Exhibit 10.10
LOAN AGREEMENT
Dated as of August 3, 2015
between
KNIGHT THERAPEUTICS INC.
as Lender
- and -
EMBER THERAPEUTICS, INC.
as Borrower
Table ofContents
| ARTICLE 1 DEFINITIONS | 1 |
| 1.1 General Definitions | 1 |
| 1.2 Schedules and Exhibits | 11 |
| 1.3 Accounting Terms and Definitions | 11 |
| 1.4 Supplements, Re-enactments, Etc. | 12 |
| 1.5 Headings of Subdivisions | 12 |
| 1.6 Gender and Number | 12 |
| 1.7 Monetary References | 12 |
| 1.8 Actions on Days Other Than Business Days | 12 |
| ARTICLE 2 TERMS OF THE LOAN | 12 |
| 2.1 The Loan | 12 |
| 2.2 Maturity Date | 12 |
| ARTICLE 3 PAYMENT | 13 |
| 3.1 Payments on Principal | 13 |
| 3.2 General Matters | 13 |
| ARTICLE 4 INTEREST, FEES AND CHARGES | 13 |
| 4.1 Interest Rate | 13 |
| 4.2 Payment of Interest | 13 |
| 4.3 Default Rate of Interest | 13 |
| 4.4 Computation of Interest and Fees | 13 |
| 4.5 Maximum Interest | 14 |
| 4.6 Origination Fee | 14 |
| 4.7 Work Fee | 14 |
| 4.8 Lender's Expenses | 14 |
| 4.9 Illegality | 14 |
| ARTICLE 5 TERMINATION AND REDUCTION | 15 |
| 5.1 Termination | 15 |
| 5.2 Continuing Obligations | 15 |
| ARTICLE 6 SECURITY AND COLLATERAL | 15 |
| 6.1 Security Delivered on the Closing Date | 15 |
| 6.2 Further Assurances | 15 |
| 6.3 Security Effective Notwithstanding Date of Loan | 16 |
| 6.4 No Merger | 16 |
| 6.5 Release of Security | 16 |
| ARTICLE 7 REPRESENTATIONS AND WARRANTIES | 16 |
| 7.1 Representations and Warranties | 16 |
| 7.2 Survival of Representations and Warranties | 22 |
| ARTICLE 8 SCHEDULES AND REPORTS | 23 |
| 8.1 Financial Information | 23 |
| 8.2 Compliance Certificate | 23 |
| |
| 8.3 Other Matters | 23 |
| ARTICLE 9 COVENANTS | 23 |
| 9.1 Positive Covenants of the Borrower | 23 |
| 9.2 Negative Covenants of the Borrower | 29 |
| 9.3 Entitled to Perform Covenants | 30 |
| 9.4 Covenants of the Lender | 31 |
| ARTICLE 10 CONDITIONS PRECEDENT | 31 |
| 10.1 Conditions Precedent to Loan | 31 |
| ARTICLE 11 EVENTS OF DEFAULT | 33 |
| 11.1 Events of Default | 33 |
| 11.2 Acceleration and Termination of Rights | 35 |
| 11.3 Remedies Cumulative and Waivers | 35 |
| 11.4 Saving | 36 |
| 11.5 Third Parties | 36 |
| 11.6 Set-Off or Compensation | 36 |
| ARTTCLE 12 INDEMNIFICATION, ETC. | 36 |
| 12.1 General lndemnity | 36 |
| 12.2 Taxes | 37 |
| ARTICLE 13 GENERAL PROVISIONS | 37 |
| 13.1 Notice | 37 |
| 13.2 Choice of Governing Law and Construction | 38 |
| 13.3 Attornment | 38 |
| 13.4 Press Releases | 38 |
| 13.5 Modification and Benefit of Agreement | 39 |
| 13.6 Waivers, Confidentiality, Information Sharing | 39 |
| 13.7 Judgment Currency | 40 |
| 13.8 Severability | 40 |
| 13.9 Conflicts | 40 |
| 13.10 Entire Agreement | 40 |
| 13.11 Counterpart Execution/Electronic Delivery | 40 |
LOAN AGREEMENT
THIS LOANAGREEMENTismadewitheffectasofthe3rddayofAugust,2015,byandbetweenEMBER THERAPEUTICS, INC.,a companyincorporated under the laws of Delaware (the"Borrower")andKNIGHT THERAPEUTICS INC.,a corporation formedunder the laws of Canada, and one or more Persons to whomthe foregoing or their permitted assigns may from time to time assignan interest in the Loan Documents (as defined below) (collectively, the"Lender").
RECITALS
WHEREAStheBorrowerdesiresthat theLenderextend theLoan(asdefinedbelow) to theBorrowerand theLenderhasindicateditswillingnesstolendonthetermsand conditionsset forthherein; and
WHEREASthepartieswishtoprovidefortheterms andconditionsuponwhichtheLoanwillbemade;
NOW THEREFORE,inconsiderationofthepremisesandthemutualcovenantshereinaftercontained andforothergoodandvaluableconsideration,thereceiptand sufficiencyof which arehereby acknowledged,the parties hereto agree as follows.
ARTICLE 1
DEFINITIONS
In thisAgreementthefollowingtermswillhavethefollowingmeanings:
"Acquisition"means,withrespecttoanyPerson,anypurchaseorotheracquisitionbysuchPerson, regardlessofhowaccomplishedor effected (including anysuch purchase or other acquisition effected by way of amalgamation,merger, arrangement, business combination orotherform of corporate reorganizationor by way of purchase,lease or otheracquisitionarrangements), of (a) any other Person (including any purchase or acquisition ofsuch number of the issued and outstanding securities of, or such portionof anEquityInterest in, such other Person so that such other Person becomes aSubsidiary of the purchaser orofany of its Affiliates) orof all or substantiallyall of the Propertyof anyother Person,or (b) any division, business, operation or undertaking ofany other Personorofall orsubstantiallyall ofthe Property of any division,business, operationor undertakingof any otherPerson.
"Action Request"meansanyrequestfromanyGovernmentalAuthorityunderanyEnvironmentalLaw wherebysuchbodyoragencyrequeststhatthePersonrequestedtakesactionorstepsordoesacts or thingsin respect of anyProperty in its charge,managementor control to remediate amatter whichis not orisalleged notto beincompliancewithall Environmental Laws,except wheresuch non-compliance wouldnot reasonably be expected to have a Material AdverseEffect.
"Affiliate"means:(a)any Personwhich,directlyorindirectly,controls,iscontrolledbyorisunder commoncontrolwithanyother Person; (b) any Person whichbeneficially owns orholds, directly or indirectly, 50%ormoreof any classof voting shares orEquity Interest (including partnership interests) of any other Person; or (c) any Person, 50% or more of any class of thevoting shares (or if such Person is not a corporation, 50%or moreofthe Equity Interest, including partnershipinterests) of which is beneficially owned or held,directly or indirectly, by any other Person. Forthe purposes of this definition, control of any Person (including the terms"controlled by"and"under common control with")means the possession, directly or indirectly, of the powerto elect orappoint a majority ofthe board ofdirectors
of, orpersonsperformingsimilarfunctionsinrespectof,suchPerson,whetherthroughtheownershipof votingsecurities,bycontract,orotherwise.
"Agreement"meansthisagreementandall schedulesattachedhereto;theexpressions"hereof", "herein", "hereto", "hereunder", "hereby"andsimilarexpressionsrefertothis Agreement,asamended, restated or supplementedfrom time to time, as a whole and not to any particular Article,Section, Schedule,or other portion hereof or thereof.
"Applicable Law"means (a)anydomesticorforeignstatute,law(includingcommonandcivillaw),treaty, code,ordinance,rule,regulation,restrictionor by-law (zoningor otherwise);(b) anyjudgment, order, writ, injunction, decision, ruling,decree or award; (c) any regulatory policy,practice, guidelineor directive; or (d) anyfranchise,licence,qualification, authorization, consent, exemption, waiver, right, permitor other approval ofany Governmental Authority, bindingonor affecting the Person referred to in the context in which the term is used or binding on or affecting the property of such Person, in each case whether or not having the force of law.
"Audited Financial Statements"means theauditedConsolidatedstatementoffinancialpositionofthe BorrowerfortheFiscalYearendedDecember 31, including, without limitation, balance sheet, statement of income and retained earnings and statementsof cash flowsforsuchFiscal Yearprepared in accordance withGAAP.
"BMP-7"meansBoneMorphogenicProtein7.
"Board"meanstheBorrower'sboardofdirectors.
"Borrower"meansEmberTherapeutics,Inc.,acompanyincorporatedunderthelawsofDelaware,and itspermittedsuccessors andassigns.
"Business"meansthedevelopmentandcommercialization ofpharmaceuticalproducts including,without limitation,MT-006, MT-007andMT-008.
"Business Day"means aday(otherthanSaturdayorSunday)onwhichbanksaregenerallyopenfor businessin Montreal, Quebec and New York,New York.
"Capital Expenditures"means,foranyperiod,anyexpendituremadebyanyPersonforthepurchase, lease,acquisition, licence, erection, development, improvement,construction, repair or replacementof capitalassets, andanyexpenditure relatedtoa CapitalLeaseorany other expenditure requiredto be capitalized, all as determinedin accordance with GAAP.
"Capital Lease"means,withrespecttoanyPerson,anyleaseof(orotheragreementconveyingtheright touse)anyrealor personal property by such Person that, inconformitywithGAAP, is or should be accountedfor as a capital lease onthe balance sheet of thatPerson.
"Cash BalanceStatement"hasthemeaningascribedtoitinSection9.1(z).
"Change of Control"means,withrespecttotheBorrower,theacquisitionbyanyPersonorgroupof Persons whoact togetherinconcertforsuch purposeof (a) shares or other voting Equity Interests of the Borrower to whichare attachedmore than 50% ofthe votes that may be castto elect directors or other Persons charged with the direction ofthe management of the Borrower andwhich, ifexercised, are sufficientto electa majority ofsuch directorsorother management Persons,or (b) anyother rightto
appoint amajorityofsuchdirectorsorothermanagementPersonsorwithrespecttoanyPersonwho fromtimeto timehas previouslymet the foregoingtest the further acquisition by suchPerson or group of Persons who act together in concert for such purpose of any furtherunits or othervoting Equity Interests of the Borrower.
"Closing Date"meansAugust4,2015orsuchotherdateonwhichtheLoanismade.
"Collateral"meansallofthe undertakingandProperty, presentandfuture, real,immovable,personal and movable,of BorroweroritsAffiliates,noworhereafterpledged,hypothecated,grantedorassignedtothe Lendertosecure,eitherdirectlyor indirectly , repaymenton account of payment of anyof the Obligations.
"Compliance Certificate"means thecertificaterequiredpursuanttoSection8.2,substantiallyintheformannexedasSchedule8.2and signedbyadirectorof the Borrower.
"Consolidated"means,whenused tomodifyafinancialterm,test,statement,orreportofaPerson, the applicationorpreparation ofsuchterm,test, statement or report (as applicable) based upon theconsolidation,in accordance with GAAP, of the financialcondition or operating results of such Person.
"Contingent Obligation"means, astoanyPerson,anyobligation,whethersecuredorunsecured,of suchPersonguaranteeingorindemnifying,or in effect guaranteeing or indemnifying, any indebtedness, leases,dividends, letters of credit or other monetary obligations (the"primary obligations")of any other Person (the"primary obligor")in any manner, whether directly orindirectly, including anyobligation of suchPerson as an accountpartyin respect ofa letter of credit or letter ofguarantee issued to assure paymentby the primary obligor ofany such primary obligationand anyobligations of such Person, whether or not contingent, (a) to purchase any such primary obligationor any Property constitutingdirect orindirect securitytherefor, (b) to advance orsupply funds forthe purchaseor payment of any such primary obligationorto maintain working capitalor equity capitalof the primary obligor or otherwise to maintain the networth or solvencyof the primary obligor,(c) to purchaseProperty,Equity Interestsor services primarilyforthe purpose of assuring the obligee underany such primary obligation of the ability of the primary obligor to makepaymentof such primaryobligation , or (d) otherwisetoassure orhold harmless the obligeeunder suchprimary obligation against loss in respect of suchprimary obligation; provided, however, that the term"Contingent Obligation"will notinclude endorsements of instruments for deposit or collectionin the ordinary course of business.
"Controlled Group"means,inrespectoftheBorroweroperatingintheUnitedStates,allmembersofacontrolledgroup ofcorporations andall trades or businesses(whether or not incorporated)under common controlwhich, together with the Borrower orany of its Subsidiaries, are treated as a single employer under Sections 414(b)and (c) of theRevenue Code.
"Debt"means,withrespecttoanyPerson,withoutduplication,theaggregateofthefollowingamounts, at thedateofdetermination:(a)allindebtedness ofsuch Personfor borrowed money; (b) allobligations of such Personfor the deferred purchase priceof Property orservices which constitute indebtedness; (c)all obligations of such Person evidencedby notes, bonds, debentures or othersimilar instruments; (d)all obligations ofsuch Person created or arising under anyconditional sale orother title retentionagreement with respect to Property acquired bysuch Person(whether ornot the rights and remediesofthe seller or lender under such agreement in theevent of defaultarelimited torepossessionor saleofsuch Property); (e) allobligationsof suchPerson aslesseeunder leases that have beenorshould be, inaccordance with GAAP,recorded as finance leases; (f) all reimbursement obligations , contingent or otherwise, of such Person under acceptance, letter of credit and similar facilities; (g) all obligations of such Person to purchase, redeem, retire, defeaseor otherwise acquirefor value any partnership or shareholder or other
equity interestsofsuchPerson(forgreatercertainty,notincluding obligations withrespectto unexercised options and rightsoffirstrefusalandwhereconditionsprecedent tothepurchase, redemption, retirement, defeasance or other acquisition of such obligations have notoccurred); (h)all Contingent Obligations of such Person in respect of Debt of another Person; and (i) any other obligation arising under arrangementsoragreementsthat, in substance,provide financingtosuchPerson.
"Deemed InterestRate"means theinterestrateapplicabletotheLoanassetoutinSection4.1or4.3, asthecasemaybe, from time to time.
"Default"meansanyeventorconditionwhich,withthegivingofnotice,thelapseoftimeorboth,would constitute anEvent of Default.
"Disposition"meansanysale,assignment,transfer,conveyance,leaseorother dispositionofanyasset ofBorrowerinasingle transaction ora series of related transactions and theword"Dispose"has a correlativemeaning.
"Distribution"means,withrespecttoanyPerson,anypayment,directlyorindirectly,bysuchPerson: (a) ofanydividends onanysharesof itscapital, otherthandividends payable inshares;(b) on account of, or for thepurpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of any Equity Interests; (c) of any other distributionin respect of any Equity Interests; or (d) of any management, consulting or similar fee or compensationor any bonus payment or comparable payment, orby way of gift or other gratuity,to any Affiliate of such Person or to any director,officer or member of the management of such Person or an Affiliate of such Person or to any Personnot dealing at arm's length with such firstPerson (for greatercertainty, compensation(including bonuses) paid by Borrower in the course ofitsbusiness to directors, officers and members of management of Borrower will not constitute Distributions hereunder).
"Environmental Laws"means allApplicableLawsrelatingtoMaterialsofEnvironmentalConcern,pollutionorprotectionofhealth,safetyortheenvironment(includingambient air, surface water,ground water, land surface or subsurface strata), including without limitation, laws and regulations relating to emissions, discharges, releases or threatenedreleasesof Materials of Environmental Concern, or otherwise relating to the manufacturing, processing, distribution,use, treatment, storage, disposal or transport of Materials of Environmental Concern.
"Equipment"meansallmachinery,apparatus,equipment, fittings,furniture,fixtures, motorvehiclesand othertangiblepersonalor movableProperty(otherthan Inventory) ofeverykind and descriptionused in a Person's operations or owned by such Person or inwhich such Person has an interest, whether now ownedor hereafteracquired by such Person and wherever located,andallparts, accessoriesand tools andall increasesand accessories thereto and substitutions andreplacements therefor.
"Equity Commitment"hasthemeaningascribedtoitinSection9.4(a)(i).
"Equity Raise"hasthemeaningascribedtoitinSection9.1(x).
"Equity Interests"means (a)inthecaseofanycorporationorcompany,allsharesorcapitalstockand anysecuritiesexchangeablefororconvertibleinto sharesorcapitalstock,(b) in thecaseof an association or business entity,any and all shares, interests, participation rights orotherequivalents of corporatestock (howeverdesignated) in ortosuchassociationor entity,(c) in the caseof a partnership, limited liability company or unlimited liability company, partnership or membership interests (whether general or limited),asapplicable, and (d) anyotherinterest orparticipationthat confers ona Person the
right toreceiveashareoftheprofitsandlossesof,ordistributionofassetsof,theissuingPerson,and including,inallofthe foregoing cases describedin clauses (a)to (d), any warrants, rights orother options to purchase or otherwise acquire any of the interests describedin any of the foregoing cases.
"ERISA"meanstheEmployeeRetirementIncomeSafetyActof1974oftheUnitedStates,togetherwith the regulations thereunderasthesamemaybe amended fromtime totime.
"ERISA Plan"means anyemployeepensionbenefitplancoveredbyTitleIVofERISAorsubjecttothe minimumfundingstandards underSection 412 of theRevenueCode(other than amultiemployer plan) thateither(a)is maintained bytheBorrower,or (b) with respect to which theBorrower has or mayhave liability.
"Event ofDefault"hasthemeaningascribedtoitinSection11.1.
"Financial Statements"means thestatementsoffinancialpositionoftheBorrower,includingwithout limitation,thebalancesheet,statementofincomeandretained earnings and statement of cash flows of the Borrower, the CashBalance Statement, allpreparedin accordance with GAAP andconsistent with the approach used by the Borrower in its AuditedFinancial Statements.
"Fiscal Quarter"means anyofthequarterlyaccountingperiodsoftheBorrowerendingonMarch31, June30,September30,andDecember 31 ofeach year.
"Fiscal Year"means anyperiodoftwelveconsecutivemonthsendingonDecember31ofanycalendar year.
"GAAP"meansUnitedStatesgenerallyacceptedaccountingprinciplesappliedonaconsistentbasis.
"Governmental Authority"means thegovernmentofCanada,theUnitedStatesoranyothernation,orofany political subdivision thereof, whether state or local,and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of orpertaining to government, including any supranationalbodies such as theEuropeanUnion or the European Central Bankand including aMinister of the Crown, Superintendent of FinancialInstitutions or other comparable authority or agency.
"Indemnified Party"hasthemeaning ascribedtoitinSection12.1.
"Intellectual Property"means theintellectualpropertyinpatents,patentapplications,trade-marks,trade- markapplications,tradenames,servicemarks,copyrights,copyrightregistrations andtrade secrets including, without limitation, customer listsandinformation and businessopportunities, industrial designs, proprietary software, technology,recipes and formulae and other similar intellectual property rights.
"Interest PaymentDate"means thedaysfallingthreemonths,sixmonths,ninemonthsand12months aftertheClosingDate,andtheanniversaryofeachof those datesin eachyear until the Maturity Date.
"Inventory"means,withrespecttoanyPerson,allinventoryofsuchPerson,whethernowownedor hereafteracquired including, but not limited to, all goods intendedfor sale or lease by such Person, or for display or demonstration; all work in process; all raw materials and other materials and supplies of every nature and description used or which might be used in connection with the manufacture, printing, packing, shipping, advertising,selling, leasingor furnishing of such goods or otherwise used or consumed in such Person's business.
"Lender"meansKnightTherapeuticsInc.,acorporationformedunderthelawsofCanada,andoneor morePersonsto whomtheforegoing or their permitted assigns mayfrom timeto timeassignaninterest in the Loan Documents.
"Lender DistributionAgreement"means theproposedlicenseanddistribution agreement between Borrower andLenderbywhichLenderwillhavethe exclusive distribution rights to theLicensedProducts, as such termis defined therein.
"Lender's Nominee"hasthemeaningascribed toitin Section9.1(aa).
"LIBOR"meanstheIntercontinentalExchangeLondonInterbankOfferedRate.
"Lien"means:(a)anyinterestinPropertysecuringanobligationowedto,oraclaimby,aPerson, whethersuch interest is based on the common law, civil law, statute, or contract, and including, without limitation,a securityinterest, charge,claim, hypothecor lien arisingfroma mortgage, deed of trust, hypothec, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditionalsale or trustreceipt or a lease, consignment or bailment for security purposes; and(b) to theextentnotincludedunderclause (a),(i) any rights of repossessionorsimilarrights of unpaid suppliers, (ii) any reservation, exception, encroachment, easement,right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting Property, and (iii) any other lien, hypothec, charge,privilege, secured claim, title retention, garnishment right, deemed trust, encumbrance or otherright affecting Property,choate or inchoate, whether or not crystallized or fixed, whether or not for amounts due or accruing due, arising by any statute or law of any jurisdiction, at law, in equity or by any agreement.
"Loan"hasthemeaningascribedtoitinSection2.1hereof.
"Loan Documents"means (a)thisAgreementandtheSecurityDocuments;and(b)allpresentandfuturesecurity,agreementsanddocuments labelled by Borrower and Lender as a Loan Document; ineach case as the same may from timeto time be supplemented,amended orrestated, and"Loan Document"means anyone oftheLoan Documents.
"Losses"hasthemeaningascribed toitinSection12.1.
"Make-whole Payment"means, intheeventoftherepaymentoftheLoanpriortotheMaturityDate,an amountequal tothe interestpayable on the outstandingprincipalamountofthe Loan calculatedatthe interestrate set forth in Section 4.1fromthedate of repaymentuntil the MaturityDate.
"Mariel"meansMarielTherapeutics,Inc.,theparentcompanyoftheBorrower.
"Mariel Guaranty"means theguarantybetweenMarielandtheLenderpursuanttowhichMarielhas guaranteedallof the obligations of Borrower hereunder.
"Material AdverseEffect"means (a)amaterialadverseeffectonthebusiness,operations,properties, assets,or financialcondition of theBorroweror any Affiliate of the Borrower who has provided Collateral ona consolidated basis, (b) an adverseeffect onthe legality, validityor enforceability ofany of the Loan Documents which could reasonablybe consideredmaterial having regard to the Loan Documents considered as a whole, including the validity, enforceability, perfection or priority of any Lien created under anyoftheSecurity which could reasonably be considered materialhavingregard to theSecurity consideredas a whole and (c)amaterial adverseeffect on theabilityofBorrower topay orperform any
of itsdebts,liabilitiesorobligationsunderanyoftheLoanDocuments,whichcouldreasonablybe considered material.
"Material Contracts"means, collectively,eachwrittenagreement(ormultipleagreementswiththesame Person),arrangementorunderstandingenteredintobyBorrowerandanyAffiliateofthe Borrower who has provided Collateral which, if notcomplied with, or expires, or isterminated, could reasonably be expected to have a Material Adverse Effect.
"Material Licences"means,collectively, eachlicence,permit orapprovalissuedbyanyGovernmental Authorityoranyapplicablestockexchangeorsecuritiescommission toBorrower andany other Affiliate of the Borrower who has provided Collateral, the breach or default of which, or termination of, could reasonably be expected to result in a Material AdverseEffect.
"Materials ofEnvironmentalConcern"meansanychemicals,pollutants,contaminants, wastes,toxic substances,petroleum,petroleumproducts, togetherwith anyhazardous, toxicor dangerous substances, materials and wastes, including,withoutlimitation,hydrocarbons (includingnaturally occurring or man- made petroleumand hydrocarbons), flammable explosives, asbestos, ureaformaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls,pesticides,herbicides and any other kindand/or type of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any othersimilar substances, materials or wastesand including any other substances, materials or wastes that are or become regulated under any laws relating to theprotection of theenvironmentor maintenance of occupational safety (including, withoutlimitation, any that are or become classified as hazardous or toxicunder any such laws).
"Maturity Date"hasthemeaningascribedtoitinSection 2.2.
"Obligations"meansallpresentandfutureobligationsandindebtedness,ofanyandeverykindand nature,ofBorrowerto theLenderarisingunderthisAgreement and the other Loan Documents, whether nowor hereafter existing, whether now due or tobecomedue, whether primary, secondary, direct, indirect, absolute, contingent orotherwise (includingwithout limitation, obligations of performance), whether several or joint or jointandseveral.
"OFAC"meansTheOfficeofForeignAssetsControloftheUSDepartmentoftheTreasury.
"Organizational Documents"means, withrespecttoanyapplicablePerson,suchPerson'sarticlesor othercharterorconstitutionaldocuments,by-laws, shareholder agreement, partnershipagreement, joint venture agreement, limited liability company agreement or trust agreement, as applicable,and any and all other similar agreements, documents and instruments relative to such Person.
"Patriot Act"hasthemeaningascribedtoitinSection9.1(v).
"PBGC"meansthePensionBenefitGuarantyCorporationoranyPersonsucceedingtoanyorallofits functionsunderERISA.
"Pension Plan"means (a)a"pensionplan"or"plan"whichissubjecttothefundingrequirementsof applicablepension benefit legislation in any jurisdictionas is applicable to the employees of Borrower; or (b) anypensionbenefit planor similar agreement applicable to employees of Borrower, other than a plan sponsored by a Governmental Authority which, for greater certainty, includes an ERISA Plan.
"Permitted Debt"means:
| (a) | Debt underthisAgreement; |
| (b) | Debt inrespectofPurchaseMoneySecurityInterestsandCapitalLeasesinan outstandingamountnotto exceed $25,000in aggregate at any time; |
| (d) | Debt consentedtoinwritingbytheLenderfromtimetotimeandsubjecttotheterms imposedbytheLender in connection with suchconsent; and |
| (e) | to theextentincludedasDebt,accountspayablethatarise,andaccruedexpenses incurredin,theordinarycourseofbusinessincluding any indebtedness incurred in connection with an EquityRaise. |
"Permitted Disposition"means (a)theDispositionofInventoryintheordinarycourse of business; (b)the Dispositionofused,worn-outorsurplusEquipment inthe ordinary course of business;(c)other Dispositions to theextentthat no DefaultorEventof Defaultexistsand the fair market value of the assets Disposed of pursuant to this clause (c) does not exceed during any Fiscal Year $25,000; and (e) a Disposition under a distribution agreementcontemplated by theLender Distribution Agreement;
"Permitted Distribution"means feesandcompensation(includingbonuses)paidbyBorrowerinthe courseofitsbusinessto directors, officers andmembers ofmanagement of Borrowerin accordance withSchedule 9.2(p);
"Permitted Liens"means,withrespecttoanyPerson,thefollowing:
| (a) | any lienarisingbyoperationoflawandintheordinarycourseoftradingandnotasa resultofanydefault or omission bythe Borrower; |
| (b) | any Lienarisingunderanyretentionoftitle,hirepurchaseorconditionalsale arrangementorarrangementshavingsimilareffectin respect of goods supplied to the Borrower in the ordinary course of trading and on the supplier's standard or usual terms and not arising as a result of any default or omission by the Borrower; |
| (c) | liens forTaxesnotyetdueorforwhichinstallmentshavebeenpaid basedonreasonable estimatespendingfinalassessments,or if due, the validity ofwhich is being contested diligently and ingoodfaith byappropriate proceedings by that Personfor which reasonable reserves underGAAPare maintained; |
| (d) | undetermined orinchoateliens, rightsofdistressandchargesincidentaltocurrent operationswhichhavenotatsuchtimebeenfiled orexercisedand ofwhichtheLender has been given notice, or which relateto obligations not due or payable, or if. due, the validityof whichis being contesteddiligentlyand in good faithby appropriate proceedings by that Person; |
| (e) | reservations, limitations,provisosandconditionsexpressedinanyoriginalgrantsfrom theCrownor othergrants ofrealorimmovableproperty, or intereststherein; |
| (f) | zoning, landuseandbuildingrestrictions,by-laws,regulationsandordinancesoffederal, provincial,state,municipalandotherGovernmentalAuthorities,licences,easements, servitudes,rights-of-way andrightsin the natureofeasements (including, without limiting the generality of the foregoing, licences, easements,servitudes, rights-of-way and rights in the nature of easements for railways, sidewalks, public ways, sewers,drains,gas, steamand water mains or electric light andpower, or telephone and telegraph conduits, poles, wires and cables) which do notmaterially impair the use of theaffected land for thepurpose for which it is used bythat Person; |
| (g) | title defects,encroachmentsorirregularitiesorothermattersrelatingto titlewhichareof aminornatureandwhichintheaggregatedo not materially impair theuse oftheaffected propertyfor thepurpose for which it is used bythatPerson; |
| (h) | the right reservedtoorvestedinanymunicipalityorgovernmentalorotherpublic authoritybythetermsofanylease,licence,contract,franchise,grant or permitacquired by thatPersonorbyanystatutory provisionto terminateany such lease,licence, contract,franchise, grant orpermit,or to require annual orotherpayments as a condition to the continuancethereof; |
| (i) | the Lienresultingfromthedepositofcashorsecuritiesinconnectionwithcontracts, tendersorexpropriationproceedings,ortosecureworkerscompensation, employment insurance, surety, appeal bonds or costs of litigation when required by law not to exceed $25,000 inaggregateoutstandingatanytime,liensandclaimsincidentaltocurrent construction, mechanics',warehousemen's,carriers'and other similar liens, and public, statutory and otherlike obligations incurred in the ordinarycourse of business; |
| (j) | security giventoapublicutilityoranymunicipalityorGovernmentalAuthority when requiredbysuchutilityorauthorityinconnectionwith theoperations of that Person in the ordinary course of its business provided that suchsecurity does notmaterially impair the use of theaffected propertyfor the purposefor which it is used by that Person; |
| (k) | the Liencreatedbyajudgmentofacourtofcompetentjurisdiction,aslongasthe judgmentisbeingcontesteddiligentlyand in good faith by appropriate proceedings by that Person anddoes not result in an Event ofDefault; |
| (m) | Purchase MoneySecurityInterestsandCapitalLeases,providedthatsuchLienssecure PermittedDebt; |
| (n) | The lienstakenbyStrykerBiotechL.L.C.andStrykerCorporationforwhichacessionof rankwillbegrantedpursuanttothelntercreditorandSubordinationAgreementdatedthe datehereof; and |
| (o) | such otherLiensasagreedtoinwritingbytheLenderinaccordancewiththis Agreement. |
"Person"means anyindividual,soleproprietorship,partnership,jointventure,trust,unincorporated organization,association,corporation,institution,entity, partyorforeign or local government (whether
federal, provincial,state,county,city,municipalorotherwise),including,withoutlimitation,any instrumentality,division, agency,bodyordepartmentthereof.
"Product"meanseachcurrentandfutureproduct,processorserviceunderdevelopment,developed, manufactured,licensed, distributed,marketedor soldby Borrower and any other current ·or future products or services in which Borrowerhas any proprietary rights or beneficial interests.
"Prohibited Transaction"means anytransactionsetforthinSection406ofERISA,orSection4975of the RevenueCode,tothe extent that suchtransaction is not otherwise exempt by ApplicableLaw.
"Property"means,withrespecttoanyPerson,alloranyportionofitsundertaking,propertyorasset, whetherreal,immovable,personal,movable, or mixed, tangibleor intangible, including for greater certainty any Equity Interests of a corporation or ownership interest in any other Person.
"Purchase MoneySecurityInterest"meansaLiencreatedorassumedbyBorrowersecuringDebt incurredtofinancetheunpaid acquisitionpriceofpersonalPropertyprovided that (a) such Lien is created concurrently with or before the acquisition of such personal Property, (b) such Lien does not atany time encumberanyProperty other than the Property financedor refinanced (to the extent theprincipal amount is not increased) by such Debt, (c) theprincipal amount of Debtsecuredthereby isnot increased subsequentto such acquisition, and(d) theprincipal amountof Debt secured by anysuch Lienat no time exceeds 100%of the original purchase price of such personal Property atthe time itwas acquired, and for the purposes of this definition theterm "acquisition" includes a Capital Lease and the term "acquire" willhavea corresponding meaning.
"Regulatory Authority"means anyGovernmentalAuthoritythathasresponsibilityinanycountryor groupofcountriesoverthedevelopment, manufacture orcommercialization ofa Product, including the
U.S.FoodandDrugAdministration,Health Canada andtheEuropean Medicines Agencyandanysuccessoragencythereof.
"Reportable Event"means anyoftheeventssetforthinSection4043ofERISA,otherthananeventfor whichtheprovisionofnoticehasbeenwaived.
"Requirements ofLaw"means, astoanyPerson,theOrganizationalDocumentsofsuchPersonand anyApplicableLaw,ordetermination of a Governmental Authority, in each case, applicable to or binding upon such Person orany ofitsbusiness orPropertyor to whichsuchPerson or any of itsbusiness or Property is subject.
"Revenue Code"means theUnitedStatesInternalRevenueCodeof1986,asamendedfromtimetotime,or any successor statute thereto, and the regulationsand published interpretations thereof.
"Sanctioned Entity"means (a)a countryoragovernmentofa country,(b)an agencyofthegovernment ofacountry,(c)anorganizationdirectlyorindirectlycontrolled by a country or its government, (d) a Person resident in a country, ineach case,that is subject to a country sanctions program administered and enforced by OFAC.
"Sanctioned Person"means apersonnamedonthelistofSpeciallyDesignatedNationalsmaintainedbyOFAC.
"Security"meanstheLienscreatedbytheSecurityDocuments.
"Security Documents"meansthedocumentssetoutinSection6.1.
"Subordinated Debt"means DebtthatissubordinatedtotheObligationsontermsacceptabletothe Lender.
"Subsidiary"means,withrespecttoaPerson,anycorporationofwhichmorethan50%ofthe outstandingcapitalstockhaving ordinaryvotingpower to elect a majorityof theboard of directors of such corporation(irrespective ofwhether at thetimestockof anyother class ofsuchcorporation will haveor might have voting power by reason of the happening of any contingency)is at the time, directly or indirectly,ownedby thePerson or by anypartnership or other corporateentity of whichmore than 50% of the outstandingequityinterests are at the time, directly or indirectly,owned by the Person.
"Taxes"hasthe meaningascribedtoitinSection12.2
"Violation Notice"means anynoticereceivedbyaPerson,fromanyGovernmentalAuthorityunderany Environmental LawthatsuchPersonor anyof itsProperty is notin compliancewith the requirementsof any Environmental Law,if such non-compliance wouldreasonably be expected to have a Material Adverse Effect.
"Warrant"meansthecommonstockpurchasewarrantsoftheBorrowerisfavouroftheLenderissuedin connectionwithan EquityRaise,as defined in Section 9.1(y).
"Welfare Plan"means anymedical,health,hospitalization,insuranceorother employeebenefitor welfare plan,agreementorarrangementsubjecttoERISAandapplicabletoemployees of Borrower and includes a "welfareplan" as defined in Section3(1)of ERISA.
The followingaretheExhibitsandSchedulestothisAgreement,whicharedeemedtobeapartofthis Agreement:
Schedule 7.1(f) – Intellectual Property
Schedule 7.1(g) – Current and Prior Names
Schedule 7.1(j) – Material Contracts and Material Licences
Schedule 7.1(r) – Location of Collateral
Schedule 7.1(z) – Insurance
Schedule 7.1(cc) – Quality and Quantity of BMP 7
Schedule 8.2 – Compliance Certificate
Schedule 9.1(f) – Use of Proceeds
Schedule 9.2(p) – Directors Fees and Management Compensation
Schedule 11.1(f) – Excluded Payments
| 1.3 | Accounting TermsandDefinitions |
Unless otherwisedefinedorspecifiedherein,alldefinedtermsinSection1.1asusedinthisAgreementwillhavethemeaningsset outinsuchparagraph, and all accounting terms usedinthis Agreementwillbe construed in accordance withGAAP, applied on a basis consistent in all material respects with the annual Audited Financial Statements, except as otherwise specifically prescribed herein. All accounting determinations for purposes of determiningcompliance with thefinancial covenants containedherein will bemade in accordance with GAAP asin effecton the Closing Date (unlessandto theextentotherwise stipulated herein) and applied on a basisconsistent in all materialrespects with the Audited Financial
Statements, exceptasotherwisespecificallyprescribedherein. Exceptasotherwisespecifiedherein,the financial statementsrequiredtobedeliveredhereunderfromand after theClosingDate,andallfinancial records, willbe maintained in accordance with soundaccounting practicesincluding,if applicable,GAAP.
| 1.4 | Supplements, Re-enactments, Etc. |
References hereintoanydocumentorlegislationare,unlessotherwise stated,tobeconstruedas referencestosuchdocumentorlegislationas amended, restatedorsupplemented from time to time and references to any enactment include re-enactments, amendments and extensions thereof.
| 1.5 | Headings ofSubdivisions |
The headingsofsubdivisionsinthisAgreementareforconvenienceofreference only,andwillnotgovern theinterpretationofanyoftheprovisions of thisAgreement.
Words importingthesingularincludethe pluralandviceversaandwordsimportinggenderincludeall genders.
Any referenceinthisAgreementto"Dollars", "dollars"or thesign"$"willbedeemedto beareferenceto lawfulmoney oftheUnitedStates,unlessotherwiseexpressly stated.
| 1.8 | Actions onDaysOtherThanBusinessDays |
Except asotherwisespecificallyprovidedherein,whereanypaymentis required tobemadeor anyother actionisrequiredtobetakenonaparticular dayand such day is not aBusiness Day and,asa result, such payment cannot be made or action cannot be taken on such day, then this Agreement will be deemed toprovidethatsuch payment willbemade orsuchactionwill be takenonthe firstBusinessDayafter such day.
ARTICLE 2
TERMS OFTHELOAN
Subject tothetermsandconditionsofthisAgreementandtheotherLoanDocuments,theLenderagrees toloantotheBorrowerinlawfulmoneyof theUnitedStatestheprincipal amountof$1,000,000 to orfor the account of the Borrower (the"Loan")on the Closing Date and the Borrower hereby irrevocably authorizes the Lendertomake theLoanonthe Closing Date.
The maturitydate(the"MaturityDate")will beAugust3,2016.
ARTICLE 3
PAYMENT
| (a) | The Borrowerwillpayinfullto theLendertheoutstandingprincipal amountontheLoan, togetherwithallaccruedandunpaidinterestthereonandanyotheraccrued andunpaid Obligations on the earliest to occurof:(i) the MaturityDate; and (ii) the date of the acceleration of the Obligations pursuant toSection 11.1(r) of this Agreement. |
| (b) | All paymentstobemadebytheBorrowertotheLenderhereunderwillbemadetothe Lenderbywiretransferinaccordancewith thewireinstructionsgivenbytheLenderto the Borrower in writing from time to time. |
| (c) | The principalamountoftheLoanmaynotbeprepaidunlessitisaccompaniedwitha Make-wholePayment. |
All paymentsmadeby theBorrowerwillbemadewithoutset-off,recoupmentorcounterclaim.The Loan madeby theLender,including ratesof interest, fees and other charges, may beevidenced by entries upon thebooks andrecords maintained by the Lenderwhich books andrecords will constitute conclusive evidence thereofin the absenceof manifest error.
ARTICLE 4
INTEREST,FEESANDCHARGES
Subject toSection4.3, theprincipalamountoftheLoanandotheroutstandingObligations(including,foravoidanceofdoubt,anyoverdueandunpaidinterest)willbearinterestfromtheClosing Datetothedate paidat a rateperannum equal to the greater of(a) 12.5% and (b) the 1-year LIBOR rate plus 10%. In each case such interest will be payable in arrears in accordance with Section4.2 and calculated in accordance withSection4.4.
The BorrowerwillpaytheLenderallaccruedandunpaidinterestontheprincipalamountoftheLoan quarterlyinarrearsin cash on each Interest PaymentDate.
| 4.3 | DefaultRate of Interest |
Upon andafter theoccurrenceandduring thecontinuationofanEventofDefaultunderSection11.1,theprincipalamountoftheLoanandthe other Obligationswillbear interestat a rate per annumequalto the interestrate otherwise payablepursuant to Section4.1plus5% andsuchinterest will be calculated daily and compounded quarterly and willbe payable ondemandby theLender.
| 4.4 | Computation ofInterestandFees |
Interest hereunderwillbedetermineddailyandcompoundedquarterlynotinadvance,bothbeforeand afterdemand,defaultandjudgmentandwillbecomputedon theactual number ofdayselapsedover a yearof three hundred and 365 daysor three hundredand366 days, as the case maybe.
It istheintentofthepartiesthattherateofinterestandtheotherchargestotheBorrowerunderthis Agreementwill be lawful; therefore, if foranyreason the interest or othercharges payableunder this Agreement arefound byacourt ofcompetentjurisdiction, inafinaldetermination,to exceedthe limit which the Lender may lawfully charge theBorrower, then the obligation to pay interest and other chargeswill automaticallybe reduced with retroactive effect to such limit and, if any amount in excess of such limit will have been paid, then such amount will be refunded to the Borrower.
The BorrowerwillpaytotheLenderanoriginationfeeequalto$40,000,being4%oftheLoanamount,which will be payable on the ClosingDate.
The BorrowerwillpaytotheLenderacashworkfeeequalto$10,000,being1%of the Loanamount, which willbe payable on theClosingDate.For greater certainty, the said fee is payable whether or not the Closing Date occurs.
The Borrower willreimbursetheLenderforallreasonablecostsandexpenses(includingwithout limitation, reasonableconsultant'sfeesandexpensesand reasonable legal fees andexpenses in each applicable jurisdiction) incurred by theLender in connection with: (a) the documentationand consummation ofthis transaction (whether or not this transaction is consummated) including, without limitation, security and otherpublic record searches, lien filings, express mail or similar express or messengerdelivery, due diligence costs andexpenses, up to theaggregate maximum amount of $75,000, and(b)in seekingto collect,protect or enforceanyrights in orto the Collateralor incurred by the Lenderin seeking to collectany Obligations and to administer and enforce anyof its rights under this Agreement andthe other Loan Documents. All such costs, expenses and charges incurred after the ClosingDate will constitute Obligations hereunder, will bepayableby the Borrower to the Lender within three BusinessDays of demandand, ifoverdue by30daysormore, until paid, will bear interest at the Deemed Interest Rate.
If anyApplicableLawcomingintoforceaftertheClosingDate,orifanychangeinanyexistingApplicable Laworintheinterpretationor application thereof byany court or Governmental Authority, now or hereaftermakes it unlawful for theLender to have advanced or acquired interest inthe Loan or to give effect to its obligations in respect thereof, the Lendermay, by writtennotice thereof to the Borrower, declare its obligations under this Agreement tobe terminated, and the Borrower will prepay, within the timerequired by suchlaw, the principal amount ofthe Loantogether withaccrued interest thereon and any otheramounts owing under thisAgreement asmay be applicable tothe dateof suchpayment.If any such event will, in the opinion of the Lender, only affect partof its obligations under this Agreement, the remainder ofthis Agreement will be unaffected and the obligations ofthe Borrower under the Loan Documentswill continue.
ARTICLE 5
TERMINATION ANDREDUCTION
This Agreementwillbeineffectfromthedatehereofuntiltherepaymentandperformanceinfullofthe ObligationsupontheMaturityDate orif the duedateof the Obligationsis acceleratedpursuant to Article 11 hereof, this Agreementwill terminate on the date that all such Obligations are paid in full.Atsuch time as theBorrowerhasrepaid allof the Obligations and thisAgreementhas terminatedtheLenderwill,at the Borrower's cost and expense, deliver to the Borrower a termination, discharge and release of all security in form and substance reasonably satisfactory tothe Borrowerandsuchotherdocuments and instrumentsas the Borrowermay reasonablyrequest in ordertoeffector evidence the terminationof this Agreement and the security.
| 5.2 | Continuing Obligations |
Nothing inSection5.1willaffectanyliabilitiesandobligationsofBorrowerortheLendersetoutinthis Agreementor in anyother LoanDocumentwhicharestated tosurvive paymentof the Obligations and terminationof this Agreement or the Loan Documents, as the case may be.
ARTICLE 6
SECURITY ANDCOLLATERAL
| 6.1 | Security DeliveredontheClosingDate |
On theClosingDate,ascontinuingcollateral security forthepaymentand satisfactionofallObligationsof theBorrowertotheLender,theBorrowerwilldeliverorcausetobedelivered tothe Lenderthe following Security,all ofwhich will bein form andsubstance satisfactory totheLender (collectively, the"Security Documents"):
| (a) | a generalsecurityagreementfromBorrowerandMarielinfavoroftheLenderconstituting firstpriorityLien(subjectonlytoPermittedLiens)onallof thepresent andfutureProperty of the Borrower and Mariel; |
| (b) | a collateralassignmentfromBorrowerofitsinterestsinallMaterialContractsand MaterialLicences; |
| (c) | the IntercreditorandSubordinationAgreementamongStrykerCorporation/Stryker BiotechL.L.C.,theBorrowerandMarielTherapeutics,Inc.infavour oftheLender; |
| (d) | the MarielGuaranty;and |
| (e) | such other agreementsastheLendermayreasonablyrequirefromtimetotime. |
The Borrowerwilltakeorcausetobetakensuchactionandexecuteand deliveror causetobeexecuted anddeliveredtotheLendersuchagreements,documentsandinstrumentsastheLendermayreasonably request,and register,file or recordthesame (oranoticeor financing statement in respect thereof) in all offices where such action, execution, delivery, registration, filing or recording is, in the opinion of the Lender or Lender's counsel, necessary or advisable to constitute, perfect and maintain the Security
Documents referredtoinSection6.1asfirst-rankingLiensofBorrowerorthePersongrantingsuchLiens,
subject onlytothePermittedLiens,inalljurisdictionsreasonablyrequiredbytheLender,ineachcase withinareasonabletimeafterthe requesttherefor by theLender or Lender's counsel, and in each case in form and substance satisfactory to theLender and Lender's counsel,acting reasonably .
6.3 SecurityEffectiveNotwithstandingDateofLoan
The SecuritywillbeeffectiveandtheundertakingsinthisAgreementandtheotherLoanDocumentswith respecttheretowillbecontinuing, whetherthemonies hereby orthereby secured or any partthereof will be advancedbefore or afteror atthe sametime asthecreationof any such Security orbeforeorafter or uponthedateof execution of thisAgreement. The Security willnot beaffected byany payments onthis Agreementoranyoftheother Loan Documents, butwill constitutecontinuingsecurity to andin favour of the Lender forthe Obligations from timetotime.
6.4 NoMerger
No judgmentobtainedbyoronbehalfoftheLenderwillinanywayaffectanyoftheprovisionsofthis Agreement,the other Loan Documents or the Security . For greater certainty, no judgment obtained by or on behalf of the Lender will in any way affecttheobligation of the Borrower to pay interest or other amounts at the rates, times and in the manner provided in this Agreement.
6.5ReleaseofSecurity
Following duepaymentandperformanceinfullofallObligationsoftheBorrowerunderthisAgreement andtheotherLoanDocuments, theLender will, atthe costandexpense of the Borrower, release and discharge the right and interest of theLender inthe Collateral, followingindefeasible payment and performancein full ofallObligations of the Borrowerunderthis Agreementand theotherLoan Documents.
In addition,ifanyPropertyofBorrowerisDisposedofaspermittedbythisAgreementor isotherwise releasedfromthe Security at the direction orwiththe consentof the Lender, attherequest, cost and expense of theBorrower (on satisfaction , or on being assured of concurrent satisfaction, of any condition to orobligation imposed withrespect to such Disposition),theLender willdischargesuch Property from theSecurityand deliver and re-assignto theBorrower or its Subsidiaries(without anyrepresentation or warranty)any of such Property as is then in the possession of the Lender.
ARTICLE 7
REPRESENTATIONSANDWARRANTIES
| 7.1 | Representations andWarranties |
The Borrowerherebymakesthefollowingrepresentations,warranties andcovenants:
| (a) | Existence andQualification.The Borrower(i)hasbeendulyincorporated,andisvalidly existing andingoodstanding as acorporation in the State ofDelaware,(ii) is duly qualified to carry onitsbusiness in each jurisdiction in which it carries onbusinessorwill carry on business except where the failure to be so qualified could not reasonably be expectedtohave a Material Adverse Effect, and(iii) hasallrequired MaterialLicences. |
| (b) | Power andAuthority.TheBorrowerhasthecorporatepowerandauthority(i)toenter into,andtoexerciseitsrightsandperform its obligations under, the LoanDocuments towhich itis apartyandallotherinstrumentsandagreementsdeliveredbyit pursuant to |
any oftheLoanDocuments,and(ii)toownitsPropertyandcarryonitsbusinessas currentlyconducted.
| (c) | Execution, Delivery,PerformanceandEnforceabilityofDocuments.Theexecution, deliveryandperformanceofeachoftheLoanDocuments towhich Borroweris aparty has been dulyauthorizedby allcorporateactionsrequired, and each ofsuch documentshas been duly executed and delivered by it. Each Loan Document to whichBorrower is a party constitutesthe legal, validandbinding obligationofBorrower,enforceableagainst Borrowerinaccordance with itsrespective terms (except, inanycase, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similarlaws affecting creditors' rights generally and by principles of equity) . |
| (d) | CompliancewithApplicableLaws,OrganizationalDocumentsandContractual Obligations.Noneof theexecutionordeliveryof, theconsummation of thetransactions contemplated in, orthe compliancewith theterms, conditionsand provisions ofany of, the Loan Documentsby Borrowerconflicts withor will conflict with,or resultsor will result in anybreach of,or constitutesadefaultunder or contravention of,any Requirement of Law in any material respect, Borrower's Organizational Documents or anyMaterial Contractor Material Licence, or results or will result in the creation or imposition ofany Liensupon any of its Property except forPermitted Liens. |
| (e) | Consent RespectingLoanDocuments.The Borrowerhasobtained,madeor takenall consents,approvals,authorizations,declarations,registrations,filings,notices andother actionswhatsoeverrequired (exceptforregistrations orfilingswhich may berequiredin respect oftheSecurity Documents) toenableit to execute anddelivereach oftheLoan Documentsto which itis aparty and to consummatethe transactions contemplated in the LoanDocumentsandtoconsummatethe transactionscontemplated in suchinstruments and agreementsexceptwhere thefailuretodo sois immaterial. |
(f) Intellectual Property
| (i) | The BorrowerandanyAffiliateoftheBorrowerwhohasprovidedCollateral possesses,andwillcontinuetopossess,adequateIntellectual Propertyto continueto conduct theirBusiness asheretofore conducted by it, details of all of which as of the Closing Date are described on Schedule 7.1(f). |
| (ii) | Except assetforthinSchedule 7.1(f),Borrower willbeentitledtocontinuetouse,practiceandexercise rights in,all ofthe Intellectual Property. |
| (g) | Current andPriorNames.TheBorrower'scurrent andprior names,trade-namesanddivisionnamesaredescribedonSchedule 7.1(g). |
| (h) | Corporate Structure.Except forMariel,the BorrowerdoesnothaveanySubsidiariesor Affiliatesandisnotengagedinany jointventure or partnership with any otherPerson. |
| (i) | Litigation.TothebestofBorrower'sknowledgeafterdueinquiry,therearenoactions, suits,counterclaimsorproceedingswhicharependingorthreatenedagainst Borrower or management of the Borrower which, if adversely determined, would have a Material Adverse Effect. |
| (j) | Material Contracts and Licences.Schedule7.1(j)(asamended fromtime to time and updated in accordancewith delivery of a Compliance Certificate pursuant to Section 8.2), accurately sets out allMaterial Contracts and MaterialLicences. A true and complete certified copy of each Material Contract and Material Licence existing at the Closing Date has been delivered to the Lender and each Material Contract and Material Licence is in full force and effect. No event has occurred and is continuing which would constitute a material breachof or a default under any such Material Contract or Material Licence. Each Material Contract to which Borrower [and any other Affiliate of the Borrower who has provided Collateral] is a party is binding upon Borrower [and any other Affiliate of the Borrower who has provided Collateral (as the case may be)] and, to its knowledge, is a binding agreement ofeach other Person who is aparty to the MaterialContract. It has obtained, as of theClosing Date, all necessary consents, including consents of landlords to the granting of a security interest in each Material Contract and Material Licence pursuant to the Security Documents . |
| (k) | NoLiens.No securityagreement,financingstatementoranalogousinstrumentexistsasattheClosingDatewith respecttoany oftheCollateralotherthan any security agreement, financing statement or analogous instrument evidencing Permitted Liens. |
| (1) | Title toCollateral.TheBorroweror Mariel(asthecasemay be) isthelawfulownerofall Collateralnowpurportedlyownedorhereafterpurportedlyacquiredbyit, free from all Liens, whethervoluntarily or involuntarily createdand whether ornot perfected,other than Permitted Liens. |
| (m) | Financial Information.All ofthequarterly andannualFinancialStatementsorother financialinformationwhichhavebeenfurnishedtotheLenderin connectionwith this Agreement are complete in all material respects and such Financial Statements or other financial information give a true and fair view (in thecase ofaudited financial statements) or fairly represent (in allother cases) the results of operations and financial position of the Borrower as of the date referred to therein and have been prepared in accordance with GAAP. All other financialinformation provided to the Lender are complete in all material respects and based on reasonable assumptions and expectations . |
| (n) | Permitted Debt.AsoftheClosingDate(givingeffecttothemakingoftheLoan),the Borrowerisnotobligated,whetherdirectlyorindirectly, for any Debt otherthan the Permitted Debt. |
| (o) | Taxes.theBorrowerhasdulyandtimelyfiledallTaxreturnsrequiredtobefiledbyitand haspaidormadeadequate provision for the paymentof allTaxes leviedonitsProperty orincomewhich areshowing therein as due and payable, including interest and penalties, or has accrued such amounts in its financial statements for the payment of suchTaxes except forTaxeswhich are notmaterial in amount or which arenot delinquent or ifdelinquent are beingcontested, and there isno materialaction (except, afterthe date of this Agreement, as is disclosed to the Lender in writing), suit, proceeding, investigation, audit orclaimnow pending,ortoits knowledge, threatened by any Governmental Authority regarding any Taxes nor has it agreed to waive or extend anystatuteof limitationswithrespect to thepayment orcollectionof Taxes. |
| (p) | Full Disclosure.Allinformationprovidedortobe providedtotheLenderbyoronbehalf ofBorrowerinconnectionwiththeLoanis,toBorrower'sknowledge,trueandcorrectin |
all materialrespectsandnoneofthedocumentationfurnishedtotheLenderbyoron behalfofit,toBorrower'sknowledge,omitsorwillomitas ofsuch time,a material fact necessaryto make the statements contained therein not misleading in any material way, andall expressions ofexpectation, intention,belief and opinion containedthereinwere honestlymade on reasonable grounds (and anyother Person who furnished such material on behalf of it).
| (q) | Insolvency.TheBorrower(i)hasnotcommittedanyactofbankruptcy,(ii)isnot insolvent,norhasproposed,norgiven notice of its intention topropose, a compromiseor arrangement to itscreditors generally, nor(iii)has any petition forareceiving order in bankruptcy filed againstit, made a voluntary assignment in bankruptcy,takenany proceedingwith respectto anycompromise or arrangement, taken any proceedingto have itself declared bankrupt or wound-up, taken any proceeding to have a receiver appointed of any part of itsProperty. |
| (r) | Location ofCollateral.TheofficeswhereBorrowerandanyotherAffiliateofthe BorrowerwhohasprovidedCollateralkeepsitsbooks,recordsandaccounts(orcopies thereof) concerning their Collateral, Borrower'sand any other Affiliate of the Borrower who hasprovided Collateral principal place of business and all of Borrower's and any other Affiliate of the Borrower who has provided Collateral other significant places of business and significantlocations of Collateral,are as set forthin Schedule 7.1(r). |
| (s) | Owned RealProperty.TheBorrowerdoesnotownrealproperty. |
| (t) | Leased RealProperty.The Borrowerdoesnotleaserealproperty. |
| (u) | Environmental Laws.TheBorrowercompliedwithallEnvironmentalLawsapplicableto theconstructionandoperationofitsPropertyandbusinesses,except where any non- compliance would not reasonably be expected to havea MaterialAdverse Effect; the Borrower hasno materialcontingentliability with respect to non-compliance with EnvironmentalLaws orthe generation, handling, use, storage, ordisposal of Materials of Environmental Concern. And, without limiting the generality of the foregoing, exceptas wouldnot reasonably be expected tohave a Material Adverse Effect, the Borrower: |
| (i) | has notreceivedanyActionRequest,ViolationNotice,summons,complaint, orderorothernoticethatitisnotincompliance with, orthat anyGovernmental Authority is investigatingits compliance with, Environmental Laws: |
| (ii) | has no knowledge or reason to believe that operations or any Property of or occupied by the Borrower or in the Borrower's charge, management or control are not in compliance with all applicable Environmental Laws and each of its Properties is free: |
| (A) | from contaminationby, andtherehasnot beenthereonarelease, dischargeoremissionof,anyMaterialsofEnvironmentalConcernwhich isprohibited,controlledor regulated under any EnvironmentalLaw; and |
| (B) | of undergroundstoragetanks,landfills,landdisposalsanddumps; |
| (iii) | has notfiledanynotice,orreceivednotice,underanyApplicableLaw,including anyEnvironmentalLaw, indicatingpastorpresenttreatment,storageordisposal ofa Material of Environmental Concern or reporting any spill or releaseof a Material ofEnvironmental Concern into the environment; |
| (iv) | has nocontingentliabilityofwhichtheBorrowerhasknowledgeorreasonably shouldhaveknowledgeinconnectionwithanyreleaseof anyMaterial of Environmental Concern; |
| (v) | does notgenerate,transport,treatordisposeofanyMaterialofEnvironmental Concerninany mannerwhichisnotincompliance with allapplicable Environmental Laws; and |
| (vi) | has notdisposedofanyMaterialofEnvironmentalConcerninorontheground ofBorrower'srealpropertiesorpremisesleasedbyBorrower. |
(v) LabourMatters.
| (i) | There isnocollectivebargainingagreement orotherlabourcontractcoveringemployeesofBorrower. |
| (ii) | There isnopendingor,tothebestofitsknowledge,threatenedstrike,work stoppage,materialunfairlabourpractice claims,or other material labour dispute againstor affecting Borrower or itsemployees which would reasonably be expected to have a Material Adverse Effect. |
| (iii) | There arenocontroversiespendingorthreatenedbetweenBorrowerandanyof itsemployees,otherthanemployeegrievancesarisingintheordinary course of businesswhich would notreasonably be expected to have a Material Adverse Effect. |
| (iv) | The BorrowerisincomplianceinallmaterialrespectswithallApplicableLaws respectingemploymentandemploymentterms,conditionsandpractices,except where thefailure to so comply would not reasonablybe expected to have a Material Adverse Effect. |
| (w) | Pension Plans.TheBorrowerdoesnotsponsorormaintainorcontributetoaPension Plan.Withrespecttoany Pension Plan adopted or to whichBorrower may become obliged tocontribute, no failure to remit contributions (other than immaterial amounts)has occurred with respect toany such Pension Plan, that is sufficient togive rise toaLien under any Applicable Lawsof anyjurisdiction (other than a Permitted Lien), and no condition exists andno event or transaction hasoccurred with respect to any such Pension Planwhich could result in the incurrence byBorrowerof anymaterial liability, fine or penalty. Each PensionPlan is in compliance in all material respects with allApplicable Lawspertaining to pensionbenefits and Tax laws,(i) all contributions (including employee contributions madeby authorized payroll deductions or other withholdings) required to be made to the appropriate funding agency in accordance with all Applicable Laws and the terms ofsuchPension Plan have been made in accordance with all ApplicableLaws and the termsof suchPension Plan,exceptfor amounts which are immaterial, (ii) all liabilities undersuch Pension Plan are fully funded, ona going |
concern andsolvencybasis,inaccordancewiththetermsoftherespectivePension Plans,therequirementsofapplicablepensionbenefitslawsandofapplicableregulatory authoritiesand themost recent actuarial report filed with respect to thePension Plan.No event has occurred and no conditions exist with respectto any such Pension Plan that hasresultedorcould reasonablybeexpected to result in such Pension Plan having its registration revoked or refused for the purposes ofany applicablepension benefitsor tax laws or beingplaced under the administration of anyrelevant pensionbenefitsregulatory authority or being required to pay any taxes or penaltiesunder any applicable pension benefits or taxlaws.
| (x) | ERISA.(i)WithrespecttoeachERISAPlan,itandeachothermemberofitsControlled Grouphasfulfilled itsobligationsundertheminimum fundingstandardsof and is in compliance in all material respects with ERISAandthe RevenueCode to the extent applicable to it and has notincurredanyliability tothe PBGCor under Title IV of ERISA, otherthan a liability tothePBGCfor premiums under Section4007of ERISA; (ii) it does not have any contingent liabilities withrespect to any post-retirement benefits under a Welfare Plan,other than liabilityforcontinuationcoveragedescribedin Part 6 of TitleI of ERISAoras required under Applicable Lawrequirements for health continuation coverage,(iii)neither a Reportable Event nor a Prohibited Transactionhas occurredand iscontinuing with respect to any ERISAPlan; (iv) no notice ofintent to terminatean ERISA Plan has been filed, nor has any ERISAPlan beenterminated; (v)no circumstances exist which constitute groundsentitlingthe PBGC to institute proceedings to terminate,or appointa trustee to administer, ERISAPlan, norhas thePBGCinstituted anysuch proceedings; (vi) neitherit nor any memberofitsControlled Grouphas completely or partiallywithdrawn froma multiemployer plan; (vii) it and all members of its ControlledGroup have met their minimumfunding requirements underERISA with respect to all of their ERISA Plans and thepresent value of all vested benefits under each ERISA Plan exceeds the fairmarket valueof allsuch ERISA Planassetsallocable to such benefits, asdetermined on the most recentvaluation date ofsuch ERISA Plan and in accordancewith theprovisions ofERISA; and neither it noranymember of its Controlled Group has incurred anyliability to thePBGC under ERISA. |
| (y) | Computer Software.TheBorrowerownsorhaslicensedforuseorotherwisehasthe righttouseortoacquireorlicenceallof the materialsoftwarenecessarytoconductits businesses.All computer equipment ownedor usedby Borrowerand necessary forthe conductof businesshas been properlymaintainedand is in goodworkingorderfor the purposesofon-going operation, subjecttoordinary wear andtear for computer equipment of comparableage. |
| (z) | Insurance.Schedule7.1(z)lists allexistinginsurancepoliciesmaintainedbyBorrowerasofthe Closing Date. |
| (aa) | OFAC.The Borrower isnotin violationofanyofthecountryorlistbasedeconomicand tradesanctionsadministeredandenforcedbyOFAC. TheBorrower (i) isnota SanctionedPerson or a Sanctioned Entity, (ii) has no more than10% of its assets located in SanctionedEntities, or (iii) derives no more than10% of its revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. |
| (bb) | No MarginStock.TheBorrowerisnotengagedinthebusinessofextendingcreditfor thepurposeofpurchasing or carryingmargin stock. None of theproceeds of theLoan willbe usedtopurchaseorcarry,ortoreduceorretireorrefinanceanycreditincurredto purchaseorcarry,anymarginstock(withinthemeaning ofRegulations U and Xof the Board ofGovernors of the FederalReserveSystem oftheUnitedStates)or to extend credit to others for the purpose of purchasing or carrying any margin stock. |
| (cc) | Quality andQuantityofBMP-7.Mariel currentlyistheownerandhasinits possessionnolessthan13grams of BMP-7. The specific characteristics of the BMP-7, including pertinent informationregarding the expirydates ofBMP-7,is set forthon Schedule 7.1(cc). |
| (dd) | NoMaterialAdverseEffect.No eventhasoccurredwhichhashadorcouldreasonably beexpectedtohaveaMaterialAdverseEffect. |
| (ee) | No EventofDefault.NoEventofDefaulthasoccurred andiscontinuing. |
| (i) | Each Productthatissubject totheApplicableLawspromulgatedbyaRegulatory Authority, is manufactured,packaged,labelled,imported,exported,stored,distributed, sold (whether or not for consideration), advertised and marketed in compliancewithall suchApplicable Laws, (except for immaterialnon- compliance) as well as all material terms andconditions imposed in any licenses andpermitsissuedin respectofthe Products. |
| (ii) | Neither theBorrowernor,totheknowledgeoftheBorrower,anyofficer, employee,contractororagentoftheBorrowerhasevermadeanuntrue statement ofmaterialfact orfraudulent statementto aRegulatory Authority or failedto disclose amaterial fact required tobe disclosedtoaRegulatory Authority. |
| (iii) | No Producthasbeenrecalled,withdrawn,suspendedordiscontinued(otherthan forcommercialorbusinessreasons)byBorroweratanytime, andBorrowerhas not received any information or report from any Governmental Authority, indicating that any of the Products, or ingredients therein, are unsafe or unsuitableforits intended use or posean unacceptable healthrisk. |
| (iv) | To theknowledgeofBorrowerafterdueinquiry,none oftheProductsoringredientsthereinhavebeenthesubjectofa warning, consumer alertorother cautionary statement issued by any Governmental Authority nor is there any ongoingcomplaint orinvestigationby any GovernmentalAuthorityrelating to the advertising or marketing practices used for any Product. The Borrower is not awareofany facts that would indicatethat any Governmental Authority hasor will prohibit or materially restrict the marketing, sale, distribution or use inthe UnitedStates, Canadaor Europe ofany Product or theoperationoruse of any facility currentlyused to produce,manufacture or distribute the Products. |
| 7.2 | Survival ofRepresentationsandWarranties |
TheBorrower,foritselfandonbehalfofBorrower,represents,warrantsandcovenantsthatall representations, warrantiesandcovenantscontainedinthisAgreement(whether appearing in Article 7 or
elsewhere) willbetrue,correctandcompleteatthetimeoftheBorrower'sexecutionofthisAgreement, andwillsurvivetheexecution,deliveryandacceptancehereofby theparties hereto and the closingofthe transactions described hereinor related hereto untilthe repayment and performance infull of allofthe Obligations and terminationof this Agreement.
ARTICLE 8
SCHEDULES ANDREPORTS
The BorrowerwilldelivertotheLenderthefollowingfinancialinformation:
| (a) | no laterthan60daysaftertheendoftheBorrower'sfirstthreeFiscalQuarterseachyear, copiesofinternallypreparedConsolidatedFinancialStatementsoftheBorrower; |
| (b) | no laterthan120daysaftertheendofeachFiscalYearoftheBorrower, copies ofannual ConsolidatedAuditedFinancialStatementsoftheBorrower;and |
| (c) | no laterthan30daysaftertheendofeachcalendarmonth,copiesoftheCashBalance Statements. |
| 8.2 | Compliance Certificate |
The ComplianceCertificatewithrespecttotheCashBalanceStatementwillbedeliveredmonthlywhen dueunderSection8.1(c).
At suchtimesasmaybereasonablyrequestedbytheLenderfromtimetotimehereafter,theBorrower willdelivertotheLender(a)suchadditionalschedules, certificates,reportsand information with respect to the Collateral asthe Lendermayfrom time totime reasonably require, including, butnotlimitedto, non-consolidated Financial Statements of theBorrower;and (b) a collateral assignmentofany orall items ofproperty heldbyBorrower,fromtimeto time,to the Lenderor as the Lendermay directnecessary to perfect thesecurity interestsin favor of theLenderin such propertyin accordancewith this Agreement(to the extent not otherwisepreviouslyperfected under a Loan Document). All schedules,certificates,reports and assignments and otheritems deliveredby the Borrower to theLenderhereunder willbe executed by anauthorized representative ofthe Borrower,andwill beinsuchform and contain suchinformationas theLender will reasonably request.The Lender,through its officers,employees oragents,willhave the right, upon reasonablenotice atanytimeandfrom timetotimein the Lender's name, in thenameof a nominee of theLender or in Borrower'sname, to verify the validity,amountor anyothermatter relating to any of the Collateral, by mail, telephone,telegraphor otherwise.The Borrower will reimburse the Lender, on demand, for all reasonablereceipted costs,fees and expenses incurred by theLender in this regard.
ARTICLE 9
COVENANTS
| 9.1 | Positive Covenants oftheBorrower |
Until paymentandperformanceinfullofallObligationsandterminationofthisAgreement,unlessthe Borrower obtainstheprior writtenconsentofthe Lender waiving or modifying anycovenants hereunder in any specific instance, the Borrower will:
| (a) | Timely Payment.MakedueandtimelypaymentoftheObligationsrequiredtobepaidby ithereunder. |
| (b) | Conduct ofBusiness,MaintenanceofExistence,CompliancewithLaws.Carry onandconductitsbusinessandoperationsina proper,efficient andbusinesslikemanner, in accordance with good business practice except for non-compliance which would not reasonably be expected tohave aMaterial AdverseEffect;preserve,renew and keepin full force and effect itsexistence; and takeall reasonable action to maintain all rights, privileges andfranchises necessary or desirable inthe normal conduct of its business and to comply in allmaterial respects withits Material Contracts, MaterialLicencesand RequirementsofLaw. |
| (c) | Further Assurances.ProvidetheLenderwithsuchotherdocuments,consents, acknowledgementsandagreementsasarereasonablynecessarytoimplement this Agreement and the other Loan Documents from time to time. |
| (d) | Access toInformation.Promptly providetheLenderwithallinformationreasonablyrequestedbytheLender from time to time concerning its financialconditionand Property, and during normal business hours and from timeto timeuponreasonable notice, permit representatives of theLender to inspectany of itsPropertyand to examine andtake extracts from itsfinancial books, accounts and records including but notlimited to accountsand records storedin computer data banks and computer software systems, and to discuss itsfinancial affairs, its business or any part of its Property withits senior officers. Provided that a Default or Event of Default is then continuing, the Borrower will pay allreasonable expenses incurred bysuch representatives in order to visit Borrower's premises or attend at the Borrower's principal office, as applicable, for suchpurposes. |
| (e) | Obligations andTaxes.Payordischargeorcause tobepaidordischarged,beforethe samewillbecomedelinquent(i)allTaxesimposeduponitor uponits income or profits or in respect of its business or Property and file all tax returns in respect thereof; (ii) all lawful claims forlabour,materialsand supplies;(iii)allrequiredpayments under any of its Debt, and(iv) all otherobligations; provided, howeverthat it willnotberequiredto pay or dischargeorto causetobepaidor discharged anysuchamountsolongasthe validity or amount thereof will be contested in good faith by appropriate proceedings and, in the case of clause (i) above,an adequatereserve in accordancewith GAAP has been establishedin its books andrecords. |
| (f) | Use ofProceeds.The proceeds of the Loan shall be used only in the manner set out inSchedule 9.1(f),subject toany minor deviations which mayarisefromtimetotime. Any otheruse of the proceeds shall be subject to theLender's consent. |
| (g) | Insurance.Within60daysoftheClosing,obtainproductliabilityinsurancecoveringat least$1,250,000perclaim.Maintainorcausetobemaintainedwithreputableinsurers coverageagainstriskof loss ordamage to its Property (including publicliability and damage to propertyof third parties) covering atleast $1,250,000 per claim and businessinterruption insurancecovering atleast $1,250,000 per claimof such typesasis customary forandwould be maintained by a corporationwith anestablished reputation engaged in thesameor similarbusinessin similar locations andprovideto the Lender, as requested (actingreasonably),evidenceof such coverage. The Borrower will, before theexpiryorreplacementofany insurancepolicy,notify the Lender of thereplacement |
and attheLender'srequestsendcopiesofallreplacementpoliciestotheLender. Withoutlimitingthegeneralityoftheforegoing,the Borrower will maintain in effectall insurance coverage reasonable and prudentfor abusiness similartothe Business conducted in similar locations. The Lenderwill be indicated in all insurance policies, as applicable, as first losspayee and additional insured, and allpolicies willcontainsuch standard mortgage clauses as the Lender willreasonably requirefor the Lender's protection.
| (h) | Notice ofDefaultorEventofDefault.Promptlyand,in anyeventwithintwoBusiness DaysofbecomingawareofanyDefaultor Event of Default, notify the Lender ofsuch DefaultorEvent ofDefault whichnoticeshall include theactiontobe taken by Borrower to remedy any suchDefault or Event ofDefault. |
| (i) | Notice ofMaterialAdverseEffect.PromptlynotifytheLenderofanyMaterialAdverse Effectofwhichitbecomes aware. |
| (j) | Notice ofLitigation.Promptlynotify theLenderonbecomingawareofthe occurrenceof anylitigation, dispute,arbitration,proceedingorothercircumstancetheresultofwhichif determined adversely wouldor couldreasonably beexpectedtoresult in(a) a judgment or award against it in excessof $25,000 or(b) aMaterial Adverse Effect, and from time to time providethe Lender with all reasonable information requested by itconcerning the status of anysuchproceeding. |
| (k) | OtherNotices.Promptly,upon havingknowledge, give noticetotheLenderof: |
| (i) | any noticeofexpropriationaffectingBorrower; |
| (ii) | any ActionRequestorViolationNotice; |
| (iii) | any violationofanyApplicableLawwhichreasonablycouldbeexpectedtohave aMaterialAdverseEffectonBorrower; |
| (iv) | anydefaultunderanyDebtinaprincipalamountgreaterthan$25,000of Borrower; |
| (v) | any terminationbeforematurityoformaterialdefaultunderaMaterialContractor anytermination,lapse,rescission ordefaultunderaMaterialLicence; |
| (vi) | any damagetoordestructionofanyProperty,of Borrowerhavingareplacementcostinexcessof$25,000; |
| (vii) | the acquisitionofany realpropertybyBorrower; |
| (viii) | the receipt ofinsurance proceedsbyBorrowerinexcessof$25,000; |
| (ix) | any LienregisteredagainstanyPropertyofBorrower,otherthanaPermittedLien; |
| (x) | the occurrenceofanyeventreferredtoinSection7.1(w); |
| (xi) | a Productbeingrecalled,withdrawn,suspendedordiscontinued orisunder considerationofbeingrecalled,withdrawn, suspendedordiscontinued; |
| (xii) | a Productbeingthesubjectofawarning,consumeralertorothercautionary statementissuedbyanyGovernmentalAuthority; |
| (xiii) | any informationorreportfromanyGovernmentalAuthority,indicatingthatanyof theProductsare,unsafeorunsuitableforitsintendeduseorpose an unacceptable healthrisk; |
| (xiv) | any enteringintoofaMaterialContractorMaterialLicence; |
| (xv) | any materialadversechangein,ormaterialadverseamendmentto,or terminationofaMaterialContractorMaterialLicence; |
| (xvi) | the occurrenceofanyoftheaboveeventsthatwouldreasonablybelikelyto haveMaterialAdverseEffectonMarieloronthe Collateral. |
| (l) | Environmental Compliance.Operate itsbusiness incompliancewithRequirementsof EnvironmentalLaws (except where thefailuretodosowouldnothave aMaterial Adverse Effect) and operate all Propertyowned, leased or otherwiseused by it suchthat no obligation, including a clean-up or remedial obligation, wouldknowingly arise under anyRequirements of Environmental Law; provided, however, that if any such claim is made or anysuch obligation arises, the Borrower willpromptlysatisfy,address or contest such claim or obligation at its own costand expense. It will promptly notify the Lender upon: (i) learning of the existence of anyMaterials of Environmental Concern located on, above orbelowthesurface of any land which it owns, leases,operates, occupies or controls (except those beingstored, usedor otherwisehandledin compliance with Requirements ofEnvironmental Law),or contained inthe soil or water constituting such land; and (ii) learning ofthe occurrence of anyreportable release, spill,leak, emission, discharge,leaching, dumping or disposal of Materials of EnvironmentalConcernthat has occurred on or from such land, which,ineitherthe caseof (i) or (ii), islikely to result in liability under Requirements of Environmental Law in excess of $25,000. |
| (m) | Security.WithrespecttotheSecurity: |
| (i) | provide totheLendertheSecurityrequiredfromtime totimepursuanttoArticle6 inaccordancewiththeprovisionsofsuchArticle, accompanied bysupporting resolutions, certificates and opinionsin formand substance reasonably satisfactory to theLender; |
| (ii) | maintain atalltimesatleast13gramsofcommercialgradeBMP-7inthe Borrower'sorMariel'spossessionandcontrol; and |
| (iii) | do,executeanddeliverallsuchthings,documents,security,agreementsand assurancesasmayfromtimetotimebereasonablyrequestedbythe Lender to ensure that the Lender holds at all timesvalid, enforceable, perfected first-priority Liens (subject only to PermittedLiens) on the Collateral meeting the requirements of Article 6. |
| (n) | Maintenance ofProperty.KeepallPropertyusefulandnecessaryinitsbusinessin goodworkingorderandcondition, normal wear and tear excepted,and maintain all Intellectual Property necessary tocarry on itsbusiness. |
| (o) | Landlord Consents . If required,useitscommercialeffortstoobtain,infavoroftheLender,a consent agreement from a landlord of premisesthat are leased at any time and from time to time by Borrower. |
| (p) | Material Contracts.Ensure thatanyMaterialContractisspecificallyassignedbywayofsecurityinfavour ofthe Lender by the Borrower orthe Borrower's Affiliate partyto such Material Contract, andto obtain, in favor of the Lender, if necessary to assign properlysuchMaterialContract, an acknowledgement ofa Person or Governmental Authority to such assignment. |
| (q) | Employee BenefitandPensionPlans.MaintainallemployeebenefitandPension Plansrelatingtoitsbusinessincompliance withall Applicable Laws except for immaterial non-compliance. |
| (r) | AdditionalInformation.Promptly providetheLender,afterthesendingorfilingthereof,withcopiesofallmaterialreports,notices,prospectusesandregistrationstatements which Borrower fileswith asecurities commission or securities regulatory authority in any ProvinceofCanadaor any othersecurities commission. |
| (s) | Material ContractsandMaterialLicences.Atthe reasonablerequestofthe Lender fromtimetotime,providetotheLendercertified copies ofall Material Contracts and Material Licences. |
| (t) | Regulatory Matters.Ensurethat(i)allnon-compliance(otherthanimmaterialnon- compliance)withregulatorymattersasidentifiedinSchedule7.1(ff) is remediedwithin a reasonableperiodof time following the Closing Date,and (ii) all existingandfuture Products are licensed and/orregistered,as applicable, in compliance with ApplicableLaws. |
| (u) | ERISA.PromptlypayanddischargeallobligationsandliabilitiesarisingunderERISAof acharacterwhichifunpaidor unperformed couldresultin the impositionofaLien other thana Permitted Lienagainst any ofits Properties;promptlynotify the Lender of(i) the occurrence of anyReportable Event with respect toan ERISA Plan thatcouldreasonably be expected toresult in material liability, (ii)receipt ofany noticefrom the PBGCofits intention toseekterminationofanyERISAPlan or appointment of a trustee therefor, (iii) itsintention toterminate or withdraw from any ERISA Planor multiemployer planthat couldreasonably be expectedtoresult in materialliability,and (iv) the occurrence of any event with respectto any ERISA Planor multiemployer planwhich would result inthe incurrence by it or any Subsidiary ofany materialliability, fineor penalty, and (v)any material increase in its contingentliabilitywithrespect toanypost-retirementWelfare Plan benefit. |
| (v) | Patriot Act.InthecaseofBorrower,the Borroweracknowledgesandagreesthatpursuanttotheprovisionsof theUSA Patriot Act (Title IIIof thePub.L. 107-56) signedintolaw October26,2001 (the" Patriot Act"),the Lendermayberequiredtoobtain,verify and record informationwithrespect toBorrower;and the Borrower hereby agrees |
to cooperatewiththeLenderandprovidethemwithallinformationthatmayberequired inordertofulfiltheirobligationsunderthePatriotAct;andwithout limitingthegenerality of the foregoing, the Borrower agrees to usecommercially reasonable effortstoobtain the consentof any of their respectiveofficers, directors andemployees whose consent to thedisclosure ofany such information is requiredunder applicable privacy legislation in Canada.
| (w) | Books andRecords.At alltimeskeepaccurateandcompletebooks,recordsand accountswithrespecttoall of its business activities, in accordance with sound accounting practices and, where applicable,GAAPconsistently applied, andwill keep such books,records andaccounts, and any copiesthereof, only at the addresses indicated for such purpose on Schedule 7.1(r). |
| (x) | Equity Raise.Borrowerwillusecommerciallyreasonableeffortstoraiseaminimumof $45,000,000 pursuanttotheissuanceofnewEquityInterests(the"EquityRaise")on or before the date falling six months after the Closing Date. For greater certainty, such $45,000,000 minimum amount will not include any amount provided by the Lender in connectionwith the Equity Raise or in connection with the Equity Commitment. |
| (y) | Warrants.On thedatetheEquityRaiseiscomplete,theBorrowerwilleitherissueto Lender,fornoadditionalconsideration,such number of common stockpurchase warrants of the Borrower with an exercise price equal to the Equity Raise price per share such that a five-year Black-Scholes valuationusing a 60% volatilityand1.75% risk-free rate would generate an expected value of $200,000 (the"Warrants").The Warrants will expire on the date which is five years after the date on which they were issued. |
| (z) | Financial CovenantsBorrowerwillmaintainatalltimesaminimumpositivecash balanceequalto$50,000orsuchloweramount as is agreed tobythe Lender acting reasonably(the"CashBalance Statement"). |
| (aa) | | Board Observer.Until therepaymentandperformanceinfullofalloftheObligations, thetermination ofthisAgreement andtheLenderhavinglessthan 5% of theEquity Interests of the Borrower on a fully diluted basis (which, for the purposesof calculating the foregoingpercentage, shall include anyEquity Interests issuable to theLender upon the exerciseof theWarrant), the Lender willbe entitled todesignate oneindividual (the"Lender's Nominee"),to be an observer and to serve as an observeron theBoard's Audit and Compensation Committee. The Borrower will notify the Lender in writing immediately upondetermining the date ofany meeting of itsshareholders at which directors of theBorrower are to be elected. TheBorrower shall have the right to exclude any Lender or Lender's Nominee from any portion of any meeting and redactany information from any written materials (i) in order to preserve any attorney-clientprivilege (based on the adviceof counsel)or (ii) at or in which strategies with respect to Obligations. |
| (bb) | | Financial Statements.The Borrowershalldeliverauditedfinancialstatementsofthe BorrowerfortheyearsendedDecember31, 2013 and December 31, 2014 within 30 days of the ClosingDate. |
| (cc) | | Merger withMarielTherapeutics.TheBorrowershallmergewithMarielTherapeutics, Inc.within 60days oftheClosingDate. |
| 9.2 | Negative Covenantsofthe Borrower |
So longasthisAgreementisinforceandexceptasotherwisepermittedbythepriorwrittenconsentof theLender,neither theBorrowernor Mariel will:
| (a) | Disposition ofProperty.Except forPermitted Dispositions,disposeof,inone transactionora seriesoftransactions,all orany part of its Property, whether now owned or hereafter acquired. |
| (b) | No Consolidation,Amalgamation,etc.Consolidate,amalgamateormergewithany otherPerson,exportacorporationintoajurisdictionoutsideof the UnitedStates, enter into any corporate reorganization or othertransaction intended toeffector otherwise permit a change in its existingcorporateorcapital structure, liquidate, wind-up ordissolve itself, or permit any liquidation, winding-up ordissolution unless prior written approval (whichwill not beunreasonably withheld) has been received bythe Lender and such documentation as is required by counselto the Lender is delivered concurrently with such transaction. |
| (c) | No ChangeofName.Changeitsnameorchangeitsjurisdictionofincorporationor formationineachcase withoutprovidingthe Lender with15 days' prior writtennotice thereof. |
| (d) | No Debt.Create,incur,assumeorpermitanyDebttoremainoutstanding,otherthan PermittedDebt. |
| (e) | Operating Leases.Create,incur,assumeorpermitobligationsoutstandinginrespectto operatingleases(which,forgreatercertainty,does notincludeleases of realproperty) suchthatthe aggregate annual payments dueonsuch leases exceeds$25,000. |
| (f) | No Distributions.Make anyDistributionexcept PermittedDistributions. |
| (g) | No Lien.Create,incur,assumeorpermittoexistanyLienuponanyofits Property exceptaPermitted Lien. |
| (h) | Acquisitions.Make anyAcquisitions,except,providedthatnoEventofDefaulthasoccurredandiscontinuingorwould result from suchAcquisition,anAcquisitionof any other Personorof all or part of the Property ofany other Personor ofall or part of any division, business, operationorundertakingof anyother Person where thebusiness of suchPerson is the same or substantially the same as, similar,complementary or related to, the Businessorthe business ofthe Borrower andtheaggregate consideration payable in respect of such Acquisition (including, withoutlimitation, any deferred consideration) is not more than $50,000, and further provided that any property acquired pursuant tosuch Acquisition becomesCollateral subject to the Security(including, without limitation, any shares of any Subsidiary). |
| (i) | No ChangetoYearEnd.MakeanychangetoitsFiscalYear. |
| (j) | Location ofAssetsinOtherJurisdictions.ExceptforanyPropertyintransitinthe ordinarycourseofbusiness,acquireanyPropertyoutsideof the jurisdictions identified in Schedule 7.1(r) or moveanyPropertyfrom one jurisdiction to another jurisdiction where the movementof suchProperty wouldcause the Lien of the Securityover suchProperty |
to ceasetobeperfectedunderApplicableLaw,orsufferorpermitinanyothermanner anyofitsProperty to not be subject to the Lien of the Security or to be orbecome located in ajurisdictionas a result of which the Lien of Security over such Property is not perfected, unless(i) Borrower has first given 30 days'prior written notice thereof to the Lender,and(ii) the Borrower has first executed anddeliveredtotheLenderallSecurity and all financing orregistration statements in form and substance satisfactory to the Lender which the Lender or itscounsel,acting reasonably, from time to time deem necessary or advisable to ensure that the Security atalltimes constitutes aperfected first-priorityLien (subject only to Permitted Liens)over suchProperty notwithstanding the movement orlocation of suchProperty as aforesaid togetherwith such supporting certificates , resolutions, opinions andother documents asthe Lender maydeem necessary or desirable in connection with such security and registrations.
| (k) | Amendments toOrganizationalDocuments.AmendanyofitsOrganizational Documentsinamannerthatwouldbemateriallyprejudicialtotheinterests of the Lender under theLoanDocuments. |
| (l) | Amendments toother Documents.Amend,varyoralterany MaterialContractor MaterialLicenceinamannerthatwould reasonablybeexpectedtohaveaMaterial AdverseEffect. |
| (m) | Non-Arm's LengthTransactions.ExceptascontemplatedbySection9.2(f),effectany transactionswithanyPersonnotdealingatarm'slengthunlesssuch transaction is on market terms and consistent with transactions withPersons at arm's length. |
| (n) | Sale andLeaseback.EnterintoanyarrangementwithanyPersonprovidingforthe leasingbyBorrower,aslessee,of Propertywhich hasbeenoris to be sold or transferred by Borrower to such Person or to any other Person to whom funds have been or are to beadvanced by such Person on the security of such Property or the lease obligation of Borrower. |
| (o) | New Subsidiaries.CreateoracquireanySubsidiaryafterthedateofthisAgreement, includinginrespectofanySubsidiariesacquired as part ofan Acquisition permitted under this Agreement, unless: (i) such Subsidiaryexists pursuant to the laws of a state oftheUnited StatesofAmerica ; (ii) allof the issuedand outstanding Equity Interests of such Subsidiaryis owned by the Borrower;(iii) such new Subsidiary provides a legal, valid and enforceable guaranteein favour of the Lender and first-ranking securityin form and substance satisfactory to the Lender; and in each case appropriate legal opinions are delivered by Borrower's counsel to the Lender. |
| (p) | Compensation.UntilsuchtimethattheEquityRaiseiscompletedandtheLoanis repaid,thedirectorsandthe managementofthe Borrower shall not receive any fees, salaries or other forms of compensation from the Borrower other than what is set forth in Schedule9.2(p). |
9.3Entitled toPerformCovenants
If theBorrowerfails toperformanycovenantcontainedinthis Article9, orinanyotherprovisionhereofor ofanyoftheother Loan Documents, the Lender may performinany manner deemed fitbyit without thereby waiving any rights to enforcethis Agreement orthe other LoanDocuments, any suchcovenant
capable ofbeingperformedbyitandifanysuchcovenantrequiresthepaymentofmoney,theLender maymakesuchpayments.All sums so expended bytheLenderwillbedeemedtoform part of the Obligations, will bearinterest at thesame rate as the Loanand will be payable by the Borrower on demand.
| (a) | Subject tocompliancewithApplicableLaws(including,forgreatercertainty,applicable securitieslaws)andSection9.4(b): |
| (i) | The Lenderwillcommitaminimumof$2,500,000toparticipateintheinitial publicofferingofEquity Interests of the Borrower, if the price per share offered to the Lender is equal toa 20%discountto the initialpublicoffering price (the"Equity Commitment"). |
| (ii) | The Lendermay,initssolediscretion,commituptoanadditional$2,500,000to participateintheinitialpublicofferingoftheEquityInterests oftheBorrower,if thepricepershareofferedto the Lenderis equaltoa20% discountto the initial public offering price. |
| (b) | Notwithstanding Section9.4(a),theLenderwillonlyparticipateintheBorrower'sinitial publicoffering, ifandonlyiftheEquityInterestsissued to the Lender in connection therewith will not be subject to a lock-up or hold period and thusbefreely tradable immediately following the completion of the initial public offering. |
| (c) | For thepurposesofthisArticle9,aninitialpublicofferingshallmeananinitialpublic offeringofthecommon sharesof the Borrowerorother form of going-public transaction (including, without limitation, areverse take-over)wheretheproceedsreceivedby the Borrowerareno less than $45,000,000, exclusive of the Equity Commitment,andthe Equity interests of the Borrower are posted and listed for trading on any one of the NYSE, NASDAQ, TSX or any other exchange approved by the Lender. |
ARTICLE 10
CONDITIONSPRECEDENT
| 10.1 | Conditions PrecedenttoLoan |
The obligationsoftheLendertofundtheLoanaresubjecttothesatisfactionorwaiveronorbefore the ClosingDateofthefollowingconditionsprecedent:
| (a) | this Agreementwillhavebeenexecutedanddeliveredbyallpartieshereto; |
| (b) | the LenderDistributionAgreementwillhavebeenexecutedanddeliveredbyallparties thereto; |
| (c) | the LenderwillhavereceivedcertifiedcopiesoftheOrganizationalDocumentsof BorrowerandMariel,theresolutionsauthorizingtheexecution,deliveryand performance of Borrower's and Mariel's respective obligations under the Loan Documents and the transactions contemplated herein, and theincumbency of the officers of Borrower; |
| (d) | copies ofallshareholderagreementsandpartnershipagreements,ifany,applicableto BorrowerandMariel,certified byBorrowertobetrue,will havebeendeliveredto theLender's satisfaction; |
| (e) | Borrower andanyotherAffiliateoftheBorrowerwhohasprovidedCollateralwillbein complianceinallmaterialrespectswith all (ifany) Material Contracts and Material Licences to the reasonable satisfaction of the Lender and copies of all Material Contracts and Material Licences if any,applicable to Borrower and any other Affiliate of the Borrower who has provided Collateral, will have been delivered to the Lender; |
| (f) | evidencethat allnecessaryorrequiredconsentsorapprovalsofanyGovernmentalAuthorityorotherPersonin connection with the delivery of the Loan Documents have been obtained; |
| (g) | releases, discharges,estoppelsandpostponementswithrespecttoallLienswhichare notPermittedLiens,ifany,will have been delivered to theLender; |
| (h) | duly executedcopiesoftheSecurityandtheSecurityDocumentswillhavebeen deliveredtotheLenderandsuch financing statements or other registrations ofsuch Security, or notice thereof, willhave been filed, registered, entered or recorded in all offices of public recordnecessaryordesirable in the opinion oftheLender to preserve or protect the charges and securityinterests created thereby; |
| (i) | a currentlydatedletterofopinionofcounseltotheBorrowerandMariel; |
| (j) | no DefaultorEventofDefaulthasoccurredandiscontinuingontheClosingDateor wouldresult from making the Loan and a senior officer of the Borrower will have certified the same to the Lender; |
| (k) | all representationsandwarrantiesmadebyBorrowerintheLoanDocumentsaretrue andcorrectinallmaterial respects; |
| (l) | no MaterialAdverseEffecthasoccurred; |
| (m) | the Lender willhavereceived suchadditionalevidence,documents orundertakingsastheLenderwill reasonably request toestablish the consummation of thetransactions contemplated hereby and be satisfied, acting reasonably, as to thetaking of all proceedings in connection herewith in compliance with the conditions set forth in this Agreement; |
| (n) | the Lenderwillhavecompletedallduediligencewhichitconsidersnecessaryor appropriateinitsdiscretioninregardtoBorrower and itsProperty,booksandrecords, operations, prospects andcondition (financialor otherwise),including, without limitation, inregards topastand ongoing compliancewithApplicable Laws(including Environmental Laws),union and labour relations andpension matters; and |
| (o) | the LenderwillhavereceivedevidencethattheOriginationFee(Section4.6),theWork Fee (Section4.7) andtheLender'sExpenses(Section4.8) havebeenpaid orare being paid concurrently with the provision of theLoan. |
ARTICLE 11
EVENTS OFDEFAULT
The occurrenceofanyone ormoreofthefollowingeventswillconstitutean"EventofDefault"hereunder:
| (a) | the failureoftheBorrowertopayanyprincipalhereunderwhendue;or |
| (b) | the failureoftheBorrowertopayanyinterestorotherObligations(otherthanprincipal hereunder)whendue;or |
| (c) | the failureoftheBorrowertoperform,keeporobserveanycovenant,condition,promise, agreementorobligationunderthisAgreement (otherthan as described in Sections 9.1 11.1(a)and(b))orinany ofthe Loan Documents,in each case whichfailure is not cured within 15 daysofreceipt of written notice fromthe Lender ofsuchfailure; or |
| (d) | the makingorfurnishingbyBorroweroranydirectororofficerthereoftotheLenderof anyrepresentation,warranty,certificate,schedule,reportorothercommunicationofa materialnaturewithin or in connection with thisAgreement or the Loan Documents, which is untrue or misleading in any material respect when made; provided that, no Event ofDefault under this Section 11.1(d) will occurif suchrepresentation,warrantyorothercommunicationis capable of being corrected within 30 days of being made and is diligently corrected within such 30 day period; or |
| (e) | if BorrowerorMarielceasesorthreatenstoceasetocarryonbusinessgenerallyor admitsitinabilityorfailstopay itsdebts generally; or |
| (f) | if (i)otherthanthepaymentslistedonSchedule11.1(f),theBorrowerfailstomakeanypaymentwhensuchpayment is due and payable to any Person in relation to any indebtedness forborrowed moneyor other indebtednessorliabilities arising in respect of any other Debt which in theaggregate principalamount thenoutstanding is in excess of $25,000 andsuchpaymentisnotmadewithinanyapplicablecureorgraceperiod;or (ii) theBorrowerdefaultsintheobservanceorperformanceofanyotheragreementor condition inrelation to any such indebtedness to any Personwhich in the aggregate principal amount then outstanding is in excess of $25,000 or contained in any instrument or agreementevidencing, securing or relating thereto and such default is not waived or cured within any applicable cure or grace period and the obligations hereunder are accelerated by such Person; or |
| (g) | if BorrowerorMarieldeniesitsobligationsunderanyoftheLoanDocumentsorclaims anyoftheLoanDocuments to be invalid or withdrawn in whole or in part; or |
| (h) | any oftheLoanDocumentsoranymaterialprovisionofanyofthembecomes unenforceable,unlawfulorischangedbyvirtueoflegislation orbyacourt, statutory board orcommission, in each case in a manner that is adverse to the Lender, if Borrower or Mariel does not, within15 Business Days of receipt of notice of such Loan Document or material provision becoming unenforceable, unlawfulor beingchanged and being provided withany required new agreement or amendment forexecution by theLender (acting reasonably), replace suchLoan Document witha new agreementthat is in form |
andsubstancesatisfactorytotheLenderoramendsuchLoanDocumenttothe satisfactionoftheLender;or
| (i) | if adecreeororderofacourtofcompetentjurisdictionisenteredadjudgingBorroweror Marielabankruptorinsolventorapprovingapetitionseekingthe winding-up of.Borroweror Mariel undertheUnited States Bankruptcy Codeor any other bankruptcy,insolvency or analogous lawsor issuing sequestration or process of execution against any substantial part of theCollateral or ordering the winding up or liquidation ofits affairs; or |
| (j) | if BorrowerorMarielbecomesinsolvent,makesanyassignmentinbankruptcyormakes anyothersimilarassignmentforthebenefitofcreditors,makes anyproposalundertheUnited States Bankruptcy Codeor any comparable law, seeks relief under any other bankruptcy, insolvency or analogouslaw,is adjudged bankrupt,filesa petitionor proposal to takeadvantage of any act ofinsolvency, consents toor acquiesces inthe appointment of a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or other Person with similar powers of itself or of all or any substantial portionofitsassets, or filesapetitionor otherwisecommences anyproceedingseeking any reorganization,arrangement, composition or readjustmentunder any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors' rights or consents to, or acquiescesin, the filingof such a petition;or |
| (k) | if anyproceedingorfilingwillbeinstitutedormadeagainstBorrowerorMarielseekingto haveanorderforreliefentered against Borrower or Marielasdebtor or to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment orcomposition under any law relatingto bankruptcy, insolvency, reorganization or relief ordebtors (including, without limitation, theUnited States BankruptcyCodeorseeking appointmentofareceiver,trustee, custodianorother similar official forBorrower or foranysubstantial partofitsproperties orassets unless the same is beingcontested actively anddiligently ingoodfaith by appropriate andtimely proceedings and is dismissed, vacated or permanently stayed within 60days of institution; or |
| (l) | if aPersontakespossessionbyappointmentofareceiver,receiverandmanager,or otherwiseofany materialportionofthePropertyof Borrower orMariel;or |
| (m) | if afinaljudgment,execution,writofseizureandsale,sequestration ordecreeforthepaymentofmoney duewillhave been obtained or enteredagainst the Borroweror Mariel in an amount in excess of $50,000 and such judgment, execution, writof seizure and sale, sequestration or decree willnot have been and remain vacated, satisfied,discharged or stayed pending appeal within the applicable appeal period or is not otherwise covered byinsurance; or |
| (n) | if anyoftheSecuritywillceasetobeavalidandperfectedfirst-prioritysecurityinterest subjectonlytoPermitted Liens and theBorrower willhave failed toremedysuchdefault within10 Business Days of the Borrowerbecoming aware of such fact; or |
| (o) | if aneventof defaultoccursunderanyMaterialContractorMaterialLicenceandwhichis committedbyBorrower oranyotherAffiliateoftheBorrowerwhohasprovidedCollateral (otherthan anevent of default specifically dealt with inthis Section) andsuch event of |
default hasorwouldreasonablybeexpectedtohaveaMaterialAdverseEffectandisnot remediedwithin30daysaftertheBorrower becomes aware ofsucheventofdefault;or
| (p) | if aChangeofControloccurs;or |
| (q) | all or anymaterialpartofthePropertyofBorrowerorMarielwillbenationalized, expropriatedorcondemned,seizedorotherwiseappropriated, or custody or control of such Property of Borrower or Mariel will be assumedbyany Governmental Authority or any court of competent jurisdictionat the instance of any Governmental Authority, in each case which has or would reasonably beexpected to have a Material Adverse Effect exceptwhere contestedin good faith by properproceedings diligently pursued where a stay of enforcement is in effect; or |
| (r) | if anyorderismadebyanyGovernmentalAuthorityinrelationtotheBorrowerorMariel, orthereisanychangeoflaw,orthe interpretation or administration therefore, ineach case, which in thereasonable opinion ofthe Lender,operates to preventor restrict the tradingof the common shares of the Borrower. |
| 11.2 | Acceleration andTerminationofRights |
If anyEventofDefaultoccursandcontinues,allObligationsowingbytheBorrowerundertheLoan Documentswill,attheoptionof the Lender,become immediately dueand payable,all without notice, presentment, protest,demand, noticeof dishonour or anyother demandor notice whatsoever, allof whichare hereby expressly waived by Borrower;provided, if any Event of Default describedin Section 11.1(e), 11.1(i) through 11.1(k) with respect to theBorroweroccurs, the outstanding principalamount ofthe Loan andallother Obligations will automatically be andbecome immediatelydueand payable. In such event the Lender may, in its discretion, exercise any right or recourse and/or proceed by any action, suit, remedy or proceedingagainst Borrower or Mariel authorized or permitted by law for the recovery of all the Obligations of the Borrower or Mariel to the Lender and proceed to exercise any and all rights hereunder andundertheSecurity and no such remedy forthe enforcement of therightsofthe Lender will be exclusive of or dependent on any other remedy but any one or more of such remedies may from time to time be exercised independently or in combination.
| 11.3 | Remedies CumulativeandWaivers |
For greatercertainty,itisexpresslyunderstoodandagreedthattherightsandremediesoftheLender hereunderorunderany other Loan Document orinstrumentexecuted pursuanttothis Agreement are cumulative and arein additiontoandnot in substitutionforanyrights or remediesprovidedby law orby equity;and anysingleorpartial exercise by the Lenderof anyright orremedyforadefaultorbreachof any term, covenant, condition or agreementcontained in this Agreementor any other Loan Document will not be deemed tobe a waiverof or to alter,affect or prejudice anyotherright or remedy or otherrights or remedies towhichthe Lender may be lawfully entitled forsuch default orbreach.Any waiver bythe Lenderof the strict observance,performanceorcompliancewithanyterm, covenant, condition orother mattercontained herein and any indulgencegranted, either expresslyorbycourseof conduct, by theLender will be effectiveonly in the specificinstance and for thepurpose for whichit was given and will be deemednot to be a waiverofanyrights and remedies of theLenderunder this Agreementor anyother Loan Document as a result of any other default or breach hereunder or thereunder.
The Lenderwillnot beunderanyobligationtotheBorroweroranyotherPersontorealizeanyCollateral orenforce the Security or any part thereof or to allow any of the Collateral to be sold, dealt with or otherwise disposed of. The Lenderwill notberesponsible or liable toBorrower orany other Personfor any loss ordamage upon therealization orenforcementof,thefailuretorealizeorenforcetheCollateral or any part thereofor the failuretoallowanyof theCollateral tobe sold, dealt with or otherwisedisposed of or foranyact or omissionon theirrespectiveparts oronthepart of anydirector, officer, agent,servant or adviserin connection withany of the foregoing, except that theLender mayberesponsible orliable for anyloss or damagearising from the wilfulmisconduct or grossnegligence of Lender.
No PersondealingwiththeLenderoranyagentoftheLenderwillberequiredtoinquirewhetherthe Securityhasbecome enforceable, or whether the powers which the Lender is purporting to exercise have been exercisable, or whetherany Obligationsremain outstandingupon the security thereof,or as tothe necessity or expediency ofthestipulationsand conditions subject towhich anysalewill bemade, or otherwiseas to thepropriety orregularityof anysale orotherdispositionor anyotherdealing withthe Collateralcharged by such Security or any part thereof.
| 11.6 | Set-Off orCompensation |
In additiontoandnotinlimitationofanyrightsnoworhereaftergrantedunderApplicableLaw,if repaymentisaccelerated pursuant to Section 11.1(r), the Lender mayat any time and from time totime withoutnotice to theBorrower or any otherPerson,any notice beingexpressly waived bytheBorrower,set-off and compensate and apply any and all deposits,general or special, time or demand, provisional or final, matured or unmatured, and any other indebtedness at any time owingby the Lender, to or for the creditofor the accountof the Borrower, against and on account ofthe Obligationsnotwithstandingthat any of them are contingentorunmatured.
ARTICLE 12
INDEMNIFICATION,ETC.
The BorroweragreesindemnifyandholdharmlesstheLender,andeachofitsAffiliates,and Subsidiaries,and itsrespective officers, directors, employees andagents (each an"Indemnified Party")from and against any and allobligations , losses, damages,penalties, actions, judgments, suits, claims, costs, expenses anddisbursements of any kind ornature (including, without limitation, the disbursements and thefees (on a solicitor-client basis) of onelegal counsel (unless it would beinappropriateforone counseltorepresentall IndemnifiedParties dueto a conflictofinterest or otherwise in whichcase, alllegal counsel for eachIndemnifiedParty) in connection with anyinvestigative,administrative or judicial proceedings, whether or notany Indemnified Partywill be designateda party thereto), (collectively,"Losses")which may beimposed on, incurred by, or asserted against, any Indemnified Party (whetherdirect, indirector consequential and whether basedon any federal, provincial, stateorlocal laws or regulations, including, without limitation, securities, environmental and commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any manner relating to or arising out of thisAgreement or any other Loan Document, orany act, event ortransaction related orattendant thereto,themaking and/or the management of theLoan or the use or intended use of theproceedsof the Loan; provided, however that theBorrower will have noobligation hereunderto any Indemnified Party tothe extent that such Losses were caused byor resulted from the wilful misconduct orgross negligence of
such IndemnifiedParty.Totheextentthatthe undertakingtoindemnifysetforthinthepreceding sentencemaybeunenforceableagainsttheBorrowerbecause it violates any law or public policy, the Borrower will satisfy such undertaking tothe maximum extent permitted by Applicable Law.Any Losses covered by this indemnity will be paid to each Indemnified Party on demand, and, failing prompt payment, will, together with interestthereon atthe Deemed Interest Ratefrom the date incurred by each IndemnifiedPartyuntil paid in full, be added to the Obligations andbesecured bytheCollateral. The provisions of this Section 12.1 will survive the satisfaction and payment ofallObligationsand the termination of this Agreement.
All paymentsmadebytheBorrowerunderthisAgreementandtheLoanDocumentswillbemadefree andclearof,andwithoutdeductionorwithholding foror onaccount of,any presentorfutureincome, stamp or other taxes, levies, assessments, imposts, deductions, charges, or withholdings imposed by any foreign, federal, provincial, state, local orother jurisdiction or any Governmental Authority thereof or political subdivisionor taxing authority therein,excludingtaxes imposed on thenet income or the capital of the Lender (all such non-excluded taxes being hereinafter called"Taxes").If any Taxes are required to be withheld from anyamounts sopayable totheLenderhereunder or underany Loan Documentsthe amounts so payable will be increased to the extent necessary to yield to the recipient (after payment of all Taxes) interest or any such other amountspayable hereunder at therates orin the amounts specifiedin this Agreementor any other Loan Documents.If theBorrower is required by ApplicableLaw to make any deduction or withholdingon account of any Taxes or other amount from any sum paid or expressed to be payable to the Lender underthis Agreement orany other Loan Document,then: (a) theBorrower will notify the Lender of any such requirement or any change in any such requirement as soon as it becomes aware of it; (b) the Borrower will pay any such Taxes or other amountbefore the date on whichpenalties attachedthereto become dueand payable;(c) the sumpayableby theBorrowerin respect of which the relevant deduction, withholding or payment is required will be increased to the extent necessary to ensure that,afterthe makingof thatdeduction, withholding orpayment, therecipientreceiveson theduedate and retains (free from any liabilityin respect of any such deduction, withholdingor payment) a sum equal to that whichit wouldhave received and so retained had no such deduction, withholdingor payment been requiredormade; and (d) within30 days afterpayment of anysum from whichtheBorroweris required by Applicable Lawto make any deduction or withholding, and within 30 days after the due date of payment of any Taxesor other amount whichit is required by clause (b) above to pay, it will deliver to the Lender all suchcertifieddocuments and otherevidenceas to the making of such deduction,withholding orpayment as(i) arereasonably satisfactory to the Lenderasproofofsuchdeduction, withholding or payment andofthe remittancethereof tothe relevanttaxingorotherauthority and(ii) arereasonably requiredby the Lendertoenable it toclaimatax creditwith respecttosuchdeduction,withholding or payment. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority, the Borrower will indemnify the Lenderfor any incrementaltaxes, interestor penalties that maybecome payable by theLenderas a result of any such failure. The provisions of thisSection12.2 will survive thesatisfaction and payment of all Obligations and the termination of this Agreement.
ARTICLE 13
GENERALPROVISIONS
Any noticeorothercommunicationrequiredorpermittedtobegivenhereunderwillbeinwritingandwill begivenbyfacsimile or other means ofelectronic communication or by hand delivery ashereinafter provided. Anysuch notice,if sentby fax or othermeans of electroniccommunication, will be deemedto
have beenreceivedonthedayofsending,orifdeliveredbyhandwillbedeemedtohavebeenreceived atthetimeitisdeliveredtotheapplicableaddress notedbelow.Noticesofchangeof addresswillalso be governed by this Section13.1. Notices and other communications will be addressed as follows:
if totheBorrower:
Ember Therapeutics,Inc.
138 East 57th Street
New York,NY10022
Attention:Joseph Hernandez
Email: hernanez_joe@yahoo.com
if totheLender:
Knight TherapeuticsInc.
376 VictoriaAvenue,Suite220
Westmount,QuebecH3Z 1C3 Canada
Attention:JeffreyKadanoff
Email:jkadanoff@gud-knight.com
With acopyto (whichshallnotconstitutenotice):
DentonsCanadaLLP
1 PlaceVillePlace
39th Floor
Montreal, QuebecH3B4M7
Email: charles.spector@dentons.com
| 13.2 | Choice ofGoverningLawandConstruction |
ThisAgreementandanynon-contractualobligationsarisingoutoforinconnectionwithit willbe governedbythelawsoftheState ofNew York.
The Partiesheretoirrevocablysubmitandattorntothenon-exclusivejurisdictionofthecourtsofthe State ofNewYork forallmattersarisingoutof,or inconnection with,thisAgreement.
Each partyheretoagreesthatit willpromptlyprovidetheotherpartywithdraftsofanypressreleases relatingtothe subject matter hereof,including theentering into of this Agreement, for review and commentbefore the issuance thereof, suchreview andcommentsnot to be unreasonably withheld or delayed.
| 13.5 | Modification andBenefitofAgreement |
This AgreementandtheotherLoanDocumentsmaynotbemodified,alteredoramendedexceptbyan agreementinwritingsignedby the Borrower and the Lender. The Borrower may not sell, assign or transferthis Agreement,or the otherLoan Documentsor anyportion thereof including, without limitation, theBorrower's right, title, interest, remedies, powers or duties thereunder. The sale, assignment, transfer orother disposition by the Lender, at any timeand from time to timehereafter, of this Agreement, or the otherLoanDocuments, orof anyportion thereof, or participation thereinincluding, withoutlimitation, the right, title,interest,remedies, powers and/or dutiesof theLender thereunder will require theprior writtenconsent of the Borrower (nottobe unreasonably withheldor delayed), unless an Eventof Default is continuing orunless such sale,assignment, transfer orotherdisposition is to an Affiliate ofthe Lender. The Borrower agrees thatitwill execute and deliversuch documents as the Lender may requestin connection withanysuchsale, assignment, transfer or other disposition.This Agreementwill inure to the benefit of, and be binding upon, the parties hereto and their successorsand permitted assigns.
| 13.6 | Waivers, Confidentiality,InformationSharing |
| (a) | In noeventwill anypartyheretobeliableforlostprofitsorotherspecialorconsequential damages. |
| (b) | To themaximumextentpermittedbyApplicableLaw,theBorrowerherebywaivesall rightstoahearingofanykindbefore theexercise by the Lender of its rights torepossess theCollateralwithout judicialprocess ortoreply,attach or levy upon such Collateral without prior noticeorhearing. |
| (c) | To themaximum extentpermittedbyApplicableLaw,theBorrowerherebywaives demand,presentment,protestandnoticeofnonpayment. |
| (d) | Failure oftheLender,atanytimeor timeshereafter, to requirestrict performanceby the BorrowerofanyprovisionofthisAgreement oranyof theother Loan Documentswill not waive, affect or diminish any right of the Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver by the Lender of a Default or Eventof Default underthisAgreement or anydefault under any ofthe Loan Documents willnotsuspend,waive or affectany other DefaultorEventofDefaultunderthis Agreementor anyother default under any of otherLoan Documents,whether thesameis priororsubsequent thereto and whether ofthe same orof adifferent kindorcharacter. No delay on the part of the Lender in the exercise of any right or remedy under this Agreement or any other Loan Documents will preclude any other or further exercise thereof or the exercise of any right or remedy. Noneof the undertakings, agreements, warranties, covenants and representationsofthe Borrowercontained inthisAgreement or any of the other Loan Documents and no Default or Event ofDefault under this Agreement or default under any of the other Loan Documents will bedeemed to have beensuspended or waived by the Lender unlesssuch suspension orwaiver is inwriting,signed byduly authorizedofficer(s) of the Lender anddirected to the Borrowerspecifying suchsuspension or waiver. |
| (e) | The BorrowerherebyagreesandacknowledgesthattheLenderwillbepermittedto sharewithanyofitsAffiliates,any information concerning theBorrower, Borrower, this Agreementand all other Loan Documents, and the subject matterthereof, thatthe Lender has or will have in its possession. |
If intherecoverybytheLenderofanyamountowinghereunderinanycurrency,judgmentcanonlybe obtained in another currencyandbecauseof changes in theexchange rate ofsuch currenciesbetween thedateof judgmentand payment in fullof the amountof such judgment, theamount of recoveryunder the judgment differs fromthe full amount owinghereunder, the Borrower will pay any such shortfall to the Lender, and such shortfall can be claimed by the Lender against the Borrower as an alternative or additional cause of action and any surplus received by the Lender will be repaid to theBorrower.
If anyprovisionofthisAgreementisheldtobeprohibitedbyorinvalidunderApplicableLaw,such provisionwillbeineffectiveonlytotheextentofsuchprohibitionorinvalidity, without invalidatingthe remainder of such provision or remaining provisions of this Agreement.
In the eventthereoccursanyconflictorinconsistencybetweenanyprovisionhereofandanyprovisionof theotherLoanDocuments,theprovisionhereof,to theextent ofanysuch conflictorinconsistency, will govern.
This Agreementand theotherLoanDocuments embodythe entire agreementandunderstanding betweenthepartiesheretoandtheretoandsupersedeallprioragreementsandunderstandingsbetween suchparties relating to the subject matterhereofand thereofand maynot be contradicted byevidenceof prioror contemporaneous agreements ofthe parties. There areno unwritten oral agreements between the parties related to the subjectmatter of this Agreement and the other LoanDocuments.
| 13.11 | Counterpart Execution/ElectronicDelivery |
This Agreementmaybeexecutedincounterpartanddeliveredbyfaxorotherelectronic meansof delivery.
[Signature PageFollows]
IN WITNESSWHEREOF,theBorrowerhasdulyexecutedthisAgreementasofthedatesetoutonthe firstpage hereof.
EMBER THERAPEUTICS, INC.
Per:/s/ Joseph Hernandez
Name: Joseph Hernandez
Title: Executive Chairman |
IN WITNESS WHEREOF,the Lender has duly executed this Agreement as of the date set out on the first page hereof.
KNIGHT THERAPEUTICS, INC.
Per:/s/ Jeffrey Kadanoff
Name: Jeffrey Kadanoff
Title: CFO |
Signature Page to the Loan Agreement
