STANDSTILL AGREEMENT
This Standstill Agreement (this “Agreement”) is entered into as of October 1, 2018, by and between CHICAGO VENTURE PARTNERS, L.P., a Utah limited partnership (“Lender”), and JAGUAR HEALTH, INC., a Delaware corporation (“Borrower”). Capitalized terms used in this Agreement without definition shall have the meanings given to them in the Notes (as defined below).
A. Borrower previously issued to Lender a Secured Convertible Promissory Note dated June 29, 2017 and three (3) Secured Promissory Notes dated December 8, 2017, February 26, 2018, and March 21, 2018 (collectively, the “Notes,” and together with all other agreements, instruments and documents entered into in connection with the Notes, the “Transaction Documents”).
B. Borrower has requested that Lender refrain from making redemptions under Section 8 of the Notes (“Redemptions”) as set forth in this Agreement (the “Standstill”).
C. Pursuant to the terms of the Notes, Lender is allowed to make Redemptions in the amount of up to $500,000.00 per month.
D. Lender has agreed, subject to the terms, amendments, conditions and understandings expressed in this Agreement, to grant the Standstill.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Recitals. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Agreement are true and accurate and are hereby incorporated into and made a part of this Agreement.
2. Standstill. Notwithstanding the terms of the Notes, Lender hereby agrees that it will not make any Redemptions for the months of September 2018 and October 2018. Lender further agrees that if Borrower makes a $1,500,000.00 debt reduction payment to Lender by October 31, 2018 (the “Debt Reduction Payment”), then Borrower will also refrain from making any Redemptions in the months of November 2018, December 2018, January 2019 and February 2019. However, if Borrower fails to make the Debt Reduction Payment by October 31, 2018, then Lender shall have the right to make up to $1,000,000.00 in Redemptions at any time thereafter in addition and the standard $500,000.00 per month in Redemptions beginning again on November 1, 2018.
3. Standstill Fee. In consideration of Lender’s grant of the Standstill, its fees incurred in preparing this Agreement and other accommodations set forth herein, Borrower agrees to pay to Lender a fee in the amount of five (5%) of the total outstanding balance of the Notes on November 1, 2018 (the “Standstill Fee”). The Standstill Fee shall be added to the outstanding balance of the oldest Note still outstanding on November 1, 2018.
4. Representations and Warranties. In order to induce Lender to enter into this Agreement, Borrower, for itself, and for its affiliates, successors and assigns, hereby
acknowledges, represents, warrants and agrees as follows:
a. Borrower has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Borrower hereunder.
b. There is no fact known to Borrower or which should be known to Borrower which Borrower has not disclosed to Lender on or prior to the date of this Agreement which would or could materially and adversely affect the understanding of Lender expressed in this Agreement or any representation, warranty, or recital contained in this Agreement.
c. Except as expressly set forth in this Agreement, Borrower acknowledges and agrees that neither the execution and delivery of this Agreement nor any of the terms, provisions, covenants, or agreements contained in this Agreement shall in any manner release, impair, lessen, modify, waive, or otherwise affect the liability and obligations of Borrower under the terms of the Transaction Documents.
d. Borrower has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action of any kind or nature whatsoever against Lender, directly or indirectly, arising out of, based upon, or in any manner connected with, the transactions contemplated hereby, whether known or unknown, which occurred, existed, was taken, permitted, or begun prior to the execution of this Agreement and occurred, existed, was taken, permitted or begun in accordance with, pursuant to, or by virtue of any of the terms or conditions of the Transaction Documents. To the extent any such defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action exist or existed, such defenses, rights, claims, counterclaims, actions and causes of action are hereby waived, discharged and released. Borrower hereby acknowledges and agrees that the execution of this Agreement by Lender shall not constitute an acknowledgment of or admission by Lender of the existence of any claims or of liability for any matter or precedent upon which any claim or liability may be asserted.
e. Borrower represents and warrants that as of the date hereof no Events of Default or other material breaches exist under the Transaction Documents or have occurred prior to the date hereof.
5. Certain Acknowledgments. Each of the parties acknowledges and agrees that no property or cash consideration of any kind whatsoever has been or shall be given by Lender to Borrower in connection with the Standstill or any other amendment to the Notes granted herein.
6. Ratification of the Notes. The Notes shall be and remain in full force and effect in accordance with their terms, and are hereby ratified and confirmed in all respects. Borrower acknowledges that it is unconditionally obligated to pay the remaining balance of the Notes and represents that such obligation is not subject to any defenses, rights of offset or counterclaims. No forbearance or waiver other than as expressly set forth herein may be implied by this Agreement. Except as expressly set forth herein, the execution, delivery, and performance of this Agreement shall not operate as a waiver of, or as an amendment to, any right, power or remedy
of Lender under the Notes or the other Transaction Documents, as in effect prior to the date hereof.
7. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.
8. Arbitration. Each party agrees that any dispute arising out of or relating to this Agreement shall be subject to the same arbitration provisions as the Notes.
9. Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah without regard to the principles of conflict of laws. Each party agrees that the proper venue for any dispute arising out of or relating to this Agreement shall the as the proper venue for the Notes. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
10. Attorneys’ Fees. In the event of any arbitration or action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the arbitration, litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award fees and expenses for frivolous or bad faith pleading.
11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart of this Agreement (or such party’s signature page thereof) will be deemed to be an executed original thereof.
12. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.
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BORROWER: | ||
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By: |
/s/ Xxxx X. Xxxxx | |
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Name: |
Xxxx X. Xxxxx | |
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Title: |
President & CEO | |
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LENDER: | ||
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CHICAGO VENTURE PARTNERS, L.P. | ||
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By: Chicago Venture Management, L.L.C., its General Partner | ||
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By: CVM, Inc., its Manager | ||
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By: |
/s/ Xxxx X. Xxxx | |
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Xxxx X. Xxxx, President | |
[Signature page to Standstill Agreement]
