthermore, notwithstanding
anything herein to the contrary, Borrower shall only be required to maintain [*]
of its investment balances at Bank or its Affiliates so long as SVB Asset
Management (“SAM”), upon Borrower’s prior written request, provides Borrower an
annual Statement on Standards for Attestation Engagements (“SSAE16”) Report
providing a detailed description of SAM’s internal controls. If SAM does not
receive an unqualified opinion from an auditor with respect to any SSAE16 audit
that SAM obtains in the ordinary course of business, after SAM has been provided
a reasonable opportunity to cure any deficiency noted in any qualified opinion,
Borrower will have the right, after consultation with Bank, to withdraw its
investment and/or operating account funds and transfer such funds to another
institution that has received an unqualified opinion from an auditor with
respect to a SSAE16 audit, provided that (a) Borrower provides Collateral Agent
and Lenders a copy of such SSAE 16 reports of any such other institutions, and
(b) any such other institution executes and delivers a Control Agreement in
favor of, and in form and content reasonably acceptable to, Collateral Agent,
with respect to each such account.

(b) Borrower shall provide Collateral Agent five (5) days’ prior written notice
before Borrower or any Loan Party establishes any Collateral Account at or with
any Person other than Bank or its Affiliates or as otherwise disclosed in the
Perfection Certificates. In addition, for each Collateral Account that Borrower
or any Loan Party, at any time maintains, Borrower or such Loan Party shall
cause the applicable bank or financial institution at or with which such
Collateral Account is maintained to execute and deliver a Control Agreement or
other appropriate instrument with respect to such Collateral Account to perfect
Collateral Agent’s Lien in such Collateral Account in accordance with the terms
hereunder, and to the extent such perfection via a Control Agreement is
recognized under local laws, prior to the establishment of such Collateral
Account, which Control Agreement may not be terminated without prior written
consent of Collateral Agent. The provisions of the previous sentence shall not
apply to deposit accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrower’s, or any
of its Subsidiaries’, employees and identified to Collateral Agent by Borrower
as such in the Perfection Certificates.

(c) Neither Borrower nor any of its Subsidiaries shall maintain any Collateral
Accounts except Collateral Accounts maintained in accordance with Sections
6.6(a) and (b).

 

[*] = 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

 

12

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6.7 Protection of Intellectual Property Rights. Borrower and each of its
Subsidiaries shall: (a) use commercially reasonable efforts to protect, defend
and maintain the validity and enforceability of its Intellectual Property that
is material to Borrower’s business; (b) promptly advise Collateral Agent in
writing of material infringement by a third party of its Intellectual Property;
and (c) not allow any Intellectual Property material to Borrower’s business to
be abandoned, forfeited or dedicated to the public without Collateral Agent’s
prior written consent.

6.8 Litigation Cooperation. Commencing on the Effective Date and continuing
through the termination of this Agreement, make available to Collateral Agent
and the Lenders, without expense to Collateral Agent or the Lenders, Borrower
and each of Borrower’s officers, employees and agents and Borrower’s Books, to
the extent that Collateral Agent or any Lender may reasonably deem them
necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Collateral Agent or any Lender with respect to any Collateral or
relating to Borrower.

6.9 Notices of Litigation and Default. Borrower will give prompt written notice
to Collateral Agent and the Lenders of any litigation or governmental
proceedings pending or threatened (in writing) against Borrower or any of its
Subsidiaries, which could reasonably be expected to result in damages or costs
to Borrower or any of its Subsidiaries of [*] or more or which could reasonably
be expected to have a Material Adverse Change. Without limiting or contradicting
any other more specific provision of this Agreement, promptly (and in any event
within three (3) Business Days) upon Borrower becoming aware of the existence of
any Event of Default or event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default, Borrower shall give written
notice to Collateral Agent and the Lenders of such occurrence, which such notice
shall include a reasonably detailed description of such Event of Default or
event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default.

6.10 [Intentionally Omitted.]

6.11 Landlord Waivers; Bailee Waivers. In the event that Borrower or any of its
Subsidiaries that are Loan Parties, after the Effective Date, intends to add any
new offices or business locations, including warehouses, or otherwise store any
portion of the Collateral having an aggregate book value in excess of [*] (other
than with contract manufacturers or at clinical sites which hold non-commercial
inventory), or deliver any portion of the Collateral to, a bailee, in each case
pursuant to Section 7.2, then Borrower or such Subsidiary will first receive the
written consent of Collateral Agent and, in the event that the new location is
the chief executive office of the Borrower or such Subsidiary that is a Loan
Party or the Collateral at any such new location is valued in excess of [*] in
the aggregate, such bailee or landlord, as applicable, must execute and deliver
a bailee waiver or landlord waiver, as applicable, in form and substance
reasonably satisfactory to Collateral Agent prior to the addition of any new
offices or business locations, or any such storage with or delivery to any such
bailee, as the case may be.

6.12 Creation/Acquisition of Subsidiaries. In the event Borrower, or any of its
Subsidiaries creates or acquires any Subsidiary, Borrower shall provide prior
written notice to Collateral Agent and each Lender of the creation or
acquisition of such new Subsidiary and take all such action as may be reasonably
required by Collateral Agent or any Lender to cause each such Subsidiary to
become a co-Borrower hereunder or to guarantee the Obligations of Borrower under
the Loan Documents and, in each case, grant a continuing pledge and security
interest in and to the assets of such Subsidiary (substantially as described on
Exhibit A hereto); and Borrower (or its Subsidiary, as applicable) shall grant
and pledge to Collateral Agent, for the ratable benefit of the Lenders, a
perfected security interest in the Shares; provided, however, that solely in the
circumstance in which Borrower or any Subsidiary creates or acquires a Foreign
Subsidiary in an acquisition permitted by Section 7.7 hereof or otherwise
approved by the Required Lenders, (i) such Foreign Subsidiary shall not be
required to guarantee the Obligations of Borrower under the Loan Documents and
grant a continuing pledge and security interest in and to the assets of such
Foreign Subsidiary, and (ii) Borrower shall not be required to grant and pledge
to Collateral Agent, for the ratable benefit of Lenders, a perfected security
interest in more than sixty five percent (65%) of the Shares of such Foreign
Subsidiary, if Borrower demonstrates to the reasonable satisfaction of
Collateral Agent that such Foreign Subsidiary providing such guarantee or pledge
and security interest or Borrower providing a perfected security interest in
more than sixty five percent (65%) of the Shares would create a present and
existing adverse tax consequence to Borrower under the U.S. Internal Revenue
Code.

 

[*] = 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

 

13

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6.13 Further Assurances.

(a) Execute any further instruments and take further action as Collateral Agent
or any Lender reasonably requests to perfect or continue Collateral Agent’s Lien
in the Collateral or to effect the purposes of this Agreement.

(b) Deliver to Collateral Agent and Lenders, within five (5) days after the same
are sent or received, copies of all material correspondence, reports, documents
and other filings with any Governmental Authority that could reasonably be
expected to have a material adverse effect on any of the Governmental Approvals
material to Borrower’s business or otherwise could reasonably be expected to
have a Material Adverse Change.

 

7. NEGATIVE COVENANTS

Borrower shall not, and shall not permit any of its Subsidiaries to, do any of
the following without the prior written consent of the Required Lenders:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; (b) of worn out, obsolete or surplus
Equipment; (c) in connection with Permitted Liens, Permitted Investments and
Permitted Licenses; (d) from any Subsidiary of Borrower to Borrower or between
Loan Parties; (e) consisting of payments of taxes; (f) of cash and Cash
Equivalents (i) in connection with transactions not prohibited hereunder, in the
ordinary course of business and (ii) in connection with transactions that
(A) are approved by Borrower’s board of directors (to the extent Board approval
is required by Borrower’s policies or other organizational documents), (B) are
customary for the Borrower’s industry and (C) not otherwise prohibited
hereunder; and (g) other Transfers of property having a book value not exceeding
[*] in the aggregate during any fiscal year.

7.2 Changes in Business, Management, Ownership, or Business Locations.
(a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses engaged in by Borrower as of the Effective Date or
reasonably related or incidental thereto; (b) liquidate or dissolve; or
(c) (i) any Key Person shall cease to be actively engaged in the management of
Borrower unless written notice thereof is provided to Collateral Agent within
five (5) Business Days of such change, or (ii) enter into any transaction or
series of related transactions in which the stockholders of Borrower who were
not stockholders immediately prior to the first such transaction own more than
forty nine percent (49%) of the voting stock of Borrower immediately after
giving effect to such transaction or related series of such transactions (other
than by the sale of Borrower’s equity securities in a public offering, a private
placement of public equity or to venture capital investors so long as Borrower
identifies to Collateral Agent the venture capital investors prior to the
closing of the transaction) (such transaction or series of transactions, a
“Change in Control”). Borrower shall not, without at least thirty (30) days’
prior written notice to Collateral Agent: (A) add any new offices or business
locations, including warehouses (unless such new offices or business locations
(i) contain less than [*], (ii) contain non-commercial inventory with contract
manufacturers or at clinical sites or (iii) are not Borrower’s or its
Subsidiaries’ chief executive office); (B) change its jurisdiction of
organization, (C) change its organizational structure or type, (D) change its
legal name, or (E) change any organizational number (if any) assigned by its
jurisdiction of organization.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock, shares or property of another Person, except where (a) (i) total
cash consideration, for all such transactions, does not in the aggregate exceed
[*] in any fiscal year of Borrower; and (ii) total consideration, for all such
transactions, does not in the aggregate exceed [*] in any fiscal year of
Borrower; (b) such transactions are accretive to Borrower; (c) such transactions
do not result in a Change in Control; (d) no Event of Default has occurred and
is continuing or would exist after giving effect to the transactions;
(e) Borrower is the surviving legal entity; and (f) immediately after giving
effect to such transactions, Borrower has sufficient cash on hand to satisfy
Borrower’s projected expenses, including but not limited to debt service, for at
least the succeeding twelve (12) months. A Subsidiary may merge or consolidate
into another Subsidiary (provided such surviving Subsidiary is a “co Borrower”
hereunder or has provided a secured Guaranty of Borrower’s Obligations
hereunder) or with (or into)

 

[*] = 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

 

14

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Borrower provided Borrower is the surviving legal entity, and as long as no
Event of Default is occurring prior thereto or arises as a result therefrom.
Without limiting the foregoing, Borrower shall not, without Collateral Agent’s
prior written consent, enter into any binding contractual arrangement with any
Person to attempt to facilitate a merger or acquisition of Borrower, unless
(i) no Event of Default exists when such agreement is entered into by Borrower,
(ii) such agreement does not give such Person the right to claim any break-up or
similar fees, payments or damages from Borrower or any of its Subsidiaries in
excess of [*] in the aggregate as a result of any failure to proceed with or
close such merger or acquisition, except to the extent any such break-up or
similar fees, payments or damages are to be funded solely from cash proceeds
received by Borrower from a third party and (iii) Borrower notifies Collateral
Agent in advance of entering into such an agreement.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein (except for Permitted Liens that are permitted by the
terms of this Agreement to have priority over Collateral Agent’s Lien), or enter
into any agreement, document, instrument or other arrangement (except with or in
favor of Collateral Agent, for the ratable benefit of the Lenders) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower, or any of its Subsidiaries, from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower’s or
such Subsidiary’s Intellectual Property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted Liens” herein.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6 hereof.

7.7 Distributions; Investments. (a) Pay any dividends (other than dividends
payable solely in capital stock) or make any distribution or payment in respect
of or redeem, retire or purchase any capital stock except that Borrower or any
Subsidiary may (i) repurchase the stock of current or former employees,
directors or consultants pursuant to stock repurchase agreements or stock
purchase plans so long as such repurchases do not exceed [*] in the aggregate
per fiscal year, (ii) repurchase the stock of current or former employees,
directors or consultants pursuant to stock repurchase agreements by the
cancellation of indebtedness owed by such former employees regardless of whether
an Event of Default exists, (iii) convert any of its convertible securities into
other securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof, (iv) purchase for value of any rights distributed
in connection with any stockholder rights plan, (v) purchases of capital stock
or options to acquire such capital stock with the proceeds received from a
substantially concurrent issuance of capital stock or convertible securities;
(vi) purchases of capital stock pledged as collateral for loans to employees;
(vii) purchases of capital stock in connection with (i) the exercise of stock
options or stock appreciation rights or (ii) the satisfaction of withholding tax
obligations; in each case, by way of cashless (or, “net”) exercise; and
(viii) cash payments in lieu of the issuance of fractional shares upon
conversion of convertible securities; or (b) directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries
to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower or any of its
Subsidiaries, except for (a) transactions that are in the ordinary course of
Borrower’s or such Subsidiary’s business, upon fair and reasonable terms that
are no less favorable to Borrower or such Subsidiary than would be obtained in
an arm’s length transaction with a non-affiliated Person, (b) Subordinated Debt,
(c) equity investments by Borrower’s investors in Borrower or its Subsidiaries,
(d) transactions among Borrower and its Subsidiaries and among Borrower’s
Subsidiaries, in each case, provided that such transactions are Permitted
Investments; (e) reasonable and customary fees paid to members of Borrower’s or
a Subsidiary’s Board of Directors in the ordinary course of business; and
(f) employment arrangements in the ordinary course of business.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to the Lenders.

 

[*] = 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

 

15

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7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA in excess of
[*], permit a Reportable Event or Prohibited Transaction, as defined in ERISA,
to occur; fail to comply with the Federal Fair Labor Standards Act or violate
any other law or regulation, if the violation could reasonably be expected to
have a Material Adverse Change, or permit any of its Subsidiaries to do so;
withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower
or any of its Subsidiaries, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other Governmental Authority.

7.11 Compliance with Anti-Terrorism Laws. Collateral Agent hereby notifies
Borrower and each of its Subsidiaries that pursuant to the requirements of
Anti-Terrorism Laws, and Collateral Agent’s policies and practices, Collateral
Agent is required to obtain, verify and record certain information and
documentation that identifies Borrower and each of its Subsidiaries and their
principals, which information includes the name and address of Borrower and each
of its Subsidiaries and their principals and such other information that will
allow Collateral Agent to identify such party in accordance with Anti-Terrorism
Laws. Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or
any of its Subsidiaries permit any Affiliate to, directly or indirectly,
knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists. Borrower and each of its Subsidiaries shall
immediately notify Collateral Agent if Borrower or such Subsidiary has knowledge
that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC
Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on,
or (d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering. Neither Borrower nor any of its
Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any
Affiliate to, directly or indirectly, (i) conduct any business or engage in any
transaction or dealing with any Blocked Person, including, without limitation,
the making or receiving of any contribution of funds, goods or services to or
for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order No. 13224 or any similar executive order or other
Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224 or other
Anti-Terrorism Law.

7.12 Assets in Cyto Bermuda. Transfer to, license or permit Cyto Bermuda to hold
or maintain, at any time, assets of an aggregate value in excess of [*].

 

8. EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day grace period shall not apply to payments
due on the Maturity Date or the date of acceleration pursuant to Section 9.1(a)
hereof). During the cure period, the failure to cure the payment default is not
an Event of Default (but no Credit Extension will be made during the cure
period);

8.2 Covenant Default.

(a) Borrower or any Loan Party fails or neglects to perform any obligation in
Sections 6.2 (Financial Statements, Reports, Certificates), 6.4 (Taxes), 6.5
(Insurance), 6.6 (Operating Accounts), 6.9 (Notice of Litigation and Default),
6.11 (Landlord Waivers; Bailee Waivers), 6.12 (Creation/Acquisition of
Subsidiaries) or 6.13 (Further Assurances) or Borrower violates any covenant in
Section 7; or

 

[*] = 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

 

16

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(b) Borrower or any Loan Party fails or neglects to perform, keep, or observe
any other term, provision, condition, covenant or agreement contained in this
Agreement or any Loan Documents, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
[*] after the occurrence thereof; provided, however, that if the default cannot
by its nature be cured within the [*] period or cannot after diligent attempts
by Borrower be cured within such [*] period, and such default is likely to be
cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed [*] days) to attempt to cure such default,
and within such reasonable time period the failure to cure the default shall not
be deemed an Event of Default (but no Credit Extensions shall be made during
such cure period). Grace periods provided under this Section shall not apply,
among other things, to financial covenants or any other covenants set forth in
subsection (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or any of its Subsidiaries or of any entity under control
of Borrower or its Subsidiaries on deposit with any Lender or any Lender’s
Affiliate or any bank or other institution at which Borrower or any of its
Subsidiaries maintains a Collateral Account, or (ii) a notice of lien, levy, or
assessment is filed against Borrower or any of its Subsidiaries or their
respective assets by any government agency, and the same under subclauses
(i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any [*] cure
period; and

(b) (i) any material portion of Borrower’s or any of its Subsidiaries’ assets is
attached, seized, levied on, or comes into possession of a trustee or receiver,
or (ii) any court order enjoins, restrains, or prevents Borrower or any of its
Subsidiaries from conducting any part of its business;

8.5 Insolvency. (a) Borrower or any of its Subsidiaries is or becomes Insolvent;
(b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower or any of its
Subsidiaries and not dismissed or stayed within forty-five (45) days (but no
Credit Extensions shall be made while Borrower or any Subsidiary is Insolvent
and/or until any Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is a default in any agreement to which Borrower or
any of its Subsidiaries is a party with a third party or parties resulting in a
right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of [*] or that could
reasonably be expected to have a Material Adverse Change; provided, however,
that the Event of Default under this Section 8.6 caused by the occurrence of a
breach or default under such other agreement shall be cured or waived for
purposes of this Agreement upon Collateral Agent receiving written notice from
the party asserting such breach or default of such cure or waiver of the breach
or default under such other agreement, if at the time of such cure or waiver
under such other agreement (x) Collateral Agent or any Lender has not declared
an Event of Default under this Agreement and/or exercised any rights with
respect thereto; (y) any such cure or waiver does not result in an Event of
Default under any other provision of this Agreement or any Loan Document; and
(z) in connection with any such cure or waiver under such other agreement, the
terms of any agreement with such third party are not modified or amended in any
manner which could in the good faith business judgment of Collateral Agent be
materially less advantageous to Borrower;

8.7 Judgments. One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least [*] (not
covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower or any of
its Subsidiaries and shall remain unsatisfied, unvacated, or unstayed for a
period of ten (10) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction, vacation, or stay of such
judgment, order or decree);

 

[*] = 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

 

17

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8.8 Misrepresentations. Borrower or any of its Subsidiaries or any Person acting
for Borrower or any of its Subsidiaries makes any representation, warranty, or
other statement now or later in this Agreement, any Loan Document or in any
writing delivered to Collateral Agent and/or Lenders or to induce Collateral
Agent and/or the Lenders to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material
respect when made;

8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower or any of its Subsidiaries and any creditor of Borrower or any of its
Subsidiaries that signed a subordination, intercreditor, or other similar
agreement with Collateral Agent or the Lenders, or any creditor that has signed
such an agreement with Collateral Agent or the Lenders breaches any terms of
such agreement;

8.10 Governmental Approvals. Any Governmental Approval shall have been revoked,
rescinded, suspended, modified in an adverse manner, or not renewed in the
ordinary course for a full term and such revocation, rescission, suspension,
modification or non-renewal has resulted in or could reasonably be expected to
result in a Material Adverse Change; or

8.11 Lien Priority. Any Lien created hereunder or by any other Loan Document
shall at any time fail to constitute a valid and perfected Lien on any of the
Collateral purported to be secured thereby, subject to no prior or equal Lien,
other than Permitted Liens which are permitted to have priority in accordance
with the terms of this Agreement.

8.12 Delisting. The shares of common stock of Borrower are delisted from NASDAQ
Capital Market because of failure to comply with continued listing standards
thereof or due to a voluntary delisting which results in such shares not being
listed on any other nationally recognized stock exchange in the United States
having listing standards at least as restrictive as the NASDAQ Capital Market.

 

9. RIGHTS AND REMEDIES

9.1 Rights and Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may, and at the written direction of Required Lenders shall,
without notice or demand, do any or all of the following: (i) deliver notice of
the Event of Default to Borrower, (ii) by notice to Borrower declare all
Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations shall be immediately due and payable without
any action by Collateral Agent or the Lenders) or (iii) by notice to Borrower
suspend or terminate the obligations, if any, of the Lenders to advance money or
extend credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Collateral Agent and/or the Lenders (but if an
Event of Default described in Section 8.5 occurs all obligations, if any, of the
Lenders to advance money or extend credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and Collateral Agent
and/or the Lenders shall be immediately terminated without any action by
Collateral Agent or the Lenders).

(b) Without limiting the rights of Collateral Agent and the Lenders set forth in
Section 9.1(a) above, upon the occurrence and during the continuance of an Event
of Default, Collateral Agent shall have the right, without notice or demand, to
do any or all of the following:

(i) foreclose upon and/or sell or otherwise liquidate, the Collateral;

(ii) apply to the Obligations any (a) balances and deposits of Borrower that
Collateral Agent or any Lender holds or controls, or (b) any amount held or
controlled by Collateral Agent or any Lender owing to or for the credit or the
account of Borrower; and/or

(iii) commence and prosecute an Insolvency Proceeding or consent to Borrower
commencing any Insolvency Proceeding.

 

[*] = 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

 

18

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(c) Without limiting the rights of Collateral Agent and the Lenders set forth in
Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of
an Event of Default, Collateral Agent shall have the right, without notice or
demand, to do any or all of the following:

(i) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Collateral Agent considers advisable,
notify any Person owing Borrower money of Collateral Agent’s security interest
in such funds, and verify the amount of such account;

(ii) make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral. Borrower
shall assemble the Collateral if Collateral Agent requests and make it available
in a location as Collateral Agent reasonably designates. Collateral Agent may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Collateral Agent a license to enter and
occupy any of its premises, without charge, to exercise any of Collateral
Agent’s rights or remedies;

(iii) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
and/or advertise for sale, the Collateral. Collateral Agent is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s and each of its Subsidiaries’ labels, patents, copyrights, mask
works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any similar property as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral and, in connection with Collateral Agent’s exercise of its rights
under this Section 9.1, Borrower’s and each of its Subsidiaries’ rights under
all licenses and all franchise agreements inure to Collateral Agent, for the
benefit of the Lenders;

(iv) place a “hold” on any account maintained with Collateral Agent or the
Lenders and/or deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;

(v) demand and receive possession of Borrower’s Books;

(vi) appoint a receiver to seize, manage and realize any of the Collateral, and
such receiver shall have any right and authority as any competent court will
grant or authorize in accordance with any applicable law, including any power or
authority to manage the business of Borrower or any of its Subsidiaries;

(vii) subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Collateral Agent and each Lender under the Loan Documents or at law
or equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof);

(viii) for any Letters of Credit, demand that Borrower (i) deposit cash with
Bank in an amount equal to (x) if such Letters of Credit are denominated in
Dollars, then [*]; and (y) if such Letters of Credit are denominated in a
Foreign Currency, then [*], of the Dollar Equivalent of the aggregate face
amount of all Letters of Credit remaining undrawn (plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by Bank in its
good faith business judgment)), to secure all of the Obligations relating to
such Letters of Credit, as collateral security for the repayment of any future
drawings under such Letters of Credit, and Borrower shall forthwith deposit and
pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to
be paid or payable over the remaining term of any Letters of Credit; and

(ix) terminate any FX Contracts.

Notwithstanding any provision of this Section 9.1 to the contrary, upon the
occurrence of any Event of Default, Collateral Agent shall have the right to
exercise any and all remedies referenced in this Section 9.1 without the written
consent of Required Lenders following the occurrence of an Exigent Circumstance.
As used in the immediately preceding sentence, “Exigent Circumstance” means any
event or circumstance that, in the reasonable judgment of Collateral Agent,
imminently threatens the ability of Collateral Agent to realize upon all or any
material

 

[*] = 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

 

19

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portion of the Collateral, such as, without limitation, fraudulent removal,
concealment, or abscondment thereof, destruction or material waste thereof, or
failure of Borrower or any of its Subsidiaries after reasonable demand to
maintain or reinstate adequate casualty insurance coverage, or which, in the
judgment of Collateral Agent, could reasonably be expected to result in a
material diminution in value of the Collateral.

9.2 Power of Attorney. Borrower hereby irrevocably appoints Collateral Agent as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s or any of its
Subsidiaries’ name on any checks or other forms of payment or security; (b) sign
Borrower’s or any of its Subsidiaries’ name on any invoice or bill of lading for
any Account or drafts against Account Debtors; (c) settle and adjust disputes
and claims about the Accounts directly with Account Debtors, for amounts and on
terms Collateral Agent determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Collateral Agent or a third party as the Code or any applicable law permits.
Borrower hereby appoints Collateral Agent as its lawful attorney-in-fact to sign
Borrower’s or any of its Subsidiaries’ name on any documents necessary to
perfect or continue the perfection of Collateral Agent’s security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations (other than inchoate indemnity obligations) have been satisfied in
full and Collateral Agent and the Lenders are under no further obligation to
make Credit Extensions hereunder. Collateral Agent’s foregoing appointment as
Borrower’s or any of its Subsidiaries’ attorney in fact, and all of Collateral
Agent’s rights and powers, coupled with an interest, are irrevocable until all
Obligations (other than inchoate indemnity obligations) have been fully repaid
and performed and Collateral Agent’s and the Lenders’ obligation to provide
Credit Extensions terminates.

9.3 Protective Payments. If Borrower or any of its Subsidiaries fail to obtain
the insurance called for by Section 6.5 or fails to pay any premium thereon or
fails to pay any other amount which Borrower or any of its Subsidiaries is
obligated to pay under this Agreement or any other Loan Document, Collateral
Agent may obtain such insurance or make such payment, and all amounts so paid by
Collateral Agent are Lenders’ Expenses and immediately due and payable, bearing
interest at the Default Rate, and secured by the Collateral. Collateral Agent
will make reasonable efforts to provide Borrower with notice of Collateral Agent
obtaining such insurance or making such payment at the time it is obtained or
paid or within a reasonable time thereafter. No such payments by Collateral
Agent are deemed an agreement to make similar payments in the future or
Collateral Agent’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Collateral Agent from or on behalf of Borrower or any of its
Subsidiaries of all or any part of the Obligations, and, as between Borrower on
the one hand and Collateral Agent and Lenders on the other, Collateral Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments received against the Obligations in such manner as Collateral Agent
may deem advisable notwithstanding any previous application by Collateral Agent,
and (b) the proceeds of any sale of, or other realization upon all or any part
of the Collateral shall be applied: first, to the Lenders’ Expenses; second, to
accrued and unpaid interest on the Obligations (including any interest which,
but for the provisions of the United States Bankruptcy Code, would have accrued
on such amounts); third, to the principal amount of the Obligations outstanding;
and fourth, to any other indebtedness or obligations of Borrower owing to
Collateral Agent or any Lender under the Loan Documents. Any balance remaining
shall be delivered to Borrower or to whoever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct. In carrying out
the foregoing, (x) amounts received shall be applied in the numerical order
provided until exhausted prior to the application to the next succeeding
category, and (y) each of the Persons entitled to receive a payment in any
particular category shall receive an amount equal to its pro rata share of
amounts available to be applied pursuant thereto for such category. Any
reference in this Agreement to an allocation between or sharing by the Lenders
of any right, interest or obligation “ratably,” “proportionally” or in similar
terms shall refer to Pro Rata Share unless expressly provided otherwise.
Collateral Agent, or if applicable, each Lender, shall promptly remit to the
other Lenders such sums as may be necessary to ensure the ratable repayment of
each Lender’s portion of any Term Loan and the ratable distribution of interest,
fees and reimbursements paid or made by Borrower.

 

[*] = 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

 

20

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Notwithstanding the foregoing, a Lender receiving a scheduled payment shall not
be responsible for determining whether the other Lenders also received their
scheduled payment on such date; provided, however, if it is later determined
that a Lender received more than its ratable share of scheduled payments made on
any date or dates, then such Lender shall remit to Collateral Agent or other
Lenders such sums as may be necessary to ensure the ratable payment of such
scheduled payments, as instructed by Collateral Agent. If any payment or
distribution of any kind or character, whether in cash, properties or
securities, shall be received by a Lender in excess of its ratable share, then
the portion of such payment or distribution in excess of such Lender’s ratable
share shall be received by such Lender in trust for and shall be promptly paid
over to the other Lender for application to the payments of amounts due on the
other Lenders’ claims. To the extent any payment for the account of Borrower is
required to be returned as a voidable transfer or otherwise, the Lenders shall
contribute to one another as is necessary to ensure that such return of payment
is on a pro rata basis. If any Lender shall obtain possession of any Collateral,
it shall hold such Collateral for itself and as agent and bailee for Collateral
Agent and other Lenders for purposes of perfecting Collateral Agent’s security
interest therein.

9.5 Liability for Collateral. So long as Collateral Agent and the Lenders comply
with reasonable banking practices regarding the safekeeping of the Collateral in
the possession or under the control of Collateral Agent and the Lenders,
Collateral Agent and the Lenders shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.

9.6 No Waiver; Remedies Cumulative. Failure by Collateral Agent or any Lender,
at any time or times, to require strict performance by Borrower of any provision
of this Agreement or any other Loan Document shall not waive, affect, or
diminish any right of Collateral Agent or any Lender thereafter to demand strict
performance and compliance herewith or therewith. No waiver hereunder shall be
effective unless signed by Collateral Agent and the Required Lenders and then is
only effective for the specific instance and purpose for which it is given. The
rights and remedies of Collateral Agent and the Lenders under this Agreement and
the other Loan Documents are cumulative. Collateral Agent and the Lenders have
all rights and remedies provided under the Code, any applicable law, by law, or
in equity. The exercise by Collateral Agent or any Lender of one right or remedy
is not an election, and Collateral Agent’s or any Lender’s waiver of any Event
of Default is not a continuing waiver. Collateral Agent’s or any Lender’s delay
in exercising any remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives, to the fullest extent permitted by law,
demand, 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 held by Collateral Agent or any Lender on which Borrower or any
Subsidiary is liable.

 

10. NOTICES

All notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”) by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three
(3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by facsimile transmission; (c) one (1) Business Day
after deposit with a reputable overnight courier with all charges prepaid; or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address, facsimile number,
or email address indicated below. Any of Collateral Agent, Lender or Borrower
may change its mailing address or facsimile number by giving the other party
written notice thereof in accordance with the terms of this Section 10.

 

If to Borrower:     

CYTOKINETICS, INCORPORATED

280 East Grand Avenue

South San Francisco, CA 94080

Attn: Chief Financial Officer

Fax: (650) 624-3200

Email: sbarbari@cytokinetics.com

 

[*] = 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

 

21

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with a copy (which

shall not constitute

notice) to:

    

Cooley LLP

101 California Street, 5th Floor

San Francisco, CA

Attn: Tammy Weng

Fax: (415) 693-2222

Email: tweng@cooley.com

If to Collateral Agent:     

OXFORD FINANCE LLC

133 North Fairfax Street

Alexandria, Virginia 22314

Attention: Legal Department

Fax: (703) 519-5225

Email: LegalDepartment@oxfordfinance.com

with a copy to     

SILICON VALLEY BANK

555 Mission Street, Suite 900

San Francisco, CA 94105

Attn: Jackie Spencer

Fax: (415) 615-0076

Email: jspencer@svb.com

with a copy (which

shall not constitute

notice) to:

    

DLA Piper LLP (US)

4365 Executive Drive, Suite 1100

San Diego, California 92121-2133

Attn: Troy Zander

Fax: (858) 638-5086

Email: troy.zander@dlapiper.com

 

11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER, AND JUDICIAL REFERENCE

California law governs the loan documents without regard to principles of
conflicts of law. Borrower, collateral agent and each lender each submit to the
exclusive jurisdiction of the state and federal courts in Santa Clara County,
California; provided, however, that nothing in this agreement shall be deemed to
operate to preclude collateral agent or any lender from bringing suit or taking
other legal action in any other jurisdiction to realize on the collateral or any
other security for the obligations, or to enforce a judgment or other court
order in favor of collateral agent or any lender. Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and borrower hereby waives any objection that it may have based upon
lack of personal jurisdiction, improper venue, or forum non conveniens and
hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to borrower at the address set forth in,
or subsequently provided by borrower in accordance with, section 10 of this
agreement and that service so made shall be deemed completed upon the earlier to
occur of borrower’s actual receipt thereof or three (3) days after deposit in
the u.s. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, COLLATERAL AGENT
AND EACH LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

[*] = 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

 

22

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WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the Santa Clara
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and orders applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to California Code of Civil Procedure § 644(a). Nothing in this
paragraph shall limit the right of any party at any time to exercise self-help
remedies, foreclose against collateral, or obtain provisional remedies. The
private judge shall also determine all issues relating to the applicability,
interpretation, and enforceability of this paragraph.

 

12. GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not transfer,
pledge or assign this Agreement or any rights or obligations under it without
Collateral Agent’s and each Lender’s prior written consent (which may be granted
or withheld in Collateral Agent’s and each Lender’s discretion, subject to
Section 12.6). The Lenders have the right, without the consent of or notice to
Borrower, to sell, transfer, assign, pledge, negotiate, or grant participation
in (any such sale, transfer, assignment, negotiation, or grant of a
participation, a “Lender Transfer”) all or any part of, or any interest in, the
Lenders’ obligations, rights, and benefits under this Agreement and the other
Loan Documents; provided, however, that any such Lender Transfer (other than a
transfer, pledge, sale or assignment to an Eligible Assignee) of its
obligations, rights, and benefits under this Agreement and the other Loan
Documents shall require the prior written consent of the Required Lenders (such
approved assignee, an “Approved Lender”). Borrower and Collateral Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned until Collateral Agent shall have received and
accepted an effective assignment agreement in form satisfactory to Collateral
Agent executed, delivered and fully completed by the applicable parties thereto,
and shall have received such other information regarding such Eligible Assignee
or Approved Lender as Collateral Agent reasonably shall require. Notwithstanding
anything to the contrary contained herein, so long as no Event of Default has
occurred and is continuing, no Lender Transfer (other than a Lender Transfer
(i) in respect of the Warrants or (ii) in connection with (x) assignments by a
Lender due to a forced divestiture at the request of any regulatory agency; or
(y) upon the occurrence of a default, event of default or similar occurrence
with respect to a Lender’s own financing or securitization transactions) shall
be permitted, without Borrower’s consent, to any Person which is an Affiliate or
Subsidiary of Borrower, a direct competitor of Borrower or a vulture hedge fund,
each as determined by Collateral Agent.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Collateral
Agent and the Lenders and their respective directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing
Collateral Agent or the Lenders (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) asserted by any other party in connection with; related to; following;
or arising from, out of or under, the transactions contemplated by the Loan
Documents; and (b) all losses or Lenders’ Expenses incurred, or paid by
Indemnified Person in connection with; related to; following; or arising

 

[*] = 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

 

23

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from, out of or under, the transactions contemplated by the Loan Documents
between Collateral Agent, and/or the Lenders and Borrower (including reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused
by such Indemnified Person’s gross negligence or willful misconduct. Borrower
hereby further indemnifies, defends and holds each Indemnified Person harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the fees and disbursements of
counsel for such Indemnified Person) in connection with any investigative,
response, remedial, administrative or judicial matter or proceeding, whether or
not such Indemnified Person shall be designated a party thereto and including
any such proceeding initiated by or on behalf of Borrower, and the reasonable
expenses of investigation by engineers, environmental consultants and similar
technical personnel and any commission, fee or compensation claimed by any
broker (other than any broker retained by Collateral Agent or Lenders) asserting
any right to payment for the transactions contemplated hereby which may be
imposed on, incurred by or asserted against such Indemnified Person as a result
of or in connection with the transactions contemplated hereby and the use or
intended use of the proceeds of the loan proceeds except for liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements directly caused by such Indemnified Person’s
gross negligence or willful misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. Collateral Agent and the Lenders may correct
patent errors and fill in any blanks in this Agreement and the other Loan
Documents consistent with the agreement of the parties, so long as Collateral
Agent provides Borrower with written notice of such correction and allows
Borrower at least ten (10) days to object to such correction. In the event of
such objection, such correction shall not be made except by an amendment signed
by both Collateral Agent, the Lenders and Borrower.

12.6 Amendments in Writing; Integration. (a) No amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, no approval or consent thereunder, or any consent to any departure by
Borrower or any of its Subsidiaries therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower, Collateral Agent and
the Required Lenders provided that:

(i) no such amendment, waiver or other modification that would have the effect
of increasing or reducing a Lender’s Term Loan Commitment or Commitment
Percentage shall be effective as to such Lender without such Lender’s written
consent;

(ii) no such amendment, waiver or modification that would affect the rights and
duties of Collateral Agent shall be effective without Collateral Agent’s written
consent or signature;

(iii) no such amendment, waiver or other modification shall, unless signed by
all the Lenders directly affected thereby, (A) reduce the principal of, rate of
interest on or any fees with respect to any Term Loan or forgive any principal,
interest (other than default interest) or fees (other than late charges) with
respect to any Term Loan (B) postpone the date fixed for, or waive, any payment
of principal of any Term Loan or of interest on any Term Loan (other than
default interest) or any fees provided for hereunder (other than late charges or
for any termination of any commitment); (C) change the definition of the term
“Required Lenders” or the percentage of Lenders which shall be required for the
Lenders to take any action hereunder; (D) release all or substantially all of
any material portion of the Collateral, authorize Borrower to sell or otherwise
dispose of all or substantially all or any material portion of the Collateral or
release any Guarantor of all or any portion of the Obligations or its guaranty
obligations with respect thereto, except, in each case with respect to this
clause (D), as otherwise may be expressly permitted under this Agreement or the
other Loan Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 12.6 or the
definitions of the terms used in this Section 12.6 insofar as the definitions
affect the substance of this Section 12.6; (F) consent to the assignment,
delegation or other transfer by Borrower of any of its rights and obligations
under any Loan Document or release Borrower of its payment obligations under any
Loan Document, except, in each case with

 

[*] = 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

 

24

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respect to this clause (F), pursuant to a merger or consolidation permitted
pursuant to this Agreement; (G) amend any of the provisions of Section 9.4 or
amend any of the definitions of Pro Rata Share, Term Loan Commitment, Commitment
Percentage or that provide for the Lenders to receive their Pro Rata Shares of
any fees, payments, setoffs or proceeds of Collateral hereunder; (H) subordinate
the Liens granted in favor of Collateral Agent securing the Obligations; or
(I) amend any of the provisions of Section 12.10. It is hereby understood and
agreed that all Lenders shall be deemed directly affected by an amendment,
waiver or other modification of the type described in the preceding clauses (C),
(D), (E), (F), (G) and (H) of the preceding sentence;

(iv) the provisions of the foregoing clauses (i), (ii) and (iii) are subject to
the provisions of any interlender or agency agreement among the Lenders and
Collateral Agent pursuant to which any Lender may agree to give its consent in
connection with any amendment, waiver or modification of the Loan Documents only
in the event of the unanimous agreement of all Lenders.

(b) Other than as expressly provided for in Section 12.6(a)(i)-(iii), Collateral
Agent may, if requested by the Required Lenders, from time to time designate
covenants in this Agreement less restrictive by notification to a representative
of Borrower.

(c) This Agreement and the Loan Documents represent the entire agreement about
this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement and the Loan
Documents merge into this Agreement and the Loan Documents.

12.7 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, is an original, and all taken together, constitute one Agreement.

12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force and effect until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied. Without limiting the
foregoing, except as otherwise provided in Section 4.1, the grant of security
interest by Borrower in Section 4.1 shall survive until the termination of all
Bank Services Agreements. The obligation of Borrower in Section 12.2 to
indemnify each Lender and Collateral Agent, as well as the confidentiality
provisions in Section 12.9 below, shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.

12.9 Confidentiality. In handling any confidential information of Borrower, the
Lenders and Collateral Agent shall exercise the same degree of care that it
exercises for their own proprietary information, but disclosure of information
may be made: (a) subject to the terms and conditions of this Agreement, to the
Lenders’ and Collateral Agent’s Subsidiaries or Affiliates, or in connection
with a Lender’s own financing or securitization transactions and upon the
occurrence of a default, event of default or similar occurrence with respect to
such financing or securitization transaction; (b) to prospective transferees
(other than those identified in (a) above) or purchasers of any interest in the
Credit Extensions (provided, however, the Lenders and Collateral Agent shall,
except upon the occurrence and during the continuance of an Event of Default,
obtain such prospective transferee’s or purchaser’s agreement to the terms of
this provision or to similar confidentiality terms); (c) as required by law,
regulation, subpoena, or other order; (d) to Lenders’ or Collateral Agent’s
regulators or as otherwise required in connection with an examination or audit;
(e) as Collateral Agent reasonably considers appropriate in exercising remedies
under the Loan Documents; and (f) to third party service providers of the
Lenders and/or Collateral Agent so long as such service providers have executed
a confidentiality agreement with the Lenders and Collateral Agent with terms no
less restrictive than those contained herein. Confidential information does not
include information that either: (i) is in the public domain or in the Lenders’
and/or Collateral Agent’s possession when disclosed to the Lenders and/or
Collateral Agent, or becomes part of the public domain after disclosure to the
Lenders and/or Collateral Agent; or (ii) is disclosed to the Lenders and/or
Collateral Agent by a third party, if the Lenders and/or Collateral Agent does
not know that the third party is prohibited from disclosing the information.
Collateral Agent and the Lenders may use confidential information for any
purpose, including, without limitation, for the development of client databases,
reporting purposes, and market analysis. The provisions of the immediately

 

[*] = 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

 

25

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preceding sentence shall survive the termination of this Agreement. The
agreements provided under this Section 12.9 supersede all prior agreements,
understanding, representations, warranties, and negotiations between the parties
about the subject matter of this Section 12.9.

12.10 Right of Set Off. Borrower hereby grants to Collateral Agent and to each
Lender, a lien, security interest and right of set off as security for all
Obligations to Collateral Agent and each Lender hereunder, whether now existing
or hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Collateral Agent or the Lenders or any entity under the control of Collateral
Agent or the Lenders (including a Collateral Agent affiliate) or in transit to
any of them. At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Collateral Agent or the Lenders may
set off the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured and regardless of the adequacy of
any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE
COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.11 Silicon Valley Bank as Agent. Collateral Agent hereby appoints Silicon
Valley Bank (“SVB”) as its agent (and SVB hereby accepts such appointment) for
the purpose of perfecting Collateral Agent’s Liens in assets which, in
accordance with Article 8 or Article 9, as applicable, of the Code can be
perfected by possession or control, including without limitation, all deposit
accounts maintained at SVB.

12.12 Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any
documents (including new Secured Promissory Notes) reasonably required to
effectuate and acknowledge each assignment of a Term Loan Commitment or Loan to
an assignee in accordance with Section 12.1, (ii) make Borrower’s management
available to meet with Collateral Agent and prospective participants and
assignees of Term Loan Commitments or Credit Extensions (which meetings shall be
conducted no more often than twice every twelve months unless an Event of
Default has occurred and is continuing) during normal business hours and upon
reasonable prior written notice (unless an Event of Default has occurred and is
continuing), and (iii) assist Collateral Agent or the Lenders in the preparation
of information relating to the financial affairs of Borrower as any prospective
participant or assignee of a Term Loan Commitment or Term Loan reasonably may
request. Subject to the provisions of Section 12.9, Borrower authorizes each
Lender to disclose to any prospective participant or assignee of a Term Loan
Commitment, any and all information in such Lender’s possession concerning
Borrower and its financial affairs which has been delivered to such Lender by or
on behalf of Borrower pursuant to this Agreement, or which has been delivered to
such Lender by or on behalf of Borrower in connection with such Lender’s credit
evaluation of Borrower prior to entering into this Agreement.

12.13 International Tax Structure. Collateral Agent and Lenders acknowledge that
Borrower is contemplating the International Tax Structure. In the event that
Collateral Agent and Lenders consent to the International Tax Structure,
Collateral Agent and Lenders agree to use their good faith business judgment,
determined from the perspective of a senior secured lender, to negotiate an
amendment to incorporate such transaction into the Loan Documents.

 

13. DEFINITIONS

13.1 Definitions. As used in this Agreement, the following terms have the
following meanings:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.

 

[*] = 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

 

26

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“Agreement” is defined in the preamble hereof.

“Amortization Date” is, November 1, 2017.

“Annual Projections” is defined in Section 6.2(a).

“Anti-Terrorism Laws” are any laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective September 24, 2001), the USA
PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the
laws administered by OFAC.

“Approved Fund” is any (i) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (ii) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (i) and that, with respect to each of the
preceding clauses (i) and (ii), is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) a Person (other than a natural person) or an
Affiliate of a Person (other than a natural person) that administers or manages
a Lender.

“Approved Lender” is defined in Section 12.1.

“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

“Bank” is defined in the preamble hereof.

“Basic Rate” is, with respect to a Term Loan, the per annum rate of interest
(based on a year of three hundred sixty (360) days) equal to the greater of
(i) seven and one-half percent (7.50%) and (ii) the sum of (a) the thirty
(30) day U.S. LIBOR rate reported in the Wall Street Journal three (3) Business
Days prior to the Funding Date of such Term Loan, plus (b) seven and thirty-one
hundredths percent (7.31%); provided that the Basic Rate shall not be adjusted
upward unless and until the thirty (30) day U.S. LIBOR rate reported in the Wall
Street Journal exceed sixty-nine hundredths percent (0.69%).

“Blocked Person” is any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are Borrower’s or any of its Subsidiaries’ books and records
including ledgers, federal, and state tax returns, records regarding Borrower’s
or its Subsidiaries’ assets or liabilities, the Collateral, business operations
or financial condition, and all computer programs or storage or any equipment
containing such information.

 

[*] = 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

 

27

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“Business Day” is any day that is not a Saturday, Sunday or a day on which
Collateral Agent is closed.

“Cash Equivalents” are (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc., and (c) certificates of deposit
maturing no more than one (1) year after issue provided that the account in
which any such certificate of deposit is maintained is subject to a Control
Agreement in favor of Collateral Agent. For the avoidance of doubt, the direct
purchase by Borrower or any of its Subsidiaries of any Auction Rate Securities,
or purchasing participations in, or entering into any type of swap or other
derivative transaction, or otherwise holding or engaging in any ownership
interest in any type of Auction Rate Security by Borrower or any of its
Subsidiaries shall be conclusively determined by the Lenders as an ineligible
Cash Equivalent, and any such transaction shall expressly violate each other
provision of this Agreement governing Permitted Investments. Notwithstanding the
foregoing, Cash Equivalents does not include and Borrower, and each of its
Subsidiaries, are prohibited from purchasing, purchasing participations in,
entering into any type of swap or other equivalent derivative transaction, or
otherwise holding or engaging in any ownership interest in any type of debt
instrument, including, without limitation, any corporate or municipal bonds with
a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an auction rate security (each,
an “Auction Rate Security”).

“Claims” are defined in Section 12.2.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of California,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account, or any other bank account maintained by Borrower or any Loan Party at
any time.

“Collateral Agent” is, Oxford, not in its individual capacity, but solely in its
capacity as agent on behalf of and for the benefit of the Lenders.

“Commitment Percentage” is set forth in Schedule 1.1, as amended from time to
time.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

“Communication” is defined in Section 10.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in

 

[*] = 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

 

28

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the ordinary course of business. The amount of a Contingent Obligation is the
stated or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support
arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower or any of its Subsidiaries maintains a Deposit
Account or the securities intermediary or commodity intermediary at which
Borrower or any of its Subsidiaries maintains a Securities Account or a
Commodity Account, Borrower and such Subsidiary, and Collateral Agent pursuant
to which Collateral Agent obtains control (within the meaning of the Code) for
the benefit of the Lenders over such Deposit Account, Securities Account, or
Commodity Account.

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Credit Extension” is any Term Loan or any other extension of credit by
Collateral Agent or Lenders for Borrower’s benefit.

“Cyto Bermuda” is Cytokinetics (Bermuda) Ltd., an entity organized under the
laws of Bermuda and a wholly-owned Subsidiary of Borrower.

“Default Rate” is defined in Section 2.3(b).

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is Borrower’s deposit account disclosed in the
Perfection Certificate dated as of the Effective Date and maintained with Bank.

“Disbursement Letter” is that certain form attached hereto as Exhibit B-1.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Effective Date” is defined in the preamble of this Agreement.

“Eligible Assignee” is (i) a Lender, (ii) an Affiliate of a Lender, (iii) an
Approved Fund and (iv) any commercial bank, savings and loan association or
savings bank or any other entity which is an “accredited investor” (as defined
in Regulation D under the Securities Act of 1933, as amended) and which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which either (A) has a rating of BBB or higher from Standard & Poor’s
Rating Group and a rating of Baa2 or higher from Moody’s Investors Service, Inc.
at the date that it becomes a Lender or (B) has total assets in excess of Five
Billion Dollars ($5,000,000,000.00), and in each case of clauses (i) through
(iv), which, through its applicable lending office, is capable of lending to
Borrower without the imposition of any withholding or similar taxes; provided
that notwithstanding the foregoing, “Eligible Assignee” shall not include,
unless an Event of Default has occurred and is continuing, (i) Borrower or any
of Borrower’s Affiliates or Subsidiaries or (ii) a direct competitor of Borrower
or a vulture hedge fund, each as determined by Collateral Agent. Notwithstanding
the foregoing, (x) in connection with assignments by a Lender due to a forced
divestiture at the request of any regulatory agency, the restrictions set forth
herein shall not apply and Eligible Assignee shall mean

 

[*] = 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

 

29

--------------------------------------------------------------------------------

any Person or party and (y) in connection with a Lender’s own financing or
securitization transactions, the restrictions set forth herein shall not apply
and Eligible Assignee shall mean any Person or party providing such financing or
formed to undertake such securitization transaction and any transferee of such
Person or party upon the occurrence of a default, event of default or similar
occurrence with respect to such financing or securitization transaction;
provided that no such sale, transfer, pledge or assignment under this clause
(y) shall release such Lender from any of its obligations hereunder or
substitute any such Person or party for such Lender as a party hereto until
Collateral Agent shall have received and accepted an effective assignment
agreement from such Person or party in form satisfactory to Collateral Agent
executed, delivered and fully completed by the applicable parties thereto, and
shall have received such other information regarding such Eligible Assignee as
Collateral Agent reasonably shall require.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

“Equity Event” is the receipt by Borrower on or after the Effective Date of
unrestricted net cash proceeds of not less than [*] from the issuance and sale
by Borrower of its equity securities.

“ERISA” is the Employee Retirement Income Security Act of 1974, as amended, and
its regulations.

“Event of Default” is defined in Section 8.

“Final Payment” is a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) due on the earliest
to occur of (a) the Maturity Date, or (b) the acceleration of any Term Loan, or
(c) the prepayment of a Term Loan pursuant to Section 2.2(c) or (d), equal to
the original principal amount of such Term Loan multiplied by the Final Payment
Percentage, payable to Lenders in accordance with their respective Pro Rata
Shares.

“Final Payment Percentage” is four percent (4.00%).

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Subsidiary” is a Subsidiary that is not an entity organized under the
laws of the United States or any territory thereof.

“Funding Date” is any date on which a Credit Extension is made to or on account
of Borrower which shall be a Business Day.

“FX Contract” is any foreign exchange contract by and between Borrower and Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession in the
United States, which are applicable to the circumstances as of the date of
determination.

“General Intangibles” are all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security

 

[*] = 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

 

30

--------------------------------------------------------------------------------

and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance and
rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Guarantor” is any Person providing a Guaranty in favor of Collateral Agent.

“Guaranty” is any guarantee of all or any part of the Obligations, as the same
may from time to time be amended, restated, modified or otherwise supplemented.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.2.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Insolvent” means not Solvent.

“Intellectual Property” means all of Borrower’s or any Subsidiary’s right, title
and interest in and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

(c) any and all source code;

(d) any and all design rights which may be available to Borrower;

(e) any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“International Tax Structure” means the contemplated transfer of its ex-US
intellectual property rights relating to clinical drug candidates pursuant to
which Borrower intends to Transfer the Intellectual Property to Cyto Bermuda
and/or its Subsidiaries would subsequently license rights to the Intellectual
Property from Borrower and/or its Subsidiaries.

 

[*] = 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

 

31

--------------------------------------------------------------------------------

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of any Person’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance, payment
or capital contribution to any Person.

“Key Person” is each of Borrower’s (i) [*], who is [*] as of the Effective Date,
(ii) [*], who is [*] as of the Effective Date and (iii) [*], who is [*] as of
the Effective Date.

“Lender” is any one of the Lenders.

“Lenders” are the Persons identified on Schedule 1.1 hereto and each assignee
that becomes a party to this Agreement pursuant to Section 12.1.

“Lenders’ Expenses” are all audit fees and expenses, costs, and expenses
(including reasonable attorneys’ fees and expenses, as well as appraisal fees,
fees incurred on account of lien searches, inspection fees, and filing fees) for
preparing, amending, negotiating, administering, defending and enforcing the
Loan Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred by Collateral Agent
and/or the Lenders in connection with the Loan Documents.

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity, or
similar agreement.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest, or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, the Warrants, the Perfection
Certificates, each Compliance Certificate, each Disbursement Letter, each Loan
Payment/Advance Request Form and any Bank Services Agreement, [the Post Closing
Letter,] any subordination agreements, any note, or notes or guaranties executed
by Borrower or any other Person, and any other present or future agreement
entered into by Borrower, any Guarantor or any other Person for the benefit of
the Lenders and Collateral Agent in connection with this Agreement; all as
amended, restated, or otherwise modified.

“Loan Party” is each of Borrower and any Subsidiary of Borrower that is a co
borrower or Guarantor hereunder.

“Loan Payment/Advance Request Form” is that certain form attached hereto as
Exhibit B-2.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Collateral Agent’s Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, operations or
condition (financial or otherwise) of Borrower or Borrower and its Subsidiaries,
taken as a whole; or (c) a material impairment of the prospect of repayment of
any portion of the Obligations.

“Maturity Date” is October 1, 2020.

“Obligations” are all of Borrower’s obligations to pay when due any debts,
principal, interest, Lenders’ Expenses, the Prepayment Fee, the Final Payment,
and other amounts Borrower owes the Lenders now or later, in connection with,
related to, following, or arising from, out of or under, this Agreement or, the
other Loan Documents (other than the Warrants), or otherwise, including, without
limitation, all obligations relating to letters of credit (including
reimbursement obligations for drawn and undrawn letters of credit), cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin (whether or not allowed)
and debts, liabilities, or obligations of Borrower assigned to the Lenders
and/or Collateral Agent, and the performance of Borrower’s duties under the Loan
Documents (other than the Warrants).

 

[*] = 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

 

32

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“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the Effective Date, and, (a) if such Person is a corporation, its
bylaws in current form, (b) if such Person is a limited liability company, its
limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications thereto.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Payment Date” is the first (1st) calendar day of each calendar month,
commencing on November 1, 2015.

“Perfection Certificate” and “Perfection Certificates” is defined in
Section 5.1.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to the Lenders and Collateral Agent under this
Agreement and the other Loan Documents;

(b) Indebtedness existing on the Effective Date and disclosed on the Perfection
Certificate(s);

(c) Subordinated Debt;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

(e) Indebtedness consisting of capitalized lease obligations and purchase money
Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to
finance the acquisition, repair, improvement or construction of fixed or capital
assets of such person, provided that (i) the aggregate outstanding principal
amount of all such Indebtedness does not exceed [*] at any time and (ii) the
principal amount of such Indebtedness does not exceed the lower of the cost or
fair market value of the property so acquired or built or of such repairs or
improvements financed with such Indebtedness (each measured at the time of such
acquisition, repair, improvement or construction is made);

(f) any obligations owing Bank with respect to corporate credit cards or
merchant services issued by Bank for the account of Borrower or any Subsidiary
in an aggregate amount outstanding at any time not to exceed [*];

(g) all obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect Borrower or a Subsidiary against
fluctuation in interest rates, currency exchange rates or commodity prices, in
an aggregate amount not to exceed [*] at any time;

(h) Indebtedness in respect of letters of credit, bank guarantees and similar
instruments issued for the account of the Borrower or any Subsidiary in the
ordinary course of business supporting obligations

 

[*] = 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

 

33

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under (A) workers’ compensation, unemployment insurance and other social
security laws and (B) bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and obligations of a like nature; in
an aggregate amount for (A) and (B) not to exceed [*] at any time;

(i) Indebtedness constituting or consisting of Investments under clause (f) of
the definition of “Permitted Investments;”

(j) Indebtedness with respect to [*], with Collateral Agent’s and Required
Lenders’ prior written consent, provided that no Event of Default exists at the
time of incurring such Indebtedness or would result after giving effect thereto;

(k) Other unsecured Indebtedness not to exceed [*] in the aggregate at any time;
and

(l) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (k) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose materially more burdensome terms upon Borrower, or its Subsidiary, as
the case may be.

“Permitted Investments” are:

(a) Investments disclosed on the Perfection Certificate(s) and existing on the
Effective Date;

(b) (i) Investments consisting of cash and Cash Equivalents, and (ii) any other
Investments permitted by Borrower’s investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved in writing by Collateral Agent;

(c) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

(d) Investments consisting of deposit, securities and/or commodities accounts in
which Collateral Agent has a perfected security interest (other than foreign
accounts, to the extent not required under Section 6.6);

(e) Investments in connection with Transfers permitted by Section 7.1 and
Investments permitted under Section 7.3;

(f) Investments (i) by Borrower in Subsidiaries that are not Loan Parties not to
exceed [*] in the aggregate in any fiscal year; and (ii) by Borrower or any
Subsidiary in or to any Loan Party;

(g) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower’s Board of Directors; not to
exceed [*] in the aggregate for (i) and (ii) in any fiscal year;

(h) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;

(i) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business; provided that this paragraph (h) shall not
apply to Investments of Borrower in any Subsidiary;

 

[*] = 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

 

34

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(j) Investments constituting interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect Borrower or a Subsidiary against
fluctuation in interest rates, currency exchange rates or commodity prices, in
an aggregate amount not to exceed [*] at any time;

(k) Investments in joint ventures or strategic alliances in the ordinary course
of Borrower’s business consisting of the non-exclusive licensing of technology
and licensing that may be exclusive in respects other than territory and that
may be exclusive as to territory only as to discreet geographical areas outside
of the United States or Europe, the development of technology or the providing
of technical support, provided that any cash investments by Borrower do not
exceed [*] in the aggregate in any fiscal year;

(l) the formation or acquisition of Subsidiaries after the Effective Date,
subject to compliance with Section 6.12 of this Agreement;

(m) Investments consisting of the conversion or settlement of any convertible
securities of Borrower or any Subsidiary or otherwise in exchange therefor; and

(n) Other Investments not to exceed [*]

“Permitted Licenses” are (A) (i) licenses of over-the-counter software that is
commercially available to the public, (ii) licenses granted pursuant to the
Collaboration and Option Agreement between Amgen Inc. and Borrower dated as of
December 29, 2006, as amended from time to time, and (iii) licenses granted
pursuant to the Amended and Restated Licenses and Collaboration Agreement
between Borrower and Astellas dated December 22, 2014, as amended from time to
time, and (B) non-exclusive and exclusive licenses for the use of the
Intellectual Property of Borrower or any of its Subsidiaries entered into in the
ordinary course of business, provided, that, with respect to each such license
described in clause (B), (i) no Event of Default has occurred or is continuing
at the time of such license; (ii) the license constitutes an arms-length
transaction, the terms of which, on their face, do not provide for a sale or
assignment of any Intellectual Property and do not restrict the ability of
Borrower or any of its Subsidiaries, as applicable, to pledge, grant a security
interest in or lien on, or assign or otherwise Transfer any Intellectual
Property; (iii) in the case of any exclusive license, (x) Borrower delivers ten
(10) days’ prior written notice and a brief summary of the terms of the proposed
license to Collateral Agent and the Lenders and delivers to Collateral Agent and
the Lenders copies of the final executed licensing documents in connection with
the exclusive license promptly upon consummation thereof, and (y) any such
license could not result in a legal transfer of title of the licensed property
but may be exclusive in respects other than territory and may be exclusive as to
territory only as to discrete geographical areas outside of the United States;
and (iv) all upfront payments, royalties, milestone payments or other proceeds
arising from the licensing agreement that are payable to Borrower or any of its
Subsidiaries are paid to a Deposit Account that is governed by a Control
Agreement.

“Permitted Liens” are:

(a) Liens existing on the Effective Date and disclosed on the Perfection
Certificates or arising under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;

(c) liens securing Indebtedness permitted under clause (e) of the definition of
“Permitted Indebtedness,” provided that (i) such liens exist prior to the
acquisition of, or attach substantially simultaneous with, or within twenty
(20) days after the, acquisition, lease, repair, improvement or construction of,
such property financed or leased by such Indebtedness and (ii) such liens do not
extend to any property of Borrower other than the property (and proceeds
thereof) acquired, leased or built, or the improvements or repairs, financed by
such 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

 

35

--------------------------------------------------------------------------------

(d) Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to Inventory, securing liabilities in the aggregate amount not
to exceed [*], and which are not delinquent or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;

(e) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

(f) leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business), and leases, subleases, non-exclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Collateral Agent or any Lender
a security interest therein;

(g) banker’s liens, rights of setoff and Liens in favor of financial
institutions incurred in the ordinary course of business arising in connection
with Borrower’s deposit accounts or securities accounts held at such
institutions solely to secure payment of fees and similar costs and expenses and
provided such accounts are maintained in compliance with Section 6.6(b) hereof;

(h) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Section 8.4 or 8.7;

(i) Liens consisting of Permitted Licenses;

(j) Liens incurred or deposits made in the ordinary course of Borrower’s or a
Subsidiary’s business, securing liabilities to secure the performance of
tenders, statutory obligations, surety, bid and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations;

(k) easements, reservations, rights-of-way, restrictions, minor defects or
irregularities in title and other similar Liens affecting real property not
interfering in any material respect with the ordinary course of the business of
Borrower;

(l) Liens or deposits to secure the performance of leases incurred in the
ordinary course of business and not representing an obligation for borrowed
money and Liens to secure tenant improvements, provided the lessor thereof has
executed a landlord consent in favor of, and in form and content reasonably
acceptable to, Collateral Agent;

(m) Liens in favor of customs and revenue authorities arising as a matter of
law, in the ordinary course of Borrower’s business, to secure payment of customs
duties in connection with the importation of goods;

(n) Liens in connection with a royalty-based financing permitted under Permitted
Indebtedness; and

(o) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (n), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase; except as
permitted under clause (m) of Permitted 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

 

36

--------------------------------------------------------------------------------

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

[“Post Closing Letter” is that certain Post Closing Letter dated as of the
Effective Date by and between Collateral Agent and Borrower.]

“Prepayment Fee” is, with respect to any Term Loan subject to prepayment prior
to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration
or otherwise, an additional fee payable to the Lenders in amount equal to:

(i) for a prepayment made on or after the Funding Date of such Term Loan through
and including the first anniversary of the Funding Date of such Term Loan, three
percent (3.00%) of the principal amount of such Term Loan prepaid;

(ii) for a prepayment made after the date which is after the first anniversary
of the Funding Date of such Term Loan through and including the second
anniversary of the Funding Date of such Term Loan, two percent (2.00%) of the
principal amount of the Term Loans prepaid; and

(iii) for a prepayment made after the second anniversary of the Funding Date of
such Term Loan and prior to the Maturity Date, one percent (1.00%) of the
principal amount of the Term Loans prepaid.

“Pro Rata Share” is, as of any date of determination, with respect to each
Lender, a percentage (expressed as a decimal, rounded to the ninth decimal
place) determined by dividing the outstanding principal amount of Term Loans
held by such Lender by the aggregate outstanding principal amount of all Term
Loans.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

“Required Lenders” means (i) for so long as all of the Persons that are Lenders
on the Effective Date (each an “Original Lender”) have not assigned or
transferred any of their interests in their Term Loan, Lenders holding one
hundred percent (100%) of the aggregate outstanding principal balance of the
Term Loan, or (ii) at any time from and after any Original Lender has assigned
or transferred any interest in its Term Loan, Lenders holding at least sixty six
percent (66%) of the aggregate outstanding principal balance of the Term Loan
and, in respect of this clause (ii), (A) each Original Lender that has not
assigned or transferred any portion of its Term Loan, (B) each assignee or
transferee of an Original Lender’s interest in the Term Loan, but only to the
extent that such assignee or transferee is an Affiliate or Approved Fund of such
Original Lender, and (C) any Person providing financing to any Person described
in clauses (A) and (B) above; provided, however, that this clause (C) shall only
apply upon the occurrence of a default, event of default or similar occurrence
with respect to such financing.

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the President, Chief Executive Officer, or Chief
Financial Officer of Borrower acting alone.

“Second Draw Period” is the period commencing on the date of the occurrence of
the Second Draw Period Milestones and ending on the earliest of (i) ninety
(90) days from the date of Borrower’s achievement of the Second Draw Period
Milestones; (ii) June 30, 2016; and (iii) the occurrence of an Event of Default;
provided, however, that the Second Draw Period shall not commence if on the date
of the occurrence of the Second Draw Period Milestones an Event of Default has
occurred and is continuing.

 

[*] = 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

 

37

--------------------------------------------------------------------------------

“Second Draw Period Milestones” is the achievement of each of the following:
(i) [*] Phase 3 clinical trial of tirasemtiv in patients with ALS
(VITALITY-ALS), (ii) [*] Phase 2 clinical trial of CK2127107 (CY 5021); and
(iii) [*] data from the Phase 2 clinical trial of omecamtiv mecarbil (COSMIC-HF)
[*]; each, in form and content reasonably acceptable to Collateral Agent and the
Lenders.

“Secured Promissory Note” is defined in Section 2.4.

“Secured Promissory Note Record” is a record maintained by each Lender with
respect to the outstanding Obligations owed by Borrower to Lender and credits
made thereto.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“Shares” is one hundred percent (100%) of the issued and outstanding capital
stock, membership units or other securities owned or held of record by Borrower
or Borrower’s Subsidiary, in any Subsidiary; provided that, (x) in the event
Borrower demonstrates to Collateral Agent’s reasonable satisfaction, that a
pledge of more than sixty five percent (65%) of the Shares of such Subsidiary
which is a Foreign Subsidiary, creates a present and existing adverse tax
consequence to Borrower under the U.S. Internal Revenue Code, and (y) solely
with respect to Cyto Bermuda, “Shares” shall mean sixty-five percent (65%) of
the issued and outstanding capital stock, membership units or other securities
owned or held of record by Borrower or its Subsidiary in such Foreign
Subsidiary.

“Solvent” is, with respect to any Person: the fair salable value of such
Person’s consolidated assets (including goodwill minus disposition costs)
exceeds the fair value of such Person’s liabilities; such Person is not left
with unreasonably small capital after the transactions in this Agreement; and
such Person is able to pay its debts (including trade debts) as they mature.

“Subordinated Debt” is indebtedness incurred by Borrower or any of its
Subsidiaries subordinated to all Indebtedness of Borrower and/or its
Subsidiaries to the Lenders (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Collateral Agent
and the Lenders entered into between Collateral Agent, Borrower, and/or any of
its Subsidiaries, and the other creditor), on terms acceptable to Collateral
Agent and the Lenders.

“Subsidiary” is, with respect to any Person, any Person of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations) is owned or controlled, directly or indirectly,
by such Person or through one or more intermediaries.

“Term A Loan” is defined in Section 2.2(a)(i) hereof.

“Term B Loan” is defined in Section 2.2(a)(ii) hereof.

“Term C Loan” is defined in Section 2.2(a)(iii) hereof.

“Term Loan” is defined in Section 2.2(a)(iii) hereof.

“Term Loan Commitment” is, for any Lender, the obligation of such Lender to make
a Term Loan, up to the principal amount shown on Schedule 1.1. “Term Loan
Commitments” means the aggregate amount of such commitments of all Lenders.

“Third Draw Period” is the period after the Term B Loan has been made,
commencing on the date Borrower has achieved the Third Draw Period Milestones
and ending on the earliest of (i) ninety (90) days from the date of Borrower’s
achievement of the Third Draw Period Milestones; (ii) March 31, 2017; and
(iii) the occurrence of an Event of Default; provided, however, that the Third
Draw Period shall not commence if on the date of the occurrence of the Third
Draw Period Milestones an Event of Default has occurred and is continuing.

 

[*] = 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

 

38

--------------------------------------------------------------------------------

“Third Draw Period Milestones” is the earlier of (i) the occurrence of the
Equity Event, or (ii) [*] data from VITALITY-ALS Phase 3 trial [*], in form and
content reasonably acceptable to Collateral Agent and the Lenders.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Warrants” are those certain Warrants to Purchase Stock dated as of the
Effective Date, or any date thereafter, issued by Borrower in favor of each
Lender or such Lender’s Affiliates.

[Balance of Page Intentionally Left Blank]

 

[*] = 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

 

39

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

 

BORROWER: CYTOKINETICS, INCORPORATED By  

/s/ Sharon A. Barbari

Name:  

Sharon A. Barbari

Title:  

EVP FINANCE and CFO

COLLATERAL AGENT AND LENDER: OXFORD FINANCE LLC By  

/s/ Mark Davis

Name:  

Mark Davis

Title:  

Vice President-Finance, Secretary & Treasurer

LENDER: SILICON VALLEY BANK By  

/s/ Jackie Spencer

Name:  

Jackie Spencer

Title:  

Director

[Signature Page to Loan and Security Agreement]

 

[*] = 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 1.1

Lenders and Commitments

Term A Loans

 

Lender

   Term Loan Commitment     Commitment Percentage  

OXFORD FINANCE LLC

   $ [* ]      [* ]% 

SILICON VALLEY BANK

   $ [* ]      [* ]%    

 

 

   

 

 

 

TOTAL

   $ 15,000,000.00        100.00 %    

 

 

   

 

 

 

Term B Loans

 

Lender

   Term Loan Commitment     Commitment Percentage  

OXFORD FINANCE LLC

   $ [* ]      [* ]% 

SILICON VALLEY BANK

   $ [* ]      [* ]%    

 

 

   

 

 

 

TOTAL

   $ 15,000,000.00        100.00 %    

 

 

   

 

 

 

Term C Loans

 

Lender

   Term Loan Commitment     Commitment Percentage  

OXFORD FINANCE LLC

   $ [* ]      [* ]% 

SILICON VALLEY BANK

   $ [* ]      [* ]%    

 

 

   

 

 

 

TOTAL

   $ 10,000,000.00        100.00 %    

 

 

   

 

 

 

Aggregate (all Term Loans)

 

Lender

   Term Loan Commitment     Commitment Percentage  

OXFORD FINANCE LLC

   $ [* ]      [* ]% 

SILICON VALLEY BANK

   $ [* ]      [* ]%    

 

 

   

 

 

 

TOTAL

   $ 40,000,000.00        100.00 %    

 

 

   

 

 

 

 

[*] = 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

Description of Collateral

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as noted below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts and other
Collateral Accounts, all certificates of deposit, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (i) any
Intellectual Property; provided, however, the Collateral shall include all
Accounts and all proceeds of Intellectual Property. If a judicial authority
(including a U.S. Bankruptcy Court) would hold that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such Accounts and such property that are proceeds of Intellectual Property, then
the Collateral shall automatically, and effective as of the Effective Date,
include the Intellectual Property to the extent necessary to permit perfection
of Collateral Agent’s security interest in such Accounts and such other property
of Borrower that are proceeds of the Intellectual Property; (ii) more than 65%
of the total combined voting power of all classes of stock entitled to vote the
shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Borrower
demonstrates to Collateral Agent’s reasonable satisfaction that a pledge of more
than sixty five percent (65%) of the Shares of such Subsidiary creates a present
and existing adverse tax consequence to Borrower under the U.S. Internal Revenue
Code; and (iii) any license, contract or interest of Borrower as a lessee under
an Equipment lease, in each case if the granting of a Lien in such license,
contract or interest is prohibited by or would constitute a default under the
agreement governing such license, contract or interest (but (A) only to the
extent such prohibition is enforceable under applicable law and (B) other than
to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-408 or 9-409 (or any other Section) of Division 9 of the
Code); provided that upon the termination, lapsing or expiration of any such
prohibition, such license, contract or interest, as applicable, shall
automatically be subject to the security interest granted in favor of Collateral
Agent hereunder and become part of the “Collateral.”

Pursuant to the terms of a certain negative pledge arrangement with Collateral
Agent and the Lenders, Borrower has agreed not to encumber any of its
Intellectual Property.

 

[*] = 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 B-1

Form of Disbursement Letter

[see attached]

 

[*] = 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

--------------------------------------------------------------------------------

DISBURSEMENT LETTER

October 19, 2015

The undersigned, being the duly elected and acting                      of
CYTOKINETICS, INCORPORATED, a Delaware corporation with offices located at 280
East Grand Avenue, South San Francisco, CA 94080 (“Borrower”), does hereby
certify to OXFORD FINANCE LLC (“Oxford” and “Lender”), as collateral agent (the
“Collateral Agent”) in connection with that certain Loan and Security Agreement
dated as of October 19, 2015, by and among Borrower, Collateral Agent and the
Lenders from time to time party thereto (the “Loan Agreement”; with other
capitalized terms used below having the meanings ascribed thereto in the Loan
Agreement) that:

1. The representations and warranties made by Borrower in Section 5 of the Loan
Agreement and in the other Loan Documents are true and correct in all material
respects as of the date hereof.

2. No event or condition has occurred that would constitute an Event of Default
under the Loan Agreement or any other Loan Document.

3. Borrower is in compliance with the covenants and requirements contained in
Sections 4, 6 and 7 of the Loan Agreement.

4. All conditions referred to in Section 3 of the Loan Agreement to the making
of the Loan to be made on or about the date hereof have been satisfied or waived
by Collateral Agent.

5. No Material Adverse Change has occurred.

6. The undersigned is a Responsible Officer.

[Balance of Page Intentionally Left Blank]

 

[*] = 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

--------------------------------------------------------------------------------

7. The proceeds of the Term A Loan shall be disbursed as follows:

 

Disbursement from Oxford:

  

Loan Amount

   $ [* ] 

Plus:

  

—Deposit Received

   $ [* ] 

Less:

  

—Interim Interest

   ($              )

—Lender’s Legal Fees

   ($              )* 

Net Proceeds due from Oxford:

   $                

Disbursement from SVB:

  

Loan Amount

   $ [* ] 

Plus:

  

—Deposit Received

   $                

Less:

  

—Interim Interest

   ($              ) 

Net Proceeds due from SVB:

   $                

TOTAL TERM A LOAN NET PROCEEDS FROM LENDERS

   $                

8. The Term A Loan shall amortize in accordance with the Amortization Table
attached hereto.

9. The aggregate net proceeds of the Term Loans shall be transferred to the
Designated Deposit Account as follows:

 

Account Name:    CYTOKINETICS, INCORPORATED Bank Name:    SILICON VALLEY BANK
Bank Address:   

3003 Tasman Drive

Santa Clara, California 95054

Account Number:    [*] ABA Number:    [*]

[Balance of Page Intentionally Left Blank]

 

 

* Legal fees and costs are through the Effective Date. Post-closing legal fees
and costs, payable after the Effective Date, to be invoiced and paid
post-closing.

 

[*] = 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

--------------------------------------------------------------------------------

Dated as of the date first set forth above.

 

BORROWER: CYTOKINETICS, INCORPORATED By  

 

Name:  

 

Title:  

 

COLLATERAL AGENT AND LENDER: OXFORD FINANCE LLC By  

 

Name:  

 

Title:  

 

LENDER: SILICON VALLEY BANK By  

 

Name:  

 

Title:  

 

[Balance of Page Intentionally Left Blank]

[Signature Page to Disbursement Letter]

 

[*] = 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

--------------------------------------------------------------------------------

FORM OF AMORTIZATION TABLE

Oxford Finance & SVB

Amortization Table

Cytokinetics AA01

 

Start Date:       Disclaimer: Interest Rate:      

THIS IS A STANDARD AMORTIZATION

SCHEDULE. IT IS NOT INTENDED TO BE

USED FOR PAYOFF PURPOSES.

Term:      

 

Payment:

      Final Payment:       Amount:       Interim Interest Days:       Interim
Interest:      

 

PMT No.

   Payment
Date    Beginning
Balance    Monthly
Payment    Interest    Principal    Ending
Balance                                                                        
        

 

  

 

  

 

         Totals                     

 

  

 

  

 

  

 

[*] = 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 B-2

Loan Payment/Advance Request Form

DEADLINE FOR SAME DAY PROCESSING IS NOON PACIFIC TIME*

 

Fax To:       Date:  

 

LOAN PAYMENT:

CYTOKINETICS, INCORPORATED

 

From Account #  

 

    To Account #  

 

  (Deposit Account #)       (Loan Account #) Principal $  

 

    and/or Interest $  

 

Authorized Signature:  

 

    Phone Number:  

 

Print Name/Title:  

 

     

LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

 

From Account #  

 

    To Account #  

 

  (Loan Account #)       (Deposit Account #) Amount of Advance $  

 

     

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

Authorized Signature:  

 

    Phone Number:  

 

Print Name/Title:  

 

     

OUTGOING WIRE REQUEST:

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, Pacific Time

 

Beneficiary Name:  

 

    Amount of Wire: $  

 

Beneficiary Bank:  

 

    Account Number:  

 

City and State:  

 

        Beneficiary Bank Transit (ABA) #:  

 

               Beneficiary Bank Code (Swift, Sort, Chip, etc.):  

 

       

(For International Wire Only)

Intermediary Bank:  

 

    Transit (ABA) #:  

 

For Further Credit to:  

 

Special Instruction:  

 

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

Authorized Signature:  

 

    2nd Signature (if required):  

 

Print Name/Title:  

 

    Print Name/Title:  

 

Telephone #:  

 

    Telephone #:  

 

 

[*] = 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 C

Compliance Certificate

 

TO:   

OXFORD FINANCE LLC, as Collateral Agent and Lender

SILICON VALLEY BANK, as Lender

FROM:    CYTOKINETICS, INCORPORATED

The undersigned authorized officer (“Officer”) of CYTOKINETICS, INCORPORATED
(“Borrower”), hereby certifies that in accordance with the terms and conditions
of the Loan and Security Agreement by and among Borrower, Collateral Agent, and
the Lenders from time to time party thereto (the “Loan Agreement;” capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Loan Agreement),

(a) Borrower is in complete compliance for the period ending
                    with all required covenants except as noted below;

(b) There are no Events of Default, except as noted below;

(c) Except as noted below, all representations and warranties of Borrower stated
in the Loan Documents are true and correct in all material respects on this date
and for the period described in (a), above; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

(d) Borrower, and each of Borrower’s Subsidiaries, has timely filed all required
tax returns and reports, Borrower, and each of Borrower’s Subsidiaries, has
timely paid all foreign, federal, state, and local taxes, assessments, deposits
and contributions owed by Borrower, or Subsidiary, except as otherwise permitted
pursuant to the terms of Section 5.8 of the Loan Agreement;

(e) No Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Collateral Agent and the
Lenders.

Attached are the required documents, if any, supporting our certification(s).
The Officer, on behalf of Borrower, further certifies that the attached
financial statements are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes and except, in
the case of unaudited financial statements, for the absence of footnotes and
subject to year-end audit adjustments as to the interim financial statements.

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

Reporting Covenant    Requirement    Actual   Complies 1)    Financial
statements    Quarterly within 45 days      Yes   No   N/A 2)    Annual (CPA
Audited) statements    Within 95 days after FYE      Yes   No   N/A 3)    Annual
Financial Projections/Budget (prepared on a monthly basis)    Annually (within
60 days of FYE), and when revised      Yes   No   N/A

 

[*] = 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

--------------------------------------------------------------------------------

4)    A/R & A/P agings    If applicable      Yes   No   N/A 5)    8-K, 10-K and
10-Q Filings    Upon filing and if otherwise applicable, within 5 days of filing
         6)    Compliance Certificate    Quarterly within 45 days      Yes   No
  N/A 7)    Cash Certificate    Monthly within 30 days      Yes   No   N/A 8)   
IP Report    When required      Yes   No   N/A 9)    Total amount of Borrower’s
cash and cash equivalents at the last day of the measurement period      
$               Yes   No   N/A 10)    Total amount of Borrower’s Subsidiaries’
cash and cash equivalents at the last day of the measurement period      
$               Yes   No   N/A

Deposit and Securities Accounts

(Please list all accounts; attach separate sheet if additional space needed)

 

Institution Name   Account Number   New Account?  
Account Control Agreement in place? 1)     Yes       No       Yes   No 2)    
Yes       No       Yes   No 3)     Yes       No       Yes   No 4)     Yes      
No       Yes   No

Financial Covenants [None]

Other Matters

 

1)    Have there been any changes in management since the last Compliance
Certificate?   Yes   No 2)    Have there been any
transfers/sales/disposals/retirement of Collateral or IP prohibited by the Loan
Agreement?   Yes   No 3)    Have there been any new or pending claims or causes
of action against Borrower that involve more than Two Hundred Fifty Thousand
Dollars ($250,000.00)?   Yes   No 4)    Have there been any amendments of or
other changes to the capitalization table of Borrower and to the Operating
Documents of Borrower or any of its Subsidiaries? If yes, provide copies of any
such amendments or changes with this Compliance Certificate.   Yes   No

 

[*] = 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

--------------------------------------------------------------------------------

Exceptions

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

CYTOKINETICS, INCORPORATED By  

 

Name:  

 

Title:  

 

Date:  

 

LENDER USE ONLY   Received by:  

 

    Date:  

 

Verified by:  

 

    Date:  

 

Compliance Status:   Yes   No  

 

[*] = 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

--------------------------------------------------------------------------------

ANNEX I

Monthly Cash Certificate

 

Monthly Cash Certificate:    Date:        

 

TO:   

OXFORD FINANCE LLC, as Collateral Agent and Lender

SILICON VALLEY BANK, as Lender

FROM:    CYTOKINETICS, INCORPORATED

 

For month ending:

                 , 20          

 

 

 

Total amount of Borrower’s cash and cash equivalents at the last day of the
measurement period

   $                   

 

 

 

Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last
day of the measurement period

   $                   

 

 

 

Consolidated Monthly Cash Burn for the measurement period

   $                

 

[*] = 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 D

Form of Secured Promissory Note

[see attached]

 

[*] = 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

--------------------------------------------------------------------------------

SECURED PROMISSORY NOTE

(Term A Loan)

 

$            Dated: October 19, 2015    

FOR VALUE RECEIVED, the undersigned, CYTOKINETICS, INCORPORATED, a Delaware
corporation with offices located at 280 East Grand Avenue, South San Francisco,
CA 94080 (“Borrower”) HEREBY PROMISES TO PAY to the order of [OXFORD FINANCE
LLC][SILICON VALLEY BANK] (“Lender”) the principal amount of [        ] MILLION
DOLLARS ($        ) or such lesser amount as shall equal the outstanding
principal balance of the Term A Loan made to Borrower by Lender, plus interest
on the aggregate unpaid principal amount of such Term A Loan, at the rates and
in accordance with the terms of the Loan and Security Agreement dated
October 19, 2015 by and among Borrower, Lender, Oxford Finance LLC, as
Collateral Agent, and the other Lenders from time to time party thereto (as
amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”). If not sooner paid, the entire principal amount and all
accrued and unpaid interest hereunder shall be due and payable on the Maturity
Date as set forth in the Loan Agreement. Any capitalized term not otherwise
defined herein shall have the meaning attributed to such term in the Loan
Agreement.

Principal, interest and all other amounts due with respect to the Term A Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement and this Secured Promissory Note (this “Note”). The
principal amount of this Note and the interest rate applicable thereto, and all
payments made with respect thereto, shall be recorded by Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Note.

The Loan Agreement, among other things, (a) provides for the making of a secured
Term A Loan by Lender to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.

This Note may not be prepaid except as set forth in Section 2.2 (c) and
Section 2.2(d) of the Loan Agreement.

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term A Loan, interest on the Term A Loan and all other amounts due Lender
under the Loan Agreement is secured under the Loan Agreement.

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of California.

The ownership of an interest in this Note shall be registered on a record of
ownership maintained by Lender or its agent. Notwithstanding anything else in
this Note to the contrary, the right to the principal of, and stated interest
on, this Note may be transferred only if the transfer is registered on such
record of ownership and the transferee is identified as the owner of an interest
in the obligation. Borrower shall be entitled to treat the registered holder of
this Note (as recorded on such record of ownership) as the owner in fact thereof
for all purposes and shall not be bound to recognize any equitable or other
claim to or interest in this Note on the part of any other person or entity.

[Balance of Page Intentionally Left Blank]

 

[*] = 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

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

BORROWER: CYTOKINETICS, INCORPORATED 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

--------------------------------------------------------------------------------

LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL

 

Date   

Principal

Amount

   Interest Rate   

Scheduled

Payment Amount

   Notation By                                    

 

[*] = 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

--------------------------------------------------------------------------------

CORPORATE BORROWING CERTIFICATE

 

BORROWER:

LENDERS:

  

CYTOKINETICS, INCORPORATED

OXFORD FINANCE LLC, as Collateral Agent and Lender

SILICON VALLEY BANK, as Lender

   DATE:    October 19, 2015                  

I hereby certify as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower. My
title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation
existing under the laws of the State of Delaware.

3. Attached hereto as Exhibit A and Exhibit B, respectively, are true, correct
and complete copies of (i) Borrower’s Certificate of Incorporation (including
amendments), as filed with the Secretary of State of the state in which Borrower
is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws.
Neither such Certificate of Incorporation nor such Bylaws have been amended,
annulled, rescinded, revoked or supplemented, and such Certificate of
Incorporation and such Bylaws remain in full force and effect as of the date
hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action). Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and the Lenders
may rely on them until each Lender receives written notice of revocation from
Borrower.

[Balance of Page Intentionally Left Blank]

 

[*] = 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

--------------------------------------------------------------------------------

RESOLVED, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

 

Name    Title    Signature   

Authorized to

Add or Remove

Signatories

     

  

     

  

     

   ¨

     

  

     

  

     

   ¨

     

  

     

  

     

   ¨

     

  

     

  

     

   ¨

RESOLVED FURTHER, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.

RESOLVED FURTHER, that such individuals may, on behalf of Borrower:

Borrow Money. Borrow money from the Lenders.

Execute Loan Documents. Execute any loan documents any Lender requires.

Grant Security. Grant Collateral Agent a security interest in any of Borrower’s
assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory
notes, or other indebtedness in which Borrower has an interest and receive cash
or otherwise use the proceeds.

Issue Warrants. Issue warrants for Borrower’s capital stock.

Further Acts. Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrower’s right to a jury trial) they believe to be
necessary to effectuate such resolutions.

RESOLVED FURTHER, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

[Balance of Page Intentionally Left Blank]

 

[*] = 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

--------------------------------------------------------------------------------

5. The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

 

By:  

     

Name:  

     

Title:  

     

*** If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the
authorized signing officers, this Certificate must also be signed by a second
authorized officer or director of Borrower.

I, the                                        of Borrower, hereby certify as to
paragraphs 1 through 5 above, as of the date set forth above.

                    [print title]

 

By:  

     

Name:  

     

Title:  

     

[Signature Page to Corporate Borrowing Certificate]

 

[*] = 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

Certificate of Incorporation (including amendments)

[see attached]

 

[*] = 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

--------------------------------------------------------------------------------

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

CYTOKINETICS, INCORPORATED

Cytokinetics, Incorporated, a corporation organized and existing under the laws
of the State Of Delaware, hereby certifies as follows:

A. The original Certificate of Incorporation of the corporation was filed with
the Secretary of State of the State of Delaware on August 5, 1997.

B. Pursuant to Sections 242 and 245 of the General Corporation Law of the State
of Delaware (the “DGCL”), this Amended and Restated Certificate of Incorporation
restates and amends the provisions of the Amended and Restated Certificate of
Incorporation of the corporation.

C. This Amended and Restated Certificate of Incorporation has been duly approved
by the Board of Directors and the stockholders of the corporation in accordance
with Sections 242 and 245 of the DGCL.

D. The Certificate of Incorporation of the corporation is hereby amended and
restated in its entirety to read as follows:

ARTICLE I

The name of the corporation is Cytokinetics, Incorporated.

ARTICLE II

The address of the corporation’s registered office in the State of Delaware is
2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle
19808. The name of its registered agent at such address is CorpAmerica, Inc.

ARTICLE III

The purpose of the corporation is to engage in any lawful act or activity for
which corporations may be organized under the DGCL.

ARTICLE IV

The corporation shall have authority to issue shares as follows:

170,000,000 shares of Common Stock, par value $0.001 per share. Each share of
Common Stock shall entitle the holder thereof to one (1) vote on each matter
submitted to a vote at a meeting of stockholders.

10,000,000 shares of Preferred Stock, par value $0.001 per share, which may be
issued from time to time in one or more series pursuant to a resolution or
resolutions providing for such issue duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board of Directors).
The Board of Directors is further authorized, subject to limitations prescribed
by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of any wholly unissued series of Preferred Stock, including without
limitation authority to fix by resolution or resolutions the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any such series, and the number of shares constituting any such
series and the designation thereof, or any of the foregoing.

The Board of Directors is further authorized to increase (but not above the
total number of authorized shares of the class) or decrease (but not below the
number of shares of any such series then outstanding) the number of shares of
any series, the number of which was fixed by it, subsequent to the issuance of
shares of such series then

 

[*] = 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

--------------------------------------------------------------------------------

outstanding, subject to the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof stated in the Certificate
of Incorporation or the resolution of the Board of Directors originally fixing
the number of shares of such series. If the number of shares of any series is so
decreased, then the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.

ARTICLE V

The number of directors that constitutes the entire Board of Directors of the
corporation shall be determined in the manner set forth in the Bylaws of the
corporation. At each annual meeting of stockholders, directors of the
corporation shall be elected to hold office until the expiration of the term for
which they are elected and until their successors have been duly elected and
qualified; except that if any such election shall not be so held, such election
shall take place at a stockholders’ meeting called and held in accordance with
the DGCL.

The directors of the corporation shall be divided into three classes as nearly
equal in size as is practicable, hereby designated Class I, Class II and
Class III. The term of office of the initial Class I directors shall expire at
the first regularly-scheduled annual meeting of the stockholders following the
effective date of this corporation’s initial public offering (the “Effective
Date”), the term of office of the initial Class II directors shall expire at the
second annual meeting of the stockholders following the Effective Date and the
term of office of the initial Class III directors shall expire at the third
annual meeting of the stockholders following the Effective Date. At each annual
meeting of stockholders, commencing with the first regularly-scheduled annual
meeting of stockholders following the Effective Date, each of the successors
elected to replace the directors of a Class whose term shall have expired at
such annual meeting shall be elected to hold office until the third annual
meeting next succeeding his or her election and until his or her respective
successor shall have been duly elected and qualified.

Notwithstanding the foregoing provisions of this Article, each director shall
serve until his or her successor is duly elected and qualified or until his or
her death, resignation, or removal. If the number of directors is hereafter
changed, any newly created directorships or decrease in directorships shall be
so apportioned among the classes as to make all classes as nearly equal in
number as is practicable, provided that no decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

Any director may be removed from office by the stockholders of the corporation
only for cause. Vacancies occurring on the Board of Directors for any reason and
newly created directorships resulting from an increase in the authorized number
of directors may be filled only by vote of a majority of the remaining members
of the Board of Directors, although less than a quorum, at any meeting of the
Board of Directors. A person so elected by the Board of Directors to fill a
vacancy or newly created directorship shall hold office until the next election
of the Class for which such director shall have been chosen and until his or her
successor shall have been duly elected and qualified.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors of the corporation is expressly authorized to adopt, amend or
repeal the Bylaws of the corporation.

ARTICLE VII

The election of directors need not be by written ballot unless the Bylaws of the
corporation shall so provide.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

ARTICLE VIII

No action shall be taken by the stockholders of the corporation except at an
annual or special meeting of the stockholders called in accordance with the
Bylaws, and no action shall be taken by the stockholders by written consent. The
affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the then
outstanding voting securities of the corporation, voting together as a single
class, shall be required for the amendment, repeal or modification of the
provisions of Article V, Article VI or Article VIII of this Certificate of
Incorporation or Sections 2.1 (Place of Meetings), 2.2 (Annual Meeting), 2.3
(Special Meeting), 2.4 (Advance Notice Procedures; Notice of Stockholders’
Meetings), 2.9 (Voting), or 3.2 (Number of Directors) of the corporation’s
Bylaws.

ARTICLE IX

The corporation shall indemnify and hold harmless, to the fullest extent
permitted by the DGCL as it presently exists or may hereafter be amended, any
director or officer of the corporation who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”) by reason of
the fact that he or she, or a person for whom he or she is the legal
representative, is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or non-profit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and
expenses reasonably incurred by such person in connection with any such
Proceeding. The corporation shall be required to indemnify a person in
connection with a Proceeding initiated by such person only if the Proceeding was
authorized by the Board.

The corporation shall have the power to indemnify and hold harmless, to the
extent permitted by applicable law as it presently exists or may hereafter be
amended, any employee or agent of the corporation who was or is made or is
threatened to be made a party or is otherwise involved in any Proceeding by
reason of the fact that he or she, or a person for whom he or she is the legal
representative, is or was an employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person in connection with any such Proceeding.

Neither any amendment nor repeal of this Article IX, nor the adoption of any
provision of this corporation’s Certificate of Incorporation inconsistent with
this Article IX, shall eliminate or reduce the effect of this Article IX in
respect of any matter occurring, or any cause of action, suit or claim accruing
or arising or that, but for this Article IX, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.

ARTICLE X

Except as provided in Article IX above, the corporation reserves the right to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Cytokinetics, Incorporated has caused this Amended and
Restated Certificate of Incorporation to be signed by the President and Chief
Executive Officer of the corporation on this 4th day of June 2008.

 

By:  

/s/ Robert I. Blum

  Robert I. Blum   President and Chief Executive Officer

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

CYTOKINETICS, INCORPORATED

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES A CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

CYTOKINETICS, INCORPORATED, a Delaware corporation (the “Corporation”), in
accordance with the provisions of Section 103 of the Delaware General
Corporation Law (the “DGCL”) does hereby certify that, in accordance with
Sections 141(c) and 151 of the DGCL, the following resolution was duly adopted
by the Board of Directors of the Corporation as of April 14, 2011:

RESOLVED, that the Board of Directors of the Corporation pursuant to authority
expressly vesting in it by the provisions of the Certificate of Incorporation of
the Corporation, hereby authorizes the issuance of a series of Preferred Stock
designated as the Series A Convertible Preferred Stock, par value $0.001 per
share, of the Corporation and hereby fixes the designation, number of shares,
powers, preferences, rights, qualifications, limitations and restrictions
thereof (in addition to any provisions set forth in the Certificate of
Incorporation of the Corporation which are applicable to the Preferred Stock of
all classes and series) as follows:

SERIES A CONVERTIBLE PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have
the following meanings:

“Affiliate” means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act . With respect to a Holder, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such Holder.

“Alternate Consideration” shall have the meaning set forth in Section 7(b).

“Beneficial Ownership Limitation” shall have the meaning set forth in
Section 6(c).

“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Buy-In” shall have the meaning set forth in Section 6(d)(iii).

“Closing Sale Price” means, for any security as of any date, the last closing
trade price for such security prior to 4:00 p.m., New York City time, on the
principal securities exchange or trading market where such security is listed or
traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting
service mutually acceptable to and hereafter designated by Holders of a majority
of the then-outstanding Series A Preferred Stock and the Corporation), or if the
foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, L.P., or, if no last trade price is reported for such
security by Bloomberg, L.P., the average of the bid prices

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

of any market makers for such security as reported on the OTC Pink Market by OTC
Markets Group, Inc. If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as determined
in good faith by the Board of Directors of the Corporation.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Corporation’s common stock, par value $0.001 per share,
and stock of any other class of securities into which such securities may
hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Corporation or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

“Conversion Date” shall have the meaning set forth in Section 6(a).

“Conversion Price” shall mean $1.50, as adjusted pursuant to paragraph 7 hereof.

“Conversion Ratio” shall have the meaning set forth in Section 6(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of the shares of Series A Preferred Stock in accordance with the
terms hereof.

“Daily Failure Amount” means the product of (x) .005 multiplied by (y) the
Closing Sale Price of the Common Stock on the applicable Share Delivery Date.

“DGCL” shall mean the Delaware General Corporation Law.

“Distributions” shall have the meaning set forth in Section 5(a).

“DWAC Delivery” shall have the meaning set forth in Section 6(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Fundamental Transaction” shall have the meaning set forth in Section 7(b).

“Holder” means any holder of Series A Preferred Stock.

“Issuance Date” means the date of the “Closing” as defined in that certain
Securities Purchase Agreement, dated April 18, 2011, by and among the
Corporation and the “Investors” named therein (the “Securities Purchase
Agreement”).

“Investors” shall have the meaning given to such term in the Securities Purchase
Agreement.

“Junior Securities” shall have the meaning set forth in Section 5(a).

“Notice of Conversion” shall have the meaning set forth in Section 6(a).

“Parity Securities” shall have the meaning set forth in Section 5(a).

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

“Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Senior Securities” shall have the meaning set forth in Section 5(a).

“Series A Preferred Stock Register” shall have the meaning set forth in
Section 2(b).

“Share Delivery Date” shall have the meaning set forth in Section 6(d).

“Stated Value” shall mean $1,500.00.

“Trading Day” means a day on which the Common Sock is traded for any period on
the principal securities exchange or if the Common Stock is not traded on a
principal securities exchange, on a day that the Common Stock is traded on
another securities market on which the Common Stock is then being traded.

Section 2. Designation, Amount and Par Value; Assignment.

a) The series of preferred stock designated by this Certificate shall be
designated as the Corporation’s Series A Convertible Preferred Stock (the
“Series A Preferred Stock”) and the number of shares so designated shall be
8,070 (which shall not be subject to increase without the written consent of the
Holders of a majority of the issued and outstanding Series A Preferred Stock).
Each share of Series A Preferred Stock shall have a par value of $0.001 per
share.

b) The Corporation shall register shares of the Series A Preferred Stock, upon
records to be maintained by the Corporation for that purpose (the “Series A
Preferred Stock Register”), in the name of the Holders thereof from time to
time. The Corporation may deem and treat the registered Holder of shares of
Series A Preferred Stock as the absolute owner thereof for the purpose of any
conversion thereof and for all other purposes. The Corporation shall register
the transfer of any shares of Series A Preferred Stock in the Series A Preferred
Stock Register, upon surrender of the certificates evidencing such shares to be
transferred, duly endorsed by the Holder thereof, to the Corporation at its
address specified herein. Upon any such registration or transfer, a new
certificate evidencing the shares of Series A Preferred Stock so transferred
shall be issued to the transferee and a new certificate evidencing the remaining
portion of the shares not so transferred, if any, shall be issued to the
transferring Holder, in each case, within three Business Days. The provisions of
this Certificate are intended to be for the benefit of all Holders from time to
time and shall be enforceable by any such Holder.

Section 3. Dividends. Holders shall not be entitled to receive any dividends in
respect of the Series A Preferred Stock, unless and until specifically declared
by the Board of Directors of the Corporation to be payable to the Holders of the
Series A Preferred Stock.

Section 4. Voting Rights. Except as otherwise provided herein or as otherwise
required by the DGCL, the Series A Preferred Stock shall have no voting rights.
However, as long as any shares of Series A Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote of the Holders of a majority
of the then outstanding shares of the Series A Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the Series A
Preferred Stock or alter or amend this Certificate, (b) increase the number of
authorized shares of Series A Preferred Stock, or (c) enter into any agreement
with respect to any of the foregoing.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

Section 5. Rank; Liquidation.

a) The Series A Preferred Stock shall rank (i) senior to all of the Common
Stock; (ii) senior to any class or series of capital stock of the Corporation
hereafter created specifically ranking by its terms junior to any Series A
Preferred Stock (“Junior Securities”); (iii) on parity with any class or series
of capital stock of the Corporation hereafter created specifically ranking by
its terms on parity with the Series A Preferred Stock (“Parity Securities”); and
(iv) junior to any class or series of capital stock of the Corporation hereafter
created specifically ranking by its terms senior to any Series A Preferred Stock
(“Senior Securities”), in each case, as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntarily
or involuntarily (all such distributions being referred to collectively as
“Distributions”).

b) Subject to the prior and superior rights of the holders of any Senior
Securities of the Corporation, upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, each holder of shares of
Series A Preferred Stock shall be entitled to receive, in preference to any
distributions of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock and Junior Securities and pari passu with any
distribution to the holders of Parity Securities, an amount equal to $0.001 per
share of Series A Preferred Stock, plus an additional amount equal to any
dividends declared but unpaid on such shares, before any payments shall be made
or any assets distributed to holders of any class of Common Stock or Junior
Securities. If, upon any such liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation shall be insufficient to pay the
holders of shares of the Series A Preferred Stock the amount required under the
preceding sentence, then all remaining assets of the Corporation shall be
distributed ratably to holders of the shares of the Series A Preferred Stock and
Parity Securities.

Section 6. Conversion.

a) Conversions at Option of Holder. Each share of Series A Preferred Stock shall
be convertible, at any time and from time to time from and after the Issuance
Date, at the option of the Holder thereof, into a number of shares of Common
Stock equal to the Conversion Ratio. Holders shall effect conversions by
providing the Corporation with the form of conversion notice attached hereto as
Annex A (a “Notice of Conversion”), duly completed and executed. Other than a
conversion following a Fundamental Transaction or following a notice provided
for under Section 7(d)(ii) hereof, the Notice of Conversion must specify at
least a number of shares of Series A Preferred Stock to be converted equal to
the lesser of (x) 100 shares (such number subject to appropriate adjustment
following the occurrence of an event specified in Section 7(a) hereof) and
(y) the number of shares of Series A Preferred Stock then held by the Holder.
Provided the Corporation’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of
Conversion may specify, at the Holder’s election, whether the applicable
Conversion Shares shall be credited to the account of the Holder’s prime broker
with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC
Delivery”). The “Conversion Date”, or the date on which a conversion shall be
deemed effective, shall be defined as the Trading Day that the Notice of
Conversion, completed and executed, is sent by facsimile to, and received during
regular business hours by, the Corporation; provided that the original
certificate(s) representing such shares of Series A Preferred Stock being
converted, duly endorsed, and the accompanying Notice of Conversion, are
received by the Corporation within two (2) Trading Days thereafter. In all other
cases, the Conversion Date shall be defined as the Trading Day on which the
original shares of Series A Preferred Stock being converted, duly endorsed, and
the accompanying Notice of Conversion, are received by the Corporation. The
calculations set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error.

b) Conversion Ratio. The “Conversion Ratio” for each share of Series A Preferred
Stock shall be equal to the Stated Value divided by the Conversion Price.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

c) Beneficial Ownership Limitation. Notwithstanding anything herein to the
contrary, the Corporation shall not effect any conversion of the Series A
Preferred Stock, and a Holder shall not have the right to convert any portion of
the Series A Preferred Stock, to the extent that, after giving effect to an
attempted conversion set forth on an applicable Notice of Conversion, such
Holder (together with such Holder’s Affiliates, and any other Person whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act and the applicable regulations of
the Commission, including any “group” of which the Holder is a member) would
beneficially own a number of shares of Common Stock in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock subject to the Notice of Conversion
with respect to which such determination is being made, but shall exclude the
number of shares of Common Stock which are issuable upon (A) conversion of the
remaining, unconverted Series A Preferred Stock beneficially owned by such
Holder or any of its Affiliates, and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Corporation
(including any warrants) beneficially owned by such Holder or any of its
Affiliates that are subject to a limitation on conversion or exercise similar to
the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this Section 6(c), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the applicable regulations
of the Commission. In addition, for purposes hereof, “group” has the meaning set
forth in Section 13(d) of the Exchange Act and the applicable regulations of the
Commission. For purposes of this Section 6(c), it is understood that the number
of shares of Common Stock beneficially owned by each Investor shall be
aggregated with each other Investor for purposes of Section 13(d) of the
Exchange Act. For purposes of this Section 6(c), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of the
following: (A) the Corporation’s most recent periodic or annual filing with the
Commission, as the case may be, (B) a more recent public announcement by the
Corporation that is filed with the Commission or (C) a more recent notice by the
Corporation or the Corporation’s transfer agent to the Holder setting forth the
number of shares of Common Stock then outstanding. Upon the written request of a
Holder (which may be by email), the Corporation shall, within three (3) Trading
Days thereof, confirm in writing to such Holder (which may be via email) the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
any actual conversion or exercise of securities of the Corporation, including
shares of Series A Preferred Stock, by such Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was last
publicly reported or confirmed to the Holder. The “Beneficial Ownership
Limitation” shall be 9.98% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock pursuant to such Notice of Conversion (to the extent permitted pursuant to
this Section 6(c)). The Corporation shall be entitled to rely on representations
made to it by the Holder in any Notice of Conversion regarding its Beneficial
Ownership Limitation.

d) Mechanics of Conversion

i. Delivery of Certificate or Electronic Issuance Upon Conversion. Not later
than three Trading Days after the applicable Conversion Date, or if the Holder
requests the issuance of physical certificate(s), two Trading Days after receipt
by the Corporation of the original certificate(s) representing such shares of
Series A Preferred Stock being converted, duly endorsed, and the accompanying
Notice of Conversion (the “Share Delivery Date”), the Corporation shall
(a) deliver, or cause to be delivered, to the converting Holder a physical
certificate or certificates representing the number of Conversion Shares being
acquired upon the conversion of shares of Series A Preferred Stock or (b) in the
case of a DWAC Delivery, electronically transfer such Conversion Shares by
crediting the account of the Holder’s prime broker with DTC through its

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

DWAC system. If in the case of any Notice of Conversion such certificate or
certificates are not delivered to or as directed by or, in the case of a DWAC
Delivery, such shares are not electronically delivered to or as directed by, the
applicable Holder by the Share Delivery Date, the applicable Holder shall be
entitled to elect to rescind such Conversion Notice by written notice to the
Corporation at any time on or before its receipt of such certificate or
certificates for Conversion Shares or electronic receipt of such shares, as
applicable, in which event the Corporation shall promptly return to such Holder
any original Series A Preferred Stock certificate delivered to the Corporation
and such Holder shall promptly return to the Corporation any Common Stock
certificates or otherwise direct the return of any shares of Common Stock
delivered to the Holder through the DWAC system, representing the shares of
Series A Preferred Stock unsuccessfully tendered for conversion to the
Corporation.

ii. Obligation Absolute. Subject to Section 6(c) hereof and subject to Holder’s
right to rescind a Conversion Notice pursuant to Section 6(d)(i) above, the
Corporation’s obligation to issue and deliver the Conversion Shares upon
conversion of Series A Preferred Stock in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by a Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of law by such Holder or
any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such Holder in connection
with the issuance of such Conversion Shares. Subject to Section 6(c) hereof and
subject to Holder’s right to rescind a Conversion Notice pursuant to
Section 6(d)(i) above, in the event a Holder shall elect to convert any or all
of its Series A Preferred Stock, the Corporation may not refuse conversion based
on any claim that such Holder or any one associated or affiliated with such
Holder has been engaged in any violation of law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Series A Preferred Stock of
such Holder shall have been sought and obtained by the Corporation, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of
150% of the value of the Conversion Shares into which would be converted the
Series A Preferred Stock which is subject to such injunction, which bond shall
remain in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to such Holder to
the extent it obtains judgment. In the absence of such injunction, the
Corporation shall, subject to Section 6(c) hereof and subject to Holder’s right
to rescind a Conversion Notice pursuant to Section 6(d)(i) above, issue
Conversion Shares upon a properly noticed conversion. If the Corporation fails
to deliver to a Holder such certificate or certificates, or electronically
deliver (or cause its transfer agent to electronically deliver) such shares in
the case of a DWAC Delivery, pursuant to Section 6(d)(i) on or prior to the
fifth (5th) Trading Day after the Share Delivery Date applicable to such
conversion (other than a failure caused by incorrect or incomplete information
provided by Holder to the Corporation), then, unless the Holder has rescinded
the applicable Conversion Notice pursuant to Section 6(d)(i) above, the
Corporation shall pay (as liquidated damages and not as a penalty) to such
Holder an amount payable, at the Corporation’s option, either (a) in cash or
(b) in shares of Common Stock that are valued for these purposes at the Closing
Sale Price on the date of such calculation, in each case equal to the product of
(x) the number of Conversion Shares required to have been issued by the
Corporation on such Share Delivery Date, (y) an amount equal to the Daily
Failure Amount and (z) the number of Trading Days actually lapsed after such
fifth (5th) Trading Day after the Share Delivery Date during which such
certificates have not been delivered, or, in the case of a DWAC Delivery, such
shares have not been electronically delivered; provided, however, the Holder
shall only receive up to such amount of shares of Common Stock such that Holder
and any other persons or entities whose beneficial ownership of Common Stock
would be aggregated with the

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

Holder’s for purposes of Section 13(d) of the Exchange Act (including shares
held by any “group” of which the Holder is a member, but excluding shares
beneficially owned by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) shall not collectively beneficially
own greater than 9.98% of the total number of shares of Common Stock of the
Corporation then issued and outstanding. Nothing herein shall limit a Holder’s
right to pursue actual damages for the Corporation’s failure to deliver
Conversion Shares within the period specified herein and such Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief; provided that Holder shall not receive duplicate damages for
the Corporation’s failure to deliver Conversion Shares within the period
specified herein. The exercise of any such rights shall not prohibit a Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.

iii. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. If the Corporation fails to deliver to a Holder the applicable
certificate or certificates or to effect a DWAC Delivery, as applicable, by the
Share Delivery Date pursuant to Section 6(d)(i) (other than a failure caused by
incorrect or incomplete information provided by Holder to the Corporation), and
if after such Share Delivery Date such Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise), or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares which such Holder
was entitled to receive upon the conversion relating to such Share Delivery Date
(a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such Holder) the
amount by which (x) such Holder’s total purchase price (including any brokerage
commissions) for the shares of Common Stock so purchased exceeds (y) the product
of (1) the aggregate number of shares of Common Stock that such Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of such
Holder, either reissue (if surrendered) the shares of Series A Preferred Stock
equal to the number of shares of Series A Preferred Stock submitted for
conversion or deliver to such Holder the number of shares of Common Stock that
would have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted conversion of shares of Series A Preferred Stock with
respect to which the actual sale price (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000 under clause
(A) of the immediately preceding sentence, the Corporation shall be required to
pay such Holder $1,000. The Holder shall provide the Corporation written notice,
within three (3) Trading Days after the occurrence of a Buy-In, indicating the
amounts payable to such Holder in respect of such Buy-In together with
applicable confirmations and other evidence reasonably requested by the
Corporation. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Corporation’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of the shares of Series A Preferred Stock
as required pursuant to the terms hereof; provided, however, that the Holder
shall not be entitled to both (i) require the reissuance of the shares of Series
A Preferred Stock submitted for conversion for which such conversion was not
timely honored and (ii) receive the number of shares of Common Stock that would
have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i).

iv. Reservation of Shares Issuable Upon Conversion. The Corporation covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion
of the Series A Preferred Stock, free from

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

preemptive rights or any other actual contingent purchase rights of Persons
other than the Holders of the Series A Preferred Stock, not less than such
aggregate number of shares of the Common Stock as shall be issuable (taking into
account the adjustments of Section 7) upon the conversion of all outstanding
shares of Series A Preferred Stock. The Corporation covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable.

v. Fractional Shares. No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the Series A
Preferred Stock. As to any fraction of a share which a Holder would otherwise be
entitled to receive upon such conversion, the Corporation shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round up to the
next whole share.

vi. Transfer Taxes. The issuance of certificates for shares of the Common Stock
upon conversion of the Series A Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the registered Holder(s) of such
shares of Series A Preferred Stock and the Corporation shall not be required to
issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Corporation the amount of
such tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.

e) Status as Stockholder. Upon each Conversion Date, (i) the shares of Series A
Preferred Stock being converted shall be deemed converted into shares of Common
Stock and (ii) the Holder’s rights as a holder of such converted shares of
Series A Preferred Stock shall cease and terminate, excepting only the right to
receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such Holder
because of a failure by the Corporation to comply with the terms of this
Certificate of Designation. In all cases, the holder shall retain all of its
rights and remedies for the Corporation’s failure to convert Series A Preferred
Stock.

Section 7. Certain Adjustments.

a) Stock Dividends and Stock Splits. If the Corporation, at any time while this
Series A Preferred Stock is outstanding: (A) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Corporation upon conversion of this Series A Preferred Stock) with respect
to the then outstanding shares of Common Stock; (B) subdivides outstanding
shares of Common Stock into a larger number of shares; or (C) combines
(including by way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, then the Conversion Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding any treasury shares of the Corporation) outstanding immediately
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event (excluding any treasury
shares of the Corporation). Any adjustment made pursuant to this Section 7(a)
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision or combination.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

b) Fundamental Transaction. If, at any time while this Series A Preferred Stock
is outstanding, (A) the Corporation effects any merger or consolidation of the
Corporation with or into another Person (other than a merger in which the
Corporation is the surviving or continuing entity and its Common Stock is not
exchanged for or converted into other securities, cash or property), (B) the
Corporation effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Corporation or another Person) is completed
pursuant to which all of the Common Stock is exchanged for or converted into
other securities, cash or property, or (D) the Corporation effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
(other than as a result of a dividend, subdivision or combination covered by
Section 7(a) above) to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, upon any subsequent conversion of this Series
A Preferred Stock the Holders shall have the right to receive, in lieu of the
right to receive Conversion Shares, for each Conversion Share that would have
been issuable upon such conversion immediately prior to the occurrence of such
Fundamental Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the “Alternate
Consideration”). For purposes of any such subsequent conversion, the
determination of the Conversion Ratio shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Corporation shall adjust the Conversion Ratio in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holders shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Series A Preferred Stock
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Corporation or surviving entity
in such Fundamental Transaction shall file a new Certificate of Designation with
the same terms and conditions and issue to the Holders new preferred stock
consistent with the foregoing provisions and evidencing the Holders’ right to
convert such preferred stock into Alternate Consideration. The terms of any
agreement to which the Corporation is a party and pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 7(b)
and insuring that this Series A Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction. The Corporation shall cause to be delivered to
each Holder, at its last address as it shall appear upon the stock books of the
Corporation, written notice of any Fundamental Transaction at least 20 calendar
days prior to the date on which such Fundamental Transaction is expected to
become effective or close.

c) Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 7, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Corporation) issued and
outstanding.

d) Notice to the Holders.

i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 7, the Corporation shall promptly
deliver to each Holder a notice setting forth the Conversion Ratio after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

ii. Other Notices. If (A) the Corporation shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Corporation shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Corporation shall

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

authorize the granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Corporation shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any sale or
transfer of all or substantially all of the assets of the Corporation, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property or (E) the Corporation shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation, then, in each case, the Corporation shall cause to be filed
at each office or agency maintained for the purpose of conversion of this Series
A Preferred Stock, and shall cause to be delivered to each Holder at its last
address as it shall appear upon the stock books of the Corporation, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any defect therein
or in the delivery thereof shall not affect the validity of the corporate action
required to be specified in such notice.

Section 8. Miscellaneous.

a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to the
Corporation, at 280 East Grand Avenue, South San Francisco, California 94080,
facsimile number (650) 624-3010, or such other facsimile number or address as
the Corporation may specify for such purposes by notice to the Holders delivered
in accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
such Holder appearing on the books of the Corporation, or if no such facsimile
number or address appears on the books of the Corporation, at the principal
place of business of such Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 5:30 p.m.
(New York City time) on any date, (ii) the date immediately following the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section between 5:30 p.m. and 11:59 p.m.
(New York City time) on any date, (iii) the second Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given.

b) [Reserved.]

c) Lost or Mutilated Series A Preferred Stock Certificate. If a Holder’s Series
A Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the
Corporation shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the shares of
Series A Preferred Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such certificate, and
of the ownership thereof, reasonably satisfactory to the Corporation and, in
each case, customary and reasonable indemnity, if requested. Applicants for a
new certificate under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Corporation may prescribe.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

d) Waiver. Any waiver by the Corporation or a Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a waiver by any
other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more
occasions shall not be considered a waiver or deprive that party (or any other
Holder) of the right thereafter to insist upon strict adherence to that term or
any other term of this Certificate of Designation. Any waiver by the Corporation
or a Holder must be in writing. Notwithstanding any provision in this
Certificate of Designation to the contrary, any provision contained herein and
any right of the holders of Series A Preferred Stock granted hereunder may be
waived as to all shares of Series A Preferred Stock (and the Holders thereof)
upon the written consent of the Holders of not less than a majority of the
shares of Series A Preferred Stock then outstanding, unless a higher percentage
is required by the DGCL, in which case the written consent of the holders of not
less than such higher percentage shall be required.

e) Severability. If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any Person or
circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount deemed
interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law.

f) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

g) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not be deemed to
limit or affect any of the provisions hereof.

h) Status of Converted Series A Preferred Stock. If any shares of Series A
Preferred Stock shall be converted or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of preferred stock and
shall no longer be designated as Series A Preferred Stock.

********************

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this 18th day of April 2011.

 

/s/ Sharon A. Barbari

Name:   Sharon A. Barbari Title:   Exec. Vice President, Finance & CFO

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES A

PREFERRED STOCK)

The undersigned Holder hereby irrevocably elects to convert the number of shares
of Series A Convertible Preferred Stock indicated below, represented by stock
certificate No(s).             (the “Preferred Stock Certificates”), into shares
of common stock, par value $0.001 per share (the “Common Stock”), of
Cytokinetics, Incorporated, a Delaware corporation (the “Corporation”), as of
the date written below. If securities are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. Capitalized terms utilized but not defined herein shall
have the meaning ascribed to such terms in that certain Certificate of
Designation of Preferences, Rights and Limitations of Series A Convertible
Preferred Stock (the “Certificate of Designation”) filed by the Corporation on
April     , 2011.

As of the date hereof, the number of shares of Common Stock beneficially owned
by the undersigned Holder (together with such Holder’s Affiliates, and any other
Person whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act and the applicable
regulations of the Commission, including any “group” of which the Holder is a
member), including the number of shares of Common Stock issuable upon conversion
of the Series A Preferred Stock subject to this Notice of Conversion, but
excluding the number of shares of Common Stock which are issuable upon
(A) conversion of the remaining, unconverted Series A Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Corporation (including any warrants) beneficially owned by such Holder or
any of its Affiliates that are subject to a limitation on conversion or exercise
similar to the limitation contained in Section 6(c) of the Certificate of
Designation, is             . For purposes hereof, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and the
applicable regulations of the Commission. In addition, for purposes hereof,
“group” has the meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission.

Conversion calculations:

Date to Effect Conversion:

Number of shares of Series A Preferred Stock owned prior to Conversion:
            

Number of shares of Series A Preferred Stock to be Converted:             

Number of shares of Common Stock to be Issued:             

Address for delivery of physical certificates:             

or

for DWAC Delivery:

DWAC Instructions:

Broker no:             

Account no:             

 

[HOLDER] By:  

 

  Name:     Title:     Date:  

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

CERTIFICATE OF AMENDMENT OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

CYTOKINETICS, INCORPORATED

CYTOKINETICS, INCORPORATED, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
“Corporation”), hereby certifies that:

1. The original name of the Corporation is CYTOKINETICS, INCORPORATED.

2. The date on which the Certificate of Incorporation of the Corporation was
originally filed with the Secretary of State of the State of Delaware was
August 5, 1997.

3. The Board of Directors of the Corporation, acting in accordance with the
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware, adopted resolutions amending the Amended and Restated Certificate
of Incorporation of the Corporation to increase the number of authorized shares
of Common Stock to 245,000,000. Specifically, the first sentence of Article IV
is hereby amended by deleting “170,000,000 shares of Common Stock” and replacing
the same with “245,000,000 shares of Common Stock”.

4. This Certificate of Amendment was duly adopted by the stockholders of the
Corporation in accordance with the provisions of Sections 228 and 242 of the
General Corporation Law of the State of Delaware.

[Signature Page Follows]

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to
be signed by its President and Chief Executive Officer this 28 day of July,
2011.

 

CYTOKINETICS, INCORPORATED By:  

/s/ Robert I. Blum

  ROBERT I. BLUM   President and Chief Executive Officer

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

CYTOKINETICS, INCORPORATED

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES B CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

CYTOKINETICS, INCORPORATED, a Delaware corporation (the “Corporation”), in
accordance with the provisions of Section 103 of the Delaware General
Corporation Law (the “DGCL”) does hereby certify that, in accordance with
Sections 141(c) and 151 of the DGCL, the following resolution was duly adopted
by the Board of Directors of the Corporation as of June 18, 2012:

RESOLVED, that the Board of Directors of the Corporation pursuant to authority
expressly vesting in it by the provisions of the Certificate of Incorporation of
the Corporation, hereby authorizes the issuance of a series of Preferred Stock
designated as the Series B Convertible Preferred Stock, par value $0.001 per
share, of the Corporation and hereby fixes the designation, number of shares,
powers, preferences, rights, qualifications, limitations and restrictions
thereof (in addition to any provisions set forth in the Certificate of
Incorporation of the Corporation which are applicable to the Preferred Stock of
all classes and series) as follows:

SERIES B CONVERTIBLE PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have
the following meanings:

“Affiliate” means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the Securities Act. With respect to a Holder, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such Holder.

“Alternate Consideration” shall have the meaning set forth in Section 7(b).

“Beneficial Ownership Limitation” shall have the meaning set forth in
Section 6(c).

“Business Day” means any day except Saturday, Sunday, any day which shall be a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Buy-In” shall have the meaning set forth in Section 6(d)(iii).

“Closing Sale Price” means, for any security as of any date, the last closing
trade price for such security prior to 4:00 p.m., New York City time, on the
principal securities exchange or trading market where such security is listed or
traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting
service mutually acceptable to and hereafter designated by Holders of a majority
of the then-outstanding Series B Preferred Stock and the Corporation), or if the
foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, L.P., or, if no last trade price is reported for such
security by Bloomberg, L.P., the average of the bid prices

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

of any market makers for such security as reported on the OTC Pink Market by OTC
Markets Group, Inc. If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as determined
in good faith by the Board of Directors of the Corporation.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Corporation’s common stock, par value $0.001 per share,
and stock of any other class of securities into which such securities may
hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Corporation or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

“Conversion Date” shall have the meaning set forth in Section 6(a).

“Conversion Price” shall mean $0.76, as adjusted pursuant to paragraph 7 hereof.

“Conversion Ratio” shall have the meaning set forth in Section 6(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of the shares of Series B Preferred Stock in accordance with the
terms hereof.

“Daily Failure Amount” means the product of (x) .005 multiplied by (y) the
Closing Sale Price of the Common Stock on the applicable Share Delivery Date.

“DGCL” shall mean the Delaware General Corporation Law.

“Distributions” shall have the meaning set forth in Section 5(a).

“DWAC Delivery” shall have the meaning set forth in Section 6(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Fundamental Transaction” shall have the meaning set forth in Section 7(b).

“Holder” means any holder of Series B Preferred Stock.

“Issuance Date” means the date of the “Closing” as defined in that certain
Underwriting Agreement related to the Series B Preferred Stock, dated June 20,
2012, by and among the Corporation and Cowen and Company, LLC as representative
of the several underwriters named therein.

“Junior Securities” shall have the meaning set forth in Section 5(a).

“Notice of Conversion” shall have the meaning set forth in Section 6(a).

“Parity Securities” shall have the meaning set forth in Section 5(a).

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

“Person” means any individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Senior Securities” shall have the meaning set forth in Section 5(a).

“Series B Preferred Stock Register” shall have the meaning set forth in
Section 2(b).

“Share Delivery Date” shall have the meaning set forth in Section 6(d).

“Stated Value” shall mean $760.00.

“Trading Day” means a day on which the Common Sock is traded for any period on
the principal securities exchange or if the Common Stock is not traded on a
principal securities exchange, on a day that the Common Stock is traded on
another securities market on which the Common Stock is then being traded.

Section 2. Designation, Amount and Par Value; Assignment.

a) The series of preferred stock designated by this Certificate shall be
designated as the Corporation’s Series B Convertible Preferred Stock (the
“Series B Preferred Stock”) and the number of shares so designated shall be
23,026 (which shall not be subject to increase without the written consent of
the Holders of a majority of the issued and outstanding Series B Preferred
Stock). Each share of Series B Preferred Stock shall have a par value of $0.001
per share.

b) The Corporation shall register shares of the Series B Preferred Stock, upon
records to be maintained by the Corporation for that purpose (the “Series B
Preferred Stock Register”), in the name of the Holders thereof from time to
time. The Corporation may deem and treat the registered Holder of shares of
Series B Preferred Stock as the absolute owner thereof for the purpose of any
conversion thereof and for all other purposes. The Corporation shall register
the transfer of any shares of Series B Preferred Stock in the Series B Preferred
Stock Register, upon surrender of the certificates evidencing such shares to be
transferred, duly endorsed by the Holder thereof, to the Corporation at its
address specified herein. Upon any such registration or transfer, a new
certificate evidencing the shares of Series B Preferred Stock so transferred
shall be issued to the transferee and a new certificate evidencing the remaining
portion of the shares not so transferred, if any, shall be issued to the
transferring Holder, in each case, within three Business Days. The provisions of
this Certificate are intended to be for the benefit of all Holders from time to
time and shall be enforceable by any such Holder.

Section 3. Dividends. Holders shall not be entitled to receive any dividends in
respect of the Series B Preferred Stock, unless and until specifically declared
by the Board of Directors of the Corporation to be payable to the Holders of the
Series B Preferred Stock.

Section 4. Voting Rights. Except as otherwise provided herein or as otherwise
required by the DGCL, the Series B Preferred Stock shall have no voting rights.
However, as long as any shares of Series B Preferred Stock are outstanding, the
Corporation shall not, without the affirmative vote of the Holders of a majority
of the then outstanding shares of the Series B Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the Series B
Preferred Stock or alter or amend this Certificate, (b) increase the number of
authorized shares of Series B Preferred Stock, or (c) enter into any agreement
with respect to any of the foregoing.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

Section 5. Rank; Liquidation.

a) The Series B Preferred Stock shall rank (i) senior to all of the Common
Stock; (ii) senior to any class or series of capital stock of the Corporation
hereafter created specifically ranking by its terms junior to any Series B
Preferred Stock (“Junior Securities”); (iii) on parity with Series A Convertible
Preferred Stock, par value $0.001 per share, and any other class or series of
capital stock of the Corporation hereafter created specifically ranking by its
terms on parity with the Series B Preferred Stock (“Parity Securities”); and
(iv) junior to any class or series of capital stock of the Corporation hereafter
created specifically ranking by its terms senior to any Series B Preferred Stock
(“Senior Securities”), in each case, as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntarily
or involuntarily (all such distributions being referred to collectively as
“Distributions”).

b) Subject to the prior and superior rights of the holders of any Senior
Securities of the Corporation, upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, each holder of shares of
Series B Preferred Stock shall be entitled to receive, in preference to any
distributions of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock and Junior Securities and pari passu with any
distribution to the holders of Parity Securities, an amount equal to $0.001 per
share of Series B Preferred Stock, plus an additional amount equal to any
dividends declared but unpaid on such shares, before any payments shall be made
or any assets distributed to holders of any class of Common Stock or Junior
Securities. If, upon any such liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation shall be insufficient to pay the
holders of shares of the Series B Preferred Stock the amount required under the
preceding sentence, then all remaining assets of the Corporation shall be
distributed ratably to holders of the shares of the Series B Preferred Stock and
Parity Securities.

Section 6. Conversion.

f) Conversions at Option of Holder. Each share of Series B Preferred Stock shall
be convertible, at any time and from time to time from and after the Issuance
Date, at the option of the Holder thereof, into a number of shares of Common
Stock equal to the Conversion Ratio. Holders shall effect conversions by
providing the Corporation with the form of conversion notice attached hereto as
Annex A (a “Notice of Conversion”), duly completed and executed. Other than a
conversion following a Fundamental Transaction or following a notice provided
for under Section 7(d)(ii) hereof, the Notice of Conversion must specify at
least a number of shares of Series B Preferred Stock to be converted equal to
the lesser of (x) 100 shares (such number subject to appropriate adjustment
following the occurrence of an event specified in Section 7(a) hereof) and
(y) the number of shares of Series B Preferred Stock then held by the Holder.
Provided the Corporation’s transfer agent is participating in the Depository
Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of
Conversion may specify, at the Holder’s election, whether the applicable
Conversion Shares shall be credited to the account of the Holder’s prime broker
with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC
Delivery”). The “Conversion Date”, or the date on which a conversion shall be
deemed effective, shall be defined as the Trading Day that the Notice of
Conversion, completed and executed, is sent by facsimile to, and received during
regular business hours by, the Corporation; provided that the original
certificate(s) representing such shares of Series B Preferred Stock being
converted, duly endorsed, and the accompanying Notice of Conversion, are
received by the Corporation within two (2) Trading Days thereafter. In all other
cases, the Conversion Date shall be defined as the Trading Day on which the
original shares of Series B Preferred Stock being converted, duly endorsed, and
the accompanying Notice of Conversion, are received by the Corporation. The
calculations set forth in the Notice of Conversion shall control in the absence
of manifest or mathematical error.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

g) Conversion Ratio. The “Conversion Ratio” for each share of Series B Preferred
Stock shall be equal to the Stated Value divided by the Conversion Price.

h) Beneficial Ownership Limitation. Notwithstanding anything herein to the
contrary, the Corporation shall not effect any conversion of the Series B
Preferred Stock, and a Holder shall not have the right to convert any portion of
the Series B Preferred Stock, to the extent that, after giving effect to an
attempted conversion set forth on an applicable Notice of Conversion, such
Holder (together with such Holder’s Affiliates, and any other Person whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act and the applicable regulations of
the Commission, including any “group” of which the Holder is a member) would
beneficially own a number of shares of Common Stock in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock subject to the Notice of Conversion
with respect to which such determination is being made, but shall exclude the
number of shares of Common Stock which are issuable upon (A) conversion of the
remaining, unconverted Series B Preferred Stock beneficially owned by such
Holder or any of its Affiliates, and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Corporation
(including any warrants) beneficially owned by such Holder or any of its
Affiliates that are subject to a limitation on conversion or exercise similar to
the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this Section 6(c), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the applicable regulations
of the Commission. In addition, for purposes hereof, “group” has the meaning set
forth in Section 13(d) of the Exchange Act and the applicable regulations of the
Commission. For purposes of this Section 6(c), it is understood that the number
of shares of Common Stock beneficially owned by each Investor shall be
aggregated with each other Investor for purposes of Section 13(d) of the
Exchange Act. For purposes of this Section 6(c), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of the
following: (A) the Corporation’s most recent periodic or annual filing with the
Commission, as the case may be, (B) a more recent public announcement by the
Corporation that is filed with the Commission or (C) a more recent notice by the
Corporation or the Corporation’s transfer agent to the Holder setting forth the
number of shares of Common Stock then outstanding. Upon the written request of a
Holder (which may be by email), the Corporation shall, within three (3) Trading
Days thereof, confirm in writing to such Holder (which may be via email) the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
any actual conversion or exercise of securities of the Corporation, including
shares of Series B Preferred Stock, by such Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was last
publicly reported or confirmed to the Holder. The “Beneficial Ownership
Limitation” shall be 9.98% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock pursuant to such Notice of Conversion (to the extent permitted pursuant to
this Section 6(c)). The Corporation shall be entitled to rely on representations
made to it by the Holder in any Notice of Conversion regarding its Beneficial
Ownership Limitation.

i) Mechanics of Conversion

vii. Delivery of Certificate or Electronic Issuance Upon Conversion. Not later
than three Trading Days after the applicable Conversion Date, or if the Holder
requests the issuance of

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

physical certificate(s), two Trading Days after receipt by the Corporation of
the original certificate(s) representing such shares of Series B Preferred Stock
being converted, duly endorsed, and the accompanying Notice of Conversion (the
“Share Delivery Date”), the Corporation shall (a) deliver, or cause to be
delivered, to the converting Holder a physical certificate or certificates
representing the number of Conversion Shares being acquired upon the conversion
of shares of Series B Preferred Stock or (b) in the case of a DWAC Delivery,
electronically transfer such Conversion Shares by crediting the account of the
Holder’s prime broker with DTC through its DWAC system. If in the case of any
Notice of Conversion such certificate or certificates are not delivered to or as
directed by or, in the case of a DWAC Delivery, such shares are not
electronically delivered to or as directed by, the applicable Holder by the
Share Delivery Date, the applicable Holder shall be entitled to elect to rescind
such Conversion Notice by written notice to the Corporation at any time on or
before its receipt of such certificate or certificates for Conversion Shares or
electronic receipt of such shares, as applicable, in which event the Corporation
shall promptly return to such Holder any original Series B Preferred Stock
certificate delivered to the Corporation and such Holder shall promptly return
to the Corporation any Common Stock certificates or otherwise direct the return
of any shares of Common Stock delivered to the Holder through the DWAC system,
representing the shares of Series B Preferred Stock unsuccessfully tendered for
conversion to the Corporation.

viii. Obligation Absolute. Subject to Section 6(c) hereof and subject to
Holder’s right to rescind a Conversion Notice pursuant to Section 6(d)(i) above,
the Corporation’s obligation to issue and deliver the Conversion Shares upon
conversion of Series B Preferred Stock in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by a Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by such Holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of law by such Holder or
any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to such Holder in connection
with the issuance of such Conversion Shares. Subject to Section 6(c) hereof and
subject to Holder’s right to rescind a Conversion Notice pursuant to
Section 6(d)(i) above, in the event a Holder shall elect to convert any or all
of its Series B Preferred Stock, the Corporation may not refuse conversion based
on any claim that such Holder or any one associated or affiliated with such
Holder has been engaged in any violation of law, agreement or for any other
reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Series B Preferred Stock of
such Holder shall have been sought and obtained by the Corporation, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of
150% of the value of the Conversion Shares into which would be converted the
Series B Preferred Stock which is subject to such injunction, which bond shall
remain in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to such Holder to
the extent it obtains judgment. In the absence of such injunction, the
Corporation shall, subject to Section 6(c) hereof and subject to Holder’s right
to rescind a Conversion Notice pursuant to Section 6(d)(i) above, issue
Conversion Shares upon a properly noticed conversion. If the Corporation fails
to deliver to a Holder such certificate or certificates, or electronically
deliver (or cause its transfer agent to electronically deliver) such shares in
the case of a DWAC Delivery, pursuant to Section 6(d)(i) on or prior to the
fifth (5th) Trading Day after the Share Delivery Date applicable to such
conversion (other than a failure caused by incorrect or incomplete information
provided by Holder to the Corporation), then, unless the Holder has rescinded
the applicable Conversion Notice pursuant to Section 6(d)(i) above, the
Corporation shall pay (as liquidated damages and not as a penalty) to such
Holder an amount

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

payable, at the Corporation’s option, either (a) in cash or (b) in shares of
Common Stock that are valued for these purposes at the Closing Sale Price on the
date of such calculation, in each case equal to the product of (x) the number of
Conversion Shares required to have been issued by the Corporation on such Share
Delivery Date, (y) an amount equal to the Daily Failure Amount and (z) the
number of Trading Days actually lapsed after such fifth (5th) Trading Day after
the Share Delivery Date during which such certificates have not been delivered,
or, in the case of a DWAC Delivery, such shares have not been electronically
delivered; provided, however, the Holder shall only receive up to such amount of
shares of Common Stock such that Holder and any other persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act (including shares held by any
“group” of which the Holder is a member, but excluding shares beneficially owned
by virtue of the ownership of securities or rights to acquire securities that
have limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) shall not collectively beneficially own greater
than 9.98% of the total number of shares of Common Stock of the Corporation then
issued and outstanding. Nothing herein shall limit a Holder’s right to pursue
actual damages for the Corporation’s failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the right to pursue all
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief; provided
that Holder shall not receive duplicate damages for the Corporation’s failure to
deliver Conversion Shares within the period specified herein. The exercise of
any such rights shall not prohibit a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.

ix. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. If the Corporation fails to deliver to a Holder the applicable
certificate or certificates or to effect a DWAC Delivery, as applicable, by the
Share Delivery Date pursuant to Section 6(d)(i) (other than a failure caused by
incorrect or incomplete information provided by Holder to the Corporation), and
if after such Share Delivery Date such Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise), or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares which such Holder
was entitled to receive upon the conversion relating to such Share Delivery Date
(a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in
addition to any other remedies available to or elected by such Holder) the
amount by which (x) such Holder’s total purchase price (including any brokerage
commissions) for the shares of Common Stock so purchased exceeds (y) the product
of (1) the aggregate number of shares of Common Stock that such Holder was
entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the option of such
Holder, either reissue (if surrendered) the shares of Series B Preferred Stock
equal to the number of shares of Series B Preferred Stock submitted for
conversion or deliver to such Holder the number of shares of Common Stock that
would have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted conversion of shares of Series B Preferred Stock with
respect to which the actual sale price (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000 under clause
(A) of the immediately preceding sentence, the Corporation shall be required to
pay such Holder $1,000. The Holder shall provide the Corporation written notice,
within three (3) Trading Days after the occurrence of a Buy-In, indicating the
amounts payable to such Holder in respect of such Buy-In together with
applicable confirmations and other evidence reasonably requested by the
Corporation. Nothing herein shall limit a Holder’s right to pursue any other

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Corporation’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of the shares of Series B Preferred Stock
as required pursuant to the terms hereof; provided, however, that the Holder
shall not be entitled to both (i) require the reissuance of the shares of Series
B Preferred Stock submitted for conversion for which such conversion was not
timely honored and (ii) receive the number of shares of Common Stock that would
have been issued if the Corporation had timely complied with its delivery
requirements under Section 6(d)(i).

x. Reservation of Shares Issuable Upon Conversion. The Corporation covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion
of the Series B Preferred Stock, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Holders of the Series B
Preferred Stock, not less than such aggregate number of shares of the Common
Stock as shall be issuable (taking into account the adjustments of Section 7)
upon the conversion of all outstanding shares of Series B Preferred Stock. The
Corporation covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable.

xi. Fractional Shares. No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of the Series B
Preferred Stock. As to any fraction of a share which a Holder would otherwise be
entitled to receive upon such conversion, the Corporation shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Conversion Price or round up to the
next whole share.

xii. Transfer Taxes. The issuance of certificates for shares of the Common Stock
upon conversion of the Series B Preferred Stock shall be made without charge to
any Holder for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the registered Holder(s) of such
shares of Series B Preferred Stock and the Corporation shall not be required to
issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Corporation the amount of
such tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.

j) Status as Stockholder. Upon each Conversion Date, (i) the shares of Series B
Preferred Stock being converted shall be deemed converted into shares of Common
Stock and (ii) the Holder’s rights as a holder of such converted shares of
Series B Preferred Stock shall cease and terminate, excepting only the right to
receive certificates for such shares of Common Stock and to any remedies
provided herein or otherwise available at law or in equity to such Holder
because of a failure by the Corporation to comply with the terms of this
Certificate of Designation. In all cases, the holder shall retain all of its
rights and remedies for the Corporation’s failure to convert Series B Preferred
Stock.

Section 7. Certain Adjustments.

e) Stock Dividends and Stock Splits. If the Corporation, at any time while this
Series B Preferred Stock is outstanding: (A) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Corporation upon conversion of this Series B Preferred Stock) with respect
to

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

the then outstanding shares of Common Stock; (B) subdivides outstanding shares
of Common Stock into a larger number of shares; or (C) combines (including by
way of a reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Corporation) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event (excluding any treasury shares of the
Corporation). Any adjustment made pursuant to this Section 7(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.

f) Fundamental Transaction. If, at any time while this Series B Preferred Stock
is outstanding, (A) the Corporation effects any merger or consolidation of the
Corporation with or into another Person (other than a merger in which the
Corporation is the surviving or continuing entity and its Common Stock is not
exchanged for or converted into other securities, cash or property), (B) the
Corporation effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Corporation or another Person) is completed
pursuant to which all of the Common Stock is exchanged for or converted into
other securities, cash or property, or (D) the Corporation effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
(other than as a result of a dividend, subdivision or combination covered by
Section 7(a) above) to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, upon any subsequent conversion of this Series
B Preferred Stock the Holders shall have the right to receive, in lieu of the
right to receive Conversion Shares, for each Conversion Share that would have
been issuable upon such conversion immediately prior to the occurrence of such
Fundamental Transaction, the same kind and amount of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of one share of Common Stock (the “Alternate
Consideration”). For purposes of any such subsequent conversion, the
determination of the Conversion Ratio shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Corporation shall adjust the Conversion Ratio in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holders shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Series B Preferred Stock
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Corporation or surviving entity
in such Fundamental Transaction shall file a new Certificate of Designation with
the same terms and conditions and issue to the Holders new preferred stock
consistent with the foregoing provisions and evidencing the Holders’ right to
convert such preferred stock into Alternate Consideration. The terms of any
agreement to which the Corporation is a party and pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 7(b)
and insuring that this Series B Preferred Stock (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction. The Corporation shall cause to be delivered to
each Holder, at its last address as it shall appear upon the stock books of the
Corporation, written notice of any Fundamental Transaction at least 20 calendar
days prior to the date on which such Fundamental Transaction is expected to
become effective or close.

g) Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 7, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Corporation) issued and
outstanding.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

h) Notice to the Holders.

iii. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 7, the Corporation shall promptly
deliver to each Holder a notice setting forth the Conversion Ratio after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

iv. Other Notices. If (A) the Corporation shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Corporation shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Corporation shall authorize the granting to all holders of the
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any
stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Corporation is a party, any sale or transfer of all or substantially all of the
assets of the Corporation, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the
Corporation shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, then, in each case,
the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Series B Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the
stock books of the Corporation, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified
in such notice.

Section 8. Miscellaneous.

i) Notices. Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to the
Corporation, at 280 East Grand Avenue, South San Francisco, California 94080,
facsimile number (650) 624-3010, or such other facsimile number or address as
the Corporation may specify for such purposes by notice to the Holders delivered
in accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
such Holder appearing on the books of the Corporation, or if no such facsimile
number or address appears on the books of the Corporation, at the principal
place of business of such Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 5:30 p.m.
(New York City

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

time) on any date, (ii) the date immediately following the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section between 5:30 p.m. and 11:59 p.m. (New York City
time) on any date, (iii) the second Business Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given.

j) [Reserved.]

k) Lost or Mutilated Series B Preferred Stock Certificate. If a Holder’s Series
B Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the
Corporation shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated certificate, or in lieu of or in substitution for a
lost, stolen or destroyed certificate, a new certificate for the shares of
Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence of such loss, theft or destruction of such certificate, and
of the ownership thereof, reasonably satisfactory to the Corporation and, in
each case, customary and reasonable indemnity, if requested. Applicants for a
new certificate under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Corporation may prescribe.

l) Waiver. Any waiver by the Corporation or a Holder of a breach of any
provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a waiver by any
other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more
occasions shall not be considered a waiver or deprive that party (or any other
Holder) of the right thereafter to insist upon strict adherence to that term or
any other term of this Certificate of Designation. Any waiver by the Corporation
or a Holder must be in writing. Notwithstanding any provision in this
Certificate of Designation to the contrary, any provision contained herein and
any right of the holders of Series B Preferred Stock granted hereunder may be
waived as to all shares of Series B Preferred Stock (and the Holders thereof)
upon the written consent of the Holders of not less than a majority of the
shares of Series B Preferred Stock then outstanding, unless a higher percentage
is required by the DGCL, in which case the written consent of the holders of not
less than such higher percentage shall be required.

m) Severability. If any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any Person or
circumstance, it shall nevertheless remain applicable to all other Persons and
circumstances. If it shall be found that any interest or other amount deemed
interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law.

n) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

o) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not be deemed to
limit or affect any of the provisions hereof.

p) Status of Converted Series B Preferred Stock. If any shares of Series B
Preferred Stock shall be converted or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of preferred stock and
shall no longer be designated as Series B Preferred Stock.

********************

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this 21st day of June 2012.

 

/s/ Robert I. Blum

Name:   Robert I. Blum Title:   Chief Executive Officer

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES B
PREFERRED STOCK)

The undersigned Holder hereby irrevocably elects to convert the number of shares
of Series B Convertible Preferred Stock indicated below, represented by stock
certificate No(s).          (the “Preferred Stock Certificates”), into shares of
common stock, par value $0.001 per share (the “Common Stock”), of Cytokinetics,
Incorporated, a Delaware corporation (the “Corporation”), as of the date written
below. If securities are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Capitalized terms utilized but not defined herein shall have the
meaning ascribed to such terms in that certain Certificate of Designation of
Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the
“Certificate of Designation”) filed by the Corporation on June 21, 2012.

As of the date hereof, the number of shares of Common Stock beneficially owned
by the undersigned Holder (together with such Holder’s Affiliates, and any other
Person whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act and the applicable
regulations of the Commission, including any “group” of which the Holder is a
member), including the number of shares of Common Stock issuable upon conversion
of the Series B Preferred Stock subject to this Notice of Conversion, but
excluding the number of shares of Common Stock which are issuable upon
(A) conversion of the remaining, unconverted Series B Preferred Stock
beneficially owned by such Holder or any of its Affiliates, and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Corporation (including any warrants) beneficially owned by such Holder or
any of its Affiliates that are subject to a limitation on conversion or exercise
similar to the limitation contained in Section 6(c) of the Certificate of
Designation, is                     . For purposes hereof, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
applicable regulations of the Commission. In addition, for purposes hereof,
“group” has the meaning set forth in Section 13(d) of the Exchange Act and the
applicable regulations of the Commission.

Conversion calculations:

Date to Effect Conversion:

Number of shares of Series B Preferred Stock owned prior to Conversion:

Number of shares of Series B Preferred Stock to be Converted:

Number of shares of Common Stock to be Issued:

Address for delivery of physical certificates:

or

for DWAC Delivery:

DWAC Instructions:

Broker no:

Account no:

 

[HOLDER] By:  

 

  Name:   Title:   Date:

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

CERTIFICATE OF AMENDMENT OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

CYTOKINETICS, INCORPORATED

CYTOKINETICS, INCORPORATED, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
“Corporation”), hereby certifies that:

FIRST: The name of the Corporation is CYTOKINETICS, INCORPORATED.

SECOND: The date on which the Certificate of Incorporation of the Corporation
was originally filed with the Secretary of State of the State of Delaware is
August 5, 1997.

THIRD: The Board of Directors of the Corporation, acting in accordance with the
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware, adopted resolutions to amend Article IV of the Corporation’s
Amended and Restated Certificate of Incorporation to read in its entirety as
follows:

“The corporation shall have authority to issue shares as follows:

81,500,000 shares of Common Stock, par value $0.001 per share. Each share of
Common Stock shall entitle the holder thereof to one (1) vote on each matter
submitted to a vote at a meeting of stockholders.

10,000,000 shares of Preferred Stock, par value $0.001 per share, which may be
issued from time to time in one or more series pursuant to a resolution or
resolutions providing for such issue duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board of Directors).
The Board of Directors is further authorized, subject to limitations prescribed
by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of any wholly unissued series of Preferred Stock, including without
limitation authority to fix by resolution or resolutions the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any such series, and the number of shares constituting any such
series and the designation thereof, or any of the foregoing.

The Board of Directors is further authorized to increase (but not above the
total number of authorized shares of the class) or decrease (but not below the
number of shares of any such series then outstanding) the number of shares of
any series, the number of which was fixed by it, subsequent to the issuance of
shares of such series then outstanding, subject to the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof stated in
the Certificate of Incorporation or the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of shares
of any series is so decreased, then the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.

Effective as of 5:00 p.m., Eastern time, on the date this Certificate of
Amendment of Amended and Restated Certificate of Incorporation is filed with the
Secretary of State of the State of Delaware, each six (6) shares of Common
Stock, par value $0.001 per share, issued and outstanding shall, automatically
and without any action on the part of the respective holders thereof, be
combined and converted into one (1) share of Common Stock, par value $.001 per
share; provided, however, that the Corporation shall issue no fractional shares
as a result of the actions set forth herein but shall instead pay to the holder
of such fractional share a sum in cash equal to such fraction multiplied by the
closing sales price of the Common Stock as reported on the Nasdaq Capital Market
on the last business day before the date this Certificate of Amendment of
Amended and Restated Certificate of Incorporation is filed with the Secretary of
State of the State of Delaware.”

FOURTH: This Certificate of Amendment was duly adopted by the stockholders of
the Corporation in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to
be signed by its Chief Executive Officer this 24th day of June, 2013.

 

CYTOKINETICS, INCORPORATED By:  

/s/ Robert I. Blum

Robert I. Blum, President & Chief Executive Officer

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

EXHIBIT B

Bylaws

[see attached]

 

[    ] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

AMENDED AND RESTATED BYLAWS OF

CYTOKINETICS, INCORPORATED

(as amended on January 21, 2004 effective as of the

closing of the corporation’s initial public offering)

--------------------------------------------------------------------------------

Table of Contents

 

          Page  

ARTICLE 1

   CORPORATE OFFICES      1   

1.1

   Registered Office      1   

1.2

   Other Offices      1   

ARTICLE 2

   MEETINGS OF STOCKHOLDERS      1   

2.1

   Place of Meetings      1   

2.2

   Annual Meeting      1   

2.3

   Special Meeting      1   

2.4

   Advance Notice Procedures; Notice of Stockholders’ Meetings      1   

2.5

   Manner of Giving Notice; Affidavit of Notice      3   

2.6

   Quorum      3   

2.7

   Adjourned Meeting; Notice      3   

2.8

   Conduct of Business      3   

2.9

   Voting      3   

2.10

   Stockholder Action by Written Consent Without a Meeting      3   

2.11

   Record Date for Stockholder Notice; Voting; Giving Consents      3   

2.12

   Proxies      4   

2.13

   List of Stockholders Entitled To Vote      4   

2.14

   Inspectors of Election      4   

ARTICLE 3

   DIRECTORS      5   

3.1

   Powers      5   

3.2

   Number of Directors      5   

3.3

   Election, Qualification and Term of Office of Directors      5   

3.4

   Resignation and Vacancies      5   

3.5

   Place of Meetings; Meetings by Telephone      6   

3.6

   Regular Meetings      6   

3.7

   Special Meetings; Notice      6   

3.8

   Quorum      6   

3.9

   Board Action by Written Consent Without a Meeting      7   

3.10

   Fees and Compensation of Directors      7   

3.11

   Approval of Loans to Officers      7   

3.12

   Removal of Directors      7   

ARTICLE 4

   COMMITTEES      7   

4.1

   Committees of Directors      7   

4.2

   Committee Minutes      7   

4.3

   Meetings and Action of Committees      7   

 

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Table of Contents

(continued)

 

          Page  

ARTICLE 5

   OFFICERS      8   

5.1

   Officers      8   

5.2

   Appointment of Officers      8   

5.3

   Subordinate Officers      8   

5.4

   Removal and Resignation of Officers      8   

5.5

   Vacancies in Offices      8   

5.6

   Representation of Shares of Other Corporations      8   

5.7

   Authority and Duties of Officers      9   

ARTICLE 6

   RECORDS AND REPORTS      9   

6.1

   Maintenance and Inspection of Records      9   

6.2

   Inspection by Directors      9   

ARTICLE 7

   GENERAL MATTERS      9   

7.1

   Execution of Corporate Contracts and Instruments      9   

7.2

   Stock Certificates; Partly Paid Shares      9   

7.3

   Special Designation on Certificates      10   

7.4

   Lost Certificates      10   

7.5

   Construction; Definitions      10   

7.6

   Dividends      10   

7.7

   Fiscal Year      10   

7.8

   Seal      10   

7.9

   Transfer of Stock      10   

7.10

   Stock Transfer Agreements      11   

7.11

   Registered Stockholders      11   

7.12

   Waiver of Notice      11   

ARTICLE 8

   NOTICE BY ELECTRONIC TRANSMISSION      11   

8.1

   Notice by Electronic Transmission      11   

8.2

   Definition of Electronic Transmission      12   

8.3

   Inapplicability      12   

ARTICLE 9

   INDEMNIFICATION      12   

9.1

   Indemnification of Directors and Officers      12   

9.2

   Indemnification of Others      12   

9.3

   Prepayment of Expenses      12   

9.4

   Determination; Claim      12   

 

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Table of Contents

(continued)

 

          Page  

9.5

   Non-Exclusivity of Rights      13   

9.6

   Insurance      13   

9.7

   Other Indemnification      13   

9.8

   Amendment or Repeal      13   

ARTICLE 10

   AMENDMENTS      13   

 

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AMENDED AND RESTATED BYLAWS OF

CYTOKINETICS, INCORPORATED

ARTICLE 1

CORPORATE OFFICES

1.1 Registered Office. The registered office of Cytokinetics, Incorporated shall
be fixed in the corporation’s certificate of incorporation, as the same may be
amended from time to time.

1.2 Other Offices. The corporation’s Board of directors (the “Board”) may at any
time establish other offices at any place or places where the corporation is
qualified to do business.

ARTICLE 2

MEETINGS OF STOCKHOLDERS

2.1 Place of Meetings. Meetings of stockholders shall be held at any place,
within or outside the State of Delaware, designated by the Board. The Board may,
in its sole discretion, determine that a meeting of stockholders shall not be
held at any place, but may instead be held solely by means of remote
communication as authorized by Section 211(a)(2) of the Delaware General
Corporation Law (the “DGCL”). In the absence of any such designation or
determination, stockholders’ meetings shall be held at the corporation’s
principal executive office.

2.2 Annual Meeting. The annual meeting of stockholders shall be held each year.
The Board shall designate the date and time of the annual meeting. In the
absence of such designation the annual meeting of stockholders shall be held on
the second Tuesday of May of each year at 10:00 a.m. However, if such day falls
on a legal holiday, then the meeting shall be held at the same time and place on
the next succeeding business day. At the annual meeting, directors shall be
elected and any other proper business may be transacted.

2.3 Special Meeting. A special meeting of the stockholders may be called at any
time by the Board, chairperson of the Board, chief executive officer or
president (in the absence of a chief executive officer), but such special
meetings may not be called by any other person or persons.

No business may be transacted at such special meeting other than the business
specified in such notice to stockholders. Nothing contained in this paragraph of
this Section 2.3 shall be construed as limiting, fixing, or affecting the time
when a meeting of stockholders called by action of the Board may be held.

2.4 Advance Notice Procedures; Notice of Stockholders’ Meetings.

(a) At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (A) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the board
of directors, (B) otherwise properly brought before the meeting by or at the
direction of the board of directors, or (C) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation. To be timely, a
stockholder’s notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days before the one year anniversary of the date on which the
corporation first mailed its proxy statement to stockholders in connection with
the previous year’s annual meeting of stockholders; provided, however, that in
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than thirty (30) days from the date
of the prior year’s meeting, notice by the stockholder to be timely must be so
received not later than the close of business on the later of one hundred twenty
(120) calendar days in advance of such annual meeting and ten (10) calendar days
following the date on which public announcement of the date of the meeting is
first made. A

 

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stockholder’s notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the corporation’s books, of the stockholder proposing such
business, (c) the class and number of shares of the corporation that are
beneficially owned by the stockholder, (d) any material interest of the
stockholder in such business, and (e) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the “1934 Act”), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder’s meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (i). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (i), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.

(b) Only persons who are nominated in accordance with the procedures set forth
in this paragraph (ii) shall be eligible for election as directors. Nominations
of persons for election to the board of directors of the corporation may be made
at a meeting of stockholders by or at the direction of the board of directors or
by any stockholder of the corporation entitled to vote in the election of
directors at the meeting who complies with the notice procedures set forth in
this paragraph (ii). Such nominations, other than those made by or at the
direction of the board of directors, shall be made pursuant to timely notice in
writing to the secretary of the corporation in accordance with the provisions of
paragraph (i) of this Section 2.4. Such stockholder’s notice shall set forth
(a) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation that are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the 1934 Act (including without limitation such person’s
written consent to being named in the proxy statement, if any, as a nominee and
to serving as a director if elected); and (b) as to such stockholder giving
notice, the information required to be provided pursuant to paragraph (i) of
this Section 2.4. At the request of the board of directors, any person nominated
by a stockholder for election as a director shall furnish to the secretary of
the corporation that information required to be set forth in the stockholder’s
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this paragraph (ii). The chairman of the
meeting shall, if the facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.

These provisions shall not prevent the consideration and approval or disapproval
at an annual meeting of reports of officers, directors and committees of the
board of directors, but in connection therewith no new business shall be acted
upon at any such meeting unless stated, filed and received as herein provided.
Notwithstanding anything in these bylaws to the contrary, no business brought
before a meeting by a stockholder shall be conducted at an annual meeting except
in accordance with procedures set forth in this Section 2.4.

All notices of meetings of stockholders shall be sent or otherwise given in
accordance with either Section 2.5 or Section 8.1 of these bylaws not less than
10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notice shall specify the place, if any,
date and hour of the meeting, the means of remote communication, if any, by
which stockholders and proxy holders may be deemed to be present in person and
vote at such meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.

 

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2.5 Manner of Giving Notice; Affidavit of Notice. Notice of any meeting of
stockholders shall be given:

(a) if mailed, when deposited in the United States mail, postage prepaid,
directed to the stockholder at his or her address as it appears on the
corporation’s records; or

(b) if electronically transmitted as provided in Section 8.1 of these bylaws.

An affidavit of the secretary or an assistant secretary of the corporation or of
the transfer agent or any other agent of the corporation that the notice has
been given by mail or by a form of electronic transmission, as applicable,
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.

2.6 Quorum. The holders of a majority of the stock issued and outstanding and
entitled to vote, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of the stockholders. If,
however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the chairperson of the meeting, or (ii) the
stockholders entitled to vote at the meeting, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.

2.7 Adjourned Meeting; Notice. When a meeting is adjourned to another time or
place, unless these bylaws otherwise require, notice need not be given of the
adjourned meeting if the time, place if any thereof, and the means of remote
communications if any by which stockholders and proxy holders may be deemed to
be present in person and vote at such adjourned meeting are announced at the
meeting at which the adjournment is taken. At the adjourned meeting, the
corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

2.8 Conduct of Business. The chairperson of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of business.

2.9 Voting. The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of Section 2.11 of these
bylaws, subject to Section 217 (relating to voting rights of fiduciaries,
pledgors and joint owners of stock) and Section 218 (relating to voting trusts
and other voting agreements) of the DGCL.

Except as may be otherwise provided in the certificate of incorporation or these
bylaws, each stockholder shall be entitled to one vote for each share of capital
stock held by such stockholder.

2.10 Stockholder Action by Written Consent Without a Meeting. Subject to the
rights of the holders of the shares of any series of Preferred Stock or any
other class of stock or series thereof having a preference over the Common Stock
as dividend or upon liquidation, any action required or permitted to be taken by
the stockholders of the corporation must be effected at a duly called annual or
special meeting of stockholders of the corporation and may not be effected by
any consent in writing by such stockholders.

2.11 Record Date for Stockholder Notice; Voting; Giving Consents. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
may fix, in advance, a record date, which record date shall not precede the date
on which the resolution fixing the record date is adopted and which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other such action.

 

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If the Board does not so fix a record date:

(a) The record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.

(b) The record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.

2.12 Proxies. Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by proxy
authorized by an instrument in writing or by a transmission permitted by law
filed in accordance with the procedure established for the meeting, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. The revocability of a proxy that states on
its face that it is irrevocable shall be governed by the provisions of
Section 212 of the DGCL.

2.13 List of Stockholders Entitled To Vote. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. The corporation shall not be required to include electronic mail
addresses or other electronic contact information on such list. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting for a period of at least 10 days prior to the meeting: (i) on a
reasonably accessible electronic network, provided that the information required
to gain access to such list is provided with the notice of the meeting, or
(ii) during ordinary business hours, at the corporation’s principal executive
office. In the event that the corporation determines to make the list available
on an electronic network, the corporation may take reasonable steps to ensure
that such information is available only to stockholders of the corporation. If
the meeting is to be held at a place, then the list shall be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of remote communication, then the list shall also be open to the
examination of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.

2.14 Inspectors of Election. A written proxy may be in the form of a telegram,
cablegram, or other means of electronic transmission which sets forth or is
submitted with information from which it can be determined that the telegram,
cablegram, or other means of electronic transmission was authorized by the
person.

Before any meeting of stockholders, the board of directors shall appoint an
inspector or inspectors of election to act at the meeting or its adjournment.
The number of inspectors shall be either one (1) or three (3). If any person
appointed as inspector fails to appear or fails or refuses to act, then the
chairperson of the meeting may, and upon the request of any stockholder or a
stockholder’s proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(a) determine the number of shares outstanding and the voting power of each, the
number of shares represented at the meeting, the existence of a quorum, and the
authenticity, validity, and effect of proxies;

(b) receive votes, ballots or consents;

(c) hear and determine all challenges and questions in any way arising in
connection with the right to vote;

(d) count and tabulate all votes or consents;

 

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(e) determine when the polls shall close;

(f) determine the result; and

(g) do any other acts that may be proper to conduct the election or vote with
fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If
there are three (3) inspectors of election, the decision, act or certificate of
a majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.

ARTICLE 3

DIRECTORS

3.1 Powers. Subject to the provisions of the DGCL and any limitations in the
certificate of incorporation or these bylaws relating to action required to be
approved by the stockholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board.

3.2 Number of Directors. The authorized number of directors shall be determined
from time to time by resolution of the Board, provided the Board shall consist
of at least one member. No reduction of the authorized number of directors shall
have the effect of removing any director before that director’s term of office
expires.

3.3 Election, Qualification and Term of Office of Directors. Except as provided
in Section 3.4 of these bylaws, each director, including a director elected to
fill a vacancy, shall hold office until the expiration of the term for which
elected and until such director’s successor is elected and qualified or until
such director’s earlier death, resignation or removal. Directors need not be
stockholders unless so required by the certificate of incorporation or these
bylaws. The certificate of incorporation or these bylaws may prescribe other
qualifications for directors.

If so provided in the certificate of incorporation, the directors of the
corporation shall be divided into three classes.

3.4 Resignation and Vacancies. Any director may resign at any time upon notice
given in writing or by electronic transmission to the corporation. When one or
more directors so resigns and the resignation is effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office as provided in this section in the filling
of other vacancies.

Unless otherwise provided in the certificate of incorporation or these bylaws,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having the
right to vote as a single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director. If
the directors are divided into classes, a person so elected by the directors
then in office to fill a vacancy or newly created directorship shall hold office
until the next election of the class for which such director shall have been
chosen and until his or her successor shall have been duly elected and
qualified.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the DGCL.

 

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If, at the time of filling any vacancy or any newly created directorship, the
directors then in office constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), then the Court of Chancery
may, upon application of any stockholder or stockholders holding at least 10% of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office as aforesaid, which election shall be governed by
the provisions of Section 211 of the DGCL as far as applicable.

3.5 Place of Meetings; Meetings by Telephone. The Board may hold meetings, both
regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws,
members of the Board, or any committee designated by the Board, may participate
in a meeting of the Board, or any committee, by means of conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

3.6 Regular Meetings. Regular meetings of the Board may be held without notice
at such time and at such place as shall from time to time be determined by the
Board.

3.7 Special Meetings; Notice. Special meetings of the Board for any purpose or
purposes may be called at any time by the chairperson of the Board, the chief
executive officer, the president, the secretary or a majority of the authorized
number of directors.

Notice of the time and place of special meetings shall be:

(a) delivered personally by hand, by courier or by telephone;

(b) sent by United States first-class mail, postage prepaid;

(c) sent by facsimile; or

(d) sent by electronic mail,

directed to each director at that director’s address, telephone number,
facsimile number or electronic mail address, as the case may be, as shown on the
corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone,
(ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered
or sent at least 24 hours before the time of the holding of the meeting. If the
notice is sent by United States mail, it shall be deposited in the United States
mail at least four days before the time of the holding of the meeting. Any oral
notice may be communicated to the director. The notice need not specify the
place of the meeting (if the meeting is to be held at the corporation’s
principal executive office) nor the purpose of the meeting.

3.8 Quorum. At all meetings of the Board, a majority of the authorized number of
directors shall constitute a quorum for the transaction of business. The vote of
a majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board, except as may be otherwise specifically provided
by statute, the certificate of incorporation or these bylaws. If a quorum is not
present at any meeting of the Board, then the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present.

A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.

 

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3.9 Board Action by Written Consent Without a Meeting. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing or by electronic
transmission and the writing or writings or electronic transmission or
transmissions are filed with the minutes of proceedings of the Board or
committee. Such filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.

3.10 Fees and Compensation of Directors. Unless otherwise restricted by the
certificate of incorporation or these bylaws, the Board shall have the authority
to fix the compensation of directors.

3.11 Approval of Loans to Officers. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiary, including any officer or employee who
is a director of the corporation or its subsidiary, whenever, in the judgment of
the Board, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board
shall approve, including, without limitation, a pledge of shares of stock of the
corporation.

3.12 Removal of Directors. Any director may be removed from office by the
stockholders of the corporation only for cause.

No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director’s term of office.

ARTICLE 4

COMMITTEES

4.1 Committees of Directors. The Board may, by resolution passed by a majority
of the authorized number of directors, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board or in these bylaws, shall have
and may exercise all the powers and authority of the Board in the management of
the business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers that may require it; but no such
committee shall have the power or authority to (i) approve or adopt, or
recommend to the stockholders, any action or matter expressly required by the
DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or
repeal any bylaw of the corporation,

4.2 Committee Minutes. Each committee shall keep regular minutes of its meetings
and report the same to the Board when required.

4.3 Meetings and Action of Committees. Meetings and actions of committees shall
be governed by, and held and taken in accordance with, the provisions of:

(a) Section 3.5 (place of meetings and meetings by telephone);

(b) Section 3.6 (regular meetings);

(c) Section 3.7 (special meetings and notice);

(d) Section 3.8 (quorum);

 

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(e) Section 7.12 (waiver of notice); and

(f) Section 3.9 (action without a meeting)

with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the Board and its members. However:

(g) the time of regular meetings of committees may be determined either by
resolution of the Board or by resolution of the committee;

(h) special meetings of committees may also be called by resolution of the
Board; and

(i) notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The Board may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.

ARTICLE 5

OFFICERS

5.1 Officers. The officers of the corporation shall be a president and a
secretary. The corporation may also have, at the discretion of the Board, a
chairperson of the Board, a vice chairperson of the Board, a chief executive
officer, a chief financial officer or treasurer, one or more vice presidents,
one or more assistant vice presidents, one or more assistant treasurers, one or
more assistant secretaries, and any such other officers as may be appointed in
accordance with the provisions of these bylaws. Any number of offices may be
held by the same person.

5.2 Appointment of Officers. The Board shall appoint the officers of the
corporation, except such officers as may be appointed in accordance with the
provisions of Sections 5.3 and 5.5 of these bylaws, subject to the rights, if
any, of an officer under any contract of employment.

5.3 Subordinate Officers. The Board may appoint, or empower the chief executive
officer or, in the absence of a chief executive officer, the president, to
appoint, such other officers and agents as the business of the corporation may
require. Each of such officers and agents shall hold office for such period,
have such authority, and perform such duties as are provided in these bylaws or
as the Board may from time to time determine.

5.4 Removal and Resignation of Officers. Subject to the rights, if any, of an
officer under any contract of employment, any officer may be removed, either
with or without cause, by an affirmative vote of the majority of the Board at
any regular or special meeting of the Board or, except in the case of an officer
chosen by the Board, by any officer upon whom such power of removal may be
conferred by the Board.

Any officer may resign at any time by giving written notice to the corporation.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice. Unless otherwise specified in the
notice of resignation, the acceptance of the resignation shall not be necessary
to make it effective. Any resignation is without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a party.

5.5 Vacancies in Offices. Any vacancy occurring in any office of the corporation
shall be filled by the Board or as provided in Section 5.2.

5.6 Representation of Shares of Other Corporations. The chairperson of the
Board, the president, any vice president, the treasurer, the secretary or
assistant secretary of this corporation, or any other person authorized by the
Board or the president or a vice president, is authorized to vote, represent,
and exercise on behalf of this corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of this
corporation. The authority granted herein may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.

 

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5.7 Authority and Duties of Officers. All officers of the corporation shall
respectively have such authority and perform such duties in the management of
the business of the corporation as may be designated from time to time by the
Board or the stockholders and, to the extent not so provided, as generally
pertain to their respective offices, subject to the control of the Board.

ARTICLE 6

RECORDS AND REPORTS

6.1 Maintenance and Inspection of Records. The corporation shall, either at its
principal executive office or at such place or places as designated by the
Board, keep a record of its stockholders listing their names and addresses and
the number and class of shares held by each stockholder, a copy of these bylaws
as amended to date, accounting books, and other records.

Any stockholder of record, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the corporation’s
stock ledger, a list of its stockholders, and its other books and records and to
make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person’s interest as a stockholder. In every instance
where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal executive
office.

6.2 Inspection by Directors. Any director shall have the right to examine the
corporation’s stock ledger, a list of its stockholders, and its other books and
records for a purpose reasonably related to his or her position as a director.
The Court of Chancery is hereby vested with the exclusive jurisdiction to
determine whether a director is entitled to the inspection sought. The Court may
summarily order the corporation to permit the director to inspect any and all
books and records, the stock ledger, and the stock list and to make copies or
extracts therefrom. The Court may, in its discretion, prescribe any limitations
or conditions with reference to the inspection, or award such other and further
relief as the Court may deem just and proper.

ARTICLE 7

GENERAL MATTERS

7.1 Execution of Corporate Contracts and Instruments. The Board, except as
otherwise provided in these bylaws, may authorize any officer or officers, or
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the corporation; such authority may be general or
confined to specific instances. Unless so authorized or ratified by the Board or
within the agency power of an officer, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.

7.2 Stock Certificates; Partly Paid Shares. The shares of the corporation shall
be represented by certificates, provided that the Board may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares.

Any such resolution shall not apply to shares represented by a certificate until
such certificate is surrendered to the corporation. Notwithstanding the adoption
of such a resolution by the Board, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the chairperson or vice-chairperson of the Board, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the

 

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certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
has ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly paid and
subject to call for the remainder of the consideration to be paid therefor. Upon
the face or back of each stock certificate issued to represent any such partly
paid shares, upon the books and records of the corporation in the case of
uncertificated partly paid shares, the total amount of the consideration to be
paid therefor and the amount paid thereon shall be stated. Upon the declaration
of any dividend on fully paid shares, the corporation shall declare a dividend
upon partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.

7.3 Special Designation on Certificates. If the corporation is authorized to
issue more than one class of stock or more than one series of any class, then
the powers, the designations, the preferences, and the relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate that the corporation shall issue to represent such class or series
of stock; provided, however, that, except as otherwise provided in Section 202
of the DGCL, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

7.4 Lost Certificates. Except as provided in this Section 7.5, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and cancelled at
the same time. The corporation may issue a new certificate of stock or
uncertificated shares in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroyed, and the corporation may require
the owner of the lost, stolen or destroyed certificate, or such owner’s legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate or uncertificated shares.

7.5 Construction; Definitions. Unless the context requires otherwise, the
general provisions, rules of construction, and definitions in the DGCL shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term “person” includes both a corporation and a natural
person.

7.6 Dividends. The Board, subject to any restrictions contained in either
(i) the DGCL, or (ii) the certificate of incorporation, may declare and pay
dividends upon the shares of its capital stock. Dividends may be paid in cash,
in property, or in shares of the corporation’s capital stock.

The Board may set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and may abolish any such
reserve. Such purposes shall include but not be limited to equalizing dividends,
repairing or maintaining any property of the corporation, and meeting
contingencies.

7.7 Fiscal Year. The fiscal year of the corporation shall be fixed by resolution
of the Board and may be changed by the Board.

7.8 Seal. The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the Board. The corporation may use the corporate seal by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.

7.9 Transfer of Stock. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.

 

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7.10 Stock Transfer Agreements. The corporation shall have power to enter into
and perform any agreement with any number of stockholders of any one or more
classes of stock of the corporation to restrict the transfer of shares of stock
of the corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the DGCL.

7.11 Registered Stockholders. The corporation:

(a) shall be entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends and to vote as such owner;

(b) shall be entitled to hold liable for calls and assessments the person
registered on its books as the owner of shares; and

(c) shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of another person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.

7.12 Waiver of Notice. Whenever notice is required to be given under any
provision of the DGCL, the certificate of incorporation or these bylaws, a
written waiver, signed by the person entitled to notice, or a waiver by
electronic transmission by the person entitled to notice, whether before or
after the time of the event for which notice is to be given, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice or any waiver by electronic transmission unless so required by
the certificate of incorporation or these bylaws.

ARTICLE 8

NOTICE BY ELECTRONIC TRANSMISSION

8.1 Notice by Electronic Transmission. Without limiting the manner by which
notice otherwise may be given effectively to stockholders pursuant to the DGCL,
the certificate of incorporation or these bylaws, any notice to stockholders
given by the corporation under any provision of the DGCL, the certificate of
incorporation or these bylaws shall be effective if given by a form of
electronic transmission consented to by the stockholder to whom the notice is
given. Any such consent shall be revocable by the stockholder by written notice
to the corporation. Any such consent shall be deemed revoked if:

(a) the corporation is unable to deliver by electronic transmission two
consecutive notices given by the corporation in accordance with such consent;
and

(b) such inability becomes known to the secretary or an assistant secretary of
the corporation or to the transfer agent, or other person responsible for the
giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(c) if by facsimile telecommunication, when directed to a number at which the
stockholder has consented to receive notice;

(d) if by electronic mail, when directed to an electronic mail address at which
the stockholder has consented to receive notice;

 

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(e) if by a posting on an electronic network together with separate notice to
the stockholder of such specific posting, upon the later of (A) such posting and
(B) the giving of such separate notice; and

(f) if by any other form of electronic transmission, when directed to the
stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent
or other agent of the corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.

8.2 Definition of Electronic Transmission. An “electronic transmission” means
any form of communication, not directly involving the physical transmission of
paper, that creates a record that may be retained, retrieved, and reviewed by a
recipient thereof, and that may be directly reproduced in paper form by such a
recipient through an automated process.

8.3 Inapplicability. Notice by a form of electronic transmission shall not apply
to Sections 164, 296, 311, 312 or 324 of the DGCL.

ARTICLE 9

INDEMNIFICATION

9.1 Indemnification of Directors and Officers. The corporation shall indemnify
and hold harmless, to the fullest extent permitted by the DGCL as it presently
exists or may hereafter be amended, any director or officer of the corporation
who was or is made or is threatened to be made a party or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a “PROCEEDING”) by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or non-profit entity,
including service with respect to employee benefit plans, against all liability
and loss suffered and expenses reasonably incurred by such person in connection
with any such Proceeding. The corporation shall be required to indemnify a
person in connection with a Proceeding initiated by such person only if the
Proceeding was authorized by the Board.

9.2 Indemnification of Others. The corporation shall have the power to indemnify
and hold harmless, to the extent permitted by applicable law as it presently
exists or may hereafter be amended, any employee or agent of the corporation who
was or is made or is threatened to be made a party or is otherwise involved in
any Proceeding by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was an employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or non-profit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and
expenses reasonably incurred by such person in connection with any such
Proceeding.

9.3 Prepayment of Expenses. The corporation shall pay the expenses incurred by
any officer or director of the corporation, and may pay the expenses incurred by
any employee or agent of the corporation, in defending any Proceeding in advance
of its final disposition; provided, however, that the payment of expenses
incurred by a person in advance of the final disposition of the Proceeding shall
be made only upon receipt of an undertaking by the person to repay all amounts
advanced if it should be ultimately determined that the person is not entitled
to be indemnified under this Article IX or otherwise.

9.4 Determination; Claim. If a claim for indemnification or payment of expenses
under this Article IX is not paid in full within sixty days after a written
claim therefor has been received by the corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification or payment of expenses under
applicable law.

 

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9.5 Non-Exclusivity of Rights. The rights conferred on any person by this
Article IX shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the certificate of
incorporation, these bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.

9.6 Insurance. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of the DGCL.

9.7 Other Indemnification. The corporation’s obligation, if any, to indemnify
any person who was or is serving at its request as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, enterprise
or non-profit entity shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
enterprise or non-profit enterprise.

9.8 Amendment or Repeal. Any repeal or modification of the foregoing provisions
of this Article IX shall not adversely affect any right or protection hereunder
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.”

ARTICLE 10

AMENDMENTS

These bylaws may be adopted, amended or repealed by the stockholders entitled to
vote. However, the corporation may, in its certificate of incorporation, confer
the power to adopt, amend or repeal bylaws upon the directors. The fact that
such power has been so conferred upon the directors shall not divest the
stockholders of the power, nor limit their power to adopt, amend or repeal
bylaws.

 

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DEBTOR:    CYTOKINETICS, INCORPORATED SECURED PARTY:    OXFORD FINANCE LLC,   
as Collateral Agent

EXHIBIT A TO UCC FINANCING STATEMENT

Description of Collateral

The Collateral consists of all of Debtor’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as noted below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts and other
Collateral Accounts, all certificates of deposit, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (i) any
Intellectual Property; provided, however, the Collateral shall include all
Accounts and all proceeds of Intellectual Property. If a judicial authority
(including a U.S. Bankruptcy Court) would hold that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such Accounts and such property that are proceeds of Intellectual Property, then
the Collateral shall automatically, and effective as of the Effective Date,
include the Intellectual Property to the extent necessary to permit perfection
of Collateral Agent’s security interest in such Accounts and such other property
of Borrower that are proceeds of the Intellectual Property; (ii) more than 65%
of the total combined voting power of all classes of stock entitled to vote the
shares of capital stock (the “Shares”) of any Foreign Subsidiary, if Borrower
demonstrates to Collateral Agent’s reasonable satisfaction that a pledge of more
than sixty five percent (65%) of the Shares of such Subsidiary creates a present
and existing adverse tax consequence to Borrower under the U.S. Internal Revenue
Code; and (iii) any license, contract or interest of Borrower as a lessee under
an Equipment lease, in each case if the granting of a Lien in such license,
contract or interest is prohibited by or would constitute a default under the
agreement governing such license, contract or interest (but (A) only to the
extent such prohibition is enforceable under applicable law and (B) other than
to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-408 or 9-409 (or any other Section) of Division 9 of the
Code); provided that upon the termination, lapsing or expiration of any such
prohibition, such license, contract or interest, as applicable, shall
automatically be subject to the security interest granted in favor of Collateral
Agent hereunder and become part of the “Collateral.”

Pursuant to the terms of a certain negative pledge arrangement with Collateral
Agent and the Lenders, Borrower has agreed not to encumber any of its
Intellectual Property.

Capitalized terms used but not defined herein have the meanings ascribed in the
Uniform Commercial Code in effect in the State of California as in effect from
time to time (the “Code”) or, if not defined in the Code, then in the Loan and
Security Agreement by and between Debtor, Secured Party and the other Lenders
party thereto (as modified, amended and/or restated from time to time).

 

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