EXHIBIT 10(ddd)
ASSIGNMENT OF PROCEEDS AND INVESTMENT AGREEMENT
between
CEL-SCI CORPORATION
AND
LAKE WHILLANS VEHICLE I LLC
OCTOBER 12, 2015
[THIS AGREEMENT IS SUBJECT TO BINDING ARBITRATION]
Assignment of Proceeds and Investment Agreement
This Assignment of Proceeds and Investment Agreement (this "Agreement") is made
and entered into as of October 12, 2015, by and between:
o CEL-SCI Corporation, a Colorado corporation, with its principal office
located at 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, as
assignor (such person, together with its permitted successors or
assigns, being referred to herein as "Assignor"); and
o Lake Whillans Vehicle I LLC, a Delaware limited liability company,
with its principal office located at 1350 Avenue of the Xxxxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as assignee ("Assignee").
Assignor and Assignee are sometimes referred to herein singularly as a "Party"
and collectively as the "Parties".
WITNESSETH:
WHEREAS, Assignor has initiated an arbitration against inVentiv Health Clinical,
LLC and certain of its affiliates, including inVentiv Health, Inc.
(collectively, the "Defendants") with the American Arbitration Association,
ARBITRATION NO. 50 122 t 01038 13, alleging breach of contract, fraudulent
inducement, and fraud in connection with work performed by PharmaNet/inVentiv
for Assignor in connection with its Phase III trial for Multikine (the
"Litigation/Arbitration");
WHEREAS, Assignee is prepared to make payments of up to $5,000,000 available to
Assignor in order to pay fees and expenses associated with the Claims (defined
below), and in consideration of Assignee making such Funds (defined below)
available to Assignor, Assignor will transfer and assign to Assignee a portion
of the Proceeds (defined below) of the Litigation/Arbitration, namely, the
Assigned Return (defined below), pursuant to the terms and conditions of this
Agreement; and
WHEREAS, to secure Assignor's promises under and performance of this Agreement,
Assignor will grant Assignee a first-in-priority lien over the Collateral, as
more particularly described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, and for other good and valuable consideration which is acknowledged to
be for the benefit of Assignor, the receipt and legal sufficiency of which is
hereby acknowledged, the Parties agree as follows:
1.0 Definitions.
1.1 The following definitions shall apply to capitalized terms used in this
Agreement:
"Adverse Party" refers to the Defendants as well as (i) any other party
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subsequently named as a defendant in any Proceedings (including any litigation
or arbitration or any collection actions arising therefrom or connected to the
Claims) or (ii) against whom or which Claims are or may be asserted or
threatened (even if such Person is not named or served), or who or which may
ultimately be liable in whole or in part, in connection with the Claims, through
indemnification or otherwise.
"Agreement" refers to this Agreement, the Schedules and Exhibits hereto,
and all documents referred to herein as constituting part of this Agreement.
"Assigned Return" means the following, which has been assigned and
transferred to Assignee by this Agreement:
(i) the repayment of capital actually disbursed by Assignee as a
Disbursement under this Agreement (or that Assignee is legally
obligated to pay at the time of receipt of Proceeds as contemplated
hereby and that Assignee does actually pay thereafter); plus
(ii) $5,000,000; plus
(iii) fifteen percent (15%) of the Net Proceeds;
provided, however, that in the event that Assignor has fully resolved the Claims
via settlement with the Defendants on or prior to November 26, 2015, "Assigned
Return" shall mean:
(iv) the repayment of capital actually disbursed by Assignee as a
Disbursement under this Agreement (or that Assignee is legally
obligated to pay at the time of receipt of Proceeds as contemplated
hereby and that Assignee does actually pay thereafter); plus
(v) the greater of (x) ten percent (10%) of the Proceeds or (y)
$2,500,000.
"Assignee" has the meaning set forth in the Preamble.
"Assignor" has the meaning set forth in the Preamble.
"Assignor Counsel" means Xxxx Xxxxxxxxx LLP, counsel to Assignor.
"Business Day" means a day banks in New York City are open for regular
business.
"Change of Control" shall mean the following: (a) a merger or consolidation
of Assignor into or with another entity as a result of which the stockholders of
Assignor immediately prior to such transaction own less than 50% of the voting
securities of Assignor or the surviving entity in such transaction; (b) the sale
or transfer of all or substantially all of the assets of Assignor; or (c) a
transaction or series of related transactions pursuant to which the stockholders
of Assignor immediately prior to such transaction(s) own less than 50% of the
voting securities of Assignor.
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"Claims" means any and all claims, causes of action, rights, choses in
action, and entitlements, known or unknown, existing or later arising, in
connection with the Litigation/Arbitration or otherwise, in favor of Assignor
and/or its affiliates against any Adverse Party.
"Closing" has the meaning ascribed in Section 12.1.
"Closing Date" is the date of the Closing.
"Collateral" shall have the meaning set forth in the Security Agreement.
"Commitment" means Assignee's financial commitment pursuant to this
Agreement to fund up to total disbursements of US$5,000,000 (Five Million United
States dollars) pursuant to Section 2.1 hereof.
"Common Interest Agreement" means the Common Interest Agreement of even
date herewith among Assignor and Assignee.
"Default" has the meaning ascribed in Section 9 hereof.
"Defendants" has the meaning set forth in the Recitals.
"Disbursements" means the amounts disbursed from time to time in connection
with the Maintenance Payment Obligation pursuant to Section 2.1 hereof.
"Distribution Schedule" refers to the order of distribution of Proceeds
described in Schedule 1, attached hereto and made a part hereof.
"Engagement Letter" means the Engagement Letter dated October 8, 2015
between Assignor and Xxxx Xxxxxxxxx LLP, a copy of which is attached hereto as
Exhibit 1.
"Escrow Agent" means Bank of Oklahoma, N.A., or another U.S.-based
money-center financial institution reasonably acceptable to the Parties.
"Escrow Agreement" means the escrow agreement to be entered into among
Assignor, Assignee, and the Escrow Agent, pursuant to which the Escrow Agent is
empowered and directed to receive, hold and distribute Proceeds in accordance
with the terms and conditions of this Agreement.
"Financial Statements" means (i) the audited balance sheet of Assignor as
of September 30, 2014 and 2013 and the related statements of income and cash
flows for the twelve months then ended, together with the appropriate notes to
such financial statements and (ii) the unaudited balance sheet of Assignor as of
June 30, 2015 and the related statements of income and cash flows for the nine
months then ended.
"Funds" means the funds made available by Assignee for the benefit of
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Assignor pursuant to Section 2.1 hereof.
"Lawyers" refers to Assignor Counsel and such other additional or
replacement attorneys, law firms or lawyers as may be employed, consulted, or
engaged by Assignor (after consultation with and written approval from Assignee
in its sole and absolute discretion) in connection with any phase or aspect of
the Claims and/or any pursuit of Proceeds. Notwithstanding anything to the
contrary contained in the foregoing "Lawyers" shall not include experts retained
by Assignor or Assignor Counsel who are attorneys.
"Lawyers' Fees" means the documented professional fees of Assignor's
Lawyers incurred in furtherance of the Proceedings (including any such fees
incurred prior to the date hereof), subject to the capped budget set forth in
the Engagement Letter.
"Litigation/Arbitration" has the meaning set forth in the Recitals.
"Litigation Costs" means all out-of-pocket costs directly related to and
incurred in furtherance of the Proceedings that are incurred by Assignor or
Assignor Counsel (subject to the capped budget set forth in the Engagement
Letter) and (i) paid or due to third parties (other than Assignor or Assignee),
and (ii) properly documented by receipts and invoices paid by Assignor Counsel
or submitted to Assignor or Assignor Counsel in connection with the costs of any
litigation or arbitration in connection with the Claims (as more particularly
provided in the Engagement Letter). Litigation Costs shall include only
reasonable out-of-pocket costs and expenses incurred by Assignor and Assignor
Counsel and/or third parties in connection with prosecuting, enforcing or
defending the Claims, such as (A) the reasonable fees and costs of consultants,
experts, other experts or technical advisors, and fact witnesses, or such fees
and costs paid directly by Assignor Counsel on behalf of any third party; (B)
reasonable travel and lodging expenses of third parties involved in the
Litigation/Arbitration, such as witnesses and experts, for purposes of holding
case meetings, the preparation of witness statements and expert reports, and the
like; (C) reasonable duplicating, secretarial, stenographer, postage, courier,
legal research, and similar expenses; (D) all reasonable fees and costs other
than as provided in the foregoing clauses (A) through (C) that are incurred in
relation to any Proceeding brought by Assignor or in order to collect and/or
enforce an award rendered in any litigation or arbitration in connection with
the Claims. Litigation Costs shall not include any internal costs or expenses of
Assignor other than reasonably documented travel costs of Assignor personnel
incurred in connection with attendance at hearings, depositions, or mediations
in connection with the Claims.
"Net Proceeds" means the Proceeds minus the sum of (i) the aggregate amount
of capital actually disbursed by Assignee as a Disbursement under this Agreement
(or that Assignee is legally obligated to pay at the time of receipt of Proceeds
as contemplated hereby and that Assignee does actually pay thereafter), and (ii)
$5,000,000. The calculation of Net Proceeds is subject to the last sentence of
the definition of "Proceeds".
"Person" means any natural person, corporation, partnership (of whatever
form), trust, limited liability company, trust, association, governmental
authority or unit, or any other entity, whether acting in an individual,
fiduciary or other capacity.
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"Proceedings" means (i) the Litigation/Arbitration (and other proceedings
relating thereto, including dispute resolution proceedings), (ii) any and all
related pre- and post-trial/arbitral proceedings or processes in or in
connection with the Claims; (iii) all appellate proceedings and proceedings on
remand, as well as enforcement, ancillary, parallel or alternate dispute
resolution proceedings and processes arising out of or related to the acts or
occurrences alleged in the Litigation/Arbitration; (iv) re-filings or parallel
filings relating to the Claims and any other legal, diplomatic or administrative
proceedings or processes founded on the underlying facts giving rise to or
forming a basis for the Claims and involving one or more Adverse Parties, in
which Assignor or any of Assignor's successor(s) in interest or assigns or
affiliates is a party; (v) ancillary or enforcement proceedings related to the
facts or Claims alleged from time to time, including against any other Person
stemming from the actions of any Adverse Party; and (vi) all arrangements,
settlements, negotiations, or compromises made between Assignor or any of its
affiliates or representatives and any Adverse Party having the effect of
resolving any of Assignor's Claims against any Adverse Party that are or could
be or could have been brought in litigation or arbitration.
"Proceeds" means (A) any and all pre-Tax monetary awards, damages, fees,
recoveries, judgments or other property or value recovered by or on behalf of
Assignor or its affiliates on account or as a result or by virtue (directly or
indirectly) of the Claims, the Litigation/Arbitration or the Proceedings,
whether by negotiation, litigation, arbitration, mediation, diplomatic efforts,
lawsuit, settlement, decree, judgment or otherwise, and includes all of
Assignor's legal and/or equitable rights, title and interest in and/or to any of
the foregoing, whether in the nature of ownership, lien, security interest or
otherwise, plus (B) any actually and successfully recovered interest, penalties,
Lawyers' Fees and Litigation Costs in connection with any of the foregoing, plus
(C) any actual, moral, punitive, exemplary, rescissionary, consequential
(including lost profits), or treble damages assessed against any Adverse Party
which are awarded and actually and successfully recovered on account thereof,
plus (D) interest actually and successfully awarded or later accruing on any of
the foregoing, plus (E) any recoveries from actions commenced by Assignor
against Lawyers, accountants, experts or officers in connection with any of the
foregoing or the pursuit of the Proceedings, plus (F) any Stream Revenue. For
the avoidance of doubt, "Proceeds" includes (without limitation) cash, real
estate, negotiable instruments, choses in action, contract rights, membership
rights, subrogation rights, annuities, future revenue streams (including
milestone and royalty payments), claims, refunds, and any other rights to
payment of cash and/or transfer(s) of things of value or other property
(including property substituted therefor), whether delivered or to be delivered
in a lump sum or in installments, in relation to any claim or negotiation with
any Person in relation to the Proceedings. "Proceeds" also includes any money,
property or other value received from any Person (including a Person other than
an Adverse Party) in a sale or other transaction arising out of or relating to
the Claims, or in any sale, buy-out or Change of Control of Assignor that occurs
(i) as a covenant or condition to any settlement of the Litigation/Arbitration
or the Proceedings or (ii) as a direct result of, or directly in connection
with, resolution of the Claims, at any time in the future, as well as any
additional amounts received by such Person as a result thereof. Solely for the
purposes of calculating Net Proceeds, in the event the Litigation/Arbitration
proceeds to a final award (and not as a result of any settlement or other
negotiated compromise of the Litigation/Arbitration), "Proceeds" shall not
include any consequential, exemplary, special, incidental or punitive damages
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(which are expressly identified as such by the arbitrator in its award) assessed
against any Adverse Party; provided, however that any award of attorneys' fees
shall not be considered consequential, special, incidental or punitive damages
hereunder. If the arbitrator's award does not specify categories of damages, all
damages up to the maximum amount of direct damages sought by Assignor shall be
deemed to be actual or direct damages. However, nothing in this paragraph shall
prevent Assignor from seeking clarification of the damages award from the
arbitrator; to the extent Assignor does so and the arbitrator clarifies the
award specifying the amounts of direct and consequential, exemplary, special,
incidental or punitive damages, if any, such specification shall serve as the
basis of the Net Proceeds calculation set forth in this paragraph.
"Pro Rata Interest" means (a) with respect to Assignee, 15%; and (b) with
respect to Assignor, 85%.
"Security Agreement" means that certain Security Agreement dated as of the
same date hereof, by Assignor in favor of Assignee, relating to the Collateral.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the present fair salable value of the property and assets of such
Person exceeds the debts and liabilities, including contingent liabilities, of
such Person, (b) the present fair salable value of the property and assets of
the such Person is greater than the amount that will be required to pay the
probable liability of such Person on its debts and other liabilities, including
contingent liabilities, as such debts and other liabilities become absolute and
matured, (c) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts and liabilities, including
contingent liabilities, beyond its ability to pay such debts and liabilities as
they become absolute and matured, and (d) such Person does not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted. The amount of
contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"Stream Revenue" means future revenue streams earned by Assignor and/or its
affiliates from a new, existing or modified business relationship, transaction
or other arrangement with any Adverse Party (or its successors or affiliates)
attributable to or arising from the Litigation/Arbitration, including, but not
limited to, licensing revenue or royalty revenue derived from Adverse Party
through settlement of the Litigation/Arbitration. Stream Revenue shall be
payable as provided in Section 8.2.
"Subordination Agreement" means that certain Subordination Agreement dated
on or about the date hereof, among Assignor, Assignee and the de Xxxxx Trust
dated June 13, 2014.
"Taxes" means any foreign, federal, state, local, municipal or other
governmental taxes, duties, levies, fees, excises or tariffs, arising as a
result of or in connection with any amounts received or paid under this
Agreement, including without limitation: (i) any state or local sales or use
taxes; (ii) any import, value-added or consumption tax; (iii) any business
transfer tax; (iv) any taxes imposed or based on or with respect to or measured
by any net or gross income or receipts of either party; (v) any franchise taxes,
taxes on doing business, gross receipts taxes or capital stock or property
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taxes; or (vi) any other tax now or hereafter imposed by any governmental or
taxing authority on any aspect of this Agreement, the Proceeds and/or the
obligations hereunder, and "pre-Tax" shall mean before the deduction of any of
the foregoing.
"Transaction Documents" means this Agreement, the Security Agreement, the
Common Interest Agreement, the Engagement Letter, the Escrow Agreement, the
Subordination Agreement and any other documents or instruments executed in
connection with the foregoing, including all schedules or exhibits thereto.
2.0 Commitment of Funds
2.1 In consideration of the Assigned Return, subject to the terms and conditions
of this Agreement, Assignee agrees to make Funds available to Assignor up to the
full amount of the Commitment in order to pay the Lawyers' Fees and the
Litigation Costs incurred by Assignor in connection with the Claims (the
"Maintenance Payments Obligation"). For the avoidance of doubt, Assignor shall
have no responsibility to pay any of the costs of the Proceedings (except costs
it may incur or agree outside of this Agreement or in excess of the Funds) and
any Assigned Return shall be paid to Assignee as provided in this Agreement. The
use and administration of amounts paid in respect of the Maintenance Payments
Obligation will be managed by Assignor, as provided herein.
2.2 Assignee shall fund the Maintenance Payments Obligation pursuant to the
terms of this Agreement within fifteen (15) Business Days of receipt of (i)
copies of valid monthly billing statements presented by Lawyers to Assignor and
Assignee, setting forth Lawyers' Fees incurred by Assignor and Litigation Costs
paid by Assignor under such reasonable invoice review and approval processes
established by Assignee from time to time; and (ii) valid invoices in respect of
Litigation Costs validly incurred by third parties, such invoices to be paid in
accordance with their terms, subject to such reasonable invoice review and
approval processes as may be established by Assignee from time to time.
2.3 The Parties recognize and acknowledge that the rights and interests assigned
to Assignee hereunder are being purchased by Assignee pursuant to this
Agreement, and an ownership interest in the Assigned Return is being sold,
transferred and assigned by Assignor to Assignee. These transactions do not
constitute a loan of money, but a purchase of capital assets owned by Assignor.
Notwithstanding Assignee's rights to Collateral to secure Assignor's promises to
pay the Assigned Return, no portion of the Assigned Return transferred pursuant
to this Agreement is intended as collateral for any loan.
2.4 The Parties understand and agree that, under all of the circumstances
relating to the Claims, the Disbursements paid by Assignee and the availability
of the Maintenance Payment Obligations for the Assigned Return is a fair market
value for the same and has been calculated based on extensive consultation with
advisors to Assignor based on the risks of pursuing the Claims, including any
litigation or arbitration or other proceedings arising therefrom. Assignor
agrees to use its commercially reasonable efforts at all times and in all
circumstances to defend the fair market value of the consideration paid
hereunder for the Assigned Return.
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3.0 Agreement to Sell and Buy/Non-Assumption by Assignee.
3.1 Under and subject to the terms and conditions of this Agreement and in
exchange for the benefits to Assignor of the Maintenance Payment Obligation and
any Disbursements, Assignor agrees to and hereby does, effective at the Closing,
irrevocably and unconditionally, (i) sell, transfer, assign and deliver to
Assignee all of Assignor's legal and equitable rights, title and interest in and
to the Assigned Return, and (ii) pursuant to the Security Agreement, transfer
and grant to Assignee a security interest in the Collateral to secure all
obligations of Assignor to Assignee hereunder from time to time.
3.2 Assignee agrees to buy and receive all of said rights and interests from
Assignor upon execution of this Agreement and to make the Funds available under
and subject to the terms and conditions of this Agreement up to the total amount
of the Commitment. For the avoidance of doubt, Assignee shall be unconditionally
entitled to the Assigned Return, at any time or from time to time, upon recovery
of Proceeds by Assignor, it being the intention of the Parties that the
Maintenance Payment Obligation is sufficient consideration for the complete and
unconditional assignment of the Assigned Return and the grant of the security
interests in the Collateral conveyed by the Security Agreement.
3.3 In making this Agreement and purchasing a portion of the Proceeds, Assignee
is not otherwise acquiring or assuming any responsibility, obligation or
liability of Assignor or any of its affiliates or arising out of any other
rights or interests of Assignor being purchased including, but not limited to,
(i) any duty or obligation to any Adverse Party by Assignor, (ii) any Taxes owed
or to be owed by Assignor, or (iii) other than as provided for in this
Agreement, any obligation or expense with regard to the Claims or the
Proceedings.
3.4 It is acknowledged and agreed that this Agreement does not, and shall not be
interpreted so as to alter, amend or affect any rights of Assignor to make
claims against or demands upon Lawyers from time to time, as may be otherwise
permitted by any law or rule of professional conduct. It is expressly agreed
that if any such claim or demand is successfully made, the proceeds of such
claim or demand shall constitute "Proceeds" for purposes hereof.
3.5 The Maintenance Payment Obligation and any Disbursements are the sole and
exclusive consideration and value to be paid to any Person for the transfer and
assignment of the Assigned Return. Assignor acknowledges that the transactions
contemplated hereunder, including the Maintenance Payment Obligation and any
Disbursements, are for its benefit. Assignee shall have no further obligations
whatsoever, other than those expressly provided in this Agreement, to make
further payments to Assignor, to any Lawyers or to any other Person, regardless
of the time or effort required to pursue the Claims and/or Proceedings to
conclusion.
3.6 It is understood and agreed that this Agreement evidences the transfer of
the Assigned Return, and that Assignee's right to receive payment of the
Assigned Return shall remain in full force and effect until the entire Assigned
Return has been unconditionally received by Assignee at any time in the future
so long as and provided always that Proceeds have been actually recovered and
are not subject to rescission or cancellation. At and from the Closing, Assignee
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shall be the sole and absolute owner of the Assigned Return which Assignor is or
may be entitled to collect or receive on account of the Claims and/or
Proceedings or otherwise as provided herein. Assignee expressly acknowledges and
agrees that in the event no Proceeds (or Proceeds less than the total
Disbursements and/or the Assigned Return) are ever actually recovered (even if
awarded as a result of litigation or arbitration) by or on behalf of Assignor,
Assignee shall have no right against Assignor for the recovery of the Assigned
Return (or any such shortfall in Proceeds) and Assignor shall have no obligation
to repay any amount actually disbursed under this Agreement (unless and until
such time as Proceeds have been actually and successfully recovered by or on
behalf of Assignor); provided, however, that nothing in this Section shall limit
either Party's ability to seek recovery or bring an action against the other
Party in the event of such other Party's breach of this Agreement.
3.7 As collateral for and to secure the accuracy and continuing veracity of
Assignor's representations, warranties, undertakings and agreements made and/or
given under this Agreement, Assignor hereby grants Assignee a first-in-priority
pledge over and security interest in all Collateral. This Agreement shall
constitute a "security agreement", "lien", "charge" (or the equivalent under
applicable law) and "pledge" in favor of Assignee for that purpose, and the
security interest hereby created shall be in express priority to any rights of
any other Person in and to the Proceeds (to the extent of the Assigned Return).
Assignor shall execute upon demand, and Assignee may file, any appropriate
documents and agreements (including security agreements) as required under
applicable law for the purpose of perfecting Assignee's security interest in the
Collateral, and as notice to third parties that Assignor has conveyed and
granted a security interest in the Collateral.
3.8 Notice of the assignment by Assignor hereunder may (at Assignee's sole
discretion) be filed by Assignee with any court, administrative body, or
government office on or after the Closing, pursuant to the provisions of
applicable laws, court rules or local custom, and may be served upon such
Persons as may be deemed necessary by Assignee to perfect and give effect to
Assignee's ownership of and right to receive the Assigned Return and Assignee's
security interest in the Collateral.
3.9 Assignor shall irrevocably direct that all Proceeds (other than Stream
Revenue) shall be paid to Escrow Agent pursuant to the Escrow Agreement, and
Assignor shall cause such Proceeds to be so paid, and the Assigned Return
disbursed to Assignee hereunder shall be paid in gross and shall not be subject
to any Tax, set-off, counter-claim (other than a counter-claim made by
Defendants against Assignor in the Litigation/Arbitration, which shall, if
awarded to Defendant in such Litigation/Arbitration, reduce the Proceeds
hereunder), deduction or lien. Any Proceeds (other than Stream Revenue) received
by Assignor shall be held in trust for Assignee until paid to the Escrow Agent
as provided herein, and Assignor agrees to immediately pay any such sums to the
Escrow Agent upon receipt. Assignor shall irrevocably direct that all Stream
Revenue shall be paid in accordance with Section 8.2 as instructed by Assignee.
3.10 Each of the Parties agrees that upon payment by Assignor to Assignee of the
full amount of the Assigned Return, including all Stream Revenue, Assignee shall
have no further rights to receive further payments in respect of the
Litigation/Arbitration, and any encumbrances, liens or pledges created by this
Agreement and the Security Agreement shall be promptly released by Assignee. In
the event that the Litigation/Arbitration is resolved without the payment of
Proceeds (or Proceeds less than the total Disbursements and/or the Assigned
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Return), whether by final decision of the arbitrator or settlement, Assignee
shall release any encumbrances, liens or pledges created by this Agreement and
the Security Agreement upon such final resolution of the Litigation/Arbitration,
unless any Claims are then ongoing or reasonably foreseeable, in which case
Assignee shall release such encumbrances, liens and pledges upon final
resolution of such Claims and payment of any portion of the Assigned Return
arising therefrom. Assignee shall promptly file a UCC-3 Termination Statement as
part of any such release.
3.11 Right of First Refusal
3.11.1 If Assignor seeks or is offered any form of financing in respect of
the Litigation/Arbitration, Assignee shall have a right of first refusal to
provide additional funds to Assignor. Assignor agrees to promptly notify
Assignee of any offers made or received by Assignor to or from any Person
for such financing, whether debt, equity or otherwise. Assignor shall
provide Assignee with a copy of any bona fide offer to provide such
financing (or, if not in writing, a written summary of all material terms).
Assignee shall have ten (10) Business Days from receipt of such notice and
information to accept such offer and agree to advance additional sums to
Assignor on substantially the same terms and conditions as are stated in
the offer.
3.11.2 If Assignee declines to provide such financing pursuant to Section
3.11.1, Assignor may obtain such financing from a third party, provided
that (i) Assignor shall not procure such funds until such Person has
confirmed in a binding agreement (in form and substance satisfactory to
Assignee in its sole discretion) that its entitlement to receive a share of
the Proceeds is subordinated to the rights of Assignee hereunder and
generally and (ii) in no event shall any such financing adversely affect
Assignee's rights hereunder.
4.0 Assignor's Representations and Warranties.
Assignor hereby represents and warrants to Assignee and agrees as follows (and
all such representations and warranties shall be continuing and shall survive
the Closing through the earlier of (i) payment of the Assigned Return and (ii)
termination of this Agreement):
4.1 Assignor has sole and exclusive ownership of the Claims. No shareholder or
other affiliate of Assignor has any ownership interest in the Claims. Other than
the Engagement Letter, Assignor has not assigned, transferred, pledged,
encumbered or given, as collateral or otherwise, to any Person other than to
Assignee hereunder, any right or interest of Assignor in the Claims or the
Proceeds.
4.2 Except as set forth on Schedule 4.2, there are no Persons who have liens,
encumbrances, claims or charges (collectively, "Liens") against any amount to
which Assignor may be entitled on account of the Claims and/or Proceedings,
other than Assignee hereunder.
4.3 Assignor has not received notice of any asserted or unasserted claims, Liens
or judgments against Assignor or its assets which might impair the rights,
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value, priority or collectability of the rights assigned or granted to Assignee
hereunder, and Assignor is not aware of any basis therefor.
4.4 Assignor is a corporation validly existing and in good standing in the State
of Colorado. Assignor has the power, authority, right and competence to enter
into this Agreement, and does so willingly and freely and on advice of competent
lawyers of its choice. All approvals, actions and consents required to authorize
Assignor to enter into this Agreement and the other Transaction Documents have
been obtained and taken and, upon execution by Assignor, this Agreement and the
other Transaction Documents shall be valid, binding and enforceable obligations
and undertakings of Assignor. Entering into this Agreement and the other
Transaction Documents and carrying out the actions provided for herein and
therein will not cause Assignor to be in breach or violation of any other
agreement or law or legal obligation (under applicable laws of the United States
or, to Assignor's knowledge, any other country or jurisdiction) to which
Assignor is a party or to which Assignor or the Collateral is subject.
4.5 Assignor is not relying in any manner on the advice of Assignee or its
counsel and understands and agrees that Assignee is not providing any legal
advice or legal professional services to Assignor or its lawyers or
representatives. Assignor is entering into this Agreement for commercial and
business purposes, and Assignor is sophisticated as to the transactions
contemplated by this Agreement and its obligations hereunder.
4.6 The Engagement Letter is enforceable by Assignor and accurately reflects the
entire financial arrangement between Assignor and Assignor Counsel.
4.7 Except for the Litigation/Arbitration, Assignor is not a party to any
material action, suit, litigation, arbitration, investigation or proceeding.
4.8 The Security Agreement is effective to create in favor of Assignee a legal,
valid and enforceable security interest in the Collateral described therein and
the proceeds thereof. Upon the execution of the Subordination Agreement by each
party thereto and the filing of a UCC financing statement by Assignee pursuant
to Section 12.3, Assignee will have a valid and perfected, first-priority lien
on and security interest in the Collateral and the proceeds thereof.
4.9 Except as set forth in the notes thereto, Assignor's Financial Statements
have been prepared in conformity with generally accepted accounting principles,
and such Financial Statements fairly present the financial position and results
of operations of Assignor as of their respective dates and for the respective
periods covered thereby. Assignor is not subject to any liabilities or
obligations that are not specifically shown or that are in excess of amounts
specifically shown or reserved for on the balance sheets included in Assignor's
Financial Statements other than liabilities and obligations incurred in the
ordinary course of business that are not material individually or in the
aggregate.
4.10 As of immediately prior to the Closing Assignor is, and immediately after
giving effect to the transactions contemplated hereby Assignor will be, Solvent.
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4.11 Assignor has disclosed to Assignee all material facts known to Assignor
relating to the Claims and/or Proceedings, and Assignor has made such
information available to Assignee for its review and consideration in advance of
the assignment contemplated herein. No representation or warranty or other
statement made by Assignor in this Agreement contains any untrue statement or,
to the knowledge of Assignor, omits to state a material fact necessary to make
any of them, in light of the circumstances in which it was made, not misleading.
5.0 Assignor's Covenants
Assignor hereby covenants and agrees as follows:
5.1 Assignor shall use its best efforts and exercise good faith and reasonable
commercial judgment, but at all times within the bounds of any applicable law
and rules of professional responsibility: (i) in pursuing all of Assignor's or
any of its affiliates' legal and equitable rights in the Claims and/or
Proceedings and with respect to the Proceeds; (ii) to bring the Claims and/or
Proceedings to settlement or final judgment; and (iii) to enforce collection of
the Proceeds and all money and other proceeds due on account of the Claims
and/or Proceedings or other enforcement actions relating to the Proceeds,
including any settlement(s) with Adverse Parties. During the pendency of the
Litigation/Arbitration, Assignor shall use its commercially reasonable efforts
to operate its business in the ordinary course of business, consistent with
Assignor's past practice (except to the extent necessary to comply with this
Section 5.1).
5.2 Assignor has not and shall not, directly or indirectly, delay, seek to
prevent, impair, or frustrate the rights granted to Assignee under this
Agreement, or payment of the Assigned Return to Assignee, in any way. To the
extent any Person (other than Assignee) acquires or is otherwise deemed to have
any ownership interest in the Claims, Assignor shall cause such ownership
interest to be transferred and assigned in full to Assignor without additional
consideration.
5.3 Assignor shall notify Assignee and keep Assignee advised regarding: the
name(s), address(es), telephone and fax numbers of Assignor and of all legal
counsel engaged to represent Assignor in connection with the Claims and/or the
Proceedings; and the nature and scope of representation of all such legal
counsel and any change therein.
5.4 Assignor shall give Assignee written notice within two (2) Business Days of
becoming aware that any of its representations or warranties have become untrue
in any material respect.
5.5 Assignor agrees not to do any of the following without Assignee's prior
written consent (which will be provided in its sole and absolute discretion):
(i) terminate its relationship with its Lawyers or modify the terms of its
engagement with its Lawyers, (ii) engage new Lawyers in connection with the
Claims or the Proceedings, unless necessary for local law purposes or to address
Lawyers' actual or potential conflicts of interest (provided that such
engagement is limited to the issue on which there is an actual or potential
conflict of interest and has no effect on the economic terms of this Agreement,
including but not limited to the priority of distributions set forth in the
Distribution Schedule or (iii) bring any separate action, suit or litigation
against any Adverse Parties (other than the Litigation/Arbitration).
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5.6 Assignor will not modify or terminate the Engagement Letter without
Assignee's prior written consent, unless necessary to do so in order to address
actual or potential conflicts of interest of the Lawyers in connection with the
Claims or Proceedings (provided, however that any such changes are limited to
the issue on which there is an actual or potential conflict and do not affect
the economic terms of this Agreement, including but not limited to the priority
of distributions set forth in the Distribution Schedule.
5.7 Assignor shall maintain and preserve (a) its existence and good standing in
the jurisdiction of its organization and (b) its qualification to do business
and good standing in each jurisdiction where the nature of its business makes
such qualification necessary.
5.8 Assignor shall not make any assignment or transfer or give, as collateral or
otherwise, any right or beneficial interest of Assignor in the Claims, the
Proceeds or rights therein or thereto, or knowingly take any other action that
has, or with the passage of time could have, the effect of impairing or delaying
Assignee's receipt of the Assigned Return. Assignor shall not and shall not
allow or permit any other Person to place any Liens (other than those created
hereunder and the lien described on Schedule 4.2) against or on the Proceeds
without the prior written consent of Assignee.
5.9 Assignor agrees not to effect any Change of Control unless (i) it provides
written notice (the "Change of Control Notice") to Assignee at least thirty (30)
days prior to the proposed effective date of such Change of Control, which
notice shall include in reasonable detail the material terms of the Change of
Control, or copies of any material agreements substantially in the form proposed
to be entered into in connection with the Change of Control and such other
information related to such terms or agreement as Assignee may reasonably
request, and (ii) Assignee shall have provided its prior written consent to such
Change of Control, which consent shall not be conditioned, delayed or withheld
unless Assignee reasonably and in good faith determines that such Change of
Control would adversely affect the payment of the Assigned Return to Assignee,
including without limitation any Stream Revenue.
5.10 If the Proceedings are moved to another jurisdiction (including a non-U.S.
jurisdiction) or forum, Assignor agrees that it will continue to pursue the
Claims in accordance with its obligations hereunder.
6.0 Assignee's Representations, Warranties and Covenants.
Assignee hereby represents and warrants to Assignor and agrees as follows (and
all such representations and warranties shall be continuing and shall survive
the Closing through the earlier of (i) payment of the Assigned Return and (ii)
termination of this Agreement):
6.1 Assignee is a limited liability company validly existing and in good
standing in its state of organization or formation. Assignee has the power,
authority, right and competence to enter into this Agreement, and does so
willingly and freely and on advice of competent lawyers of its choice. All
approvals, actions and consents required to authorize Assignee to enter into
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this Agreement have been obtained and taken and, upon execution by Assignee,
this Agreement and all documents contemplated to be signed by Assignee herein
shall be valid and binding obligations and undertakings of Assignee. Entering
into this Agreement and carrying out the actions provided for in this Agreement
will not cause Assignee to be in breach or violation of any other agreement to
which such Assignee is a party.
6.2 Assignee has not engaged or used, and is not obligated to, any finder or
agent in connection with the transactions contemplated hereby.
6.3 As of the Closing Date, ASSIGNEE shall have the financial resources (or the
ability to obtain) to make the payments required under the Maintenance Payments
Obligation.
6.4 Assignee agrees for all accounting and tax reporting purposes: (i) to report
the transactions contemplated herein as the acquisition of an asset
(specifically, the Assigned Return) from Assignor and not as a loan to or equity
investment in Assignor or any other person or entity and (ii) to not take an
income tax or other deduction with respect to any funded amounts related to its
Maintenance Payment Obligation as such amounts represent Assignee's acquisition
costs paid to Assignor for the Assigned Return.
7.0 Activities Concerning Proceedings.
7.1 Assignor hereby consents to and irrevocably shall instruct the Lawyers to do
the following at all times while this Agreement is in effect: (i) subject to any
restrictions arising from any protective order in connection with the Claims
and/or Proceedings, to promptly provide all non-privileged documents in the
possession of Assignor or the Lawyers requested by Assignee, or any information
that Assignee might have an interest in being aware of, relating to (A) the
Proceedings, and opportunities and negotiations or other efforts (including
non-judicial efforts) to settle the Claims and/or Proceedings against any
Adverse Party, (B) any opportunities to earn or recover Proceeds, (C) any
Persons' interest in or claim or potential claim against any of the Proceeds
and/or the subject matter of the Claims and/or Proceedings or this Agreement;
(ii) subject to any restrictions arising from any protective order in the
Litigation/Arbitration, when requested by Assignee or its lawyers, to provide
factual information within the knowledge of Assignor or Lawyers relating to the
Claims and/or Proceedings and Adverse Parties; and (iii) to perform all those
action(s) to be taken by Lawyers provided for in this Agreement. Lawyers will be
provided with a copy of this Agreement and will be instructed by Assignor to
comply with the provisions of this Section 7.1.
7.2 Assignor shall instruct the Lawyers and other agents representing or
advising Assignor from time to time in connection with the Proceedings to
provide and continue to provide Assignee with the following, as soon as
reasonably practicable after receipt:
7.2.1 Except for letters, emails or other correspondence between or among
Assignor Counsel, attorneys for the Defendants and the arbitrator(s)
hearing the Litigation/Arbitration (to the extent that the same would not
reasonably be expected to be material to Assignee), written notice of all
documents filed in connection with the Claims and/or Proceedings,
including, but not limited to, any memorials, notices, orders, pleadings,
briefs, motions, or other documents presented to any party or filed with
the court relating to the Proceedings (with actual copies of such filings
15
to be provided on request by Assignee). If any such documents are subject
to a protective order, the Lawyers and lawyers for Assignee shall discuss
the proper handling of such documents and, to the extent Assignee and/or
its lawyers may and are willing to agree to the terms of any such
protective order, Assignor and the Lawyers will cooperate in seeking the
court's/arbitration panel's and the Adverse Party's consent, unless such
consent is deemed disadvantageous to the underlying litigation;
7.2.2 Notice of and documents relating to payment or receipt of any money,
consideration or other Proceeds to Assignor or their agents on account of
the Claims or the Proceedings, including all accountings of the application
of said money or other Proceeds received from any Adverse Party;
7.2.3 Information requested by Assignee relating to the status of any
demands upon, negotiations with or proposals made by or to any Adverse
Party, including any litigation, settlement, alternative dispute resolution
proceedings, appeals and any efforts to enforce any rights relating to any
Claims, Proceedings, or Proceeds; and
7.2.4 Copies of all invoices for Lawyers' Fees and Litigation Costs, all
incurred in connection with the Claims and/or the Proceedings.
7.3 Control. For the avoidance of doubt, subject to Assignor's compliance with
its obligations under Article 5 and Section 9.3 of this Agreement, the Parties
agree that Assignor retains exclusive control over the Claims, the
Litigation/Arbitration and/or Proceedings, including any settlement or
resolution thereof.
8.0 Liquidation and Distribution of Non-Cash Proceeds; Stream Revenue.
8.1 In the event that the Proceeds consist of any non-cash items, Assignee and
Assignor shall, at the option of Assignee, as soon as reasonably possible after
the receipt of such Proceeds, cause such Proceeds to be disposed of at the
highest possible price in a commercially reasonable transaction. The cash
received as result of any such transaction, less any reasonable transaction
costs, shall be delivered to the Escrow Agent for distribution as provided in
this Agreement.
8.2 In the event that the Proceeds consist of any Stream Revenue, Assignor shall
be obligated to pay to Assignee (in addition to any cash or non-cash Proceeds)
(a) one hundred percent (100%) of such Stream Revenue until such time as the
Assignee has received an aggregate amount of Proceeds equal to (i) the capital
actually disbursed by Assignee as a Disbursement under this Agreement (or that
Assignee is legally obligated to pay at the time of receipt of Proceeds as
contemplated hereby and that Assignee does actually pay thereafter); plus (ii)
$5,000,000; and (b) thereafter, fifteen percent (15%) of such Stream Revenue;
provided, however, that in the event that Assignor has fully resolved the Claims
via settlement with the Defendants on or prior to November 26, 2015, then clause
(a) above shall be replaced with "one hundred percent (100%) of such Stream
Revenue until such time as the Assignee has received an aggregate amount of
Proceeds equal to the capital actually disbursed by Assignee as a Disbursement
under this Agreement (or that Assignee is legally obligated to pay at the time
of receipt of Proceeds as contemplated hereby and that Assignee does actually
pay thereafter)" and clause (b) above shall be replaced with "thereafter, ten
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percent (10%) of such Stream Revenue until such time as Assignor has received
$2,500,000 under this clause (b)". Any Stream Revenue shall be paid to Assignee
on a monthly basis in accordance with its instructions until Assignee has
received the full amount of the Assigned Return. Assignor shall use commercially
reasonable efforts to structure any Stream Revenue arrangements such that
Assignee shall be able to sell its share of such Stream Revenue to a third party
buyer.
9.0 Default and Remedies; Complete Assignment of Claims; Guarantee.
9.1 Each of the following shall be a default (a "Default") under this Agreement:
(i) the breach or nonperformance by Assignor of any covenants or agreement made
by it herein in any material respect which remains uncured (if such breach or
nonperformance is capable of being cured) ten (10) Business Days after
Assignee's written notice to Assignor of such breach or nonperformance; (ii) the
failure of Assignor's representations or warranties to be true and correct in
any material respect (or, in the case of representations and warranties that are
qualified by materiality, the failure of such representations and warranties to
be true and correct in any respect); (iii) unless dismissed within twenty (20)
Business Days, the beginning of involuntary proceedings against Assignor under
federal bankruptcy law, or any other applicable federal or state bankruptcy,
insolvency, or similar law, or the beginning of proceedings seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Assignor or for any substantial part of
Assignor's property, or the beginning of proceedings seeking an order winding up
or liquidating the affairs of Assignor; and (iv) the beginning by Assignor of a
voluntary case under federal bankruptcy law, or any other applicable federal or
state bankruptcy, insolvency, or other similar law, or the consent by Assignor
to the appointment of, or taking possession by, a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of
Assignor or for any substantial part of Assignor's property, or Assignor making
any assignment for the benefit of creditors, or the failure of Assignor
generally to pay its debts as they become due, or the taking of formal action by
Assignor in furtherance of any of the foregoing.
9.2 If Assignor is in Default under this Agreement, (i) Assignee shall be
granted the recourse to recover the Assigned Return (if payable pursuant to this
Agreement) from Assignor (regardless of source), including without limitation
from revenue of Assignor (regardless of source), (ii) Assignee may immediately
cease any further disbursements under this Agreement and/or pursue its rights
hereunder, including under the provisions of Section 9.3, and (iii) Assignor
shall have no rights to receive any payment of any Proceeds until all payments
due hereunder to Assignee (including any damages payment) have been paid in
full.
9.3 In addition to the foregoing rights, upon Default by Assignor, Assignee may
at its election, under this Agreement, become the assignee of any and all Claims
asserted or assertable in connection with the Claims and/or Proceedings and may
prosecute the same in the name of Assignor and/or its own name, as may be
required or permitted by applicable law. Assignor agrees to do all things, and
execute any and all further documents and certificates as may be requested from
time to time by Assignee to evidence Assignee's ownership of the Claims as
contemplated hereby. In the event of a complete assignment of the Claims, the
entitlement of Assignor to Proceeds hereunder shall remain unchanged; provided,
however, that any and all documented costs and/or expenses reasonably incurred
17
or owed by Assignee and/or its agents and advisors in remedying the breach by
Assignor or the consequences of such breach, shall be (i) deemed "Disbursements"
for purposes hereof, and (ii) deducted from Assignor's share of the Proceeds to
be distributed to it.
9.4 In addition to the foregoing, upon any breach of this Agreement by any
Party, each other Party shall have all remedies available to it in law or
equity, including all of the rights and remedies granted in the Security
Agreement and the other Transaction Documents. Notwithstanding the provisions of
Section 16.1, each Party shall have the right to seek equitable relief,
including a temporary restraining order, an injunction, specific performance,
and any other relief that may be available from a court of competent
jurisdiction.
10.0 Indemnification; Taxes.
10.1 Assignor agrees to indemnify, defend and hold Assignee and its owners,
directors, executives, officers, employees, members, partners, affiliates,
managers, attorneys, agents and advisors ("Assignee Indemnitees") free and
harmless from and against any and all losses, liabilities, costs, damages,
claims, sanctions, penalties and expenses (including reasonable attorneys' fees
and costs of experts and advisors) which any Assignee Indemnitee has sustained
or may sustain at any time by reason of or relating to (i) the breach or alleged
breach of, inaccuracy or alleged inaccuracy of, or failure to comply with, any
of the warranties, representations, covenants or agreements of Assignor
contained in this Agreement or the other Transaction Documents, and (ii) any
claim by the Adverse Parties relating to the Claims and/or the Proceedings,
including counterclaims or claims for interest, penalties, reasonable attorney's
fees, costs or damages associated with the foregoing for any reason whatsoever.
10.2 Assignee agrees to indemnify, defend and hold Assignor and its directors,
executives, officers, employees, members, partners, affiliates, managers,
attorneys, agents and advisors ("Assignor Indemnitees") free and harmless from
and against any and all losses, liabilities, costs, damages, claims, sanctions,
penalties and expenses (including reasonable attorneys' fees and costs of
experts and advisors) which any Assignor Indemnitee has sustained or may sustain
at any time by reason of or relating to the breach or alleged breach of,
inaccuracy or alleged inaccuracy of, or failure to comply with, any of the
warranties, representations, covenants or agreements of Assignee contained in
this Agreement or the other Transaction Documents.
10.3 All Taxes shall be the financial responsibility of the Party obligated to
pay such Taxes as determined by the applicable law and neither Party is or shall
be liable at any time for any of the other Party's Taxes incurred in connection
with or related to amounts paid under this Agreement. Each Party agrees to
indemnify, defend and hold the other Party harmless from and against any Taxes
owed by or assessed against the indemnified Party that are the obligation of the
indemnifying Party pursuant to this Section 10.2 and from any claims, causes of
action, costs, expenses, reasonable attorneys' fees, penalties, assessments and
any other liabilities of any nature whatsoever related to such Taxes.
10.4 Any Party who receives notice of a claim for which it will seek
indemnification ("Indemnified Party") hereunder shall notify as promptly as
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reasonably practicable the Party from which the Indemnified Party will seek
indemnification ("Indemnifying Party") of such claim in writing; provided that
the failure to so notify shall not relieve the Indemnifying Party of its
obligations hereunder, except to the extent that the Indemnifying Party is
actually and materially prejudiced thereby. Assignee shall have the exclusive
right to control the defense of such claim and all negotiations for its
settlement or compromise. Assignor shall provide reasonable assistance to
Assignee, at Assignor's expense, in connection with the defense of any such
claim. Notwithstanding the foregoing, Assignor may participate in the defense of
or settlement negotiations regarding any claim with counsel of its own
selection, the costs and fees of which shall be paid by Assignor, and, to the
extent such claim also includes claims that would not give rise to potential
indemnification hereunder, nothing herein shall be construed to limit Assignor's
ability to control its defense with respect to such claims that would not give
rise to potential indemnification hereunder.
10.5 EACH PARTY, FOR ITSELF AND FOR ITS PRESENT AND FORMER AGENTS, ATTORNEYS,
REPRESENTATIVES, HEIRS, EXECUTORS, SUCCESSORS, AND ASSIGNS, HEREBY RELEASES,
ACQUITS, DISCHARGES, AND FOREVER HOLDS HARMLESS THE OTHER PARTY AND ITS PRESENT
AND FORMER EMPLOYEES, AGENTS, ATTORNEYS, REPRESENTATIVES, OFFICERS,DIRECTORS,
SHAREHOLDERS, DIVISIONS, SUBSIDIARIES, AFFILIATES, PARENTS, PREDECESSORS,
SUCCESSORS, INSURERS, HEIRS, EXECUTORS, AND ASSIGNS, OF AND FROM ANY AND ALL
CLAIMS, DEMANDS, LIABILITIES OR CAUSES OF ACTION, LEGAL OR EQUITABLE, KNOWN OR
UNKNOWN, FIXED OR CONTINGENT, LIQUIDATED OR UNLIQUIDATED, RELATING TO THE
CONDUCT OF THE PROCEEDINGS OR THE LITIGATION, EXCEPT TO THE EXTENT ARISING FROM
SUCH OTHER PARTY'S WILLFUL MISCONDUCT OR BREACH OF THIS AGREEMENT.
11.0 Attorney-Client Relationships; Escrow.
11.1 Should a dispute arise at any time between or among the Parties and the
Lawyers, or any of them, regarding payment or application of any sums recovered
in the Proceedings, which dispute may delay, reduce or otherwise affect payment
or retention of the Proceeds pursuant to the Distribution Schedule, any amounts
of Proceeds not so disputed shall be paid immediately in accordance with the
Distribution Schedule. In order to allow Assignee to become fully aware of any
dispute to which it is not a party, Assignor hereby authorizes and directs the
Lawyers to provide Assignee all facts and information related to the dispute.
Notwithstanding any other provisions of this Agreement, Assignor relies on the
common interest exception to avoid any waiver of the attorney-client privilege
as to information requested by Assignee under these limited circumstances.
11.2 Assignor shall ensure that all Lawyers acting for Assignor from time to
time in connection with the Litigation/Arbitration shall recognize the duty to
cause all Proceeds to be paid to the Escrow Agent, or to any successor escrow
agent agreed to by all parties to this Agreement.
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12.0
Delivery by Assignee/Closing.
12.1 The closing of the transactions contemplated hereby (the "Closing"),
including the assignment of the Assigned Return and the delivery and attachment
of the Collateral shall take place at the offices of Assignee at a time
designated by the Assignee or as otherwise agreed to by the Parties.
12.2 At the Closing, Assignor shall deliver the following documents to Assignee,
duly executed by all parties thereto (other than Assignee), each in form and
substance satisfactory to Assignee:
12.2.1 The Common Interest Agreement;
12.2.2 The Escrow Agreement;
12.2.3 The Subordination Agreement;
12.2.4 The Engagement Letter, together with an acknowledgment from Assignor
Counsel of the rights granted to Assignee hereunder;
12.2.5 The Security Agreement and all documents or certificates deliverable
thereunder;
12.2.6 Executed charge or lien documents reasonably necessary to record the
liens contemplated hereby over the Collateral; and
12.2.7 Such other agreements, documents certificates as Assignee shall
reasonably request.
12.3 At the Closing, Assignee's rights in the Proceeds (to the extent of the
Assigned Return), and all of Assignee's rights (in the Collateral or otherwise)
as provided for in this Agreement and the Security Agreement, shall attach and
be fully vested, secured and perfected; this Agreement and the assignment
contemplated hereby shall be absolute and irrevocable by Assignor; and Assignee
shall be entitled to file Form UCC-1 Financing Statements or the equivalent
perfecting documents with respect to the Collateral in all jurisdictions that
Assignee deems appropriate. In case the cooperation of the Assignor is required
for the rights to be fully vested or the security interest to be fully
perfected, the Assignor will promptly cooperate as required. This Agreement
constitutes a security agreement for the purpose of UCC Article 9.
13.0 Maintenance and Availability of Records.
13.1 Assignor shall keep complete and proper records concerning the Proceeds and
shall promptly deliver and make the same available to Assignee on request from
time to time.
13.2 Assignee shall have the right, during reasonable business hours no more
than once per calendar year, to audit, at its sole expense, the correctness of
any previously unaudited Assignor report by an independent public accountant
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chosen by Assignee. Assignee and its representatives shall hold in confidence
any such information and shall not use the information for any purposes other
than verifying Assignor's reporting in connection with this Agreement.
14.0 Assignment.
14.1 This Agreement shall inure to the benefit of, and be binding upon the
successors and permitted assigns of Assignee, subject to the other terms and
conditions of this Section.
14.2 This Agreement is personal and non-assignable by each Party hereto, other
than in the case of Assignee, to an affiliate thereof or, with the prior written
consent of Assignor, a third party with the means to honor the Agreement.
15.0 Miscellaneous.
15.1 This Agreement, including the exhibits hereto, the Security Agreement and
the Escrow Agreement set forth the entire agreement and understanding between
the Parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements, term sheets and understandings of every kind and nature
between them. No Party hereto shall be bound by any term, condition, warranty or
representation other than as expressly provided for in this Agreement, or as may
be on a date on or after the date hereof duly set forth in writing signed by the
Party hereto which is to be bound thereby. This Agreement shall not be changed,
modified or amended except by a writing dated and signed by the Party to be
charged.
15.2 This Agreement and its validity, construction and performance, and any and
all disputes arising hereunder, shall be governed in all respects by the laws of
the State of New York, but without recourse to its conflict of laws provisions;
provided, however, any rights Assignee has or may have under Article 9 of the
Uniform Commercial Code to foreclose on the Collateral shall be governed by the
law of the place where the Collateral is located.
15.2.1 Assignor irrevocably waives and forever and unconditionally
releases, discharges and quitclaims any claims, counterclaims, defenses,
causes of action, remedies and/or rights that it or its permitted assigns
or successors in interest have or may in the future have arising from any
doctrine, rule or principle of law or equity that this Agreement, or the
relationships or transactions contemplated by this Agreement (i) are
against the public policy of its state of incorporation or of any
jurisdiction with which Assignor has a connection, or (ii) are
unconscionable or the subject to any laws, rules or regulations relating to
consumer protection, or (iii) call for the payment of interest at a
usurious rate, or (iv) constitute champerty, maintenance or any
impermissible transfers or assignments of property or choses in action (or
doctrines or principles of law of equivalent effect) (the foregoing
defenses being referred to herein as the "Waived Defenses"). The arbitrator
set forth in Section 16.1 shall have exclusive jurisdiction, to the
exclusion of any court, to determine the scope and validity of the waiver
of any Waived Defenses by Assignor. In any proceeding brought for
prejudgment or provisional relief under Section 16.3 or for enforcement
under Section 16.2 or 17.0, the Parties agree that a court shall enforce
this Agreement and any related agreements without regard to any Waived
Defenses asserted by Assignor and shall refer any such Waived Defense to
arbitration under Section 16 to be determined as to validity, scope or
effect exclusively by the arbitrator. The Parties further agree that a
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court shall not defer or delay granting any remedy while any such
arbitration takes place. In addition to the aforesaid, Assignor agrees that
it will defend the validity of this Agreement - if requested to do so by
Assignee - against any third party, including but not limited to creditors
in any bankruptcy proceedings, and will hold Assignee and its owners,
directors, executives, employees, members, partners, affiliates, managers,
attorneys, agents and advisors harmless from and against any and all loss
and damages of any kind (including reasonable attorneys' fees and
associated costs) that Assignee or its owners, directors, executives,
employees, members, partners, affiliates, managers, attorneys, agents and
advisors or affiliates may incur as a result of any claim by a creditor of
Assignor.
15.3 The invalidity of any portion hereof shall not affect the validity, force
or effect of the remaining portions hereof. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction to
its fullest extent, such restriction shall be enforced to the maximum extent
permitted by law.
15.4 This Agreement shall be binding upon, and inure to the benefit of the
parties hereto, individually and to each and all of their agents, attorneys,
beneficiaries, representatives and its respective successors, legal
representatives and permitted assigns. No assignment by any Party shall relieve
the assigning Party from any obligation, duty, representation, warranty or
agreement absent an express written release given by the non-assigning Party.
15.5 The headings in the sections of this Agreement are inserted for convenience
or reference only and shall not constitute a part hereof. Where the context so
permits, the singular form of a word shall include the plural and the plural
form shall include the singular.
15.6 Any notices given under this Agreement shall be in writing and delivered by
first class mail or by overnight courier service (such as Federal Express, DHL,
UPS) to the Parties as follows unless changed by written notice delivered to the
other Party(s).
In the case of Assignor, to it at:
CEL-SCI Corporation
Attention: Geert X. Xxxxxxx
0000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: 000-000-0000
with a copy (which shall not constitute notice to Assignor) to:
Xxxx Xxxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxxxxxxx, Esq.
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In the case of Assignee, to:
Lake Whillans Vehicle I LLC
c/o Lake Whillans Litigation Finance LLC
1350 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
15.7 Each Party agrees to execute and file or cause to be filed such other or
further documents as may be reasonably requested by the other Party to give
effect to the purposes of this Agreement. Such further documents shall include,
but not be limited to: (i) documents intended to perfect Assignee's ownership of
and power to exercise the rights herein granted by Assignor; (ii) if any
judgment resulting from the Claims and/or Proceedings is modified, vacated and
there are further proceedings, a replacement assignment or deed of property in
order to give effect to Assignee's rights in and to the Assigned Return and the
Collateral and this Agreement and (iii) to perfect Assignee's security interest
in the Collateral.
15.8 Failure by either Party to enforce any provision of this Agreement or to
assert a claim on account of breach hereof shall not be deemed a waiver of its
right to enforce the same or any other provision hereof on the occasion of a
subsequent breach.
15.9 The remedies expressed in this Agreement are not and shall not be deemed to
be exclusive and shall be in addition to any other remedies that either Party
may have at law or in equity.
15.10 This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
16.0 Disputes between the Parties.
16.1 Except as provided in Section 9.4 or Section 17 of this Agreement, any
dispute, claim or controversy arising out of or relating to this Agreement, or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement to
arbitrate, shall be determined by an arbitration in New York, New York before a
panel of three arbitrators. The Litigation/Arbitration shall be administered by
JAMS pursuant to the Commercial Arbitration Rules ("Rules") of American
Arbitration Association (the "AAA") in effect as of the date of execution of the
Assignment, except that (i) the fees for filing the arbitration and for case
management and administration of the arbitration shall be those required by JAMS
and not those listed in the Rules, and (ii) if the Parties are unable to agree
on an arbitrator within 21 days of the filing of the arbitration claim, the
procedure in Rules R-11 shall be used, except that the arbitrators shall be
appointed using a list provided by JAMS from the JAMS national roster of
arbitrators. The arbitrators shall follow the terms of this Agreement and the
applicable law, including without limitation, the attorney-client privilege and
the attorney work product doctrine. The arbitrators shall issue a reasoned Award
in writing not more than 45 days after the conclusion of the arbitration
hearing. The administrative costs of the arbitration will be borne by the
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non-prevailing party (as determined by the arbitrator) as part of the award.
Nothing in this Section 16.1 is intended to limit any Party's right to seek
equitable relief, including a temporary restraining order, an injunction,
specific performance, and any other relief that may be available from a court of
competent jurisdiction.
16.2 All arbitration proceedings, including testimony or evidence exchanged by
the Parties or provided during the hearing, shall be kept confidential. However,
the award issued by the arbitrator pursuant to the terms of this Agreement may
be submitted for enforcement to and confirmed by the United States District
Court for the Southern District of New York or any court possessing jurisdiction
within the federal judicial district which includes the residence of the Party
against whom such award was entered.
16.3 Prior to appointment of the arbitrator, either Party may commence judicial
proceedings in the United States District Court for the Southern District of New
York, or in any court possessing jurisdiction within the federal judicial
district which includes the residence of the Party against whom relief is
sought, to obtain preliminary relief, including injunctive relief, for the
purposes of: (i) enforcement of this arbitration provision; (ii) preserving the
status quo pending the appointment of the arbitrator; or (iii) preventing the
disbursement by any Person of disputed funds pending the appointment of the
arbitrator. Nothing herein will be construed to prevent a Party's use of
bankruptcy, receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure, and/or any other
prejudgment or provisional action or remedy relating to any Collateral for any
current or future debt owed by either Party to the other. Any such action or
remedy will not waive a Party's right to compel arbitration of any dispute.
16.4 Survival after Termination. The provisions of Sections 9, 10, 11, 15, 16,
17 and 18 of this Agreement shall survive the termination of this Agreement.
17.0 Foreclosure on Collateral. Without limiting the other provisions of Section
16 of this Agreement which provide exclusively that all disputes between the
Parties will be arbitrated, Assignee shall have the right to take action under
the applicable provisions of the law of the jurisdiction where the Collateral is
located from time to time to enforce its rights in and to and to foreclose upon
the Collateral. In any action under this Section, the Parties agree that any
court in which such relief is sought shall determine the availability of such
relief without regard to any claims or defenses that may be asserted by the
other Party (other than claims or defenses directly relating to the relief
sought). The Parties agree that any such claims and defenses shall be referred
to the exclusive jurisdiction of the arbitrator under Section 16 and that the
court shall not defer or delay granting a remedy while any such litigation takes
place.
18.0 Confidentiality.
All information provided pursuant to this Agreement, including without
limitation, any information provided pursuant to Section 5.9, shall be regarded
as "Confidential Information" by the receiving party. The Parties agree that,
other than as required by law, they shall not disclose any Confidential
Information and shall use the Confidential Information only for the purposes set
24
forth herein; provided that a party may disclose Confidential Information to its
affiliates and the directors, officers, partners, members, managers, employees,
agents or advisors of such Party and its affiliates who need to know such
information. Assignee acknowledges and agrees that the Confidential Information
may contain material non-public information relating to Assignor, and provisions
of applicable securities laws and/or rules may restrict or prohibit the use
and/or disclosure of such information. Assignee agrees that it will not use
Confidential Information to trade in any securities of Assignor except in
accordance with applicable securities laws.
19.0 Third-Party Beneficiary.
The Parties to this Agreement expressly agree that Assignor Counsel is a
third-party beneficiary of this Agreement to the extent it calls for the payment
of certain amounts to Assignor Counsel and, as such, Assignor Counsel has the
right to enforce the payment provisions of this Agreement to such, and only to
such, extent.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be
effective as of the date first set forth above. This Agreement is entered into
in New York, New York.
CEL-SCI CORPORATION
By: /s/ Geert X. Xxxxxxx
--------------------
Name: Geert X. Xxxxxxx
Title: Chief Executive Officer
LAKE WHILLANS VEHICLE I LLC
By: Lake Whillans Capital Partners LLC, its
Managing Member
By: /s/ Xxxx Xxxxxxxxx
----------------------
Name: Xxxx Xxxxxxxxx
Title: Principal
26
