LOAN AND SECURITY AGREEMENT
EXHIBIT 10.1
THIS LOAN AND SECURITY AGREEMENT (the “Agreement”) is made and dated as of March 25, 2011
and is entered into by and among ANTHERA PHARMACEUTICALS, INC., a Delaware corporation (“Parent”),
and each of Parent’s subsidiaries joined hereto (the “Joined Subsidiaries”; the Joined Subsidiaries
together with Parent are hereinafter collectively referred to as the “Borrowers” and each
individually as a “Borrower”), HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership, as the
collateral agent (in such capacity, the “Collateral Agent”) and a lender (“XX XX”), and HERCULES
TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation, as a lender (“HTGC”; XX XX together with
HTGC are hereinafter collectively referred to as the “Lender”).
RECITALS
A. The Borrowers have requested that the Lender make available to the Borrowers a loan in an
aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) (the “Term Loan”); and
B. The Lender is willing to make the Term Loan on the terms and conditions set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, the Borrowers and the Lender agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Unless otherwise defined herein, the following capitalized terms shall have the following
meanings:
“Account Control Agreement(s)” means any agreement entered into by and among the Collateral
Agent, any Borrower and a third party Bank or other institution (including a Securities
Intermediary) with which such Borrower maintains a Deposit Account or an account holding Investment
Property in which such Borrower has granted to the Collateral Agent for the benefit of the Lender a
perfected first priority security interest in the subject account or accounts.
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of
Exhibit H.
“Administrative Borrower” has the meaning given to it in Section 11.19.
“Advance” means a Term Loan Advance.
“Advance Date” means the funding date of any Advance.
“Advance Request” means a request for an Advance submitted by the Administrative Borrower to
the Lender in substantially the form of Exhibit A.
“Agreement” means this Loan and Security Agreement, as amended, restated, supplemented or
otherwise modified from time to time.
“Assignee” has the meaning given to it in Section 11.13.
“Borrower Products” means all products (including drugs and biologics), software, service
offerings, technical data or technology currently being designed, manufactured or sold by any
Borrower or which any Borrower intends to sell, license, or distribute in the future including any
products or service offerings under development, collectively, together with all products,
software, service offerings, technical data or technology that have been sold, licensed or
distributed by any Borrower since its incorporation.
“Cash” means all cash and liquid funds.
“Change in Control” means any reorganization, recapitalization, consolidation or merger (or
similar transaction or series of related transactions) of Parent, sale or exchange of outstanding
shares (or similar transaction or series of related transactions) of Parent in which the holders of
Parent’s outstanding shares immediately before consummation of such transaction or series of
related transactions do not, immediately after consummation of such transaction or series of
related transactions, retain shares representing more than fifty percent (50%) of the voting power
of the surviving entity of such transaction or series of related transactions (or the parent of
such surviving entity if such surviving entity is wholly owned by such parent), in each case
without regard to whether Parent is the surviving entity.
“Claims” has the meaning given to it in Section 11.10.
“Closing Date” means the date of this Agreement.
“Collateral” means the property described in Section 3.
“Collateral Agent” has the meaning given to such term in the preamble hereto.
“Confidential Information” has the meaning given to it in Section 11.12.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend,
letter of credit or other obligation of another, including any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with
respect to undrawn letters of credit, corporate credit cards or merchant services issued for the
account of that Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in interest rates,
currency exchange rates or commodity prices; provided, however, that the term “Contingent
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Obligation” shall not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the guarantee or other
support arrangement.
“Copyright License” means any written agreement granting any right to use any Copyright or
Copyright registration, now owned or hereafter acquired by any Borrower or in which any Borrower
now holds or hereafter acquires any interest.
“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the
laws of the United States, any State thereof, or of any other country.
“Deposit Account” means any “deposit account,” as such term is defined in the UCC, and
includes any checking account, savings account, or certificate of deposit.
“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations, as in
effect from time to time.
“Event of Default” has the meaning given to it in Section 9.
“Facility Charge” means $187,500.
“Financial Statements” has the meaning given to it in Section 7.1.
“GAAP” means generally accepted accounting principles in the United States of America, as in
effect from time to time.
“XX XX” has the meaning given to such term in the preamble hereto.
“HTGC” has the meaning given to such term in the preamble hereto.
“Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed
money or the deferred purchase price of property or services (excluding trade credit entered into
in the ordinary course of business due within ninety (90) days), including reimbursement and other
obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all
Contingent Obligations.
“Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
“Intellectual Property” means all of any Borrower’s Copyrights; Trademarks; Patents; Licenses;
trade secrets and inventions; mask works; any Borrower’s applications for any
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of the foregoing and
reissues, extensions, or renewals thereof; and any Borrower’s goodwill
associated with any of the foregoing, together with any Borrower’s rights to xxx for past,
present and future infringement of Intellectual Property and the goodwill associated therewith.
“Investment” means any beneficial ownership (including stock, partnership or limited liability
company interests) of or in any Person, or any loan, advance or capital contribution to any Person
or the acquisition of all, or substantially all, of the assets of another Person.
“Joined Subsidiaries” has the meaning given to it in the preamble to this Agreement.
“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder Agreement in
substantially the form attached hereto as Exhibit G.
“Lender” has the meaning given to it in the preamble to this Agreement.
“Lender Expenses” are all reasonable audit fees and expenses, costs, and expenses (including
reasonable, documented attorneys’ fees and expenses) for preparing, negotiating, administering,
defending and enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred by the Lender or the
Collateral Agent with respect to Borrower.
“License” means any Copyright License, Patent License, Trademark License or other license of
rights or interests.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, xxxx, xxxx or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, and any lease in the nature of a security interest.
“Loan” means the Advances made under this Agreement.
“Loan Documents” means this Agreement, the Notes, the ACH Authorization, the Account Control
Agreements, the Joinder Agreements, all UCC Financing Statements, the Warrants, and any other
documents executed in connection with the Secured Obligations or the transactions contemplated
hereby, as the same may from time to time be amended, modified, supplemented or restated.
“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations,
properties, assets, or condition (financial or otherwise) of the Borrowers and their Subsidiaries,
taken as a whole, other than an effect in and of itself reasonably attributable to (a) the failure
of any nonclinical or clinical trial to demonstrate the desired safety or efficacy of any biologic
or drug or (b) the denial, delay or limitation of approval of, or taking of any other regulatory
action by, the United States Food and Drug Administration or any other governmental entity with
respect to any biologic or drug; or (ii) the ability of the Borrowers to perform the Secured
Obligations when due in accordance with the terms of the Loan Documents, or the ability
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of the
Collateral Agent or the Lender to enforce any of its rights or remedies with respect to the
Secured Obligations; or (iii) the Collateral or the Liens of the Collateral Agent for the
benefit of the Lender on the Collateral or the priority of such Liens, in each case, in the
aggregate.
“Maximum Term Loan Amount” means Twenty-Five Million and No/100 Dollars ($25,000,000).
“Maximum Rate” shall have the meaning assigned to such term in Section 2.2.
“Notes” means the Term Notes.
“Patent License” means any written agreement granting any right with respect to any invention
on which a Patent is in existence or a Patent application is pending, in which agreement any
Borrower now holds or hereafter acquires any interest.
“Patents” means all letters patent of, or rights corresponding thereto, in the United States
or in any other country, all registrations and recordings thereof, and all applications for letters
patent of, or rights corresponding thereto, in the United States or any other country.
“Permitted Indebtedness” means: (i) Indebtedness of any Borrower in favor of the Lender
arising under this Agreement or any other Loan Document; (ii) Indebtedness existing on the Closing
Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $1,000,000 outstanding
at any time secured by a lien described in clause (vii) of the defined term “Permitted Liens,”
provided such Indebtedness does not exceed the lesser of the cost or fair market value of the
Equipment or software or other intellectual property financed with such Indebtedness; (iv)
Indebtedness to trade creditors incurred in the ordinary course of business, including Indebtedness
incurred in the ordinary course of business with corporate credit cards; (v) Indebtedness that also
constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations
in connection with letters of credit or surety bonds that are issued on behalf of any Borrower or a
Subsidiary thereof in an amount not to exceed $200,000 at any time outstanding, (viii) other
Indebtedness in an amount not to exceed $500,000 at any time outstanding, and (ix) extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that the principal
amount is not increased or the terms modified to impose materially more burdensome terms upon any
Borrower or any Subsidiary thereof, as the case may be.
“Permitted Investment” means: (i) Investments existing on the Closing Date which are disclosed
in Schedule 1B or made in accordance with the Investment Policy delivered to Lender prior
to the Closing Date; (ii) (a) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within one year from the
date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of
creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Xxxxx’x Investors Service, (c) certificates of deposit issued by any bank with
assets of at least $500,000,000 maturing no more than one year from the date of investment therein,
and (d) money market accounts; (iii) repurchases of stock from former employees, directors, or
consultants of any Borrower under the terms of applicable repurchase agreements at the original
issuance price of such securities (a) in an aggregate amount not to exceed $250,000 in any fiscal
year, provided that no Event of Default has occurred, is
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continuing or would exist after giving effect to the repurchases or (b) in any amount where the
consideration for the repurchase is the cancellation of Indebtedness owed by such former
employees, directors, or consultants, to any Borrower regardless of whether an Event of Default
exists, so long as no Borrower extended any cash with respect to such Indebtedness; (iv)
Investments accepted in connection with Permitted Transfers; (v) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of customers or suppliers
and in settlement of delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of the Borrowers’ business; (vi) Investments consisting of notes
receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are
not affiliates, in the ordinary course of business, provided that this subparagraph (vi) shall not
apply to Investments of any Borrower in any Subsidiary; (vii) Investments consisting of loans not
involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees,
officers or directors relating to the purchase of capital stock of any Borrower pursuant to
employee stock purchase plans or other similar agreements approved by such Borrower’s Board of
Directors; (viii) Investments consisting of travel advances in the ordinary course of business;
(ix) Investments in newly-formed Subsidiaries organized in the United States, provided that such
Subsidiaries enter into a Joinder Agreement promptly after their formation by any Borrower and
execute such other documents as shall be reasonably requested by the Lender; (x) Investments in
subsidiaries organized outside of the United States approved in advance in writing by the Lender;
(xi) joint ventures or strategic alliances in the ordinary course of the Borrowers’ business
consisting of the nonexclusive licensing of technology, the development of technology or the
providing of technical support, provided that any cash Investments by any Borrower do not exceed
$1,000,000 in the aggregate in any fiscal year; and (xii) additional Investments that do not exceed
$500,000 in the aggregate throughout the term of this Agreement.
“Permitted Liens” means any and all of the following: (i) Liens in favor of the Lender; (ii)
Liens existing on the Closing Date which are disclosed in Schedule 1C; (iii) Liens for
taxes, fees, assessments or other governmental charges or levies, either not delinquent or being
contested in good faith by appropriate proceedings; provided, that the Borrowers maintain adequate
reserves therefor in accordance with GAAP; (iv) Liens securing claims or demands of materialmen,
artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the
ordinary course of the Borrowers’ business and imposed without action of such parties; provided,
that the payment thereof is not yet required; (v) Liens arising from judgments, decrees or
attachments in circumstances which do not constitute an Event of Default hereunder; (vi) the
following deposits, to the extent made in the ordinary course of business: deposits under worker’s
compensation, unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure statutory obligations
(other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to
secure indemnity, performance or other similar bonds; (vii) Liens on Equipment or software or other
intellectual property constituting purchase money liens and liens in connection with capital leases
securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”; (viii) Liens incurred
in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases,
licenses granted in the ordinary course of business and not interfering in any
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material respect with the business of the licensor and licenses of Intellectual Property described in clause (ii) of
the definition of “Permitted Transfers”; (x) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of custom duties that are
promptly paid on or before the date they become due; (xi) Liens on insurance proceeds securing the
payment of financed insurance premiums that are promptly paid on or before the date they become due
(provided that such Liens extend only to such insurance proceeds and not to any other property or
assets); (xii) statutory and common law rights of set-off and other similar rights as to deposits
of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii)
easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business so long as they do not materially impair the
value or marketability of the related property; (xiv) Liens on cash or cash equivalents securing
obligations permitted under clause (vii) of the definition of Permitted Indebtedness; and (xv)
Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured
by Liens of the type described in clauses (i) through (xiv) above; provided, that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and
the principal amount of the indebtedness being extended, renewed or refinanced (as may have been
reduced by any payment thereon) does not increase.
“Permitted Transfers” means (i) sales of Inventory in the normal course of business, (ii)
non-exclusive and exclusive licenses and similar arrangements for the use of Intellectual Property
on commercially reasonable terms that could not result in a legal transfer of title of the licensed
property, or (iii) dispositions of worn-out, obsolete or surplus Equipment at fair market value in
the ordinary course of business, and (iv) other Transfers of assets having a fair market value of
not more than $500,000 in the aggregate in any fiscal year.
“Person” means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability company, institution,
other entity or government.
“Prepayment Charge” shall have the meaning assigned to such term in Section 2.4.
“Prepayment Date” shall have the meaning assigned to such term in Section 2.4.
“Prime Rate” means for any day, the prime rate as reported in The Wall Street Journal for such
day.
“Principal Market” means The NASDAQ Global Market or its successors.
“Receivables” means (i) all of the Borrowers’ Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit
Rights, and (ii) all customer lists, software, and business records related thereto.
“SBA” shall have the meaning assigned to such term in Section 7.15.
“SBIC” shall have the meaning assigned to such term in Section 7.15.
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“SBIC Act” shall have the meaning assigned to such term in Section 7.15.
“Secured Obligations” means the Borrowers’ obligations under this Agreement and any Loan
Document, including any obligation to pay any amount now owing or later arising. Notwithstanding
the foregoing, the “Secured Obligations” shall not include any of Borrowers’ obligations,
liabilities or duties under the Warrants.
“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in
amounts and on terms and conditions satisfactory to the Lender in its reasonable discretion.
“Subsequent Financing” means the closing of the next Parent private equity financing which
becomes effective after the Closing Date and results in aggregate proceeds to Parent of at least
$5,000,000.
“Subsidiary” means an entity, whether corporate, partnership, limited liability company, joint
venture or otherwise, in which a Borrower owns or controls 50% or more of the outstanding voting
securities, including each entity listed on Schedule 1 hereto.
“Term Loan Advance” means any Term Loan funds advanced under this Agreement.
“Term Loan Amortization Date” means April 1, 2012; provided that, if (a) positive biomarker
analysis results are obtained from the VISTA-16 Phase III FDA Clinical Trial on or before July 31,
2011, and (b) full enrollment (n = 540) of the PEARL-SC Phase 2b FDA Clinical Trial is obtained on
or before March 31, 2012, then the Term Loan Amortization Date shall be extended to July 1, 2012.
“Term Loan Interest Rate” means for any day, the greater of (a) 7.30 percentage points (7.30%)
plus the Prime Rate or (b) 10.55 percentage points (10.55%).
“Term Loan Maturity Date” means the twenty-ninth monthly anniversary of the Term Loan
Amortization Date.
“Term Note” means a Promissory Note in substantially the form of Exhibit B.
“Trademark License” means any written agreement granting any right to use any Trademark or
Trademark registration, now owned or hereafter acquired by any Borrower or in which any Borrower
now holds or hereafter acquires any interest.
“Trademarks” means all trademarks (registered, common law or otherwise) and any applications
in connection therewith, including registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof.
“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the
State of California; provided that, in the event that, by reason of mandatory
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provisions of law,
any or all of the attachment, perfection or priority of, or remedies with respect to, the Lien of
the Collateral Agent for the benefit of the Lender on any Collateral is governed by the Uniform
Commercial Code as the same is, from time to time, in effect in a jurisdiction other
than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
“Warrants” means the warrants entered into in connection with the Loan.
Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto
to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding
Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise
specifically provided herein, any accounting term used in this Agreement or the other Loan
Documents shall have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP, consistently applied.
Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in
the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.
SECTION
2. THE LOAN
2.1 Term Loan.
(a) Advances. Subject to the terms and conditions of this Agreement, the Lender will
make, and the Borrowers agree to draw, a Term Loan Advance equal to the Maximum Term Loan
Amount on the Closing Date.
(b) Advance Request. To obtain the Term Loan Advance, the Administrative Borrower
shall complete, sign and deliver an Advance Request and the Borrowers shall execute and
deliver the Term Notes to the Lender on the Closing Date. The Lender shall fund the Term
Loan Advance in the manner requested by the Advance Request provided that each of the
conditions precedent to such Term Loan Advance is satisfied as of the requested Advance
Date.
(c) Interest. The principal balance of the Term Loan Advance shall bear interest
thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of
360 days, with interest computed daily based on the actual number of days elapsed. The Term
Loan Interest Rate will float and change on each day the Prime Rate changes from time to
time.
(d) Payment. The Borrowers will pay interest on the Term Loan Advance on the first day
of each month, beginning the month after the Closing Date. The Borrowers shall repay the
aggregate Term Loan principal balance that is outstanding on the Term Loan Amortization Date
in thirty (30) equal monthly installments of principal and interest beginning on the Term
Loan Amortization Date and continuing on the first business day of each month thereafter
(each a “Repayment Date”). The entire Term Loan principal
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balance and all accrued but
unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date. The
Borrowers shall make all payments under this Agreement without setoff, recoupment or
deduction and regardless of any counterclaim or defense. The Lender will initiate debit
entries to the Administrative Borrower’s account as
authorized on the ACH Authorization on each payment date of all periodic obligations
payable to the Lender under each Term Note or Term Advance.
2.2 Maximum Interest. Notwithstanding any provision in this Agreement, the Notes, or any
other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a
rate that is greater than the maximum rate permissible by law that a court of competent
jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be
deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”). If a court of competent jurisdiction shall finally determine that the Borrowers have
actually paid to the Lender an amount of interest in excess of the amount that would have been
payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then
such excess interest actually paid by the Borrowers shall be applied as follows: first, to the
payment of principal outstanding on the Notes; second, after all principal is repaid, to the
payment of the Lender’s accrued interest, costs, expenses, professional fees and any other Secured
Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be
refunded to the Borrowers.
2.3 Default Interest. In the event any payment is not paid on the scheduled payment date, an
amount equal to five percentage points (5%) of the past due amount shall be payable on demand. In
addition, upon the occurrence and during the continuation of an Event of Default hereunder, all
Secured Obligations, including principal, interest, compounded interest, and professional fees,
shall bear interest at a rate per annum equal to the rate set forth in Section 2.1(c) plus five
percentage points (5%) per annum. In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on interest, to the extent
permitted by law, compounded at the rate set forth in Section 2.1(c) or Section 2.3, as applicable.
2.4 Prepayment. At the Borrowers’ option upon at least 5 business days prior written notice
to the Lender from the Administrative Borrower of the date of prepayment (the “Prepayment Date”),
the Borrowers may prepay all or any portion of at least $2,000,000 in cash, of the outstanding
Advances by paying (i) the principal balance being prepaid, (ii) all accrued and unpaid interest,
(iii) all other sums, if any, that shall have become due and payable hereunder or under the Notes,
(iv) together with a prepayment charge equal to the following percentage of the Advance amount
being prepaid: for a prepayment made on or before the first anniversary of the Closing Date, 3.0%
of the outstanding principal amount of the Advance prepaid, (ii) for a prepayment made after the
first anniversary, but on or before the second anniversary of the Closing Date, 2.0% of the
outstanding principal amount of the Advance prepaid, and (iii) for a prepayment made after the
second anniversary of the Closing Date, but before the Term Loan Maturity Date, 1.0% of the
outstanding principal amount of the Advance prepaid (each, a “Prepayment Charge”). The Borrowers
agree that the Prepayment Charge is a reasonable calculation of the Lender’s lost profits in view
of the difficulties and impracticality of determining actual damages resulting from an early
repayment of the Advances. The Borrowers shall prepay
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the outstanding amount of all principal and
accrued and unpaid interest, plus the applicable Prepayment Charge, upon the consummation of a
Change in Control.
2.5 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the
date that the Borrowers prepay in full the outstanding Secured
Obligations, or (iii) the date that the Secured Obligations become due and payable, the
Borrowers shall pay Lender a charge of $937,500; provided, however, that, if the Secured
Obligations are prepaid upon the consummation of a Change of Control on or before the one year
anniversary of the Closing Date, the Borrowers shall pay Lender a reduced charge of $500,000.
Notwithstanding the required payment date of such charge, it shall be deemed fully earned by the
Lender as of the Closing Date.
SECTION 3. SECURITY INTEREST
3.1 As security for the prompt, complete and indefeasible payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations (other than obligations arising under
the Warrant), the Borrowers grant to the Collateral Agent for the benefit of the Lender a security
interest in all of the Borrowers’ right, title and interest in and to all of their personal
property now owned or hereafter acquired, including the following (collectively, the “Collateral”):
(a) Receivables; (b) Equipment (but excluding leased Equipment or Equipment financed by purchase
money indebtedness (and any accessions, attachments, replacements or improvements thereon) that is
subject to a Lien that is permitted pursuant to subsection (vii) of the definition of “Permitted
Liens”, which is securing Indebtedness permitted pursuant to subsection (iii) of the definition of
“Permitted Indebtedness”, provided, that (x) the foregoing exclusion shall apply only to the extent
the applicable lease or finance contract relating to such Equipment prohibits the granting of
security interests other than such Permitted Lien and (y) upon the release of any such Lien, such
Equipment (and any accessions, attachments, replacements or improvements thereon) shall be deemed
to be Collateral hereunder and shall be subject to the security interest granted herein); (c)
Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property (but excluding
thirty-five percent (35%) of the voting capital stock of any foreign Subsidiary if to not exclude
such stock would cause such Borrower material adverse tax consequences under Internal Revenue Code
Section 956 (or any successor statute); (g) Deposit Accounts; (h) Cash; (i) Goods; (j) Commercial
Tort Claims; all customer lists, software, and business records related to any of the foregoing;
and other tangible and intangible personal property of the Borrowers whether now or hereafter owned
or existing, leased, consigned by or to, or acquired by, any Borrower and wherever located; and, to
the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of each of the foregoing;
provided, however, that the Collateral does not include Intellectual Property, but shall include
all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale,
licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights
to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy
Court) holds that a security interest in the underlying Intellectual Property is necessary to have
a security interest in the Rights to Payment, then the Collateral shall automatically, and
effective as of the date of this Agreement, include the Intellectual Property to the extent
necessary to permit perfection of the security interest of the Collateral Agent for the benefit of
the Lender in the Rights to Payment.
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Upon payment in full in cash of the Secured Obligations
(other than inchoate indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) and at such time as this Agreement has been terminated,
the Collateral Agent shall, at Borrowers’ sole cost and expense, release its Liens in the
Collateral and all rights therein shall revert to Borrowers.
SECTION 4. CONDITIONS PRECEDENT TO LOAN
The obligations of the Lender to make the Loan hereunder are subject to the satisfaction by
the Borrowers of the following conditions:
4.1 Initial Advance. On or prior to the Closing Date, the Borrowers shall have delivered to
the Lender the following:
(a) executed originals of the Loan Documents, Account Control Agreements, a legal
opinion of the Borrowers’ special counsel, and all other documents and instruments
reasonably required by the Lender to effectuate the transactions contemplated hereby or to
create and perfect the Liens of the Collateral Agent for the benefit of the Lender with
respect to all Collateral, in all cases in form and substance reasonably acceptable to the
Lender;
(b) certified copy of resolutions of each Borrower’s board of directors evidencing
approval of (i) the Loan and other transactions evidenced by the Loan Documents; and (ii)
the Warrant and transactions evidenced thereby;
(c) certified copies of the Certificate of Incorporation and the Bylaws, as amended
through the Closing Date, of each Borrower;
(d) a certificate of good standing for each Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which such Borrower does business
and where the failure to be qualified would have a Material Adverse Effect;
(e) payment of the Facility Charge and reimbursement of the Lender’s current expenses
reimbursable pursuant to this Agreement, which amounts may be deducted from the initial
Advance; and
(f) such other documents as the Lender may reasonably request.
4.2 All Advances. On each Advance Date:
(a) The Lender shall have received (i) an Advance Request from the Administrative
Borrower and Notes from the Borrowers for the relevant Advance as required by Section
2.1(b), each duly executed by the applicable Borrower’s Chief Executive Officer or Chief
Financial Officer, and (ii) any other documents the Lender may reasonably request.
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(b) The representations and warranties set forth in this Agreement and in Section
5 hereof and in the Warrant shall be true and correct in all material respects on and as
of the Advance Date with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an earlier date.
(c) The Borrowers shall be in compliance in all material respects with all the terms
and provisions set forth herein and in each other Loan Document on its part to be
observed or performed, and at the time of and immediately after such Advance no Event
of Default shall have occurred and be continuing.
(d) Each Advance Request shall be deemed to constitute a representation and warranty by
the Borrowers on the relevant Advance Date as to the matters specified in paragraphs (b) and
(c) of this Section 4.2 and as to the matters set forth in the Advance Request.
4.3 No Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists
that would (or would, with the passage of time, the giving of notice, or both) constitute an Event
of Default and (ii) no event that has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
Each Borrower represents and warrants that:
5.1 Corporate Status. Each Borrower is a corporation duly organized, legally existing and in
good standing under the laws of the State of its State of incorporation or formation, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of its business or
location of its properties require such qualifications and where the failure to be qualified could
reasonably be expected to have a Material Adverse Effect. Each Borrower’s present name, former
names (if any), locations, place of formation, tax identification number, organizational
identification number and other information are correctly set forth in Exhibit C, as may be
updated by the Administrative Borrower in a written notice (including any Compliance Certificate)
provided to the Lender after the Closing Date.
5.2 Collateral. Each Borrower owns the Collateral and the Intellectual Property, free of all
Liens, except for Permitted Liens and subject to the Borrowers’ compliance with Section
7.16(a) hereof. Each Borrower has the power and authority to grant to the Collateral Agent for
the benefit of the Lender a Lien in the Collateral as security for the Secured Obligations (other
than obligations arising under the Warrant).
5.3 Consents. Each Borrower’s execution, delivery and performance of the Notes, this
Agreement and all other Loan Documents, and each Borrower’s execution of the Warrant, (i) have been
duly authorized by all necessary corporate action of such Borrower, (ii) will not result in the
creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens
created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of such
Borrower’s Certificate or Articles of Incorporation or Formation (as applicable), bylaws, operating
agreement, or any, law, regulation, order,
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injunction, judgment, decree or writ to which such
Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any
material contract or agreement or require the consent or approval of any other Person. The
individual or individuals executing the Loan Documents and the Warrant are duly authorized to do
so.
5.4 Material Adverse Effect. Since December 31, 2010, no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing. No Borrower is aware of any event likely to occur that is reasonably expected to
result in a Material Adverse Effect.
5.5 Actions Before Governmental Authorities. Except as described on Schedule 5.5,
there are no actions, suits or proceedings at law or in equity or by or before any governmental
authority now pending or, to the knowledge of any Borrower, threatened against or affecting any
Borrower or its property (i) which seek to prevent, enjoin, hinder or delay the transactions
contemplated by the Loan Documents or (ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, would reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect.
5.6 Laws. No Borrower is in violation of any law, rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any governmental authority, where such
violation or default is reasonably expected to result in a Material Adverse Effect. No Borrower is
in default in any manner under any provision of (i) any agreement to which it is a party or by
which it is bound and for which such default would reasonably be expected to result in a Material
Adverse Effect or (ii) any agreement or instrument evidencing indebtedness.
5.7 Information Correct and Current. No information, report, Advance Request, financial
statement, exhibit or schedule furnished, by or on behalf of any Borrower to the Lender in
connection with any Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or, when taken together with all other
such information or documents, omitted, omits or will omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were, are or will
be made, not misleading at the time such statement was made or deemed made. Additionally, any and
all financial or business projections provided by any Borrower to the Lender shall be (i) provided
in good faith and based on the most current data and information available to such Borrower, and
(ii) the most current of such projections provided to such Borrower’s Board of Directors.
5.8 Tax Matters. Except as described on Schedule 5.8, (a) each Borrower has filed all
federal, state and local tax returns that it is required to file, (b) each Borrower has duly paid
or fully reserved for all taxes or installments thereof (including any interest or penalties) as
and when due, which have or may become due pursuant to such returns, and (c) each Borrower has paid
or fully reserved for any tax assessment received by such Borrower for the three (3) years
preceding the Closing Date, if any (including any taxes being contested in good faith and by
appropriate proceedings).
5.9 Intellectual Property Claims. Each Borrower is the sole owner of, or otherwise has the
right to use, the Intellectual Property. Except as described on Schedule 5.9, (i)
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each of
the material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part of
the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii)
no claim has been received by any Borrower that any material part of the Intellectual Property
violates the rights of any third party except to the extent such claim would not reasonably be
expected to cause a Material Adverse Effect. Exhibit D is a true, correct and complete
list of each Borrower’s Patents, registered Trademarks, registered Copyrights, and material
agreements under which each Borrower licenses Intellectual Property from third parties
(other than shrink-wrap software licenses), together with application or registration numbers,
as applicable, owned by each Borrower or any Subsidiary, in each case as of the Closing Date. No
Borrower is in material breach of, nor has any Borrower failed to perform any material obligations
under, any of the foregoing contracts, licenses or agreements and, to any Borrower’s knowledge, no
third party to any such contract, license or agreement is in material breach thereof or has failed
to perform any material obligations thereunder.
5.10 Intellectual Property. Except as described on Schedule 5.10, each Borrower has,
or in the case of any proposed business, will have, all material rights with respect to
Intellectual Property necessary in the operation or conduct of such Borrower’s business as
currently conducted and proposed to be conducted by such Borrower. Without limiting the generality
of the foregoing, and in the case of Licenses, except for restrictions that are unenforceable under
Division 9 of the UCC, each Borrower has the right, to the extent required to operate such
Borrower’s business, to freely transfer, license or assign Intellectual Property without condition,
restriction or payment of any kind (other than license payments in the ordinary course of business)
to any third party, and each Borrower owns or has the right to use, pursuant to valid licenses, all
software development tools, library functions, compilers and all other third-party software and
other items that are used in the design, development, promotion, sale, license, manufacture,
import, export, use or distribution of Borrower Products.
5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual
Property owned by any Borrower or any Borrower Product has been or is subject to any actual or, to
the knowledge of any Borrower, threatened litigation, proceeding (including any proceeding in the
United States Patent and Trademark Office or any corresponding foreign office or agency) or
outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any
material respect such Borrower’s use, transfer or licensing thereof or that could reasonably be
expected to adversely affect the validity, use or enforceability thereof. There is no outstanding
decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in
connection with any litigation or proceeding that obligates any Borrower to grant licenses or
ownership interest in any future Intellectual Property related to the operation or conduct of the
business of any Borrower or any Borrower Products. No Borrower has received any written notice or
claim, or, to the knowledge of any Borrower, oral notice or claim, challenging or questioning any
Borrower’s ownership in any material part of the Intellectual Property (or written notice of any
claim challenging or questioning the ownership in any licensed Intellectual Property of the owner
thereof) or suggesting that any third party has any claim of legal or beneficial ownership with
respect thereto nor, to any Borrower’s knowledge, is there a reasonable basis for any such claim.
No Borrower’s use of its Intellectual Property nor the production and sale of any Borrower Products
infringes the Intellectual Property or other rights of others.
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5.12 Financial Accounts. Exhibit E, as it may be updated by the Administrative
Borrower in a written notice provided to the Lender after the Closing Date, is a true, correct and
complete list of (a) all banks and other financial institutions at which any Borrower or any
Subsidiary maintains Deposit Accounts and (b) all institutions at which any Borrower or any
Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies
the name, address and telephone number of each bank or other institution, the name in
which the account is held, a description of the purpose of the account, and the complete
account number therefor.
5.13 Employee Loans. No Borrower has any outstanding loans to any employee, officer or
director of any Borrower, nor has any Borrower guaranteed the payment of any loan made to an
employee, officer or director of any Borrower by a third party.
5.14 Capitalization and Subsidiaries. Each Borrower’s capitalization as of the Closing Date
is set forth on Schedule 5.14 annexed hereto. No Borrower owns any stock, partnership
interest or other securities of any Person, except for Permitted Investments. Attached as
Schedule 5.14, as such schedule may be updated by the Administrative Borrower in a written
notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.
SECTION 6. INSURANCE; INDEMNIFICATION
6.1 Coverage. So long as there are any Secured Obligations (other than obligations arising
under the Warrant or inchoate indemnity obligations) outstanding, Parent shall cause to be carried
and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against Parent’s line of business. Such risks shall include the risks of
bodily injury, including death, property damage, personal injury, advertising injury, and
contractual liability per the terms of the indemnification agreement found in Section 6.3.
Parent must maintain a minimum of $5,000,000 of commercial general liability insurance for each
occurrence. Parent has and agrees to maintain a minimum of $20,000,000 of directors and officers’
insurance for each occurrence and $20,000,000 in the aggregate. So long as there are any Secured
Obligations (other than obligations arising under the Warrant or inchoate indemnity obligations)
outstanding, Parent shall also cause to be carried and maintained insurance upon the Collateral,
insuring against all risks of physical loss or damage howsoever caused, in an amount not less than
the full replacement cost of the Collateral, provided that such insurance may be subject to
standard exceptions and deductibles. Parent shall also carry and maintain a fidelity insurance
policy in an amount not less than $100,000.
6.2 Certificates. Parent shall deliver to the Collateral Agent certificates of insurance that
evidence Parent’s compliance with its insurance obligations in Section 6.1 and the
obligations contained in this Section 6.2. Parent’s insurance certificate shall state the
Collateral Agent for the benefit of the Lender is an additional insured for commercial general
liability, an additional insured and a loss payee for all risk property damage insurance, subject
to the insurer’s approval, a loss payee for fidelity insurance, and a loss payee for property
insurance and additional insured for liability insurance for any future insurance that Parent may
acquire from such insurer. Attached to the certificates of insurance will be additional insured
endorsements for liability and lender’s loss payable endorsements for all risk property damage
insurance and fidelity. Unless an Event of Default shall have occurred and be continuing, all
16
insurance proceeds shall be paid or turned over to Parent. All certificates of insurance will
provide for a minimum of thirty (30) days advance written notice to the Collateral Agent of
cancellation or any other change adverse to the Collateral Agent’s interests. Any failure of the
Collateral Agent to scrutinize such insurance certificates for compliance is not a waiver of any of
the Collateral Agent’s rights, all of which are reserved.
6.3 Indemnity. Each Borrower agrees to indemnify and hold the Collateral Agent and the Lender
and their officers, directors, employees, agents, in-house attorneys, representatives and
shareholders harmless from and against any and all claims, costs, expenses, damages and liabilities
(including such claims, costs, expenses, damages and liabilities based on liability in tort,
including strict liability in tort), including reasonable attorneys’ fees and disbursements and
other costs of investigation or defense (including those incurred upon any appeal), that may be
instituted or asserted against or incurred by the Collateral Agent and/or the Lender or any such
Person as the result of credit having been extended, suspended or terminated under this Agreement
and the other Loan Documents or the administration of such credit, or in connection with or arising
out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in
connection therewith, or arising out of the disposition or utilization of the Collateral, excluding
in all cases claims resulting solely from the Collateral Agent’s or the Lender’s gross negligence
or willful misconduct. Each Borrower agrees to pay, and to save the Collateral Agent and the
Lender harmless from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all excise, sales or other similar taxes (excluding taxes imposed on or measured by
the net income of the Collateral Agent or the Lender) that may be payable or determined to be
payable with respect to any of the Collateral or this Agreement.
SECTION 7. COVENANTS OF BORROWER
Each Borrower agrees as follows for so long as there are any Secured Obligations (other than
obligations arising under the Warrant and inchoate indemnity obligations) outstanding:
7.1 Financial Reports. The Administrative Borrower shall furnish to the Lender the Compliance
Certificate in the form of Exhibit F monthly within thirty (30) days after the end of each
month and the financial statements listed hereinafter (the “Financial Statements”):
(a) as soon as practicable (and in any event within thirty (30) days) after the end of
each month, unaudited interim and year-to-date financial statements as of the end of such
month (prepared on a consolidated and consolidating basis, if applicable), including balance
sheet and related statements of income and cash flows accompanied by a report detailing any
material contingencies (including the commencement of any material litigation by or against
any Borrower) or any other occurrence that would reasonably be expected to have a Material
Adverse Effect, all certified by the Administrative Borrower’s Chief Executive Officer or
Chief Financial Officer to the effect that they have been prepared in accordance with GAAP,
except (i) for the absence of footnotes, (ii) that they are subject to normal year end
adjustments, and (iii) they do not contain certain non-cash items that are customarily
included in quarterly and annual financial statements;
17
(b) as soon as practicable (and in any event within forty-five (45) days) after the end
of each calendar quarter, unaudited interim and year-to-date financial statements as of the
end of such calendar quarter (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash flows
accompanied by a report detailing any material contingencies (including the commencement of
any material litigation by or against any Borrower) or any other
occurrence that would reasonably be expected to have a Material Adverse Effect,
certified by the Administrative Borrower’s Chief Executive Officer or Chief Financial
Officer to the effect that they have been prepared in accordance with GAAP, except (i) for
the absence of footnotes, and (ii) that they are subject to normal year end adjustments;
(c) as soon as practicable (and in any event within ninety (90) days) after the end of
each fiscal year, unqualified audited financial statements as of the end of such year
(prepared on a consolidated basis, if applicable), including balance sheet and related
statements of income and cash flows, and setting forth in comparative form the corresponding
figures for the preceding fiscal year, certified by Deloitte & Touche LLP or another firm of
independent certified public accountants selected by the Borrowers and reasonably acceptable
to the Lender, accompanied by any management report from such accountants;
(d) promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements, financial statements or reports that any Borrower has made available to
its stockholders and copies of any regular, periodic and special reports or registration
statements that any Borrower files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or any national securities
exchange; and
(e) financial and business projections promptly following their approval by each
Borrower’s Board of Directors, as well as budgets, operating plans and other financial
information reasonably requested by the Lender.
The executed Compliance Certificate may be sent via facsimile to the Lender at (000) 000-0000 or
via e-mail to xxxxxx@xxxxxxxxxxxx.xxx. All Financial Statements required to be delivered pursuant
to clauses (a), (b) and (c) shall be sent via e-mail (which email may contain a link to such
financial statements) to xxxxxxxxxxxxxxxxxxx@xxxxxxxxxxxx.xxx with a copy to
xxxxxx@xxxxxxxxxxxx.xxx; provided that, if e-mail is not available or sending such Financial
Statements via e-mail is not possible, they shall be sent via facsimile to the Lender at: (000)
000-0000, attention Xxxxx Xxxxx.
7.2 Management Rights. Each Borrower shall permit any representative that the Collateral
Agent or the Lender authorizes, including its attorneys and accountants, to inspect the Collateral
and examine and make copies and abstracts of the books of account and records of such Borrower at
reasonable times and upon reasonable notice during normal business hours. Such inspections or
examinations shall be conducted no more often than once every six months unless an Event of Default
has occurred and is continuing. In addition, any such representative shall have the right to meet
with management and officers of each Borrower to discuss such books of account and records. In
addition, the Collateral Agent or Lender shall be entitled at
18
reasonable times and intervals to
consult with and advise the management and officers of each Borrower concerning significant
business issues affecting the Borrowers. Such consultations shall not unreasonably interfere with
the Borrowers’ business operations. The parties intend that the rights granted the Collateral
Agent and the Lender shall constitute “management rights” within the meaning of 29 C.F.R Section
2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by the Collateral Agent
or the Lender with respect to any business issues shall not be deemed to give the Collateral Agent
or the Lender, nor be deemed an
exercise by the Collateral Agent nor the Lender of, control over any Borrower’s management or
policies.
7.3 Further Assurances. Each Borrower shall from time to time execute, deliver and file,
alone or with the Collateral Agent and/or the Lender, any financing statements, security
agreements, collateral assignments, notices, control agreements, or other documents reasonably
requested by the Collateral Agent or Lender to perfect or give the highest priority to the
Collateral Agent’s Lien on the Collateral for the benefit of the Lender. Each Borrower shall from
time to time procure any instruments or documents as may be reasonably requested by the Collateral
Agent or the Lender, and take all further action that may be necessary or desirable, or that the
Collateral Agent or the Lender may reasonably request, to perfect and protect the Liens granted
hereby and thereby. In addition, and for such purposes only, each Borrower hereby authorizes the
Collateral Agent and/or the Lender to execute and deliver on behalf of such Borrower and to file
such financing statements, collateral assignments, notices, control agreements, security agreements
and other documents without the signature of such Borrower either in the Collateral Agent’s or the
Lender’s name or in the name of the Collateral Agent or the Lender as agent and attorney-in-fact
for such Borrower. Each Borrower shall protect and defend such Borrower’s title to the Collateral
and the Lien of the Collateral Agent for the benefit of the Lender thereon against all Persons
claiming any interest adverse to such Borrower or the Lender other than Permitted Liens.
7.4 [Reserved.]
7.5 Indebtedness. No Borrower shall create, incur, assume, guarantee or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness, or prepay any Indebtedness or take any actions which impose on any Borrower an
obligation to prepay any Indebtedness, except for the conversion of Indebtedness into equity
securities and the payment of cash in lieu of fractional shares in connection with such conversion.
7.6 Collateral. Each Borrower shall at all times keep the Collateral, the Intellectual
Property and all other property and assets used in such Borrower’s business or in which such
Borrower now or hereafter holds any interest free and clear from any legal process or Liens
whatsoever (except for Permitted Liens), and shall give the Collateral Agent and the Lender prompt
written notice of any legal process affecting the Collateral, the Intellectual Property, such other
property and assets, or any Liens thereon. Each Borrower shall cause its Subsidiaries to protect
and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest
adverse to such Subsidiary, and each Borrower shall cause its Subsidiaries at all times to keep
such Subsidiary’s property and assets free and clear from any legal process or Liens
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whatsoever
(except for Permitted Liens), and shall give the Collateral Agent and the Lender prompt written
notice of any legal process affecting such Subsidiary’s assets. Except with respect to (i)
specific property encumbered to secure payment of particular Indebtedness and (ii) restrictions by
reason of customary provisions restricting assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets secured by such Liens or the property
or assets subject to such leases, licenses or similar agreements, as the case
may be), no Borrower shall agree with any Person other than the Collateral Agent and the
Lender not to encumber such Borrower’s property.
7.7 Investments. No Borrower shall directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted
Investments.
7.8 Distributions. Except for Permitted Investments, no Borrower shall, or allow any
Subsidiary to, (a) repurchase or redeem any class of stock or other equity interest other than
pursuant to employee, director or consultant repurchase plans, stock option plans or agreements,
restricted stock agreements or other similar agreements, provided, however, in each case the
repurchase or redemption price does not exceed the original consideration paid for such stock or
equity interest, (b) declare or pay any cash dividend or make a cash distribution on any class of
stock or other equity interest, except that a Subsidiary may pay dividends or make distributions to
such Borrower, or (c) lend money to any employees, officers or directors or guarantee the payment
of any such loans granted by a third party in excess of $100,000 in the aggregate, or (d) waive,
release or forgive any indebtedness owed by any employees, officers or directors in excess of
$100,000 in the aggregate.
7.9 Transfers. Except for Permitted Transfers, no Borrower shall voluntarily or involuntarily
transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or
legal interest in any material portion of their assets.
7.10 Mergers or Acquisitions. No Borrower shall (a) merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business organization (other than
(i) mergers or consolidations of a Subsidiary into another Subsidiary or into a Borrower and (ii)
mergers or consolidations in which Borrower is the surviving entity that does not result in a
Change of Control, provided, that, upon a Change of Control, the Secured
Obligations shall be paid in full in accordance with Section 2.4 hereof), or (b) acquire,
or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person (other than Permitted Investments).
7.11 Taxes. Each Borrower and its Subsidiaries shall pay when due all taxes, fees or other
charges of any nature whatsoever (together with any related interest or penalties) now or hereafter
imposed or assessed against such Borrower or the Collateral or upon such Borrower’s ownership,
possession, use, operation or disposition thereof or upon such Borrower’s rents, receipts or
earnings arising therefrom. Each Borrower shall file on or before the due date therefor all
personal property tax returns in respect of the Collateral. Notwithstanding the foregoing, a
Borrower may contest, in good faith and by appropriate proceedings, taxes for which such Borrower
maintains adequate reserves therefor in accordance with GAAP.
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7.12 Corporate Changes. No Borrower nor any Subsidiary shall change its corporate
name, legal form or jurisdiction of formation without twenty (20) days’ prior written notice to the
Lender. No Borrower nor any Subsidiary shall suffer a Change in Control. No Borrower nor any
Subsidiary shall relocate its chief executive office or its principal place of business unless: (i)
it has provided prior written notice to the Lender; and (ii) such relocation shall be within the
continental United States. No Borrower nor any Subsidiary shall relocate any item of Collateral
(other than (w) sales of Inventory in the ordinary course of business, (x) relocations of worn-out,
obsolete or surplus Equipment, (y) relocations of mobile equipment, or other Equipment having an
aggregate value of up to $150,000 in any fiscal year, and (z) relocations of Collateral from a
location described on Exhibit C to another location described on Exhibit C) unless
(i) it has provided prompt written notice to the Lender, (ii) such relocation is within the
continental United States and, (iii) if such relocation is to a third party bailee, it has
delivered a bailee agreement in form and substance reasonably acceptable to the Lender.
7.13 Deposit Accounts. No Borrower nor any Subsidiary shall maintain any Deposit Accounts
(other than payroll, trust or escrow accounts), or accounts holding Investment Property, except
with respect to which the Collateral Agent for the benefit of the Lender has an Account Control
Agreement. The proceeds of any Advance shall be deposited into and maintained only in one or more
accounts of any Borrower which are subject to an Account Control Agreement in favor of the
Collateral Agent.
7.14 Joinder. Each Borrower shall notify the Collateral Agent and the Lender of each
Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shall cause any
such Subsidiary organized under the laws of any State within the United States to execute and
deliver to the Collateral Agent and the Lender a Joinder Agreement.
7.15 SBA. The Lender has received a license from the U.S. Small Business Administration
(“SBA”) to extend loans as a small business investment company (“SBIC”) pursuant to the Small
Business Investment Act of 1958, as amended, and the associated regulations (collectively, the
“SBIC Act”). Portions of the loan to the Borrowers will be made under the SBA license and the SBIC
Act. Addendum 1 to this Agreement outlines various responsibilities of the Lender and the
Borrowers associated with an SBA loan, and such Addendum 1 is hereby incorporated in this
Agreement.
7.16 Post-Closing Deliveries.
(a) On or before March 30, 2011, Borrowers (1) shall cause the secured parties of
record or their authorized designee to file, or shall obtain such secured parties’
authorization to file on their behalf and shall so file, an effective UCC-3 termination
statement with respect to the UCC-1 financing statement, filing number 20092351648, filed
with the Delaware Secretary of State on July 22, 2009 (the “VantagePoint Financing
Statement”), or (2) shall have made an authenticated demand to the secured parties of record
pursuant to Section 9-513 of the UCC to terminate the VantagePoint Financing Statement, and
shall have filed an effective UCC-3 termination statement in respect of the VantagePoint
Financing Statement in accordance with Section 9-513 of the UCC.
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(b) Within 5 business days of the Closing Date, Borrower shall deliver, or cause to
be delivered, to Collateral Agent on behalf of the Lender the insurance certificates and
endorsements required by Section 6.2 hereof.
(c) Within 30 days of the Closing Date, Borrowers shall deliver, or cause to be
delivered, to Collateral Agent on behalf of the Lender an Account Control Agreement with
respect to each deposit account or securities account (or any successor account(s)) of any
Borrower which is not subject to an Account Control Agreement as of the Closing Date. Prior
to the delivery of an Account Control Agreement with respect to any such deposit or
securities account (or any successor account(s)), no Borrower shall transfer any funds or
credit any financial assets to such accounts (or any successor account(s)).
SECTION 8. RIGHT TO INVEST
8.1 The Lender or its assignee or nominee shall have the right, in its discretion, to
participate in the Subsequent Financing in an amount of up to $2,000,000 on the same terms,
conditions and pricing afforded to the lead investors participating in any such Subsequent
Financing.
SECTION 9. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall be an Event of Default:
9.1 Payments. The Borrowers fail to pay any amount due under this Agreement, the Notes or
any of the other Loan Documents on the due date; or
9.2 Covenants. Any Borrower breaches or defaults in the performance of any covenant or
Secured Obligation under this Agreement or the Notes, and (a) with respect to a default (other than
under Sections 6.1, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.15) such default continues for more than ten (10)
days after the earlier of the date on which (i) the Lender has given notice of such default to such
Borrower and (ii) such Borrower has actual knowledge of such default or (b) with respect to a
default under any of Sections 6.1, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.15, the occurrence of such default;
or
9.3 Material Adverse Effect. A circumstance has occurred that would reasonably be
expected to have a Material Adverse Effect; or
9.4 Other Loan Documents. The occurrence of any default under any Loan Document or any
other agreement between any Borrower and the Lender and such default continues for more than ten
(10) days after the earlier of (a) the Lender has given notice of such default to such Borrower, or
(b) such Borrower has actual knowledge of such default; or
9.5 Representations. Any representation or warranty made by any Borrower in any Loan
Document or in the Warrant shall have been false or misleading in any material respect when made or
deemed made; or
22
9.6 Insolvency. Any Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or
perform under the Loan Documents; or (iii) shall file a voluntary petition in bankruptcy; or (iv)
shall file any petition, answer, or document seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any present or future
statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, or liquidator of such Borrower or of all or
any substantial part (i.e., 33-1/3% or more) of the assets or property of such Borrower; or (vi)
shall cease operations of its business as its business has normally been conducted, or terminate
substantially all of its employees; or (vii) any Borrower or its directors shall take any action
initiating any of the foregoing actions described in clauses (i) through (vi); or (B) either (i)
sixty (60) days shall have expired after the commencement of an involuntary action against such
Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, without such action being
dismissed or all orders or proceedings thereunder affecting the operations or the business of such
Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set
aside and the action setting it aside shall not be timely appealed; or (iii) any Borrower shall
file any answer admitting or not contesting the material allegations of a petition filed against
such Borrower in any such proceedings; or (iv) the court in which such proceedings are pending
shall enter a decree or order granting the relief sought in any such proceedings; or (v) thirty
(30) days shall have expired after the appointment, without the consent or acquiescence of such
Borrower, of any trustee, receiver or liquidator of such Borrower or of all or any substantial part
of the properties of such Borrower without such appointment being vacated; or
9.7 Attachments; Judgments. Any portion of any Borrower’s assets is attached or seized,
or a levy is filed against any such assets, or a judgment or judgments is/are entered for the
payment of money, individually or in the aggregate, of at least $100,000, or any Borrower is
enjoined or in any way prevented by court order from conducting any part of its business; or
9.8 Other Indebtedness. The occurrence of any default under any agreement or obligation
of any Borrower involving any Indebtedness in excess of $250,000, or the occurrence of any default
under any agreement or obligation of any Borrower that could reasonably be expected to have a
Material Adverse Effect.
SECTION 10. REMEDIES
10.1 General. Upon and during the continuance of any one or more Events of Default, in
accordance with applicable law (i) the Lender may, at its option, accelerate and demand payment of
all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be
immediately due and payable (provided, that upon the occurrence of an Event of Default of the type
described in Section 9.6, the Notes and all of the Secured Obligations shall automatically
be accelerated and made due and payable, in each case without any further notice or act), and (ii)
the Collateral Agent may notify any Borrower’s account debtors to make payment directly to the
Collateral Agent, compromise the amount of any such
23
account on any Borrower’s behalf and endorse the Collateral Agent’s name without recourse on
any such payment for deposit directly to the Collateral Agent’s account. The Collateral Agent may
exercise all rights and remedies with respect to the Collateral under the Loan Documents or
otherwise available to it under the UCC and other applicable law, including the right to release,
hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the
Collateral and the right to occupy, utilize, process and commingle the Collateral. All of the
Collateral Agent’s rights and remedies shall be cumulative and not exclusive.
10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of any Event
of Default, the Collateral Agent may, at any time or from time to time and in accordance with
applicable law, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose
of, any or all of the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as the Collateral Agent may elect. Any such sale may be
made either at public or private sale at its place of business or elsewhere. Each Borrower agrees
that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to
any Borrower. The Collateral Agent may require each Borrower to assemble the Collateral and make
it available to the Collateral Agent at a place designated by the Collateral Agent that is
reasonably convenient to the Collateral Agent and such Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be applied by the
Collateral Agent in the following order of priorities:
First, to the Lender and to itself in its capacity as the Collateral Agent in an
amount sufficient to pay in full the Lender’s and the Collateral Agent’s costs and
professionals’ and advisors’ fees and expenses as described in Section
11.11;
Second, to the Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in such
order and priority as the Lender may choose in its sole discretion; and
Finally, after the full, final, and indefeasible payment in Cash of all of the
Secured Obligations, to any creditor holding a junior Lien on the Collateral, or to
the Administrative Borrower or its representatives or as a court of competent
jurisdiction may direct.
The Collateral Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a secured party under
the UCC.
10.3 No Waiver. The Collateral Agent shall be under no obligation to marshal any of the
Collateral for the benefit of any Borrower or any other Person, and each Borrower expressly waives
all rights, if any, to require the Collateral Agent to marshal any Collateral.
10.4 Cumulative Remedies. The rights, powers and remedies of the Collateral Agent or the
Lender hereunder shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers and remedies
provided herein shall not be construed as a waiver of or election of remedies with respect to any
other rights, powers and remedies of the Collateral Agent or the Lender.
24
SECTION 11. MISCELLANEOUS
11.1 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective only to the extent and duration of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
11.2 Notice. Except as otherwise provided herein, any notice, demand, request, consent,
approval, declaration, service of process or other communication (including the delivery of
Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with
respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly
served, given, delivered, and received upon the earlier of: (i) the day of transmission by
facsimile or hand delivery or delivery by an overnight express service or overnight mail delivery
service; or (ii) the third calendar day after deposit in the United States mails, with proper first
class postage prepaid, in each case addressed to the party to be notified as follows:
| (a) | If to Lender: |
HERCULES TECHNOLOGY II, L.P.
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and Nick Martitsch
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and Nick Martitsch
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
| (b) | If to Collateral Agent: |
HERCULES TECHNOLOGY II, L.P.
Legal Department
Attention: Chief Legal Officer and Nick Martitsch
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Legal Department
Attention: Chief Legal Officer and Nick Martitsch
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
| (c) | If to Borrower: |
ANTHERA PHARMACEUTICALS, INC.
Attention: Xxxxxxxxxxx X. Xxxx, Chief Financial Officer
00000 Xxxxxxxxxx Xxxx., Xxxxx X
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxxxxxxx X. Xxxx, Chief Financial Officer
00000 Xxxxxxxxxx Xxxx., Xxxxx X
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
or to such other address as each party may designate for itself by like notice.
25
11.3 Entire Agreement; Amendments. This Agreement, the Notes, and the other Loan
Documents constitute the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, letters, negotiations or other documents or agreements, whether written or oral, with
respect to the subject matter hereof or thereof (including the Lender’s revised proposal letter
dated February 10, 2011). None of the terms of this Agreement, the Notes or any of the other Loan
Documents may be amended except by an instrument executed by each of the parties hereto.
11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
11.5 No Waiver. The powers conferred upon the Collateral Agent or the Lender by this
Agreement are solely to protect its rights hereunder and under the other Loan Documents and its
interest in the Collateral and shall not impose any duty upon the Collateral Agent or the Lender to
exercise any such powers. No omission or delay by the Collateral Agent or the Lender at any time
to enforce any right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by any Borrower at any time designated, shall be a waiver of any
such right or remedy to which the Collateral Agent or the Lender is entitled, nor shall it in any
way affect the right of the Collateral Agent or the Lender to enforce such provisions thereafter.
11.6 Survival. All agreements, representations and warranties contained in this
Agreement, the Notes and the other Loan Documents or in any document delivered pursuant hereto or
thereto shall be for the benefit of the Collateral Agent or the Lender and shall survive the
execution and delivery of this Agreement and the expiration or other termination of this Agreement.
11.7 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on each Borrower and its permitted assigns
(if any). No Borrower shall assign its obligations under this Agreement, the Notes or any of the
other Loan Documents without the Lender’s express prior written consent, and any such attempted
assignment shall be void and of no effect. The Collateral Agent and the Lender may assign,
transfer, or endorse their respective rights hereunder and under the other Loan Documents without
prior notice to any of the Borrowers, and all of such rights shall inure to the benefit of the
Collateral Agent’s or the Lender’s successors and assigns.
11.8 Governing Law. This Agreement, the Notes and the other Loan Documents have been
negotiated and delivered to the Collateral Agent and the Lender in the State of California, and
shall have been accepted by the Collateral Agent and the Lender in the State of California.
Payment to the Lender by the Borrowers of the Secured Obligations is due in the State of
California. This Agreement, the Notes and the other Loan Documents shall be
26
governed by, and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the application of laws of any
other jurisdiction.
11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the
reference requirement of Section 11.10 is not applicable) arising in or under or related to
this Agreement, the Notes or any of the other Loan Documents may be brought in any state or federal
court of competent jurisdiction located in the State of California. By execution and delivery of
this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive
personal jurisdiction in Santa Xxxxx County, State of California; (b) waives any objection as to
jurisdiction or venue in Santa Xxxxx County, State of California; (c) agrees not to assert any
defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees
to be bound by any judgment rendered thereby in connection with this Agreement, the Notes or the
other Loan Documents. Service of process on any party hereto in any action arising out of or
relating to this Agreement shall be effective if given in accordance with the requirements for
notice set forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring proceedings in the courts
of any other jurisdiction.
11.10 Mutual Waiver of Jury Trial / Judicial Reference.
(a) Because disputes arising in connection with complex financial transactions are
most quickly and economically resolved by an experienced and expert person and the parties
wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH
BORROWER, THE COLLATERAL AGENT, AND THE LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR
ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY ANY BORROWER AGAINST THE COLLATERAL
AGENT, THE LENDER OR THEIR ASSIGNEES OR BY THE COLLATERAL AGENT, THE LENDER OR ITS ASSIGNEES
AGAINST ANY BORROWER. This waiver extends to all such Claims, including Claims that involve
Persons other than the Borrowers, the Collateral Agent, and the Lender; Claims that arise
out of or are in any way connected to the relationship between the Borrowers, the Collateral
Agent, and the Lender; and any Claims for damages, breach of contract, tort, specific
performance, or any equitable or legal relief of any kind, arising out of this Agreement,
any other Loan Document.
(b) If the waiver of jury trial set forth in Section 11.10(a) is
ineffective or unenforceable, the parties agree that all Claims shall be resolved by
reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee
selected by the Presiding Judge of the Santa Xxxxx County, California. Such proceeding
shall be conducted in Santa Xxxxx County, California, with California rules of evidence and
discovery applicable to such proceeding.
27
(c) In the event Claims are to be resolved by judicial reference, either party may
seek from a court of competent jurisdiction identified in Section 11.9, any
prejudgment order, writ or other relief and have such prejudgment order, writ or other
relief enforced to the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.
11.11 Professional Fees. The Borrowers promise to pay all of the Collateral Agent’s and
the Lender’s respective reasonable and documented fees and expenses necessary to finalize the loan
documentation, including but not limited to reasonable attorneys fees, UCC searches, filing costs,
and other miscellaneous expenses. In addition, the Borrowers promise to pay any and all Lender
Expenses, including without limitation, reasonable, invoiced attorneys’ and other professionals’
fees and expenses (including fees and expenses of in-house counsel) incurred by the Collateral
Agent and the Lender after the Closing Date in connection with or related to: (a) the Loan; (b)
the administration, collection, or enforcement of the Loan; (c) the amendment or modification of
the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e)
the protection, preservation, sale, lease, liquidation, or disposition of Collateral or the
exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to any Borrower or the
Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring,
reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action
related to any Borrower, the Collateral, the Loan Documents, including representing the Collateral
Agent and/or the Lender in any adversary proceeding or contested matter commenced or continued by
or on behalf of any Borrower’s estate, and any appeal or review thereof.
11.12 Confidentiality. The Collateral Agent and the Lender acknowledge that information
provided to the Collateral Agent and the Lender by the Borrowers, including the financial
statements provided to Lender by the Borrowers and certain items of Collateral, is confidential and
proprietary information of the Borrowers, if and to the extent such information either (x) is
marked as confidential by the Borrowers at the time of disclosure, or (y) should reasonably be
understood to be confidential and proprietary information of the Borrowers (the “Confidential
Information”). Accordingly, the Collateral Agent and the Lender agree that any Confidential
Information they may obtain in connection with the Loan or this Agreement, including in the course
of acquiring, administering, or perfecting the security interest of the Collateral Agent for the
benefit of the Lender in the Collateral, shall not be disclosed to any other person or entity in
any manner whatsoever, in whole or in part, without the prior written consent of any Borrower,
except that the Collateral Agent or the Lender may disclose any such information: (a) to its own
directors, officers, employees, accountants, counsel and other professional advisors and to its
affiliates if the Collateral Agent or the Lender in its sole discretion determines that any such
party should have access to such information in connection with such party’s responsibilities in
connection with the Loan or this Agreement and, provided that such recipient of such Confidential
Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or
(ii) is otherwise subject to confidentiality restrictions that reasonably protect against the
disclosure of Confidential Information; (b) if such information is generally available to the
public through no fault of the Collateral Agent or the Lender; (c) if required or appropriate in
any report, statement or testimony submitted to any
28
governmental authority having or claiming to have jurisdiction over the Collateral Agent or
the Lender; (d) if required or appropriate in response to any summons or subpoena or in connection
with any litigation, to the extent permitted or deemed advisable by the Collateral Agent and/or the
Lender’s counsel; (e) to comply with any legal requirement or law applicable to the Collateral
Agent and/or the Lender; (f) to the extent reasonably necessary in connection with the exercise of
any right or remedy under any Loan Document, including the Collateral Agent’s sale, lease, or other
disposition of Collateral after the occurrence and during the continuance of an Event of Default;
(g) to any participant or assignee of the Lender or any prospective participant or assignee;
provided, that such participant or assignee or prospective participant or assignee agrees in
writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior consent of
any Borrower; provided, that any disclosure made in violation of this Agreement shall not affect
the obligations of any Borrower or any of its affiliates or any guarantor under this Agreement or
the other Loan Documents.
11.13 Assignment of Rights. Each Borrower acknowledges and understands that the Lender
may sell and assign all or part of its interest hereunder and under the Notes and Loan Documents to
any person or entity (an “Assignee”). After such assignment the term “Lender” as used in the Loan
Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights,
powers and remedies of the Lender hereunder with respect to the interest so assigned; but with
respect to any such interest not so transferred, the Lender shall retain all rights, powers and
remedies hereby given. No such assignment by the Lender shall relieve any Borrower of any of its
obligations hereunder. The Lender agrees that in the event of any transfer by it of the Notes, it
will endorse thereon a notation as to the portion of the principal of the Notes, which shall have
been paid at the time of such transfer and as to the date to which interest shall have been last
paid thereon.
11.14 Revival of Secured Obligations. This Agreement and the Loan Documents shall remain
in full force and effect and continue to be effective if any petition is filed by or against any
Borrower for liquidation or reorganization, if any Borrower becomes insolvent or makes an
assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any
significant part of any Borrower’s assets, or if any payment or transfer of Collateral is recovered
from the Lender or the Collateral Agent. The Loan Documents and the Secured Obligations and
Collateral security shall continue to be effective, or shall be revived or reinstated, as the case
may be, if at any time payment and performance of the Secured Obligations or any transfer of
Collateral to the Collateral Agent or the Lender, or any part thereof is rescinded, avoided or
avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from,
the Collateral Agent or Lender or by any obligee of the Secured Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or
transfer of Collateral had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and
the Secured Obligations shall be deemed, without any further action or documentation, to have been
revived and reinstated except to the extent of the full, final, and indefeasible payment to the
Lender in Cash.
11.15 Counterparts. This Agreement and any amendments, waivers, consents or supplements
hereto may be executed originally or by means of electronic transmission in any
29
number of counterparts, and by different parties hereto in separate counterparts, each of
which when so delivered shall be deemed an original, but all of which counterparts shall constitute
but one and the same instrument.
11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor
will be interpreted, to provide or create any third-party beneficiary rights or any other rights of
any kind in any person other than the Lender, the Collateral Agent, and the Borrowers unless
specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the
Loan Documents will be personal and solely between the Lender, the Collateral Agent, and the
Borrowers.
11.17 Publicity. The Lender may use each Borrower’s name and logo, and include a brief
description of the relationship between such Borrower and the Lender, in the Lender’s marketing
materials.
11.18 Joint and Several Liability. Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial accommodations to be
provided by the Lender under this Agreement, for the mutual benefit, directly and indirectly, of
each Borrower and in consideration of their undertakings to accept joint and several liability for
the Secured Obligations. Each Borrower, jointly and severally, hereby irrevocably, absolutely and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several
liability with respect to the payment and performance of all of the Secured Obligations (including,
without limitation, any Secured Obligations arising under this Section 11.18), it being the
intention of each Borrower that all the Secured Obligations shall be the joint and several
obligations of each Borrower without preferences or distinction among them. If and to the extent
that any Borrower fails to make any payment with respect to any of the Secured Obligations as and
when due or to perform any of the Secured Obligations in accordance with the terms thereof, then in
each such event, the other Persons comprising the Borrowers will make such payment with respect to,
or perform, such Secured Obligation. Each of Borrower hereby agrees that it will not enforce any
of its rights of contribution or subrogation against any other Persons comprising the Borrowers
with respect to any liability incurred by it hereunder or under any of the other Loan Documents,
any payments made by it to the Collateral Agent or the Lender with respect to any of the Secured
Obligations or any collateral security therefor until such time as all of the Secured Obligations
(other than inchoate indemnity obligations) have been paid in full in cash. Any claim which any of
the Borrowers may have against any other Persons comprising the Borrowers with respect to any
payments to the Collateral Agent or the Lender hereunder or under any other Loan Documents are
hereby expressly made subordinate and junior in right of payment, without limitation as to any
increases in the Secured Obligations arising hereunder or thereunder, to the prior payment in full
in cash of the Secured Obligations (other than inchoate indemnity obligations) and, in the event of
any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding
under the laws of any jurisdiction relating to any of the Borrowers, their respective debt or
assets, whether voluntary or involuntary, all such Secured Obligations (other than inchoate
indemnity obligations) shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any other Persons
comprising the Borrowers therefor.
30
11.19 Administrative Borrower. Each Borrower irrevocably appoints Parent as the borrowing
agent and attorney-in-fact (“Administrative Borrower”) for all Persons comprising the Borrowers
which appointment shall remain in full force and effect unless and until the Lender shall have
received prior written notice signed by each of the other Borrowers that such appointment has been
revoked and that another Borrower has been appointed as the Administrative Borrower.
SECTION 12. COLLATERAL AGENT
12.1 Appointment of Agent. Each of XX XX and HTGC hereby appoint XX XX as Collateral
Agent hereunder and under the other Loan Documents, to act in such representative capacity as
secured party on behalf and for the benefit of each such Lender under this Agreement and the other
Loan Documents. Collateral Agent hereby agrees to act in its capacity as such upon the express
conditions contained herein and the other Loan Documents, as applicable. The provisions of this
Section 12 are solely for the benefit of Collateral Agent and each Lender, and the
Borrowers shall not have any rights as a third party beneficiary of any of the provisions thereof.
12.2 Powers and Duties. Each Lender irrevocably authorizes Collateral Agent to take such
action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under
the other Loan Documents as are specifically delegated or granted to Collateral Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are reasonably incidental
thereto. Collateral Agent may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. Collateral Agent may accept payments of principal, interest,
fees and expenses due under the Loan Documents from and deposits from any Borrower on the account
of or for the benefit of any Lender.
(SIGNATURES TO FOLLOW)
31
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Loan and Security
Agreement as of the day and year first above written.
| BORROWER: ANTHERA PHARMACEUTICALS, INC. |
||||
| By: | /s/ Xxxxxxxxxxx X. Xxxx | |||
| Name: | Xxxxxxxxxxx X. Xxxx | |||
| Title: | Chief Business Officer and Chief Financial Officer |
|||
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
Accepted in Palo Alto, California:
| LENDER AND COLLATERAL AGENT: HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership |
||||
| By: | Hercules Technology SBIC | |||
| Management, LLC, its General Partner | ||||
| By: | Hercules Technology Growth | |||
| Capital, Inc., its Manager | ||||
| By: | /s/ X. Xxxxxxxx Martitsch | |||
| Name: | X. Xxxxxxxx Martitsch | |||
| Its: | Associate General Counsel | |||
| LENDER: HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation |
||||
| By: | /s/ X. Xxxxxxxx Martitsch | |||
| Name: | X. Xxxxxxxx Martitsch | |||
| Its: | Associate General Counsel | |||
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
Table of Addenda, Exhibits and Schedules
Addendum 1:
|
SBA Provisions | |
Exhibit A:
|
Advance Request | |
| Attachment to Advance Request | ||
Exhibit B:
|
Form of Term Note | |
Exhibit C:
|
Name, Locations, and Other Information for Borrowers | |
Exhibit D:
|
Borrowers’ Patents, Trademarks, Copyrights and Licenses | |
Exhibit E:
|
Borrowers’ Deposit Accounts and Investment Accounts | |
Exhibit F:
|
Compliance Certificate | |
Exhibit G:
|
Joinder Agreement | |
Exhibit H:
|
ACH Debit Authorization Agreement | |
Schedule 1
|
Subsidiaries | |
Schedule 1A
|
Existing Permitted Indebtedness | |
Schedule 1B
|
Existing Permitted Investments | |
Schedule 1C
|
Existing Permitted Liens | |
Schedule 5.3
|
Consents, Etc. | |
Schedule 5.5
|
Actions Before Governmental Authorities | |
Schedule 5.8
|
Tax Matters | |
Schedule 5.9
|
Intellectual Property Claims | |
Schedule 5.10
|
Intellectual Property | |
Schedule 5.11
|
Borrower Products | |
Schedule 5.14
|
Capitalization |
ADDENDUM 1 to LOAN AND SECURITY AGREEMENT
(a) Borrowers’ Business. For purposes of this Addendum 1, each of the Borrowers shall
be deemed to include its “affiliates” as defined in Title 13 Code of Federal Regulations
Section 121.103. The Borrowers represent and warrant to the Lender (as of the Closing Date
and for a period of one year thereafter) and covenants to the Lender as follows:
| 1. | Size Status. The Borrowers, on a consolidated basis, have fewer than 500 employees in the aggregate, at least 50% of whom are located in the United States; | ||
| 2. | No Relender. Each Borrower’s primary business activity does not involve, directly or indirectly, providing funds to others, purchasing debt obligations, factoring, or long-term leasing of equipment with no provision for maintenance or repair; | ||
| 3. | No Passive Business. Each Borrower is engaged in a regular and continuous business operation (excluding the mere receipt of payments such as dividends, rents, lease payments, or royalties). Each Borrower’s employees are carrying on the majority of day to day operations. No Borrower will pass through substantially all of the proceeds of the Loan to another entity; | ||
| 4. | No Real Estate Business. No Borrower is classified under Major Group 65 (Real Estate) or Industry No. 1531 (Operative Builders) of the SIC Manual. The proceeds of the Loan will not be used to acquire or refinance real property unless the Borrowers (x) are acquiring an existing property and will use at least 51 percent of the usable square footage for its business purposes; (y) are building or renovating a building and will use at least 67 percent of the usable square footage for its business purposes; or (z) occupy the subject property and use at least 67 percent of the usable square footage for its business purposes. | ||
| 5. | No Project Finance. No Borrower’s assets are intended to be reduced or consumed, generally without replacement, as the life of its business progresses, and the nature of each Borrower’s business does not require that a stream of cash payments be made to the business’s financing sources, on a basis associated with the continuing sale of assets (e.g., real estate development projects and oil and gas xxxxx). The primary purpose of the Loan is not to fund production of a single item or defined limited number of items, generally over a defined production period, where such production |
| will constitute the majority of the activities of any Borrower (e.g., motion pictures and electric generating plants). | |||
| 6. | No Farm Land Purchases. No Borrower will use the proceeds of the Loan to acquire farm land which is or is intended to be used for agricultural or forestry purposes, such as the production of food, fiber, or wood, or is so taxed or zoned. | ||
| 7. | No Foreign Investment. The proceeds of the Loan will not be used substantially for a foreign operation. At the time of the Loan, no Borrower will have more than 49 percent of its employees or tangible assets located outside the United States. The representation in this subsection (7) is made only as of the date hereof and shall not continue for one year as contemplated in the first sentence of this Section 1. |
(b) Small Business Administration Documentation. The Lender acknowledges that the
Borrowers completed, executed and delivered to the Lender SBA Forms 480, 652 and 1031 (Parts
A and B) together with a business plan showing the Borrowers’ financial projections
(including balance sheets and income and cash flows statements) for the period described
therein and a written statement (whether included in the purchase agreement or pursuant to a
separate statement) from the Lender regarding its intended use of proceeds from the sale of
securities to the Lender (the “Use of Proceeds Statement”). The Borrowers represent and
warrant to the Lender that the information regarding each Borrower and its affiliates set
forth in the SBA Form 480, Form 652 and Form 1031 and the Use of Proceeds Statement
delivered as of the Closing Date is accurate and complete.
(c) Inspection. The following covenants contained in this Section (c) are
intended to supplement and not to restrict the related provisions of the Loan Documents.
Subject to the preceding sentence, the Borrowers will permit, for so long as the Lender
holds any debt or equity securities of any Borrower, the Lender or its representative, and
examiners of the SBA to visit and inspect the properties and assets of each Borrower, to
examine its books of account and records, and to discuss each Borrower’s affairs, finances
and accounts with each Borrower’s officers, senior management and accountants, all at such
reasonable times as may be requested by the Lender or the SBA.
(d) Annual Assessment. Promptly after the end of each calendar year (but in any event
prior to February 28 of each year) and at such other times as may be reasonably requested by
the Lender, the Borrowers will deliver to the Lender a written assessment of the economic
impact of the Lender’ investment in the Borrowers, specifying the full-time equivalent jobs
created or retained in connection with the investment, the impact of the investment on the
businesses of the Borrowers in terms of expanded revenue and taxes, other economic benefits
resulting from the investment (such as technology development or commercialization, minority
business development, or expansion of exports) and such other information as may be required
regarding the Borrowers in connection with the filing of the Lender’s SBA Form 468. The
Lender will assist the Borrowers with preparing such assessment. In addition to any other
rights granted hereunder, the
Borrowers will grant the Lender and the SBA access to the Borrowers’ books and records
for the purpose of verifying the use of such proceeds. Each Borrower also will furnish or
cause to be furnished to the Lender such other information regarding the business, affairs
and condition of such Borrower as the Lender may from time to time reasonably request.
(e) Use of Proceeds. The Borrowers will use the proceeds from the Loan only for
general working capital purposes. The Borrowers will deliver to the Lender from time to
time promptly following the Lender’s request, a written report, certified as correct by the
Administrative Borrower’s Chief Financial Officer, verifying the purposes and amounts for
which proceeds from the Loan have been disbursed. The Borrowers will supply to the Lender
such additional information and documents as the Lender reasonably requests with respect to
its use of proceeds and will permit the Lender and the SBA to have access to any and all of
each Borrower’s records and information and personnel as the Lender deems necessary to
verify how such proceeds have been or are being used, and to assure that the proceeds have
been used for the purposes specified in Section 7.15 of the Agreement.
(f) Activities and Proceeds. Neither the Borrowers nor any of their affiliates (if
any) will engage in any activities or use directly or indirectly the proceeds from the Loan
for any purpose for which a small business investment company is prohibited from providing
funds by the SBIC Act, including 13 C.F.R. §107.720. Without obtaining the prior written
approval of the Lender, no Borrower will change within 1 year of the date hereof, such
Borrower’s current business activity to a business activity which a licensee under the SBIC
Act is prohibited from providing funds by the SBIC Act.
(g) Redemption Provisions. Notwithstanding any provision to the contrary contained in
the Certificate of Incorporation of the Parent, as amended from time to time (the
“Charter”), if, pursuant to the redemption provisions contained in the Charter, if any, the
Lender is entitled to a redemption of its Warrant, such redemption (in the case of the
Lender) will be at a price equal to the redemption price set forth in the Charter (the
“Existing Redemption Price”). If, however, the Lender delivers written notice to the Parent
that the then current regulations promulgated under the SBIC Act prohibit payment of the
Existing Redemption Price in the case of an SBIC (or, if applied, the Existing Redemption
Price would cause the Common Stock to lose its classification as an “equity security” and
the Lender has determined that such classification is unadvisable), the amount the Lender
will be entitled to receive shall be the greater of (i) fair market value of the securities
being redeemed taking into account the rights and preferences of such securities plus any
costs and expenses of the Lender incurred in making or maintaining the Warrants, and (ii)
the Existing Redemption Price where the amount of accrued but unpaid dividends payable to
the Lender is limited to the Borrower’s earnings plus any costs and expenses of the Lender
incurred in making or maintaining the Warrants; provided, however, the amount calculated in
subsections (i) or (ii) above shall not exceed the Existing Redemption Price.
(h) Cost of Money. Notwithstanding any provision to the contrary contained in the Loan
Documents, all interest and fees charged pursuant to the Loan Documents shall comply with
the provisions of 13 C.F.R. § 107.855, including, without limitation,
that such amounts shall not exceed the Cost of Money ceiling (as defined hereafter).
The current Cost of Money ceiling for this Loan is fourteen percent.
(i) Compliance and Resolution. Each Borrower agrees that a failure to comply with such
Borrower’s obligations under this Addendum, or any other set of facts or circumstances where
it has been asserted by any governmental regulatory agency (or the Lender believes that
there is a substantial risk of such assertion) that the Lender and its affiliates are not
entitled to hold, or exercise any significant right with respect to, any securities issued
to the Lender by any Borrower, will constitute a breach of the obligations of such Borrower
under the financing agreements between the Borrowers and the Lender. In the event of (i) a
failure to comply with any Borrower’s obligations under this Addendum; or (ii) an assertion
by any governmental regulatory agency (or the Lender believes that there is a substantial
risk of such assertion) of a failure to comply with any Borrower’s obligations under this
Addendum, then (i) the Lender and the Borrowers will meet and resolve any such issue in good
faith to the satisfaction of the Borrowers, the Lender, and any governmental regulatory
agency, and (ii) upon request of the Lender, each Borrower will cooperate and assist with
any assignment of the financing agreements from Hercules Technology II, L.P. to Hercules
Technology Growth Capital, Inc.
EXHIBIT A
ADVANCE REQUEST
| To: Lender: | Date: [__________], 2011 |
Hercules Technology II, L.P.
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attn: [_______________]
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attn: [_______________]
Anthera Pharmaceuticals, Inc. (the “Administrative Borrower”) hereby requests from Hercules
Technology II, L.P. and Hercules Technology Growth Capital, Inc. (collectively, the “Lender”) an
Advance in the amount of Twenty-Five Million Dollars ($25,000,000) on [______________], 2011 (the
“Advance Date”) pursuant to the Loan and Security Agreement between the Administrative Borrower,
the other borrowers from time to time party thereto, the Lender, and Hercules Technology II, L.P.
in its capacity as the collateral agent (the “Agreement”). Capitalized words and other terms used
but not otherwise defined herein are used with the same meanings as defined in the Agreement.
Please:
| (a | ) | Issue a check payable to the Administrative Borrower |
|||||||||||
or
|
|||||||||||||
| (b | ) | Wire Funds to the Administrative Borrower’s account |
|||||||||||
| Bank: | ||||||
| Address: | ||||||
| ABA Number: | ||||||
| Account Number: | ||||||
| Account Name: | ||||||
The Administrative Borrower represents that the conditions precedent to the Advance requested
hereby which are set forth in the Agreement are satisfied and shall be satisfied upon the making of
such Advance, including but not limited to: (i) that since December 31, 2009, no event that has
had or could reasonably be expected to have a Material Adverse Effect has occurred and is
continuing; (ii) that the representations and warranties set forth in the Agreement and in the
Warrant are and shall be true and correct in all material respects on and as of the Advance Date
with the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date; (iii) that each Borrower is in
compliance in all material respects with all the terms and provisions set forth in each Loan
Document on its part to be observed or performed; and (iv) that as of the Advance Date, no fact or
condition exists that would (or would, with the passage of time, the giving of notice, or both)
constitute an Event of Default under the Loan Documents. The Administrative Borrower
understands and acknowledges that the Lender has the right to review the financial information
supporting this representation and, based upon such review in its sole discretion, the Lender may
decline to fund the requested Advance.
The Administrative Borrower hereby represents that the Borrowers’ corporate status and
locations have not changed since the date of the Agreement or, if the Attachment to this Advance
Request is completed, are as set forth in the Attachment to this Advance Request.
The Administrative Borrower agrees to notify the Lender promptly before the funding of the
Loan if any of the matters which have been represented above shall not be true and correct in all
material respects on the Advance Date (unless such representations are already qualified by
materiality, in which case the Administrative Borrower agrees to notify Lender if such
representations are not true and correct in all respects), and if the Lender has received no such
notice before the Advance Date, then the statements set forth above shall be deemed to have been
made and shall be deemed to be true and correct as of the Advance Date.
Executed as of [__________], 2011.
| ADMINISTRATIVE BORROWER: ANTHERA PHARMACEUTICALS, INC. |
||||
| By: | ||||
| Name: | Xxxxxxxxxxx X. Xxxx | |||
| Title: | Chief Business Officer and Chief Financial Officer |
|||
ATTACHMENT TO ADVANCE REQUEST
Dated: [___________], 2011
The Administrative Borrower hereby represents and warrants to the Lender that each Borrower’s
current name and organizational status is as follows:
| Names: | [ | ] | ||||||
| Type of organizations: | Corporation | |||||||
| States of organization: | [ | ] | ||||||
| Organization file numbers: |
The Administrative Borrower hereby represents and warrants to the Lender that xxx xxxxxx xxxxxxxxx,
xxxxxx, xxxxxx and postal codes of each Borrower’s current locations are as follows:
EXHIBIT B
SECURED TERM PROMISSORY NOTE
| [$11,250,000] | Advance Date: [ ], 2011 | |
| [$13,750,000] |
Maturity Date: as provided in the
Loan Agreement (as defined below)
Loan Agreement (as defined below)
FOR VALUE RECEIVED, ANTHERA PHARMACEUTICALS, INC., a Delaware corporation (“Parent”), for
itself and each of its subsidiaries joined to the below-defined Loan Agreement (the “Joined
Subsidiaries”; the Joined Subsidiaries together with Parent are hereinafter collectively referred
to as the “Borrowers” and each individually as a “Borrower”), hereby promise to pay to the order of
[Hercules Technology II, L.P., a Delaware limited partnership] [Hercules Technology Growth Capital,
Inc., a Maryland corporation], or to the holder (the “Lender”) of this Secured Term Promissory Note
(this “Promissory Note”), at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx, XX 00000, or such other
place of payment as the holder may specify from time to time in writing, in lawful money of the
United States of America, the principal amount of Twenty-Five Million Dollars ($25,000,000), or
such other principal amount as the Lender has advanced to the Borrowers, together with interest
equal to the Term Loan Interest Rate set forth in the below-defined Loan Agreement, based upon a
year consisting of 360 days, with interest computed daily based on the actual number of days in
each month.
This Promissory Note is one of the Notes referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement dated as of March 25, 2011, by and
between the Borrowers, the Lender, and Hercules Technology II, L.P. in its capacity as the
Collateral Agent (as the same may from time to time be amended, restated, supplemented, or
otherwise modified from time to time in accordance with its terms, the “Loan Agreement”), and is
entitled to the benefit and security of the Loan Agreement and the other Loan Documents (as defined
in the Loan Agreement), to which reference is made for a statement of all of the terms and
conditions thereof. All payments shall be made in accordance with the Loan Agreement. All terms
defined in the Loan Agreement shall have the same definitions when used herein, unless otherwise
defined herein. An Event of Default under the Loan Agreement shall constitute a default under this
Promissory Note.
Each Borrower waives presentment and demand for payment, notice of dishonor, protest and
notice of protest under the UCC or any applicable law. The Borrowers agree to make all payments
under this Promissory Note without setoff, recoupment or deduction and regardless of any
counterclaim or defense. This Promissory Note has been negotiated and delivered to the Lender and
is payable in the State of California. This Promissory Note shall be governed by and construed and
enforced in accordance with, the laws of the State of California, excluding any conflicts of law
rules or principles that would cause the application of the laws of any other jurisdiction.
| BORROWER FOR ITSELF AND ON BEHALF OF ITS SUBSIDIARIES: |
ANTHERA PHARMACEUTICALS, INC. |
|||
| By: | ||||
| Name: | Xxxxxxxxxxx X. Xxxx | |||
| Title: | Chief Business Officer and Chief Financial Officer |
|||
EXHIBIT C
NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWERS
1. Each Borrower represents and warrants to the Lender that such Borrower’s current name and
organizational status as of the Closing Date is as follows:
Names:
|
[ ] | |
Type of organizations:
|
Corporation | |
States of organization:
|
[ ] | |
Organization file numbers:
|
[ ] |
2.
Each Borrower represents and warrants to the Lender that for five (5) years prior to the
Closing Date, such Borrower did not do business under any other name or organization or form except
the following:
Name:
Used during dates of:
Type of Organization:
State of organization:
Organization file Number:
Borrower’s fiscal year ends on _____
Borrower’s federal employer tax identification number is: _______________
Used during dates of:
Type of Organization:
State of organization:
Organization file Number:
Borrower’s fiscal year ends on _____
Borrower’s federal employer tax identification number is: _______________
3. Each Borrower represents and warrants to the Lender that its chief executive office is
located at ______________.
EXHIBIT D
BORROWERS’ PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
EXHIBIT E
BORROWERS’ DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
EXHIBIT F
[FORM OF] COMPLIANCE CERTIFICATE
Hercules Technology II, L.P.
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Reference is made to that certain Loan and Security Agreement dated March 25, 2011 and all
ancillary documents entered into in connection with such Loan and Security Agreement all as may be
amended from time to time (hereinafter referred to collectively as the “Loan Agreement”) by and
among Hercules Technology II, L.P., as a Lender (“XX XX”) and the Collateral Agent, and Hercules
Technology Growth Capital, Inc., as a Lender (“HTGC”, and together with XX XX, “Hercules”), Anthera
Pharmaceuticals, Inc., as the Administrative Borrower (the “Company”), and the other borrowers from
time to time party thereto. All capitalized terms not defined herein shall have the same meaning
as defined in the Loan Agreement.
The undersigned is the [Chief Executive Officer / Chief Financial Officer] of the Company,
knowledgeable of all Company financial matters, and is authorized to provide certification of
information regarding the Company; hereby certifies that in accordance with the terms and
conditions of the Loan Agreement, the Company is in compliance in all material respects for the
period ending ___________ of all covenants, conditions and terms (unless such covenants, conditions
and terms are qualified by materiality, in which case the Company is in compliance in all respects
with such covenants, conditions and terms); and hereby reaffirms that all representations and
warranties contained therein are true and correct in all material respects on and as of the date of
this Compliance Certificate with the same effect as though made on and as of such date, except (i)
to the extent such representations and warranties expressly relate to an earlier date, and (ii)
such representation and warranties are qualified by any standard(s) of materiality contained in the
Loan Agreement, in which case such representations and warranties are true and correct in all
respects. Attached are the required documents supporting the above certification. The undersigned
further certifies that these are prepared in accordance with GAAP (except for the absence of
footnotes with respect to unaudited financial statement and subject to normal year end adjustments)
and are consistent from one period to the next except as explained below.
REPORTING REQUIREMENT
|
REQUIRED | CHECK IF ATTACHED | ||
Interim Financial Statements
|
Monthly within 30 days | |||
Interim Financial Statements
|
Quarterly within 45 days | |||
Audited Financial Statements
|
FYE within 90 days |
| Very Truly Yours, ANTHERA PHARMACEUTICALS, INC., as Administrative Borrower |
||||
| By: | ||||
| Name: | Xxxxxxxxxxx X. Xxxx | |||
| Its: Chief Business Officer and Chief Financial Officer |
||||
EXHIBIT G
[FORM OF] JOINDER AGREEMENT
This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [_______, ____], and
is entered into by and between __________________, a ___________ corporation (“Subsidiary”),
HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership, as the collateral agent (in such
capacity, the “Collateral Agent”) and a lender (“XX XX”), and HERCULES TECHNOLOGY GROWTH CAPITAL,
INC., a Maryland corporation, as a lender (“HTGC”; XX XX together with HTGC are hereinafter
collectively referred to as the “Lender”).
RECITALS
A. Subsidiary’s Affiliate, Anthera Pharmaceuticals, Inc. (the “Company”) has entered into that
certain Loan and Security Agreement dated March 25, 2011, with the Lender and the Collateral Agent,
as such agreement may be amended (the “Loan Agreement”), together with the other agreements
executed and delivered in connection therewith; and
B. Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from the
Company’s execution of the Loan Agreement and the other agreements executed and delivered in
connection therewith.
AGREEMENT
NOW THEREFORE, Subsidiary, the Lender and the Collateral Agent hereby agree as follows:
1. The recitals set forth above are incorporated into and made part of this Joinder
Agreement. Capitalized terms not defined herein shall have the meaning provided in the Loan
Agreement.
2. By signing this Joinder Agreement, Subsidiary hereby agrees to be bound as a Borrower by
all of the terms, covenants and conditions set forth in the Loan Agreement to the same extent that
it would have been bound if it had been a signatory to the Loan Agreement as a Borrower thereunder
on the Closing Date, mutatis mutandis, provided however, that the Lender shall have no duties,
responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the
other agreements executed and delivered in connection therewith. Rather, to the extent that the
Lender has any duties, responsibilities or obligations arising under or related to the Loan
Agreement or the other agreements executed and delivered in connection therewith, those duties,
responsibilities or obligations shall flow only to the Company and not to Subsidiary or any other
person or entity. By way of example (and not an exclusive list): (a) the Lender’s providing notice
to the Company in accordance with the Loan Agreement or as otherwise agreed between the Company and
the Lender shall be deemed provided to Subsidiary; (b) the Lender’s providing an Advance to the
Company shall be deemed an Advance to Subsidiary; and (c) Subsidiary shall have no right to request
an Advance or make any other demand on the Lender.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE TO JOINDER AGREEMENT]
| SUBSIDIARY: |
| ____________________________________________. |
| By: | ||||
| Name: | ||||
| Title: | ||||
Address: Telephone: |
______________________ | |||
| Facsimile: | _______________________ | |||
LENDER AND COLLATERAL AGENT:
HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership
| By: | Hercules Technology SBIC Management, LLC, their General Partner |
|||
| By: | Hercules Technology Growth Capital, Inc. its Manager |
|||
| By: | ||||
| Name: | ||||
| Its: | ||||
|
Address: 000 Xxxxxxxx Xxx., Xxxxx 000 Xxxx Xxxx, XX 00000 Facsimile: 000-000-0000 Telephone: 000-000-0000 |
||||
LENDER:
HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation,
as a Lender
| By: | ||||
| Name: | ||||
| Its: | ||||
|
Address: 000 Xxxxxxxx Xxx., Xxxxx 000 Xxxx Xxxx, XX 00000 Facsimile: 000-000-0000 Telephone: 000-000-0000 |
||||
EXHIBIT H
ACH DEBIT AUTHORIZATION AGREEMENT
Hercules Technology II, L.P.
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Hercules Technology Growth Capital, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Re: Loan and Security Agreement dated March 25, 2011 (the “Agreement”), by and among
Anthera Pharmaceuticals, Inc. (the “Administrative Borrower”), the other borrowers from
time to time party thereto, and Hercules Technology II, L.P., as a Lender (“XX XX”) and the
Collateral Agent, and Hercules Technology Growth Capital, Inc., as a Lender (“HTGC”, and
together with XX XX, the “Lender”)
In connection with the above referenced Agreement, the Administrative Borrower hereby authorizes
the Lender to initiate debit entries for the periodic payments due under the Agreement to the
Administrative Borrower’s account indicated below. The Administrative Borrower authorizes the
depository institution named below to debit to such account.
DEPOSITORY NAME
|
BRANCH | |
CITY
|
STATE AND ZIP CODE | |
TRANSIT/ABA NUMBER
|
ACCOUNT NUMBER |
This authority will remain in full force and effect so long as any amounts are due under the
Agreement.
| (Borrower)(Please Print) |
||||
| By: | ||||
| Date: | ||||
