CONSENT AND LIMITED WAIVER AGREEMENT
Exhibit 10.6
This
Consent and Limited Waiver Agreement (this “Waiver”) is entered into
as of the November 1, 2019, by and among Xxxxx Xxxxxxxx
(“Xxxxxxxx”), Xxxxx Xxxxx
(“Xxxxx”), and Deerfield
CSF, LLC, on behalf of itself and its affiliates
(“Deerfield”, and
collectively with Xxxxxxxx and Xxxxx, the “Deerfield Parties”),
Avadel U.S. Holdings, Inc. and its subsidiaries and affiliates
(collectively, “Avadel”), Armistice
Capital Master Fund, Ltd. (“Armistice”), Cerecor Inc.
(“Cerecor”), Aytu
BioScience, Inc. (“Buyer”) and Aytu
Therapeutics LLC (“Aytu
Therapeutics”).
RECITALS
WHEREAS, the
Deerfield Parties and Avadel (including through its affiliated
entities) are parties to that certain Membership Interest Purchase
Agreement dated as of February 5, 2016, as may be amended from time
to time (the “Deerfield
Agreement”);
WHEREAS, pursuant
to that certain Asset Purchase Agreement dated February 12, 2018
(the “Prior
APA”), Cerecor purchased from Avadel certain assets
and assumed certain liabilities, including certain of
Avadel’s liabilities under the Deerfield
Agreement;
WHEREAS, Cerecor
and Buyer have entered into an Asset Purchase Agreement dated as of
October 10, 2019 (the “APA”) pursuant to which
Buyer will purchase certain assets from Cerecor and assume certain
of Cerecor’s liabilities, including all of Cerecor’s
assets and liabilities arising under the Deerfield Agreement and,
to the extent related to or arising out of the operation of the
Business (as defined in the APA) after the Closing (as defined in
the APA), the Prior APA (the “Asset
Purchase”);
WHEREAS, each of
Armistice and Cerecor have agreed to enter into Guarantees in favor
of the Deerfield Parties in substantially the forms attached hereto
as Exhibits A-1 and
A-2 (the “Armistice Guaranty” and
“Cerecor
Guarantee”, respectively, and collectively, the
“Guarantees”);
WHEREAS, Armistice
has agreed to deposit $15,000,000 (the “Escrow Funds”) in an
escrow account (the “Escrow Account”) governed
by that certain escrow agreement dated on or about the date hereof
by and among Armistice, the Deerfield Parties and JPMorgan Chase
Bank, N.A. (the “Escrow Agent”), in
substantially the form attached hereto as Exhibit B (the “Escrow Agreement”) for
the purpose of securing the portion of the Primary Obligations
under the Armistice Guarantee comprised of the balloon payment of
$15,000,000 due to the Deerfield Parties by Buyer on the last
business day of January 2021 or earlier in accordance with Section
1.6(g) of the Deerfield Agreement (the “Balloon Payment
Obligation”);
WHEREAS, neither
Buyer nor Cerecor would agree to consummate the Asset Purchase
without the prior written consent, release and limited waiver of
and by Avadel and the Deerfield Parties as set forth herein;
and
WHEREAS, in
consideration of Buyer’s agreement to assume certain
liabilities under the Deerfield Agreement as set forth in the APA,
as well as the Escrow Agreement and the Guarantees, the Deerfield
Parties and Avadel desire to provide this consent, release and
limited waiver.
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NOW,
THEREFORE, in consideration of the premises and of the mutual
covenants, conditions and agreements set forth herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows.
1. Defined Terms. Capitalized
terms used herein (including in the preamble and recitals above)
but not otherwise defined herein have the meanings ascribed to them
in the Deerfield Agreement.
2. Reliance. The parties hereto
acknowledge and agree that the effectiveness of the Deerfield
Parties’ consent and waiver, as set forth in Sections 6 and 7
below, is contingent upon (a) Armistice entering into the Escrow
Agreement and depositing $15,000,000 in the Escrow Account
thereunder, (b) Armistice and Cerecor entering into the Guarantees
and (c) payment by Cerecor of the attorney fees incurred by the
Deerfield Parties in connection with transactions contemplated
hereby.
3. Security
Arrangements.
(a) In the event that
the Deerfield Parties do not receive payment of the Balloon Payment
Obligation in full when due and the Escrow Funds are still in the
Escrow Account, then, upon written request from Deerfield,
Armistice and the Deerfield Parties shall sign and deliver to the
Escrow Agent a joint written instruction sufficient under the
Escrow Agreement to cause the Escrow Agent to deliver Escrow Funds
to the Deerfield Parties in an amount sufficient such that the
Deerfield Parties receive the amount of the Balloon Payment
Obligation in full with any excess Escrow Funds being disbursed to
Armistice. The Deerfield Parties acknowledge and agree that they
will seek payment from the Escrow Funds pursuant to this Section
3(a) before requesting payment from Avadel pursuant to the Avadel
Guarantee; provided, that such agreement
does not limit the rights of the Deerfield Parties pursuant to the
Avadel Guarantee in the event that payment is not timely made from
the Escrow Funds with respect to the Balloon Payment
Obligation.
(b) In the event that
the Deerfield Parties do receive payment of the Balloon Payment
Obligation in full when due and the Escrow Funds are still in the
Escrow Account, then, upon written request from Armistice,
Armistice and the Deerfield Parties shall sign and deliver to the
Escrow Agent a joint written instruction sufficient under the
Escrow Agreement to cause the Escrow Agent to deliver the Escrow
Funds to Armistice.
(c) In
the event that Armistice arranges for an Acceptable Letter of
Credit to be issued in favor of the Deerfield Parties, then, upon
written request from Armistice, Armistice and the Deerfield Parties
shall sign and deliver to the Escrow Agent a joint written
instruction sufficient under the Escrow Agreement to cause the
Escrow Agent to deliver the Escrow Funds to Armistice. An
“Acceptable Letter of Credit” means a letter of credit
that is (i) issued by a bank domiciled in the United States
acceptable to Deerfield, (ii) on a form acceptable to Deerfield,
(iii) is in the amount of $15,000,000, (iv) is for the benefit of
the Deerfield Parties, (v) does not expire until the last business
day of February 2021, and (vi) permits the Deerfield Parties to
draw on such letter of credit immediately if the Deerfield Parties
do not receive payment of the Balloon Payment Obligation in full
when due.
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4. Assumption. Buyer acknowledges
and agrees that: (i) it has assumed all obligations under the
provisions of the Deerfield Agreement set forth on Appendix A; (ii)
this limited waiver of the Asset Purchase as an Acceleration
Trigger Event only applies to the Asset Purchase and any future
events, facts or circumstances that constitute an Acceleration
Trigger Event are not waived; (iii) the definition of “Net
Sales” in the Deerfield Agreement shall hereby be deemed to
include, among other items, the amounts invoiced for sales of
Products by or on behalf of Buyer or any of its Affiliates or any
direct or indirect assignee or licensee of Buyer or any of its
Affiliates; and (iv) the audit rights of the Deerfield Parties in
Section 1.6(d) of the Deerfield Agreement shall apply to the books
and records of Buyer and its Affiliates.
5. Security Interest.
Buyer’s subsidiary, Aytu Therapeutics, which will hold the
Purchased Assets (as defined below), hereby pledges, assigns,
hypothecates, transfers and grants to the Deerfield Parties, a
first priority lien upon and security interest in, all of its
right, title and interest in and to the Purchased Assets (as
defined in the APA) to the extent such Purchased Assets were also
“Purchased Assets” under the Prior APA. The Purchased
Assets shall secure the full and prompt payment, at any time and
from time to time as and when due (whether at the stated payment
date, by acceleration or otherwise), of Buyer’s obligations
under the provisions of the Deerfield Agreement set forth on
Appendix A. Buyer and the Deerfield Parties acknowledge that the
Purchased Assets constitute the FSC Assets Collateral for purposes
of Buyer’s obligations under the provisions of the Deerfield
Agreement set forth on Appendix A (including, without limitation,
Sections 1.7(b) and (c)).
6. Deerfield Consent and Limited
Waiver. The Deerfield Parties hereby (i) consent to the
Asset Purchase and Cerecor and Buyer’s entry into the APA for
all purposes, (ii) represent and warrant to Cerecor and Buyer that
to the actual knowledge of Xxxxxxxx and Xxxxx no breach of the
Deerfield Agreement exists as of the date hereof and no such breach
will occur as a result of the consummation of the Asset Purchase,
(iii) agree that the Asset Purchase is not, and will not be deemed
to be, an Acceleration Trigger Event, (iv) irrevocably waive all
rights with respect to Section 1.6(g) of the Deerfield Agreement
only in connection with the Asset Purchase (but not any future
events), (v) irrevocably waive, discharge and release Cerecor and
Buyer from any claim that Cerecor or Buyer is in breach of Section
1.6(g) of the Deerfield Agreement only as a result of the Asset
Purchase (but not any future events), (vi) agree that the
provisions of the Deerfield Agreement set forth on Appendix A hereto (as such obligations
may be expressly modified therein with respect to the Deferred
Consideration and each Deferred Payment related thereto), and all
obligations of Cerecor arising thereunder, are assigned to Buyer,
and (vii) agree that if (a) Buyer is current in its payment
obligations to the Deerfield Parties and (b) makes a payment
to the Deerfield Parties in advance of such payment being due and
payable (a “Prepayment”), then Buyer
may designate whether such Prepayment is deemed to be a Fixed
Payment or a Deferred Payment.
7. Avadel Consent and Release. In
accordance with Section 7.6 of the Prior APA, Avadel hereby (a)
consents to Cerecor’s assignment to Buyer of all
Cerecor’s rights, interests and obligations under the Prior
APA and Cerecor and Buyer’s entry into the APA for all
purposes, and (b) represents and warrants to Cerecor and Buyer that
to the actual knowledge of Avadel no breach of the Prior APA exists
as of the date hereof and no such breach will occur as a result of
the consummation of the Asset Purchase. Avadel, on behalf of itself
and its Affiliates, hereby releases Cerecor from all obligations
under the Prior APA. Avadel further acknowledges and agrees to the
modification of the payment terms with respect to the Deferred
Consideration and Deferred Payments pursuant to the APA and agrees
that such modification is hereby incorporated into the terms of the
Deerfield Agreement, subject to the guarantee of such obligations
by Armistice pursuant to the Armistice Guarantee. Avadel also
acknowledges and agrees that its Guarantee (the “Avadel Guarantee’) issued
on February 16, 2018, in favor of the Deerfield Parties remains in
full force and effect notwithstanding the assignment of the
Obligations (as defined in the Avadel Guarantee) to Buyer and the
modification of the payment terms with respect to the Deferred
Consideration and Deferred Payments.
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8. No Breach. Cerecor hereby
represents and warrants that no breach of the Deerfield Agreement
exists as of the date hereof.
9. No Modification. Except as
amended, waived or consented to hereby, the Deerfield Agreement
remains unmodified and in full force and effect.
10. Successors and Assigns. The
provisions of this Waiver will inure to the benefit of and be
binding on each of the Deerfield Parties, Cerecor and Buyer and
their permitted assigns (if any).
11. Governing Law. This Waiver
shall be governed by, and construed, interpreted and enforced in
accordance with, the laws of the Delaware. Any legal action or
proceeding with respect to this Waiver will be brought solely and
exclusively in any state or federal court of competent jurisdiction
in Delaware. By execution and delivery of this Waiver, each party
hereto hereby irrevocably consents to and accepts, for itself and
in respect of its property, generally and unconditionally the sole
and exclusive jurisdiction of such courts. Each party hereto hereby
further irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of
any action or proceeding in such jurisdiction in respect of this
Waiver.
12. Notice. Each party and express
beneficiary irrevocably consents to the service of process out of
any of the courts referred to in this Waiver in any such suit,
action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to it at its address set forth
in the Deerfield Agreement, or with respect to Cerecor, to:
Cerecor, Inc., 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000, attention: Xxx Xxxxxx, via email: xxxxxxx@xxxxxxx.xxx, with
a copy (that does not constitute notice) to Xxxxxx Xxxxxxx Xxxxx
& Xxxxxx LLP, 0000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
Xxxxxxxx 00000, attention: Xxx Xxxxxxxx, via email:
xxxxxxxxx@xxxxxx.xxx, or with respect to Buyer, to: Aytu
BioScience, Inc., 000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000, attention: Xxxxx Xxxxx, CFO, via email:
xxxxxx@xxxxxxx.xxx, with a copy (that does not constitute notice)
to Xxxxxx & Whitney, 000 X Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx
Xxxx, XX 00000, attention: Xxxxx Xxxxxx, or with respect to
Armistice, to: Armistice Capital Master Fund, Ltd., 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, attention: Xxxxxxx Xxxxxxx, via email:
xxxxxxxx@xxxxxxxxxxxxxxxx.xxx. Each party irrevocably waives any
objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any suit, action or proceeding
commenced hereunder that service of process was in any way invalid
or ineffective. Nothing herein shall affect the right of a party to
serve process on the other party in any other manner permitted by
law.
13. Counterparts. This Waiver may
be executed in any 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. Any counterpart may be
executed by facsimile or pdf signature and such facsimile or pdf
signature shall be deemed an original.
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14.
Disclosure.
On or before 8:00 a.m.,
New York time, on the business day immediately following the date
hereof, Buyer shall file a
Current Report on Form 8-K meeting all of the requirements of Item
1.01 thereof, which Form 8-K shall disclose the closing of the
transactions contemplated by the APA, disclose all the material
terms of the transactions contemplated by this Waiver and the
Guarantees (and any previously undisclosed terms of the APA) and
shall attach each of the APA (to the extent not previously publicly
filed), this Waiver and the Guarantees, in each of their
entireties. Each of Avadel, Cerecor, and Buyer (each a
“Disclosing Party”) expressly acknowledges, represents
and agrees that after such filing, (i) all material, non-public information
(if any) provided or made available to the Deerfield Parties and
their affiliates (and their respective agents and representatives)
by such Disclosing Party or any of its officers, directors,
employees, affiliates or agents in connection with the transactions
contemplated by the APA, the Prior APA, this Waiver, the Guarantees, or
otherwise prior to the date hereof, shall have been publicly
disclosed. and (ii) that from and after such filing, the
Deerfield Parties and their affiliates (and their respective agents
and representatives) shall not have any duty to any Disclosing
Party of trust or confidence with respect to, or a duty to any
Disclosing Party not to trade in any securities on the basis of,
any information regarding such Disclosing Party (unless expressly
agreed to by such Deerfield Party in a written definitive and
binding and binding agreement executed by such Disclosing Party and
Deerfield Party or customary oral (confirmed by e-mail) “wall
cross” agreement).
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Consent and
Limited Waiver Agreement as of the day and year first above
written.
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DEERFIELD
PARTIES:
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Deerfield
CSF, LLC
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By:_________________________________
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Name:_______________________________
Title:________________________________
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____________________________________
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Xxxxx
Xxxxxxxx
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____________________________________
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Xxxxx
Xxxxx
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[Signature
Page to Consent, Release and Limited Waiver Agreement]
AVADEL:
Avadel
U.S. Holdings, Inc.
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By:
____________________________________
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Name: ____________________________________
Title:
____________________________________
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[Signature
Page to Consent, Release and Limited Waiver Agreement]
ARMISTICE
Armistice
Capital Master Fund, Ltd.
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By:
____________________________________
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Name: ____________________________________
Title:
____________________________________
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[Signature
Page to Consent, Release and Limited Waiver Agreement]
CERECOR:
Cerecor
Inc.
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By:
____________________________________
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Name: ____________________________________
Title:
____________________________________
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[Signature
Page to Consent, Release and Limited Waiver Agreement]
BUYER:
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By:
____________________________________
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Name: ____________________________________
Title:
____________________________________
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BUYER
SUBSIDIARY:
Aytu
Therapeutics LLC
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By:
____________________________________
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Name: ____________________________________
Title:
____________________________________
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[Signature
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Schedule I
Fixed Payments
