UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-K/A
Amendment No. 1
___________________________________________
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2012
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to | |
Commission File Number: 000-19756
____________________________________________
PDL BioPharma, Inc.
(Exact name of registrant as specified in its charter)
___________________________________________
Delaware | 94-3023969 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
932 Southwood Boulevard
Incline Village, Nevada 89451
(Address of principal executive offices)
Registrant’s telephone number, including area code
(775) 832-8500
___________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Class | Name of Exchange on which Registered |
Common Stock, par value $0.01 per share | The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
___________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
(Do not check if a smaller reporting company) | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The aggregate market value of shares of common stock held by non-affiliates of the registrant, based on the closing sale price of a share of common stock on June 29, 2012 (the last business day of the registrant’s most recently completed second fiscal quarter, as reported on the NASDAQ Global Select Market, was $925,223,899.
As of February 15, 2013, the registrant had outstanding 139,982,837 shares of common stock.
Explanatory Note
PDL BioPharma, Inc. (the Company) is filing this Amendment No. 1 on Form 10-K/A (this Amendment No. 1) to amend the Company's Annual Report on Form 10-K for the year ended December 31, 2012 (the Annual Report), as originally filed with the Securities and Exchange Commission (the Commission) on March 1, 2013 (the Original Filing Date). This Amendment No. 1 is being filed solely to amend Exhibit 10.49 and Exhibit 10.50 (the Exhibits) originally filed with the Annual Report. The Company had sought confidential treatment under Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), and 17 C.F.R. Section 200.80(b)(4), for portions of the Exhibits and, following correspondence and conversations with the Staff of the Commission's Division of Corporate Finance, is re-filing the Exhibits to address comments the Company received from the Staff in response to its requests for confidential treatment.
The Exhibits filed herewith supersede in their entirety the Exhibits originally filed with the Annual Report. Except for the revised Exhibits, this Amendment No. 1 does not amend any other information set forth in the Annual Report. This Amendment No. 1 speaks as of the Original Filing Date, does not reflect any events that may have occurred subsequent to the Original Filing Date, and does not modify or update in any way any disclosures made in the Annual Report. Additionally, in connection with the filing of this Amendment No. 1, the Company is including new certifications of the Company's chief executive officer and chief financial officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. The Company is not including certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.1350) as no financial statements are being filed with this Amendment No. 1.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(3) Index to Exhibits
Exhibit Number | Exhibit Title |
2.1 | Separation and Distribution Agreement, dated December 17, 2008, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 23, 2008) |
2.2 | Amendment No. 1 to Separation and Distribution Agreement, dated January 20, 2009, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 2.2 to Annual Report on Form 10-K filed March 2, 2009) |
3.1 | Restated Certificate of Incorporation effective March 23, 1993 (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K filed March 31, 1993) |
3.2 | Certificate of Amendment of Certificate of Incorporation effective August 21, 2001 (incorporated by reference to Exhibit 3.3 to Annual Report on Form 10-K filed March 14, 2002) |
3.3 | Certificate of Amendment of Certificate of Incorporation effective January 9, 2006 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed January 10, 2006) |
3.4 | Certificate of Designation, Preferences and Rights of the Terms effective August 25, 2006 (incorporated by reference to Exhibit 3.4 to Registration Statement on Form 8-A filed September 6, 2006) |
3.5 | Amended and Restated Bylaws effective June 4, 2009 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed June 10, 2009) |
4.1 | Indenture between the Company and J.P. Morgan Trust Company, National Association, dated February 14, 2005 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed February 16, 2005) |
4.2 | Indenture between wholly-owned subsidiary QHP Royalty Sub LLC and U.S. Bank National Association, dated November 2, 2009 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed November 6, 2009) |
4.3 | Indenture between the Company and The Bank of New York Mellon, N.A., dated November 1, 2010 (incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed November 9, 2010) |
4.4 | Indenture between the Company and The Bank of New York Mellon, N.A., dated May 16, 2011 (incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed July 29, 2011) |
4.5 | Supplemental Indenture between the Company and The Bank of New York Mellon, N.A., dated May 16, 2011 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed May 16, 2011) |
4.6 | Indenture between the Company and The Bank of New York Mellon, N.A., dated January 5, 2012 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed January 6, 2012) |
10.1* | 1999 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.2* | 1999 Nonstatutory Stock Option Plan, as amended through February 20, 2003 (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.3* | Form of Notice of Grant of Stock Option under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed August 14, 2002) |
10.4* | Form of Stock Option Agreement (incentive stock options) under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.5* | Form of Stock Option Agreement (nonstatutory stock options) under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.6* | Form of Notice of Grant of Stock Option under the 1999 Nonstatutory Stock Option Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q/A filed November 14, 2007) |
3
10.7* | Form of Stock Option Agreement under the 1999 Nonstatutory Stock Option Plan (incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.8* | 2002 Outside Directors Stock Option Plan, as amended June 8, 2005 (incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K filed June 14, 2005) |
10.9* | Form of Nonqualified Stock Option Agreement under the 2002 Outside Directors Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q/A filed November 14, 2007) |
10.10* | Amended and Restated 2005 Equity Incentive Plan effective June 4, 2009 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed July 31, 2009) |
10.11* | Form of Notice of Grant of Stock Option under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.12* | Form of Stock Option Agreement under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.13* | Form of Notice of Grant of Restricted Stock Award under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.14* | Form of Restricted Stock Agreement under the 2005 Equity Incentive Plan (for the officers of the Company) (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q filed August 9, 2006) |
10.15* | Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-1 filed December 16, 1991) |
10.16* | Offer Letter between the Company and John McLaughlin, dated November 4, 2008 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed November 10, 2008) |
10.17* | Offer Letter between the Company and Christine Larson, dated December 15, 2008 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 19, 2008) |
10.18 | Tax Sharing and Indemnification Agreement, dated December 18, 2008, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed December 23, 2008) |
10.19 | Patent Licensing Master Agreement between the Company and Genentech, Inc., dated September 25, 1998 (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q filed November 16, 1998)† |
10.20 | Amendment No. 1 to Patent Licensing Master Agreement between the Company and Genentech, Inc., dated September 18, 2003 (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed March 8, 2004)† |
10.21 | Amendment No. 2 to Patent Licensing Master Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed March 2, 2009) |
10.22 | Amendment No. 1 to the Herceptin® License Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.47 to Annual Report on Form 10-K filed March 8, 2004) |
10.23 | Patent License Agreement, dated July 17, 1997, between the Company and MedImmune Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 24, 2011)† |
10.24 | Patent License Agreement, dated April 24, 1998, between the Company and Elan International Services Ltd. (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed March 2, 2009) † |
10.25* | Offer Letter between the Company and Christopher Stone, dated December 30, 2008 (incorporated by reference to Exhibit 10.29 to Annual Report on Form 10-K filed March 1, 2010) |
10.26 | Purchase and Sale Agreement, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K filed November 6, 2009) |
10.27 | Pledge and Security Agreement, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.3 to Current Report on Form 8-K filed November 6, 2009) |
4
10.28 | Bill of Sale, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.4 to Current Report on Form 8-K filed November 6, 2009) |
10.29* | Company 2010 Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 19, 2010) |
10.30 | Settlement Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed November 9, 2010) † |
10.31 | Amended and Restated Patent Licensing master Agreement between the Company and Genentech, Inc., dated July 27, 2009 (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed November 9, 2010) † |
10.32 | Amendments to Product Licenses and Settlement Agreement between the Company and Genentech, Inc. dated July 27, 2009 (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed November 9, 2010) |
10.33 | Form of Exchange Agreement between the Company and certain holders of the Company’s 2.75% Convertible Subordinated Notes due 2023 (incorporated by reference to Exhibit 10.1 to Current Report Form 8-K filed August 5, 2010) |
10.34 | Form of Exchange Agreement between the Company and certain holders of the Company’s 2.00% Convertible Senior Notes due 2012 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed October 27, 2010) |
10.35 | Form of Purchase Agreement between the Company and certain holders of the Company’s 2.00% Convertible Senior Notes due 2012 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed October 27, 2010) |
10.36 | Form of Exchange and Purchase Agreement between the Company and certain holders of the Company’s 2.00% Convertible Senior Notes due 2012 (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed October 27, 2010) |
10.37* | Offer Letter between the Company and Caroline Krumel, dated January 6, 2011 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 25, 2011) |
10.38* | Company 2011 Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 26, 2011) |
10.39* | Offer Letter between the Company and Danny Hart, dated January 11, 2010 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 18, 2011) |
10.40* | Form of Executive Officer Severance Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed May 26, 2011) |
10.41* | 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed July 29, 2011) |
10.42* | Separation Agreement between the Company and Christine Larson, dated December 9, 2011 (incorporated by reference to Exhibit 10.46 to Annual Report on Form 10-K filed February 23, 2012) |
10.43* | 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.47 to Annual Report on Form 10-K filed February 23, 2012) |
10.44* | 2012 Annual Bonus Plan (Incorporated by reference to Exhibit 10.48 to Annual Report on Form 10-K filed February 23, 2012) |
10.45 | Form of Exchange Agreement between the Company and certain holders of the Company's 2.875% Convertible Senior Notes due February 15, 2015 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed February 2, 2012) |
10.46 | Lease Agreement between 932936, LLC and the Company, dated April 17, 2012 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed May 3, 2012) |
10.47* | Offer Letter between the Company and Bruce Tomlinson, dated April 20, 2012 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 27, 2012) |
10.48 | Credit Agreement between the Company and Merus Labs International, Inc., dated July 10, 2012 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q/A filed May 24, 2013)† |
5
10.49# | Revenue Interests Purchase Agreement between the Company and AxoGen, Inc., dated October 5, 2012† |
10.50# | Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated November 2, 2012† |
10.51*## | Separation Agreement between the Company and Bruce Tomlinson, dated November 30, 2012 |
12.1## | Ratio of Earnings to Fixed Charges |
14.1## | Code of Business Conduct |
21.1## | Subsidiaries of the Registrant |
23.1## | Consent of Independent Registered Public Accounting Firm |
31.1# | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended |
31.2# | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended |
32.1### | Certification by the Principal Executive Officer and the Acting Principal Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) |
101.INS## | XBRL Instance Document |
101.SCH## | XBRL Taxonomy Extension Schema |
101.CAL## | XBRL Taxonomy Extension Calculation Linkbase |
101.DEF## | XBRL Taxonomy Extension Definition Linkbase |
101.LAB## | XBRL Taxonomy Extension Label Linkbase |
101.PRE## | XBRL Taxonomy Extension Presentation Linkbase |
_________________________
# | Filed herewith. |
## | Previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
### | Previously furnished and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, with the Company's Annual Report on Form 10-K for the year ended December 31, 2012. |
* | Management contract or compensatory plan or arrangement. |
† | Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4) and 24b-2. |
6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PDL BIOPHARMA, INC. ( REGISTRANT) | |||
By: | /S/ JOHN P. MCLAUGHLIN | ||
John P. McLaughlin | |||
President and Chief Executive Officer | |||
Date: | September 6, 2013 | ||
7
Exhibit 10.49
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “* * *” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
REVENUE INTERESTS PURCHASE AGREEMENT
Dated as of October 5, 2012
between
AxoGen, Inc.
and
PDL BioPharma, Inc.
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Table of Contents | |||
Page | |||
ARTICLE I DEFINITIONS | 1 | ||
ARTICLE II PURCHASE OF INTERESTS | 13 | ||
Section 2.01 | Purchase | 13 | |
Section 2.02 | Payments by the Company | 14 | |
Section 2.03 | Closing; Payment Purchase Price; Closing Deliveries | 14 | |
Section 2.04 | No Assumed Obligations | 15 | |
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY | 15 | ||
Section 3.01 | Organization | 15 | |
Section 3.02 | Authorization | 15 | |
Section 3.03 | Governmental Authorization | 15 | |
Section 3.04 | Ownership | 16 | |
Section 3.05 | Financial Statements | 17 | |
Section 3.06 | No Undisclosed Liabilities | 17 | |
Section 3.07 | Solvency | 17 | |
Section 3.08 | Litigation | 17 | |
Section 3.09 | Compliance with Laws | 17 | |
Section 3.10 | Conflicts | 18 | |
Section 3.11 | Subordination | 18 | |
Section 3.12 | Intellectual Property | 18 | |
Section 3.13 | Regulatory Approval | 20 | |
Section 3.14 | Material Contracts | 21 | |
Section 3.15 | Place of Business | 21 | |
Section 3.16 | Broker's Fees | 21 | |
Section 3.17 | Other Information | 22 | |
Section 3.18 | Insurance | 22 | |
Section 3.19 | Taxes | 22 | |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER | 22 | ||
Section 4.01 | Organization | 22 | |
Section 4.02 | Authorization | 23 | |
Section 4.03 | Broker's Fees | 23 | |
Section 4.04 | Conflicts | 23 | |
ARTICLE V COVENANTS | 23 | ||
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Table of Contents (continued) | |||
Page | |||
Section 5.01 | Consents and Waivers | 23 | |
Section 5.02 | Access; Information | 24 | |
Section 5.03 | Material Contracts | 25 | |
Section 5.04 | Confidentiality; Public Announcement | 25 | |
Section 5.05 | Guarantee and Collateral Agreement | 26 | |
Section 5.06 | Efforts; Further Assurance | 26 | |
Section 5.07 | Change of Control; Put Option | 27 | |
Section 5.08 | Remittance to Deposit Account | 28 | |
Section 5.09 | Intellectual Property | 30 | |
Section 5.10 | Negative Covenants | 31 | |
Section 5.11 | Insurance | 31 | |
Section 5.12 | Notice | 32 | |
Section 5.13 | Use of Proceeds | 32 | |
Section 5.14 | Taxes | 32 | |
Section 5.15 | Board Designee. | 32 | |
Section 5.16 | Rights to Future Stock Issuances. | 33 | |
ARTICLE VI TERMINATION | 34 | ||
Section 6.01 | Termination Date | 34 | |
Section 6.02 | Effect of Termination | 34 | |
ARTICLE VII MISCELLANEOUS | 35 | ||
Section 7.01 | Survival | 35 | |
Section 7.02 | Specific Performance; Limitations on Damages | 35 | |
Section 7.03 | Notices | 35 | |
Section 7.04 | Successors and Assigns | 36 | |
Section 7.05 | Indemnification | 36 | |
Section 7.06 | No Implied Representations and Warranties | 38 | |
Section 7.07 | Independent Nature of Relationship | 38 | |
Section 7.08 | Federal Tax. | 39 | |
Section 7.09 | Entire Agreement | 39 | |
Section 7.10 | Amendments; No Waivers | 39 | |
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Table of Contents (continued) | |||
Page | |||
Section 7.11 | Interpretation | 39 | |
Section 7.12 | Headings and Captions | 40 | |
Section 7.13 | Counterparts; Effectiveness | 40 | |
Section 7.14 | Severability | 40 | |
Section 7.15 | Expenses | 40 | |
Section 7.16 | Governing Law; Jurisdiction | 40 | |
Section 7.17 | Waiver of Jury Trial | 41 | |
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EXHIBITS
Exhibit A - Form of Guarantee and Collateral Agreement
Exhibit B - Form of Assignment of Interests
Exhibit C - Form of Deposit Agreement
Exhibit D Form of Legal Opinion
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REVENUE INTERESTS PURCHASE AGREEMENT
This REVENUE INTERESTS PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is made and entered into as of October 5, 2012, by and between AxoGen, Inc., a Minnesota corporation (the “Company”), and PDL BioPharma, Inc., a Delaware corporation (“Purchaser”).
WHEREAS, the Company wishes to obtain financing in respect of the commercialization of the Product (as hereinafter defined) and to sell, assign, convey and transfer to Purchaser in consideration for its payment of the Purchase Price (as hereinafter defined), and Purchaser wishes to purchase from the Company, the Assigned Interests (as hereinafter defined), all upon and subject to the terms and conditions hereinafter set forth;
WHEREAS, the Company and Purchaser entered into that certain Interim Royalty Purchase Agreement, dated August 14, 2012 (“Interim Royalty Purchase Agreement”), pursuant to which, Purchaser paid $1,750,000.00 (the “Interim Payment”) for the acquisition of certain of the Company's revenue rights; and
WHEREAS, the parties desire for this Agreement to amend, restate and replace the Interim Royalty Purchase Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
The following terms, as used herein, shall have the following meanings:
“2013 Annual Meeting” shall have the meaning set forth in Section 5.15.
“Accounts” shall mean, collectively, the Deposit Account, the Joint Concentration Account, the Company Concentration Account and the Purchaser Concentration Account, each established and maintained pursuant to the Deposit Agreement.
“Affiliate” shall mean any Person that controls, is controlled by, or is under common control with another Person. For purposes of this definition, “control” shall mean (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (ii) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.
“Aggregate Deposit Funds” shall mean any and all financial assets, funds, monies, checks or other items deposited into the Deposit Account.
“Agreement” shall have the meaning set forth in the first paragraph hereof.
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“Applicable Percentage” shall mean 9.95%.
“Assigned Interests” shall mean the following amounts of the Company's Net Revenues:
(a)from the Closing Date until September 30, 2014, an amount equal to the product of the Applicable Percentage multiplied by the Company's Net Revenues;
(b)for each of the following twenty-four (24) Fiscal Quarters, the greater of (i) an amount equal to the Applicable Percentage of the Company's Net Revenues for such Fiscal Quarter or (ii) the following amounts:
(i)for the quarter ending December 31, 2014, $1,250,805;
(ii)for the quarter ending March 31, 2015, $1,452,146;
(iii)for the quarter ending June 30, 2015, $1,558,610;
(iv)for the quarter ending September 30, 2015, $1,769,395;
(v)for the quarter ending December 31, 2015, $2,001,289;
(vi)for the quarter ending March 31, 2016, $2,323,434;
(vii)for the quarter ending June 30, 2016, $2,182,055;
(viii)for the quarter ending September 30, 2016, $2,477,153;
(ix)for the quarter ending December 31, 2016, $2,250,000;
(x)for the quarter ending March 31, 2017, $2,250,000;
(xi)for the quarter ending June 30, 2017, $2,250,000;
(xii)for the quarter ending September 30, 2017, $2,250,000;
(xiii)for the quarter ending December 31, 2017, $2,250,000;
(xiv)for the quarter ending March 31, 2018, $2,250,000;
(xv)for the quarter ending June 30, 2018, $2,250,000;
(xvi)for the quarter ending September 30, 2018, $ 2,250,000;
(xvii)for the quarter ending December 31, 2018, $2,250,000;
(xviii)for the quarter ending March 31, 2019, $2,250,000;
(xix)for the quarter ending June 30, 2019, $2,250,000;
(xx)for the quarter ending September 30, 2019, $2,250,000;
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(xxi)for the quarter ending December 31, 2019, $2,313,000;
(xxii)for the quarter ending March 31, 2020, $2,313,000;
(xxiii)for the quarter ending June 30, 2020, $2,313,000; and
(xxiv)for the quarter ending September 30, 2020, $2,313,000.
“Assigned Interests Collateral” shall mean the property included in the definition of “Collateral” in the Guarantee and Collateral Agreement.
“Assignment of Interests” shall mean the Assignment of Interests pursuant to which the Company shall assign to Purchaser all of its rights and interests in and to the Assigned Interests purchased hereunder, which Assignment of Interests shall be substantially in the form of Exhibit B.
“Audit Costs” shall mean, with respect to any audit of the books and records of the Company with respect to amounts payable or paid under this Agreement, the reasonable out-of-pocket cost of such audit, including all fees, costs and expenses incurred in connection therewith.
“Bankruptcy Event” shall mean the occurrence of any of the following:
(a)the Company shall commence any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, relief of debtors or the like, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any portion of its assets, or the Company shall make a general assignment for the benefit of its creditors;
(b)there shall be commenced against the Company any case, proceeding or other action of a nature referred to in clause (a) above which remains undismissed, undischarged or unbonded for a period of sixty (60) days;
(c)there shall be commenced against the Company any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against (i) all or any substantial portion of its assets and/or (ii) the Product or any substantial portion of the Intellectual Property related to the Product, which results in the entry of an order for any such relief which shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within sixty (60) days from the entry thereof;
(d)the failure of the Company to take action to object to any of the acts set forth in clause (b) or (c) above within ten (10) days of the Company receiving written notice of such act; or
(e)the Company shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its respective debts as they become due.
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“BLA” shall mean a biologics license application and all amendments and supplements thereto, submitted to the FDA with respect to Avance® Nerve Graft.
“Board” shall mean the Board of Directors of the Company.
“Business Day” shall mean any day other than a Saturday, a Sunday, any day which is a legal holiday under the laws of the State of New York, or any day on which banking institutions located in the State of New York are required by law or other governmental action to close.
“Call Closing Date” shall have the meaning set forth in Section 5.07(c).
“Call Option” shall have the meaning set forth in Section 5.07(c).
“Change of Control” shall mean:
(a)the acquisition by any Person or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership of any capital stock of the Company, if after such acquisition, such Person or group would be the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors;
(b)a merger or consolidation of the Company, with any other Person, other than a merger or consolidation which would result in the Company's voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the Company's voting securities or such surviving entity's voting securities outstanding immediately after such merger or consolidation;
(c)during any period of two (2) consecutive years, measured from the first Business Day after the Purchaser Designee appointed pursuant to Section 5.15 hereof takes office, individuals who at the beginning of such period constitute the board of directors of the Company (together with any new directors (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in clause (a) or (b) of this definition of “Change of Control”), whose election by such board of directors or nomination for election by the Company's stockholders, as applicable, was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the board of directors of the Company then in office, provided that for purposes of determining a Change of Control pursuant to this clause (c), the directorship held by the Purchaser Designee shall be disregarded.
(d)the bona fide sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any of its Subsidiaries of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more Subsidiaries of the Company if substantially all of the assets of the Company and its Subsidiaries, taken as a whole, are held
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by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned (direct or indirect) Subsidiary of the Company.
“Change of Control Payment” shall mean the sum of (i) an amount that, when paid to Purchaser, would generate an IRR to Purchaser of thirty-two and one half percent (32.5%) on all payments made by Purchaser pursuant to the Interim Royalty Purchase Agreement and Section 2.03 of this Agreement as of the date of the Change of Control Payment, taking into account the amount and timing of all payments made by the Company to Purchaser (and retained by Purchaser) pursuant to Sections 2.02 and 5.08 of this Agreement and, if applicable, the Interim Royalty Purchase Agreement, prior to and as of the date of payment of the Change of Control Payment, plus (ii) any Delinquent Assigned Interests Payment owed (it being understood and agreed that in calculating the Change of Control Payment, in no event shall Purchaser be required to repay any amounts previously paid to Purchaser pursuant to Sections 2.02 and 5.08 of this Agreement if such payments exceed the IRR required pursuant to this definition).
“Closing” shall have the meaning set forth in Section 2.03(a).
“Closing Date” shall have the meaning set forth in Section 2.03(a).
“Company” shall have the meaning set forth in the first paragraph hereof.
“Company Concentration Account” shall mean a segregated account established and maintained at the Deposit Bank pursuant to the terms of the Deposit Agreement and this Agreement. The Company Concentration Account shall be the account into which the funds remaining in the Joint Concentration Account after payment therefrom of the amounts payable to Purchaser pursuant to this Agreement are swept in accordance with the terms of this Agreement and the Deposit Agreement.
“Company Indemnified Party” shall have the meaning set forth in Section 7.05(b).
“Confidential Information” shall mean, as it relates to the Company and its Affiliates and the Product, the Intellectual Property, confidential business information, financial data and other like information (including ideas, research and development, know-how, formulas, schematics, compositions, technical data, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), inventory, ideas, algorithms, processes, computer software programs or applications (in both source code and object code form), client lists and tangible or intangible proprietary information or material, or such other information that either party identifies to the other as confidential or the nature of which or the circumstances of the disclosure of which would reasonably indicate that such information is confidential. Notwithstanding the foregoing definition, Confidential Information shall not include information that (a) is already in the public domain at the time the information is disclosed, (b) thereafter becomes lawfully obtainable from other sources who, to the knowledge of the recipient, have no obligation of confidentiality, (c) can be shown to have been independently developed by the recipient or its representatives without reference to any Confidential Information of the other party, or (d) is required to be disclosed under securities laws, rules and regulations applicable to the Company or its Affiliates or the Purchaser or its Affiliates, as the case may be, or pursuant to the rules and regulations of any securities exchange
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or trading system or pursuant to any other laws, rules or regulations of any Governmental Authority having jurisdiction over the Company and its Affiliates or Purchaser and its Affiliates.
“Controlled” or “Control” shall mean, with respect to Intellectual Property, the right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise, to grant a license, sublicense or other right to or under such Intellectual Property without violating the terms of any agreement with a third party related to such Intellectual Property.
“Daily Amount” shall have the meaning set forth in Section 2.02(b).
“Default” shall mean the occurrence of any event or circumstance that would, with the giving of notice, lapse of time, or both, be an Event of Default.
“Delinquent Assigned Interests Payment” shall mean, with respect to any Assigned Interests Payment and, if owed by the Company to Purchaser, any payment due under Section 5.08(g)(iii) that is not paid when due shall, in each case, be an amount equal to the product of the amount so owed multiplied by the lower of (i) the highest rate permitted by applicable law, and (ii) one and one-half percent (1.5%) per month, compounded monthly.
“Deposit Account” shall mean collectively, any deposit and segregated deposit account established and maintained at the Deposit Bank pursuant to a Deposit Agreement and this Agreement. The Deposit Account shall be the account into which all payments made to the Company in respect of the sale of the Product are to be remitted.
“Deposit Agreement” shall mean the agreement entered into by a Deposit Bank, the Company and Purchaser, substantially in the form of Exhibit C attached hereto, pursuant to which, among other things, the Deposit Account, the Joint Concentration Account, the Purchaser Concentration Account and the Company Concentration Account shall be established and maintained.
“Deposit Bank” shall mean Silicon Valley Bank or such other bank or financial institution approved by each of Purchaser and the Company and a party to any Deposit Agreement (it being understood that the parties intend to engage a new bank within 120 days of the date hereof).
“Dispute” shall have the meaning set forth in Section 3.12(e).
“Event of Default” shall mean the occurrence of any Put Option Event (other than pursuant to clause of (a) of said definition) and any material breach by the Company of the Transaction Documents, whether or not constituting a Put Option Event.
“Excluded Liabilities and Obligations” shall have the meaning set forth in Section 2.04.
“Existing Agent” shall mean Midcap Financial SBIC LP, in its capacity as agent for the lenders under the Existing Credit Agreement.
“Existing Credit Agreement” shall mean that certain Loan and Security Agreement, dated as of September 30, 2011 among the Company, its Subsidiary, the Existing Agent and the
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lenders party thereto, as amended, restated, supplemented or otherwise modified from time to time.
“FDA” shall mean the United States Food and Drug Administration or any successor federal agency thereto.
“Financial Statements” shall mean (a) the audited consolidated balance sheets of the Company and its Subsidiary as of December 31, 2012 and 2011, and the related audited consolidated statements of operations, cash flows and shareholders' equity for the Fiscal Years then ended and (b) the unaudited consolidated balance sheet of the Company and its Subsidiary as of June 30, 2012, and the related unaudited consolidated statements of operations, cash flows and shareholders' equity for the three (3) and six (6) month period then ended.
“Fiscal Quarter” shall mean each three (3) month period commencing January 1, April 1, July 1 or October 1, provided however that (a) the first Fiscal Quarter of the Term shall extend from the Closing Date to the end of the first full Fiscal Quarter thereafter, and (b) the last Fiscal Quarter of the Term shall end upon the expiration of this Agreement.
“Fiscal Year” shall mean the calendar year.
“GAAP” shall mean generally accepted accounting principles in the United States in effect from time to time.
“Governmental Authority” shall mean any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether foreign, federal, state or local (domestic or foreign), including the United States Patent and Trademark Office, the FDA, or the United States National Institutes of Health.
“Gross Product Revenues” means, for any period of determination, the sum of the following for such period: (a) the amounts invoiced and recognized as revenue in accordance with GAAP by the Company, its Subsidiaries or any of their Affiliates with respect to the sale of Product to a Third Party by the Company, its Subsidiaries or any of their Affiliates, (b) the amounts invoiced and recognized as revenue in accordance with GAAP by the Company, its Subsidiaries or any of their Affiliates from a Third Party with respect to the sale, distribution or other use of the Product by such Third Party in connection with any marketing, royalty, manufacturing, co-promotion, co-development, equity investment, cost sharing or other strategic arrangements, and (c) any collections in respect of write-offs or allowances for bad debts in respect of items described in the preceding clauses (a) and (b). For purposes of prevention of duplication, “Gross Product Revenue” shall not include amounts invoiced by distributors, wholesalers or other Persons acting in similar capacities.
“Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral Agreement between the Company and Purchaser providing for, among other things, the grant by the Company in favor of Purchaser of a valid continuing, perfected lien on and security interest in, the Assigned Interests and the other Assigned Interests Collateral described therein, which Guarantee and Collateral Agreement shall be substantially in the form of Exhibit A.
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“Intellectual Property” shall mean all proprietary information; technical data; laboratory notebooks; clinical data; priority rights; trade secrets; know-how; confidential information; inventions (whether patentable or unpatentable and whether or not reduced to practice or claimed in a pending patent application) and improvements thereto; Patents; registered or unregistered trademarks, trade names, service marks, including all goodwill associated therewith; registered and unregistered copyrights and all applications thereof; in each case that are owned, Controlled by, generated by, issued to, licensed to, licensed by or hereafter acquired by or licensed by the Company, in each case relating to, or otherwise relevant or desirable, now or in the future, for the manufacture and sale of the Product.
“Interim Payment” shall have the meaning set forth in the Recitals.
“Interim Royalty Purchase Agreement” shall have the meaning set forth in the Recitals.
“IRR” shall mean the internal rate of return utilizing the same methodology utilized by the XIRR function in Microsoft Excel.
“Joint Concentration Account” shall mean a segregated account, subject to a control agreement in favor of Purchaser, established for the benefit of the Company and Purchaser and maintained at the Deposit Bank pursuant to the terms of the Deposit Agreement and this Agreement. The Joint Concentration Account shall be the account into which the Deposit Bank sweeps the funds held in the Deposit Account.
“Knowledge” shall mean the actual knowledge, or that which would or should have been known after reasonable inquiry, of any officer, director or employee of the Company or its Subsidiaries relating to a particular matter.
“License Agreement” shall mean any existing or future license, commercialization, co-promotion, collaboration, distribution, marketing or partnering agreement entered into before or during the Revenue Interest Period by the Company or any of its Affiliates relating to the Product and/or under the Intellectual Property.
“Licensees” shall mean, collectively, the licensees, sublicensees or distributors under the License Agreements; each a “Licensee”.
“Liens” shall mean any lien, hypothecation, charge, instrument, license, preference, priority, security agreement, security interest, interest, mortgage, deed of trust, option, privilege, pledge, liability, covenant, order, tax, right of recovery, trust or deemed trust (whether contractual, statutory or otherwise arising) or any encumbrance, right or claim of any other person of any kind whatsoever whether choate or inchoate, filed or unfiled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown, including, without limitation, any conditional sale or other title retention agreement, any lease having the same financial effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC.
“Losses” shall mean collectively, any and all claims, damages, losses, judgments, awards, penalties, liabilities, costs and expenses (including reasonable expenses of investigation and reasonable attorneys' fees and expenses incurred in connection with investigating, preparing for or defending any action, suit or proceeding).
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“Major Countries” shall mean the United States.
“Material Adverse Change” shall mean, with respect to the Company and its Subsidiaries, any event, change, circumstance, occurrence, effect or state of facts that has caused or is reasonably likely to cause a material adverse change on the business, operations, assets, condition (financial or otherwise), results of operations or prospects of the Company and its Subsidiaries, taken as a whole.
“Material Adverse Effect” shall mean (a) the effect of a Material Adverse Change, (b) a material adverse effect on the validity or enforceability of any of the Transaction Documents, (c) material adverse effect on the ability of the Company to perform any of its obligations under the Transaction Documents, (d) the inability or failure of Company to make payment of the Assigned Interests or any other amounts in violation of this Agreement, and (e) any material adverse effect on the Product or the ability of the Company to distribute, market and/or sell the Product.
“Material Contract” shall mean: (a) any marketing agreement, co-promotion agreement or partnering agreement related to the manufacture, sale or distribution of the Product in any of the Major Countries; or (b) any agreement relating to any Material Patent, including any license, assignment, or agreement related to Control of such Material Patent.
“Net Revenues” shall mean, for any period of determination, the difference of
(a)Gross Product Revenues for such period, less
(b)the sum, with respect to the items described in clauses (i) and (ii) of the definition of Gross Product Revenues, of
(i)cash, trade discounts and rebates actually granted or paid Third Parties in accordance with customary industry standards,
(ii)allowances and adjustments actually credited to customers for Product that is spoiled, damaged, outdated, obsolete, returned or otherwise recalled, but only if and to the extent the same are in accordance with sound business practices and not in excess of customary industry standards,
(iii)charges for freight, postage, shipping, delivery, service and insurance charges, to the extent invoiced,
(iv)taxes, duties or other governmental charges to the extent invoiced,
(v)write-offs or allowances for bad debts,
(vi)rebates and chargebacks and other price reduction programs granted to managed care entities, Governmental Authorities, group purchasing organizations or pharmaceutical benefit management companies, and
(vii)other payments required by law to be made under Medicaid, Medicare or other government special medical assistance programs.
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Net Revenues shall be determined in accordance with GAAP as applied by the Company and its Subsidiary on the date of this Agreement.
“New Securities” shall mean, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.
“Obligations” shall mean any and all obligations of the Company under the Transaction Documents.
“Offer Notice” shall have the meaning set forth in Section 5.16(a).
“Patents” shall mean all patents, patent rights, patent applications, patent disclosures and invention disclosures issued or filed, together with all reissues, divisions, continuations, continuations-in-part, revisions, term extensions, substitutes, supplementary protection certificates and reexaminations, including the inventions claimed in any of the foregoing and any priority rights arising therefrom, covering or related to the manufacture, use and sale of the Product that are issued or filed as of the date hereof or during the Revenue Interest Period, including, without limitation, those identified in Schedule 3.12 in each case, which are owned, Controlled by, issued to, licensed to or licensed by the Company, its Subsidiary or any of its Affiliates.
“Person” shall mean an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, but not including a government or political subdivision or any agency or instrumentality of such government or political subdivision.
“Product” shall mean Avance® Nerve Graft, AXOGUARD® Nerve Protector and AXOGUARD® Nerve Connector, regardless of the purpose for which such products are marketed or sold, and any and all future iterations of such products developed or licensed by the Company as a solution to repair or protect nerves as marketed in any jurisdiction.
“Purchase Price” shall mean $20,800,000 less the Interim Payment and any additional amounts due and payable under the Interim Royalty Purchase Agreement as of the Closing Date.
“Purchaser” shall have the meaning set forth in the first paragraph hereof.
“Purchaser Concentration Account” shall mean a segregated account established for the benefit of Purchaser and maintained at a bank specified in writing by Purchaser pursuant to the terms of the Deposit Agreement and this Agreement. The Purchaser Concentration Account shall be the account into which the funds held in the Joint Concentration Account which are payable to Purchaser pursuant to this Agreement are swept by the Deposit Bank in accordance with the terms of this Agreement and the Deposit Agreement.
“Purchaser Designee” shall have the meaning set forth in Section 5.15(a).
“Purchaser Indemnified Party” shall have the meaning set forth in Section 7.05(a).
“Put Option” shall have the meaning set forth in Section 5.07(b).
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“Put Option Closing Date” shall have the meaning set forth in Section 5.07(b).
“Put Option Event” shall mean any one of the following events:
(a)the anniversary of four (4) years from the Closing Date;
(b)any Bankruptcy Event;
(c)occurrence of a Material Adverse Effect;
(d)any Transfer by the Company of its interests in the Revenue Interests or substantially all of its interest in the Product; or
(e)any material breach of any representation or warranty made by the Company in this Agreement or any material breach of or default under any covenant or agreement by the Company pursuant to a Transaction Document, which breach is not cured within thirty (30) days after the earlier of (1) written notice thereof being delivered by Purchaser to the Company and (2) the date the Company becomes aware of such material breach.
“Put Price” shall mean the sum of (i) an amount that, when paid to Purchaser, would generate an IRR to Purchaser of twenty percent (20%) on all payments made by Purchaser pursuant to the Interim Royalty Purchase Agreement and Section 2.03 of this Agreement as of the date of payment of the Put Price, taking into account the amount and timing of all payments made by the Company to Purchaser (and retained by Purchaser) pursuant to Sections 2.02 and 5.08 of this Agreement and, if applicable, the Interim Royalty Purchase Agreement, prior to and as of the date of payment of the Put Price, plus (ii) any Delinquent Assigned Interests Payment owed (it being understood and agreed that in calculating the Put Price, in no event shall Purchaser be required to repay any amounts previously paid to Purchaser pursuant to Sections 2.02 and 5.08 of this Agreement if such payments exceed the IRR required pursuant to this definition).
“Quarterly Report” shall mean, with respect to the relevant Fiscal Quarter of the Company, (a) a report showing Gross Profit Revenues for such quarter and the adjustments and other reconciliations used to arrive at Net Revenues for such quarter, reconciled, in each case, to the most applicable line item in the Company's consolidated statements of operations as most recently filed or to be filed with the Securities and Exchange Commission or furnished to Purchaser pursuant to Section 5.02(h) and (b) a reconciliation of all payments made by the Company to Purchaser pursuant to this Agreement during such quarter, including all amounts deposited into the Purchaser Concentration Account during such quarter.
“Regulatory Agency” shall mean a Governmental Authority with responsibility for the approval of the marketing and sale of pharmaceuticals in the United States or other regulation of pharmaceuticals.
“Regulatory Approval” shall mean all approvals (including, without limitation, where applicable, pricing and reimbursement approval and schedule classifications), product and/or establishment licenses, registrations or authorizations of any Governmental Authority necessary for the manufacture, use, storage, import, export, transport, offer for sale, or sale of the Product in a regulatory jurisdiction.
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“Revenue Interest Period” shall mean the period from and including the Closing Date through the earliest of:
(a)expiration of eight (8) complete years following the Closing Date;
(b)payment of the Put Price; or
(c)payment of the Change of Control Payment.
“Revenue Interests” shall mean all of the Company's interest in the Gross Product Revenues.
“Secretary's Certificate” shall mean the duly executed Secretary's and Officer's Certificate, dated as of the Closing Date, in form and substance reasonably satisfactory to Purchaser, (W) attaching certified copies of the Company's organizational documents (together with any and all amendments thereto); (X) attaching certified copies of the resolutions adopted by the board of directors of the Company authorizing and approving the execution, delivery and performance by the Company of the Agreement and the Assignment of Interests and the transactions contemplated herein and therein; (Y) setting forth the incumbency of the officer or officers of the Company who have executed and delivered the Agreement and the Assignment of Interests; and (Z) attaching copies, certified by such officer as true and complete, of a certificate of the appropriate Governmental Authority of the Company's jurisdiction of formation, stating that the Company is in good standing under the laws of the State of Minnesota.
“Subsidiary” shall mean, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries.
“Tax” or “Taxes” shall mean any federal, state, local or foreign tax, levy, impost, duty, assessment, fee, deduction or withholding or other charge, including all excise, sales, use, value added, transfer, stamp, documentary, filing, recordation and other fees imposed by any taxing authority (and interest, fines, penalties and additions related thereto).
“Tax Return” shall mean any report, return, form (including elections, declarations, statements, amendments, claims for refund, schedules, information returns or attachments thereto) or other information supplied or required to be supplied to a Governmental Authority with respect to Taxes.
“Term” shall have the meaning set forth in Section 6.01.
“Term Sheet” shall mean the Term Sheet between the Company and Purchaser, dated July 26, 2012.
“Third Party” shall mean any Person other than the Company.
“Transaction Documents” shall mean, collectively, this Agreement, the Assignment of Interests, the Guarantee and Collateral Agreement, the UCC Financing Statements, the Deposit Agreement, the Secretary's Certificate and any related ancillary documents or agreements.
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“Transfer” shall mean any sale, conveyance, assignment, disposition, pledge, hypothecation or transfer.
“True-Up Amount” shall have the meaning set forth in Section 5.08(g)(i).
“True-Up Statement” shall have the meaning set forth in Section 5.08(g)(i).
“UCC” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.
“UCC Financing Statements” shall mean the UCC-1 financing statements, in form and substance reasonably satisfactory to Purchaser, that shall be filed at or promptly following the Closing, as well as any additional UCC-1 financing statements or amendments thereto as reasonably requested from time to time, to perfect Purchaser's security interest in the Assigned Interests Collateral.
“United States” shall mean the United States of America.
“Year-to-Date Assigned Interests” shall have the meaning set forth in Section 5.08(g)(i).
“Year-to-Date Net Revenues” shall have the meaning set forth in Section 5.08(g)(i).
ARTICLE II
PURCHASE OF INTERESTS
Section 2.01 Purchase.
(a)Upon the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell, assign, transfer and convey to Purchaser, and Purchaser agrees to purchase from the Company, free and clear of all Liens (except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document), all of the Company's rights and interests in and to the Assigned Interests on the Closing Date. Purchaser's ownership interest in each of the Assigned Interests so acquired shall vest immediately upon the Company's receipt of payment for such Assigned Interests pursuant to Section 2.03(a).
(b)The Company and Purchaser intend and agree that the sale, assignment and transfer of the Assigned Interests under this Agreement is a true sale by the Company to Purchaser that provides Purchaser with the full benefits of ownership of the Assigned Interests. The Company waives any right to contest or otherwise assert that this Agreement is other than a true sale by the Company to Purchaser in any bankruptcy or insolvency proceeding relating to the Company.
(c)The Company hereby consents to Purchaser recording and filing, at Purchaser's sole cost and expense, the UCC Financing Statements and other financing statements in the appropriate filing offices under the UCC (and continuation statements with respect to such financing statements when applicable) meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary or appropriate to perfect the purchase by Purchaser of the Assigned Interests.
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Section 2.02 Payments by the Company.
(a)Payments in Respect of the Assigned Interests. In connection with the assignment of the Assigned Interest, Purchaser shall be entitled to receive (i) the Assigned Interests in respect of Net Revenues earned during the Revenue Interest Period and (ii) any Delinquent Assigned Interests Payment, as and when due.
(b)Interim Payments into Deposit Accounts. Subject to Section 5.08(a), within 120 days of the date hereof, the Applicable Percentage of the Aggregate Deposit Funds in each Fiscal Year shall be swept from the Deposit Account into the Purchaser Concentration Account on a daily basis (the “Daily Amount”) pursuant to Section 5.08. Prior to the establishment of Purchaser Concentration Account as contemplated by Section 5.08(a), the Company shall promptly pay to Purchaser upon demand the aggregate Daily Amount.
(c)Payment Procedure. Other than payments made pursuant to the Deposit Agreement, any payments to be made by the Company to Purchaser hereunder or under any other Transaction Document shall be made by wire transfer of immediately available funds.
Section 2.03 Closing; Payment Purchase Price; Closing Deliveries.
(a)Closing. The closing of the purchase of the Assigned Interests pursuant to this Agreement (the “Closing”) will take place concurrently with the execution of this Agreement on the date hereof (the “Closing Date”) and will be held at the offices of PDL.
(b)Payment of Purchase Price. At the Closing, Purchaser shall pay to the Company the Purchase Price by wire transfer of immediately available funds to the account designated by the Company prior to the date hereof.
(c)Closing Deliveries.
(i)At the Closing, the Company will deliver to Purchaser:
A.its duly executed counterpart to each of the Transaction Documents to which the Company is a party;
B.a duly executed Secretary's Certificate, dated as of the Closing Date;
C.a payoff letter in form and substance reasonably satisfactory to Purchaser and duly executed and delivered by the Company and the Existing Agent which provides for the payment in full of the obligations owing under the Existing Credit Agreement and release of the liens thereunder;
D.copies of the UCC Financing Statements in respect of the Assigned Interests Collateral in form for filing in each appropriate jurisdiction; and
E.a legal opinion reasonably satisfactory to Purchaser from Morgan, Lewis & Bockius LLP addressing such matters with respect to the Transaction Documents as set forth on Exhibit D hereto.
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(ii)At the Closing, the Purchaser will deliver to the Company:
A.payment of the Purchase Price consistent with Section 2.03(b); and
B.its duly executed counterpart to each of the Transaction Documents to which Purchaser is a party.
Section 2.04 No Assumed Obligations.
Notwithstanding any provision in this Agreement or any other writing to the contrary, Purchaser is acquiring only the Assigned Interests and is not assuming any liability or obligation of the Company or any of its Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter, whether under any Transaction Document or otherwise. All such liabilities and obligations shall be retained by and remain obligations and liabilities of the Company or its Affiliates (the “Excluded Liabilities and Obligations”).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
For purposes of all the representations and warranties contained in Article III, the term “Product” shall mean Avance® Nerve Graft, AXOGUARD® Nerve Protector and AXOGUARD® Nerve Connector as such products currently exist and are marketed in any jurisdiction, and no broader definition shall be implied. The Company hereby represents and warrants to Purchaser, as of the Closing Date, the following:
Section 3.01 Organization.
Each of the Company and its Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of the States of Minnesota and Delaware, respectively, and has all corporate powers and all licenses, authorizations, consents and approvals required to carry on its respective business as now conducted and as proposed to be conducted in connection with the transactions contemplated by the Transaction Documents. Each of the Company and its Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction in which the failure to do so would have a Material Adverse Effect. The Company has no direct or indirect Subsidiaries, other than AxoGen Corporation, a Delaware corporation.
Section 3.02 Authorization.
The Company has all necessary power and authority to enter into, execute and deliver the Transaction Documents and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The Transaction Documents have been duly authorized, executed and delivered by the Company and each Transaction Document constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or general equitable principles.
Section 3.03 Governmental Authorization.
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The execution and delivery by the Company of the Transaction Documents, and the performance by the Company of its obligations hereunder and thereunder, does not require any notice to, action or consent by, or in respect of, or filing with, any Governmental Authority, except for the filing of the UCC Financing Statements.
Section 3.04 Ownership.
(a)The Company owns, Controls, or holds a valid license under, all of the Intellectual Property and the Regulatory Approvals which it currently purports to own related to the Product free and clear of all Liens, and no license or covenant not to sue under any Intellectual Property has been granted to or exists in any Third Party. Neither the Company nor its Subsidiary has granted, nor does there exist, any Lien on the Revenue Interests, the Assigned Interests or any other Collateral (except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document).
(b)The Company, immediately prior to the purchase of the Assigned Interests, owns, and is the sole holder of, all the Revenue Interests; and the Company owns, and is the sole holder of, and/or has and holds a valid, enforceable and subsisting license to, all of those other assets that are required to produce or receive any payments from any Licensee or payor under and pursuant to, and subject to the terms of any License Agreement, in each case free and clear of any and all Liens, except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document. The Company has not transferred, sold, or otherwise disposed of, or agreed to transfer, sell, or otherwise dispose of any portion of the Revenue Interests other than under the Interim Royalty Purchase Agreement or as contemplated by this Agreement. No Person other than the Company has any right to receive the payments payable under any License Agreement, other than Purchaser's rights with respect to the Assigned Interests, from and after the Closing Date. The Company has the full right to sell, transfer, convey and assign to Purchaser all of the Company's rights and interests in and to the Assigned Interests being sold, transferred, conveyed and assigned to Purchaser pursuant to this Agreement without any requirement to obtain the consent of any Person. By the delivery to Purchaser of the executed Assignment of Interests, the Company shall transfer, convey and assign to Purchaser all of the Company's rights and interests in and to the Assigned Interests being sold, transferred, conveyed and assigned to Purchaser pursuant to this Agreement, free and clear of any Liens, except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document. At the Closing, and upon the delivery of the Assignment of Interests to Purchaser by the Company, Purchaser shall have acquired good and valid rights and interests of the Company in and to the Assigned Interests being sold, transferred, conveyed and assigned to Purchaser pursuant to this Agreement, free and clear of any and all Liens, except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document.
(c)As of the Closing Date and upon the Company's execution and delivery of the Guarantee and Collateral Agreement, Purchaser shall have valid, continuing, first perfected lien on and security interest in the Revenue Interests, the Assigned Interests and the other Assigned Interests Collateral described in the Guarantee and Collateral Agreement.
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Section 3.05 Financial Statements.
The Financial Statements are complete and accurate in all material respects, were prepared in conformity with GAAP and present fairly in all material respects the financial position and the financial results of the Company and its Subsidiary as of the dates and for the periods covered thereby.
Section 3.06 No Undisclosed Liabilities.
Except for those liabilities (a) specifically identified on the face of the Financial Statements, (b) incurred by the Company in the ordinary course of business since June 30, 2012, or (c) in connection with the Obligations under the Transaction Documents, there are no material liabilities of the Company or its Subsidiary of any kind whatsoever, whether accrued, contingent, absolute, determined or determinable.
Section 3.07 Solvency.
The Company and its Subsidiary, taken as a whole, are not insolvent as defined in any statute of the United States Bankruptcy Code or in the fraudulent conveyance or fraudulent transfer statutes of the States of Delaware, Florida, Minnesota or New York. Assuming consummation of the transactions contemplated by the Transaction Documents, (a) the present fair saleable value of the Company's and its Subsidiary's assets and the fair value of the Company's and its Subsidiary's assets are each greater than the total amount of liabilities (including contingent and unliquidated liabilities) of the Company and its Subsidiary as such liabilities mature, (b) neither the Company nor its Subsidiary has unreasonably small capital with which to engage in its respective business, and (c) neither the Company nor its Subsidiary has incurred, nor does either have present plans to or intend to incur, debts or liabilities beyond their respective ability to pay such debts or liabilities as they become absolute and matured.
Section 3.08 Litigation.
There is no (a) action, suit, arbitration proceeding, claim, investigation or other proceeding pending or, to the Knowledge of the Company, threatened against the Company or its Subsidiary or (b) any governmental inquiry pending or, to the Knowledge of the Company, threatened against the Company or its Subsidiary, in each case with respect to clauses (a) and (b) above, which, if adversely determined, would question the validity of, or could adversely affect the transactions contemplated by any of the Transaction Documents or could reasonably be expected to have a Material Adverse Effect. There is no action, suit, arbitration proceeding, claim, investigation or other proceeding pending or, to the Knowledge of the Company, threatened against the Company, its Subsidiary or any other Person relating to the Product, the Intellectual Property, the Regulatory Approvals, the Revenue Interests or the Assigned Interests.
Section 3.09 Compliance with Laws.
Neither the Company nor its Subsidiary (a) is in violation of, has violated, or to the Knowledge of the Company, is under investigation with respect to, and, (b) has been threatened to be charged with or been given notice of any violation of any law, rule, ordinance or regulation of, or any judgment, order, writ, decree, permit or license entered by any Governmental
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Authority applicable to the Company, the Assigned Interests or the Revenue Interests which would reasonably be expected to have a Material Adverse Effect.
Section 3.10 Conflicts.
Neither the execution and delivery of any of this Agreement or the other Transaction Documents to which the Company is a party nor the performance or consummation of the transactions contemplated hereby or thereby will: (a) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (i) any law, rule, ordinance or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, to which the Company or its Subsidiary or any of their respective assets or properties may be subject or bound; or (ii) any contract, agreement, commitment or instrument to which the Company or its Subsidiary is a party or by which the Company or its Subsidiary or any of their respective assets or properties is bound or committed; (b) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, any provisions of the articles or certificate of incorporation or bylaws (or other organizational or constitutional documents) of the Company or its Subsidiary; (c) except for the filing of the UCC Financing Statements required hereunder and filings with the United States Patent and Trademark Office, require any notification to, filing with, or consent of, any Person or Governmental Authority; (d) give rise to any right of termination, cancellation or acceleration of any right or obligation of the Company, its Subsidiary or any other Person or to a loss of any benefit relating to the Revenue Interests or the Assigned Interests; or (e) other than pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests, or any other Transaction Document, result in the creation or imposition of any Lien on (i) the assets or properties of the Company or its Subsidiary or (ii) the Assigned Interests, the Revenue Interests, or any other Assigned Interests Collateral, except, in the case of the foregoing clauses (a), (c), (d) or (e), for any such breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Material Adverse Effect.
Section 3.11 Subordination.
The claims and rights of Purchaser created by any Transaction Document in and to the Assigned Interests, the Revenue Interests and any other Assigned Interests Collateral are not and shall not be subordinated to any creditor of the Company or any other Person.
Section 3.12 Intellectual Property.
(a)Schedule 3.12(a) sets forth an accurate, true and complete list of all (i) Patents and utility models, (ii) trade names, registered trademarks, registered service marks, and applications for trademark registration or service mark registration, (iii) registered copyrights and (iv) domain name registrations and websites, in each case with respect to clauses (i), (ii), (iii) and (iv) above in this subsection (a) that the Company owns or licenses and which are necessary to make, have made, use, sell, have sold, offer for sale, import, develop, promote, market, distribute, manufacture, commercialize or otherwise exploit the Product in the jurisdictions where the Product marketed and sold. For each item of Intellectual Property listed on Schedule 3.12(a), the Company has identified (x) the owner, (y) the countries in which such listed item is patented or registered or in which an application for Patent or registration is pending and (z) the application
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number, the Patent number or registration number. To the Company's Knowledge, except as disclosed therein, each Patent and trademark listed on Schedule 3.12(a) is valid, enforceable and subsisting and none has lapsed, expired, been cancelled or become abandoned. The Patent applications listed in Schedule 3.12(a) have been prosecuted by competent patent counsel in a diligent manner. After due inquiry, the Company has determined that there are no published patents, patent applications, articles, prior art references, public uses, undisclosed information (including best mode) or other grounds, factors or circumstances that could adversely affect the validity or enforceability of any of the Patents listed in Schedule 3.12(a). After due inquiry, the Company has determined that all Persons relevant to the prosecution of any of the Material Patents or applications related thereto have complied with the duty to disclose information and/or the duty of candor, including obligations to the United States Patent and Trademark Office specified under Rule 56. To the Company's Knowledge, each of the Material Patents and Material Patent applications correctly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Material Patent is issued or such Material Patent application is pending. To the Company's Knowledge, each Person who has or has had any rights in or to the Intellectual Property listed on Schedule 3.12(a) that are owned by, or licensed to, the Company, including, each inventor named on the Patents and Patent applications listed in Schedule 3.12(a), has executed an agreement assigning his, her or its entire right, title and interest in and to such Intellectual Property, and the inventions embodied, described and/or claimed therein, to the purported owner and no such Person has any contractual or other obligation that would preclude or conflict with any such assignment or otherwise conflict with the obligations of such Person to the applicable owner of each listed Intellectual Property. To the Company's Knowledge, all Persons having a claim to inventorship to any pending or issued claim of the Patents are currently listed as inventors with respect to such Patents, and that the Company has performed an appropriate inquiry with respect to such inventorship.
(b)Except for Intellectual Property licensed to and owned by the Company and set forth on Schedule 3.12(a), no other Intellectual Property is necessary to make, have made, offer to sell, sell, have sold, use, import, distribute, commercialize or market the Product in the Major Countries. The use, manufacture, import, export, offer for sale, distribution, marketing and sale of the Product does not infringe any patents that are owned by a Third Party in the Major Countries.
(c)The Company has the full right, power and authority to grant all of the rights and interests granted to Purchaser in this Agreement.
(d)To the Company's Knowledge, there are no unpaid maintenance, annuity or renewal fees currently overdue for any of the Patents that cover the manufacture, use or sale of the Product or which cover compositions of matter and/or processes which relate to the Product or alternatives thereto (“Material Patents”).
(e)There is, and has been, no pending, decided or settled opposition, interference proceeding, reexamination proceeding, cancellation proceeding, injunction, claim, lawsuit, declaratory judgment, administrative post-grant review proceeding, other administrative or judicial proceeding, hearing, investigation, complaint, arbitration, mediation, International Trade Commission investigation, decree, or any other filed claim (collectively referred to hereinafter as “Disputes”) related to any of the Material Patents, nor, to the Knowledge of the Company, has
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any such Dispute been threatened challenging the legality, validity, enforceability or ownership of any Material Patents or which would give rise to a credit against the revenues or royalties due to the Company for the manufacture, sale, offer for sale, use, importation or exportation of the Product and the Company has no notice of any facts that would form the basis for such a Dispute. There are no Disputes by any Person or Third Party against the Company, its Licensees or its licensor, and the Company has not received any written notice or claim of any such Dispute as pertaining to the Product. Neither the Company nor its licensor has sent any notice of any such Dispute to a Third Party. The Company is not subject to any outstanding injunction, judgment, order, decree, ruling, charge, settlement or other disposition of Dispute which relates to the Product or the Patents.
(f)There is no pending or threatened action, suit, or proceeding, or any investigation or claim by any Governmental Authority to which the Company is a party (i) that would be the subject of a claim for indemnification by any Person or Third Party under any agreement, or (ii) that the marketing, sale or distribution of the Product worldwide by the Company or its by Licensees pursuant to the related License Agreement, as applicable, does or will infringe on any patent of any other Person, and there is no basis for any such action, suit, proceeding, investigation or claim of the type described in clause (i) or (ii) above. To the Company's Knowledge, there are no pending published or unpublished United States, international or foreign patent applications owned by any other Person, which, if issued, would limit or prohibit, in any material respect, the use of the Product or the licensed Intellectual Property relating to the Product.
(g)The Company has taken all commercially reasonable measures and precautions necessary to protect and maintain (i) the confidentiality of all Intellectual Property that it owns and (ii) the value of all Intellectual Property related to the Product, except where such failure to take action would not have a Material Adverse Effect.
(h)No material trade secret of the Company has been published or disclosed to any Person except pursuant to a written agreement requiring such Person to keep such trade secret confidential, except where such disclosure would not have a Material Adverse Effect.
(i)Each Product, or its manufacture or use, is covered by one or more claims of an issued Patent in the United States.
Section 3.13 Regulatory Approval.
(a)The Company and its Subsidiary have made available to Purchaser any written reports or other written communications received from a Governmental Authority that would indicate that any Regulatory Agency (A) is not likely to approve the BLA, (B) is likely to revise or revoke any current Regulatory Approval granted by any Regulatory Agency with respect to the Product, or (C) is likely to pursue any material compliance actions against the Company.
(b)The Company and its Subsidiary possess all Regulatory Approvals issued or required by the appropriate Regulatory Agencies, which Regulatory Approvals are necessary to conduct the current clinical trials relating to the Product, and neither the Company nor its Subsidiary has received any notice of proceedings relating to the revocation, suspension, termination or modification of any such Regulatory Approvals.
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(c)The Company and its Subsidiary are in material compliance with, and has materially complied with, all applicable federal, state, local and foreign laws, rules, regulations, standards, orders and decrees governing its business, including all regulations promulgated by each Regulatory Agency, the failure of compliance with which could reasonably be expected to result in a Material Adverse Effect; the Company and its Subsidiary have not received any notice citing action or inaction by any of them that would constitute any material non-compliance with any applicable federal, state, local and foreign laws, rules, regulations, or standards, which could reasonably be expected to result in a Material Adverse Effect; and to the Company's Knowledge, no prospective change in any applicable federal, state, local or foreign laws, rules, regulations or standards has been adopted which, when made effective, could reasonably be expected to result in a Material Adverse Effect.
(d)Preclinical and clinical trials conducted on behalf of the Company or its Subsidiary relating to the Product were conducted in compliance with applicable laws and, in all material respects, in accordance with experimental protocols, procedures and controls pursuant to, where applicable, accepted professional and scientific standards; the descriptions of the results of such trials provided to Purchaser are accurate in all material respects. Neither the Company nor its Subsidiary has received any notices or correspondence from any Regulatory Agency or comparable authority requiring the termination, suspension, or material modification or clinical hold of any clinical trials conducted by or on behalf of the Company or its Subsidiary with respect to the Product, which termination, suspension, material modification or clinical hold could reasonably be expected to result in a Material Adverse Effect.
Section 3.14 Material Contracts.
Neither the Company nor its Subsidiary is in breach of or in default under any Material Contract which default, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. To the Knowledge of the Company, nothing has occurred and no condition exists that would permit any other party thereto to terminate any Material Contract. Neither the Company nor its Subsidiary has received any notice or, to the Knowledge of the Company, any threat of termination of any such Material Contract. To the Knowledge of the Company, no other party to a Material Contract is in breach of or in default under such Material Contract. All Material Contracts are valid and binding on the Company or its Subsidiary and, to the Knowledge of the Company, on each other party thereto, and are in full force and effect. The Company is in compliance with all obligations of the Amended and Restated Standard Exclusive License Agreement with Sublicensing Terms between AxoGen Corporation and the University of Florida Research Foundation dated February 21, 2006, and the Patent License Agreement between AxoGen Corporation and the Board of Regents of The University of Texas System dated July 19, 2005.
Section 3.15 Place of Business.
The Company's principal place of business and chief executive office are set forth on Schedule 3.15.
Section 3.16 Broker's Fees.
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The Company and its Subsidiary have not taken any action that would entitle any Person to any commission or broker's fee in connection with this Agreement except fees, commissions and expenses to be paid to JMP Securities LLC, all of which will be paid by the Company.
Section 3.17 Other Information.
No written statement, information, report or materials prepared by or on behalf of the Company or its Subsidiary and furnished to Purchaser by or on behalf of the Company or its Subsidiary in connection with any Transaction Document or any transaction contemplated hereby or thereby, no written representation, warranty or statement made by the Company or its Subsidiary in any Transaction Document, and no Schedule or Exhibit hereto or thereto, in each case taken in the aggregate, contains any untrue statement of a material fact or omits any statement of material fact necessary in order to make the statements made therein in light of the circumstances under which they were made not misleading.
Section 3.18 Insurance.
There are in full force and effect insurance policies maintained by the Company with an insurance company rated not less than “A-” by A.M. Best Company, Inc., with coverages and in amounts customary for companies of comparable size and condition similarly situated in the same industry as the Company, including product liability insurance, directors and officers insurance and insurance against litigation liability, subject only to such exclusions and deductible items as are usual and customary in insurance policies of such type. All material insurable risks in respect of the business and assets of the Company and its Subsidiary are covered by such insurance policies. The Company has named Purchaser as an additional insured party with respect to its general liability and product liability insurance policies. A schedule of the Company's insurance policy or insurance policies is attached hereto as Schedule 3.18.
Section 3.19 Taxes.
The Company has timely filed (taking into account all extensions of due dates) all Tax returns required to be filed by, or on behalf of, it and has timely paid all Taxes required to be paid with such returns. All Tax Returns filed by the Company (or on its behalf) have been true, correct and complete in all material respects. Except as set forth on Schedule 3.19, there is no outstanding or, to the Company's Knowledge, threatened action, claim or other examination or proceeding with respect to Taxes of the Company or its assets (including with respect to the Assigned Interests and the Revenue Interests). Except as set forth on Schedule 3.19, there are no Taxes of the Company that form or could form, individually or in the aggregate, the basis for a material encumbrance (other than encumbrances for current taxes not yet past due) on any of its assets (including the Assigned Interests and the Revenue Interests).
ARTICLE IV
REPRESENTATION AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company the following:
Section 4.01 Organization.
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Purchaser is a corporation duly incorporated and validly existing under the laws of the State of Delaware.
Section 4.02 Authorization.
Purchaser has all necessary power and authority to enter into, execute and deliver the Transaction Documents and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The Transaction Documents have been duly authorized, executed and delivered by Purchaser and each Transaction Document constitutes the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or general equitable principles.
Section 4.03 Broker's Fees.
Purchaser has not taken any action that would entitle any Person to any commission or broker's fee in connection with the transactions contemplated by the Transaction Documents.
Section 4.04 Conflicts.
Neither the execution and delivery of this Agreement or any other Transaction Document to which Purchaser is a party nor the performance or consummation of the transactions contemplated hereby or thereby will: (a) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (i) any law, rule or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, to which Purchaser or any of its assets or properties may be subject or bound; or (ii) any contract, agreement, commitment or instrument to which Purchaser is a party or by which Purchaser or any of its assets or properties is bound or committed; (b) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, any provisions of the organizational or constitutional documents of Purchaser; or (c) require any notification to, filing with, or consent of, any Person or Governmental Authority, except, in the case of the foregoing clauses (a) or (c), for any such breaches, defaults or other occurrences that would not, individually or in the aggregate, have a material adverse effect on the ability of Purchaser to perform any of its obligations under the Transaction Documents.
ARTICLE V
COVENANTS
From the date hereof through and including the end of the Revenue Interest Period, the following covenants shall apply:
Section 5.01 Consents and Waivers.
The Company shall use its commercially reasonable efforts to obtain and maintain any required consents, acknowledgements, certificates or waivers so that the transactions contemplated by this Agreement or any other Transaction Document may be consummated and shall not result in any default or breach or termination of any of the Material Contracts.
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Section 5.02 Access; Information.
(a)License Notices. Subject to any applicable confidentiality restrictions, the Company shall promptly provide Purchaser with copies of any material written notices received or given by the Company under any Material Contract, and to the extent the Company is barred from providing Purchaser with copies of such notices due to any applicable confidentiality restrictions, the Company shall (i) inform Purchaser of the existence of such notice accompanied by a written description of the substance contained in such notice and (ii) promptly seek the removal or waiver of any such confidentiality restrictions so as to permit a free exchange of information with the Purchaser regarding the substance of such notice. The Company shall promptly notify Purchaser of any breaches or alleged breaches under any Material Contracts and of any other events with respect to any Material Contract or the subject matter thereof which could reasonably be expected to have a Material Adverse Effect.
(b)Litigation or Investigations. The Company shall promptly notify Purchaser of (i) any action, demand, suit, claim, cause of action, proceeding or investigation pending or, to the best knowledge of the Company, threatened by or against the Company, or (ii) proceeding or inquiry of any Governmental Authority pending or, to the best knowledge of the Company, threatened against the Company, related to any Material Contract, the Product, the Patents or any Transaction Document.
(c)Maintenance of Books and Records. The Company shall keep and maintain, or cause to be kept and maintained, at all times accurate and complete books and records. During the Term, the Company shall keep and maintain, or cause to be kept and maintained, at all times full and accurate books of account and records adequate to correctly reflect all payments paid and/or payable with respect to the Revenue Interests and Assigned Interests and all deposits made into the applicable deposit accounts.
(d)Inspection Rights. Purchaser and any of Purchaser's representatives shall have the right, once a year (and at any other time a Default or Event of Default shall have occurred or be continuing), to visit the Company and its Subsidiaries' offices and properties where the Company and its Subsidiaries keep and maintain their books and records relating or pertaining to the Revenue Interests, the Assigned Interests and the other Assigned Interests Collateral for purposes of conducting an audit of such books and records, and to inspect, copy and audit such books and records, during normal business hours, and, upon five (5) Business Days' written notice given by Purchaser to the Company (provided one (1) Business Day's notice shall be required if a Default or Event of Default shall have occurred and be continuing), the Company will provide Purchaser and any of Purchaser's representatives reasonable access to such books and records, and shall permit Purchaser and any of Purchaser's representatives to discuss the business, operations, properties and financial and other condition of the Company or any of its Affiliates including, but not limited to, matters relating or pertaining to the Revenue Interests, the Assigned Interests and any the other Assigned Interests Collateral with officers of such parties, and with their independent certified public accountants.
(e)Audit Costs. In the event any audit of the books and records of the Company and its Subsidiaries relating to the Revenue Interests, Assigned Interests, and the other Assigned Interests Collateral by Purchaser and/or any of Purchaser's representatives reveals that the amounts paid to Purchaser hereunder for the period of such audit have been understated by more
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than five percent (5%) of the amounts determined to be due for the period subject to such audit, then the Audit Costs in respect of such audit shall be borne by the Company; and in all other cases, such Audit Costs shall be borne by Purchaser.
(f)Quarterly Reports. During the Term, the Company shall, promptly after the end of each Fiscal Quarter of the Company (but in no event later than forty-five (45) days following the end of such quarter), produce and deliver to Purchaser a Quarterly Report for such quarter, together with a certificate of the Company, certifying that to the best Knowledge of the Company (i) such Quarterly Report is a true and complete copy and (ii) any statements and any data and information therein prepared by the Company are true, correct and accurate in all material respects.
(g)GAAP Accounting. The Company shall maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP.
(h)Periodic Reports. In the event that the Company is not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Company shall deliver to Purchaser the following financial statements:
(i)Within forty-five (45) days after the end of each Fiscal Quarter, copies of the unaudited consolidated financial statements of the Company and its Subsidiaries for such Fiscal Quarter; and
(ii)Within forty-five (45) days after the end of each Fiscal Year, copies of the audited consolidated financial statements of the Company and its Subsidiaries for such Fiscal Year.
Section 5.03 Material Contracts.
The Company shall comply with all material terms and conditions of and fulfill all of its obligations under all the Material Contracts. The Company shall not amend, modify or supplement any Material Contract in a manner which would adversely affect Purchaser or issue any waivers, consents, or other approvals under any Material Contract in a manner which would adversely affect Purchaser without the prior written consent of Purchaser. Upon the occurrence of a material breach of any Material Contract by any Third Party thereto, which is not cured pursuant to the express terms as provided therein (disregarding any rights of waiver or extensions of time or other rights or consents that are excisable at the discretion of the Company), the Company shall, in its discretion but in accordance with its sound business judgment, use its commercially reasonable efforts to enforce its rights and remedies thereunder.
Section 5.04 Confidentiality; Public Announcement.
(a)All Confidential Information furnished by Purchaser to the Company or by the Company to Purchaser in connection with this Agreement and any other Transaction Document and the transactions contemplated hereby and thereby, as well as the terms, conditions and provisions of this Agreement and any other Transaction Document, shall be kept confidential by the Company and Purchaser. Notwithstanding the foregoing, the Company and Purchaser may disclose such Confidential Information to their partners, directors, employees, managers,
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officers, investors, bankers, advisors, trustees and representatives, provided that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to the terms of this Section 5.04(a). The Company will consult with Purchaser, and Purchaser will consult with the Company, on the form, content and timing of any such disclosures of Confidential Information, including, without limitation, any disclosures made pursuant to applicable securities laws or made to investment or other analysts.
(b)Except as required by law or the rules and regulations of any securities exchange or trading system or the FDA or any Governmental Authority with similar regulatory authority, or except with the prior written consent of the other party (which consent shall not be unreasonably withheld), no party shall issue any press release or make any other public disclosure with respect to the transactions contemplated by this Agreement or any other Transaction Document; provided, however, that the Company and Purchaser may jointly prepare a press release for dissemination promptly following the Closing Date.
Section 5.05 Guarantee and Collateral Agreement.
During the Revenue Interest Period, the Company shall, at all times until the Obligations are paid and performed in full, grant in favor of Purchaser a valid, continuing, first perfected lien on and security interest in the Revenue Interests, the Assigned Interests and the other Assigned Interests Collateral described in the Guarantee and Collateral Agreement.
Section 5.06 Efforts; Further Assurance.
(a)Subject to the terms and conditions of this Agreement, each of Purchaser and the Company will use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by this Agreement and any other Transaction Document. Purchaser and the Company agree to execute and deliver such other documents, certificates, agreements and other writings (including any financing statement filings requested by Purchaser) and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement and any other Transaction Document and to vest in Purchaser good, valid and marketable rights and interests in and to the Assigned Interests free and clear of all Liens, except those Liens created in favor of Purchaser pursuant to the Guarantee and Collateral Agreement, the Assignment of Interests and any other Transaction Document.
(b)Purchaser and the Company shall execute and deliver such additional documents, certificates and instruments, and perform such additional acts, as may be reasonably requested and necessary or appropriate to carry out and effectuate all of the provisions of this Agreement and any other Transaction Document and to consummate all of the transactions contemplated by this Agreement and any other Transaction Document.
(c)Purchaser and the Company shall cooperate and provide assistance as reasonably requested by the other party in connection with any Third Party litigation, arbitration or other Third Party proceeding (whether threatened, existing, initiated, or contemplated prior to, on or after the date hereof) to which any party hereto or any of its officers, directors, shareholders, agents or employees is or may become a party or is or may become otherwise directly or
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indirectly affected or as to which any such Persons have a direct or indirect interests, in each case relating to this Agreement, any other Transaction Document, the Assigned Interests or any other Assigned Interests Collateral, or the transactions described herein or therein.
Section 5.07 Change of Control; Put Option.
(a)Change of Control. In the event that a Change of Control shall occur during the Revenue Interest Period, the Company shall repurchase the Assigned Interests from Purchaser for a repurchase price equal to the Change of Control Payment on or prior to the third Business Day after the occurrence of a Change of Control. The Change of Control Payment shall be made by wire transfer of immediately available funds to the account designated by Purchaser.
(b)Put Option. In the event that a Put Option Event shall occur during the Term, Purchaser shall have the right, but not the obligation (the “Put Option”) to require the Company to repurchase from Purchaser the Assigned Interests at the Put Price. In the event Purchaser elects to exercise its Put Option, Purchaser shall deliver written notice to the Company specifying the closing date which date shall be forty-five (45) days from such notice date (the “Put Option Closing Date”), which notice must be given within sixty (60) days of Purchaser's receipt of written notice from the Company of a Put Option Event. Failure to provide notice by such times will be deemed an irrevocable waiver of the right to exercise the Put Option. On the Put Option Closing Date, the Company shall repurchase from Purchaser the Assigned Interests at the Put Price in cash, the payment of which shall be made by wire transfer of immediately available funds to the account designated by Purchaser. Notwithstanding anything to the contrary contained herein, immediately upon the occurrence of a Bankruptcy Event, Purchaser shall be deemed to have automatically and simultaneously elected to have the Company repurchase from Purchaser the Assigned Interests for the Put Price in cash and the Put Price shall be immediately due and payable without any further action or notice by any party.
(c)Call Option. At any time after the fourth anniversary following the Closing Date, the Company shall have the right (the “Call Option”), exercisable upon ten (10) days' written notice to Purchaser, to repurchase the Assigned Interests from Purchaser at a repurchase price equal to the Change of Control Payment. In order to exercise the Call Option, the Company shall deliver written notice to Purchaser of its election to so repurchase the Assigned Interests not less than ten (10) days prior to the proposed closing date (the “Call Closing Date”). On the Call Closing Date, the Company shall repurchase from Purchaser the Assigned Interests at the Change of Control Payment, the payment of which shall be made by wire transfer of immediately available funds to the account designated by Purchaser.
(d)Obligations of Purchaser. In connection with the consummation of a repurchase of the Assigned Interests pursuant to the Change of Control Payment or the Put Option, Purchaser agrees that it will (i) promptly but no later than three (3) Business Days execute and deliver to the Company such UCC termination statements and other documents as may be necessary to release Purchaser's Lien on the Assigned Interests Collateral and otherwise give effect to such repurchase and (ii) take such other actions or provide such other assistance as may be necessary to give effect to such repurchase.
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Section 5.08 Remittance to Deposit Account.
(a)On the Closing Date, the parties hereto shall enter into a Deposit Agreement in form and substance reasonably satisfactory to the parties hereto and the Deposit Bank, which Deposit Agreement will provide for, among other things, the establishment and maintenance of a Deposit Account and Joint Concentration Account in accordance with the terms herein and therein. Funds deposited into the Deposit Account shall be swept by the Deposit Bank on a daily basis into the Joint Concentration Account. The parties understand and agree that the current Deposit Bank cannot accommodate multiple Deposit Accounts; and accordingly, so long as the Company has not established a separate Company Concentration Account and Purchaser Concentration Account as required pursuant to Section 5.08(b), the Company shall be responsible for computing the Daily Amount and shall retain at all times (subject to any payments of the Daily Amount paid to Purchaser, which payments shall be made promptly upon Purchaser's request) an amount equal to the aggregate Daily Amount owed to Purchaser pursuant to this Agreement.
(b)Notwithstanding any provision herein or in any other Transaction Document to the contrary, the Company shall no later than one hundred twenty (120) days after the Closing Date to enter into a new Deposit Agreement (in form and substance reasonably satisfactory to Purchaser) with a bank or financial institution approved by Purchaser, which bank or financial institution shall thereafter serve as the Deposit Bank pursuant to the terms hereof. Upon engagement of the replacement Deposit Bank and the entering into the new Deposit Agreement in accordance with the immediately preceding sentence, such Deposit Agreement shall provide for, among other things, the establishment and maintenance of a Deposit Account, a Joint Concentration Account, a Company Concentration Account and a Purchaser Concentration Account in accordance with the terms herein and therein. Any Purchaser Concentration Account shall be held solely for the benefit of Purchaser, but shall be subject to the terms and conditions of this Agreement, the Guarantee and Collateral Agreement and the other Transaction Documents. Funds deposited into the Deposit Account shall be swept by the Deposit Bank on a daily basis into the Joint Concentration Account and subsequent thereto, the Daily Amount shall be swept into the Purchaser Concentration Account. Purchaser shall have immediate and full access to any funds held in the Purchaser Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever. After the Daily Amount is swept into the Purchaser Concentration Account, the amounts remaining in the Joint Concentration Account shall then be swept, at the direction of the Company, into the Company Concentration Account. The Company shall have immediate and full access to any funds held in the Company Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever other than those of the Deposit Bank; provided, however, that nothing herein shall (i) affect or reduce the Company's obligations to pay in full all amounts due to Purchaser under this Agreement, or (ii) in any manner limit the recourse of Purchaser to the Assigned Interests Collateral to satisfy the Company's Obligations.
(c)The Company shall pay all fees, expenses and charges of the Deposit Bank (including the replacement Deposit Bank contemplated by Section 5.08(b)).
(d)The Company shall use commercially reasonable efforts to amend each License Agreement, within thirty (30) Business Days after the engagement of the replacement Deposit Bank contemplated by Section 5.08(b), to contain a provision providing for all payments in
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respect of sales of the Product and in respect of royalties received from Licensees to be remitted directly by the applicable party into the Deposit Account and the Company shall cause such payments to be remitted directly by the applicable party into the Deposit Account. If the Company is unsuccessful in amending the License Agreements in accordance with the foregoing sentence and at all times prior to the engagement of the replacement Deposit Bank as contemplated by Section 5.08(b), the Company shall instruct each Licensee to such License Agreement to remit to the Deposit Account when due all applicable payments in respect of sales and licensing revenue in respect of the Product and in respect of royalties received from such Licensees. Without in any way limiting the foregoing, commencing on the Closing Date and thereafter, any and all payments in respect of sales of the Product received by the Company shall be deposited into the Deposit Account within two (2) Business Days of the Company's receipt thereof.
(e)With respect to any License Agreement (excluding License Agreement that do not call for direct payment to the Company) entered into by the Company from and after the engagement of the replacement Deposit Bank contemplated by Section 5.08(b), the Company shall (i) at the time of the execution and delivery of such agreement, instruct any party thereto under such agreement to remit to the Deposit Account when due all applicable payments in respect of sales and licensing revenue in respect of the Product and in respect of royalties received from Licensees that are due and payable to the Company in respect of or derived from such agreement during the Revenue Interest Period and (ii) deliver to Purchaser evidence of such instruction and of such applicable party's agreement thereto. Without in any way limiting the foregoing, commencing on the Closing Date and thereafter, any and all payments in respect of sales of the Product received by the Company shall be deposited into the Deposit Account within two (2) Business Days of the Company's receipt thereof.
(f)Prior to the termination of this Agreement, the Company shall not have any right to terminate the Deposit Bank without Purchaser's prior written consent. Any such consent, which Purchaser may grant or withhold in its sole and absolute discretion, shall be subject to the satisfaction of each of the following conditions to the satisfaction of Purchaser:
(i)the successor Deposit Bank shall be acceptable to Purchaser;
(ii)Purchaser, the Company and the successor Deposit Bank shall have entered into a deposit agreement substantially in the form of the Deposit Agreement initially entered into;
(iii)all funds and items in the accounts subject to the Deposit Agreement to be terminated shall be transferred to the new accounts held at the successor Deposit Bank prior to the termination of the then existing Deposit Bank; and
(iv)Purchaser shall have received evidence that all of the applicable parties making payments in respect of sales of the Product have been instructed to remit all future payments in respect of sales of the Product to the new accounts held at the successor Deposit Bank.
(g)True-Up.
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(i)Following the end of each Fiscal Quarter, as soon as the Company shall have determined the Net Revenues for such Fiscal Quarter and for each other Fiscal Quarter in the Fiscal Year in which the then most recently ended Fiscal Quarter occurred (the “Year-to-Date Net Revenues”) and in any event no later than forty-five (45) days after the end of such Fiscal Quarter (unless such Fiscal Quarter is the last Fiscal Quarter of a Fiscal Year in which case no later than ninety (90) days after the end of such Fiscal Quarter), the Company shall present Purchaser a certificate, in reasonable detail with supporting calculations and information, detailing the Year-to-Date Net Revenues (the “True-Up Statement”). The True-Up Statement shall include a calculation of (A) the year-to-date Assigned Interests as of the end of such quarterly period, which shall be the product of the Applicable Percentage multiplied by the Year-to-Date Net Revenues, with a separate calculation taking into account any mandatory minimum payments as provided in the definition of Assigned Interests (“Year-to-Date Assigned Interests”) and (B) the difference between (X) the amount Purchaser has received on or prior to the last day of the most recently ended Fiscal Quarter in payments from the Company under Section 2.02(a) or this Section 5.08 in respect of the Fiscal Year for which Year-to-Date Net Revenues is calculated less (Y) the Year-to-Date Assigned Interests (the “True-Up Amount”).
(ii)If the True-Up Amount calculated pursuant to clause (i) above is positive, Purchaser shall pay such amount to the Company within five (5) days of receipt by Purchaser of the True-Up Statement.
(iii)If the True-Up Amount calculated pursuant to clause (i) above is negative, the Company shall pay the absolute value of such amount to Purchaser within five (5) days of the receipt by Purchaser of the True-Up Statement.
Section 5.09 Intellectual Property.
(a)The Company shall, at its sole expense, either directly or by causing any Licensee to do so, take any and all actions (including taking legal action to specifically enforce the applicable terms of any License Agreement), and prepare, execute, deliver and file any and all agreements, documents or instruments which are necessary to diligently maintain the Material Patents. The Company shall ensure that all patent applications corresponding to the Material Patents are diligently prosecuted with the intent to protect the Product. In the exercise of its reasonable business discretion, the Company shall diligently defend or assert such Intellectual Property and such Patents against infringement or interference by any other Persons, and against any claims of invalidity or unenforceability, in any jurisdiction (including, without limitation, by bringing any legal action for infringement or defending any counterclaim of invalidity or action of a Third Party for declaratory judgment of non-infringement or non-interference). The Company shall not, and shall use its commercially reasonable efforts to cause any Licensee not to, disclaim or abandon, or fail to take any action necessary or desirable to prevent the disclaimer or abandonment of, the Material Patents.
(b)In the event that the Company becomes aware that any intellectual property licensed by it to a Licensee under any License Agreement infringes or violates any Third Party intellectual property, the Company shall, in the exercise of its reasonable business discretion, use commercially reasonable efforts to attempt to secure the right to use such intellectual property on behalf of itself and the affected Licensee and shall pay all costs and amounts associated with obtaining any such license, without any reduction in the Assigned Interests.
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(c)The Company shall directly, or through a Licensee, take any and all actions and prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or commercially reasonable or desirable to secure and maintain, all Regulatory Approvals in the United States.
(d)The Company shall notify PDL regarding any material developments with the Material Patents, including new filings, allowance and issuance, abandonment, or the initiation of any interference, reexamination, reissue, post-grant review proceeding and litigation, and shall provide PDL with an updated patent schedule upon request, but at least once per year.
Section 5.10 Protective Covenants.
(a)The Company shall not, without the prior written consent of Purchaser:
(i)Forgive, release or compromise any amount owed to the Company or its Subsidiary and relating to the Assigned Interests outside the ordinary course of business;
(ii)Waive, amend, cancel or terminate, exercise or fail to exercise, any of its material rights constituting or relating to the Revenue Interests (including any rights under any License Agreement) outside the ordinary course of business;
(iii)Amend, modify, restate, cancel, supplement, terminate or waive any material provision of any Material Contract, or grant any consent thereunder, or agree to do any of the foregoing, including, without limitation, entering into any agreement with any Person under the provisions of such Material Contract;
(iv)Enter into any agreement that would be reasonably expected to have a Material Adverse Effect;
(v)Create, incur, assume or suffer any interference with the direction of payments set for in Section 5.08; or
(vi)Create, incur, assume or suffer to exist any Lien, or exercise any right of rescission, offset, counterclaim or defense, upon or with respect to the Assigned Interests, the Revenue Interests or the other Assigned Interests Collateral, or agree to do or suffer to exist any of the foregoing, except for any Lien or agreements in favor of Purchaser granted under or pursuant to this Agreement and the other Transaction Documents.
(b)During the Term, the Company agrees that, within five (5) Business Days of any Person becoming a direct or indirect wholly owned Subsidiary of the Company, the Company shall cause such Subsidiary to deliver to Purchaser an Assumption Agreement (as defined in the Guarantee and Collateral Agreement) executed by such Subsidiary, pursuant to which such Subsidiary shall become a guarantor of the obligations hereunder and grant a security interest in the Assigned Interests Collateral.
Section 5.11 Insurance.
The Company shall (i) maintain the current insurance policies with its current insurance companies or with companies having at the least the same rating from A.M. Best Company, Inc.,
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including product liability insurance and directors and officers insurance and insurance against litigation, liability, subject only to such exclusions and deductible items as are usual and customary in insurance policies of such type, and (ii) maintain Purchaser as an additional insured party with respect to its general liability and product liability insurance policies. From time to time (with reasonable frequency) the Company will revise its insurance policy so as to maintain coverage in amounts customary for companies of comparable size and condition similarly situated in the same industry as the Company.
Section 5.12 Notice.
The Company shall provide Purchaser with written notice as promptly as practicable (and in any event within two (2) Business Days) after becoming aware of any of the following:
(a)any material breach or default by the Company of any covenant, agreement or other provision of this Agreement, or any other Transaction Document;
(b)any representation or warranty made or deemed made by the Company in any of the Transaction Documents or in any certificate delivered to Purchaser pursuant hereto shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made or deemed made;
(c)the occurrence of a Change of Control; or
(d)the occurrence of a Put Option Event.
Section 5.13 Use of Proceeds.
The Company shall use proceeds received from Purchaser in support of the business plan for the Product, including sales operation and expansion and additional clinical studies. The Company shall take commercially reasonable measures to support the sales of the Product.
Section 5.14 Taxes.
(a)The Company shall timely file (taking into account all extensions of due dates) all Tax Returns required to be filed by it and will pay all Taxes required to be paid with such returns.
(b)Each payment made by the Company pursuant to the Transaction Documents shall be payable free of any Tax, withholding or other deduction except for any Tax, withholding or deduction imposed by applicable law. The Company and Purchaser agree that to each of their knowledge such payments are not subject to any deduction or withholding under current applicable law.
Section 5.15 Board Designee.
Effective immediately after the Closing, Purchaser shall have the right to designate, and the Company shall appoint an individual designated by the Purchaser (the “Purchaser Designee”), who shall serve on the Board until the 2013 Annual Meeting of Shareholders (the “2013 Annual Meeting”). For the 2013 Annual Meeting and each annual meeting thereafter
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during the Term, the Board shall nominate and recommend the Purchaser Designee as a director nominee to serve on the Board until the next annual meeting and shall include such nomination in the Company's proxy statement for the 2013 Annual Meeting and each annual meeting thereafter, provided that the election of the Purchaser Designee is subject to shareholders' approval. Should at any time there become a vacancy on the Board as a result of (1) the resignation, death or removal of the Purchaser Designee or (2) such Purchaser Designee failing to obtain the requisite approval of the Company's shareholders at any annual or special meeting of the Company's shareholders and where no other individual is elected to such vacancy, Purchaser shall have the right to designate an individual to fill such vacancy, and the Company shall take such actions necessary to appoint, such individual to the Board. The Company shall have taken all actions necessary at or prior to the Closing to ensure there is a vacancy on the Board as of the Closing to permit the appointment of the Purchaser Designee to the Board as of the Closing.
Section 5.16 Rights to Future Stock Issuances.
Subject to the terms and conditions of this Section 5.16 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to the Purchaser. The Purchaser shall be entitled to apportion the right of first offer hereby granted to it among itself and its Affiliates in such proportions as it deems appropriate.
(a)The Company shall give notice (the “Offer Notice”) to the Purchaser, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.
(b)By notification to the Company within five (5) days after the Offer Notice is given, the Purchaser may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to * * * of such New Securities. The closing of any sale pursuant to this Section 5.16(b) shall occur within the later of one hundred and twenty (120) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 5.16(c).
(c)If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 5.16(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 5.16(b), offer and sell such New Securities (including any portion of New Securities Purchaser declined to acquire pursuant to Section 5.16(b)) to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Purchaser in accordance with this Section 5.16.
(d)The right of first offer in this Section 5.16 shall not be applicable to (i) issuance of options under the Company's equity compensation plans, where such plans have been approved by the Company's shareholders; and (ii) issuance of equity securities to one or more counterparties in connection with the consummation, by the Company, of a strategic partnership
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, joint venture, collaboration or acquisition or license of any business products or technology (it being understood and agreed that the primary purpose of any issuance pursuant to this clause (ii) shall not be to raise capital).
(e)The Purchaser shall agree to treat the Offer Notice as confidential, and it shall not trade any securities of the Company while the terms of the Offer Notice remain as material, non-public information.
Section 5.17 Dividends.
During the period from the Closing Date to sixty (60) days after the fourth anniversary of the Closing Date (or the payment of the Put Price in the event the Put Option is exercised on or prior to 60 days after the fourth anniversary of the Closing Date), the Company shall not, nor shall it permit any Subsidiary to, declare, pay or make any dividend or distribution on any shares of the common stock or preferred stock of such Person (other than dividends or distributions payable in its stock, or split-ups or reclassifications of its stock) or apply any of its funds, property or assets to the purchase, redemption or other retirement of any common or preferred stock, or of any options to purchase or acquire any such shares of common or preferred stock of any such Person (collectively, “Restricted Payments”), except that: (a) each Subsidiary may make direct or indirect Restricted Payments to the Company; and (b) the Company and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it solely with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests. For purposes of this Agreement, “Equity Interests” of any Person means any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended).
ARTICLE VI
TERMINATION
Section 6.01 Termination Date.
This Agreement shall terminate upon the earlier of expiration or termination of the Revenue Interest Period, in each case after full satisfaction of any amounts due under this Agreement by Company to the Purchaser (the “Term”).
Section 6.02 Effect of Termination.
In the event of the termination of this Agreement pursuant to Section 6.01, this Agreement shall forthwith become void and have no effect without any liability on the part of any party hereto or its Affiliates, directors, officers, stockholders, partners, managers or members other than the provisions of this Section 6.02 and Sections 5.04, and Article VII hereof, which shall survive any termination as set forth in Section 6.01. Nothing contained in this Section 6.02 shall relieve any party from liability for any breach of this Agreement.
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ARTICLE VII
MISCELLANEOUS
Section 7.01 Survival.
(a)All representations and warranties made herein and in any other Transaction Document, any certificates or in any other writing delivered pursuant hereto or thereto shall survive the execution and delivery of this Agreement and shall continue to survive until the termination of this Agreement in accordance with Article VI.
(b)Any investigation or other examination that may have been made or may be made at any time by or on behalf of the party to whom representations and warranties are made shall not limit, diminish or in any way affect the representations and warranties in the Transaction Documents, and the parties may rely on the representations and warranties in the Transaction Documents irrespective of any information obtained by them by any investigation, examination or otherwise.
Section 7.02 Specific Performance; Limitations on Damages.
(a)Each of the parties hereto acknowledges that the other party will have no adequate remedy at law if it fails to perform any of its obligations under any of the Transaction Documents. In such event, each of the parties agrees that the other party shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Agreement.
(b)Notwithstanding anything to the contrary in this Agreement, in no event shall either party be liable for special, indirect, incidental, punitive or consequential damages of the other party, whether or not caused by or resulting from the actions of such party or the breach of its covenants, agreements, representations or warranties hereunder, even if such party has been advised of the possibility of such damages.
Section 7.03 Notices.
All notices, consents, waivers and communications hereunder given by any party to the other shall be in writing (including facsimile transmission) and delivered personally, by telegraph, telecopy, telex or facsimile, by a recognized overnight courier, or by dispatching the same by certified or registered mail, return receipt requested, with postage prepaid, in each case addressed:
If to Purchaser to:
PDL BioPharma, Inc.
932 Southwood Blvd.
Attention: General Counsel
Facsimile No.: (775) 832-8501
with a copy to:
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Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
Attention: Dhiya El-Saden
Facsimile No.: (213) 229-7520
If to the Company to:
AxoGen, Inc.
AxoGen Corporation
13859 Progress Blvd.
Alachua, FL 32615
Attention: Karen Zaderej
Fax: (386) 462-6803
with a copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
Attention: Fahd M.T. Riaz
Fax: (215) 963-5001
or to such other address or addresses as Purchaser or the Company may from time to time designate by notice as provided herein, except that notices of changes of address shall be effective only upon receipt. All such notices, consents, waivers and communications shall: (a) when posted by certified or registered mail, postage prepaid, return receipt requested, be effective three (3) Business Days after dispatch, unless such communication is sent trans-Atlantic, in which case they shall be deemed effective five (5) Business Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be effective upon receipt by the transmitting party of confirmation of complete transmission, or (c) when delivered by a recognized overnight courier or in person, be effective upon receipt when hand delivered.
Section 7.04 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Company shall not be entitled to assign any of its obligations and rights under the Transaction Documents without the prior written consent of Purchaser. Solely upon the consent of the Company (which consent may not be unreasonably withheld, delayed or conditioned), Purchaser may assign any of its obligations or rights under the Transaction Documents without restriction; provided, however, that Purchaser, notwithstanding such assignment, will remain liable under Section 5.08(g) (to the extent of any amount subject thereto during the Fiscal Quarter as of the date of such assignment) and Section 7.05.
Section 7.05 Indemnification.
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(a)The Company hereby indemnifies and holds Purchaser and its Affiliates and any of their respective partners, directors, managers, members, officers, employees and agents (each, a “Purchaser Indemnified Party”) harmless from and against any and all Losses (including all Losses in connection with any product liability claims or claims of infringement or misappropriation of any Intellectual Property rights of any Third Parties) incurred or suffered by any Purchaser Indemnified Party arising out of any breach of any representation, warranty or certification made by the Company in any of the Transaction Documents or certificates given by the Company in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by the Company pursuant to any Transaction Document, including any failure by the Company to satisfy any of the Excluded Liabilities and Obligations.
(b)Purchaser hereby indemnifies and holds the Company, its Affiliates and any of their respective partners, directors, managers, officers, employees and agents (each, a “Company Indemnified Party”) harmless from and against any and all Losses incurred or suffered by a Company Indemnified Party arising out of any breach of any representation, warranty or certification made by Purchaser in any of the Transaction Documents or certificates given by Purchaser in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by Purchaser pursuant to any Transaction Document.
(c)If any claim, demand, action or proceeding (including any investigation by any Governmental Authority) shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to the preceding paragraphs, the indemnified party shall, promptly after receipt of notice of the commencement of any such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any; provided, that the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under the foregoing provisions of this Section 7.05 unless, and only to the extent that, such omission results in the forfeiture of, or has a material adverse effect on the exercise or prosecution of, substantive rights or defenses by the indemnifying party. In case any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 7.05 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of such counsel. It is agreed that the indemnifying party shall not, in
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connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.
(d)To the extent that any breach by the Company of this Agreement does not trigger a Put Option Event, Purchaser's sole remedy shall be to recover any monetary damages associated with such breach, subject to the other terms and provisions contained in this Agreement.
Section 7.06 No Implied Representations and Warranties.
Each party acknowledges and agrees that, other than the representations and warranties specifically contained in any of the Transaction Documents or certificates given in writing by a party hereto or thereto, there are no representations or warranties of either party or any other Person either expressed or implied with respect to the Assigned Interests or the transactions contemplated hereby. Without limiting the foregoing, Purchaser acknowledges and agrees that (a) Purchaser and its Affiliates, together with its and its Affiliates' representatives, have made their own investigation of the Product and the Intellectual Property and are not relying on any implied warranties or upon any representation or warranty whatsoever as to the future amount or potential amount of the Assigned Interests or as to the creditworthiness of Company and (b) except as expressly set forth in any representation or warranty in a Transaction Document, Purchaser shall have no claim or right to indemnification pursuant to Section 7.05 (or otherwise) with respect to any information, documents or materials furnished to Purchaser, any of its Affiliates, or any of its or its Affiliates' representatives, including any information, documents or material made available to Purchaser and its Affiliates and its Affiliates' representatives in any data room, presentation, interview or any other form relating to the transactions contemplated hereby.
Section 7.07 Independent Nature of Relationship.
(a)The relationship between the Company and its Subsidiary, on the one hand, and Purchaser, on the other, is solely that of seller and purchaser, and neither Purchaser, on the one hand, nor the Company and its Subsidiary, on the other, has any fiduciary or other special relationship with the other or any of their respective Affiliates. Nothing contained herein or in any other Transaction Document shall be deemed to constitute the Company and its Subsidiary and Purchaser as a partnership, an association, a joint venture or other kind of entity or legal form.
(b)No officer or employee of Purchaser will be located at the premises of the Company or any of its Affiliates, except in connection with an audit performed pursuant to
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Section 5.02. No officer, manager or employee of Purchaser shall engage in any commercial activity with the Company or any of its Affiliates other than as contemplated herein and in the other Transaction Documents.
(c)The Company and/or any of its Affiliates shall not at any time obligate Purchaser, or impose on Purchaser any obligation, in any manner or respect to any Person not a party hereto.
Section 7.08 Federal Tax.
Notwithstanding the accounting treatment thereof, for United States federal, state and local tax purposes, the Company and Purchaser shall treat the transactions contemplated by the Transaction Documents as debt for United States tax purposes. The parties hereto agree not to take any position that is inconsistent with the provision of this Section 7.08 on any tax return or in any audit or other administrative or judicial proceeding unless (a) the other party to this Agreement has consented to such actions, which consent shall not be unreasonably withheld, or (b) the party that contemplates taking such an inconsistent position has been advised by its tax advisor in writing that it is more likely than not (i) that there is no “reasonable basis” (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) for the position specified in this Section 7.08 or (ii) that taking such a position would otherwise subject the party to penalties under the Internal Revenue Code of 1986, as amended.
Section 7.09 Entire Agreement.
This Agreement, together with the Exhibits and Schedules hereto (which are incorporated herein by reference), and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements (including the Term Sheet and the Interim Revenue Interest Purchase Agreement), understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits, Schedules or other Transaction Documents) has been made or relied upon by either party hereto. None of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.
Section 7.10 Amendments; No Waivers.
(a)This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto. No waiver of any right hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced.
(b)No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 7.11 Interpretation.
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When a reference is made in this Agreement to Articles, Sections, Schedules or Exhibits, such reference shall be to an Article, Section, Schedule or Exhibit to this Agreement unless otherwise indicated. The words “include”, “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”. Neither party hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against one party or the other.
Section 7.12 Headings and Captions.
The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.
Section 7.13 Counterparts; Effectiveness.
This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. Any counterpart may be executed by facsimile or pdf signature and such facsimile or pdf signature shall be deemed an original.
Section 7.14 Severability.
If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nevertheless be given full force and effect.
Section 7.15 Expenses.
The Company will pay all of its own fees and expenses in connection with entering into and consummating the transactions contemplated by this Agreement. The Company shall, promptly (and, in any event, within five (5) Business Days) upon demand, reimburse Purchaser up to * * * for its reasonable legal fees and expenses incurred in connection with the transactions contemplated by the Transaction Documents, less any amounts reimbursed in connection with the Interim Royalty Purchase Agreement, not to exceed * * * in the aggregate.
Section 7.16 Governing Law; Jurisdiction.
(a)This Agreement shall be governed by, and construed, interpreted and enforced in accordance with, the laws of the state of New York, without giving effect to the principles of conflicts of law thereof.
(b)Any legal action or proceeding with respect to this Agreement or any other Transaction Document may be brought in any state or federal court of competent jurisdiction in the State of Nevada, Washoe County and city of Reno. By execution and delivery of this Agreement, each party hereto hereby irrevocably consents to and accepts, for itself and in respect of its property, generally and unconditionally the non-exclusive jurisdiction of such courts. Each party hereto hereby further irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter
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have to the bringing of any action or proceeding in such jurisdiction in respect of any Transaction Document.
(c)Each party hereto hereby irrevocably consents to the service of process out of any of the courts referred to in subsection (b) of this Section 7.16 in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address set forth in this Agreement. Each party hereto hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any suit, action or proceeding commenced hereunder or under any other Transaction Document that service of process was in any way invalid or ineffective. Nothing herein shall affect the right of a party to serve process on the other party in any other manner permitted by law.
Section 7.17 Waiver of Jury Trial.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any action, proceeding, claim or counterclaim arising out of or relating to any Transaction Document or the transactions contemplated under any Transaction Document. This waiver shall apply to any subsequent amendments, renewals, supplements or modifications to any Transaction Document.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.
COMPANY: | AxoGen, Inc. By: /s/ Karen Zaderej _ Name: Karen Zaderej Title: Chief Executive Officer |
PURCHASER: | PDL BIOPHARMA, INC. By: /s/ John P. McLaughlin _ Name: John P. McLaughlin Title: President and Chief Executive Officer |
[Signature Page to Revenue Purchase Agreement]
SCHEDULE 3.12 (a)
INTELLECTUAL PROPERTY AND LICENSE AGREEMENTS
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | US Patent 6,972,168 (UFRF) | Licensed | Patent - 8/13/2021 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | US Patent 7,402,319 (UTA) | Licensed | Patent - 9/26/2023 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | US Patent 7,732,200 (UFRF) | Licensed | Patent - 12/21/2022 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | US Published Patent Application 20080299536 (UFRF) | Licensed | Patent Application- N/A Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | US Published Patent Application 20090030269 (UTA) | Licensed | Patent Application - N/A Agreement - See UTA License Agreement Below | Yes |
AxoGen Corporation | Canada Patent Application 2,455,827 (UFRF) | Licensed | Patent Application- N/A Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | European Patent No. EP1425390 (UFRF) | Licensed | Patent - 8/12/2022 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | Japanese Patent No. 4,749,667 (UFRF) | Licensed | Patent- 8/13/2022 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | Mexico Patent No. 296009 (UFRF) | Licensed | Patent - 2/13/2012 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | Mexico Patent No. 296020 (UFRF) | Licensed | Patent - 2/13/2012 Agreement - See UFRF License Agreement Below | Yes |
AxoGen Corporation | Mexico Patent No. 296021 (UFRF) | Licensed | Patent - 2/13/2012 Agreement - See UFRF License Agreement Below | No |
AxoGen Corporation | Mexico Patent No. 296019 (UFRF) | Licensed | Patent Application- 2/13/2012 Agreement - See UFRF License Agreement Below | No |
AxoGen Corporation | US Published Patent Application 20090264871 (AxoGen) | Owned | N/A | Yes |
AxoGen Corporation | Canada Patent Application 2,721,945 (AxoGen) | Owned | N/A | Yes |
AxoGen Corporation | European Patent Application EP2276410 (AxoGen) | Owned | N/A | Yes |
AxoGen Corporation | US Patent 6,696,575 (UTA) | Licensed | Patent - 3/27/2021 Agreement - See UTA License Agreement Below | No |
AxoGen Corporation | US Patent 7,851,447 (UFRF) | Licensed | Patent - 11/18/2023 Agreement - See UFRF License Agreement Below | No |
AxoGen Corporation | US Published Patent Application US-20110082482 (UFRF) | Licensed | Patent Application- N/A Agreement - See UFRF License Agreement Below | No |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | US 7,772,185 (Emory) | Licensed | Patent - 11/18/2023 Agreement - See Emory License Agreement Below | No |
AxoGen Corporation | US Published Patent Application US-201000268336 (Emory) | Licensed | Patent Application - N/A Agreement - See Emory License Agreement Below | No |
AxoGen Corporation | Japanese Patent No. 4,773,976 (Emory) | Licensed | Patent - 1/31/2025 Agreement - See Emory License Agreement Below | No |
AxoGen Corporation | European Patent Application EP1737476 (Emory) | Licensed | Patent Application - N/A Agreement - See Emory License Agreement Below | No |
AxoGen Corporation | Canada Patent Application 2,556,161 (Emory) | Licensed | Patent Application - N/A Agreement - See Emory License Agreement Below | No |
AxoGen Corporation | AxoGen Nerve Regeneration - Nerve Recovery Training Video (Copyright) | Owned | N/A | Yes |
AxoGen Corporation | LB-122 AVANCE 70 AG-T-1 Instructions for Use: AxoGen Product (Copyright) | Owned | N/A | Yes |
AxoGen Corporation | LB-123 AxoGuard Nerve Connector Instructions for Use (Copyright) | Owned | N/A | Yes |
AxoGen Corporation | LB-124 AxoGuard Nerve Protector Instructions for Use (Copyright) | Owned | N/A | Yes |
AxoGen Corporation | (Canada Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGUARD (Canada Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AxoGen (Canada Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AVANCE NERVE GRAFT (Canada Trademark) | Owned | N/A | Yes |
AxoGen Corporation | (European Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AVANCE NERVE GRAFT (European Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGEN NERVE REGENERATION (Japan Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AVANCE NERVE GRAFT (Japan Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AVANCE NERVE GRAFT (Mexico Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGEN NERVE REGENERATION (Mexico Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGEN NERVE REGENERATION (Mexico Trademark) | Owned | N/A | Yes |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | AXOGEN NERVE REGENERATION (Mexico Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGUARD (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGEN (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AXOGEN (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | AVANCE (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | (U.S. Trademark) | Owned | N/A | Yes |
AxoGen Corporation | RANGER (U.S. Trademark) | Owned | N/A | No |
AxoGen Corporation | 11.-, (U.S. Trademark) | Owned | N/A | NO |
AxoGen Corporation | License Agreement- University of Florida Research Foundation (UFRF) | N/A | The expiration date of the agreement is until the earlier of the date that no Licensed Patent remains enforceable or the payment of earned royalties ceases for more than four (4) calendar quarters on all Licensed Products and Processes. | Yes |
AxoGen Corporation | License Agreement- Emory University (Emory) | N/A | Expires on the last to expire Valid Claim. | No |
AxoGen Corporation | License Agreement- University of Texas at Austin (UTA) | N/A | Expires on the last to expire of the Licensed Patents. | Yes |
AxoGen, Inc. | Patent Application- US 11/535,214 | Owned | Patent Application - not pursuing | No |
AxoGen, Inc. | Patent Application PCT-US- 2009-001407 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | Patent Application- US 12/921,253 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | Patent Application- US 61/409,786 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | Patent Application- US 13/035,535 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | Patent Application PCT-US- 2011-026319 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | Patent Application US 61/705,251 | Owned | Patent Application - N/A | No |
AxoGen, Inc. | US Patent - 7,288,265 | Owned | 1-2023 | No |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen, Inc. | US Patent - 6,830,758 | Owned | 4-2021 | No |
AxoGen, Inc. | US Patent - 6,495,158 | Owned | 1-2019 | No |
AxoGen, Inc. | US Patent - 6,469,227 | Owned | 5-2020 | No |
AxoGen, Inc. | US Patent - 6,455,065 | Owned | 5-2019 | No |
AxoGen, Inc. | US Patent - 6,406,712 | Owned | 6-2019 | No |
AxoGen, Inc. | US Patent - 6,348,212 | Owned | 5-2019 | No |
AxoGen, Inc. | US Patent - 6,090,403 | Owned | 8-2018 | No |
AxoGen, Inc. | US Patent - 5,804,213 | Owned | 9-2015 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.BIZ | Owned | 6/8/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.COM | Owned | 6/9/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.INFO | Owned | 6/9/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.MOBI | Owned | 6/9/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.NET | Owned | 6/9/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.ORG | Owned | 6/9/2012 | No |
AxoGen Corporation | Domain name - ABOUTNERVE.US | Owned | 6/8/2012 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.BIZ | Owned | 4/8/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.CO | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.COM | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.INFO | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.MOB I | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.NET | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.ORG | Owned | 4/9/2015 | No |
AxoGen Corporation | Domain name - AVANCENERVEGRAFT.US | Owned | 4/8/2015 | No |
AxoGen Corporation | Domain name - AXGN.BIZ | Owned | 2/21/2014 | No |
AxoGen Corporation | Domain name - AXGN.CO | Owned | 2/21/2014 | No |
AxoGen Corporation | Domain name - AXGN.INFO | Owned | 2/22/2014 | No |
AxoGen Corporation | Domain name - AXGN.ORG | Owned | 2/22/2014 | No |
AxoGen Corporation | Domain name - AXGN.US | Owned | 2/21/2014 | No |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Domain name - AXOGEN.BIZ | Owned | 8/5/2012 | No |
AxoGen Corporation | Domain name - AXOGEN.INFO | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGEN.ME | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGEN.NET | Owned | 11/13/2011 | No |
AxoGen Corporation | Domain name - AXOGEN.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - AXOGEN.US | Owned | 8/5/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.BIZ | Owned | 8/5/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.COM | Owned | 11/13/2017 | Yes |
AxoGen Corporation | Domain name - AXOGENINC.INFO | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.ME | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.MOBI | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.NAME | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.NET | Owned | 7/20/2014 | No |
AxoGen Corporation | Domain name - AXOGENINC.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - AXOGENINC.US | Owned | 3/7/2013 | No |
AxoGen Corporation | Domain name - AXOGENINC.WS | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.BIZ | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.COM | Owned | 10/6/2012 | Yes |
AxoGen Corporation | Domain name - AXOGUARD.INFO | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.ME | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.MOBI | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.NET | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.ORG | Owned | 10/6/2012 | No |
AxoGen Corporation | Domain name - AXOGUARD.US | Owned | 10/5/2011 | No |
AxoGen Corporation | Domain name - NERVEGRAFT.BIZ | Owned | 5/21/2015 | No |
AxoGen Corporation | Domain name - NERVEGRAFT.COM | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEGRAFT.INFO | Owned | 5/22/2014 | No |
AxoGen Corporation | Domain name - NERVEGRAFT.MOBI | Owned | 5/22/2014 | No |
AxoGen Corporation | Domain name - NERVEGRAFT.NET | Owned | 7/20/2012 | No |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Domain name - NERVEGRAFT.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEINJURY.NET | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEINJURY.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEREGENERATION.NET | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEREGENERATION.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.BIZ | Owned | 8/5/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.INFO | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.ME | Owned | 8/6/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.NET | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.ORG | Owned | 7/20/2012 | No |
AxoGen Corporation | Domain name - NERVEREPAIR.US | Owned | 8/5/2012 | No |
AxoGen Corporation | Domain name - PERIPHERALNERVE.BIZ | Owned | 5/21/2015 | No |
AxoGen Corporation | Domain name - PERIPHERALNERVE.NET | Owned | 7/21/2012 | No |
AxoGen Corporation | Domain name - PROSTATECTOMY.NET | Owned | 7/20/2012 | No |
AxoGen Corporation | Non-clinical data - VP-001‑ Installation Qualification Protocol for the ACCU-SEAL Model 730- 3B6E Medical Sealer (SN 37443) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-002‑ Operation Qualification Protocol for the ACCU-SEAL Model 730-3B6E Medical Sealer (SN 37443) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-003- ACCU-SEAL Model 730-3B6E Medical Sealer (SN 37443) Validation Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-004‑ Seal Parameters for ACCU-SEAL Model 730 Next Generation Medical Sealer (SN 37443) and Mangar RM48WLAM and DT 1073UC Pouches | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical Data - RD-001- AGT-1 Nerve Graft Small Animal Study: Axon Regeneration and Functional Recovery following Rat Sciatic Nerve Defect Repair using 14mm and 28mm Grafts | Owned* | N/A | Yes |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - RD-002- AG-T-1 Nerve Graft Large Animal Study: Evaluation of Regeneration Across Long Nerve (70 mm) Autografts compared to Allografts in Sheep | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-003- Preparation of Suffolk Sheep Nerve Grafts using the AG-T-1 Nerve Graft Processing Method | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-004‑ Evaluation of CS56 Staining of AG- T-1 processed Mouse, Rat and Sheep Tissue | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-005‑ Summary of AG-T-1-UT Development Project: Evaluation and development of a detergent treatment process for human peripheral nerve | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-006‑ AG-T-1 Process Improvement Project | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-007‑ Evaluation of Label Adherence to AG-T-1 Packaging Components following Gamma Irradiation and Frozen Storage | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-008‑ Results of EM Investigation of Particulate on AG-T-1 Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-009‑ Examination of Histological Processing Parameters | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-012‑ Assessment of AxoGuard Nerve Protector and Nerve Connector Sizing | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-013- AxoGuard Handling Benchtop Test for Optimal Hydration Time | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-014‑ Histological Processing of Explant Samples from RD-001 Using Historical Methods | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-015‑ Justification for the potential for revascularization across nerve graft length and diameter | Owned* | N/A | Yes |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - RD-018‑ Muir Sensory vs. Motor vs. Mixed versions of Autograft and Avance | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-019‑ Muir Restablished CPSG | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-020‑ Graft Processing and Histology summary of rabbit Sciatic Nerve using the Alpha Process | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-021‑ Processing and Histology results of rabbit Peroneal Nerve Study | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-022‑ Evaluation of a 7cm AG-T-1 Processed Nerve Allograft: A morphometric and function study in the rabbit peroneal nerve model | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-023‑ Testing of Cryoembedding/ Sectioning of AVANCETM Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-024- Avance Nerve Graft Working Expiration Time Study | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-025‑ Preliminary Evaluation of the Effects of Decreased ChABC Concentrations on Peripheral Nerve CSPG Clearance | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-026‑ Evaluation of scarring, inflammation, and nerve function following nerve wrapping | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-027‑ Vacuum Filtration of Enzyme A with Nerve Tissue II | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-028‑ Avance Handling Equivalency Study | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-029‑ Avance Handling Equivalency Study II | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-031‑ Detergent and CSPG relationship -Avance | Owned* | N/A | Yes |
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Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - RD-032- SEM Microphotographs of Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-033‑ Collagen 1 immunostaining of AVANCE samples | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-034‑ Investigation of CSPG in processed and unprocessed human skin | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-036‑ Vacuum Filtration of Enzyme A w/ Nervous Tissue | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-037‑ Avance Suture Retention Strength Method | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-038‑ Avance Suture Retention Strength | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-039‑ Post-hoc investigation of neurite recruitment by Avance in an ectopic muscle implant | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-040‑ Validation of the Gel Clot Method Bacterial Endotoxin Test for Nerve | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-041‑ Effects of detergent processing on the growth-promoting properties of nerve basal lamina and laminin | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-045‑ Vacuum Filtration of Enzyme A and the Effect on CSPG Removal from Nerve Tissue II | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-048‑ Histological Testing of CSPG Clearance | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - RD-049‑ Clearance of NGF by Detergent Processing | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-005- Validation of the Corporate Quality Folder Security | Owned* | N/A | Yes |
S- 10
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-007‑ Evaluation of Mediatech Data on 20 L Plastic Film used for Processing Solution Storage | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-008‑ Stability Study on Mediatech Solutions A, B and D | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-009- CS56 Staining Effectiveness Test Run Summary | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-012‑ Determination of Foil/Mylar Pouch Sealing Parameters and Integrity Testing Regimen | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-013‑ Determination of Burst Criteria for Tyvek/Mylar Pouch Integrity Testing Regimen | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-014‑ Qualification Protocol and Final Report of Sanyo Pharmaceutical Refrigerator SN 6081303 ID AX-027 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-015‑ Qualification Protocol and Final Report of Shel Lab Orbital Shaking Incubator SN# 10099606, ID# AX-021 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-016‑ Qualification Protocol and Final Report of Shel Lab Orbital Shaking Incubator SN# 10099806, ID# AX-023 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-017‑ Qualification Protocol and Final Report of Shel Lab Orbital Shaking Incubator SN# 04004206, ID# AX-001 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-018‑ Qualification Protocol and Final Report of Sanyo -86oC Freezer SN# 60812908, ID# AX-004 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-019- Qualification Protocol and Final Report of Sanyo -86oC Freezer SN# 60812909, ID# AX-005 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-020‑ Qualification Protocol and Final Report of Sanyo -86oC Freezer SN# 60812913, 1D# AX-003 | Owned* | N/A | Yes |
S- 11
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-021‑ Initial Biocompatibility Testing for AG-T-1 Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-022‑ Comparative Muscle Implantation Study with Negative Control - 6 weeks -Product Code AG-T-1 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-023- AxoGuard Handling Equivalency Study | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-025‑ Qualification Protocol and Final Report of Shel Lab Orbital Shaking Incubator SN# 10099506, ID# AX-022 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-026‑ 1, 2, & 3 Year Shelf-Life Package Validation Testing AG-T-1 Nerve Graft Packaging | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-027- Biocompatibility Testing of the Avance Peripheral Nerve Graft | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-029‑ AG-T-1 Debridement Process Performance Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-030- AppTec-Biological Safety Cabinet IQ/OQ/PQ for AX-026 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-031- AppTec-B iological Safety Cabinet IQ/OQ/PQ for AX-025 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-032‑ Evaluation of Thawing AVANCE Peripheral Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-033- Thermal Performance Qualification of the ThermoSafe® Insulated Shipper Model # 615 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-034‑ Thermal Performance Qualification of the ThermoSafe® Insulated Shipper Model # 326 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-035- AG-T-1 Processing and Packaging Performance Qualification | Owned* | N/A | Yes |
S- 12
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-036‑ Evaluation of Enzyme A from Alternative Manufacturers for Use in Production | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-037‑ Sterilization Validation for the Avance Product Family | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-038- IQ/0Q for AccuSeal Impulse Sealer AX-020- AppTec St. Paul Facility | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-039‑ Process Qualification of Final AG-T-1 Product Packaging | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-040- IQ/OQ for BT_1000 Burst Tester AX-048- AppTec St. Paul Facility | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-041‑ User Handling Qualification of AG‑T‑1 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-042‑ Thermal Performance Qualification of the ThermoSafe® Insulated Shipper Model # E186 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-043- Incubator AX-001 Empty Chamber Thermal Mapping | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-044- Incubator AX-021 Empty Chamber Thermal Mapping | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-045- Evaluation of AG-T-1 Nerve Grafts from Processing Performance Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-046- AG-T-1 Pilot Production Run Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-047- System Validation Master Plan: Microsoft Dynamics GP 9.00.0281 Implementation | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-048- Validation of an Analytical Method for Triton X-200 using HPLC-MS | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-049- IQ/OQ for Zebra Printer AX-066 | Owned* | N/A | Yes |
S- 13
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-050- Validation of Zebra Printer AX-066 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-051- Validation of Sandwich ELISA for Detection of Chondroitinase ABC (EN-026) Residuals | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-052- AG-T-1 2009 Gamma Irradiation Yearly Dose Re-Mapping | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-053- Sanyo Freezer Final Report AX-068 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-054- Sanyo Freezer Final Report AX-069 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-055- Sanyo Freezer Final Report AX-070 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-056- Sanyo Freezer Final Report AX-073 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-057- AG-T-1 Labeling Process Performance Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-058- IQ/OQ for Zebra Printer AX-071 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-059- Summary Report: Non-Immunogenicity of AG-T-1 Nerve Graft | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-060- Residual Enzyme Validation: Chondroitinase ABC and AG-T-1 Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-061- Dose Map Report AG-T-1 in SCA Thermosafe E-186 Shipping Container | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-062- AppTec Cleaning Practices, Isolette L‑145 Qualification and Isolette L‑145 Environmental Monitoring Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-063‑ Washington University Handling Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-064- Bioburden Equivalency Investigation - AG-T-1 XXXX70 product codes | Owned* | N/A | Yes |
S- 14
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-065‑ AG-T-1 Risk Management - FMEA [Application, Design and Process] | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-066‑ Validation of Labeling Software | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-067‑ Summary Report: Functional Recovery Support for AG-T-1 Nerve Graft | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-068‑ AG-T-1 Processing: Detergent Virucidal Effects | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-069‑ 1, 2, & 3 Year Real Time Shelf-Life Study of AG-T-1 Peripheral Nerve Graft | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-070- AxoGaurd Receiving, Releasing, Ordering and Shipping Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-071‑ Sanyo Freezer Loss of Power Study | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -072- Validation of Labeling Software PS-001 R02 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-073- Installation and Operational Qualification of Accu-Seal Model 730 [AX-076] Next Generation Medical Sealer | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -074- Process Qualification Protocol for the ACCU-SEAL Model 730-1B6E (AX‑076) Medical Sealer (SN 42487) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -075- Installation and Certification of AX‑083 Labconco Purifier Delta Class II, Type A2 Safety Cabinet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -076- Installation and Certification of AX‑ 084 Labconco Purifier Delta Class II, Type A2 Safety Cabinet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -077- Installation and Qualification of AX‑085 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
S- 15
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP -078- Installation and Qualification of AX‑086 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-079- Installation and Qualification of AX‑087 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP -080- Installation and Qualification of AX‑088 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-081- IQ/OQ for ELPRO ECOLOG “LP4” Datalogger Installation in Sid Martin Biotechnology Building Room 137 and 170 (Linked to AX-091) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-082- PQ for ELPRO ECOLOG “LP4” Datalogger Installation in Sid Martin Biotechnology Building Room 137 and 170 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-083- AG-T-1 2007 3rd Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-085- EN-004 Solution C Lot 98198013: Filtered versus Manual Comparison | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-086- Summary Report: Support for 5 cm AG-T-1 Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-088- 5 Year Accelerated and Real Time Aging for AG-T-1 Product | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-089- Installation and Qualification of AX‑093 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-090- Installation and Qualification of AX‑094 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-091- Installation and Qualification of AX‑095 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
S- 16
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-092- Installation and Qualification of AX‑096 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-093- AG-T-1 2007 4th Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-094- SI6R Orbital Shaking Incubator Temperature Mapping Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-095- Re-Qualification Protocol and Final Report of Sanyo -80oC Freezer SN# 60812913, 1D# AX-003 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-097- Requalification of AX-048 BT-1000 Burst Tester | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-098‑ LifeNet: AG-T-1 Debridement Process Performance Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-099‑ Installation and Operational Qualification of Sanyo -86oC Freezer SN# 70611640, ID# AX-092 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-100‑ Installation, Operational and Process Qualification of Accu-Seal Model 730 Next Generation Medical Sealer | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-101‑ Validation of Labeling Program -PS-001 R04 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-102‑ Burst Tester 1 Qualificationat LifeNet (BT-1000 Burst Tester) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-104‑ AG-T-1 Processing and Packaging Performance Qualification LifeNet Ward Court Facility | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-105‑ Installation and Qualification of SN#11022307, ID# LNH2 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
S- 17
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-106‑ Installation and Qualification of SN#01016208, 1D# LNH4 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-107‑ Installation and Qualification of SN#11022207, ID# LNH3 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-108- Installation and Qualification of SN#01016108, 1D# LNH1 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-109- Installation and Qualification of SN#01015508 LNH7 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-110- Installation and Qualification of SN 01015908 LNH6 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-111- Installation and Qualification of SN#11022507, 1D# LNH5 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-112- Installation and Qualification of SN# 11022607 LNH 8 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-113- Sterilization Validation for the AVANCE Product Family: LifeNet Facility | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-114- Installation and Qualification of SN#01015408 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-115- Installation and Qualification of SN#01015708 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-116- Installation and Qualification of SN#01015808 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
S- 18
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-117- Installation and Qualification of SN#01016308 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-118- Installation and Qualification of SN#01015608 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-119- Installation and Qualification of SN#01015208 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-120- Installation and Qualification of SN#01015308 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-121- Installation and Qualification of SN#01016008 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-122- Installation and Qualification of SN#01015108 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-123- Installation and Qualification of SN#01015008 Shel Lab SI6R Orbital-Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-124- Interim Report: 1-Year Real-Time Package Validation Testing for the AG-T-1 Nerve Graft | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-125- AG-T-1 2008 1st Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-126- Requalification of the Sandwich ELISA for Chondroitinase ABC Residuals in Nerve Grafts | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-127- Qualification Protocol and Final Report of Sanyo-86*C Freezer SN#08020041, ID#AX-099 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-128- Qualification Protocol and Final Report of Sanyo-86*C Freezer SN#08020044, ID#AX-090 | Owned* | N/A | Yes |
S- 19
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-129- Chamber Thermal Mapping: Sanyo -86°C Freezer SN# 70611640, ID# AX-092 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-130- AG-T-1 Process Improvement #1 Processing and Packaging Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-131- AxoGuard User Handling | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-132- Process Bioburden Investigation Protocol | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-133- Process Cytotoxicity Protocol | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-134- Process Residual Enzyme Protocol | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-135- Process Handling Equivalency Protocol | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-136- Qualification of the Hyclone-Thermofisher Solution C Reagent | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-137- AG-T-1 2008 2nd Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-138- AG-T-1 2008 2nd Quarterly Gamma Irradiation Dose Audit for LifeNet Processing | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-140- 2007-2008 Histology Summary Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-141- EN-004 Solution C Analysis | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-142- Installation, Operational, and Performance Qualification of the Sanyo -80 C Freezer | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-143- Installation, Operational, and Performance Qualification of the Sanyo Pharmaceutical Refrigerator | Owned* | N/A | Yes |
S- 20
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-144- Installation, Operational, and Performance Qualification of the Shel Lab Orbital Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-145- AG-T-1 2008 3nd Quarterly Gamma Irradiation Dose Audit for WuXi AppTec Processing | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-146- AG-T-1 2008 3nd Quarterly Gamma Irradiation Dose Audit for LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-147- AG-T-1 Process Improvement #1 Operations Qualification, LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-148- Stability Study for Hyclone Solutions A, B, C, D and F | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-149- Packaging User Qualification for AxoGuard | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-150- Shipper Qualification of AxoGuard Finished Product | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-152- September 2008 Steris Isomedix Dose Mapping | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-153- Verifying the use of Tissue Tek VIP processor for processing of histology samples at Histology Tech Services, Inc. | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-154- Mini Pak'R Air Cushion Machine Validation Protocol | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-155- AxoGuard Nerve Wrap Distribution FMEA | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-156- AG-T-1 2008 4th Quarterly Gamma Irradiation Dose Audit for LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-157- Validation of Donor Database PS-002 R00 | Owned* | N/A | Yes |
S- 21
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-158- AxoGen Dose Confirmation Study for AVANCE Nerve Graft (CAPA 08-005) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-159- AX-004 Qualification Report | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-160- 1, 2, & 3 Yr RT Shelf-Life Study of AG-T-1 Peripheral Nerve Graft, 1 week Process | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-161- Determination of Ethylene Oxide Residuals for Processing Tubing | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-162- BioStorage Shipping Qualification | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-163- AG-T-1 2009 1st Quarterly Gamma Irradiation Dose Audit for LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-165- Inspection Report Review BSC 7 (120868013108) Nuaire Hood (NU-425-500) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-166- Inspection Report Review BSC 6 (120874013108) Nuaire Hood (NU-425-500) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-167- Inspection Report Review BSC 4 (121151021308) Nuaire Hood (NU-425-500) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-168- Inspection Report Review BSC 5 (102906020408) Nuaire Hood (NU-425-500) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-169- IQ/OQ Report BSC 1 (071179035) Labconco Hood (3460001) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-170- IQ/OQ Report BSC 2 (071178797) Labconco Hood (3460001) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-171- IQ/OQ Report BSC 3 (071179045) Labconco Hood (3460001) | Owned* | N/A | Yes |
S- 22
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-172- Validation of Labeling Program - 5 year expiration date | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-173- Re-Qualification of the Sanyo -80 C Freezer | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-174- Re-Qualification of the Sanyo Pharmaceutical Refrigerator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-175- Re-Qualification of the Shel Lab Orbital Shaking Incubator | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-176- Vacuum Filtration of Enzyme A | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-177- IQ/OQ/PQ Report of the Shel Lab Orbital Shaking Incubator S/N 03003409 (IN-19) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-178- Preventive Maintenance Report of the Shel Lab Orbital Shaking Incubator S/N 01015008 (IN-15) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-179- AG-T-1 2009 2nd Quarterly Gamma Irradiation Dose Audit for LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-180- AG-T-1 2010 1st Quarterly Gamma Irradiation Dose Audit for LifeNet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-181- Dose Map Report for Quarterly Dose Audits | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-184- Detergent Dilution Calculation | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-185- Meta-Analysis of Reported Two-Point Discrimination Outcomes from the use of Nerve Cuffs and Avance® Nerve Graft for the Reconstruction of Digital Nerve Discontinuities of the Hand of 5 mm or Greater | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-186- Product Dose Mapping for Off Carrier Processing for AxoGen AG-T-1 Product - Steris Isomedix Libertyville IL | Owned* | N/A | Yes |
S- 23
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - VP-187- Process Re-Qualification, Lifenet | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-188- LifeNet Incubators Qualifications | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-190‑ AG-T-1 2010 3rd Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-192‑ Product Dose Re-Mapping Report for AxoGen AG-T-1 Product - Steris North Libertyville IL | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-193- AG-T-1 2011 1Q Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-194‑ Determination of Ethylene Oxide Residuals for Processing Tubing: 2011 | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-195‑ AG-T-1 2011 2Q Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-196‑ Meta-Analysis of Reported Outcomes for NeuraGen Nerve Guide and Avance Nerve Graft for the Reconstruction of Nerve Discontinuities | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-197- IQ/OQ/PQ Houston | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-198‑ AG-T-1 2011 3Q Quarterly Gamma Irradiation Dose Audit | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - VP-199‑ 2011 Product Dose Re-Mapping Report for AxoGen AG-T-1 Product - Steris North Libertyville IL | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - AGD-CF-01- Early Customer Feedback from Implantation of AxoGuard Nerve Connector and AxoGuard Nerve Protector | Owned* | N/A | Yes |
S- 24
Owner or Licensee of IP | Type of IP (e.g., patent, TM, ©, mask work) or License Agreement(1) | Owned or Licensed? | Anticipated Expiration Date (if a License, expiration of License and Licensed Property) | Material IP? |
AxoGen Corporation | Non-clinical data - AXGN CP-003- A pilot study to assess the technical feasibility of robotic assisted Laparoscopic Interpositioning of the AVANCE Nerve Graft for Reconstruction of the Neurovascular Bundle, with a twenty-four month follow-up term to assess efficacy | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - ANG-CP-004- A multicenter, prospective, randomized, comparative study of Hollow Nerve Conduit a,d Avance Nerve Graft evauating recovery outcomes of Nerve Repair in the hand. (Change) | Owned* | N/A | Yes |
AxoGen Corporation | Non-clinical data - ANG-CP-005 - A multicenter, retropective study of Avance Nerve Graft utilization, evaluations and outcomes in peripheral nerve injury repair (RANGER) | Owned* | N/A | Yes |
AxoGen Corporation | Clinical data - A Multicenter Retrospective Study of Avance® Nerve Graft Utilization, Evaluations and Outcomes in Peripheral Nerve Injury Repair (RANGER). The Ranger study, the Avance® Nerve Graft registry, has completed the first data milestone and continues to enroll additional cases. | Owned* | N/A | Yes |
AxoGen Corporation | Clinical data -A Multicenter, Prospective, Randomized, Comparative Study of Hollow Nerve Conduit and Avance® Nerve Graft Evaluation Recovery Outcomes of the Nerve Repair in the Hand (CHANGE). The CHANGE study is being run as a pilot comparative study and enrollment is still in process. | Owned* | N/A | Yes |
AxoGen Corporation | Clinical data -Cavernous Nerve Reconstruction Using Avance® Nerve Graft in Subjects Who Undergo Robotic Assisted Prostatectomy for Treatment of Prostate Cancer. This study is being conducted to assess the technical feasibility of robotic assisted implantation of Avance® Nerve Graft and the long term outcomes for continence and potency in men undergoing radical prostatectomy. Enrollment is still in process. | Owned* | N/A | Yes |
(1) Unless otherwise reflected in the Schedule, all intellectual property is registered in the United States
*For clarity, some or all part of such data may be jointly owned by the Institution/Principal Investigator that conducted the study.
S- 25
SCHEDULE 3.15
COMPANY'S PRINCIPAL PLACE OF BUSINESS AND CHIEF EXECUTIVE OFFICE
13859 Progress Blvd.,
Suite 100
Alachua, FL 32615
S- 26
SCHEDULE 3.18
INSURANCE
Policy | Carrier | Policy # | Period | Amount | Deductible | ||||
Workers Compensation Employers Liability | Travelers | UB7A746705 | 10/31/2011 | $1,000,000 | — | ||||
Auto Liability | Travelers | BA5A90456A | 10/31/2011 | $ | 1,000,000 | $ | 1,000 | ||
General Liability | St Paul Fire & Marine Travelers | TT06306983 | 10/31/2011 | $1M/$2M | $ | 1,000 | |||
Umbrella | St Paul Fire & Marine Travelers | TT06306983 | 10/31/2011 | $ | 4,000,000 | $ | 1,000 | ||
Property | St Paul Fire & Marine Travelers | TT06306983 | 10/31/2011 | $ | 6,091,500 | $ | 500 | ||
Product Liability | St Paul Fire & Marine Travelers | TT06306984 | 10/31/2011 | $ | 5,000,000 | $ | 50,000 | ||
Directors & Officers | SH Smith & Co. | 11,053,901 | 9/30/2012 | $ | 3,000,000 | $ | 75,000 | ||
Employment Practices | SH Smith & Co. | 82,244,603 | 9/30/2012 | $ | 1,000,000 | $ | 10,000 | ||
SCHEDULE 3.19
The Company has been working on getting reinstated with the Illinois Secretary of State, the Dept of Revenue and the Workforce Commission (Unemployment Taxes) for about 8 months. The documents that have been submitted by the Company have been rejected more than once and the Company subsequently engaged its public accounting firm to help get this resolved. The Company also changed its registered agent in the state of Illinois, which registered agent is now also assisting in this resolution. Once reinstated, the Company will have some nominal state taxes due for state income tax and unemployment taxes. The Company has already prepaid the Annual report fees associated with reinstatement with the Secretary of State's office. Total Taxes due are less than $5,000.
S-1
Exhibit A
Form of Guarantee and Collateral Agreement
[See attached.]
S-1
Execution Version
GUARANTEE AND COLLATERAL AGREEMENT
DATED AS OF OCTOBER 5, 2012
BY
AXOGEN, INC.,
AND
AXOGEN CORPORATION,
AS GRANTORS
IN FAVOR OF
PDL BIOPHARMA, INC.,
AS PURCHASER
2
TABLE OF CONTENTS
Page | ||||
Section 1. | DEFINITIONS | 1 | ||
1.01. | Definition of Terms Used Herein Generally | 1 | ||
1.02. | Definition of Certain Terms Used Herein | 1 | ||
1.03. | Rules of Interpretation | 2 | ||
Section 1. | DEFINITIONS | 1 | ||
1.01. | Definition of Terms Used Herein Generally | 1 | ||
1.02. | Definition of Certain Terms Used Herein | 1 | ||
1.03. | Rules of Interpretation | 2 | ||
Section 2. | GUARANTEE | 3 | ||
2.01. | Guarantee | 3 | ||
2.02. | Right of Contribution | 3 | ||
2.03. | Subrogation | 3 | ||
2.04. | Amendments, etc. with respect to the Secured Obligations | 4 | ||
2.05. | Guarantee Absolute and Unconditional | 4 | ||
2.06. | Reinstatement | 5 | ||
2.07. | Payments | 5 | ||
2.08. | Waiver of Subrogation | 5 | ||
2.09. | Election of Remedies | 6 | ||
2.10. | Limitation | 6 | ||
2.11. | Contribution with Respect to Guaranty Obligations | 6 | ||
Section 3. | GRANT OF SECURITY INTEREST | 7 | ||
Section 4. | AUTHORIZATION TO FILE FINANCING STATEMENTS | 8 | ||
Section 5. | [RESERVED] | 8 | ||
Section 6. | Representations and Warranties | 8 | ||
6.01. | Grantors' Legal Status | 8 | ||
6.02. | Grantors' Legal Names | 8 | ||
6.03. | Grantors' Locations | 8 | ||
6.04. | Representations in the Purchase Agreement | 9 | ||
6.05. | Title to Collateral | 9 | ||
6.06. | Nature of Collateral | 9 | ||
6.07. | Compliance with Laws | 9 | ||
6.08. | Validity of Security Interest | 9 | ||
6.09. | Reserved | 10 | ||
6.10. | Investment Property in lieu of Payment | 10 | ||
i
6.11. | Account Receivables | 10 | ||
6.12. | Accounts | 10 | ||
6.13. | Reserved | 10 | ||
Section 7. | COVENANTS | 10 | ||
7.01. | Grantors' Legal Status | 10 | ||
7.02. | Grantors' Names | 10 | ||
7.03. | Grantors' Organizational Numbers | 10 | ||
7.04. | Reserved | 10 | ||
7.05. | Covenants in Purchase Agreement | 10 | ||
7.06. | Promissory Notes and Tangible Chattel Paper | 11 | ||
7.07. | Deposit Accounts | 11 | ||
7.08. | Pledged Stock | 11 | ||
7.09. | Reserved | 11 | ||
7.10. | Reserved | 11 | ||
7.11. | Reserved | 11 | ||
7.12. | Reserved | 11 | ||
7.13. | Reserved | 11 | ||
7.14. | Maintenance of Collateral; Compliance with Laws | 11 | ||
7.15. | Reserved | 11 | ||
7.16. | Reserved | 12 | ||
7.17. | Periodic Certification | 12 | ||
7.18. | Other Actions as to any and all Collateral | 12 | ||
7.19. | Treatment of Accounts | 12 | ||
Section 8. | [RESERVED] | 12 | ||
Section 9. | COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL | 12 | ||
9.01. | Expenses Incurred by the Purchaser | 12 | ||
9.02. | Purchaser's Obligations and Duties | 13 | ||
9.03. | Reserved | 14 | ||
Section 10. | DEPOSITS | 14 | ||
Section 11. | NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON COLLATERAL | 14 | ||
Section 12. | POWER OF ATTORNEY | 15 | ||
ii
12.01. | Appointment and Powers of Purchaser | 15 | ||
12.02. | Failure of Grantor to Perform | 16 | ||
12.03. | Expenses of Attorney-in-Fact | 16 | ||
12.04. | Ratification by Grantor | 16 | ||
12.05. | No Duty on Purchaser | 16 | ||
Section 13. | REMEDIES | 16 | ||
13.01. | Default | 16 | ||
13.02. | Remedies Upon Default | 17 | ||
13.03. | Reserved | 18 | ||
13.04. | Waivers by Grantors | 18 | ||
13.05. | Application of Proceeds | 18 | ||
13.06. | Surplus; Deficiency | 18 | ||
13.07. | Information Related to the Collateral | 19 | ||
13.08. | Reserved | 19 | ||
13.09. | Rights and Remedies Cumulative | 19 | ||
13.10. | Reserved | 19 | ||
Section 14. | STANDARDS FOR EXERCISING REMEDIES | 19 | ||
14.01. | Commercially Reasonable Manner | 19 | ||
14.02. | Standard of Care | 20 | ||
Section 15. | WAIVERS BY GRANTOR; OBLIGATIONS ABSOLUTE | 20 | ||
15.01. | Specific Waivers | 20 | ||
15.02. | Obligations Absolute | 20 | ||
Section 16. | MARSHALLING | 21 | ||
Section 17. | INTEREST | 21 | ||
Section 18. | REINSTATEMENT | 21 | ||
Section 19. | MISCELLANEOUS | 21 | ||
19.01. | Notices | 21 | ||
19.02. | GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS | 21 | ||
19.03. | WAIVER OF JURY TRIAL, ETC | 22 | ||
19.04. | Counterparts | 22 | ||
19.05. | Headings | 22 | ||
19.06. | No Strict Construction | 22 | ||
19.07. | Severability | 22 | ||
19.08. | Survival of Agreement | 22 | ||
19.09. | Fees and Expenses; Indemnification | 23 | ||
19.10. | Binding Effect; Several Agreement | 23 | ||
19.11. | Waivers; Amendment | 23 | ||
19.12. | Set Off | 24 | ||
19.13. | Integration | 24 | ||
19.14. | Acknowledgments | 24 | ||
19.15. | Additional Grantors and Guarantors | 25 | ||
iii
19.07. | Severability | 22 | ||
19.08. | Survival of Agreement | 22 | ||
19.09. | Fees and Expenses; Indemnification | 23 | ||
19.10. | Binding Effect; Several Agreement | 23 | ||
19.11. | Waivers; Amendment | 23 | ||
19.12. | Set Off | 24 | ||
19.13. | Integration | 24 | ||
19.14. | Acknowledgments | 24 | ||
19.15. | Additional Grantors and Guarantors | 25 | ||
SCHEDULES
6.01 Information for UCC Filings
6.06 Nature of Collateral
6.09 Deposit Accounts
ANNEXES
I Form of Assumption Agreement
iv
GUARANTEE AND COLLATERAL AGREEMENT, dated as of October 5, 2012 by AXOGEN, INC., a Minnesota corporation ( the “Seller”; and together with any other entity on the signature pages hereto or that may become a party hereto as a grantor as provided herein, each a “Grantor” and collectively, jointly and severally, the “Grantors”), in favor of PDL BIOPHARMA, INC., a Delaware corporation, as Purchaser (in such capacity, the “Purchaser”) under the Revenue Interests Purchase Agreement, dated as of October 5, 2012 (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”) between the Seller and the Purchaser.
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Purchaser has agreed to purchase the Assigned Interests (as defined in the Purchase Agreement) upon the terms and conditions set forth therein; and
WHEREAS, it is a condition precedent to the purchase by Purchaser of the Assigned Interests that the Grantors shall have executed and delivered this Agreement to the Purchaser;
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS.
1.01. Definition of Terms Used Herein Generally. Except as otherwise provided herein, all capitalized terms used herein (including in the preamble hereto) but not defined herein shall have the meanings set forth in the Purchase Agreement. Except as specifically provided herein, all terms used herein and defined in the NYUCC shall have the same definitions herein as specified therein as of the date hereof; provided, however, that if a term is defined in Article 9 of the NYUCC differently than in another Article of the NYUCC, the term has the meaning specified in Article 9 of the NYUCC as of the date hereof.
1.02. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings:
“Agreement”: this Guarantee and Collateral Agreement, as the same may be amended, supplemented, replaced or otherwise modified from time to time.
“Collateral”: as defined in Section 3.
“Event of Default”: the occurrence of any Put Option Event under the Purchase Agreement.
“Fully Satisfied”: with respect to the Secured Obligations, at any time that (a) all amounts constituting Secured Obligations shall have been paid in full in cash; and (b) all fees, expenses and other amounts (including contingent obligations, including those in respect of indemnification provisions contained in the Transaction Documents, but excluding obligations in
1
respect of such indemnification provisions for which no claim has been made and for which no notice of claim has been given) unpaid as of such time which constitute Secured Obligations shall have been paid in full in cash.
“Grantor”: as defined in the preamble.
“Guarantors”: the collective reference to each Grantor, other than Borrower.
“NYUCC”: the Uniform Commercial Code as in effect in the State of New York from time to time.
“Person”: any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Pledged Stock”: the shares of capital stock or other equity interests owned at any time by any Person, together with any other shares, stock certificates, options, rights or security entitlements of any nature whatsoever in respect of the capital stock or other equity interests of any Person that may be issued or granted to, or held by, any Person.
“Proceeds”: all “proceeds” as such term is defined in Section 9-102(64) of the NYUCC.
“Purchase Agreement”: as defined in the preamble.
“Purchaser”: as defined in the preamble.
“Secured Obligations”: means the “Obligations” of the Seller to the Purchaser, as defined in the Purchase Agreement, and any obligations owed by a Grantor other than the Seller to the Purchaser pursuant to the terms of the Transaction Documents.
“Security Interest”: the security interest granted pursuant to Section 3, as well as all other security interests created or assigned as additional security for the Secured Obligations pursuant to the provisions of this Agreement.
“Seller”: as defined in the preamble. Any references herein to “each,” “either” or “such” Seller or to the “applicable” Seller, or to the “the Seller” shall mean and refer to Seller.
“UCC”: the Uniform Commercial Code as in effect in any jurisdiction (except as otherwise contemplated in Section 7.18). References to particular sections of Article 9 of the UCC shall be, unless otherwise indicated, references to revised Article 9 of the UCC adopted and effective in certain jurisdictions on or after July 1, 2001.
1.03. Rules of Interpretation. The rules of interpretation specified in Section 7.10 of Purchase Agreement shall be applicable to this Agreement. References to “Sections,” “Exhibits” and “Schedules” shall be to Sections, Exhibits and Schedules, respectively, of this Agreement unless otherwise specifically provided. Any of the terms defined in this Section 1 may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. All references to statutes and related regulations shall include (unless otherwise
2
specifically provided herein) any amendments of same and any successor statutes and regulations.
Section 2. GUARANTEE
2.01. Guarantee. (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Purchaser and its successors, indorsees, transferees and assigns, the prompt and complete payment and performance by Seller when due of the Secured Obligations.
(b)Anything herein or in any other Transaction Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Transaction Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal, state and other laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.02).
(c)Each Guarantor agrees that the Secured Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Purchaser hereunder.
(d)The guarantee contained in this Section 2 shall remain in full force and effect until all the Secured Obligations shall have been Fully Satisfied notwithstanding that from time to time during the term of the Purchase Agreement Seller may be free from any Secured Obligations.
(e)No payment made by the Seller, any of the Guarantors, any other guarantor or any other Person or received or collected by the Purchaser from the Seller, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Secured Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment, remain liable for the Secured Obligations up to the maximum liability of such Guarantor hereunder until the Secured Obligations are Fully Satisfied.
2.02. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid at least its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Section 2.03. The provisions of this Section 2.02 shall in no respect limit the obligations and liabilities of any Guarantor to the Purchaser and each Guarantor shall remain liable to the Purchaser for the full amount guaranteed by such Guarantor hereunder.
2.03. Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Purchaser, (i) no Guarantor shall be entitled to be subrogated to any of the rights of the Purchaser against the Seller or any other Guarantor or Grantor or any collateral security or guarantee or right of offset
3
held by the Purchaser for the payment of the Secured Obligations, (ii) no Guarantor shall seek or be entitled to seek any contribution or reimbursement from the Seller or any other Guarantor or Grantor in respect of payments made by such Guarantor hereunder, and (iii) each Guarantor hereby expressly and irrevocably waives any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor, in each case, until all Secured Obligations are Fully Satisfied. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Secured Obligations shall not have been Fully Satisfied, such amount shall be held by such Guarantor in trust for the Purchaser, and shall, forthwith upon receipt by such Guarantor, be turned over to the Purchaser in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Purchaser, if required), to be applied against the Secured Obligations, whether matured or unmatured, in such order as the Purchaser may determine. Each Guarantor acknowledges and agrees that this waiver is intended to benefit the Purchaser and shall not limit or otherwise affect such Guarantor's liability hereunder or the enforceability of this Section 2.03, and that the Purchaser and its successors and assigns are intended third-party beneficiaries of the waivers and agreements set forth in this Section 2.03, and its rights under this Section 2.03, shall survive payment in full of the Obligations.
2.04. Amendments, etc. with respect to the Secured Obligations. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Secured Obligations made by the Purchaser may be rescinded by the Purchaser and any of the Secured Obligations continued, and the Secured Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Purchaser, and the Purchase Agreement and the other Transaction Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Purchaser may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held the Purchaser for the payment of the Secured Obligations may be sold, exchanged, waived, surrendered or released. The Purchaser shall not have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Secured Obligations or for the guarantee contained in this Section 2 or any property subject thereto.
2.05. Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Secured Obligations and notice of or proof of reliance by the Purchaser upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Secured Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Seller and any of the Guarantors, on the one hand, and the Purchaser, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or any of the Guarantors with respect to the Secured Obligations, except as required pursuant to
4
the Purchase Agreement. Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment and performance (and not of collection) without regard to (a) the validity or enforceability of the Purchase Agreement or any other Transaction Document (other than this Agreement), any of the Secured Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Purchaser; (b) any defense, set-off or counterclaim (other than a defense of complete payment and performance hereunder) which may at any time be available to or be asserted by the Seller or any other Person against the Purchaser; or (c) any other circumstance whatsoever (with or without notice to or knowledge of Seller or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Secured Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Purchaser may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against Seller, any other Guarantor or any other Person or against any collateral security or guarantee for the Secured Obligations or any right of offset with respect thereto, and any failure by any Secured Creditor to make any such demand, to pursue such other rights or remedies or to collect any payments from Seller, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of Seller, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Purchaser against any Guarantor. For the purposes hereof, “demand” shall include the commencement and continuance of any legal proceedings.
2.06. Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Purchaser upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Seller or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Seller or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.
2.07. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Purchaser without set-off or counterclaim in Dollars in immediately available funds to the account of Purchaser and that all such payments will be subject to the provisions of the Transaction Agreement.
2.08. Waiver of Subrogation. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document, and except as set forth in Section 2.11, each Guarantor hereby expressly and irrevocably waives until all Secured Obligations have been paid in full any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor. Each Guarantor acknowledges and agrees that this waiver is intended to benefit the Purchaser and shall not limit or otherwise affect such Guarantor's liability hereunder or the enforceability of this Section 2.08, and that the Purchaser and its successors and
5
assigns are intended third-party beneficiaries of the waivers and agreements set forth in this Section 2.08, and its rights under this Section 2.08, shall survive payment in full of the Obligations. The foregoing waiver shall not be deemed to limit or prohibit the payment of indebtedness or other obligations of any Guarantor to any other Guarantor or other Person which is otherwise permitted under this Agreement or any other Transaction Document.
2.09. Election of Remedies. If the Purchaser may, under applicable law, proceed to realize its benefits under any of the Transaction Documents giving the Purchaser a Lien upon any Collateral, whether owned by any Guarantor or by any other Person, either by judicial foreclosure or by nonjudicial sale or enforcement, the Purchaser may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Section 2. If, in the exercise of any of its rights and remedies, the Purchaser shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Guarantor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Guarantor hereby consents to such action by the Purchaser and waives, to the extent permitted by applicable law, any claim based upon such action, even if such action by Purchaser shall result in a full or partial loss of any rights of subrogation that each Guarantor might otherwise have had but for such action by the Purchaser. Any election of remedies that results in the denial or impairment of the right of the Purchaser to seek a deficiency judgment against any Guarantor shall not impair any other Guarantor's obligation to pay the full amount of the Secured Obligations. In the event the Purchaser shall bid at any foreclosure or trustee's sale or at any private sale permitted by law or the Transaction Documents, the Purchaser may bid all or less than the amount of the Secured Obligations and the amount of such bid need not be paid by the Purchaser but shall be credited against the Secured Obligations. The amount of the successful bid at any such public sale, whether the Purchaser or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Secured Obligations shall be conclusively deemed to be the amount of the Secured Obligations guaranteed under this Section 2, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which the Purchaser might otherwise be entitled but for such bidding at any such sale.
2.10. Limitation. Notwithstanding any provision herein contained to the contrary, each Guarantor's liability under this Section 2 (which liability is in any event in addition to amounts for which such Guarantor is primarily liable under Section 2 of the Purchase Agreement) shall be limited to an amount not to exceed as of any date of determination the amount that could be claimed by the Purchaser from such Guarantor under this Section 2.10 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Guarantor's right of contribution and indemnification from each other Guarantor under Section 2.11.
2.11. Contribution with Respect to Guaranty Obligations.
(a)To the extent that any Guarantor shall make a payment under this Section 2.11 of all or any of the Secured Obligations which it has agreed to guarantee pursuant
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hereto (a “Guarantor Payment”) that, taking into account all other Guarantor Payments then previously or concurrently made by any other Guarantor, exceeds the amount that such Guarantor would otherwise have paid if each Guarantor had paid the aggregate Secured Obligations satisfied by such Guarantor Payment in the same proportion that such Guarantor's Allocable Amount (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Guarantors as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Secured Obligations, such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.
(b)As of any date of determination, the “Allocable Amount” of any Guarantor shall be equal to the maximum amount of the claim that could then be recovered from such Guarantor under this Section 2 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.
(c)This Section 2.11 is intended only to define the relative rights of Guarantors and nothing set forth in this Section 2.11 is intended to or shall impair the obligations of Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 2.01. Nothing contained in this Section 2.11 shall limit the liability of Seller to pay the payments owing from it to the Purchaser for which Seller shall be primarily liable.
(d)The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Guarantor to which such contribution and indemnification is owing.
(e)The rights of the indemnifying Guarantors against other Grantors under this Section 2.11 shall be exercisable upon the full and indefeasible payment of the Secured Obligations.
Section 3. GRANT OF SECURITY INTEREST. Each Grantor hereby grants to the Purchaser a security interest in, and mortgage on, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has, or at any time in the future may acquire, any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations:
a.all accounts, including health-care receivables, all instruments, chattel paper, and promissory notes evidencing such accounts and all Pledged Stock delivered to a Grantor in respect of settlement of any account;
b.all deposit accounts, all claims now or hereafter arising therefrom, all funds now or hereafter held therein, all amounts now or hereafter credited thereto and all
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certificates and instruments, if any, from time to time representing or evidencing such bank accounts; and
c.all cash, provided that such shall exclude any deposits given for security of any lease.
Section 4. AUTHORIZATION TO FILE FINANCING STATEMENTS. Each Grantor hereby irrevocably authorizes the Purchaser at any time and from time to time to file in any jurisdiction in which the UCC has been adopted any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as “all accounts receivable, including health care receivables, and all instruments, chattel paper, and promissory notes evidencing such accounts and all Pledged Stock delivered to a Grantor in respect of settlement of any account; all deposit accounts, all claims now or hereafter arising therefrom, all funds now or hereafter held therein, all amounts now or hereafter credited thereto and all certificates and instruments, if any, from time to time representing or evidencing such bank accounts; and all cash of such Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the NYUCC or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any initial financing statement or amendment, including whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor. Each Grantor agrees to furnish any such information to the Purchaser promptly upon request. Each Grantor also ratifies its authorization for the Purchaser to have filed in any UCC jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.
Section 5. [RESERVED].
Section 6. Representations and Warranties. To induce the Purchaser to enter into the Purchase Agreement and to induce the Purchaser to purchase the Secured Obligations from the Seller thereunder, each Grantor hereby represents and warrants to the Purchaser that:
6.01. Grantors' Legal Status. (a) Such Grantor is an organization as set forth in Schedule 6.01; (b) such organization is of the type, and is organized in the jurisdiction, set forth in Schedule 6.01; and (c) Schedule 6.01 sets forth such Grantor's correct legal name, prior organizational names within the previous five years, chief executive office, organizational identification number or states that such Grantor has none.
6.02. Grantors' Legal Names. Such Grantor's exact legal name is that set forth on the signature page hereof (or, in the case of any Grantor that becomes a party hereto after the date hereof, on the signature page to the applicable Assignment and Assumption Agreement).
6.03. Grantors' Locations. Schedule 6.01 sets forth such Grantor's place of business or (if it has more than one place of business) its chief executive office, as well as its mailing address if different. Such Grantor's place of business or (if it has more than one place of business) its chief executive office (if such Grantor is an organization) is located in a jurisdiction that has adopted the UCC or whose laws generally require that information concerning the
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existence of nonpossessory security interests be made generally available in a filing, recording or registration system as a condition or result of the security interest obtaining priority over the rights of a lien creditor with respect to the Collateral.
6.04. Representations in the Purchase Agreement. The representations and warranties set forth in Section 5 of the Purchase Agreement as they relate to such Grantor to the Transaction Documents to which such Grantor is a party, each of which is hereby incorporated herein by reference, are true and correct in all material respects, and the Purchaser shall be entitled to rely on each of them as if they were fully set forth herein; provided that each reference in each such representation and warranty to the applicable Seller's knowledge shall, for the purposes of this Section 6.04, be deemed to be a reference to such Grantor's knowledge.
6.05. Title to Collateral. The Collateral of such Grantor is owned by such Grantor free and clear of any Lien, except for Liens expressly permitted pursuant to the Purchase Agreement. Such Grantor has not filed or consented to the filing of (a) any financing statement or analogous document under the UCC or any other applicable laws covering any of its Collateral or (b) any assignment in which such Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, with respect to Liens expressly permitted pursuant to the Purchase Agreement.
6.06. Nature of Collateral. None of the Collateral of such Grantor constitutes, or is the proceeds of, farm products and none of the Collateral has been purchased or will be used by such Grantor primarily for personal, family or household purposes, and as of the Closing Date, except as set forth on Schedule 6.06:
(a)none of the account debtors or other persons obligated on any of the Collateral of such Grantor is a Governmental Authority subject to the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral;
(b)such Grantor has no deposit accounts or other bank accounts; and
(c)such Grantor has no securities accounts or securities entitlements.
6.07. Compliance with Laws. Such Grantor has at all times operated its business in compliance with all laws, except as could not reasonably be expected to have a Material Adverse Effect.
6.08. Validity of Security Interest. (a) The Security Interest granted by each Grantor constitutes, to the extent possible under applicable law, a legal and valid security interest in all of the Collateral of such Grantor securing the payment and performance of the Secured Obligations and (b) upon the giving of value, the filing of financing statements describing the Collateral in the offices listed on the Schedule 6.01, and the taking of all applicable actions in respect of perfection contemplated by Sections 7.06 and 7.07 in respect of Collateral (in which a security interest cannot be perfected by the filing of a financing statement), the Security Interest will be valid, enforceable and perfected in all Collateral of such Grantor. The Security Interest is
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and shall be prior to any other Lien on the Collateral, other than Liens expressly permitted to be prior to the Security Interest under the Purchase Agreement.
6.09. Reserved.
6.10. Investment Property in lieu of Payment. No account exceeding $50,000 has been settled with the Grantor's receipt of Pledged Stock that has not been delivered to the Purchaser.
6.11. Account Receivables. No amount exceeding $50,000 and payable to such Grantor under or in connection with any account is evidenced by any instrument, promissory note, chattel paper, and no account exceeding $50,000 has been settled by the account debtor granting to such Grantor Pledged Stock which has not been delivered to the Purchaser.
6.12. Accounts. (i) Each account of such Grantor is genuine and in all material respects what they purport to be, (ii) each account arises out of (A) a bona fide sale of goods sold and delivered by such Grantor (or is in the process of being delivered) or (B) services theretofore actually rendered or to be rendered by such Grantor to the account debtor named therein, (iii) no material account of such Grantor is evidenced by any instrument, promissory note or chattel paper other than any such instrument, promissory note or chattel paper that has been theretofore endorsed over, assigned and delivered to, or submitted to the control of, the Purchaser (accompanied by such instruments of transfer and assignment duly executed in blank as the Purchaser may from time to time specify), and (iv) no surety bond was required or given in connection with any account of such Grantor or the contracts or purchase orders out of which they arose and the right to receive payment under each account is assignable.
6.13. Reserved.
Section 7. COVENANTS. Each Grantor covenants and agrees with the Purchaser, in each case at such Grantor's own cost and expense, as follows.
7.01. Grantors' Legal Status. Such Grantor shall not change its type of organization, jurisdiction of organization or other legal structure except upon not less than twenty (20) days' prior written notice to the Purchaser.
7.02. Grantors' Names. Such Grantor shall not change its name except upon not less than twenty (20) days' prior written notice to the Purchaser.
7.03. Grantors' Organizational Numbers. Without providing at least twenty (20) days' prior written notice to the Purchaser, such Grantor shall not change its organizational identification number if it has one. If such Grantor does not have an organizational identification number and later obtains one, such Grantor shall forthwith notify the Purchaser of such organizational identification number promptly upon obtaining such identification number.
7.04. Reserved.
7.05. Covenants in Purchase Agreement. Each Grantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as
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the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Grantor or any of its subsidiaries.
7.06 Promissory Notes and Tangible Chattel Paper. If such Grantor, together with the other Grantors, shall at any time hold or acquire any instruments, promissory notes or tangible chattel paper in an aggregate principal amount of more than $50,000 payable to such Grantor under or in connection with any account, such Grantor shall forthwith endorse, assign and deliver the same to the Purchaser, accompanied by such instruments of transfer or assignment duly executed in blank as the Purchaser may from time to time specify to be held by the Purchaser as Collateral pursuant to this Agreement.
7.07 Deposit Accounts. For each deposit account that such Grantor at any time opens or maintains, such Grantor shall, at the Purchaser's request and option, either (a) cause the depository bank to enter into a written agreement or other authenticated record with the Purchaser, in form and substance reasonably satisfactory to the Purchaser, pursuant to which such depository bank shall agree, among other things, to comply at any time with instructions from the Purchaser to such depository bank directing the disposition of funds from time to time credited to such deposit account, without further consent of the Grantor, or (b) arrange for the Purchaser to become the customer of the depository bank with respect to the deposit account; provided, however, that notwithstanding the foregoing, the requirements of this Section 7.07 shall not apply to any zero balance payroll or similar disbursement account maintained by any Grantor (and each Grantor agrees not to deposit in any payroll account or similar disbursement account maintained by it any funds, except funds needed at the time of deposit (or within three days thereafter) to meet payroll needs of such Grantor).
7.08. Pledged Stock. If such Grantor, together with the other Grantors, shall at any time hold or acquire any Pledged Stock granted to such Grantor by an account debtor to settle an account in an aggregate principal amount of more than $50,000, such Grantor shall forthwith deliver the same to the Purchaser, accompanied by an executed blank stock power and such other instruments of transfer or assignment duly executed in blank as the Purchaser may from time to time specify to be held by the Purchaser as Collateral pursuant to this Agreement.
7.09. Reserved.
7.10. Reserved.
7.11. Reserved.
7.12. Reserved.
7.13. Reserved.
7.14. Maintenance of Collateral; Compliance with Laws. (a) Such Grantor shall not use the Collateral in violation of any law to the extent that such violation could reasonably be expected to have a Material Adverse Effect.
7.15. Reserved.
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7.16. Reserved.
7.17. Periodic Certification. From time to time on demand (which demand, absent an Event of Default, shall be no more frequent than once every four months) from the Purchaser such Grantor shall deliver to the Purchaser either (a) new Schedules setting forth the information required pursuant to Sections 6.01, 6.03 and 6.06, and a certificate from an executive officer of the Seller certifying as to the accuracy of the information set forth therein or (b) a certificate from an executive officer of the Seller confirming that there has been no change in the information set forth on the Schedules delivered as of the date hereof or since the date of the most recent certificate delivered pursuant to Section 7.17(a), as applicable.
7.18. Other Actions as to any and all Collateral. Such Grantor further agrees to take any other action reasonably requested by the Purchaser to insure the attachment, perfection and, first priority of, and the ability of the Purchaser to enforce, the Security Interest in any and all of the Collateral provided by such Grantor including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that such Grantor's signature thereon is required therefor; (b) causing the Purchaser's name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Purchaser to enforce, the Security Interest in such Collateral; (c) complying with any provision of any statute, regulation or treaty of the United States of America as to any Collateral if compliance with such provision is a condition to the attachment, perfection or priority of, or the ability of the Purchaser to enforce, the Security Interest in such Collateral; (d) obtaining governmental and other third party consents and approvals, including without limitation any consent of any licensor, lessor or other person obligated on such Collateral; (e) providing to the Purchaser “control” over such Collateral, to the extent that perfection can only be achieved under the UCC by control or where obtaining perfection by control provides more protection to the Purchaser that perfection by filing a financing statement; and (f) taking all actions required by the UCC or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction; provided, however, that nothing contained in clause (d) or (e) shall require such Grantor to pay any consideration (other than any governmental application, processing, filing or recording fees) in order to obtain any consent or waiver referred to in such clauses.
7.19. Treatment of Accounts. Subject to Section 5.10 of the Purchaser Agreement, no Grantor shall grant or extend the time for payment of any material account, or compromise or settle any account for less than the full amount thereof, or release any person or property, in whole or in part, from payment thereof, or allow any credit or discount thereon, other than as normal and customary in the ordinary course of a Grantor's business.
Section 8. [RESERVED].
Section 9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
9.01. Expenses Incurred by the Purchaser. In its discretion, the Purchaser may, if the relevant Grantor fails to do so, discharge taxes and other encumbrances at any time
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levied or placed on any material portion of the Collateral and pay any necessary filing fees. Each Grantor agrees to reimburse the Purchaser on demand for any and all expenditures so made, and all sums disbursed by the Purchaser in connection with this Section 9.01, including reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by such Grantor to the Purchaser shall bear interest at the per annum rate specified in Section 17 and shall constitute additional Secured Obligations. The Purchaser shall have no obligation to any Grantor to make any such expenditures, nor shall the making thereof relieve any Grantor of any default.
9.02. Purchaser's Obligations and Duties.
(a)Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each contract or agreement comprised in the Collateral provided by it to be observed or performed by such Grantor thereunder. The Purchaser shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Purchaser of any payment relating to any of the Collateral, nor shall the Purchaser be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Purchaser in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the or to which the Purchaser may be entitled at any time or times.
(b)The Purchaser's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the NYUCC or otherwise, shall be to deal with such Collateral in the same manner as the Purchaser deals with similar property for its own account.
(c)Neither the Purchaser nor any of its respective officers, directors, partners, employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Purchaser hereunder are solely to protect the Purchaser's interests in the Collateral and shall not impose any duty upon Purchaser to exercise any such powers. The Purchaser shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, partners, employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be responsible to any Grantor for any act or failure to act hereunder, except to the extent that any such act or failure to act is found by a final and non-appealable decision of a court of competent jurisdiction to have resulted from their respective gross negligence or willful misconduct.
(d)Each Grantor acknowledges that the rights and responsibilities of the Purchaser under this Agreement with respect to any action taken by the Purchaser or the exercise or non-exercise by the Purchaser of any option, voting right, request, judgment or other
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right or remedy provided for herein or resulting or arising out of this Agreement shall, be governed by the Purchase Agreement and by such other agreements with respect thereto as may exist from time to time among them.
9.03. Reserved.
Section 10. DEPOSITS. The Purchaser may after the occurrence and during the continuance of an Event of Default demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Secured Obligations, any deposits or other sums at any time credited by or due from the Purchaser to any Grantor may at any time be applied to or set off against any of the Secured Obligations whether or not due and owing.
Section 11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON COLLATERAL. If an Event of Default shall have occurred and be continuing, each Grantor shall, at the request of the Purchaser, notify account debtors and other persons obligated on any of the Collateral of such Grantor of the Security Interest in any account or chattel paper, promissory notes or instruments payable to such Grantor under or in connection with any account, or Pledged Stock delivered to such Grantor to settle an account, or other claims constituting Collateral that payment thereof is to be made directly to the Purchaser or to any financial institution designated by the Purchaser as the Purchaser's agent therefor, and the Purchaser may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon any Grantor, so notify account debtors and other persons obligated on Collateral. After the making of such a request or the giving of any such notification, each Grantor shall hold any proceeds of collection of accounts and other claims constituting Collateral received by the Grantor as trustee for the Purchaser without commingling the same with other funds of the Grantor and shall turn the same over to the Purchaser in the identical form received, together with any necessary endorsements or assignments. The Purchaser shall have no liability or responsibility to any Grantor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance. Without limitation of the foregoing, during the continuation of an Event of Default (1) the Purchaser shall have the right, but not the obligation, to make test verifications of the accounts in any manner and through any medium that it reasonably considers advisable, and the Grantors shall furnish all such assistance and information as the Purchaser may require in connection with such test verifications, and (2) the Purchaser in its own name or in the name of others may communicate with account debtors on the accounts to verify with them to the Purchaser's satisfaction the existence, amount and terms of any accounts. The Purchaser may apply the proceeds of collection of accounts and other claims constituting Collateral received by the Purchaser to the Secured Obligations or hold such proceeds as additional Collateral, at the option of the Purchaser. The provisions of Section 9-209 of the NYUCC shall not apply to any account as to which notification of assignment has been sent to the account debtor or other person obligation on the Collateral, whether under this Section 11, Section 12 or Section 13.
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Section 12. POWER OF ATTORNEY.
12.01. Appointment and Powers of Purchaser. Upon the occurrence and during the continuance of an Event of Default, each Grantor hereby irrevocably constitutes and appoints the Purchaser and any officer or Purchaser thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Purchaser the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:
(a)in the name of such Grantor or its own name, or otherwise, take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any account or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Purchaser for the purpose of collecting any and all such moneys due under any account or with respect to any other Collateral whenever payable;
(b)pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or provide any insurance and pay all or any part of the premiums therefor and the costs thereof;
(c)execute, in connection with any sale provided for in Section 13, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral;
(d)exercise all rights of such Grantor as owner of the Pledged Stock or as party to any partnership, limited liability company or similar agreement, including, without limitation, the right to sign any and all amendments, instruments, certificates, proxies, and other writings and exercise all voting and consent rights with respect to the Pledged Stock;
(e)(1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Purchaser or as the Purchaser shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (4) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (5) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Purchaser may deem appropriate; and (6) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Purchaser were the absolute owner thereof for all purposes, and do, at the Purchaser's option and such Grantor's expense, at any time, or from time to time, all acts and things which the Purchaser deems necessary to protect,
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preserve or realize upon the Collateral and the Security Interest therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do; and
(f)to the extent that such Grantor's authorization given in Section 4 is not sufficient, to file such financing statements or similar documents under the laws of any jurisdiction with respect hereto, with or without such Grantor's signature, or a photocopy of this Agreement in substitution for a financing statement or such other document, as the Purchaser may deem appropriate and to execute in such Grantor's name such financing statements, other such documents and amendments thereto and continuation statements which may require such Grantor's signature.
Anything in this Section 12.01 to the contrary notwithstanding, the Purchaser agrees that it will not exercise any rights under the power of attorney provided for in this Section 12.01 (other than under paragraph (e) of this Section 12.01) unless an Event of Default shall have occurred and be continuing.
12.02. Failure of Grantor to Perform. If any Grantor fails to perform or comply with any of its agreements contained herein, the Purchaser, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
12.03. Expenses of Attorney-in-Fact. The expenses of the Purchaser incurred in connection with actions undertaken as provided in this Section 12, together with interest thereon at a rate equal to the lower of (i) the highest rate permitted by applicable law, and (ii) one and one-half percent (1.5%) per month, compounded monthly, shall be payable by such Grantor to the Purchaser on demand.
12.04. Ratification by Grantor. To the extent permitted by law, each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this Section 12. This power of attorney is a power coupled with an interest and is irrevocable.
12.05. No Duty on Purchaser. The powers conferred on the Purchaser, its directors, officers and agents pursuant to this Section 12 are solely to protect the Purchaser's interests in the Collateral and shall not impose any duty upon any of them to exercise any such powers. The Purchaser shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or Purchasers shall be responsible to any Grantor for any act or failure to act, except for the Purchaser's own gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction.
Section 13. REMEDIES.
13.01. Default. Grantors shall be in default under this Agreement (a) whenever any Event of Default has occurred and is continuing (and each of the Grantors shall thereupon be in default hereunder without regard to whether or to what degree any Grantor individually may have caused, participated in, or had any knowledge of the occurrence of such Event of Default) and (b) at all times after any Secured Obligation has become due and payable and remains unpaid beyond any applicable grace period.
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13.02. Remedies Upon Default. At any time when any Grantor is in default under this Agreement as set forth in Section 13.01, the Purchaser may exercise and enforce, in any order, (i) each and all of the rights and remedies available to a secured party upon default under the NYUCC or any other applicable UCC or other applicable law, (ii) each and all of the rights and remedies available to it under the Purchase Agreement or any other Transaction Document, and (iii) each and all of the following rights and remedies:
(a)Collection Rights. Without notice to any Grantor or any other Loan Party, the Purchaser may notify any or all account debtors and obligors on any accounts, chattel paper or instruments evidencing an account, or other claims constituting Collateral of the Purchaser's Security Interests therein or the issuers of Pledged Stock delivered to settle an account and may direct, demand and enforce payment thereof directly to the Purchaser. The provisions of Section 9-209 of the NYUCC shall not apply to any account or chattel paper, promissory note or payment intangible as to which notification of assignment has been sent to the account debtor.
(b)Foreclosure. The Purchaser may sell, lease, license or otherwise dispose of or transfer any or all of the Collateral or any part thereof in one or more parcels at public sale or in private sale or transaction, on any exchange or market or at the Purchaser's offices or on any Grantor's premises or at any other location, for cash, on credit or for future delivery, and may enter into all contracts necessary or appropriate in connection therewith, without any notice whatsoever unless required by law. Where permitted by law, the Purchaser may be the purchaser at any such sale and in such event, the Purchaser may bid part or all of the Secured Obligations owing to it without necessity of any cash payment on account of the purchase price, even though any other purchaser at such sale is required to bid a purchase price payable in cash. Each Grantor agrees that at least ten (10) calendar days' written notice to such Grantor of the time and place of any public sale of Collateral owned by it (or, to the extent such Grantor is entitled by law to notice thereof, the public sale of any other Collateral), or the time after which any private sale of Collateral owned by it (or, to the extent such Grantor is entitled by law to notice thereof, the private sale of any other Collateral) is to be made, shall be commercially reasonable. For purposes of such notice, to the fullest extent permitted by law (i) each Grantor waives notice of any sale of Collateral owned by any other Grantor and (ii) each Grantor agrees that notice given to the Seller shall constitute notice given to such Grantor. The giving of notice of any such sale or other disposition shall not obligate the Purchaser to proceed with the sale or disposition, and any such sale or disposition may be postponed or adjourned from time to time, without further notice.
(c)Voting Rights. The Purchaser may exercise any and all rights of any Grantor as the owner of any Pledged Stock delivered to a Grantor to settle an account, including, without limitation, voting rights, rights to give or withhold consent under any agreement under which such Pledged Stock is issued.
(d)Appointment of Receiver. Without limiting any other right or remedy of the Purchaser in this Agreement, upon the occurrence and during the continuance of any Event of Default, the Purchaser may by instrument in writing appoint any person as a receiver of all or any part of the Collateral of each applicable Grantor. The Purchaser may from time to time remove or replace a receiver, or make application to any court of competent
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jurisdiction for the appointment of a receiver. Any receiver appointed by the Purchaser shall (for purposes relating to responsibility for the receiver's acts or omissions) be considered to be the Purchaser of each applicable Grantor. The Purchaser may from time to time fix the receiver's remuneration and the Grantors shall pay the amount of such remuneration to the Purchaser. The Purchaser shall not be liable to any Grantor or any other person in connection with appointing or not appointing a receiver or in connection with the receiver's actions or omissions.
13.03. Reserved.
13.04. Waivers by Grantors. Each Grantor hereby irrevocably waives (a) all rights of redemption from any foreclosure sale; (b) the benefit of all valuation, appraisal, exemption and moratorium laws; (c) to the fullest extent permitted by law, all rights to notice or a hearing prior to the exercise by the Purchaser of its right to take possession of any Collateral, whether by self-help or by legal process and any right to object to the Purchaser taking possession of any Collateral by self-help; and (d) if the Purchaser seeks to obtain possession of any Collateral by replevin, claim and delivery, attachment, levy or other legal process, (i) any notice or demand for possession prior to the commencement of legal proceedings, (ii) the posting of any bond or security in any such proceedings, and (iii) any requirement that the Purchaser retain possession and not dispose of any Collateral until after a trial or final judgment in such proceedings.
13.05. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by the Purchaser in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Purchaser, be held by the Purchaser as Collateral for, or then, or at any other time thereafter, applied in full or in part by the Purchaser against, the Secured Obligations in the following order of priority:
FIRST: to the payment of all reasonable costs and expenses of such sale, collection or other realization, including reasonable compensation to the Purchaser and its agents and counsel, and all other reasonable expenses, liabilities and advances made or incurred by the Purchaser in connection therewith, and all amounts for which the Purchaser is entitled to indemnification hereunder and all reasonable advances made by the Purchaser hereunder for the account of any Grantor, and to the payment of all reasonable costs and expenses paid or incurred by the Purchaser in connection with the exercise of any right or remedy hereunder, all in accordance with Section 19.09;
SECOND: to the payment of all other Secured Obligations then due and payable in the manner and order provided in the Purchase Agreement;
THIRD: to any payments required by Section 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC or other applicable law; and
FOURTH, to the payment to or upon the order of the Grantor entitled thereto, or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds.
13.06. Surplus; Deficiency. Any surplus proceeds of any sale or other disposition by the Purchaser of any Collateral remaining after discharge of the Purchase
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Agreement and after all Secured Obligations are paid in full and in cash and any payments required by Section 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC are paid in full shall be paid over to the Grantor entitled thereto, or to whomever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct, but prior to termination and discharge of the Purchase Agreement, such surplus proceeds may be retained by the Purchaser and held as Collateral until termination and discharge of the Purchase Agreement. The Seller and each Guarantor shall be and remain liable for any deficiency.
13.07. Information Related to the Collateral. If, during the continuance of an Event of Default, the Purchaser determines to sell or otherwise transfer any Collateral, each Grantor shall, and shall cause any Person controlled by it to, furnish to the Purchaser all information the Purchaser may request that pertains or could pertain to the value or condition of the Collateral or that would or might facilitate such sale or transfer. The Purchaser shall have the right, notwithstanding any confidentiality obligation or agreement otherwise binding upon it, freely (but not in violation of any law, including federal securities laws) to disclose such information, and any and all other information (including confidential information) pertaining in any manner to the Collateral or the assets, liabilities, results of operations, business or prospects of the Purchaser, freely to any Person that the Purchaser in good faith believes to be a potential or prospective purchaser in such sale or transfer, without liability for any disclosure, dissemination or use that may be made as to such information by any such Person.
13.08. Reserved.
13.09. Rights and Remedies Cumulative. The rights provided for in this Agreement and the other Transaction Documents are cumulative and are not exclusive of any other rights, powers or privileges or remedies provided by law or in equity, or under any other instrument, document or agreement. The Purchaser may exercise and enforce each right and remedy available to it either before or concurrently with or after, and independently of, any exercise or enforcement of any other right or remedy of the Purchaser against any Person or property. All such rights and remedies shall be cumulative, and no one of them shall exclude or preclude any other.
13.10. Reserved.
Section 14. STANDARDS FOR EXERCISING REMEDIES.
14.01. Commercially Reasonable Manner. To the extent that applicable law imposes duties on the Purchaser to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Purchaser (a) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third-party consents for the collection or disposition of Collateral to be collected or disposed of; (b) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to remove any Lien on or any adverse claims against Collateral; (c) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists; (d) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized
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nature; (e) to contact other persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of the Collateral; (f) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature; (g) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets; (h) to dispose of assets in wholesale rather than retail markets; (i) to disclaim disposition warranties; (j) to purchase insurance or credit enhancements to insure the Purchaser against risks of loss, collection or disposition of Collateral or to provide to the Purchaser a guaranteed return from the collection or disposition of Collateral; or (k) to the extent deemed appropriate by the Purchaser, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Purchaser in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 14 is to provide non-exhaustive indications of what actions or omissions by the Purchaser would not be commercially unreasonable in the Purchaser's exercise of remedies against the Collateral and that other actions or omissions by the Purchaser shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 14. Without limiting the foregoing, nothing contained in this Section 14 shall be construed to grant any rights to any Grantor or to impose any duties on the Purchaser that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 14.
14.02. Standard of Care. The powers conferred on the Purchaser hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Purchaser shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or to protect, preserve, vote or exercise any rights pertaining to any Collateral. The Purchaser shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Purchaser accords its own property or if it selects, with reasonable care, a custodian to hold such Collateral on its behalf.
Section 15. WAIVERS BY GRANTOR; OBLIGATIONS ABSOLUTE.
15.01. Specific Waivers. Each Grantor waives demand, notice, protest, notice of acceptance of this Agreement, notice of any purchase pursuant to the terms of the Purchase Agreement, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description other than those required pursuant to the Purchase Agreement or any other Transaction Documents to which such Grantor is a party.
15.02. Obligations Absolute. All rights of the Purchaser hereunder, the Security Interest and all obligations of the Grantors hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Purchase Agreement, any other Transaction Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Purchase Agreement, any other Transaction Document, or any other agreement or instrument; (c) any
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exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from or any acceptance of partial payment thereon and or settlement, compromise or adjustment of any Secured Obligation or of any guarantee, securing or guaranteeing all or any of the Secured Obligations; or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement other than the prompt and complete performance and payment in full of the Secured Obligations.
Section 16. MARSHALLING. The Purchaser shall not be required to marshal any present or future collateral security (including but not limited to this Agreement and the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it shall not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Purchaser's rights under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
Section 17. INTEREST. Until paid, all amounts due and payable by each Grantor hereunder shall be deemed to be a debt secured by the Collateral and shall bear, whether before or after judgment, interest at a rate equal to the lower of (i) the highest rate permitted by applicable law, and (ii) one and one-half percent (1.5%) per month, compounded monthly.
Section 18. REINSTATEMENT. The obligations of each Grantor pursuant to this Agreement shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Secured Obligations is rescinded or otherwise must be restored or returned by the Purchaser upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of such Grantor or any other obligor or otherwise, all as though such payment had not been made.
Section 19. MISCELLANEOUS.
19.01. Notices. All notices, requests and demands to or upon the Purchaser or any Grantor hereunder shall be effected in the manner provided for in Section 7.03 of the Purchase Agreement.
19.02. GOVERNING LAW; CONSENT TO JURISDICTION; SERVICE OF PROCESS. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
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AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEVADA, WASHOE COUNTY AND CITY OF RENO; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT PURCHASER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PARTY HERETO HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA, WASHOE COUNTY AND CITY OF RENO FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEVADA. EACH PARTY HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
19.03. WAIVER OF JURY TRIAL, ETC. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED UNDER ANY TRANSACTION DOCUMENT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY TRANSACTION DOCUMENT.
19.04. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.
19.05. Headings. The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof.
19.06. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
19.07. Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.
19.08. Survival of Agreement. All representations, warranties and agreements made by or on behalf of any in this Agreement and in the other Transaction Documents shall
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survive the execution and delivery hereof or thereof and the payment of the Secured Obligations. In addition, notwithstanding anything herein or under applicable law to the contrary, the provisions of this Agreement and the other Transaction Documents relating to indemnification or payment of costs and expenses, including, without limitation, the provisions of Sections 7.05 and 7.14 of the Purchase Agreement, shall survive the payment in full of the Secured Obligations and any termination of this Agreement or any of the other Transaction Documents.
19.09. Fees and Expenses; Indemnification.
(a)The Grantors, jointly and severally, agree to pay upon demand the amount of any and all reasonable expenses, including the fees, disbursements and other charges of counsel and of any experts or Purchasers, which (i) the Purchaser may incur in connection with (x) collecting against any Grantor or otherwise enforcing or preserving any rights under this Agreement and the other Transaction Documents, (y) the exercise, enforcement or protection of any of the rights of the Purchaser hereunder or (z) the failure of any Grantor to perform or observe any of the provisions hereof, and (ii) the Purchaser may incur in connection with (x) the administration of this Agreement (including the customary fees and charges for any audits conducted by it or on its behalf with respect to the accounts receivable) or (y) the custody or preservation of, or the sale of, collection from or other realization upon any of the Collateral.
Each Grantor agrees to pay, and to save the Purchaser harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Seller would be required to do so pursuant to Section 7.05 of the Purchase Agreement.
(b)The agreements in this Section shall survive repayment of the Secured Obligations and all other amounts payable under the Purchase Agreement and the other Transaction Documents.
(c)Each Grantor agrees that the provisions of Article III of the Purchase Agreement are hereby incorporated herein by reference, mutatis mutandis, and the Purchaser shall be entitled to rely on each of them as if they were fully set forth herein.
19.10. Binding Effect; Several Agreement. This Agreement is binding upon each Grantor and the Purchaser and their respective successors and permitted assigns, and shall inure to the benefit of the Grantors, the Purchaser and their respective successors and permitted assigns, except that no Grantor shall have any right to assign or transfer its rights or obligations hereunder or any interest herein, except as specifically permitted by the Purchase Agreement, without the prior written consent of the Purchaser (and any such assignment or transfer shall be void).
19.11. Waivers; Amendment.
(a)No failure or delay of the Purchaser in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.
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The rights and remedies of the Purchaser hereunder and of the Purchaser under the Purchase Agreement and other Transaction Documents are cumulative and are not exclusive of any rights or remedies that it would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Grantor in any case shall entitle such or any other Grantor to any other or further notice or demand in similar or other circumstances.
(b)Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Purchaser and each affected Grantor.
19.12. Set Off. Each Grantor hereby irrevocably authorizes the Purchaser at any time and from time to time while an Event of Default shall have occurred and be continuing, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Purchaser to or for the credit or the account of such Grantor, or any part thereof in such amounts as the Purchaser may elect, against and on account of the obligations and liabilities of such Grantor to the Purchaser hereunder and claims of every nature and description of the Purchaser against such Grantor, in any currency, whether arising hereunder, under the Purchase Agreement, any other Transaction Document or otherwise, as the Purchaser may elect. The Purchaser shall notify such Grantor promptly of any such set-off and the application made by the Purchaser of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Purchaser under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Purchaser may have.
19.13. Integration. This Agreement and the other Transaction Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
19.14. Acknowledgments. Each Grantor hereby acknowledges that:
(a)it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Transaction Documents to which it is a party;
(b)the Purchaser does not have any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Transaction Documents, and the relationship between the Grantors, on the one hand, and the Purchaser, on the other hand, in connection herewith or therewith is solely that of seller and purchaser (or, in the case that a Grantor owes Secured Obligations to the Purchaser, that of debtor and creditor); and
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(c)no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby among the Grantors and the Purchaser.
19.15. Additional Grantors and Guarantors. Each subsidiary of the Seller that is required to become a party to this Agreement pursuant to Section 5.10(b) of the Purchase Agreement shall become a Grantor and Guarantor for all purposes of this Agreement upon execution and delivery by such subsidiary of an Assumption Agreement in the form of Annex I hereto.
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.
GRANTORS:
AXOGEN, INC.
By: /s/ Karen Zaderej
Name: Karen Zaderej
Title: Chief Executive Officer
AXOGEN CORPORATION
By: /s/ Karen Zaderej
Name: Karen Zaderej
Title: Chief Executive Officer
[Collateral Agreement - Signature Page]
PDL BIOPHARMA, INC.,
as Purchaser
By: /s/ John P. McLaughlin
Name: John P. McLaughlin
Title: President and Chief Executive Officer
[Collateral Agreement - Signature Page]
Annex A to Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of _________________, 20__, made by _____________________________________, a ________________________ (the “Additional Grantor”), in favor of PDL Biopharma, Inc., as Purchaser (the “Purchaser”) party to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have the meaning ascribed to them in such Purchase Agreement.
W I T N E S S E T H:
WHEREAS, AxoGen, Inc. (“Seller”) and the Purchaser have entered into the Revenue Interests Purchase Agreement, dated as of October 5, 2012 (as amended, supplemented, replaced or otherwise modified from time to time, the “Purchase Agreement”);
WHEREAS, in connection with the Purchase Agreement, the Seller and certain of its Affiliates (other than the Additional Grantor) have entered into a Guarantee and Collateral Agreement, dated as of October 5, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guarantee and Collateral Agreement”) in favor of the Purchaser;
WHEREAS, the Purchase Agreement requires the Additional Grantor to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this Assumption Agreement, the Additional Grantor, as provided in Section 19.15 of the Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral Agreement as a Grantor and Guarantor thereunder with the same force and effect as if originally named therein as a Grantor and Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor and Guarantor thereunder. The information set forth in Annex I-A hereto is hereby added to the information set forth in the update to the Schedules to the Purchase Agreement most recently delivered pursuant to the terms of the Guarantee and Collateral Agreement. The Additional Grantor hereby represents and warrants that each of the representations and warranties as to the Additional Grantor contained in Section 6 of the Guarantee and Collateral Agreement is true and correct on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
Name:
Title:
Schedule 6.01
Name: AxoGen, Inc.
Jurisdiction of Organization: Minnesota
Identification Number: 41-1301878
Chief Executive Office: 13859 Progress Boulevard, Suite 100
Alachua, Florida 32615
Prior Organizational Names: LecTec Corporation
Name: AxoGen Corporation
Jurisdiction of Organization: Delaware
Identification Number: 55-0805988
Chief Executive Office: 13859 Progress Boulevard, Suite 100
Alachua, Florida 32615
Prior Organizational Names: None
Schedule 6.06
Deposit Accounts
Guarantor | Bank | Account Number |
AxoGen, Inc. | Silicon Valley Bank | *** |
AxoGen Corporation | Silicon Valley Bank | *** |
Exhibit B
Form of Assignment of Interests
[See attached.]
ASSIGNMENT OF INTERSTS
THIS ASSIGNMENT OF INTERESTS (“Assignment of Interests”) is made as of August 13, 2012, between AxoGen, Inc., a Minnesota corporation (the “Company”), and PDL BioPharma, Inc., a Delaware corporation (“Purchaser”).
A.The Company and Purchaser have entered into that certain Revenue Interests Purchase Agreement, dated as of October 5, 2012 (the “Revenue Purchase Agreement”), pursuant to which the Company is to sell and Purchaser is to purchase the Assigned Interests. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Revenue Purchase Agreement; and
B.The Company has agreed to execute and deliver this Assignment of Interests to Purchaser for the purpose of transferring to and vesting in Purchaser title to the Assigned Interests as set forth herein.
In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.The Company does hereby sell, assign, transfer, convey, deliver and vest in Purchaser, its successors and assigns forever, all of its right, title and interest in and to the Assigned Interests.
2.The Company hereby covenants that, from time to time after the delivery of this instrument, at Purchaser's request, the Company will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered such further acts, conveyances, transfers, assignments, powers of attorney and assurances as Purchaser may reasonably require to convey, transfer to and vest in Purchaser, and to put Purchaser in possession of, any of the Assigned Interests.
3.Nothing in this Assignment of Interests shall alter any liability or obligation of the Company or Purchaser arising under the Revenue Purchase Agreement, which shall govern the representations, warranties and obligations of the parties with respect to the Assigned Interests.
4.This Assignment of Interests shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
5.This Assignment of Interests shall be governed by, and construed in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts of law thereof.
6.This Assignment of Interests may be executed in counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties have executed this Assignment of Interests as of the date first written above.
AXOGEN, INC.
By: _/s/ Karen Zaderej__________
Name: Karen Zaderej
Title: Chief Executive Officer
PDL BIOPHARMA, INC.
By: _/s/ John P. McLaughlin______
Name: John P. McLaughlin
Title: President and Chief Executive Officer
Exhibit C
Form of Deposit Agreement
[See attached.]
Account Numbers: * * *
* * *
SVB Silicon Valley Bank
A Member of SVB Financial Group
DEPOSIT ACCOUNT CONTROL AGREEMENT
Customer: AxoGen, Inc. and AxoGen Corporation
Creditor: PDL Biopharma, Inc.
Date: 10-5-2012
This Deposit Account Control Agreement (“Agreement”) is entered into as of the above date among Silicon Valley Bank (“Bank”), Creditor identified above (“Creditor”), and Customer identified above (“Customer”).
All parties agree as follows:
Deposit Account. Bank maintains one or more demand, time, savings, passbook, certificates of deposit or other similar accounts that are identified above in which Customer has an interest (collectively, the “Account”). The Deposit Account (as defined below) is subject to Bank's Deposit Agreement and Disclosure Statement (the “Deposit Agreement”), provided that, in the case of any conflict between the terms of this Agreement and the Deposit Agreement, the terms of this Agreement will prevail. The parties acknowledge that the Deposit Account constitutes a “deposit account” within the meaning of Section 9102 of the Uniform Commercial Code of the State of California (the “UCC”), and Bank is a “bank” within the meaning of Section 9102 of the UCC. Bank's jurisdiction for purposes of Section 9304 of the UCC is California. The provisions of this Agreement constitute “control” over the Deposit Account within the meaning of Section 9104 of the UCC.
Security Interests. Pursuant to a security agreement or similar agreement, Customer has granted to Creditor a security interest in the Account and in all cash, funds, items, instruments, and any other amounts now or later deposited into or held therein (collectively, the “Deposit Account”). Bank acknowledges the lien on and security interest in the Deposit Account granted by Customer to Creditor.
[For Bank use only - Bank representative to check box, if necessary, and insert initials.]
x Other than as set forth in Section 6 below, Bank does not have a security interest in the Deposit Account. __________ [DLM initials]
¨ Bank has a security interest in the Deposit Account. __________ [DLM initials]
If the box is Section 2(b) above is checked, the priorities of Creditor's security interest and Bank's security interest in the Deposit Account are governed by an intercreditor or other similar agreement between Bank and Creditor.
Other Deposit Control Agreements.
[For Bank use only - Bank representative to check appropriate box below and insert initials.]
¨ Bank has not entered into any other control agreement governing the Deposit Account with any other party. __________ [DLM initials]
¨ Bank has entered into other control agreement(s) governing the Deposit Account with the following party or parties:
__________ [DLM initials]
Bank agrees that it will not enter into a control agreement with any other party with respect to the Deposit Account without Creditor's prior written consent.
Customer's Rights in Deposit Account. Creditor has control over the Deposit Account, provided that, until Bank receives a Notice of Exclusive Control (as described and set forth in Section 13(b) below), Customer will be entitled to draw items on and to withdraw or otherwise direct the disposition of funds from the Deposit Account. So long as this Agreement is in effect, Customer may not close the Deposit Account without Creditor's prior written consent. Bank may close the Deposit Account in accordance with the Deposit Agreement and as may be required by applicable law. After Bank receives a Notice of Exclusive Control, Bank will notify Creditor not less than thirty (30) calendar days prior to closing the Deposit Account in nonemergency circumstances and substantially contemporaneously with closing the Deposit Account in emergency circumstances (for example, in response to fraud or returned items), unless prohibited by law. Customer will notify Creditor promptly if Bank closes the Deposit Account.
Creditor's Control of Deposit Account. Except as permitted in Section 6 hereof, after Bank receives a Notice of Exclusive Control and has reasonable opportunity to comply with it, but no later than two Business Days (as defined below) after the Notice of Exclusive Control has been validly given (in accordance with Section 13(b) below), Bank and Customer agree that: (a) Bank will comply only with Creditor's instructions as to the withdrawal or disposition of any funds credited to the Deposit Account and to any other matters relating to the Deposit Account, without Customer's further consent, and (b) Bank will not comply with any instructions from Customer concerning the Deposit Account or any funds therein. Bank shall have no duty to inquire or determine whether Creditor is entitled to send a Notice of Exclusive Control. Creditor's instructions may include the giving of stop payment orders for any items being presented to the Deposit Account for payment. Bank will be fully entitled to rely upon such instructions from Creditor even if such instructions are contrary to any instructions or demands given by Customer. Customer confirms that Bank (x) should follow instructions from Creditor even if the result of following such instructions is that Bank dishonors items presented for payment from the Deposit Account, and (y) will have no liability to Customer for wrongful dishonor of such items in following such instructions from Creditor. For purposes of this Agreement, “Business Day”
SVB Deposit Account Control Agreement (October 2008)
3
means a day on which Bank is open to the public for business and is measured in a 24 hour increment.
Priorities of Security Interests; Rights Reserved by Bank.
Creditor agrees that nothing herein subordinates or waives, and that Bank expressly reserves, any and/or all of Bank's present and future rights (whether described as rights of setoff, banker's liens, chargeback or otherwise, and whether available to Bank under the law or under any other agreement between Bank and Customer concerning the Deposit Account) with respect to:
the face amount of a check, draft, money order, instrument, wire transfer of funds, automated clearing house entry, credit from a merchant card transaction, other electronic transfer of funds or other item (A) deposited in or credited to the Deposit Account, whether before or after the date of this Agreement, and returned unpaid or otherwise uncollected or subject to an adjustment entry, whether for insufficient funds or for any other reason and without regard to the timeliness of the return or adjustment or the occurrence or timeliness of any other person's notice of nonpayment or adjustment, (B) subject to a claim against the Bank for breach of transfer, presentment, encoding, retention or other warranty under Federal Reserve Regulations or Operating Circulars, clearing house rules, the UCC or other applicable law, or (C) for a merchant card transaction, against which a contractual demand for chargeback has been made (“Returned Items”);
service charges, fees or expenses payable or reimbursable to the Bank in connection with the Deposit Account or any related services (“Account Charges”); and
any adjustments or corrections of any posting or encoding errors (“Adjustments”).
Creditor agrees that notwithstanding receipt of the Notice of Exclusive Control, Bank may exercise Bank's rights and remedies in connection with any liens or claims it may have in or on the Deposit Account as described in this Section 6.
Statements. At Customer's expense, Bank will send copies of all statements sent to Customer for the Deposit Account to Creditor at Creditor's address set forth below Creditor's signature at the end of this Agreement. Until this Agreement is terminated, Customer authorizes Bank to disclose to Creditor at Creditor's request any information concerning the Deposit Account, including but not limited to the identity of any other party with which Customer and Bank have executed control agreements.
Returned Items, Account Charges, and Adjustments. Bank may debit the Deposit Account for Returned Items, Account Charges and Adjustments. If at any time after Creditor exercises exclusive control over the Deposit Account (a) funds are not available in the Deposit Account to cover the amount of any Returned Item, Account Charge or Adjustment, and (b) Customer fails to pay such amount within fifteen (15) Business Days of Bank's written demand therefor, then Creditor agrees that it will pay, within ten (10) Business Days of a written demand by Bank, amounts owed for each such Returned Item, Account Charge or Adjustment that is not paid in full by Customer up to the amount of the proceeds received by Creditor from the Deposit
SVB Deposit Account Control Agreement (October 2008)
4
Account, provided that Bank must make a demand from Creditor within 180 days of termination of this Agreement.
Indemnity and Hold Harmless of Bank by Customer. Customer hereby agrees to indemnify and hold harmless Bank, its affiliates and their respective directors, officers, agents and employees (each, an “Indemnified Person”) against any and all claims, causes of action, liabilities, lawsuits, demands and damages (each, a “Claim”) asserted by Creditor or any other party (other than an Indemnified Person), including without limitation, any and all court costs and reasonable attorneys' fees, in any way related to or arising out of or in connection with this Agreement; provided that no Indemnified Person shall be entitled to be indemnified to the extent that such Claims result from the gross negligence or willful misconduct of such Indemnified Person.
Indemnification and Hold Harmless of Bank by Creditor. To the extent that an Indemnified Person is not promptly indemnified by Customer, Creditor shall indemnify and hold harmless such Indemnified Person against any and all Claims (including reasonable attorneys' fees) asserted by persons other than an Indemnified Person and arising from any Notice of Exclusive Control from Creditor except to the extent such Claims result from the gross negligence or willful misconduct of Bank or any other Indemnified Person; provided that in no event shall Creditor be liable for any special, indirect, consequential or punitive damages, or lost profits. Creditor agrees that Bank is released from any and all liabilities to the Creditor arising from the terms of this Agreement except to the extent such liabilities arise from Bank's or another Indemnified Person's gross negligence or willful misconduct.
Limitation of Liability. IN NO EVENT SHALL BANK BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES RELATING TO THIS AGREEMENT WHETHER ANY CLAIM IS BASED ON ANY THEORY OF LIABILITY (INCLUDING WITHOUT LIMITATION ANY THEORY IN CONTRACT OR TORT) AND WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN TO BANK AND REGARDLESS OF THE FORM OF ANY CLAIM OR ACTION.
Amendments. This Agreement and all exhibits attached hereto may be amended only by a written agreement signed by Bank, Creditor, and Customer.
Notices.
Any notice, other than a Notice of Exclusive Control, or other communication provided for or allowed hereunder shall be in writing and shall be considered to have been validly given (i) when received if delivered personally (whether by messenger, hand delivery or otherwise) or by overnight delivery or by facsimile to the recipient to the address or facsimile number set forth below the signature of the applicable party hereto, or (ii) 72 hours after being deposited in the United States mail, registered or certified, postage prepaid, return receipt requested, if sent to the address and addressee as set forth below the signature of the applicable party hereto. The addresses and facsimile numbers to which notices or other communications are to be given (including statements delivered pursuant to Section 7 and a Notice of Exclusive Control pursuant to Section 13(b) below) may be changed from time to time by notice given as provided herein.
SVB Deposit Account Control Agreement (October 2008)
5
A Notice of Exclusive Control shall be in writing, must be in the form set forth in Exhibit A hereto, must be delivered to the address listed below Bank's signature at the end of this Agreement via hand delivery, messenger, overnight delivery or facsimile, and shall be considered to have been validly given when actually received, except that a facsimile will be considered to have been validly given only when acknowledged in writing by Bank (Bank agrees that it will use its good faith effort to promptly acknowledge receipt of such facsimile). To the extent Creditor does not deliver the Notice of Exclusive Control as set forth in this Section 13 or to the address listed below Bank's signature at the end of this Agreement, Creditor (a) acknowledges that Bank may not be able to respond to such Notice of Exclusive Control pursuant to Section 5 above, and (b) agrees that Bank will not be held liable for any failure to respond to such Notice of Exclusive Control.
If deemed necessary by Bank to enable Bank to comply with the provisions of §326 of the USA PATRIOT Act, Creditor agrees that it will provide Bank with a copy of its formation documentation when delivering a Notice of Exclusive Control, unless such documentation has previously been provided to Bank, and Bank can verify that such documentation is still maintained in Bank's files (provided that no such request by Bank shall delay the effectiveness of any such Notice of Exclusive Control).
Integration Provision. This Agreement constitutes the entire agreement among Bank, Customer and Creditor with respect to Creditor's control over the Deposit Account and matters related thereto, and all prior communications, whether verbal or written, between any of the parties hereto with respect to the subject matter hereof shall be of no further effect or evidentiary value.
Counterparts. This Agreement may be signed in counterparts that, when signed by all parties, shall constitute one agreement.
Relationship of the Parties. Nothing in this Agreement shall create any agency or fiduciary relationship between Customer, Creditor and Bank.
Governing Law and Jurisdiction. The parties hereto agree that this Agreement shall be governed exclusively under and in accordance with the laws of the State of California. All parties hereto each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California.
Jury Trial Waiver. CUSTOMER, CREDITOR, AND BANK EACH WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
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
SVB Deposit Account Control Agreement (October 2008)
6
controversies of any nature between them arising at any time out of or based upon this Agreement or any transaction contemplated herein 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 order 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 the 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.
Successors. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors or heirs and personal representatives. Customer may not assign this Agreement without the prior written consent of Creditor and Bank. Creditor may assign this Agreement upon written notice to Bank; provided, that such assignee must assume in writing or by operation of law all of Creditor's obligations under this Agreement. Bank may assign this Agreement upon written notice to Creditor (which shall be given to Creditor at the same time such notice is provided to Customer); provided, that such assignee must assume in writing or by operation of law all of Bank's obligations under this Agreement.
Attorneys' Fees, Costs and Expenses. In any action or proceeding between Bank and any other party to this agreement, the prevailing party will be entitled to recover its reasonable attorneys' fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled.
Termination; Survival. Customer may terminate this Agreement only with the written consent of Creditor. Creditor may terminate this Agreement by giving Bank and Customer written notice of termination. Bank may terminate this Agreement by giving Creditor and Customer thirty (30) calendar days' prior written notice of termination unless termination is a result of Bank's closure of the Deposit Account pursuant to its rights set forth in the Deposit Agreement or in accordance
SVB Deposit Account Control Agreement (October 2008)
7
with applicable law, in which case, Creditor's receipt of notice shall be governed by Section 4 hereof. Subject to the foregoing, this Agreement automatically terminates when the Deposit Account closes. Sections 9, 10, 11, 17, 18 and 20 shall survive the termination of this Agreement.
[Signature page follows.]
SVB Deposit Account Control Agreement (October 2008)
8
BANK: | SILICON VALLEY BANK By Title: Deposit Liability Management Address for Notices: Silicon Valley Bank Deposit Liability Management 3003 Tasman Drive, Mail Sort HF184 Santa Clara, CA 95054 Telephone: (408) 654-5071 Facsimile: (408) 496-2409 |
CUSTOMER: | AxoGen, Inc. and AxoGen Corporation , a Minnesota and Delaware Company, respectively TIN* Inc. - 41-1301878 / Corp. 55-0805988 By Name:Greg Freitag Title:CFO Address for Notices: 13859 Progress Boulevard Suite 100 Alachua, Florida 32615 Telephone: 1-888-296-4361 Facsimile: (386) 462-6801 |
CREDITOR: | PDL Biopharma, Inc. , a Delaware Corporation TIN* 94-3023969 By Name: Title: Address for Notices: 932 Southwood Boulevard Incline Village, Nevada 89451 Telephone: (775) 832-8500 Facsimile: |
*Pursuant to §326 of the USA PATRIOT Act, Bank is required to obtain a Tax Identification Number (TIN) from all parties to this Agreement.
SVB Deposit Account Control Agreement (October 2008)
Exhibit A
Notice of Exclusive Control
To: Silicon Valley Bank (“Bank”)
From: (“Creditor”)
Re: (“Customer”)
Date:
Pursuant to the Deposit Account Control Agreement dated _________________ (“Agreement”) entered among Bank, Customer and Creditor, Creditor hereby notifies Bank of Creditor's exercise of Creditor's rights under the Agreement and directs Bank to cease complying with instructions or any directions originated by Customer or its agents.
Creditor agrees that it will provide Bank with a copy of its formation documentation when delivering a Notice of Exclusive Control if deemed necessary by Bank to enable Bank to comply with the provisions of §326 of the USA PATRIOT Act (provided that no such request by Bank shall delay the effectiveness of any such Notice of Exclusive Control).
CREDITOR: | By Title: |
ACKNOWLEDGED BY: (for facsimile only) | SILICON VALLEY BANK By: Name: Title: Date: Time: |
101583046.1
SVB Deposit Account Control Agreement (October 2008)
Exhibit D
Form of Legal Opinion
[See attached.]
SVB Deposit Account Control Agreement (October 2008)
Form of Legal Opinion
October 5, 2012
PDL BioPharma, Inc.
932 Southwood Blvd.
Incline Village, NV 89451
Re: | Revenue Interests Purchase Agreement dated as of October 5, 2012 of AxoGen, Inc. and AxoGen Corporation |
Ladies and Gentlemen:
We have acted as counsel for AxoGen, Inc., a Minnesota corporation (the “Company”), and AxoGen Corporation, a Delaware corporation (the “Subsidiary”), in connection with the Revenue Interests Purchase Agreement, dated as of October 5, 2012 (the “Revenue Interests Purchase Agreement”), by and between the Company and PDL BioPharma, Inc. (“PDL”). Terms defined in the Revenue Interests Purchase Agreement are used as therein defined, unless otherwise defined herein. References in this opinion letter to the “Delaware UCC” and “Minnesota UCC” are to the Uniform Commercial Code as currently in effect in the State of Delaware and the State of Minnesota, respectively. The terms in paragraphs 9-12 that are defined in the Delaware UCC or the Minnesota UCC and that are not capitalized have the respective meanings given to them in the Delaware UCC or the Minnesota UCC, as applicable. This opinion letter is being delivered to you pursuant to Section 2.03(c)(E) of the Revenue Interests Purchase Agreement.
In connection with this opinion letter, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws of the Company, and the Certificate of Incorporation and Bylaws of the Subsidiary, and such other documents and records, and other instruments as we have deemed appropriate for purposes of the opinions set forth herein, including the following documents (the documents referred to in clauses (a) through (g) below are referred to herein as the “Transaction Documents”):
(a) the Revenue Interests Purchase Agreement;
(b) the Assignment of Interests;
(c) the Guaranty and Collateral Agreement;
(d) the Deposit Agreement;
(e) an unfiled copy of a Uniform Commercial Code financing statement (the “Minnesota Financing Statement”) naming the Company as debtor and PDL as secured party, to be filed in the Office of the Secretary of State of the State of Minnesota (the “Minnesota Filing Office”), and
(g) an unfiled copy of a Uniform Commercial Code financing statement (the “Delaware Financing Statement”) naming the Subsidiary as debtor and PDL as secured party, to be filed in the Office of the Secretary of State of the State of Delaware (the “Delaware Filing Office”).
We have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of the documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as certified, facsimile or photostatic copies, and the authenticity of the originals of all documents submitted to us as copies. We have also assumed that the Transaction Documents constitute valid and binding obligations of each party thereto other than the Company and the Subsidiary party thereto.
As to any facts that are material to the opinions hereinafter expressed that we did not independently establish or verify, we have relied without investigation upon the representations of the Company contained in the Transaction Documents and upon certificates of officers of the Company.
In rendering the opinions set forth herein, whenever a statement or opinion set forth therein is qualified by “to our knowledge,” “known to us” or by words of similar import, it is intended to indicate that, during the course of our representation of the Company in the subject transaction, no information has come to the attention of those lawyers in our firm who have rendered legal services in connection with such transaction that gives us actual knowledge of the inaccuracy of such statement or opinion. We have not undertaken any independent investigation to determine the
accuracy of facts material to any such statement or opinion, and no inference as to such statement or opinion should be drawn from the fact of our representation of the Company and the Subsidiary.
We have relied upon a certificate of an officer of the Company dated the date hereof, certifying that the items listed in such certificate are (i) all of the material indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes, other agreements or instruments (the “Other Company Agreements”) to which the Company or the Subsidiary are a party, and (ii) all of the judicial or administrative orders, writs, judgments, awards, injunctions and decrees (the “Company Orders”) binding on the Company or the Subsidiary.
Based upon and subject to the foregoing, and to the limitations and qualifications described below, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under the laws of the State of Minnesota.
2. The Subsidiary is a corporation validly existing and in good standing under the laws of the State of Delaware.
3. Each of the Company and the Subsidiary has the corporate power and authority to enter into and perform the Transaction Documents to which it is a party, has taken all necessary corporate action to authorize the execution, delivery and performance of such Transaction Documents and has duly executed and delivered such Transaction Documents.
4. Each Transaction Document to which the Company or the Subsidiary is a party is the valid and binding obligation of the Company or the Subsidiary, as applicable, enforceable against the Company and the Subsidiary in accordance with its terms.
5. The execution and delivery by the Company and the Subsidiary of the Transaction Documents to which it is a party do not, and the performance by the Company and the Subsidiary of their respective obligations thereunder will not, (i) result in a violation of the Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws of the Company, or the Certificate of Incorporation and Bylaws of the Subsidiary, (ii) result in a breach or default under any Other Company Agreement, (iii) result in a violation of any Company Order or (iv) result in or require the creation or imposition of any lien or encumbrance upon any assets of the Company or the Subsidiary under any Other Company Agreements (for the avoidance of doubt, any liens and security interests created pursuant to the Transaction Documents are excluded from this clause (iv)).
6. The execution and delivery by each of the Company and the Subsidiary of the Transaction Documents to which it is a party do not, and the performance by each of the Company and the Subsidiary of its obligations thereunder will not, require any approval from or filing with any governmental authority of the United States, the State of New York, the State of Minnesota or under any provision of the General Corporation Law of the State of Delaware or the Delaware UCC, other than the filings and records contemplated by the Transaction Documents to perfect security interests.
7. The execution and delivery by each of the Company and the Subsidiary of the Transaction Documents to which it is a party do not, and the performance by the Company and the Subsidiary of its obligations thereunder will not, result in any violation of any federal law of the United States, the law of the State of New York or any regulation thereunder, the law of the State of Minnesota or any regulation thereunder, or any provision of the Delaware General Corporation Law or Delaware UCC.
8. Neither the Company nor the Subsidiary is, or will be after giving effect to the sale of the Assigned Interests and the use of proceeds therefrom, an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act of 1940, as amended.
9. The Guaranty and Collateral Agreement is effective to create in favor of PDL, as security for the Secured Obligations, as defined in the Guaranty and Collateral Agreement, a security interest (the “Article 9 Security Interest”) in the collateral described in the Guaranty and Collateral Agreement in which a security interest may be created under Article 9 of the New York UCC (the “Article 9 Collateral”).
2
10. Upon the filing of the Minnesota Financing Statement with the Minnesota Filing Office, the Article 9 Security Interest in that portion of the Article 9 Collateral in which a security interest may be perfected by the filing of a financing statement under the Minnesota UCC will be perfected.
11. Upon the filing of the Delaware Financing Statement with the Delaware Filing Office, the Article 9 Security Interest in that portion of the Article 9 Collateral in which a security interest may be perfected by the filing of a financing statement under the Delaware UCC will be perfected.
12. The Article 9 Security Interest in the Deposit Account as defined in the Deposit Agreement will be perfected by control upon the execution and delivery of the Deposit Agreement.
The opinions expressed above are subject to the following limitations, exceptions, qualifications and assumptions:
A. The opinion expressed in paragraph 4 is subject to bankruptcy, insolvency, fraudulent transfer and other similar laws affecting the rights and remedies of creditors generally and general principles of equity.
B. Provisions of the Transaction Documents relating to indemnification or exculpation may be limited by public policy or by law.
C. The opinions expressed in this opinion letter are limited to the laws of the State of New York, the laws of the State of Minnesota, the General Corporation Law of the State of Delaware, the Delaware UCC (subject to the immediately succeeding sentence) and the Federal laws of the United States of America, and we express no opinion with respect to the laws of any other state or jurisdiction. With respect to the applicable provisions of the Delaware UCC and Minnesota UCC we have, with your permission, confined our investigation of the laws of such jurisdiction to an examination of the relevant provisions of the Uniform Commercial Code as in effect in such jurisdiction as set forth in a standard compilation such as the CCH Secured Transactions Guide. To the extent that our opinions involve the laws of the State of Minnesota, we have relied, with their consent, solely on the opinion letter of Kaplan, Strangis and Kaplan, P.A., dated the date hereof. We express no opinion on any matter covered by laws, rules or regulations applicable to (a) patents, copyrights, trademarks and other proprietary rights and licenses, (b) the U.S. Food and Drug Administration or (c) health care regulatory matters or health care reimbursement matters.
D. For purposes of our opinions in paragraphs 1 and 2 hereof as to the valid existence and good standing of the Company and the Subsidiary, we have relied solely upon good standing or similar certificates issued by the appropriate authorities in the subject jurisdictions.
E. For purposes of the opinion in paragraph 7, we have considered only such laws and regulations that in our experience are typically applicable to a transaction of the nature contemplated by the Transaction Documents.
F. Certain waivers by the Company and the Subsidiary in the Transaction Documents may relate to matters that cannot, as a matter of law, be effectively waived. Without limiting the foregoing, you should be aware that under applicable law guarantors may be entitled to certain rights or protections which as a matter of statutory or common law may not be waived or altered. We express no opinion herein as to the enforceability of any provisions of the Guaranty and Collateral Agreement which purport to waive or alter such rights or protections, except to the extent permitted by law.
G. The enforceability of the Transaction Documents, may be limited by the unenforceability under certain circumstances of provisions imposing penalties, forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or an occurrence of default.
H. For purposes of the opinion in paragraph 6, where any Other Company Agreement states that it is governed by laws of a state other than the State of New York, we have not made any investigation of the laws of such other state but have merely assumed that they would be interpreted in accordance with their plain meaning. We have not reviewed the covenants in the Other Company Agreements that contain financial ratios and other similar financial restrictions, and no opinion is provided with respect thereto.
I. We express no opinion as to:
3
(i) The enforceability of any provision of the Transaction Documents insofar as it provides that any Person purchasing a participation from PDL or other Person may exercise set-off or similar rights with respect to such participation or that a lender or other Person may exercise set-off or similar rights other than in accordance with applicable law.
(ii) The enforceability of any provision of the Transaction Documents permitting modification thereof only by means of an agreement in writing signed by the parties thereto.
(iii) The sale, assignment and transfer of the Assigned Interests being a true sale.
(iv) The enforceability of any provision of the Transaction Documents purporting to waive the right to trial by jury.
L. In connection with the opinions set forth in paragraphs 9-12, we have assumed that the Company or the Subsidiary has, or has power to transfer, rights (to the extent necessary to grant a security interest) in the Article 9 Collateral existing on the date hereof and will have, or will have the power to transfer, rights (to such extent) in property which becomes Article 9 Collateral after the date hereof.
M. In connection with the opinions set forth in paragraphs 9-12, the perfection of a security interest in any collateral consisting of “proceeds” (as defined in the Uniform Commercial Code of the applicable jurisdiction) is subject to limitations set forth in Section 9-315 of the Uniform Commercial Code of the applicable jurisdiction.
This opinion letter is effective only as of the date hereof. We do not assume responsibility for updating this opinion letter as of any date subsequent to its date, and we assume no responsibility for advising you of any changes with respect to any matters described in this opinion letter that may occur subsequent to the date of this opinion letter or from the discovery, subsequent to the date of this opinion letter, of information not previously known to us pertaining to the events occurring prior to such date.
This opinion letter is furnished by us solely for the benefit of PDL and its respective successors and permitted assigns and participants pursuant to the Revenue Interests Purchase Agreement, and this opinion letter may not be relied upon by such parties for any other purpose or by any other person or entity for any purpose whatsoever. This opinion letter is not to be quoted in whole or in part or otherwise referred to or used or furnished to any other person, except as may be required by any governmental authority or pursuant to legal process, without our express written consent.
Very truly yours,
4
Exhibit 10.50
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked “* * *” and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.
_______________________________________________________________________________________________
_______________________________________________________________________________________________
CREDIT AGREEMENT
dated as of November 2, 2012
among
WELLSTAT DIAGNOSTICS, LLC
as the Borrower,
PDL BIOPHARMA, INC.,
as the Lender,
and
PDL BIOPHARMA, INC.,
as the Agent
_______________________________________________________________________________________________
_______________________________________________________________________________________________
TABLE OF CONTENTS | ||||
Page | ||||
Section 1. | Definitions; Interpretation. | 1 | ||
1.1. | Definitions | 1 | ||
1.2. | Interpretation | 12 | ||
Section 2. | Credit Facilities. | 13 | ||
2.1. | Loan | 13 | ||
2.1.1. Loan | 13 | |||
2.1.2. General | 13 | |||
2.2. | Loan Accounting | 13 | ||
2.2.1. Recordkeeping | 13 | |||
2.2.2. Notes | 13 | |||
2.3. | Interest | 13 | ||
2.3.1. Interest Rate | 13 | |||
2.3.2. Interest Payments | 14 | |||
2.3.3. Computation of Interest | 14 | |||
2.4. | Prepayment | 14 | ||
2.4.1. Voluntary Prepayment | 14 | |||
2.4.2. Payments in Respect of the Assigned Interests | 14 | |||
2.5. | Payment Upon Maturity | 14 | ||
2.6. | Making of Payments | 15 | ||
2.7. | Application of Payments and Proceeds | 15 | ||
2.8. | Payment Dates | 15 | ||
2.9. | Set-off | 15 | ||
2.10. | Currency Matters | 15 | ||
Section 3. | Yield Protection. | 15 | ||
3.1. | Taxes | 15 | ||
3.2. | Increased Cost | 16 | ||
3.3. | Mitigation of Circumstances | 18 | ||
3.4. | Conclusiveness of Statements; Survival | 18 | ||
Section 4. | Conditions Precedent. | 18 | ||
4.1. | Loan | 18 | ||
4.1.1. Delivery of Loan Documents | 18 | |||
4.1.2. Payment of Fees, Expenses and Existing Obligations | 19 | |||
4.1.3. Representations and Warranties | 19 | |||
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TABLE OF CONTENTS (continued) | ||||
Page | ||||
4.1.4. No Default | 20 | |||
4.1.5. No Material Adverse Change | 20 | |||
4.1.6. Surviving Debt Subordination Agreement and Acknowledgment | 20 | |||
4.1.7. Execution and Delivery of Letter Agreement | 20 | |||
Section 5. | Representations and Warranties. | 20 | ||
5.1. | Organization | 20 | ||
5.2. | Authorization; No Conflict | 20 | ||
5.3. | Validity; Binding Nature | 21 | ||
5.4. | Financial Condition | 21 | ||
5.5. | No Material Adverse Change | 21 | ||
5.6. | Litigation | 21 | ||
5.7. | Ownership of Properties; Liens | 21 | ||
5.8. | Capitalization; Subsidiaries | 22 | ||
5.9. | Pension Plans | 22 | ||
5.10. | Compliance with Law; Investment Company Act; Other Regulated Entities | 22 | ||
5.11. | Margin Stock | 23 | ||
5.12. | Taxes | 23 | ||
5.13. | Solvency | 23 | ||
5.14. | Environmental Matters | 23 | ||
5.15. | Insurance | 24 | ||
5.16. | Information | 24 | ||
5.17. | Intellectual Property | 24 | ||
5.18. | Labor Matters | 25 | ||
5.19. | No Default | 25 | ||
5.20. | Foreign Assets Control Regulations and Anti-Money Laundering | 25 | ||
5.20.1. OFAC | 25 | |||
5.20.2. Patriot Act | 25 | |||
Section 6. | Affirmative Covenants. | 26 | ||
6.1. | Information | 26 | ||
6.1.1. Annual Report | 26 | |||
6.1.2. Quarterly Reports | 26 | |||
6.1.3. Reserved | 26 | |||
6.1.4. Compliance Certificate | 26 | |||
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TABLE OF CONTENTS (continued) | ||||
Page | ||||
6.1.5. Monthly Net Revenue Report | 26 | |||
6.1.6. Notice of Default; Litigation; ERISA Matters | 26 | |||
6.1.7. Reserved | 27 | |||
6.1.8. Budgets | 27 | |||
6.1.9. Other Information | 27 | |||
6.2. | Books; Records; Inspections | 27 | ||
6.3. | Maintenance of Property; Insurance | 28 | ||
6.4. | Compliance with Laws and Contractual Obligations; Payment of Taxes and Liabilities | 29 | ||
6.5. | Maintenance of Existence | 29 | ||
6.6. | Environmental Matters | 29 | ||
6.7. | Further Assurances | 30 | ||
6.8. | Post-Closing Obligations | 31 | ||
6.9. | Assigned Interests Payments | 31 | ||
Section 7. | Negative Covenants. | 31 | ||
7.1. | Debt | 31 | ||
7.2. | Liens | 32 | ||
7.3. | Restricted Payments | 33 | ||
7.4. | Mergers; Consolidations; Asset Sales | 33 | ||
7.5. | Modification of Organizational Documents or Surviving Debt Subordination Agreement and Acknowledgment | 34 | ||
7.6. | Use of Proceeds | 35 | ||
7.7. | Transactions with Affiliates | 35 | ||
7.8. | Inconsistent Agreements | 35 | ||
7.9. | Business Activities | 36 | ||
7.10. | Investments | 36 | ||
7.11. | Fiscal Year | 36 | ||
7.12. | Deposit Accounts and Securities Accounts | 36 | ||
7.13. | Sale-Leasebacks | 36 | ||
7.14. | Hazardous Substances | 36 | ||
7.15. | ERISA Liability | 37 | ||
Section 8. | Events of Default; Remedies. | 37 | ||
8.1. | Events of Default | 37 | ||
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TABLE OF CONTENTS (continued) | ||||
Page | ||||
8.1.1. Non-Payment of Credit | 37 | |||
8.1.2. Default Under Other Debt. | 37 | |||
8.1.3. Bankruptcy; Insolvency | 37 | |||
8.1.4. Non-Compliance with Loan Documents. | 38 | |||
8.1.5. Representations; Warranties | 38 | |||
8.1.6. Judgments. | 38 | |||
8.1.7. Invalidity of Collateral Documents | 39 | |||
8.1.8. Invalidity of Subordination Provisions | 39 | |||
8.1.9. Change of Control | 39 | |||
8.1.10. Invalidity of Subordination Provisions | 39 | |||
8.2. | Remedies | 39 | ||
Section 9. | The Agent. | 40 | ||
9.1. | Appointment; Authorization | 40 | ||
9.2. | Delegation of Duties | 40 | ||
9.3. | Limited Liability | 40 | ||
9.4. | Successor Agent | 40 | ||
9.5. | Collateral Matters | 41 | ||
Section 10. | Miscellaneous. | 41 | ||
10.1. | Waiver; Amendments | 41 | ||
10.2. | Notices | 41 | ||
10.3. | Costs; Expenses | 42 | ||
10.4. | Indemnification by the Borrower | 42 | ||
10.5. | Marshaling; Payments Set Aside | 43 | ||
10.6. | Nonliability of the Lender | 43 | ||
10.7. | Confidentiality | 43 | ||
10.8. | Captions | 44 | ||
10.9. | Nature of Remedies | 44 | ||
10.10. | Counterparts | 44 | ||
10.11. | Severability | 44 | ||
10.12. | Entire Agreement | 44 | ||
10.13. | Successors; Assigns | 44 | ||
10.14. | Governing Law | 44 | ||
10.15. | Forum Selection; Consent to Jurisdiction; Service of Process | 45 | ||
10.16. | Waiver of Jury Trial | 45 | ||
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TABLE OF CONTENTS (continued) | ||||
Page | ||||
10.17. | Collateral Agent | 45 | ||
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TABLE OF CONTENTS (continued)
Annexes
Annex I | Internal Rate of Return Calculation |
Annex II | Addresses |
Exhibits
Exhibit A | Compliance Certificate |
Schedules
Schedule 5.7 | Real Property |
Schedule 5.10 | Authorizations, Permits, Licenses and Approvals |
Schedule 5.15 | Insurance |
Schedule 5.18 | Labor Matters |
Schedule 7.1 | Existing Debt |
Schedule 7.2 | Permitted Liens |
Schedule 7.10 | Existing Investments |
Schedule 7.12 | Bank Accounts |
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CREDIT AGREEMENT
This Credit Agreement dated as of November 2, 2012, (as amended, restated or otherwise modified from time to time, this “Agreement”) is made among WELLSTAT DIAGNOSTICS, LLC, a Delaware limited liability company (the “the Borrower”), PDL BIOPHARMA, INC. (the “the Lender”), and PDL BIOPHARMA, INC., not individually, but as the Agent (as defined below).
The Borrower has agreed to enter into this Agreement with the Lender and the Agent evidencing its agreement to incur the Loan, and in connection therewith, to make the representations and warranties, covenants and undertakings as hereinafter set forth.
Section 1. | Definitions; Interpretation. |
1.1. Definitions. When used herein the following terms shall have the following meanings:
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or a substantial portion of the assets of a Person, or of all or a substantial portion of any business or division of a Person, (b) the acquisition of in excess of 50% of the Stock of any Person, or otherwise causing any Person to become a Subsidiary, (c) a merger, consolidation, amalgamation or any other combination with another Person (other than a combination between two Persons that prior to the merger, consolidation, amalgamation or combination were already Loan Parties) and (d) the acquisition of a brand, line of business, division, branch, product line, marketing rights, patent rights, or other Intellectual Property rights unrelated to Product, with respect to a product line, operating division, product or potential product, or other unit operation of any Person.
“Affiliate” of any Person means (a) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and (b) any officer or director of such Person. A Person shall be deemed to be “controlled by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Unless expressly stated otherwise herein, neither the Agent nor the Lender shall be deemed an Affiliate of any Loan Party.
“Agent” means PDL BioPharma, Inc. in its capacity as administrative agent for the Lender hereunder and any successor thereto in such capacity.
“Agreement” has the meaning set forth in the Preamble.
“Applicable IRR Amount” means on or before December 31, 2014, the IRR * * * Return Amount, and thereafter the IRR * * * Return Amount.
“Applicable Law” means all applicable provisions of all (i) constitutions, treaties, statutes, laws, rules, regulations and ordinances of any Governmental Authority, (ii) authorizations, consents, approvals, permits or licenses issued by, or a registration or filing with,
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any Governmental Authority and (iii) orders, decisions, judgments, awards and decrees of any Governmental Authority (including common law and principles of public policy).
“Assigned Interests” means an amount equal to * * * of Net Revenues for each calendar month, commencing with the first calendar month of Commercialization.
“Assigned Interests Payment” means each monthly payment of Assigned Interests.
“Audit Costs” means the reasonable out-of-pocket costs of any audit of the books and records of the Borrower and its Subsidiaries with respect to amounts paid or payable under this Agreement, including all fees and expenses incurred in connection therewith.
“Borrower” has the meaning set forth in the Preamble.
“Business Day” means any day on which commercial banks are open for commercial banking business in New York, New York.
“Capital Lease” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.
“Capital Stock” means, with respect to any Person, the Stock and Stock Equivalents of such Person.
“Cash Equivalent Investment” means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, or corporate demand notes, in each case rated at least A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors Service, Inc., (c) any certificate of deposit (or time deposit represented by a certificate of deposit) or banker's acceptance maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any commercial banking institution of the nature referred to in clause (c) above which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder, (e) money market accounts or mutual funds which invest predominantly in assets satisfying the foregoing requirements and (f) other short term liquid investments approved in writing by the Agent.
“Change of Control” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) (other than the Holders) becomes the “beneficial owner” (as defined in Rules 13-d and 13d-5 under the Securities Exchange Act of 1934, except that a person or group
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shall be deemed to have “beneficial ownership” of all Stock that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more of the Stock and Stock Equivalents of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);
(b) individuals who on the Closing Date constituted the board of directors or similar governing body of the Borrower (together with any new directors whose election or appointment by such board of directors or similar governing body or whose nomination for election by the shareholders of the Borrower was approved by a vote of a majority of the directors of the Borrower then still in office who were either directors on the Closing Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors or similar governing body of the Borrower then in office;
(c) all or substantially all of the assets of the Borrower are disposed of in any one or more transactions; or
(d) the Holders shall fail to hold directly 100% of the Capital Stock of the Borrower and pledge such Capital Stock to the Agent pursuant to a perfected first priority security interest therein.
“Closing Date” means the date on which the conditions set forth in Section 4.1 have been satisfied or waived by the Lender.
“Closing Fee” means the fee due from the Borrower to the Agent on or before the Closing Date in an amount equal to * * * of the aggregate principal amount of the Loan.
“Collateral” means all property and interests in property and proceeds thereof now owned or hereafter acquired by any Loan Party and any other Person who has granted a Lien to the Agent, in or upon which a Lien now or hereafter exists in favor of the Lender or the Agent for the benefit of the Agent and the Lender, whether under this Agreement or under any other documents executed by any such Persons and delivered to the Agent, including the Capital Stock and other collateral pledged by the Holders pursuant to the Guarantee and Pledge Agreement.
“Collateral Access Agreement” means an agreement in form and substance satisfactory to the Agent in its reasonable discretion pursuant to which a mortgagee or lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of inventory or other property owned by any Loan Party, acknowledges the Liens of the Agent and waives (or, if approved by the Agent, subordinates) any Liens held by such Person on such property, and, in the case of any such agreement with a mortgagee or lessor, permits the Agent reasonable access to and use of such real property during the continuance of an Event of Default to assemble, complete and sell any Collateral stored or otherwise located thereon.
“Collateral Documents” means, collectively, the Guarantee and Pledge Agreement, the Security Agreement (including as may be supplemented by the joinder of any Subsidiary of the Borrower thereto), any Subsidiary Guaranty, and each other agreement or instrument pursuant to or in connection with which the Holders, any Loan Party or any other Person grants a security
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interest in any Collateral to the Agent for the benefit of the Lender or pursuant to which any such security interest in Collateral is perfected, each as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Commercialization” means any (i) sale, lease or other transfer of Product by any Person or (ii) license, assignment or other transfer of Intellectual Property to market, sell, lease or transfer Product or any other product utilizing such Intellectual Property resulting under clause (i) or (ii), in the receipt by any of the Loan Parties of revenue pursuant to such transactions; provided, that, the use, sale, license or other transfer of Product or Intellectual Property solely for research and development purposes by a Third Party that results in the receipt by the Loan Parties of revenue not to exceed * * * in the aggregate during the term of this Agreement shall not constitute Commercialization.
“Commitment” means, as to the Lender, the Lender's commitment to provide the Loan in the aggregate principal amount of $40,000,000 pursuant to Section 2.1.1.
“Compliance Certificate” means a certificate substantially in the form of Exhibit A.
“Contingent Obligation” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or otherwise to invest in a debtor, to provide security for the obligations of a debtor or otherwise to assure a creditor against loss) any indebtedness, obligation or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Stock of any other Person. The amount of any Person's obligation in respect of any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the principal amount of the indebtedness, obligation or other liability supported thereby or the amount of the dividends or distributions guaranteed, as applicable.
“Control Agreement” means a tri-party deposit account, securities account or commodities account Control Agreement by and among the applicable Loan Party, the Agent and the depository, securities intermediary or commodities intermediary, and each in form and substance satisfactory in all respects to the Agent in its reasonable discretion and in any event providing to the Agent “control” of such deposit account, securities or commodities account within the meaning of Articles 8 and 9 of the UCC.
“Copyrights” means all rights, title and interests (and all related IP Ancillary Rights) arising under any Applicable Law in copyrights and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith.
“Current Financial Statements” has the meaning set forth in Section 5.4.
“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d)
4
all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person (with the amount thereof being measured as the fair market value of such property), (f) all obligations, contingent or otherwise, with respect to letters of credit (whether or not drawn), banker's acceptances and surety bonds issued for the account of such Person, (g) all Hedging Obligations of such Person, (h) all Contingent Obligations of such Person, (i) all non-compete payment obligations and earn-out, purchase price adjustment and similar obligations, (j) all obligations of such Person in respect of Disqualified Capital Stock issued by such Person, (k) all indebtedness of the types listed in (a) through (j) and (l) of any partnership of which such Person is a general partner and (l) all obligations of such Person under any synthetic lease transaction, where such obligations are considered borrowed money indebtedness for tax purposes but the transaction is classified as an operating lease in accordance with GAAP.
“Default” means any event that, if it continues uncured, will, with the lapse of time or the giving of notice or both, constitute an Event of Default.
“Default Rate” has the meaning set forth in Section 2.3.1.
“Disqualified Capital Stock” means any Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable or is redeemable at the option of the holder thereof, in whole or in part, on or prior to December 31, 2022, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Stock referred to in (a) above, in each case at any time on or prior to December 31, 2022, or (c) contains any repurchase obligation which may come into effect prior to the Obligations being Paid in Full; provided that any Stock that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Stock is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem or repurchase such Stock upon the occurrence of a change in control or an asset sale occurring prior to December 31, 2022 shall not constitute Disqualified Capital Stock if such Stock provides that the issuer thereof will not redeem or repurchase any such Stock pursuant to such provisions prior to the repayment in full of the Obligations.
“Dollar” and “$” mean lawful currency of the United States of America.
“Environmental Claims” means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility under or for violation of any Environmental Law, or for release or injury to the environment or any Person or property or natural resources.
“Environmental Laws” means all present or future federal, state, provincial or local laws, statutes, common law duties, rules, regulations, ordinances and codes, including all amendments, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to any
5
matter arising out of or relating to health and safety, or pollution or protection of the environment, natural resources or workplace, including any of the foregoing relating to the presence, use, production, recycling, reclamation, generation, handling, transport, treatment, storage, disposal, distribution, discharge, release, emission, control, cleanup or investigation or management of any Hazardous Substance.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Event of Default” means any of the events described in Section 8.1.
“Excluded Taxes” has the meaning set forth in Section 3.1(a).
“Existing Loan Documents” means that certain Loan Agreement dated as of March 21, 2012, as amended by the First Amendment to Loan Agreement dated as of August 8, 2012, between Samuel J. Wohlstadter and Nadine H. Wohlstadter, as borrower, and PDL BioPharma, Inc., a Delaware corporation, as lender, and all documents and instruments executed and delivered from time to time in connection therewith.
“Existing Obligations” means all obligations, including accrued interest, outstanding pursuant to the Existing Loan Documents.
“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.
“Fiscal Year” means the fiscal year of the Borrower and its Subsidiaries, which period shall be the 12-month period ending on December 31 of each year.
“FRB” means the Board of Governors of the Federal Reserve System or any successor thereto.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“Governmental Authority” means any nation or government, any state, province, municipality or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank), and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
“Gross Revenue” means, for any period of determination, the sum of the following for such period: (i) the amounts invoiced and recognized as revenue in accordance with GAAP by the Borrower, its Subsidiaries or any of their Affiliates with respect to (a) the sale of Product to a Third Party by the Borrower, its Subsidiaries or any of their Affiliates, (b) the sale, distribution or other commercial use of Product by such Third Party in connection with any marketing, royalty, manufacturing, co-promotion, co-development, or other strategic arrangements, (c) the license, assignment or other transfer of Intellectual Property to market, sell, lease or transfer Product or any other product utilizing such Intellectual Property and (ii) any collections in respect of write-offs or allowances for bad debts in respect of items described in the preceding
6
clause (i). For purposes of prevention of duplication, “Gross Revenue” shall not include amounts invoiced by Affiliates, distributors, wholesalers or other Persons acting in similar capacities to the extent that such amounts are duplicative.
“Guarantee and Pledge Agreement” means the Guarantee and Pledge Agreement, dated as of the Closing Date, made by the Holders in favor of the Agent, and governed by the laws of New York, as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Hazardous Substances” means any waste, chemical, substance, or material listed, defined, classified, or regulated as a hazardous waste, hazardous substance, pollutant, contaminant, toxic substance, or hazardous, dangerous or radioactive material, chemical or waste or otherwise regulated by any Environmental Law, including, without limitation, any petroleum or any derivative, waste, or byproduct thereof, radon, asbestos, and polychlorinated biphenyls, and any other substance, the storage, manufacture, disposal, treatment, generation, use, transportation, remediation, release into or concentration in the environment of which is prohibited, controlled, regulated or licensed by any governmental authority under any Environmental Law.
“Hedging Obligation” means, with respect to any Person, any liability of such Person under any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices. The amount of any Person's obligation in respect of any Hedging Obligation shall be deemed to be the incremental obligation that would be reflected in the financial statements of such Person in accordance with GAAP.
“Holders” means, each of Samuel J. Wohlstadter and Nadine H. Wohlstadter, each natural relative who is a rightful heir of the foregoing, and any trust maintained by or for the benefit of any of the foregoing.
“Indemnified Liabilities” has the meaning set forth in Section 10.4.
“Intellectual Property” means all rights, title and interests in intellectual property arising under any Applicable Law and all IP Ancillary Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names, Trade Secrets, industrial designs, integrated circuit topographies, and rights under IP Licenses.
“Internet Domain Name” means all right, title and interest (and all related IP Ancillary Rights) arising under any Applicable Law in internet domain names.
“Investment” means, with respect to any Person, (a) the purchase or other acquisition of any debt or equity security of any other Person, (b) the making of any loan, advance or capital contribution to any other Person, (c) becoming obligated with respect to a Contingent Obligation in respect of obligations of any other Person or (d) the making of an Acquisition.
“IP Ancillary Rights” means, with respect to an item of Intellectual Property all foreign counterparts to, and all divisionals, reversions, continuations, continuations-in-part, reissues,
7
reexaminations, renewals and extensions of, such Intellectual Property and all income, royalties, proceeds and liabilities at any time due or payable or asserted under or with respect to any of the foregoing or otherwise with respect to such Intellectual Property, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in each case, all rights to obtain any other IP Ancillary Right.
“IP License” means all contractual obligations (and all related IP Ancillary Rights), whether written or oral, granting any right, title and interest in any Intellectual Property.
“IRC” means the Internal Revenue Code of 1986, as amended.
“IRR” shall mean the internal rate of return utilizing the same methodology utilized by the XIRR function in Microsoft Excel, version 2010.
“IRR * * * Return Amount” shall mean an aggregate amount such that, when paid to the Agent and taken together with all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), would equal the sum of (i) the aggregate principal amount of the Loan and (ii) such additional amount that would generate an IRR to the Lender in respect of the original principal amount of the Loan funded on the Closing Date of * * * percent (* * * ) as of the date of payment, taking into account the amount and timing of all payments made by the Borrower pursuant to this Agreement as calculated pursuant to Annex I.
“IRR * * * Return Amount” shall mean an aggregate amount such that, when paid to the Agent and taken together with all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), would equal the sum of (i) the aggregate principal amount of the Loan and (ii) such additional amount that would generate an IRR to the Lender in respect of the original principal amount of the Loan funded on the Closing Date of * * * percent (* * * ) as of the date of payment, taking into account the amount and timing of all payments made by the Borrower pursuant to this Agreement as calculated pursuant to Annex I.
“Legal Costs” means, with respect to any Person, (a) all reasonable fees and charges of any counsel, accountants, auditors, appraisers, consultants and other professionals to such Person, (b) the reasonable allocable cost of internal legal services of such Person and all reasonable disbursements of such internal counsel and (c) all court costs and similar legal expenses.
“Lender Party” has the meaning set forth in Section 10.4.
“Lender” has the meaning set forth in the Preamble.
“Letter Agreement” has the meaning set forth in Section 4.1.7.
8
“Lien” means, with respect to any Person, any interest granted by such Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, charge or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise.
“Loan” means the term loan from the Lender in a principal amount of $40,000,000 made to the Borrower on the Closing Date pursuant to Section 2.1.1.
“Loan Documents” means this Agreement, the Notes, the Collateral Documents, the Letter Agreement, and all other documents, instruments and agreements delivered in connection with the foregoing, all as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Loan Party” means the Borrower and each Subsidiary of the Borrower that has executed and delivered a Subsidiary Guaranty and Security Agreement.
“Margin Stock” means any “margin stock” as defined in Regulation T, U or X of the FRB.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, assets, business, prospects, properties or condition (financial or otherwise) of the Borrower or the Loan Parties taken as a whole, (b) a material impairment of the ability of the Holders or any Loan Party to perform in any material respect any of its Obligations under any Loan Document to which it is a party or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Holders or any Loan Party of any Loan Document to which it is a party.
“Maturity Date” means the earliest of (a) the date of any sale, by means of one or more transactions, of all or substantially all of the assets or all or substantially all of the Intellectual Property of the Loan Parties, (b) December 31, 2017 if, as of such date, the consolidated revenue (as determined in accordance with GAAP) of the Loan Parties for the fiscal year ended as of such date is less than the Minimum 2017 Revenue Amount, (c) December 31, 2021, and (d) any date upon which the aggregate amount of all payments made by the Borrower to the Agent pursuant to this Agreement, including interest (including interest paid in kind and added to principal) and any Assigned Interests Payment but excluding payment or reimbursement of any fees, costs or expenses (including the Closing Fee or any Indemnified Liability), equals the Applicable IRR Amount.
“Minimum 2017 Revenue Amount” means * * *.
“Monthly Net Revenue Report” means, with respect to the relevant calendar month, a report reflecting Net Revenue for such calendar month, including a description of Gross Revenue for such calendar month and the adjustments and other reconciliations used to arrive at Net Revenue, in form and substance acceptable to the Agent and the Lender.
“Net Revenue” means, for any period of determination, the difference between (a) Gross Revenue for such period, less (b) the sum, with respect to the items described in clauses (i) and
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(ii) of the definition of Gross Revenue, without duplication, of (i) bona fide cash, trade discounts and rebates actually granted or paid to Third Parties in accordance with customary industry standards, (ii) allowances and adjustments actually credited to customers for Product that is spoiled, damaged, outdated, obsolete, returned or otherwise recalled, but only if and to the extent the same are in accordance with sound business practices and not in excess of customary industry standards, (iii) charges for freight, postage, shipping, delivery, service and insurance charges, to the extent invoiced, (iv) taxes, duties or other governmental charges to the extent invoiced, (v) write-offs or allowances for bad debts, (vi) rebates and chargebacks and other price reduction programs, and (vii) other payments required by Applicable Law, in each case as determined in accordance with GAAP.
“Non-Excluded Taxes” has the meaning set forth in Section 3.1(a).
“Note” means a promissory note in form and substance acceptable to the Lender and the Agent, as the same may be replaced, substituted, amended, restated or otherwise modified from time to time.
“Obligations” means all liabilities, indebtedness and obligations (including interest accrued at the rate provided in the applicable Loan Document after the commencement of a bankruptcy proceeding whether or not a claim for such interest is allowed) of any Loan Party under this Agreement, or the Holders or any Loan Party under any other Loan Document, any Collateral Document or any other document or instrument executed in connection herewith or therewith, in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, including the Applicable IRR Amount.
“OFAC” has the meaning set forth in Section 5.20.1.
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.
“Paid in Full” or “Payment in Full” means, with respect to any Obligations, the payment in full in cash and performance of all such Obligations.
“Patents” means all (i) all patents and certificates of invention, or similar property rights, and applications for any of the foregoing, of the United States, any other country or any political subdivision thereof, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arising therefrom, (vii) all proceeds of the foregoing, including, without limitation, licenses, royalties, and income, and (viii) without duplication, all IP Ancillary Rights in respect of the foregoing.
“Permitted Lien” means any Lien expressly permitted by Section 7.2.
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“Permitted Refinancing” means any replacement, renewal, refinancing or extension of any existing Debt, in any such case, permitted by this Agreement that (a) does not exceed the aggregate principal amount (plus accrued interest and any applicable premium and associated fees and expenses) of the Debt being replaced, renewed, refinanced or extended, (b) does not have a weighted average life to maturity at the time of such replacement, renewal, refinancing or extension that is less than the weighted average life to maturity of the Debt being replaced, renewed, refinanced or extended, (c) does not rank at the time of such replacement, renewal, refinancing or extension senior to the Debt being replaced, renewed, refinanced or extended, and (d) does not contain terms (including, without limitation, terms relating to security, amortization, interest rate, premiums, fees, covenants, subordination, event of default and remedies) that are less favorable to any Loan Party or adverse to the interests of the Agent and the Lender than those applicable to the Debt being replaced, renewed, refinanced or extended.
“Person” means any natural person, corporation, partnership, trust, limited liability company, association, Governmental Authority or unit, or any other entity, whether acting in an individual, fiduciary or other capacity.
“Product” means and includes any point-of-care device or assay used or useable on such device, and laboratory services business related to any of the foregoing, and any and all future iterations of any of the foregoing.
“Qualified Capital Stock” of any person shall mean any Stock of such person that is not Disqualified Capital Stock.
“Restricted Payment” has the meaning set forth in Section 7.3.
“Security Agreement” means the Security Agreement, dated as of the Closing Date, made by the Borrower in favor of the Agent, and governed by the laws of the State of New York, as amended, restated or otherwise modified from time to time in accordance with the terms hereof and thereof.
“Stock” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in, or equivalents (regardless of how designated) of, a Person (other than an individual), whether voting or non-voting.
“Stock Equivalents” means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding shares of voting Stock or Stock Equivalents as to have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Borrower.
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“Subsidiary Guaranty” means each Subsidiary Guaranty executed and delivered by a Subsidiary in favor of the Agent pursuant to Section 6.7 (to be based on the guaranty provisions of the Guarantee and Pledge Agreement, without the limitation on recourse set forth therein), in form and substance satisfactory to the Agent and the Lender.
“Surviving Debt” means the loans in the aggregate principal amount of * * * as of September 30, 2012 owed by the Borrower to Samuel and Nadine Wohlstadter.
“Surviving Debt Subordination Agreement and Acknowledgment” means the Subordination Acknowledgment and Agreement dated as of the Closing Date delivered by each of the Holders to the Borrower in form and substance acceptable to the Borrower.
“Taxes” has the meaning set forth in Section 3.1(a).
“Tax Returns” has the meaning set forth in Section 5.12.
“Third Party” means any Person other than the Borrower, Lender and Agent.
“Trade Secrets” means all right, title and interest (and all related IP Ancillary Rights) arising under any Applicable Law in or relating to trade secrets.
“Trademark” means all rights, title and interests (and all related IP Ancillary Rights) arising under any Applicable Law in trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers and, in each case, all goodwill associated therewith, all registrations and recordations thereof and all applications in connection therewith.
“UCC” means the Uniform Commercial Code as in effect in from time to time in the State of New York.
“Wholly-Owned Subsidiary” means, as to any Subsidiary, all of the Stock and Stock Equivalents of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower and/or another Wholly-Owned Subsidiary of the Borrower.
1.2. Interpretation. In the case of this Agreement and each other Loan Document, (a) the meanings of defined terms are equally applicable to the singular and plural forms of the defined terms; (b) Annex, Exhibit, Schedule and Section references in each Loan Document are to the particular Annex, Exhibit, Schedule and Section of such Loan Document unless otherwise specified; (c) the term “including” is not limiting and means “including but not limited to”; (d) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including”; (e) unless otherwise expressly provided in such Loan Document, (i) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation; (f) this Agreement and the other Loan Documents may use several different
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limitations, tests or measurements to regulate the same or similar matters, all of which are cumulative and each shall be performed in accordance with its terms; and (g) this Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrower, the Lender and the other parties hereto and thereto and are the products of all parties; accordingly, they shall not be construed against the Agent or the Lender merely because of the Agent's or the Lender's involvement in their preparation. Any reference in any Loan Document to a Permitted Lien is not intended to subordinate or postpone, and shall not be interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any Lien created by any of the Loan Documents to any Permitted Lien.
Section 2. | Credit Facilities. |
2.1.Loan.
2.1.1.Loan. On the terms and subject to the conditions of this Agreement, the Lender agrees to lend to the Borrower on the Closing Date the entire amount of its Commitment, after which the Commitment shall terminate.
2.1.2.General. No portion of the Loan may be re-borrowed once repaid. The proceeds of the Loan shall be used to repay and terminate the Existing Obligations in full concurrently with the incurrence of the Loan and for development of the Borrower's Intellectual Property rights, products and businesses in accordance with the Borrower's business activities as set forth in Section 7.9, in each case in accordance with the Loan Documents and Applicable Law.
2.2.Loan Accounting.
2.2.1. Recordkeeping. The Agent, on behalf of the Lender, shall record in its records the date and amount of the Loan made by the Lender, each interest payment paid in kind, accrued interest and each repayment of principal or interest thereon. The aggregate unpaid principal amount so recorded shall be rebuttably presumptive evidence of the principal amount of the Loan owing and unpaid. The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect the Obligations of the Borrower hereunder or under any Note to repay the principal amount of the Loan hereunder, together with all interest accruing thereon.
2.2.2. Notes. At the request of the Lender, the Loan shall be evidenced by one or more Notes, with appropriate insertions, payable to the order of the Lender in a face principal amount equal to the Loan and payable in such amounts and on such dates as are set forth herein.
2.3.Interest.
2.3.1. Interest Rate. The Borrower promises to pay interest on the unpaid principal amount of the Loan for the period commencing on the Closing Date until the Loan is Paid in Full at a rate payable in cash or in kind, at the election of the Borrower, per annum equal to 5.00%. The foregoing notwithstanding, (i) at any time an Event of Default exists, if requested by the Agent or the Lender, the interest rate then applicable to the Loan shall be increased by two percent (2.00%) per annum (any such increased rate, the “Default Rate”), (ii) any such increase
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may thereafter be rescinded by the Lender, and (iii) upon the occurrence of an Event of Default under Section 8.1.1 or 8.1.3, any such increase described in the foregoing clause (i) shall occur automatically. In the event that the Obligations are not Paid in Full as of the Maturity Date, or in the event that the Obligations shall be declared or shall become due and payable pursuant to Section 8.2, the Obligations shall bear interest subsequent thereto at the Default Rate and such interest shall be payable in cash on demand. In no event shall interest or other amounts payable by the Borrower to the Lender hereunder exceed the maximum rate permitted under Applicable Law, and if any such provision of this Agreement is in contravention of any such law, (x) any amounts paid hereunder shall be deemed to be and shall be applied against the principal amount of the Obligations to the extent necessary such that the amounts paid hereunder do not exceed the maximum rate under Applicable Law and (y) such provision shall otherwise be deemed modified as necessary to limit such amounts paid to the maximum rate permitted under Applicable Law.
2.3.2. Interest Payments. Interest accrued on the Loan during the period from the Closing Date until the Maturity Date shall accrue and be payable in cash or in kind, at the election of the Borrower, quarterly on each March 31, June 30, September 30 and December 31, in arrears, and, to the extent not paid in advance, upon a prepayment of the Loan in accordance with Section 2.4 and at maturity, in each such case, in cash. After maturity and at any time an Event of Default exists, all accrued interest on the Loan shall be payable in cash on demand at the rates specified in Section 2.3.1.
2.3.3. Computation of Interest. Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days consisting of twelve 30-day months.
2.4.Prepayment.
2.4.1. Voluntary Prepayment.
(a)The Borrower may, on or before December 31, 2014, on at least three (3) Business Days' written notice to the Agent, not later than 12:00 noon New York City time on such day, prepay the Loan in full, provided that the amount so prepaid as of the date of prepayment is equal to the IRR * * * Return Amount.
(b)The Borrower may, after December 31, 2014, on at least three (3) Business Days' written notice to the Agent, not later than 12:00 noon New York City time on such day, prepay the Loan in full, provided that the amount so prepaid as of the date of prepayment is equal to the IRR * * * Return Amount.
2.4.2. Payments in Respect of the Assigned Interests. Commencing upon Commercialization, the Borrower shall pay to the Lender the Assigned Interests in respect of Net Revenues earned during the immediately preceding month concurrently with the delivery of each Monthly Net Revenue Report in the amount set forth thereon, until the Maturity Date.
2.5.Payment Upon Maturity. The Loan shall be Paid in Full on the Maturity Date by and upon payment in full of the Applicable IRR Amount. The parties hereto agree that the amounts payable hereunder in respect of the Applicable IRR Amount are a reasonable
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calculation of the parties' expected return to the Lender arising out of the transactions described herein, and, in the case of a prepayment of the Loans, foregone returns, and agree that the payment of such amounts constitute consideration pursuant to this Agreement that the parties agree is fair and reasonable.
2.6.Making of Payments. All payments on the Loan in accordance with this Agreement, including any payment in respect of the Applicable IRR Amount and all payments of fees and expenses, shall be made by the Borrower to the Agent without setoff, recoupment or counterclaim and in immediately available funds, in United States Dollars, by wire transfer to the account of the Agent set forth on Annex II or as otherwise specified by the Agent, in any case, not later than 1:00 p.m. New York City time on the date due, and funds received after that hour shall be deemed to have been received by the Agent on the following Business Day. The Agent shall promptly remit to the Lender all payments received in collected funds by the Agent for the account of such Lender.
2.7.Application of Payments and Proceeds. Any payment by the Borrower hereunder shall be in respect of the Payment in Full of the Obligations; in the event that the Agent shall consent to any partial prepayment hereunder the proceeds of such partial prepayment shall be applied to such Obligations as the Agent shall determine in its sole discretion.
2.8.Payment Dates. If any payment of principal of or interest on a Loan, or of any fees, falls due on a day which is not a Business Day, then such due date shall be extended to the immediately following Business Day and, in the case of principal, additional interest shall accrue and be payable for the period of any such extension.
2.9.Set-off. The Borrower agrees that the Agent and the Lender and its Affiliates have all rights of set-off and bankers' lien provided by Applicable Law, and in addition thereto, the Borrower agrees that at any time an Event of Default has occurred and is continuing, the Agent and the Lender may apply to the payment of any Obligations of the Borrower hereunder, whether or not then due, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with the Agent or such Lender.
2.10.Currency Matters. All amounts payable under this Agreement and the other Loan Documents to the Agent and the Lender shall be payable in Dollars.
Section 3. | Yield Protection. |
3.1. Taxes.
(a)Except as otherwise provided in this Section 3.1, all payments of principal and interest on the Loan and all other amounts payable under any Loan Document shall be made free and clear of and without deduction or withholding for any present or future income, excise, stamp, documentary, property or franchise taxes or other taxes, fees, duties, levies, withholdings or other charges of any nature whatsoever imposed by any taxing authority, including any interest, additions to tax or penalties applicable thereto (“Taxes”), excluding taxes imposed on or measured by the Lender's net income by the jurisdiction under which the Lender is organized or conducts business (other than
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business arising from the Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction with respect to the Loan or pursuant to or enforced any Loan Document (collectively, “Excluded Taxes” and all such non-Excluded Taxes, “Non-Excluded Taxes”)). If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law (as determined in the good faith reasonable discretion of the Borrower or the Agent), rule or regulation, then the Borrower shall: (i) timely pay directly to the relevant taxing authority the full amount required to be so withheld or deducted; (ii) within thirty (30) days after the date of any such payment of Taxes, forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (iii) in the case of Non-Excluded Taxes, pay to the Agent for the account of the Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by the Lender will equal the full amount the Lender would have received had no such withholding or deduction (including withholdings and deductions applicable to any additional sums payable under this Section 3.1) been required.
(b)the Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.
(c)The Borrower shall reimburse and indemnify, within 10 days after receipt of demand therefor (with copy to the Agent), the Agent and the Lender for all Non-Excluded Taxes and Other Taxes (including any additional Taxes imposed by any jurisdiction on amounts payable under this Section 3.1) paid by the Agent or the Lender, or required to be withheld or deducted from a payment to the Agent or the Lender, and any liabilities arising therefrom or with respect thereto (including any penalty, interest or expense), whether or not such Taxes were correctly or legally asserted. A certificate of the Agent or the Lender (or of the Agent on behalf of the Lender) claiming any compensation under this clause (c), setting forth the amounts to be paid thereunder and delivered to the Borrower with copy to the Agent, shall be conclusive, binding and final for all purposes, absent manifest error.
The provisions of this Section 3.1 shall survive the termination of this Agreement and repayment of all Obligations.
3.2. Increased Cost.
(a)If, after the Closing Date, the adoption or taking effect of, or any change in, any Applicable Law, rule, regulation or treaty, or any change in the interpretation or administration of any Applicable Law, rule, regulation or treaty by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Lender with any request, rule, guideline or directive (whether or not having the
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force of law) of any such authority, central bank or comparable agency: (i) shall impose, modify or deem applicable any reserve (including any reserve imposed by the FRB), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by the Lender; (ii) subject the Lender or the Agent to any Taxes (other than Taxes indemnified pursuant to Section 3.1); or (iii) shall impose on the Lender any other condition affecting its Loan, its Note or its obligation to make the Loan; and the result of anything described in clauses (i) through (iii) above is to increase the cost to (or to impose a cost on) such Lender of making or maintaining its Loan, or to reduce the amount of any sum received or receivable by such Lender under this Agreement or under its Note with respect thereto, then, upon demand by such Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Agent), the Borrower shall pay directly to the Lender such additional amount as will compensate the Lender for such increased cost or such reduction.
(b)If the Lender shall reasonably determine that any change in, or the adoption or phase-in of, any Applicable Law, rule or regulation regarding capital adequacy, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or the compliance by the Lender or any Person controlling the Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the Lender's or such controlling Person's capital as a consequence of such Lender's Commitments hereunder to a level below that which the Lender or such controlling Person could have achieved but for such change, adoption, phase-in or compliance (taking into consideration the Lender's or such controlling Person's policies with respect to capital adequacy) by an amount deemed by the Lender or such controlling Person to be material, then from time to time, upon demand by the Lender (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to the Agent), the Borrower shall pay to the Lender such additional amount as will compensate the Lender or such controlling Person for such reduction.
(c)Notwithstanding anything herein to the contrary, (i) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by United States or foreign regulatory authorities, in each case pursuant to Basel III, and (ii) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof, shall in each case be deemed to be a change in law, regardless of the date enacted, adopted, issued or implemented.
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3.3. Mitigation of Circumstances.
The Lender shall promptly notify the Borrower and the Agent of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender's sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, any obligation by the Borrower to pay any amount pursuant to Section 3.1 or 3.2; provided, that this Section 3.3 shall not apply to, or operate to prevent, any assignment of the Loan and the rights and obligations of the Lender pursuant to Section 10.13. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by the Lender in connection with this Section 3.3.
3.4. Conclusiveness of Statements; Survival. Determinations and statements of the Lender pursuant to Sections 3.1 or 3.2 shall be conclusive absent demonstrable error provided that the Lender or the Agent provides the Borrower with written notification of such determinations and statements. The Lender may use reasonable averaging and attribution methods in determining compensation under Sections 3.1 or 3.2 and the provisions of such Sections shall survive repayment of the Loan, cancellation of the Notes and termination of this Agreement.
Section 4. | Conditions Precedent. |
4.1. Loan. The obligation of the Lender to make the Loan on the Closing Date is subject to the following conditions precedent, each of which shall be satisfactory in all respects to the Agent and the Lender:
4.1.1. Delivery of Loan Documents. The Borrower shall have delivered the following documents in form and substance satisfactory to the Agent (and, as applicable, duly executed by all Persons named as parties thereto and dated the Closing Date or an earlier date satisfactory to the Agent):
(a)Agreement. This Agreement.
(b)Notes. A Note in respect of the Loan.
(c)Collateral Documents. The Security Agreement, the Guarantee and Pledge Agreement, all other Collateral Documents, and all instruments, documents, certificates and agreements executed or delivered pursuant thereto (including Intellectual Property assignments and pledged equity and limited liability company interests in the Borrower and the Borrower's Subsidiaries, if any, with undated irrevocable transfer powers executed in blank), in each case, executed and delivered by the Holders, each Loan Party and each other Person named as a party thereto.
(d)Financing Statements. Properly completed Uniform Commercial Code financing statements and other filings and documents required by law or the Loan Documents to provide the Agent perfected Liens (subject only to Permitted Liens) in the Collateral.
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(e)Lien Searches. Copies of Uniform Commercial Code search reports listing all effective financing statements or equivalent filings filed against the Holders or any Loan Party, with copies of such financing statements and filings; and copies of Patent, Trademark, Copyright and Internet Domain Name search reports in material jurisdictions listing all effective collateral assignments in respect of such Intellectual Property filed with respect to any Loan Party, with copies of such collateral assignment documentation.
(f)Authorization Documents. For each Loan Party, such Person's (i) charter (or similar formation document), certified by the appropriate Governmental Authority (as applicable) in its jurisdiction of incorporation (or formation), (ii) good standing certificates in its jurisdiction of incorporation (or formation) and in each other jurisdiction requested by the Agent or the Lender, (iii) limited liability company agreement, partnership agreement, bylaws (and similar governing document) (as applicable), (iv) resolutions of its board of directors (or similar governing body) approving and authorizing such Person's execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby, and (v) signature and incumbency certificates of its directors and/or officers executing any of the Loan Documents, all certified by its secretary or an assistant secretary (or similar officer) as being in full force and effect without modification.
(g)Opinions of Counsel. Opinions of counsel for each Loan Party, in form and substance requested by the Agent.
(h)Insurance. Certificates or other evidence of insurance in effect as required by Section 6.3(b), with endorsements naming the Agent as lenders' loss payee and/or additional insured, as applicable.
(i)Other Documents. Such other certificates, documents and agreements that may be listed on the closing checklist provided by the Agent to the Borrower or as the Agent or the Lender may request.
4.1.2. Payment of Fees, Expenses and Existing Obligations. The Borrower shall have paid, on or prior to the Closing Date, (i) all fees and expenses owing and payable to the Agent and the Lender as of the Closing Date, including the Closing Fee, (ii) subject to Section 10.3 and without duplication, all fees, expenses and other amounts payable set forth herein and costs and expenses incurred by the Agent and the Lender in connection with the transactions contemplated hereby which are required to be paid by the Borrower and (iii) all Existing Obligations, and shall provide evidence acceptable to the Agent of each of the foregoing.
4.1.3. Representations and Warranties. Each representation and warranty by each Loan Party contained herein or by the Holders and each Loan Party in any other Loan Document to which the Holders or such Loan Party is a party, shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of the Closing Date.
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4.1.4. No Default. No Default or Event of Default shall have occurred and be continuing.
4.1.5. No Material Adverse Change. Since December 31, 2011, there has been no event or occurrence that has or could reasonably be expected to result in a Material Adverse Effect.
4.1.6. Surviving Debt Subordination Agreement and Acknowledgment. The Holders shall have executed and delivered to the Agent the Surviving Debt Subordination Agreement and Acknowledgment pursuant to which the Holders shall agree and acknowledge that the Surviving Debt is subordinated to the Obligations as set forth therein.
4.1.7. Execution and Delivery of Letter Agreement. The Borrower shall have executed and delivered a letter agreement to the Agent dated as of the Closing Date (the “Letter Agreement”) containing, among other items, certain representations and warranties regarding its Intellectual Property, on terms and conditions acceptable to the Lender and Agent.
Section 5. | Representations and Warranties. |
To induce the Agent and the Lender to enter into this Agreement and to induce the Lender to advance the Loan hereunder, the Borrower represents and warrants to the Agent and the Lender that each of the following are, and after giving effect to the borrowing of the Loan, will be, true, correct and complete:
5.1. Organization. The Borrower is a limited liability company validly existing and in good standing under the laws of the State of Delaware; and each other Loan Party is validly existing and in good standing (as applicable) under the laws of the jurisdiction of its organization; and each Loan Party is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect.
5.2. Authorization; No Conflict. Each of the Borrower and each other Loan Party is duly authorized to execute and deliver each Loan Document to which it is a party, the Borrower is duly authorized to borrow monies hereunder, the granting of the security interests pursuant to the Collateral Documents is within the corporate purposes of the Borrower and each other Loan Party party thereto, and the Borrower and each other Loan Party is duly authorized to perform its Obligations under each Loan Document to which it is a party. The execution, delivery and performance by the Borrower of this Agreement and by each of the Holders, the Borrower and each Loan Party of each Loan Document to which it is a party, and the borrowings by the Borrower hereunder, do not and will not (a) require any consent or approval of any Governmental Authority (other than (i) any consent or approval which has been obtained and is in full force and effect and (ii) recordings and filings in connection with the Liens granted to the Agent under the Collateral Documents), (b) conflict with (i) any provision of Applicable Law, (ii) the charter, by-laws, limited liability company agreement, partnership agreement or other organizational documents of any Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Holders or any
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Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of the Holders, the Borrower or any other Loan Party (other than Liens in favor of the Agent created pursuant to the Collateral Documents).
5.3. Validity; Binding Nature. Each of this Agreement and each other Loan Document to which the Holders, the Borrower or any other Loan Party is a party is the legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity.
5.4. Financial Condition. The unaudited consolidated financial statements of the Borrower and its Subsidiaries (presented on a consolidated basis) as at December 31, 2011, together with the unaudited consolidated financial statements of the Borrower and its Subsidiaries (presented on a consolidated basis) as at June 30, 2012 (“Current Financial Statements”) have been prepared on a cash/tax accounting basis and present fairly the consolidated financial condition of such Persons as at such dates and the results of their operations for the periods then ended. As of the Closing Date, the Borrower and its Subsidiaries have no liabilities other than as set forth on the foregoing financial statements other than trade payables and compensation costs incurred in the ordinary course of business.
5.5. No Material Adverse Change. Since December 31, 2011, there has been no event or occurrence that has or could reasonably be expected to result in a Material Adverse Effect.
5.6. Litigation. No litigation (including derivative actions), arbitration proceeding or governmental investigation or proceeding is pending or, to the Holders or any Loan Party's knowledge, threatened, against the Holders or any Loan Party or any of their respective properties which (i) purport to affect or pertain to this Agreement, any other Loan Document or any of the transactions contemplated hereby or (ii) could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement, any other Loan Document, or directing that the transactions provided for herein not be consummated as herein provided. As of the Closing Date, neither the Holders nor any Loan Party is the subject of an audit or, to the Holders and each Loan Party's knowledge, any review or investigation by any Governmental Authority (excluding the IRS and other taxing authorities) concerning the violation or possible violation of any requirement of law.
5.7. Ownership of Properties; Liens. There are no Liens on the Collateral other than those granted in favor of the Agent to secure the Obligations and Permitted Liens. Each of the Borrower and each other Loan Party owns good and, in the case of real property, marketable, title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges and claims (including infringement claims with respect to Intellectual Property), and the Holders hold 100% of the Capital Stock of the Borrower free and clear of all Liens, charges and claims except as permitted by Section 7.2. As of the
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Closing Date, Schedule 5.7 lists all of the real property owned, leased, subleased or otherwise owned or occupied by any Loan Party.
5.8. Capitalization; Subsidiaries.
(a)Equity Interests. As of the Closing Date the Borrower has no Subsidiaries and does not hold any Capital Stock of any other Person. All Stock and Stock Equivalents of each Loan Party are duly and validly issued and, in the case of each entity that is a corporation, are fully paid and non-assessable, and, other than the Stock and Stock Equivalents of the Borrower, are owned by the Borrower, directly or indirectly through Wholly-Owned Subsidiaries. The Holders and each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Stock and Stock Equivalents pledged by it to the Agent under the Collateral Documents, free of any and all Liens, rights or claims of other persons, except the security interest created by the Collateral Documents, and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Stock and Stock Equivalents. As of the Closing Date, no Loan Party is engaged in any joint venture with any other Person.
(b)No Consent of Third Parties Required. No consent of any person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or reasonably desirable (from the perspective of a secured party) in connection with the creation, perfection or first priority status of the security interest of the Agent in any Stock and Stock Equivalents pledged to the Agent for the benefit of the Lender under the Collateral Documents or the exercise by the Agent of the voting or other rights provided for in the Collateral Documents or the exercise of remedies in respect thereof.
5.9. Pension Plans. No Loan Parties have any liability under ERISA and no Loan Party sponsors any “pension plan” or has any liability subject to Title IV of ERISA.
5.10. Compliance with Law; Investment Company Act; Other Regulated Entities. Except as set out in Schedule 5.10, the Borrower and each other Loan Party possesses all necessary authorizations, permits, licenses and approvals from all Governmental Authorities in order to conduct their respective businesses as presently conducted. All business and operations of the Borrower and each other Loan Party complies with all applicable federal, state and local laws and regulations, except where the failure so to comply could not reasonably be expected to result in a Material Adverse Effect. Neither the Borrower nor any other Loan Party is operating any aspect of its business under any agreement, settlement, order or other arrangement with any Governmental Authority. Neither the Borrower nor any other Loan Party is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company”, within the meaning of the Investment Company Act of 1940. None of any Loan Party, any Person controlling any Loan Party, or any Subsidiary of any Loan Party, is subject to regulation under any Federal or state statute, rule or regulation
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limiting its ability to incur Debt, pledge its assets or perform its Obligations under the Loan Documents.
5.11. Margin Stock. Neither the Borrower nor any Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. No portion of the Obligations is secured directly or indirectly by Margin Stock.
5.12. Taxes. Each of the Borrower and each other Loan Party has filed all federal, and all other material state, provincial, local and foreign income, sales, goods and services, harmonized sales and franchise and other tax returns, reports and statements (collectively, the “Tax Returns”) with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are or were required to be filed. All such Tax Returns are true and correct in all material respects. All Taxes, charges and other impositions reflected therein or otherwise due and payable have been paid prior to the date on which any liability may be added thereto for non-payment thereof, except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Loan Party, as applicable. As of the Closing Date, no Tax Return is under audit or examination by any Governmental Authority and no notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Governmental Authority. Proper and accurate amounts have been withheld by the each Loan Party, as applicable, from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of Applicable Law and such withholdings have been timely paid to the respective Governmental Authorities. No Loan Party has been a member of an affiliated, combined or unitary group other than the group of which the Holders or a Loan Party is the common parent or has liability for Taxes of any other person.
5.13. Solvency. Both immediately before and after giving effect to (a) the Loan made on or prior to the date this representation and warranty is made or remade, (b) the disbursement of proceeds of such Loan, and (c) the payment and accrual of all transaction costs in connection with the foregoing, with respect to the Borrower and each other Loan Party, on a consolidated basis, (i) the fair value of its assets is greater than the amount of its liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated, (ii) the present fair saleable value of its assets is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, (iii) it is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (iv) it does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature and (v) it is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute unreasonably small capital.
5.14. Environmental Matters. The on-going operations of the Borrower and each other Loan Party comply in all respects with all Environmental Laws, except such non-compliance which could not (if enforced in accordance with Applicable Law) reasonably be expected to result in a Material Adverse Effect. The Borrower and each other Loan Party have
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obtained, and maintained in good standing, all licenses, permits, authorizations and registrations required under any Environmental Law and necessary for their respective ordinary course operations, and the Borrower and each other Loan Party are in compliance with all material terms and conditions thereof, except where the failure to do so could not reasonably be expected to result in material liability to the Borrower or any other Loan Party and could not reasonably be expected to result in a Material Adverse Effect. None of the Borrower, any other Loan Party or any of their respective properties or operations is subject to any outstanding written order from or agreement with any federal, state or local Governmental Authority, nor subject to any judicial or docketed administrative proceeding, nor subject to any indemnification agreement or other contractual obligation, respecting any Environmental Law, Environmental Claim or Hazardous Substance. There are no Hazardous Substances or other conditions or circumstances existing with respect to any property, or arising from operations prior to the Closing Date, of the Borrower or any other Loan Party that could reasonably be expected to result in a Material Adverse Effect. Neither the Borrower nor any other Loan Party has any underground or above ground storage tanks that are not properly registered or permitted under applicable Environmental Laws or that are leaking or disposing of Hazardous Substances.
5.15. Insurance. The Borrower and each other Loan Party and their respective properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or such other Loan Party operates. A true and complete listing of such insurance as of the Closing Date, including issuers, coverages and deductibles, is set forth on Schedule 5.15.
5.16. Information. All information heretofore or contemporaneously herewith furnished in writing by the Holders, the Borrower or any other Loan Party to the Agent or the Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Holders, the Borrower or any Loan Party to the Agent or the Lender pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by the Agent and the Lender that any projections and forecasts provided by the Borrower are based on good faith estimates and assumptions believed by the Borrower to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results).
5.17. Intellectual Property. Each Loan Party owns, or is licensed or otherwise has the right to use, all Intellectual Property necessary to conduct its business as currently conducted except for such Intellectual Property the failure of which to own or have a license or other right to use would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. To the knowledge of each Loan Party, (a) the conduct and operations of the businesses of each Loan Party do not, and the anticipated products and Intellectual Property applications of the Loan Parties will not, infringe upon, misappropriate, dilute or violate any Intellectual Property owned by any other Person and (b) no other Person has
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contested any right, title or interest of any Loan Party in any Intellectual Property or any anticipated products and applications derived or expected to be derived therefrom, other than, in each case, as cannot reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Intellectual Property of the Loan Parties is sufficient, and conveys adequate rights, title and interests, for the Borrower and other Loan Parties to develop and commercialize its anticipated products and Intellectual Property applications.
5.18. Labor Matters. Except as set forth on Schedule 5.18, neither the Borrower nor any other Loan Party is subject to any labor or collective bargaining agreement. There are no existing or threatened strikes, lockouts or other labor disputes involving the Borrower or any other Loan Party that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Borrower and the other Loan Parties are not in violation of the Fair Labor Standards Act or any other Applicable Law, rule or regulation dealing with such matters.
5.19. No Default. No Loan Party is in default under or with respect to any contractual obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect.
5.20. Foreign Assets Control Regulations and Anti-Money Laundering.
5.20.1. OFAC. Each Loan Party is and will remain in compliance in all material respects with all U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Treasury Department's Office of Foreign Assets Control (“OFAC”) and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to any of the foregoing. No Loan Party (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a U.S. Person cannot deal with or otherwise engage in business transactions, (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List, a Terrorist List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under U.S. law.
5.20.2. Patriot Act. The Loan Parties and each of their Affiliates are in compliance with (a) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling legislation or executive order relating thereto and (b) the Patriot Act. No part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.
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Section 6. Affirmative Covenants.
Until all Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) are Paid in Full, the Borrower agrees that, unless at any time the Lender shall otherwise expressly consent in writing, it will:
6.1. Information. Furnish to the Agent and the Lender:
6.1.1. Annual Report. Promptly when available and in any event within 90 days of the end of each Fiscal Year of the Borrower beginning with the Fiscal Year ended December 31, 2012, the unaudited consolidated financial statements of the Borrower and the Subsidiaries as at the end of such Fiscal Year prepared, (i) if Commercialization has not occurred as of the last day of such period, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP.
6.1.2. Quarterly Reports. Commencing with respect to the first Fiscal Quarter of 2013, promptly when available and in any event within 45 days of the end of such Fiscal Quarter and each subsequent Fiscal Quarter, consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal quarter, together with consolidated financial statements for such period prepared, (i) if Commercialization has not occurred as of the last day of such period, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP, and a management discussion and analysis relating to such information in reasonable detail, together with a comparison with the corresponding period of the previous Fiscal Year and a comparison with the budget for such period of the current Fiscal Year, certified by the chief financial officer of the Borrower.
6.1.3. Reserved.
6.1.4. Compliance Certificate. Contemporaneously with the furnishing of the financial statements required pursuant to Sections 6.1.1 and 6.1.2, a duly completed Compliance Certificate signed by the chief financial officer of the Borrower to the effect that such officer has not become aware of any Event of Default or Default that has occurred and is continuing or, if there is any such Event of Default, describing it and the steps, if any, being taken to cure it, and providing such other information as required thereby.
6.1.5. Monthly Net Revenue Report. Commencing upon Commercialization, and thereafter promptly when available and in any event within 30 days after the end of each calendar month, a Monthly Net Revenue Report, together with a certificate of the Borrower signed by the chief financial officer of the Borrower certifying that the foregoing report is true, correct and accurate in all material respects as of such date.
6.1.6. Notice of Default; Litigation; ERISA Matters. Promptly upon becoming aware of any of the following, written notice describing the same and the steps being taken by the Borrower or the applicable Loan Party affected thereby with respect thereto:
(a)the occurrence of an Event of Default or a Default;
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(b)any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Borrower to the Lender which has been instituted or, to the knowledge of the Borrower, is threatened against the Holders, the Borrower or any other Loan Party, or to which any of the properties of any thereof is subject, which could reasonably be expected to have a Material Adverse Effect;
(c)any cancellation or material change in coverage in any insurance maintained by the Borrower or any other Loan Party; or
(d)any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim, (ii) the enactment or effectiveness of any law, rule or regulation, (iii) any violation or noncompliance with any law or (iv) any breach or non-performance of, or any default under, any contractual obligation of the Holders or any Loan Party) which could reasonably be expected to have a Material Adverse Effect.
6.1.7. Reserved.
6.1.8. Budgets. As soon as practicable, and in any event not later than 30 days after the commencement of each Fiscal Year, a budget of the Borrower and its Subsidiaries for such Fiscal Year (including quarterly operating and cash flow budgets) prepared in a manner reasonably satisfactory to the Agent, accompanied by a certificate of the chief financial officer of the Borrower to the effect that (a) such budget was prepared by the Borrower, in good faith, (b) the Borrower has a reasonable basis for the assumptions contained in such budget and (c) such budget has been prepared in accordance with such assumptions.
6.1.9. Other Information. Promptly from time to time, such other information concerning the Holders, the Borrower and any other Loan Party as the Lender or the Agent may reasonably request.
6.2. Books; Records; Inspections. Keep, and cause the Borrower and each other Loan Party to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause the Borrower and each other Loan Party to permit, the Agent, the Lender, or any representative of the foregoing to inspect, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the properties and operations of the Borrower or such other Loan Party; and permit, and cause the Borrower and each other Loan Party to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the Agent, the Lender, or any representative thereof to visit any or all of its offices, to discuss its financial matters with its directors or officers and its independent auditors, if any (and the Borrower hereby authorizes such independent auditors, if any, to discuss such financial matters with the Lender or the Agent or any representative thereof), and to examine (and, at the expense of the Borrower or the applicable Loan Party, photocopy extracts from) any of its books or other records; and permit, and cause the Borrower and each other Loan Party to permit, the Agent, the Lender and their representatives to inspect, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), the
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Collateral and other tangible assets of the Borrower or such Loan Party, to perform appraisals of the equipment of the Borrower or such Party, and to inspect, audit, check and make copies of and extracts from the books, records, computer data, computer programs, journals, orders, receipts, correspondence and other data relating to any Collateral, including the Assigned Interests for purposes of or otherwise in connection with conducting a review, audit or appraisal of such books and records. In the event that the Agent or Lender shall determine pursuant to any audit of the books and records of the Borrower and its Subsidiaries conducted pursuant to this Section 6.2 that the aggregate amount paid to the Lender hereunder during any period covered by such audit is less than the aggregate amount that was in fact due and payable in respect of such period the Borrower shall promptly remit the amount of such shortfall to the Agent together with interest thereon payable at the Default Rate.
6.3. Maintenance of Property; Insurance.
(a)Keep, and cause each other Loan Party to keep, all property useful and necessary in the business of the Borrower or such other Loan Party in good working order and condition, ordinary wear and tear excepted, and maintain, and cause each other Loan Party to maintain, its Intellectual Property in accordance with the provisions of the Collateral Documents.
(b)Maintain, and cause each other Loan Party to maintain, with responsible insurance companies, such insurance coverage as shall be required by all laws, governmental regulations and court decrees and orders applicable to it and such other insurance, to such extent and against such hazards and liabilities, as is customarily maintained by companies similarly situated; provided that in any event, such insurance shall insure against all risks and liabilities of the type insured against as of the Closing Date and shall have insured amounts no less than, and deductibles no higher than, those amounts provided for as of the Closing Date. Upon request of the Agent or the Lender, the Borrower shall furnish to the Agent or such Lender a certificate setting forth in reasonable detail the nature and extent of all insurance maintained by the Borrower and each other Loan Party. The Borrower shall cause each issuer of an insurance policy to provide the Agent with an endorsement (i) showing the Agent as a loss payee with respect to each policy of property or casualty insurance and naming the Agent as an additional insured with respect to each policy of liability insurance, (ii) providing that 30 days' notice will be given to the Agent prior to any cancellation of, or reduction or change in coverage provided by or other material modification to such policy and (iii) acceptable in all other respects to the Agent. The Borrower shall execute and deliver to the Agent, upon request of the Agent, a collateral assignment, in form and substance satisfactory to the Agent, of each business interruption insurance policy maintained by the Loan Parties.
(c)Unless the Borrower provides the Agent with evidence of the continuing insurance coverage required by this Agreement, the Agent may purchase insurance (to the extent of such insurance coverage as shall be required by clause (b) above) at the Borrower's expense to protect the Agent's and the Lender's interests in the Collateral. This insurance may, but need not, protect the
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Borrower's and each other Loan Party's interests. The coverage that the Agent purchases may, but need not, pay any claim that is made against the Borrower or any other Loan Party in connection with the Collateral. The Borrower may later cancel any insurance purchased by the Agent, but only after providing the Agent with evidence that the Borrower has obtained the insurance coverage required by this Agreement. If the Agent purchases insurance for the Collateral, as set forth above, the Borrower will be responsible for the costs of that insurance, including interest and any other charges that may be imposed with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance and the costs of the insurance may be added to the principal amount of the Loan owing hereunder.
6.4. Compliance with Laws and Contractual Obligations; Payment of Taxes and Liabilities. Comply, and cause each other Loan Party to comply, in all material respects with all Applicable Laws, rules, regulations, decrees, orders, judgments, licenses and permits and all indentures, agreements and other instruments binding upon it or its property, except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, ensure, and cause each other Loan Party to ensure, that no person who owns a controlling interest in or otherwise controls a Loan Party is or shall be (i) listed on the Specially Designated Nationals and Blocked Person List maintained by OFAC, Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated under Section 1(b), (c) or (d) of Executive Order 13224, any related enabling legislation or any other similar Executive Orders; (c) without limiting clause (a) above, comply and cause each other Loan Party to comply, with all applicable Bank Secrecy Act and anti-money laundering laws and regulations; and (d) timely prepare and file all Federal and all other material Tax Returns required to be filed by Applicable Law and pay, and cause each other Loan Party to pay, prior to delinquency, all taxes and other governmental charges against it or any of its property, as well as claims of any kind which, if unpaid, could become a Lien on any of its property; provided that the foregoing shall not require the Borrower or any other Loan Party to pay any such Tax or charge so long as it shall promptly contest the validity thereof in good faith by appropriate proceedings and shall set aside on its books adequate reserves with respect thereto in accordance with GAAP.
6.5. Maintenance of Existence. Maintain and preserve, and (subject to Section 7.4) cause each other Loan Party to maintain and preserve, (a) its existence and good standing (as applicable) in the jurisdiction of its organization and (b) its qualification to do business and good standing (as applicable) in each jurisdiction where the nature of its business makes such qualification necessary, other than any such jurisdiction where the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect.
6.6. Environmental Matters. If any release or disposal of Hazardous Substances shall occur or shall have occurred on or from any real property or any other assets of the Borrower or any other Loan Party, cause, or direct the applicable Loan Party to cause, the prompt containment and removal of such Hazardous Substances and the remediation of such real property or other assets as is necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets. Without limiting the generality of the foregoing,
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the Borrower shall, and shall cause each other Loan Party to, comply with each valid Federal or state judicial or administrative order requiring the performance at any real property by the Borrower or any other Loan Party of activities in response to the release or threatened release of a Hazardous Substance. If any violation of any Environmental Law shall occur or shall have occurred at any real property or any other assets of the Borrower or any other Loan Party or otherwise in connection with their operations, cause, or direct the applicable Loan Party to cause, the prompt correction of such violation.
6.7. Further Assurances. Promptly upon request by the Agent, the Holders and the Loan Parties shall (and, subject to the limitations hereinafter set forth, shall cause each of their Subsidiaries to) take such additional actions as the Agent may reasonably require from time to time in order (i) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests, whether now owned or hereafter acquired, covered or intended to be covered by any of the Collateral Documents, (ii) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Agent and the Lender the rights granted or now or hereafter intended to be granted to the Agent and the Lender under any Loan Document or under any other document executed in connection therewith. Without limiting the generality of the foregoing and except as otherwise approved in writing by the Lender, the Loan Parties shall cause each of their Subsidiaries (including any Subsidiary formed or acquired after the Closing Date) to guaranty the Obligations and cause each such Subsidiary to grant to the Agent, for the benefit of the Agent and the Lender, a security interest in, subject to the limitations hereinafter set forth, all of such Subsidiary's property to secure such guaranty, in each case pursuant to the execution and delivery of a Subsidiary Guaranty and a joinder to the Security Agreement and such other documents as may be reasonably requested, each in form and substance reasonably satisfactory to the Agent. Furthermore and except as otherwise approved in writing by the Lender, the Borrower shall, and shall cause each of its Subsidiaries (except Inactive Subsidiaries) to, pledge all of the Stock and Stock Equivalents of each of its Subsidiaries to the Agent for the benefit of the Agent and the Lender, to secure the Obligations, in each case pursuant to documents in form and substance reasonably satisfactory to the Agent. In connection with each pledge of Capital Stock, the Holders, the Borrower and each Subsidiary shall deliver, or cause to be delivered, to the Agent, irrevocable proxies and stock powers and/or assignments, as applicable, duly executed in blank, in each case pursuant to documents in form and substance reasonably satisfactory to the Agent. In the event that any Capital Stock of the Borrower shall be transferred to any new Holder the Borrower shall cause such Holder to execute and deliver a Guarantee and Pledge Agreement to the Agent prior to or concurrently with such transfer. The Borrower and each Loan Party shall be under an ongoing obligation to use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property, bailee in possession of any Collateral with respect to each location where any Collateral is stored or located, which Collateral Access Agreement shall be in form and substance reasonably satisfactory to the Agent. Without limiting the requirements of the Collateral Documents, in the event that any Loan Party shall acquire, develop, or otherwise obtain, register or seek to register any Patent, Copyright, Trademark, or other Intellectual Property with any Governmental Authority, or obtain, register or seek to register any application for, or license in respect of, any of the foregoing, the Borrower shall notify the Agent thereof within five (5) Business Days and shall promptly thereafter execute and deliver to the Agent, for the benefit of the Lenders, such
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Intellectual Property Assignments, other Collateral Documents or other documents as the Agent may request in order to secure and perfect the security interest in respect of such Intellectual Property.
6.8. Post-Closing Obligations.
(a)Within thirty (30) days after the Closing Date (subject to extension by the Agent in its sole discretion), the Loan Parties shall deliver to the Agent a deposit account or securities account, as applicable, Control Agreement for each deposit account and securities account maintained by any Loan Party (other than zero balance payroll and similar accounts), in form and substance satisfactory to the Agent.
(b)Each Loan Party shall use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each leased property, bailee in possession of any Collateral or mortgage of any owned property with respect to each location where any Collateral is stored or located, which Collateral Access Agreement shall be in form and substance reasonably satisfactory to the Agent.
6.9. Assigned Interests Payments. In the event of Commercialization, it shall remit to the Lender amounts pursuant to Section 2.4.2.
Section 7. Negative Covenants.
Until the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) are Paid in Full, the Borrower agrees that, unless at any time the Lender shall otherwise expressly consent in writing, it will:
7.1. Debt. Not, and not suffer or permit any Loan Party to, create, incur, assume or suffer to exist any Debt, except for the following Debt of the Borrower and/or Loan Party Subsidiaries:
(a)Obligations under this Agreement and the other Loan Documents;
(b)Debt that is unsecured or secured by Liens permitted by Section 7.2(d); provided that the aggregate principal amount of all such Debt at any time outstanding shall not exceed $50,000;
(c)Debt of the Borrower to any Loan Party that is a Wholly-Owned Subsidiary of the Borrower or Debt of any Loan Party that is a Wholly-Owned Subsidiary of the Borrower to the Borrower or another Loan Party that is a Wholly-Owned Subsidiary of the Borrower; provided that all such Debt shall be evidenced by a global intercompany demand note in form and substance satisfactory to the Agent and pledged and delivered to the Agent pursuant to the applicable Collateral Document as additional collateral security for the
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Obligations, and the obligations under such demand note shall be subordinated to the Obligations hereunder in a manner satisfactory to the Agent;
(d)Debt described on Schedule 7.1 as of the Closing Date, and any Permitted Refinancing thereof;
(e)Contingent Obligations arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions permitted under Section 7.4;
(f)Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided that such Debt is extinguished within two (2) Business Days of notice to the Borrower or the relevant Subsidiary of its incurrence;
(g)Debt incurred in connection with the financing of insurance premiums in the ordinary course of business; and
(h)guaranties by the Borrower of the Debt of any Loan Party that is a Wholly-Owned Subsidiary of the Borrower or guaranties by any Subsidiary thereof of the Debt of the Borrower in each case so long as such Debt is otherwise permitted under Section 7.1(a) or (b).
7.2. Liens. Not, and not suffer or permit any Loan Party to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:
(a)Liens for Taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;
(b)Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics, customs brokers, landlords and materialmen and other similar Liens imposed by law and (ii) Liens consisting of pledges or deposits incurred in connection with worker's compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being diligently contested in good faith by appropriate proceedings and not involving any deposits or advances or borrowed money or the deferred purchase price of property or services and, in each case, for which it maintains adequate reserves in accordance with GAAP and the execution or other enforcement of which is effectively stayed;
(c)Liens described on Schedule 7.2 as of the Closing Date;
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(d)(i) Liens arising in connection with Capital Leases (and attaching only to the property being leased), and (ii) Liens that constitute purchase money security interests on any property securing debt incurred for the purpose of financing all or any part of the cost of acquiring such property, in each case permitted by Section 7.1(b); provided that any such Lien attaches to such property within 60 days of the acquisition thereof and attaches solely to the property so acquired;
(e)attachments, appeal bonds, judgments and other similar Liens, in connection with judgments the existence of which do not constitute an Event of Default;
(f)easements, encroachments, rights of way, leases, subleases, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Borrower or any Subsidiary;
(g)any interest or title of a lessor or sublessor under any lease (other than a Capital Lease) or of a licensor or sublicensor under any license, in each case permitted by this Agreement;
(h)Liens arising from precautionary uniform commercial code financing statements filed under any lease (other than a Capital Lease) permitted by this Agreement;
(i)Liens arising under the Loan Documents; and
(j)the replacement, extension or renewal of any Lien permitted by clause (d) above upon or in the same property subject thereto arising out of the Permitted Refinancing of the Debt secured thereby.
7.3. Restricted Payments. Not, and not suffer or permit any Loan Party to, (i) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any Stock or Stock Equivalent, (ii) purchase, redeem or otherwise acquire for value any Stock or Stock Equivalent now or hereafter outstanding or (iii) make any payment or prepayment of principal of, premium, if any, interest, fees, redemption, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, Debt that is subordinated by its terms to the payment of the Obligations, including any Surviving Debt or any other indebtedness which is intended to be subordinated to the Obligations (the items described in clauses (i), (ii) and (iii) above are referred to as “Restricted Payments”) except that any Subsidiary of the Borrower may declare and pay dividends to, repay intercompany debt owed to, and make internal profit-sharing payments to, the Borrower or any other Loan Party that is a Wholly-Owned Subsidiary of the Borrower.
7.4. Mergers; Consolidations; Asset Sales.
(a)Not, and not suffer or permit any Loan Party to, be a party to any merger, consolidation or amalgamation, except for any such merger or
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consolidation (i) of any Subsidiary of the Borrower into the Borrower (so long as the Borrower survives such merger) or any Loan Party that is a Wholly-Owned Subsidiary of the Borrower, as applicable (so long as such Loan Party that is a Wholly-Owned Subsidiary survives such merger) or (ii) in which the Obligations shall be Paid in Full prior to or concurrently with the consummation of such transaction.
(b)Not, and not suffer or permit any Loan Party to, sell, transfer, dispose of, convey or lease any of its assets or Capital Stock of any Loan Party, or sell or assign with or without recourse any receivables, except for (i) sales or dispositions of worn-out or surplus equipment, all in the ordinary course of business, (ii) the abandonment or other disposition of Intellectual Property that is no longer useful or material to the conduct of the business of the Loan Parties as determined by the Borrower in its reasonable business judgment, (iii) dispositions of cash and Cash Equivalent Investments, (iv) licenses, sublicenses, leases or subleases (including any license or sublicense of Intellectual Property) granted to third parties in the ordinary course of business not interfering with the business of the Loan Parties in any material respect as determined by the Borrower in its reasonable business judgment, (v) the granting of Liens permitted under Section 7.2, Restricted Payments permitted by Section 7.3, transactions permitted by Section 7.4(a) and Investments permitted by Section 7.10, (vi) dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Loan Party provided the proceeds thereof are promptly applied to replace such assets, and (vii) dispositions in connection with the Commercialization of Intellectual Property the revenues of which are applied in accordance with Section 6.9 or research and development activities not constituting Commercialization pursuant to the proviso of the definition thereof.
(c)Not, and not suffer or permit any Loan Party to, sell, transfer, dispose of, convey or license any of its Intellectual Property other than as permitted by the foregoing clauses (a) and (b) of this Section 7.4.
7.5. Modification of Organizational Documents or Surviving Debt Subordination Agreement and Acknowledgment. Not waive, amend or modify, and not suffer or permit any waiver, amendment or modification of, any term of the charter, limited liability company agreement, partnership agreement, articles of incorporation, by-laws or other organizational documents of the Borrower or any other Loan Party or the Surviving Debt Subordination Agreement and Acknowledgment, in each case except for those amendments and modifications that do not materially adversely affect the interests of the Agent or the Lender under the Loan Documents or in the Collateral (it being understood and agreed that any adverse impact on the effectiveness or validity of any Collateral Document or the Liens granted to the Agent thereunder or any amendment to the Surviving Debt Subordination Agreement and Acknowledgment that shall render the indebtedness incurred thereunder, including any principal, interest, fee or any other payment in respect thereof, payable in cash on or before the date that is ninety-one (91) days subsequent to the final Maturity Date, shall each be deemed to materially adversely affect such interests of the Agent and the Lender).
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7.6. Use of Proceeds. Not use the proceeds of the Loan for any purposes other than solely as expressly provided in Section 2.1.2.
7.7. Transactions with Affiliates. Not, and not suffer or permit any Loan Party to, enter into any transaction or arrangement with any Affiliate of the Borrower or of any such Loan Party, except:
(a)Restricted Payments permitted by Section 7.3, intercompany loans among Loan Parties permitted by Section 7.1(c), transactions permitted by Section 7.4(a) and Investments permitted by Section 7.10(a) and (b);
(b)in the ordinary course of business and pursuant to the reasonable requirements of the business of such Loan Party or such Subsidiary; provided that, in the case of this clause (b), such transaction shall be upon fair and reasonable terms no less favorable to such Loan Party or such Subsidiary than would be obtained in a comparable arm's length transaction with a Person not an Affiliate of the Borrower or such Subsidiary and which are disclosed in writing to the Agent;
(c)payment of compensation and benefits (including customary indemnities) to officers, directors and employees for actual services rendered to the Loan Parties in the ordinary course of business;
(d)payment of reasonable and customary fees to members of the boards of directors (or similar governing body) of the Loan Parties, and the reimbursement of actual out of pocket expenses incurred in connection with attending board of director meetings; and
(e)advances for reasonable travel and entertainment expenses and reasonable relocation costs and expenses and other reasonable loans and advances in the ordinary course of business.
7.8. Inconsistent Agreements. Not, and not suffer or permit the Holders or any other Loan Party to, enter into any agreement containing any provision which would (i) be violated or breached by any borrowing by the Borrower hereunder or by the performance by the Holders, the Borrower or any other Loan Party of any of its Obligations hereunder or under any other Loan Document, (ii) prohibit the Holders, the Borrower or any other Loan Party from granting to the Agent and the Lender a Lien on any of its assets that constitute Collateral or (iii) other than pursuant to the Loan Documents, create or permit to exist or become effective any encumbrance or restriction on the ability of any other Subsidiary to (x) pay dividends or make other distributions to the Borrower or any Wholly-Owned Subsidiary, or pay any Debt owed to the Borrower or any Wholly-Owned Subsidiary, (y) make loans or advances to the Borrower or any Wholly-Owned Subsidiary or (z) transfer any of its assets or properties to the Borrower or any Wholly-Owned Subsidiary, except, in the case of clause (ii) and (iii) above: (a) negative pledges and restrictions on Liens in favor of any holder of Debt permitted under Section 7.1(b) but solely to the extent any negative pledge or limitation on Liens relates to the property that is the subject of such Debt and the proceeds and products thereof, (b) customary restrictions on
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leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto, (c) customary provisions restricting assignment of any agreement entered into in the ordinary course of business, and (d) prohibitions and limitations that exist pursuant to Applicable Law.
7.9. Business Activities. Not, and not suffer or permit any Loan Party to, engage in any line of business other than the businesses engaged in on the Closing Date and businesses directly related thereto. As of the Closing Date the Borrower and other Loan Parties engage in the business of the development, manufacture, sale and distribution of small point of care diagnostic systems that can perform a wide variety of tests targeting the clinical diagnostics market utilizing electrochemiluminescence technology.
7.10. Investments. Not, and not suffer or permit any Loan Party to, make or permit to exist, any Investment in any other Person, except the following:
(a)Investments between or among the Loan Parties;
(b)Investments constituting Debt permitted by Section 7.1(c);
(c)Contingent Obligations constituting Debt permitted by Section 7.1;
(d)Cash Equivalent Investments;
(e)Investments listed on Schedule 7.10 as of the Closing Date;
(f)extensions of trade credit in the ordinary course of business;
(g)other Investments in an aggregate amount not to exceed $50,000 at any time outstanding.
7.11. Fiscal Year. Not, and not suffer or permit any other Loan Party to, change its Fiscal Year.
7.12. Deposit Accounts and Securities Accounts. Not, and not suffer or permit any Loan Party to, maintain or establish any deposit account or securities account other than the deposit accounts and securities accounts set forth on Schedule 7.12 without prior written notice to the Agent and unless the Agent, the Borrower or such other Loan Party and the bank or securities intermediary at which such deposit account or securities account, as applicable, is to be opened or maintained enter into a Control Agreement regarding such deposit account or securities account, as applicable, on terms satisfactory to the Agent.
7.13. Sale-Leasebacks. Not and not suffer or permit any Loan Party to, engage in a sale leaseback, synthetic lease or similar transaction involving any of its assets.
7.14. Hazardous Substances. Not, and not suffer or permit any other Loan Party to, cause or suffer to exist any release of any Hazardous Substances at, to or from any real
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property owned, leased, subleased or otherwise operated or occupied by any Loan Party that would violate any Environmental Law, form the basis for any Environmental Claims or otherwise adversely affect the value or marketability of any real property (whether or not owned by any Loan Party), other than such violations, Environmental Claims and effects that would not, in the aggregate, be reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, under no circumstances will any Loan Party cause or suffer to exist any disposal of any Hazardous Substances at, on, under or in any real property owned, leased, subleased, or otherwise operated or occupied by any Loan Party.
7.15. ERISA Liability. Not, and not suffer or permit, any liability under ERISA and the sponsorship of any “pension plan” or any liability subject to Title IV of ERISA.
Section 8. Events of Default; Remedies.
8.1. Events of Default. Each of the following shall constitute an Event of Default under this Agreement:
8.1.1. Non-Payment of Credit. Default, in the payment when due of the principal of the Loan or of any interest, fee, or other amount payable hereunder, including any IRR * * * Return Amount, any IRR * * * Return Amount or any Assigned Interests Payment, by any Loan Party, or any default in any payment of any amount due under any other Loan Document, shall occur.
8.1.2. Default Under Other Debt.
(a)Any default for the payment of principal or interest when due shall occur under the terms applicable to any Debt (other than the Obligations) of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $50,000; and
(b)Any default shall occur under the terms applicable to any Debt (other than the Obligations) of any Loan Party in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $50,000 and such default shall result in the acceleration of the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable (or require the Borrower or any other Loan Party to purchase or redeem such Debt or post cash collateral in respect thereof) prior to its expressed maturity.
8.1.3. Bankruptcy; Insolvency. (i) Any Loan Party becomes insolvent or generally fails to pay, or admits in writing its inability or refusal to pay, debts as they become due; (ii) any Holder or any Loan Party commences any case, proceeding or other action (x) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
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arrangement, adjustment, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (y) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets; or (iii) there shall be commenced against any Holder or any Loan Party any case, proceeding or other action of a nature referred to in clause (ii) above that (x) results in the entry of an order for relief or any such adjudication or appointment or (y) remains undismissed or undischarged for a period of 60 days; (iv) there shall be commenced against any Holder or any Loan Party any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; (v) any Holder or any Loan Party shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (ii), (iii) or (iv) above; or (vi) any Holder or any Loan Party shall make a general assignment for the benefit of its creditors.
8.1.4. Non-Compliance with Loan Documents.
(a) Failure by the Borrower or any other Loan Party to comply with or to perform any covenant set forth in Sections 6.1, 6.4, 6.5, 6.6, 6.8, 6.9 and 7; or (b) failure by any Holder, the Borrower or any other Loan Party to comply with or to perform any other provision of this Agreement or any other Loan Document applicable to it (and not constituting an Event of Default under any other provision of this Section 8) and continuance of such failure described in this clause (b) for 30 days.
8.1.5. Representations; Warranties. Any representation or warranty made by or in respect of any Holder or any Loan Party herein or any other Loan Document is breached or is false or misleading in any material respect, or any schedule, certificate, financial statement, report, notice or other writing furnished by any Holder or any Loan Party to the Agent or the Lender in connection herewith is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified.
8.1.6. Judgments.
(a)Final judgments which exceed an aggregate of $50,000 shall be rendered against any Loan Party and shall not have been paid, discharged or vacated or had execution thereof stayed pending appeal within 30 days after entry or filing of such judgments; or
(b)One or more non-monetary judgments, orders or decrees shall be rendered against any one or more of the Loan Parties or any of their respective Subsidiaries which has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, and there shall be any period of ten (10) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
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8.1.7. Invalidity of Collateral Documents. Any Collateral Document shall cease to be in full force and effect; or any Holder or any Loan Party or other grantor or pledgor (or any Person by, through or on behalf of any Loan Party, grantor or pledgor) shall contest in any manner the validity, binding nature or enforceability of any Collateral Document.
8.1.8. Invalidity of Subordination Provisions. Any subordination provision in any document or instrument governing Debt that is intended to be subordinated to the Obligations or any subordination provision in any subordination agreement that relates to any such Debt, or any subordination provision in any guaranty by any Loan Party of any such Debt, shall cease to be in full force and effect, or any Person (including the holder of any applicable Debt) shall contest in any manner the validity, binding nature or enforceability of any such provision.
8.1.9. Change of Control. (a) A Change of Control shall occur, or (b) a “Change of Control” or other similar event shall occur, as defined in, or under, any indenture, agreement, instrument or other documentation evidencing or otherwise relating to any Debt.
8.1.10. Invalidity of Subordination Provisions. Any subordination provision in any document or instrument governing the Surviving Debt or any other indebtedness that is intended to be subordinated to the Obligations or any subordination provision in any subordination agreement that relates to any such indebtedness, or any subordination provision in any guaranty by any Loan Party of any such indebtedness, shall cease to be in full force and effect, or any Person (including the holder of any applicable indebtedness) shall contest in any manner the validity, binding nature or enforceability of any such provision.
8.2. Remedies. If any Event of Default described in Section 8.1.3 shall occur, the Loan and all other Obligations (including the Applicable IRR Amount) shall become immediately due and payable and all outstanding Commitments shall terminate, all without presentment, demand, protest or notice of any kind; and, if any other Event of Default shall occur and be continuing, the Agent may, and upon the written request of the Lender shall, declare all or any part of the Loan and other Obligations (including the Applicable IRR Amount) to be due and payable and/or all or any part of the Commitments then outstanding to be terminated, whereupon the Loan and other Obligations (including the Applicable IRR Amount) shall become immediately due and payable (in whole or in part, as applicable), and such Commitments shall immediately terminate (in whole or in part, as applicable), all without presentment, demand, protest or notice of any kind. The Agent shall promptly advise the Borrower of any such declaration, but failure to do so shall not impair the effect of such declaration. Any cash collateral delivered hereunder shall be applied by the Agent to any remaining Obligations (including the Applicable IRR Amount) and any excess remaining after the Obligations (including the Applicable IRR Amount) shall have been Paid in Full shall be delivered to the Borrower or as a court of competent jurisdiction may elect. Upon the declaration of the Obligations (including the Applicable IRR Amount) to be, or the Obligations (including the Applicable IRR Amount) becoming, due and payable pursuant to this Section 8.2 such Obligations (including the Applicable IRR Amount) shall bear interest at the Default Rate as provided in Section 2.3.1.
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Section 9. The Agent.
9.1. Appointment; Authorization.
(a)Each Lender hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with the Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent.
9.2. Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects with reasonable care.
9.3. Limited Liability. None of the Agent or any of its directors, officers, employees or agents shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except to the extent resulting from its own gross negligence or willful misconduct as determined in a final non-appealable judgment by a court of competent jurisdiction), or (b) be responsible in any manner to the Lender for any recital, statement, representation or warranty made by any Holder or any Loan Party or Affiliate of Holders or of any Loan Party, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (or the creation, perfection or priority of any Lien or security interest therein), or for any failure of any Holder or any Loan Party or any other party to any Loan Document to perform its Obligations hereunder or thereunder. The Agent shall not be under any obligation to the Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Holder or any Loan Party or Affiliate of any Loan Party.
9.4. Successor Agent. The Agent may resign as the Agent at any time upon 30 days' prior notice to the Lender. If the Agent resigns under this Agreement, the Lender shall, with (so long as no Event of Default exists) the consent of the Borrower (which shall not be unreasonably withheld or delayed), appoint a successor agent for the Lender. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, on behalf of the Lender after consulting with the Lender and (so long as no Event of Default exists) the Borrower, a successor agent. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term “the Agent” shall mean such successor agent, and the retiring Agent's appointment, powers and duties as the Agent shall be terminated. After any retiring the Agent's resignation hereunder as the Agent, the provisions of this Section 9 and Sections 10.4 and 10.5 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement. If no
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successor agent has accepted appointment as the Agent by the date which is 30 days following a retiring the Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lender shall perform all of the duties of the Agent hereunder until such time as the Lender shall appoint a successor agent as provided for above.
9.5. Collateral Matters. Each Lender irrevocably authorizes the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent under any Collateral Document (i) when all Obligations have been Paid in Full; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any sale or other disposition permitted hereunder (it being agreed and understood that the Agent may conclusively rely without further inquiry on a certificate of an officer of the Borrower as to the sale or other disposition of property being made in compliance with this Agreement); or (iii) subject to Section 10.1, if approved, authorized or ratified in writing by the Lender. Upon request by the Agent at any time, the Lender will confirm in writing the Agent's authority to release types or items of Collateral pursuant to this Section 9.5. The Agent shall have the right, in accordance with the Collateral Documents, to sell, lease or otherwise dispose of any Collateral for cash, credit or any combination thereof, and the Agent may purchase any Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of the purchase price, may credit bid and setoff the amount of such price against the Obligations.
Section 10. Miscellaneous.
10.1. Waiver; Amendments. No delay on the part of the Agent or the Lender in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement, the Notes or any of the other Loan Documents (or any subordination and intercreditor agreement or other subordination provisions relating to any other Debt) shall in any event be effective unless the same shall be in writing and approved by the Agent and the Lender, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No provision of Section 9 or other provision of this Agreement affecting the Agent in its capacity as such shall be amended, modified or waived without the consent of the Agent.
10.2. Notices. All notices hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Annex II or at such other address as such party may, by written notice received by the other parties, have designated as its address for such purpose. Notices sent by facsimile or other electronic transmission shall
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be deemed to have been given when sent; notices sent to the Borrower by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier service shall be deemed to have been given when received.
10.3. Costs; Expenses. The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent and the Lender (including Legal Costs) in connection with the administration (including perfection and protection of Collateral subsequent to the Closing Date) of this Agreement, the other Loan Documents and all other documents provided for herein or delivered or to be delivered hereunder or in connection herewith (including any proposed or actual amendment, supplement or waiver to any Loan Document), and all out-of-pocket costs and expenses (including Legal Costs) incurred by the Agent and the Lender in connection with the collection of the Obligations and enforcement of this Agreement, the other Loan Documents or any such other documents. In addition, the parties agree that in the event that the Agent or Lender determines pursuant to any audit of the books and records of the Borrower and its Subsidiaries conducted pursuant to Section 6.2 that the aggregate amount paid to the Lender hereunder during any period covered by such audit was less than the aggregate amount that was in fact due and payable in respect of such period and the amount of such shortfall exceeds five percent (5%) of the amount that was due and payable, then all Audit Costs in respect of such audit shall be borne by the Borrower and reimbursed to the Agent or Lender, as applicable, and in all other cases, such Audit Costs shall be borne by the Agent or Lender conducting such audit. All Obligations provided for in this Section 10.3 shall survive repayment of the Loan, cancellation of the Notes and termination of this Agreement.
10.4. Indemnification by the Borrower. In consideration of the execution and delivery of this Agreement by the Agent and the Lender and the agreement to extend the Commitments provided hereunder, the Borrower hereby agrees to indemnify, exonerate and hold the Agent, the Lender and each of the officers, directors, employees, Affiliates, controlling persons, advisors and agents of the Agent and the Lender (each a “the Lender Party”) free and harmless from and against any and all actions, causes of action, suits, losses, liabilities (including, without limitation, strict liabilities), obligations, damages, penalties, judgments, fines, disbursements, expenses and costs, including Legal Costs (collectively, the “Indemnified Liabilities”), incurred by the Lender Parties or asserted against the Lender Party by any Person (including in connection with any action, suit or proceeding brought by any Holder, the Borrower, any other Loan Party or any Lender Party) as a result of, or arising out of, or relating to the execution, delivery, performance, administration or enforcement of this Agreement or any other Loan Document, the use of proceeds of the Loans, or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Loan Party, except to the extent any such Indemnified Liabilities result from the applicable Lender Party's own gross negligence, willful misconduct, or material breach of any Loan Document, in each case as determined by a court of competent jurisdiction in a final, non-appealable determination. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under Applicable Law. All Obligations provided for in this Section 10.4 shall survive repayment of the Loan, cancellation of the Notes, any foreclosure under, or any modification, release or discharge of, any or all of the Collateral Documents and termination of this Agreement.
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10.5. Marshaling; Payments Set Aside. Neither the Agent nor the Lender shall be under any obligation to marshal any assets in favor of the Borrower or any other Person or against or in payment of any or all of the Obligations. To the extent that the Borrower makes a payment or payments to the Agent or the Lender, or the Agent or the Lender enforces its Liens or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or the Lender in its discretion) to be repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or similar proceeding, or otherwise, then (a) to the extent of such recovery, the obligation hereunder or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and (b) the Lender severally agrees to pay to the Agent upon demand its ratable share of the total amount so recovered from or repaid by the Agent to the extent paid to such Lender.
10.6. Nonliability of the Lender. The relationship between the Borrower on the one hand and the Lender and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent nor the Lender shall have any fiduciary responsibility to the Holders, the Borrower or any other Loan Party. Neither the Agent nor the Lender undertakes any responsibility to the Holders, the Borrower or any other Loan Party to review or inform (including payment of all outstanding principal), the Borrower or any other Loan Party of any matter in connection with any phase of the Borrower's or any other Loan Party's business or operations. Execution of this Agreement by the Borrower constitutes a full, complete and irrevocable release of any and all claims which the Borrower may have at law or in equity in respect of all prior discussions and understandings, oral or written, relating to the subject matter of this Agreement and the other Loan Documents. Neither the Borrower, the Agent nor the Lender shall have any liability with respect to, and the Borrower, Agent and Lender each hereby waives, releases and agrees not to sue for, any special, indirect, punitive or consequential damages or liabilities.
10.7. Confidentiality. The Agent and the Lender agree to use commercially reasonable efforts (equivalent to the efforts the Agent or such Lender applies to maintain the confidentiality of its own confidential information) to maintain as confidential all information provided to them by the Holders or any Loan Party and designated as confidential, except that the Agent and the Lender may disclose such information (a) to Persons employed or engaged by the Agent or such Lender or any of their Affiliates (including collateral managers of the Lender) in evaluating, approving, structuring or administering the Loan and the Commitments; (b) to any assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this Section 10.7 (and any such assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in clause (a) above); (c) as required or requested by any federal or state regulatory authority or examiner, or as reasonably believed by the Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of the Agent's or such Lender's counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any litigation to which the Agent or such Lender is a party; (f) to any nationally recognized rating agency or investor of the Lender that requires access to information about the Lender's investment portfolio in connection
43
with ratings issued or investment decisions with respect to such Lender; (g) that ceases to be confidential through no fault of the Agent or the Lender; or (h) to a Person that is an investor or prospective investor in the Agent or any of its Affiliates.
10.8. Captions. Captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement.
10.9. Nature of Remedies. All Obligations of the Borrower and rights of the Agent and the Lender expressed herein or in any other Loan Document shall be in addition to and not in limitation of those provided by Applicable Law. No failure to exercise and no delay in exercising, on the part of the Agent or the Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
10.10. Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. Receipt by telecopy or electronic transmission of any executed signature page to this Agreement or any other Loan Document shall constitute effective delivery of such signature page.
10.11. Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.
10.12. Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof and any prior arrangements made with respect to the payment by the Borrower of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Agent or the Lender
10.13. Successors; Assigns. This Agreement shall be binding upon the Borrower, the Lender and the Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lender and the Agent and the successors and assigns of the Lender and the Agent. No other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. The Borrower may not assign or transfer any of its rights or Obligations under this Agreement without the prior written consent of the Agent and the Lender. The Lender may sell, transfer, or assign all or a portion of its rights and obligations hereunder to any Person acceptable to the Lender pursuant to assignment documentation reasonably acceptable to Lender and such assignee.
10.14. Governing Law. THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
44
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
10.15. Forum Selection; Consent to Jurisdiction; Service of Process. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. Each Loan Party hereby appoints CT Corporation as such Loan Party's agent where notices and demands to or upon such Loan Party in respect of this Agreement or any other Loan Document may be served (without prejudice to the right of the Agent or the Lender to serve process in any other manner permitted by law). If for any reason such process agent is unable to act as such, such Loan Party will within 30 days appoint a substitute process agent located in the State of New York and give notice of such appointment to the Agent.
10.16. Waiver of Jury Trial. EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
10.17. Collateral Agent. Each Lender hereby appoints PDL BioPharma, Inc. as its collateral agent under the Guarantee and Collateral Agreement and agrees that in so acting PDL BioPharma, Inc. will have all the rights, protections, exculpations, indemnities and other benefits provided to PDL BioPharma, Inc. under Section 9 hereof, and authorizes and directs PDL BioPharma, Inc. to take or refrain from taking any and all action that it deems necessary or
45
advisable in fulfilling its role as Collateral Agent under each Guarantee and Collateral Agreement.
[signature pages follow]
46
The parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first set forth above.
WELLSTAT DIAGNOSTICS, LLC
By: /s/ Nadine H Wohlstadter _
Name: Nadine Wohlstadter
Title: Manager
[Credit Agreement - Signature Page]
PDL BIOPHARMA, INC.,
as the Agent and the Lender
By: : /s/ John P. McLaughlin _
Name: John P. McLaughlin
Title: CEO
[Credit Agreement - Signature Page]
ANNEX I
Internal Rate of Return Formula
See attached.
I-1
EXCEL FILE USED TO GENERATE IRR CALCULATIONS
ON FILE WITH AGENT
HARD COPY FOLLOWS FOR ILLUSTRATION
I-1
IRR CALCULATION
Term 9yr
Interest 5%
Principal 40
10/31/2012 | 12/31/2012 | 3/31/2013 | 3/20/2013 | 2/20/2014 | 2/20/2015 | 2/20/2016 | 2/20/2017 | 2/20/2018 | 2/20/2019 | 2/20/2020 | 2/20/2021 | |
Out | (40.000) | |||||||||||
Interest - Cash | ||||||||||||
Interest - PIK | ||||||||||||
Royalty Payments | ||||||||||||
Total | (40.000) | — | — | — | — | — | — | — | — | — | — | — |
40.000 | — | — | — | — | — | — | — | — | — | — | ||
XIRR
Cash on Cash
Notes: | 1.Royalty Payments should be * * * of net sales each month; this amount does not go towards principal repayment and currently does not hit interest; Wellstat to elect to pay interest in cash by making cash payment of interest due |
2.Payment dates to be set based on date payment received | |
3.Outstanding principal used to calculate the required interest PIK; “Payment in Full” of the debt is based on the “Applicable IRR” at the time of payment | |
4.Interest can be paid by Wellstat In cash or PIK notes at Wellstat election | |
ANNEX II
Addresses
LOAN PARTIES
Address for Notices:
Wellstat Diagnostics, LLC
930 Clopper Road
Gaithersburg, Maryland 20878
Attn: Manager
Telephone: (240) 631-2500
Facsimile. (240) 683-3793
Copy to:
Thomas F. Cooney, III, Esq.
K&L GATES LLP
1601 K Street, N.W.
Washington, D.C. 20006
Telephone: (202) 778-9076
Facsimile: (202) 778-9100
AGENT
PDL BioPharma, Inc.,
as the Agent and the Lender
Address for Notices:
932 Southwood Boulevard
Incline Village, NV 89451
Attention: General Counsel
Telephone: (775) 832-8500
Facsimile: (775) 832-8501
Bank:
Wells Fargo Bank, N.A.
San Francisco, CA 94136
Account #:
* * *
II- 1
ABA Routing #:
* * *
Swift Code:
* * *
II- 2
Exhibit A ‑ Compliance Certificate
See attached.
A-1
EXHIBIT A
COMPLIANCE CERTIFICATE
Date: _____________, 201_
This Compliance Certificate (this “Certificate”) is given by WELLSTAT DIAGNOSTICS, LLC, a Delaware limited liability company (“Borrower”), pursuant to that certain Credit Agreement dated as of November 2, 2012 (the “Credit Agreement”; capitalized terms used and not defined herein shall have the meaning set forth in the Credit Agreement), between Borrower and PDL BIOPHARMA, INC., as Lender and Agent (“Agent”).
Pursuant to Section 6.1.4 of the Credit Agreement, the undersigned hereby certifies that he or she is the duly appointed, qualified, and acting Controller of Borrower, and in such capacity, certifies on behalf of Borrower to Agent that:
1. The financial statements delivered with this Certificate fairly present, (i) if Commercialization has not occurred as of the last day of the period reflected therein, on a basis consistent with the Current Financial Statements or (ii) if Commercialization has occurred as of the last day of such period, on a basis consistent with GAAP, the financial condition and the results of operations of Borrower and its Subsidiaries as of the dates of and for the periods covered by such financial statements as required by the Credit Agreement;
2. Such officer has reviewed the terms of the Credit Agreement and made, or caused to be made under such officer's supervision, a review in reasonable detail of the transactions and conditions of Borrower and its Subsidiaries during the accounting period covered by such financial statements; and
3. Such review has not disclosed the existence during or at the end of such accounting period, and such officer has no knowledge of, the existence, as of the date hereof, of any condition or event that constitutes a Default or an Event of Default, except as set forth on Schedule 1 hereto1, which includes a description of the nature and period of existence of such Default or Event of Default and what action Borrower has taken, is undertaking and proposes to take with respect thereto.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed as of the date first written above.
WELLSTAT DIAGNOSTICS, LLC
By:
Name:
Title: Controller
________________________
1 Schedule 1 should be prepared and attached if a Default or Event of Default has occurred.
[Schedules to be attached hereto]
Schedule 5.7
Real Property
Leases
• | 9 W. Watkins Mill, Suite 100 |
Gaithersburg, MD 20878
• | 9 W. Watkins Mill, Suite 200 |
Gaithersburg, MD 20878
Schedule 5.10
Authorizations, Permits, Licenses and Approvals
None.
Schedule 5.15
Insurance
See Attached
Client#: 4447 WELLSTAT2
ACORDTMCERTIFICATE OF LIABILITY INSURANCE | DATE (MM/DD/YYYY) 10/26/2012 | ||||||
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. | |||||||
IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). | |||||||
PRODUCER William Gallagher Associates Insurance Brokers, Inc. 5950 Symphony Woods Road #314 Columbia, MD 21044 | CONTACT NAME: | Paulina Lipinski | |||||
PHONE (A/C, No, Ext): | 443 283-1360 | FAX (A/C, No): | 617-330-4628 | ||||
E-MAIL ADDRESS: | |||||||
INSURER(S) AFFORDING COVERAGE | NAIC # | ||||||
INSURED Wellstat Diagnostics, LLC Wellstat Management Co. LLC. 930 Clopper Road Gaithersburg, MD 20878 | INSURER A: Travelers Indemnity Co. of Amer | 25666 | |||||
INSURER B: | |||||||
INSURER C: | |||||||
INSURER D: | |||||||
INSURER E: | |||||||
INSURER F: | |||||||
COVERAGESCERTIFICATE NUMBER:REVISION NUMBER:
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. | |||||||||||||||||||||||||
INSR LTR | TYPE OF INSURANCE | ADDL INSR | SUBR WVD | POLICY NUMBER | POLICY EFF (MM/DD/YYYY) | POLICY EXP (MM/DD/YYYY) | LIMITS | ||||||||||||||||||
A | GENERAL LIABILITY | X | 6303B035881 | 2/15/2012 | 2/15/2013 | EACH OCCURRENCE | $ | 1,000,000 | |||||||||||||||||
X | COMMERCIAL GENERAL LIABILITY | DAMAGE TO RENTED PREMISES (Ea occurrence) | $ | 1,000,000 | |||||||||||||||||||||
CLAIMS-MADE | X | OCCUR | MED EXP (Any one person) | $ | 10,000 | ||||||||||||||||||||
PERSONAL & ADV INJURY | $ | 1,000,000 | |||||||||||||||||||||||
GENERAL AGGREGATE | $ | 2,000,000 | |||||||||||||||||||||||
GENL. AGGREGATE LIMIT APPLIES PER: | PRODUCTS-COMP/OP AGG | $ | |||||||||||||||||||||||
X | POLICY | PRO- JECT | LOC | $ | |||||||||||||||||||||
AUTOMOBILE LIABILITY | COMBINED SINGLE LIMIT (Ea accident) | $ | |||||||||||||||||||||||
ANY AUTO | BODILY INJURY (Per person) | $ | |||||||||||||||||||||||
ALL OWNED AUTOS | SCHEDULED AUTOS | BODILY INJURY (Per accident) | $ | ||||||||||||||||||||||
HIRED AUTOS | NON-OWNED AUTOS | PROPERTY DAMAGE (Per accident) | $ | ||||||||||||||||||||||
$ | |||||||||||||||||||||||||
UMBRELLA LIAB | OCCUR | EACH OCCURRENCE | $ | ||||||||||||||||||||||
EXCESS LIAB | CLAIMS-MADE | AGGREGATE | $ | ||||||||||||||||||||||
DED | RETENTION $ | $ | |||||||||||||||||||||||
WORKER'S COMPENSATION AND EMPLOYERS' LIABILITYY/N | WC STATU- TORY LIMITS | OTH-ER | |||||||||||||||||||||||
ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? | ☐ | N/A | E.L. EACH ACCIDENT | $ | |||||||||||||||||||||
(Mandatory In NH) If yes, describe under | E.L. DISEASE - EA EMPLOYEE | $ | |||||||||||||||||||||||
DESCRIPTION OF OPERATIONS below | E.L. DISEASE - POLICY LIMIT | $ | |||||||||||||||||||||||
A | Business Personal Property | 6303B035881 | 2/15/2012 | 2/15/2013 | $16,272,500 limit | ||||||||||||||||||||
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space required) PDL BioPharma, Inc. is included as an additional insured as their interest may appear. | |||||||||||||||||||||||||
CERTIFICATE HOLDERCANCELLATION
PDL BioPharma, Inc. 932 Southwood Boulevard Incline Village, NV 89451 | SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. |
AUTHORIZED REPRESENTATIVE | |
© 1998-2010 ACORD CORPORATION. All rights reserved.
ACORD 25 (2010/05) 1 of 1 The ACORD name and logo are registered marks of ACORD
#S296881/M260099 PAL
Schedule 5.18
Labor Matters
None
Schedule 7.1
Existing Debt
Long term note payable to Bioveris (Roche) - ***
Total debt owed to Samuel and Nadine Wohlstadter as of September 30, 2012 - ***
Schedule 7.2
Permitted Liens
None.
Schedule 7.10
Existing Investments
None
Schedule 7.12
Bank Accounts
Bank | Description | Account Number |
Wells Fargo Bank N.A. | Payroll Account | *** |
Wells Fargo Bank N.A. | Operating Account | *** |
Exhibit 31.1
CERTIFICATIONS
I, John P. McLaughlin, President and Chief Executive Officer of PDL BioPharma, Inc., certify that:
(1) I have reviewed this Annual Report on Form 10-K of PDL BioPharma, Inc.; and
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Date: | September 6, 2013 | |
/s/ John P. McLaughlin | ||
John P. McLaughlin President and Chief Executive Officer (Principal Executive Officer) | ||
Exhibit 31.2
CERTIFICATIONS
I, Peter S. Garcia, Vice President and Chief Financial Officer of PDL BioPharma, Inc., certify that:
(1) I have reviewed this Annual Report on Form 10-K of PDL BioPharma, Inc.; and
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Date: | September 6, 2013 | |
/s/ Peter S. Garcia | ||
Peter S. Garcia Vice President and Chief Financial Officer (Principal Financial Officer) | ||