EXHIBIT 10.1
FORBEARANCE
AGREEMENT
This
Forbearance Agreement (this “Forbearance Agreement”) is entered into as of April 21, 2017, by and between (a)
SILICON VALLEY BANK, a California corporation (“Bank”), and (b) (i) XTANT MEDICAL HOLDINGS, INC.,
a Delaware corporation (“Holdings”), (ii) BACTERIN INTERNATIONAL, INC., a Nevada corporation (“Bacterin”),
(iii) X-SPINE SYSTEMS, INC., an Ohio corporation (“X-spine”), and (iv) XTANT MEDICAL, INC., a
Delaware corporation (“Xtant”, and together with Holdings, Bacterin and X-spine, individually and collectively,
jointly and severally, the “Borrower”).
1. DESCRIPTION
OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank,
Borrower is indebted to Bank pursuant to a loan arrangement dated as of May 25, 2016, evidenced by, among other documents, a certain
Loan and Security Agreement, dated as of May 25, 2016, between Borrower and Bank, as amended by a certain First Loan Modification
Agreement, dated as of August 12, 2016 (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreement.
2. DESCRIPTION
OF COLLATERAL. Repayment of the Obligations is secured by (a) the Collateral as described in the Loan Agreement, and (b) the
“Intellectual Property Collateral”, as such term is defined in that certain Intellectual Property Security Agreement,
executed and delivered by Borrower to Bank, dated as of May 25, 2016 (the “IP Agreement”). Hereinafter, the
Loan Agreement and the IP Agreement, together with all other documents executed in connection therewith evidencing, securing or
otherwise relating to the Obligations, shall be referred to as the “Existing Loan Documents”.
3. ACKNOWLEDGMENT
OF DEFAULTS. Borrower acknowledges that (i) an Event of Default under Section 8.2(a) of the Loan Agreement has occurred by
virtue of Borrower failing to deliver an “unqualified” opinion from an independent certified public accounting firm,
on the annual financial statements of Borrower for the fiscal year ended December 31, 2016 (such opinion includes a “going
concern” qualification), and (ii) an Event of Default or Events of Default under Section 8.3, 8.6 and/or Section 8.9 of
the Loan Agreement have occurred by virtue of Borrower’s events of default under the OrbiMed Loan Documents, that certain
Indenture, dated as of July 31, 2015, by and between Holdings and Wilmington Trust, National Association, as trustee, and certain
Convertible Promissory Notes issued by Holdings to ROS Acquisition Offshore LP on April 14, 2016 (in the aggregate principal amount
of $1,428,552.78) and January 17, 2017 (in the aggregate principal amounts of $995,700 and $42,856.59), and to OrbiMed Royalty
Opportunities II, LP on April 14, 2016 (in the aggregate principal amount of $809,613.67) and January 17, 2017 (in the aggregate
principal amounts of $564,300 and $24,288.41), as a result of such “going concern” qualification (the foregoing Events
of Default described in clause (i) and clause (ii) are collectively referred to as the “Stated Defaults”).
4. FORBEARANCE
BY BANK.
| A. | In
consideration of, among other things, Borrower’s compliance with each and every
term of this Forbearance Agreement, Bank hereby agrees to forbear from exercising its
rights and remedies as a result of the Stated Defaults until the earlier of (i) a Default
or an Event of Default occurs under the Loan Agreement (with the sole exception of the
Stated Defaults), (ii) the failure of Borrower to promptly, punctually, or faithfully
perform or comply with any term or condition of this Forbearance Agreement as and when
required, it being expressly acknowledged and agreed that TIME IS OF THE ESSENCE, or
(iii) 3:00 p.m. Pacific time on April 30, 2017 (the period commencing as of the date
of the effectiveness of this Forbearance Agreement and ending on the earlier of (i),
(ii) or (iii) above shall be referred to as the “Forbearance Period”). |
| B. | Borrower
hereby acknowledges and agrees that nothing contained in this section or in any other
section of this Forbearance Agreement shall be deemed or otherwise construed as a waiver
by Bank of the Stated Defaults or any other Default or Event of Default (whether now
existing or hereafter arising) or of any of its rights and remedies pursuant to the Existing
Loan Documents, applicable law or otherwise. This Forbearance Agreement shall only constitute
an agreement by Bank to forbear from enforcing its rights and remedies based upon the
Stated Defaults, upon the terms and conditions set forth herein. Upon the expiration
of the Forbearance Period, the agreement of Bank to forbear as set forth in this Forbearance
Agreement shall automatically terminate and Bank may immediately commence enforcing its
rights and remedies pursuant to the Existing Loan Documents, applicable law or otherwise,
in such order and manner as Bank may determine appropriate. |
5. TERMS
OF FORBEARANCE.
| A. | From
and after the execution of this Forbearance Agreement, Borrower agrees that Bank shall
have no further obligation to make any Advances to Borrower, or to issue any other Credit
Extensions for Borrower’s account, or to provide any other extensions of credit
of any kind (if an obligation exists in a particular instance) to Borrower. Notwithstanding
the foregoing, during the Forbearance Period and at the request of Borrower, Bank may,
in its sole and absolute discretion, continue to make Advances (hereinafter, such financial
accommodations shall be referred to collectively as “Discretionary Financial
Accommodations” and singly as a “Discretionary Financial Accommodation”),
subject, in all events, to the terms and conditions of this Forbearance Agreement, the
Loan Agreement, (including but not limited to, all limitations imposed by the Availability
Amount) and the other Loan Documents, as affected hereby. Borrower covenants and agrees
that if, in the sole and absolute discretion of Bank, Bank shall make any Discretionary
Financial Accommodation during the Forbearance Period, such act shall not constitute
(i) a waiver of the Stated Defaults, or of any other Default or Event of Default which
may now exist or which may occur after the date of this Forbearance Agreement under any
of the Loan Documents, or (ii) an agreement on the part of Bank to make any further extensions
of credit of any kind to Borrower at a later date. |
| B. | At
all times during the Forbearance Period, Borrower shall comply with all terms and conditions
of the Loan Agreement and the other Loan Documents including, without limitation, all
representations, warranties, affirmative and negative covenants contained in the Loan
Agreement and the other Loan Documents. |
6. FEES.
Borrower shall reimburse Bank for all legal fees and expenses incurred in connection with the Existing Loan Documents and this
Forbearance Agreement.
7. RATIFICATION
OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of the Loan Documents and all
security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation,
the Obligations.
8. CONSISTENT
CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
9. RATIFICATION
OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of the Loan Documents and all
security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation,
the Obligations.
10. NO
DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims
against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses,
claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.
11. CONTINUING
VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant
to this Forbearance Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s
agreement to forbear from enforcing it rights and remedies pursuant to this Forbearance Agreement in no way shall obligate Bank
to make any future forbearances or make any other modifications to the Obligations. Nothing in this Forbearance Agreement shall
constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers
of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of
this Forbearance Agreement.
12. JURISDICTION/VENUE/TRIAL
WAIVER. Section 11 of the Loan Agreement is hereby incorporated by reference in its entirety.
13. COUNTERSIGNATURE.
This Forbearance Agreement shall become effective only when it shall have been executed by Borrower and Bank.
[Signature
page follows.]
This
Forbearance Agreement is executed as of the date first written above.
BANK: |
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SILICON VALLEY BANK |
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By |
/s/ Xxx Xxxxxxx |
Name: |
Xxx Xxxxxxx |
Title: |
VP |
BORROWER:
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XTANT MEDICAL HOLDINGS, INC. |
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BACTERIN INTERNATIONAL, INC. |
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By |
/s/ Xxxx X. Xxxxxxxx |
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By |
/s/ Xxxx X. Xxxxxxxx |
Name: |
Xxxx X. Xxxxxxxx |
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Name: |
Xxxx X. Xxxxxxxx |
Title: |
CFO |
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Title: |
CFO |
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X-SPINE SYSTEMS, INC. |
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XTANT MEDICAL, INC. |
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By |
/s/ Xxxx X. Xxxxxxxx |
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By |
/s/ Xxxx X. Xxxxxxxx |
Name: |
Xxxx X. Xxxxxxxx |
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Name: |
Xxxx X. Xxxxxxxx |
Title: |
CFO |
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Title: |
CFO |