SECURED TERM LOAN AGREEMENT
This Secured Term Loan Agreement is made this 7th day of August, 1996, by and
between Merck & Co., Inc., a New Jersey corporation, having an address at
Xxxxxxxxxx Xxxx, Xxxx Xxxxx, XX 00000-0000 ("Merck") and Xxxxxx Technologies,
Inc., a New York corporation, having an address at 00-00 00xx Xxxxxx, Xxxx
Xxxxxx Xxxx, XX 00000 ("Xxxxxx").
Xxxxxx is currently engaged in the manufacturing and marketing of computed
digital radiography dental devices which employ Charged Couple Device technology
and is developing a similar dental device which employs Active Pixel technology.
In connection with such business, Xxxxxx has developed an application of these
technologies which may be useful in developing a device for measuring bone
density.
Xxxxxx is interested in developing such device for measuring bone density, but
requires financial assistance in order to do so. Merck is interested in
facilitating the development of such device, and has agreed to provide such
financial assistance to Xxxxxx on a secured term loan basis, subject to the
terms and conditions contained in this Agreement.
NOW THEREFORE, it is agreed as follows:
1. Definitions. The following capitalized terms shall have the indicated
meanings when used in this Agreement:
(a) "Affiliate" shall mean (i) any corporation, partnership or other
business entity fifty (50%) percent or more of the voting stock or
interests of which is owned directly or indirectly by a party; or (ii)
any corporation, partnership or other business entity which directly
or indirectly owns fifty (50%) percent or more of the voting stock or
interests of a party; or (iii) any corporation, partnership or other
business entity fifty (50%) percent or more of the voting stock or
interests of which is owned directly or indirectly by a corporation,
partnership or other business entity described in Section 1 (a)(i) or
(ii)
(b) "Agreement" shall mean this Secured Term Loan Agreement between Merck
and Xxxxxx and all Exhibits and Schedules hereto.
(c) "Amended and Restated Security Agreement" shall mean the Amended and
Restated Security Agreement attached as Exhibit A.
(d) "Ancillary Agreements" shall mean the Amended and Restated Security
Agreement, the Secured Term Notes and any other certificates or
agreements executed and delivered pursuant to this Agreement.
(e) "Calendar Quarter" shall mean the three calendar month periods
constituting fiscal quarters under the accounting year used by Xxxxxx
in preparing its financial statements. Currently, such three month
periods begin on April 1, July 1, October 1 and January 1.
(f) "Device" shall mean any device for measuring human bone density which
is developed by Xxxxxx and which employs the Technology.
(g) "Default Rate" shall mean the lower of (ii) twenty four (24%) percent
per annum or (ii) the maximum non-usurious interest rate permitted
under applicable law.
(h) "Event of Default" is defined in Section 8.
(i) "FDA" shall mean the U.S. Food and Drug Administration.
(j) "First Secured Term Loan" is defined in Section 2(a).
(k) "First Secured Term Note" shall mean the secured term note in the form
attached hereto as Exhibit B to be executed and delivered by Xxxxxx at
the Initial Closing to evidence the First Secured Term Loan.
(l) "Initial Closing" shall mean the date, time and place for the
execution and delivery of this Agreement and the making of the First
Secured Term Loan in accordance with Section 5(a).
(m) "Interest Rate" shall mean two (2) percentage points above the Prime
Rate as specified in the "Money Rate" section of the Wall Street
Journal ("Prime Rate") on the date of issue of the applicable Secured
Term Note, which interest rate shall fluctuate with the change, if
any, in the Prime Rate as listed in the Wall Street Journal on each
anniversary date of the issuance of such Secured Term Note, effective
as of each such anniversary date. If no publication of the Prime Rate
is made on any such anniversary date, then the foregoing annual
adjustment shall be made by reference to the next following date on
which such publication of the Prime Rate is made, but shall
nonetheless be effective as of such anniversary date.
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(n) "January Note" shall mean the $250,000 Promissory Note made
by Xxxxxx to Merck dated January 31, 1996.
(o) "March Note" shall mean the $250,000 Promissory Note made
by Xxxxxx to Merck dated March 13, 1996.
(p) "Maturity Date" shall mean, for each Secured Term Loan, the
thirty (3O) month anniversary of the date of issuance of the related
Secured Term Note.
(q) "1933 Act" shall mean the Securities Act of 1933, as amended.
(r) "Obligations" shall mean all principal, interest and other amounts
owing from Xxxxxx to Merck under this Agreement and the Ancillary
Agreements.
(s) "Proprietary Rights" is defined in Section 4(h).
(t) "Qualifying Instrument" shall mean (i) any Qualifying Security, (ii)
any options, warrants or other rights convertible into or exchangeable
for any Qualifying Security, (iii) any instruments or other securities
issued by Xxxxxx, excluding debt instruments issued in connection with
Commercial Loans, or (iv) any options, warrants or other rights to
acquire instruments or other securities issued by Xxxxxx, excluding
debt instruments issued in connection with Commercial Loans. For the
purposes of the foregoing, Commercial Loans shall mean any loan or
similar financial accommodation for borrowed money made by a federally
or state chartered bank, savings and loan, trust company or similar
commercial financial institution.
(u) "Qualifying Securities" shall mean shares of any class or series of
the common or preferred stock of Xxxxxx.
(v) "Register" shall mean to effect a registration by preparing and filing
a registration statement or similar document in compliance with the
1933 Act, and the declaration or ordering of the effectiveness of such
registration statement or document.
(w) "Related Assets" shall mean (i) all Proprietary Rights associated with
the Technology (as it relates to bone densitometry) and the Device,
(ii) all raw materials, work-in-process, finished inventory,
equipment, materials and other items purchased or produced with the
proceeds of the January Note, the March Note or the Secured Term
Loans, (iii) all books, records and other written or recorded
materials relating to the Technology (as it relates to bone
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densitometry) and the Device, and (iv) all other rights or
assets in the control or possession of Xxxxxx which are primarily
related to the development of the Technology (as it relates to bone
densitometry) and the manufacturing and marketing of the Device, in
each case whether now existing or hereafter acquired or developed.
(x) "SEC" shall mean the U. S. Securities and Exchange Commission.
(y) "Second Secured Term Loan" is defined in Section 2(b).
(z) "Second Secured Term Note" shall mean the secured term note in the
form attached as Exhibit B to be executed and delivered by Xxxxxx at
the Subsequent Closing to evidence the Second Secured Term Loan.
(aa) "Secured Term Loans" shall mean the First Secured Term Loan and the
Second Secured Term Loan; "Secured Term Loan" shall refer to either
the First Secured Term Loan or the Second Secured Term Loan.
(bb) "Secured Term Notes" shall mean the First Secured Term Note and the
Second Secured Term Note; "Secured Term Note" shall refer to either
the First Secured Term Note or the Second Secured Term Note.
(cc) "Subsequent Closing" shall mean the date, time and place for the
making of the Second Secured Term Loan in accordance with Section
5(a).
(dd) "Technology" shall mean all technology associated with the computed
digital radiograph device developed by Xxxxxx for use in bone
densitometry, including both (i) the Charged Couple Device technology
licensed to and developed by Xxxxxx, and (ii) the Active Pixel
technology licensed to and developed by Xxxxxx, in all cases as now
existing or hereafter acquired or developed.
2. Secured Term Loans. Subject to all of the terms and conditions
contained in this Agreement, Merck hereby agrees to make the Secured Term Loans
to Xxxxxx in the aggregate principal amount of Two Million Twelve Thousand Eight
Hundred Thirty-Three and 33/100 Dollars ($2,012,833.33) as follows:
(a) First Secured Term Loan. A secured term loan (the "First Secured Term
Loan") shall be funded by Merck at the Initial Closing as follows:
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(i) Merck shall advance to Xxxxxx the sum of One Million
($1,000,000) Dollars by wire transfer of immediately available
funds into the account specified in Exhibit C;
(ii) Merck shall consolidate the Two Hundred Fifty-Seven Thousand
Two Hundred Eighteen and 75/100 Dollars ($257,218.75) of
principal and interest obligations owing under the January Note
as of the Initial Closing into the principal amount of the
First Secured Term Loan; and
(iii) Merck shall consolidate the Two Hundred Fifty-Five Thousand Six
Hundred Fourteen and 58/100 Dollars ($255,614.58) of principal
and interest obligations owing under the March Note as of the
Initial Closing into the principal amount of the First Secured
Term Loan.
(b) Second Secured Term Loan. A secured term loan (the "Second Secured
Term Loan") shall be funded at the Subsequent Closing by Merck
advancing to Xxxxxx the sum of Five Hundred Thousand ($500,000)
Dollars by wire transfer of immediately available funds into the
account specified in Exhibit C;
(c) Interest. Interest on the unpaid principal balance of each Secured
Term Loan shall accrue at the applicable Interest Rate for such
Secured Term Loan, as in effect from time to time, and shall be due
and payable at the same time as the principal amount of such Secured
Term Loan as provided in Section 2(d). Interest shall be calculated on
the basis of a 360 day year and shall be simple interest.
(d) Maturity Date. The entire unpaid principal balance of each Secured
Term Loan, together with all accrued interest thereon, shall be due
and payable on the Maturity Date for such Secured Term Loan. The
Secured Term Loans are subject to mandatory and permissive prepayment
as provided in Section 7 of this Agreement.
(e) Certain Deliveries. The First Secured Term Loan shall be evidenced by
the First Secured Term Note to be executed and delivered by Xxxxxx to
Merck at the Initial Closing, appropriately completed in exchange for
the funds specified in Section 2(a)(i) and the original January Note
and March Note marked "paid in full". The Second Secured Term Loan
shall be evidenced by the Second Secured Term Note to be executed and
delivered by Xxxxxx to Merck at the Subsequent Closing, appropriately
completed, in exchange for the funds specified in Section 2(b).
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3. Collateral. As collateral security for the timely repayment of all
Obligations, and the timely performance of each and every covenant, agreement
and condition described in this Agreement and the Ancillary Agreements to be
performed by Xxxxxx, Xxxxxx grants to Merck the rights, powers and interests
described in the Amended and Restated Security. At the Initial Closing, Xxxxxx
shall execute and deliver to Merck the Amended and Restated Security Agreement,
together with UCC-3 amendments to financing statements and such other
documentation as Merck may reasonably request to effectuate its rights, powers
and interests under the Amended and Restated Security Agreement.
4 Representations and Warrants of Xxxxxx. Xxxxxx hereby represents and
warrants to Merck as follows:
(a) Due Organization. Xxxxxx is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to
carry out its business as currently conducted or contemplated to be
conducted, and to enter into and perform its obligations under this
Agreement and the Ancillary Agreements. Xxxxxx is duly qualified to
transact business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which the conduct of its
business or ownership or lease of its properties require such
qualification.
(b) Capitalization. The authorized capitalized stock of Xxxxxx consists of
10,000,000 shares of Common Stock, $.01 par value, of which 2,530,481
shares are currently issued and outstanding (the "Common Stock"). All
issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable.
Except as set forth on Schedule 4(b), there are no outstanding
options, warrants, rights (including conversional or preemptive
rights) or agreements for the purchase or acquisition from Xxxxxx of
any shares of its capital stock.
(c) Subsidiaries. Xxxxxx does not own or control, directly or indirectly,
any interest in any other corporation, association, joint venture or
other business entity.
(d) Authorization. This Agreement and each of the Ancillary Agreements has
been duly authorized, executed and delivered by Xxxxxx and constitutes
a valid, legal and binding obligation of Xxxxxx, enforceable against
Xxxxxx accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of
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general application relating to or affecting the enforcement of
creditor's rights and the application of equitable principles in any
action, at law or in equity. All corporate action on the part of
Xxxxxx necessary for the consummation of the transactions
contemplated hereby and by the Ancillary Agreements has been taken.
(e) Certificate of Incorporation and By-laws. Attached as Schedule 4(e)
are true and complete copies of the Certificate of Incorporation and
By-laws, including all amendments thereto, of Xxxxxx. The minute books
and stock ledgers of Xxxxxx accurately set forth the ownership of all
of the issued and outstanding shares of the capital stock of Xxxxxx
and contain the records of all actions legally required to be
contained therein.
(f) Governmental Consents. Xxxxxx possesses all required governmental
licenses, permits, approvals, consents and orders for the operation of
its business as currently conducted and as contemplated to be
conducted. Xxxxxx is in compliance with all laws, regulations, orders,
judgments and decrees applicable to it or to the operation of its
business. The execution, delivery and performance of this Agreement by
Xxxxxx and the consummation of the transactions contemplated hereby
will not result in any violation of any such laws, regulations,
orders, judgments or decrees as applicable to Xxxxxx. No consent,
approval, order or authorization of, or registration, qualification,
designation or declaration or filing with, any Federal, State or local
government authority on the part of Xxxxxx is required in connection
with the execution of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated thereby.
(g) Litigation. Except as set forth on Schedule 4(g), there is no action,
suit, proceeding or, to Xxxxxx'x knowledge, investigation pending or
currently threatened against Xxxxxx or any or its assets in any court
or tribunal or before any governmental agency or instrumentality, and
Xxxxxx does not know of any valid basis for any such action, suit,
proceeding or investigation. Xxxxxx is not a party to or subject to
the provisions of any writ, order, injunction, judgment or decree of
any court, tribunal or governmental agency or instrumentality.
(h) Proprietary Rights. Except as is set forth on Schedule 4(h), the
conduct by Xxxxxx of its current and contemplated business does not
violate or conflict with, and has not been claimed to violate or
conflict with, the patents, trademarks, service marks, trade names,
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copyrights, trade secrets, informational proprietary rights or
processes (collectively "Proprietary Rights") of others, and Xxxxxx
possesses all Proprietary Rights necessary for the conduct of such
current and contemplated business. For the purposes of the foregoing,
"contemplated business" shall include, but not be limited to, the
design, development, manufacture and sale of Devices and dental
devices which employ the Active Pixel technology. A list of all
Proprietary Rights owned by or licensed to Xxxxxx is set forth in
Schedule 4(h). Except as set forth on Schedule 4(h), Xxxxxx has not
granted any option or license of any kind relating to its Proprietary
Rights nor is Xxxxxx bound by or party to any option or license of any
kind with respect its Proprietary Rights.
(i) Compliance with Organizational Documents. Xxxxxx is not in violation
of any provisions of its Certificate of Incorporation or By-laws, and
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result
in any such violation.
(j) Employee Benefit Plans. Except as set forth in Schedule 4(j), no plan,
program, policy or arrangement providing cash or non-cash compensation
or benefits to employees (including, without limitation, any "employee
benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (each a
"Benefit Plan") is now, or previously has been, adopted, sponsored,
maintained, contributed to or required to be contributed to by Xxxxxx,
and Xxxxxx has no liability, contingent or otherwise, to or with
respect to any Benefit Plan. A true and complete copy of each Benefit
Plan is set forth on Schedule 4(j) attached hereto.
(k) Employment and Labor Relations. Xxxxxx is not bound by or subject to
(and none of its assets or properties are bound by or subject to) any
employment contract, commitment or arrangement with any employee,
express or implied, which provides a binding obligation for (i)
continued employment of such employee by Xxxxxx, or (ii) any
termination, severance or other consideration payable by Xxxxxx to
such employee upon termination of employment. Xxxxxx has no collective
bargaining agreements with any labor union, and no labor union has
requested or, to the knowledge of Xxxxxx, has sought to represent
any of its employees, representatives, or agents. Xxxxxx has not
experienced any material labor difficulty during the past 2 years and,
except as set forth in Schedule 4(k), there is no pending or, to the
best of Xxxxxx'x knowledge, threatened dispute, controversy,
proceeding
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or charge by or with any employee or former employee of Xxxxxx. To the
best of Xxxxxx'x knowledge, none of the employees of Xxxxxx is
obligated or under contract, agreement or commitment of any nature
with a third party, or subject to any judgment, decree or order of any
court or administrative agency that would interfere with the use of
such employee's best efforts to promote the interest of Xxxxxx or that
would conflict with the business of Xxxxxx as currently conducted or
contemplated to be conducted.
(l) Title to Properties; Lien Priority. Xxxxxx has good and marketable
title to and lawfully possesses all of the personal property used in
its businesses, free and clear of all liens, security interests,
encumbrances or rights of third parties, except for liens in favor of
Merck and the rights of equipment lessors under equipment leases. The
lien on the assets of Xxxxxx created under the Amended and Restated
Security Agreement constitutes a first priority security interest,
which will be duly perfected upon the filing of UCC-3 amendments to
financing statements in accordance with the Amended and Restated
Security Agreement.
(m) Real Property. Xxxxxx has no legal or equitable ownership interest, or
any contract to acquire any legal or equitable ownership interest, in
any real property. Except as set forth in Schedule 4(m), Xxxxxx does
not lease any real property. A true and complete copy of any lease set
forth on Schedule 4(m) is attached hereto. All leases referred to in
Schedule 4(m) are in full force and effect, and Xxxxxx'x leasehold
interest thereunder is free and clear of all mortgages, assignments,
pledges, liens, charges, encumbrances or rights of third parties.
Neither Xxxxxx nor, to the best of Xxxxxx'x knowledge, any other party
to the leases set forth on Schedule 4(m) is in material breach of any
of the terms, conditions or provisions thereof or is in default
thereunder; the execution, delivery and performance of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby will not result in any such breach or default.
(n) Material Contracts. Except as set forth on Schedule 4(n), Xxxxxx is
not a party to or bound by, and none of its properties are subject to,
any material agreement, contract or other commitment, whether oral or
written, express or implied. Each agreement, contract and commitment
referred to in Schedule 4(n) is in full force and effect. Neither
Xxxxxx nor, to the best of Xxxxxx'x knowledge, any other party to any
such agreement, contract or commitment is in material breach of any of
the terms, conditions or provisions thereof or is in default
thereunder; the execution, delivery and performance of this
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Agreement and the consummation of the transactions contemplated hereby
will not result in any such breach or default. A true and complete
copy of each contract referred to in Schedule 4(n) attached hereto.
Insurance. Set forth on Schedule 4(o) is a complete list of all
insurance policies which Xxxxxx maintains with respect to its
businesses, properties or employees. Such policies are in full force
and effect and (i) in the case of casualty insurance, provides
coverage in an amount at least equal to the full replacement value of
Xxxxxx'x assets, and (ii) in the case of liability insurance, is in an
amount not less than $5,000,000 per occurrence.
(p) Financial Statements. Xxxxxx has furnished Merck with the Balance
Sheets of Xxxxxx dated March 31, 1995 and December 31, 1995, and the
related Statements of Operation, Statements of Cash Flows and
Supplementary Schedules for the periods then ended, all audited by
Xxxxxxx X. Xxxxxx & Company; Xxxxxx has also furnished Merck with the
Balance Sheet of Xxxxxx dated March 31, 1996, and the related
Statement of Operation, Statement of Cash Flows and Supplementary
Schedules for the period then ended, all audited by Price Waterhouse
(all of such financial statements from March 31, 1995 to March 31,
1996 are collectively the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
indicated. Each of the Balance Sheets included within the Financial
Statements fairly represents the financial condition of Xxxxxx as of
the dates thereof and reflects all claims against and all debts and
liabilities of Xxxxxx, fixed or contingent, at the dates thereof. Each
of the Statements of Operation and Statements of Cash Flow included in
the Financial Statements fairly presents the results of the operations
of Xxxxxx and the changes in its cash flows, respectively, for the
periods covered thereby. Since March 31, 1996, there has been no
material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or the results of
operations or prospects of Xxxxxx.
(q) Tax Returns and Payments. All required tax returns and reports of
Xxxxxx have been duly filed and all taxes, assessments, fees and other
government charges upon Xxxxxx or any of its assets, income or
franchises which are due and payable have been paid. All such tax
returns and reports are true and complete in every material respect
and reflect accurately all liability for taxes of Xxxxxx for the
periods indicated. The charges, accruals and reserves on the
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books of Xxxxxx in respect of federal and state taxes for all
fiscal periods to date are adequate and there are no unpaid
assessments for additional federal and state taxes with respect to
Xxxxxx for any fiscal period. No examination of any tax return of
Xxxxxx is currently in progress.
(r) Relationship with Vendors and Customers. Since December 31, 1995
Xxxxxx has not suffered any material deterioration in its business
relationship with any of its customary vendors or customers, and
Xxxxxx does not have any reason to anticipate any such material
deterioration.
(s) Interests in Vendors or Customers. No director, officer, employee or
agent of Xxxxxx has any direct or indirect financial interest in, or
is a director, officer or employee of, any corporation, firm,
association or other entity which is a customer or vendor of Xxxxxx.
(t) Disclosure. Neither this Agreement nor any other documents,
correspondence, statements or certificates made or delivered by Xxxxxx
in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements herein or therein contained not misleading.
5. Closings.
(a) Initial and Subsequent Closing. The Initial Closing shall occur on
August 7th, 1996, subject the satisfaction of all terms and conditions
contained in this Agreement which are to be satisfied on or before the
date of the Initial Closing. The Subsequent Closing shall occur on a
mutually agreed date within 15 business days after the satisfaction of
all terms and conditions contained in this Agreement which are to be
satisfied on or before the date of the Subsequent Closing. Both the
Initial Closing and the Subsequent Closing shall occur at the offices
of Merck located at Xxxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxxxxxx.
(b) Initial Closinq Deliveries. At the Initial Closing, Xxxxxx shall make
the following deliveries to Merck:
(i) The First Secured Term Note, duly executed by Xxxxxx;
(ii) The Amended and Restated Security Agreement, duly executed by
Xxxxxx;
(iii)UCC-3 Amendments to Financing Statements, duly executed by
Xxxxxx and in form and substance satisfactory to Merck;
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(iv) An opinion of Xxxxxx'x counsel, in form and substance reasonably
satisfactory to Merck, as to the matters set forth in Sections
4(a), (d), (f) (last sentence), (g) and (i) of this Agreement and
Section 8(v) of the Amended and Restated Security Agreement;
(v) Certified resolutions authorizing Xxxxxx to execute, deliver and
perform its obligations under this Agreement and the Ancillary
Agreements;
(vi) A certificate from the Chief Executive Officer of Xxxxxx dated as
of the Initial Closing date, certifying that the conditions
specified in Section 5(d) have been satisfied; and
(vii) The insurance certificates required by Section 6(i).
(c) Subsequent Closinq Deliveries. At the Subsequent Closing, Xxxxxx shall
make the following deliveries to Merck:
(i) The Second Secured Term Note, duly executed by Xxxxxx;
(ii) A certificate from the Chief Executive Officer of Xxxxxx dated as
of the Subsequent Closing date, certifying that the conditions
specified in Section 5(e) have been satisfied; and
(iii)A copy of the 510(k) registration for the Device issued by the
FDA pursuant to which the Device is authorized to be marketed for
measuring bone mineral density.
(d) Certain Conditions--Initial Closing. The obligation of Merck to
advance the First Secured Term Loan is subject to the following
additional conditions:
(i) All representations and warranties of Xxxxxx contained in the
Agreement and the Ancillary Agreements shall be true as of the
Initial Closing Date.
(ii) Xxxxxx shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement and the
Ancillary Agreements that are required to be performed or
complied with by Xxxxxx on or before the Initial Closing date.
(iii)There shall have occurred no Event of Default under the January
Note, the March Note or the Security Agreement between Merck and
Xxxxxx dated January 31, 1996 (as amended by an amendment dated
March 13, 1996), or any
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event which, with the giving of notice, the passage of time, or
both, would constitute any such Event of Default under such
documents.
(iv) Xxxxxx shall have retained the consulting firm of X.X. XxXxxxxx &
Associates, Inc., or with Merck's prior written consent, another
firm reasonably satisfactory to Merck, for the purposes of
obtaining advice regarding (A) the filing of and obtaining a
510(k) registration with the FDA for the Device and (B)
compliance with current Good Manufacturing Practices with respect
to implementing a manufacturing capability for the manufacture of
Devices.
(v) Xxxxxx shall have entered into a definitive written license
agreement with Photobit, Inc. for use of the Active Pixel
technology in the fields of dental radiograph, bone
densitometry, and osteoporosis diagnosis, and a true and complete
copy of such agreement shall have been delivered to Merck.
(vi) Xxxxxx shall provide to Merck written evidence of the closing of
a Xxxxxx common stock private placement offering pursuant to
which Xxxxxx has raised not less than Two Million Five Hundred
Thousand ($2,500,000) Dollars.
(vii)Xxxxxx shall have withdrawn its trademark application relating to
the Device which has been filed with the U.S. Patent and
Trademark Office under the name FOSAMETER, and shall certify that
no similar applications have been filed in other jurisdictions.
(e) Certain Conditions--Subsequent Closing. The obligation of Merck to
advance the Second Secured Term Loan is subject to the following
additional conditions:
(i) The representations and warranties contained in Sections 4(a),
(c), (d), (f), (h), (i), (l), (o), (p), (q), (r) and (t) shall be
true on and as of such Subsequent Closing date with the same
effect as though such representations and warranties had been
made on such Subsequent Closing date.
(ii) Xxxxxx shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement and the
Ancillary Agreements that are required to be performed or
complied with by Xxxxxx on or before the Subsequent Closing date.
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(iii)There shall have occurred no Event of Default under this
Agreement or any of the Ancillary Agreements or any event which,
with the giving of notice, the passage of time, or both, would
constitute any such Event of Default under such documents;
(iv) The studies referred to in Section 10(a)(i)-(iii) shall have been
completed;
(v) Xxxxxx shall have obtained a 510(k) registration for the Device
from the FDA; and
(vi) The Subsequent Closing shall occur prior to June 30, 1997.
6. Covenants of Xxxxxx. For so long as any of the Obligations are
outstanding, Xxxxxx agrees as follows:
(a) Delivery of Financial Statements. Xxxxxx shall deliver to Merck:
(i) as soon as practicable, but in any event within 90 days after the
end of each fiscal year of Xxxxxx, (A) an Operating Statement for
such fiscal year, (B) a Statement of Cash Flows for such fiscal
year and (C) a Balance Sheet as of the end of such year. The
foregoing year end financial reports shall be prepared in
reasonable detail, in accordance with generally accepted
accounting principles consistently applied and shall be certified
by Price Waterhouse or another independent certified public
accountant selected by Xxxxxx and reasonably acceptable to Merck.
(ii) as soon as practicable, but in any event within 60 days after the
end of each of the first three Calendar Quarters of each fiscal
year of Xxxxxx, (A) and Operating Statement for such Calendar
Quarter and on a fiscal year to date basis, (B) a Statement of
Cash Flows for such Calendar Quarter and on a fiscal year to date
basis, and (C) a Balance Sheet as of the end of such Calendar
Quarter. The foregoing financial reports shall be prepared in
reasonable detail, in accordance with generally accepted
accounting principles consistently applied and shall have the
same level of review (e.g. compiled, review or certified) as is
performed by or on behalf of Xxxxxx for such quarterly statements
at that time.
(iii)as soon as practicable, but in any event within 30 days after the
end of each month (A) an unaudited Operating Statement for such
month and on fiscal year to date basis, (B) an
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unaudited Statement of Cash Flows for such month and on a fiscal
year to date basis, and (C) an unaudited Balance Sheet as of the
end of such month. The foregoing financial reports shall be
prepared in reasonable detail, in accordance with generally
accepted accounting principles consistently applied.
(iv) as soon as practicable, but in any event within 5 days of the
filing or release thereof, copies of each filing made by Xxxxxx
or any Afffiliate with the SEC and each communication from Xxxxxx
to its debtholders or shareholders generally.
(b) Inspection. Xxxxxx shall permit Merck to visit and inspect its
properties and facilities, to examine its books and records and to
discuss its affairs, finances, and accounts with each of its officers,
employees and accountants, all at such reasonable times as may be
requested.
(c) cGMP Compliance; Regulatory Correspondence. Xxxxxx shall at all times
comply with cGMP's in connection with the conduct of its operations.
Xxxxxx shall immediately forward to Merck any Notice of Observation,
Warning Letter, or other communications of any type received from the
FDA or other federal or state regulatory agency or authority.
(d) Environmental. Xxxxxx has not and shall not at any time generate,
store, treat, discharge, refine, handle, release or dispose of any
Hazardous Materials except for standard maintenance uses of small
quantities of cleaning agents in accordance with all applicable laws
and free from statutory or common law liability, including but not
limited to, liability for property, personal or natural resource
damages. For the purposes of the foregoing, "Hazardous Materials"
shall mean any substances the presence of which requires investigation
or remediation or which otherwise may result in liability under any
current or future federal, state, or local statute, regulation,
ordinance, order, action, policy or common law.
(e) ERISA. If Xxxxxx shall hereafter adopt a Benefit Plan, such Benefit
Plan shall be established and maintained in accordance with its terms
and in compliance with all applicable laws, statutes, orders, rules
and regulations, including, but not limited to, ERISA and the Code.
(f) Comply with Laws. Xxxxxx shall comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental
authority relating to its corporate existence and the conduct of its
business. Xxxxxx shall maintain all required governmental licenses,
-15-
permits, approvals, consents or orders for the operation of its businesses
as then being conducted or contemplated to be conducted.
(g) Investments, etc. Xxxxxx shall not, directly or indirectly, (i) purchase or
otherwise acquire or own any stock or other securities of any other entity,
other than (A) immaterial investments (i.e. investments in amounts of less
than $30,000) and (B) investments in investment grade interest bearing
securities; (ii) make or permit to be outstanding any loan or advance
(other than advances to employees for travel expenses and similar ordinary
course expenditures) or capital contributions to any other entity; or (iii)
guarantee or become or be liable with respect to, directly or indirectly,
any indebtedness, obligations, liability, or dividend of any other entity.
(h) Payments and Distributions. Xxxxxx shall not, directly or indirectly: (i)
declare, order or pay any dividend or other distribution on account of any
shares of any class of its stock except a dividend payable solely in shares
of its own capital stock, or (ii) order or make any redemption, retirement,
purchase or other acquisition of any shares of any class of its stock or of
any options (including warrants or similar right) to purchase such stock,
except to the extent that such consideration consists of shares of its own
capital stock.
(i) Insurance of Property. Xxxxxx will maintain with financially sound and
reputable insurers (i) casualty insurance with respect to its personal
property and fixtures in an amount at least equal to the full replacement
value thereof and (ii) commercial liability insurance in an amount not less
than $5,000,000 per occurrence. Xxxxxx will deliver to Merck certificates
of insurance evidencing the existence and continuation of such insurance
coverage at the Initial Closing, which certificates shall name Merck as an
additional named insured and loss payee.
(j) Taxes. Xxxxxx will pay or cause to be paid all taxes, assessments, fees and
other governmental charges levied upon any of its properties or assets or
in respect of its franchises, business, income or profits before the same
become delinquent, except to the extent such charges are then being
contested in good faith and by appropriate proceedings promptly initiated
and diligently conducted and a reserve for which has been established in
the full amount of the claimed charge.
-16-
(k) Use of proceeds; Reports. All proceeds from the Secured Term Loan
shall be used for the sole purposes of (i) developing the Technology (as it
pertains to bone densitometry) and the Device, (ii) obtaining FDA approval
of the Device, (iii) conducting clinical and other related studies with
respect the Device, (iv) scaling up manufacturing operations for the
production of Devices, and (v) the introduction, sale and marketing of
Devices. Xxxxxx shall deliver to Merck as soon as possible, but in any
event within 30 days after the end of each month, an accounting setting
forth in reasonable detail all amounts expended in such month in connection
with the activities referred to in clauses (i)-(v), which accounting shall
include a ratable allocation of such amounts expended between the Secured
Term Loans and amounts supplied by Xxxxxx, and which allocation shall have
at least fifty (50%) percent of such amounts expended allocated to amounts
supplied by Xxxxxx. For the purposes of the foregoing, allocation of Xxxxxx
overhead shall be made in accordance with Exhibit D
(l) Study Results, etc. Xxxxxx shall, within 5 days after receipt, provide to
Merck the full results of any (i) trials, studies or other clinical data
obtained with respect to the Device or the Technology (as it pertains to
densitometry), (ii) regulatory inspections of its facilities by FDA or
other regulatory authorities, or (iii) consultant reports concerning the
Device or any of its manufacturing operations pertaining thereto. Xxxxxx
shall consult with Merck regarding the results of any such trial, study,
data, inspections or report.
(m) Notice to Merck. Xxxxxx shall immediately notify Merck of the occurrence of
any event which constitutes an Event of Default or which would, with the
giving of notice, the passage of time, or both, constitute an Event of
Default.
(n) [deleted].
(o) Retention of Xxxxx Xxxxxx. Xxxxxx shall at all times retain Xxxxx Xxxxxx as
its Chief Executive Officer and as a full time employee, and shall cause
Xxxxx Xxxxxx to devote such efforts as are required for the design,
development, manufacturing and marketing of the Device in accordance with
the development plan attached as Exhibit E.
(p) Continued Retention of X.X. XxXxxxxx. Xxxxxx shall continue to retain the
consulting firm of X.X. XxXxxxxx & Associates, or with
- 17 -
Merck's prior written consent, another firm reasonably satisfactory to Merck,
for the purposes set forth in Section 5(d)(iv).
(q) Use of CCD Technology. Xxxxxx shall not employ the CCD technology in the
Devices manufactured by it for sale or commercial use.
(r) Trademarks. Xxxxxx will not refile a trademark or service xxxx application
for the Device using the name or xxxx "FOSAMETER" or file a trademark or
service xxxx application or adopt a trademark or service xxxx which uses
the phrase "FOSA" or any other name or xxxx similar to the trademarks of
Merck or its Affliates.
(s) Commitment of Capital. In addition to the Secured Term Loans, Xxxxxx agrees
to commit such additional capital as may be required to accomplish the
purposes specified in Section 6(k)(i)-(v) in accordance with the timing
expressed in the development plan.
(t) Further Assurances. Xxxxxx shall execute such additional documentation as
Merck may reasonably request to establish, perfect, assure and/or maintain
Merck's rights and interests under this Agreement and the Ancillary
Agreements.
7. Prepayment.
(a) Mandatory Prepayment. The Secured Term Notes are subject to full or partial
mandatory prepayment as follows:
(i) If Xxxxxx or an Afffiliate shall Register any Qualifying Securities
under the 1933 Act in connection with the public offering of such
Qualifying Securities, Xxxxxx shall make an immediate prepayment on
the Obligations in an amount equal to the Net Proceeds (as hereinafter
defined) of such public offering;
(ii) If Xxxxxx or an Afffiliate shall issue Qualifying Instruments
resulting in Net Proceeds equal or exceeding $2,000,000 (individually
or in the aggregate) pursuant to one or more offerings occurring after
the date of this Agreement, which offering or offerings are not
required to be Registered, Xxxxxx shall make an immediate prepayment
on the Obligations in an amount equal to $250,000 (a one time payment
due upon exceeding the $2,000,000 threshold) plus 25% of the Net
Proceeds received in such offering(s) which exceed $2,000,000.
Notwithstanding the foregoing, any Qualifying Instrument issued by
Xxxxxx in connection with the private
-18-
placement referred to in Section 5(d)(vi) shall be excluded from the
foregoing calculation.
(iii)In the event that Xxxxxx individually, any Xxxxxx Affliate
individually, or Xxxxxx and its Affliates on a consolidated basis
(collectively the "Xxxxxx Group") shall have Augmented Net Income (as
hereafter defined) at the end of any Calendar Quarter in excess of
$1,250,000 on a fiscal year to date basis in any fiscal year of
Xxxxxx, then Xxxxxx shall make an immediate prepayment on the
Obligations in an amount equal to 25% of the difference between the
amount of the fiscal year to date Augmented Net Income at the end of
such Calendar Quarter and $1,250,000. In the event that at the end of
any subsequent Calendar Quarter in such fiscal year, the Xxxxxx Group
shall have additional Augmented Net Income, Xxxxxx shall make an
immediate payment to Merck of 25% of the difference between the
Augmented Net Income on a fiscal year to date basis as of the end of
such Calendar Quarter and the Augmented Net Income at the end of the
last Calendar Quarter in such fiscal year with respect to which a
prepayment under this Section 7(a)(iii) has been made. For the
purposes of the foregoing "Augmented Net Income" shall mean net income
plus depreciation, amortization, and other non-cash items that are
deducted from gross income in determining net income in Xxxxxx'x and
its Affiliates' respective financial statements. It is acknowledged by
the parties that Xxxxxx'x current fiscal year is April 1 to March 31;
in the event that Xxxxxx shall change its fiscal year, the parties
shall negotiate in good faith for an adjustment in the provisions of
this Section 7(a)(iii) as they apply to any resulting short fiscal
year, it being the intention of the parties that the provisions of
this Section 7(a)(iii) are to apply, in each case, to a full 12 month
period.
For the purposes of Section 7(a)(i) and (ii), "Net Proceeds" shall mean gross
proceeds less reasonable underwriting fees, brokerage fees, attorneys fees,
listing fees and other similar expenses customarily incurred in similar
transactions.
Written notice of the occurrence of either of the events in Section 7(a)(i)-(ii)
shall be given to Merck no later than the date of the occurrence of such event;
written notice of the occurrence of the events in Section 7(a)(iii) shall be
given to Merck no later than 60 days after the close of the relevant Calendar
Quarter.
(b) Optional Prepayment. The Secured Term Loans are subject to full or
partial prepayment by Xxxxxx at its option at any time, and
-19-
without penalty or premium. Written notice of any optional prepayment
shall be given to Merck not less 15 days before the date fixed for
repayment, and shall specify the amount to be prepaid.
(c) Partial Payment. The amount of any partial prepayment of the Secured
Term Loans shall be allocated first to all amounts owing thereunder
other than principal and interest, second to interest thereon, and
third to the principal amount thereof; in each case further allocation
within each such category between the First Secured Term Note and the
Second Secured Term Note shall be made in such fashion as Merck shall
determine.
8. Default.
(a) Events of Default. Each of the following events shall constitute an
event of default under the Secured Term Loans (each an "Event of
Default"):
(i) any failure to repay all Obligations under either Secured Term
Loan at the Maturity Date;
(ii) any failure to make a prepayment on the Obligations under
either Secured Term Loan in accordance with Section 7(a) as and
when required;
(iii) any failure to make a payment required hereunder or under the
Ancillary Agreements when due, other than a payment referred to
in Section 8(a)(i) or (ii), provided that if such failure is
curable in its entirety within 10 days and no cure period is
otherwise afforded under this Agreement or the Ancillary
Agreements, then Xxxxxx shall be permitted a 10 day cure period
from the occurrence of such failure;
(iv) any of the representations or warranties made by Xxxxxx
hereunder or under the Ancillary Agreements shall be untrue
when made or deemed made;
(v) Xxxxxx shall fail to perform or observe any covenant, term or
condition of this Agreement or the Ancillary Agreements, other
than a payment referred to in Section 8(a)(i),(ii) or (iii),
provided that if such failure is curable in its entirety within
10 days and no cure period therefor is otherwise afforded under
this Agreement or the Ancillary Agreements, then Xxxxxx shall
be permitted a 10 day cure period from the occurrence of such
failure;
-20-
(vi) the occurrence of any Event of Default under the Amended and
Restated Security Agreement or either of the Secured Term Notes
(as such terms are defined therein);
(vii) any final non-appealable judgment amount exceeding $50,000
shall be entered against Xxxxxx, which shall remain
undischarged or unpaid for a period of 60 days;
(viii) any default by Xxxxxx on any indebtedness or debt obligations
to third parties (excluding trade payables and other accrued
current liabilities arising in the ordinary course of business)
in an amount exceeding $50,000 such that the holder of such
indebtedness or debt obligation is entitled to declare same due
and payable prior to the scheduled maturity date;
(ix) Any default by Xxxxxx on payment of trade payables or other
accrued current liabilities arising in the ordinary course of
business, in an amount exceeding $75,000 individually or
$150,000 in the aggregate, such that the party or parties
entitled to payment thereunder have declared the same
immediately due and payable;
(x) any warrant of attachment or for distraint relating to the
nonpayment of taxes or any notice of tax lien shall be issued
relating to or encumbering any of the assets of Xxxxxx that is
not, within 15 days of entry, discharged or stayed or bonded,
to the satisfaction of Merck;
(xi) Xxxxxx shall transfer, or enter an agreement to transfer
(whether by sale, merger, or otherwise) (i) all or
substantially all of its assets, or (ii) any substantial
portion of the Related Assets; provided however, that a
transfer of the Related Assets to a wholly owned subsidiary
shall not be deemed an Event of Default if, prior to such
transfer, Xxxxxx shall have delivered to Merck (x) a written
guaranty of such subsidiary, in form and substance reasonably
satisfactory to Merck, pursuant to which such subsidiary
guarantees the full payment of all Obligations, and the full
performance of all covenants an agreements of Xxxxxx under this
Agreement and the Ancillary Agreements, in each case as and
when due, and (y) a security agreement and UCC-1 financing
statements, in form and substance reasonably satisfactory to
Merck, pursuant to which such subsidiary grants to Merck a
first priority security interest in all inventory and accounts
receivable of such subsidiary, and all
-21-
proceeds and products thereof, and (z) such other documents
and instruments as Merck may reasonably request;
(xii) the dissolution or liquidation of Xxxxxx;
(xiii) the cessation of normal business operations by Xxxxxx for a
period exceeding ten (10) business days;
(xiv) Any restraining order, injunction or other decree shall be
issued or entered and remain in effect for sixty (60) days
which materially and adversely impacts the ability of Xxxxxx to
make, have made, use or sell Devices (A) in the United States,
Canada, Germany, France, Italy, Japan or the United Kingdom or
(B) in any other country where gross sales of Devices in the
preceding twelve month period (or portion thereof) exceeded
$250,000;
(xv) Xxxxxx shall file a voluntary petition in bankruptcy or
insolvency, or shall be adjudicated as bankrupt or insolvent,
or shall file any petition or answer seeking any
reorganization, arrangement, composition, adjustment,
liquidation or similar relief under the present or any future
federal bankruptcy code or law or any other present or
applicable federal, state or statute or law relating to relief
of debtors, or shall make an assignment for the benefit of
creditors or shall seek or consent to or acquiesce in the
appointment of a trustee, receiver or liquidator for all or any
part of its assets; or
(xvi) any case, proceeding or other action against Xxxxxx shall be
commenced seeking to have an order for relief entered against
it as debtor or seeking a reorganization, arrangement,
adjustment or liquidation of its affairs under any code or law
related to bankruptcy, insolvency, reorganization or relief of
debtors or seeking appointment of a receiver, trustee,
custodian or similar official for Xxxxxx or for all or any
substantial part of its assets and such case, proceeding, or
action (A) results in the entry for any order of relief or (B)
remains undismissed for a period of 60 days.
(xvii) any termination of the license agreement with Photobit, Inc,
unless prior to such termination, Xxxxxx shall have created,
acquired or licensed a replacement technology reasonably
satisfactory to Merck.
-22-
(b) Remedies.
(i) Upon the occurrence of a Event of Default, Merck shall have the
right and remedy to:
(A) Declare all Obligations immediately due and payable, which
amount shall thereafter bear interest at the Default Rate;
(B) Commence an action at law, in equity or by other appropriate
proceeding to enforce specific performance of any term hereof
or for an injunction against violation for any term hereof;
(C) Perform any duties or obligations on Xxxxxx'x part to be
performed hereunder or under the Ancillary Agreements and add
any amounts expended in so doing to the Obligations due under
the Secured Term Loans with interest at the Default Rate;
(D) Exercise any rights and remedies available under the Amended
and Restated Security Agreement or either of the Secured Term
Notes; and
(E) Exercise any rights and remedies available to creditors under
applicable law.
(c) Fees and Expenses. Xxxxxx agrees to pay to Merck upon demand all fees
and expenses incurred in successfully enforcing this Agreement or any
of the Ancillary Agreements, including reasonable attorneys fees and
expenses, plus interest at the Default Rate.
(d) Remedies Cumulative; Direct Recourse. All remedies of Merck under this
Agreement and the Ancillary Agreements are cumulative and may, to the
extent permitted by law, be exercised concurrently or separately and
the exercise of one remedy shall not be deemed to preclude the
exercise of any other remedy. Xxxxxx agrees that, upon the occurrence
of an Event of Default, Merck may institute suit to collect the
Obligations directly against Xxxxxx, without first foreclosing upon or
liquidating any collateral under the Amended and Restated Security
Agreement. No failure on the part of Merck to exercise and no delay in
exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Merck of any
right or remedy preclude any other or further exercise thereof, or the
same or any other right or remedy by Merck.
-23-
9. Indemnification.
(a) Xxxxxx Obligation. Xxxxxx agrees to indemnify, defend and hold
harmless Merck and its Affiliates and their respective directors,
officers, employees and agents from and against all claims, actions,
damages, losses, liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and attorneys fees)
arising out of:
(i) any failure to pay all Obligations hereunder when due;
(ii) any breach by Xxxxxx of a representation or warranty made by it
in this Agreement or any Ancillary Agreement;
(iii) any material failure by Xxxxxx to perform or observe any
covenant or agreement to be observed or performed by it under
this Agreement or the Ancillary Agreements;
(iv) any personal injury or property damage relating to the
operation of Xxxxxx'x business or use of its products,
including but not limited to, the development, testing,
manufacturing, marketing, sale, use or misuse of the Device;
(v) any claim for inducing patent infringement, to the extent based
upon Xxxxxx'x manufacture, use, sale, offers to sell or
importation of the Device; and
(vi) the enforcement by Merck of its rights under this Agreement or
the Ancillary Agreements.
(b) Procedure. Promptly after receipt by Merck of notice of a claim
requiring indemnification hereunder, Merck will, if a claim in
respect thereof is to be made against an Xxxxxx under this
Section 9, deliver to the Xxxxxx a written notice of the
commencement thereof and Xxxxxx shall have the right to
participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties. Merck shall have the
right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of the Merck, unless (i)
the employment of such counsel has been specifically authorized
in writing by Xxxxxx, (ii) Xxxxxx has failed to assume the
defense of such claim and employ counsel, or (iii) the named
parties to any such action (including any impleaded parties)
include both the Merck and the Xxxxxx, and Merck shall have
been advised by its counsel that there may be one or more legal
defenses available to it which are different from or additional
to those available to the Xxxxxx (in which case Xxxxxx shall
not have
-24-
the right to assume the defense of such action on behalf of
Merck). Xxxxxx shall not be liable under Section 9(a) for any
settlement affected without its consent, which consent shall
not unreasonably be withheld. Merck shall make available during
normal business hours all employees and records with relevant
information as Xxxxxx may reasonably request in connection with
the defense or investigation of any matter subject to
indemnification hereunder.
10. Other Obligations.
(a) Protocol Development. Merck will develop and propose to Xxxxxx a
protocol for performing (i) an in vivo clinical study to investigate
"raw data" correlation between radiographic absorptiometry ("RA") and
the Device for measuring phalange bone density, (ii) an in vivo
clinical study to establish a normative database for use in connection
with the Device, and (iii) a cadaver study to measure precision and
accuracy of the Device, and "raw data" correlation between RA and the
Device, in each case as it pertains to measurement of phalange bone
density. Merck agrees that it will deliver to Xxxxxx the protocols
referred to in clauses (i)-(iii) on or before September 30, 1996,
provided that if Merck shall fail to make such deliveries by that
date, the June 30, 1997 date referred to in Sections 5(e)(vi) and
10(c) shall be extended one day for each day that such protocols are
so delayed. Merck shall make good faith efforts in the performance of
its obligations under this Section 10(a), but shall not be responsible
for outcomes, implementation, scope, methodology or design
deficiencies.
(b) Partial Funding of Development and Clinical Work. Merck agrees to
provide the following funding:
(i) Payment of fees and expenses due to X.X. XxXxxxxx & Associates in
connection with the work referred to in Sections 5(d)(iv), up to
a maximum of twenty thousand ($20,000) dollars;
(ii) Payment of fifty (50%) percent of the fees and expenses in
connection with the in vivo correlative study and normative
database study referred to in Section 10(a)(i) and (ii).
Xxxxxx understands and agrees that the amounts referred to in Section 10(b)(i)
may not constitute all fees and expenses required to be paid to X.X. XxXxxxxx &
Associates in connection with the work referred to in Sections 5(d)(iv); Xxxxxx
also acknowledges and agrees that all fees and expenses referred to in Section
10(a)(iii) shall be the responsibility of Xxxxxx. Further, Xxxxxx acknowledges
that Merck has no obligation to fund any other studies or expenses in connection
with
-25-
the Device. Xxxxxx agrees that X.X. XxXxxxxx & Associates is an independent
contractor and not an agent of Merck, and that Merck shall have no
responsibility or liability for the services performed by X.X. XxXxxxxx &
Associates.
(c) Marketing. Assuming FDA approval for marketing the Device is obtained
on or prior to June 30, 1997, Merck agrees to discuss with
Xxxxxx mutually acceptable marketing initiatives for the Device, as
the parties deem appropriate, and which are consistent with
the objectives and practices of both Merck and The Bone Measurement
Institute, an Affiliate of Merck, as then in effect in the field of
bone densitometry. Each of Merck and Xxxxxx shall be free to pursue
marketing initiatives with other parties, and neither Merck nor Xxxxxx
shall be obligated to offer or to accept any specific marketing
activity.
(d) Xxxxxx Obligations Not Affected. Xxxxxx agrees that its obligation to
repay all Obligations as and when due is independent of the agreements
of the parties under this Section 10, and that Xxxxxx shall not be
entitled to any set-off, reduction or other adjustment in the
Obligations in any way arising out of or relating to the alleged
performance, non-performance or inadequate performance by Merck of its
obligations under this Section 10. Merck's obligations under Section
10 shall survive any prepayment of the Secured Term Loans.
11. Miscellaneous.
(a) Entire Agreement. This Agreement, together with the Ancillary
Agreements, constitutes the entire agreement among the parties and
supersedes any previously negotiated agreements or understandings
relating to the subject matter hereof. Except as otherwise expressly
provided in this Agreement, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any third
party any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this
Agreement.
(b) Survival of Warranties. The warranties, representations and covenants
of Xxxxxx and Merck contained in or made pursuant to this Agreement
and the Ancillary Agreements shall survive the execution and delivery
of this Agreement, the Initial Closing and the Subsequent Closing, and
shall in no way be affected by any
-26-
investigation of the subject matter thereof made by or on behalf of
any party.
(c) Governing Law. This Agreement and the Ancillary Agreements shall be
governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and intended to be wholly
performed in New York.
(d) Counterparts. This Agreement and the Ancillary Agreements may be
executed in various counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(e) Titles and Subtitles. The titles and subtitles used in this Agreement
and the Ancillary Agreements are used for convenience only and are not
to be considered in construing or interpreting this Agreement or the
Ancillary Agreements.
(f) Expenses. Xxxxxx shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of
this Agreement and the Ancillary Agreements, and Merck shall pay all
costs and expenses that it incurs with respect to the negotiation,
execution, delivery, and performance of this Agreement and the
Ancillary Agreements.
(g) Amendments and Waivers. Any term of this Agreement and the Ancillary
Agreements may be amended only with the written consent of the parties
hereto. The observance of any term of this Agreement and the Ancillary
Agreements may be waived only by the written consent of the party who
was intended to benefit from such term.
(h) Severability. If one or more provisions of this Agreement or the
Ancillary Agreements are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement and the
balance of this Agreement and the Ancillary Agreements shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
(i) Assignment. This Agreement and the Ancillary Agreements and the rights
and obligations specified herein and therein shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Merck shall have the right to assign
its rights and obligations hereunder and thereunder to any successor
holder of a Secured Term Note and such successor holder shall have
all of the rights and shall be entitled to all of the
-27-
benefits of Merck with respect to such Secured Term Note, this
Agreement and the Ancillary Agreements; provided however that Merck
shall not be entitled to assign its rights or obligations under
Section 10 of this Agreement. Xxxxxx shall not be entitled to assign
its rights or obligations under this Agreement or the Ancillary
Agreements.
(j) Cooperation. Each of the parties hereto shall cooperate with the other
in each and every way to carry out the transactions contemplated
herein and to deliver all documents and instruments deemed necessary
or appropriate to effectuate the provisions hereof.
(k) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if by telefax,
when delivered to the telefax operator of the recipient, if sent by
reliable overnight courier service providing a delivery receipt, one
(1) day after deposit with such courier or if mailed, seven (7)
business days after the time it was mailed, certified or registered,
return-receipt requested, postage prepaid, addressed to such party as
follows or at such other address as may hereafter be designated in
writing by such party to the other party hereto:
If to Xxxxxx:
Xxxxxx Technologies, Inc.
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
ATTN.: Xxxxx Xxxxxx
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN.: Xxxx Xxxx, Esq.
Telecopier No.: (000) 000-0000
-28-
If to Merck:
Merck & Co., Inc.
X.X. Xxx 0
Xxxxxxxxxx Xxxx
Xxxx Xxxxx, XX 00000-0000
ATTN.: Senior Director, USHH Business Development
XX00-000
Xxxxxxxxxx No.: (000) 000-0000
with a copy to:
Merck & Co. Inc.
X.X. Xxx 0
Xxxxxxxxxx Xxxx
Xxxx Xxxxx, XX 00000-0000
ATTN.: Assistant General Counsel - USHH Commercial
WP53C-316
Telecopier No.: (000) 000-0000
(m) Public Announcements; Use of Name. No public announcements or similar
publicity with respect to this Agreement, the Ancillary Agreements or
the transactions contemplated herein shall be made by either party
without the prior written approval of the other party. In addition,
neither party shall use the name of the other for any commercial
purpose without such other party's prior written approval. Nothing in
this Section 10(m), however, shall prevent either party from making
such disclosures as such party's legal obligations require; however,
in such event, the party who is required to make the disclosure will
allow the other party to review the disclosure sufficiently in advance
in order to provide suggestions on the form and substance of the
disclosure. In the event that either party intends to publish any data
or results from the clinical studies referred to in Section 10(a), the
party who intends to make the publication will allow the other party
to review the publication sufficiently in advance in order to provide
suggestions on the form and substance of the publication. Further,
each party agrees not to publish data derived from such studies that
the other party considers proprietary without the prior written
consent of such other party, which consent shall not be unreasonably
withheld.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.
Xxxxxx Technologies, Inc. Merck & Co., Inc.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
--------------------------- ---------------------------------
Xxxxx Xxxxxx, President Xxxxx Xxxxxxx, President USHH
By: /s/ Xxxxxxxx Xxxxx
---------------------------------
Xxxxxxxx Xxxxx, Treasurer
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