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Check the appropriate box below if the Form 8-K filing is intended tosimultaneously satisfy the filing obligation of the registrant under any of thefollowing provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Trading Name of each exchange on Symbols which Title of each class registeredClass A Common Stock, $0.001 AZYO The Nasdaq Capital par value per share Market
Indicate by check mark whether the registrant is an emerging growth company asdefined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) orRule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant haselected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of theExchange Act.
Item 1.01. Entry into a Material Definitive Agreement..
On August 10, 2022 (the "Closing Date"), Aziyo Biologics, Inc., a Delawarecorporation (the "Company" or the "Borrower") entered into a Credit Agreement,dated as of August 10, 2022, between Aziyo Biologics, Inc. and the subsidiariesof the Company (each, a "Loan Party," and, together with the Company,collectively, the "Loan Parties"), with the financial institutions party theretofrom time to time as lenders and SWK Funding LLC, as agent (the "CreditAgreement"). The Credit Agreement provides for (i) a senior secured term loan inan aggregate amount of $21.0 million (the "Initial Term Loan") and (ii) anadditional tranche of term loan feature which permits the Borrower to borrow upto an additional $4.0 million, subject to the achievement of specifiedoperational and financial metrics by September 30, 2023 (the "Additional TermLoan" and, together with the Initial Term Loan, the "Term Loans") and (iii) theestablishment of a separate, new asset-based revolving facility of up to $8.0million.
The Initial Term Loan was drawn on the Closing Date, and the Company used theborrowings to repay outstanding amounts under the Company's existing amended andrestated term loan credit agreement with Midcap Financial Trust, as agent andlender, and the other lenders party thereto (as amended, the "Existing TermLoan") and the Company's amended and restated revolving credit agreement withMidcap Funding IV Trust, as agent and lender, and the other lenders partythereto (as amended, the "Existing Revolving Facility" and, together with theExisting Term Loan, "Existing Credit Agreement"). The Company intends to use theremaining borrowings under the Initial Term Loan for its ongoing commercial andproduct development initiatives.
The Company's obligations under the Credit Agreement are guaranteed by the otherLoan Parties, including Aziyo Med, LLC, a Delaware limited liability company anda wholly owned subsidiary of the Borrower. Pursuant to the Credit Agreement andthe other Loan Documents, the Company and the other Loan Parties granted a liento the Agent in substantially all of the assets now owned or hereafter acquiredby any Loan Party, subject to certain customary exceptions.
All of the Term Loan borrowings under the Credit Agreement take the form ofSecured Overnight Financing Rate ("SOFR") loans. SOFR loans will bear interestat a rate per annum equal to the sum of an applicable margin of (i) 8.75% andthe "Term SOFR Rate" (based upon an interest period of 3 months), or (ii) if theBorrower has elected the PIK Interest option (as defined below), 4.75% and the"Term SOFR Rate." The Borrower may elect a portion of the interest due, to bepaid in-kind at a rate per annum of 4.5% ("PIK Interest"), and such election maybe made (x) until November 15, 2024 if the conditions to draw the AdditionalTerm Loan have not been met, or (y) if such conditions to draw the AdditionalTerm Loan have been satisfied, until November 17, 2025. The "Term SOFR Rate" issubject to a floor of 2.75%. Amortization of the Term Loan starts on November15, 2024, which amortization may be extended to November 17, 2025 if conditionsto draw the Additional Term Loan have been satisfied. Principal payments duringthe amortization period will be limited based on revenue-based caps.
Under the Credit Agreement, the Loan Parties are required: to (a) maintainminimum Consolidated Unencumbered Liquid Assets (as defined in the CreditAgreement) of (i) at any time on or after the Closing Date and on or beforeOctober 10, 2022, $5.0 million, and (ii) at any time thereafter, the greater of(x) $5.0 million, or (y) the sum of the Operating Burn (as defined in the CreditAgreement) for the two (2) prior, consecutive fiscal quarters then ended; and(b) maintain certain minimum revenue levels, to be tested on a quarterly basis,beginning on the fiscal quarter ending September 30, 2022.
Any amounts voluntarily or mandatorily prepaid under the Credit Agreement aresubject to a prepayment penalty, subject to certain exceptions, equal to (i)2.00% of the principal amount prepaid if the prepayment occurs prior to thefirst anniversary of the Closing Date, plus all remaining regularly scheduledinterest payments for such first year period, (ii) 2.00% of the principal amountprepaid if the prepayment occurs after the first anniversary and prior to thesecond anniversary of the Closing Date, and (iii) 0.00% thereafter. Upontermination of the Credit Agreement, the Company shall pay an exit fee equal to6.50% of the aggregate amount of Term Loans funded prior to such terminationdate.
Pursuant to the Credit Agreement, on August 10, 2022, the Company issued to SWKFunding LLC a warrant (the "Warrant") to purchase, in the aggregate, up to187,969 shares of Class A common stock of the Company, $0.001 par value pershare (the "Common Stock") at an exercise price of $6.65 per share. The Warrantis immediately exercisable for up to 157,894 shares of Common Stock from time totime on or after the Closing Date. Subject to and effective upon the borrowingby the Borrower of the Additional Term Loan, the Warrant will be exercisable forup to an additional 30,075 shares of Common Stock. The exercise price and numberof shares of Common Stock issuable upon exercise of the Warrant are subject toadjustment in the event of stock dividends, stock splits and certain otherevents affecting the Common Stock. Unless earlier exercised or terminated inaccordance with its terms, the Warrant will expire on the seventh anniversary ofthe Closing Date.
The foregoing summaries do not purport to be complete and are qualified in theirentirety by reference to the Credit Agreement and the Warrant which are filed asExhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K.
Item 1.02. Termination of a Material Definitive Agreement.
The disclosure set forth in Item 1.01 of this Current Report on Form 8-Kregarding the termination of the Existing Credit Agreement is incorporated byreference into this Item 1.02.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-Kregarding the Credit Agreement is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description
4.1 Warrant to Purchase Stock, issued on August 10, 2022, by Aziyo Biologics, Inc.to SWK Funding LLC.
10.1# Credit Agreement, dated as of August 10, 2022, between Aziyo Biologics, Inc. and the subsidiaries of the Company, with the financial institutions party thereto from time to time as lenders and SWK Funding LLC, as agent.
104 Cover Page Interactive Data File (formatted as Inline XBRL document)
# Annexes, schedules and exhibits have been omitted pursuant to Item601(a)(5)(b)(2) of Regulation S-K. The Registrant hereby agrees to furnishsupplementally a copy of any omitted annex, schedule or exhibit to the SEC uponrequest.
Pursuant to the requirements of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned hereunto duly authorized.
AZIYO BIOLOGICS, INC.
Date: August 15, 2022 By: /s/ Matthew Ferguson Matthew Ferguson Chief Financial Officer
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDERTHE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES OR BLUESKY LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND APPLICABLESTATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCESATISFACTORY TO THE ISSUER OF THESE SECURITIES (SUBJECT TO THE PROVISIONS OFARTICLE 6 BELOW), SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION ISEXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Issuer: AZIYO BIOLOGICS, INC., a Delaware corporation (the "Company")
First Tranche Issuance Date: August 10, 2022
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SWK FundingLLC, a Delaware limited liability company, or its assignees ("Holder"), isentitled to purchase the number of fully paid and non-assessable shares of theCompany's common stock, par value $0.001 per share ("Common Stock"), as setforth herein, including the First Tranche Share and the Second Tranche Shares(collectively, the "Shares"), as applicable, at the Exercise Price per Share, asthe same may be adjusted from time to time pursuant to Article 2 of thisWarrant, subject to the provisions and upon the terms and conditions set forthin this Warrant.
1.1 Definitions. For purposes of this Warrant, the following terms notdefined specifically elsewhere herein, shall have the meanings ascribed thereto:
(a) "Additional Advance" means an aggregate dollar amount equal to FourMillion and No/100 Dollars ($4,000,000).
(b) "Common Stock" means the Class A Common Stock of the Company, par value$0.001 per share, and any other class of securities into which such securitiesmay hereafter be reclassified or changed.
(c) "Credit Agreement" means that certain Credit Agreement dated as ofAugust 10, 2022, by and among the Company, as the Borrower, SWK, as Agent forall Lenders, and the financial institutions party thereto from time to time, asLenders.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as amended,and the rules and regulations promulgated thereunder.
(e) "Exercise Price" means $6.65, as may be adjusted from time to time asprovided herein.
(f) "First Tranche Shares" means a number of shares of Common Stock equalto (i) One Million and Fifty Thousand Dollars ($1,050,000), divided by (ii) theExercise Price.
(g) "Second Tranche Issuance Date" means the date that the Lenders make theAdditional Advance to the Company as provided in Section 2.2.2 of the CreditAgreement.
(h) "Second Tranche Shares" means a number of shares of Common Stock equalto (i) Two Hundred Thousand Dollars ($200,000), divided by (ii) the ExercisePrice.
(i) "Securities Act" means the Securities Act of 1933, as amended, and therules and regulations promulgated thereunder.
(j) "Termination Date" means the close of business on the seven (7) yearanniversary of the First Tranche Issuance Date.
(k) "Trading Market" means The Nasdaq Global Market.
2.1 Method of Exercise. This Warrant is exercisable, in whole or in part,at any time and from time to time on or before the Termination Date set forthabove. Holder may exercise this Warrant by delivering the original of thisWarrant together with a duly executed Notice of Exercise in substantially theform attached as Appendix 1 to the Company in accordance with Section 6.6 (orsuch other office or agency of the Company as it may designate by notice inwriting to the Holder in accordance with Section 6.6). Unless Holder isexercising the cashless exercise right set forth in Section 2.2, Holder shallalso deliver to the Company a check, wire transfer (to an account designated bythe Company), or other form of payment acceptable to the Company in an amountequal to the aggregate Exercise Price for the Shares being purchased.
2.2 Cashless Exercise. In lieu of exercising this Warrant as specified inSection 2.1, Holder may from time to time exercise this Warrant, in whole or inpart, by means of a "cashless exercise" in which the Holder shall be entitled toreceive a certificate for the number of Shares determined in accordance with thefollowing equation:
X = the number of Shares purchasable upon a "cashless exercise" of the Warrant pursuant to the provisions of this Section 2.2;
A = the Fair Market Value (defined below) per share of Common Stock on the date of the "cashless exercise";
B = Exercise Price per Share, as adjusted hereunder; and
C = the number of Shares as to which this Warrant is being exercised pursuant to the provisions of this Article 2.
If the foregoing calculation results in a negative number or zero, then noShares shall be issued upon a "cashless exercise" pursuant to this Section 2.2.If the Holder does not agree with the Fair Market Value per share ultimatelydetermined pursuant to Section 2.3(b) or Section 2.3(c), the Holder may, in itssole discretion (i) rescind the "cashless exercise", (ii) pay the aggregateExercise Price in the form of, at the Holder's option, (1) a check payable tothe Company or (2) a wire transfer of funds to an account designated by theCompany, or (iii) proceed with the "cashless exercise" at the Fair Market Valueper Share so determined. In the event that, upon the Expiration Date or othertermination of this Warrant, as to any Share, the Fair Market Value of suchShare (or other security issuable upon the exercise hereof) as determined inaccordance with Section 2.3 is greater than the Exercise Price in effect on suchdate, then this Warrant shall automatically be deemed on and as of such date tobe exercised pursuant to this Section 2.2 as to all such Shares (or such othersecurities) for which it shall not previously have been exercised, and theCompany shall promptly deliver a certificate representing the Shares (or suchother securities) issued upon such exercise to Holder.
2.3 Fair Market Value. For purposes of this Warrant, the "Fair MarketValue" of a Share as of a particular date (the "Determination Date") shall mean:
(a) If the Common Stock is then publicly listed or quoted on one or moresecurities exchanges, inter-dealer quotation systems or over-the-countermarkets, the fair market value of a Share shall be the closing price per shareof Common Stock reported on the principal such exchange, system or market forthe business day immediately before Holder delivers this Warrant together withits Notice of Exercise to the Company.
(b) If the Determination Date is the date of a liquidation, dissolution orwinding up, or any event deemed to be a liquidation, dissolution or winding uppursuant to the Company's charter, then the fair market value of a Share shallbe equal to all amounts to be payable per share to holders of the Common Stockpursuant to the charter in the event of such liquidation, dissolution or windingup, assuming for the purposes of this clause (b) that all of the shares ofCommon Stock then issuable upon exercise of all in-the-money options, warrantsand other exercisable or convertible rights or other securities outstanding atthe Determination Date.
(c) If the Common Stock is not then publicly listed or quoted on one ormore securities exchanges, inter-dealer quotation systems or over-the-countermarkets, then the Board of Directors of the Company (the "Board") shalldetermine the fair market value of a Share in its reasonable good faithjudgment.
2.4 Delivery of Certificate and New Warrant. Promptly after Holderexercises this Warrant and, if applicable, the Company receives payment of theaggregate Exercise Price, the Company shall deliver to Holder certificates forthe Shares acquired (or, if the Common Stock is uncertificated, evidence of thebook-entry position) and, if this Warrant has not been fully exercised and hasnot expired, a new warrant of like tenor representing a warrant to purchase theShares not yet acquired.
2.5 Replacement of Warrants. On receipt of evidence reasonably satisfactoryto the Company of the loss, theft, destruction or mutilation of this Warrantand, in the case of loss, theft or destruction, on delivery of an indemnityagreement reasonably satisfactory in form and amount to the Company or, in thecase of mutilation, on surrender and cancellation of this Warrant, the Companyshall execute and deliver a replacement Warrant.
2.6 Sale, Merger, or Consolidation of the Company. For the purpose of thisWarrant, "Acquisition" means any reorganization, consolidation, or merger of theCompany where the holders of the Company's securities before the transactionbeneficially own less than 50% of the outstanding voting securities of thesurviving entity after the transaction. Upon the closing of any Acquisition, thesuccessor entity shall assume the obligations of this Warrant, and this Warrantshall be exercisable for the same securities, cash, and property as would bepayable for the Shares issuable upon exercise of the unexercised portion of thisWarrant as if such Shares were outstanding on the record date for theAcquisition and subsequent closing, and the Exercise Price shall be adjustedaccordingly; provided, however, that (i) in the event of an Acquisition in whichthe consideration to be received by the Company's stockholders consists solelyof cash, solely of Marketable Securities (as defined below) or a combination ofcash and Marketable Securities (a "Cash/Public Acquisition"), and, as to anyShare, the fair market value of such Share as determined in accordance withSection 2.3above would be greater than the Exercise Price in effect on such dateimmediately prior to such Cash/Public Acquisition, and Holder has not exercisedthis Warrant pursuant to Article 2 above as to all such Shares, then (A) thisWarrant shall automatically be deemed to be cashless exercised pursuant toSection 2.2 above as to all such Shares for which it has not been previouslyexercised effective immediately prior to and contingent upon the consummation ofsuch Cash/Public Acquisition and (B) in connection with such cashless exercise,Holder shall be deemed to have restated each of the representations andwarranties in Section 5of the Warrant as the date thereof (which representationsand warranties shall also pertain, as applicable, to the applicable MarketableSecurities as well as the issuer thereof) and the Company shall promptly notifythe Holder of the number of Shares (or such other Marketable Securities) issuedupon exercise, and (ii) in the event of a Cash/Public Acquisition where, as toany Share, the fair market value of such Share as determined in accordance withSection 2.3 above would be less than the Exercise Price in effect immediatelyprior to such Cash/Public Acquisition, then this Warrant will expire immediatelyprior to the consummation of such Cash/Public Acquisition as to all such Shares."Marketable Securities" means securities meeting all of the followingrequirements: (1) the issuer thereof is then subject to the reportingrequirements of Section 13 or 15(d) of the Exchange Act, and is then current inits filing of all required reports and other information under the Act and theExchange Act; (2) the class and series of shares or other security of the issuerthat would be received by Holder in connection with the Acquisition were Holderto exercise this Warrant on or prior to the closing thereof is then traded in anationally recognized securities exchange, inter-dealer quotation system orover-the-counter market, and (3) following the closing of such Acquisition,Holder would not be restricted from publicly re-selling all of the issuer'sshares and/or other securities that would be received by Holder in suchAcquisition were Holder to exercise or convert this Warrant in full on or priorto the closing of such Acquisition, except to the extent that any suchrestriction (x) arises solely under federal or state securities laws, rules orregulations, and (y) does not extend beyond six (6) months from the closing ofsuch Acquisition.
ADJUSTMENTS TO THE SHARES.
3.1 Stock Dividends, Splits, Etc. If the Company, at any time while thisWarrant is outstanding: (a) pays a dividend on the Shares payable in CommonStock, (b) subdivides the outstanding Shares into a greater number of Shares,(c) combines (including by way of reverse stock split) outstanding shares ofCommon Stock into a smaller number of shares or (d) issues by reclassificationof shares of Common Stock any shares of capital stock of the Company, then ineach such case (i) the Exercise Price will be adjusted by multiplying suchExercise Price then in effect by a fraction, the numerator of which equals thenumber of shares of Common Stock outstanding immediately prior to such event(excluding treasury shares, if any), and the denominator of which equals thenumber of shares of Common Stock outstanding immediately after such event(excluding treasury shares, if any), and (ii) the number of Shares issuablehereunder shall be concurrently adjusted by multiplying such number by thereciprocal of such fraction. Such adjustments will take effect on the effectivedate of such dividend, subdivision, combination or issuance by reclassification,as the case may be. The provisions of this Section 3.1shall similarly apply tosuccessive reclassifications, exchanges, combinations, substitutions,recapitalizations and reorganizations.
3.2 Fractional Shares. No fractional Shares shall be issuable upon exerciseof the Warrant and the number of Shares to be issued shall be rounded down tothe nearest whole Share. If a fractional share interest arises upon any exerciseof the Warrant, the Company shall eliminate such fractional share interest bypaying Holder the amount computed by multiplying the fractional interest by theFair Market Value of a full Share.
3.3 Certificate as to Adjustments. Upon any adjustment pursuant to thisArticle 3, including any adjustments to the Exercise Prices or number of Sharesthat are exercisable under this Warrant, the Company shall promptly notifyHolder in writing, and, at the Company's expense, promptly compute suchadjustment, and furnish Holder with a certificate of its officer setting forthsuch adjustment and the facts upon which such adjustment is based.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
4.1 Representations and Warranties. The Company represents and warrants tothe Holder as follows:
(a) The Company is a corporation validly existing and in good standingunder the laws of the State of Delaware and has all requisite corporate powerand authority to carry on its business as now conducted.
(b) This Warrant constitutes the Company's valid and legally bindingobligation, enforceable in accordance with its terms, except as may be limitedby (i) applicable bankruptcy, insolvency, reorganization, or similar lawsrelating to or affecting the enforcement of creditors' rights and (ii) lawsrelating to the availability of specific performance, injunctive relief or otherequitable remedies. All corporate action has been taken on the part of theCompany, its officers, directors, and stockholders necessary for theauthorization, execution and delivery of this Warrant and the issuance of theShares upon exercise of this Warrant.
(c) All Shares which may be issued upon the exercise of this Warrant shallat all times during the term hereof and prior to exercise in full hereof be dulyreserved out of the Company's authorized and unissued capital stock for issuanceupon exercise hereof and shall, upon issuance, be duly and validly issued, fullypaid and non-assessable, and free of any liens and encumbrances except forrestrictions on transfer provided for herein or under applicable federal andstate securities laws.
4.2 No Shareholder Rights; Preemptive Rights. Except as provided in thisWarrant, Holder will not have any rights as a shareholder of the Company untilthe exercise of this Warrant. The Shares for which this Warrant is exercisableshall at all times be free from preemptive rights and any other rights (or theCompany shall have received a valid waiver from all such holders of any suchrights) that would prevent the exercise of this Warrant in full by the Holder.
4.3 Valid Issuance. The Company shall take all steps necessary to ensurethat all Shares which may be issued upon the exercise of this Warrant shall,upon issuance, be duly authorized, validly issued, fully paid and nonassessable,free of any liens and encumbrances, and issued to the Holder without violationof any applicable law or governmental regulation or any requirements of anydomestic securities exchange or similar quotation system upon which the Sharesmay be listed, except for restrictions on transfer provided for herein or underapplicable federal and state securities laws.
REPRESENTATIONS AND WARRANTIES OF THE HOLDER.
The Holder represents and warrants to the Company as follows:
5.1 Purchase for Own Account. This Warrant and the Shares to be acquiredupon exercise of this Warrant by Holder are being acquired for investment forHolder's account, not as a nominee or agent, and not with a view to the publicresale or distribution in violation of applicable securities laws. Holder alsorepresents that it has not been formed for the specific purpose of acquiringthis Warrant or the Shares.
5.2 Disclosure of Information. Holder has received or has had full accessto all the information it considers necessary or appropriate to make an informedinvestment decision with respect to this Warrant and its underlying securities.Holder further has had an opportunity to ask questions and receive answers fromthe Company regarding the terms and conditions of the offering of this Warrantand its underlying securities and to obtain additional information (to theextent the Company possessed such information or could acquire it withoutunreasonable effort or expense) necessary to verify any information furnished toHolder or to which Holder has access.
5.3 Investment Experience. Holder understands that the purchase of thisWarrant and its underlying securities involves substantial risk. Holder hasexperience as an investor in securities of companies in the development stageand acknowledges that Holder can bear the economic risk of such Holder'sinvestment in this Warrant and its underlying securities and has such knowledgeand experience in financial or business matters that Holder is capable ofevaluating the merits and risks of its investment in this Warrant and itsunderlying securities and/or has a preexisting personal or business relationshipwith the Company and certain of its officers, directors or controlling personsof a nature and duration that enables Holder to be aware of the character,business acumen and financial circumstances of such persons.
5.4 Accredited Investor Status. Holder is an "accredited investor" withinthe meaning of Regulation D promulgated under the Act.
5.5 The Act. Holder understands that this Warrant and the Shares issuableupon exercise hereof have not been registered under the Act in reliance upon aspecific exemption therefrom, which exemption depends upon, among other things,the bona fide nature of the Holder's investment intent as expressed herein.Holder understands that this Warrant and the Shares issued upon any exercisehereof must be held indefinitely unless subsequently registered under the Actand qualified under applicable state securities laws, or unless exemption fromsuch registration and qualification are otherwise available.
6.1 Term.This Warrant is exercisable in whole or in part at any time andfrom time to time on or before the Expiration Date.
6.2 Legends. This Warrant and the Shares shall be imprinted with alegend in substantially the following form:
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDERTHE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED ORHYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATESECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCESATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
6.3 Compliance with Securities Laws on Transfer. This Warrant and/or theShares issuable upon exercise of this Warrant may not be transferred or assignedin whole or in part without compliance with applicable federal and statesecurities laws by the transferor and the transferee, and in connection with anyproposed transfer of this Warrant or the Shares to any Person other than anAffiliate of the Holder, the transferor shall, if reasonably requested by theCompany, deliver a legal opinion of counsel to the transferor (at thetransferor's expense).
6.4 Registration Rights. In the event that the Company, at any time priorto the Termination Date, proposes to file on behalf of any stockholder orwarrantholder a registration statement under the Act on any form (other than aregistration statement on Form S-4 or Form S-8) to specifically register theshares or warrant shares held by such stockholder or warrantholder and namingsuch stockholder or warrantholder therein, the Company shall provide writtennotice to the Holder as soon as practicable of such proposed filing, but in noevent shall such written notice be given to the Holder later than ten (10) daysprior to the date that the Company intends to file such registration statement,and, subject to the receipt by the Company of any information of the Holderreasonably required to be included in the registration statement, the Holdershall have the right, in its discretion, to include the Shares of the Holder insuch registration statement at the Company's expense; provided, however, thatthe Holder shall have no such right with respect to any Shares that cannot beregistered on such registration statement, as a result of the rules andregulations of the Securities and Exchange Commission. All legal and other feesand expenses incurred by the Holder in connection with such registration shallbe borne by the Holder. The Holder shall not, in connection with any suchregistration, provide any information to the Company that contains any untruestatement of a material fact or fail to state a material fact required to bestated or necessary to make the statements provided to the Company notmisleading, in light of the circumstances in which they were made. The rights ofthe Holder contained in this Section 6.4 shall terminate upon the earliest tooccur of: (a) immediately before the closing of an Acquisition; (b) such time asSecurities and Exchange Commission Rule 144 or another similar exemption underthe Securities Act is available for the sale of all the Shares withoutlimitation during a three-month period without registration; and (c) theTermination Date.
6.5 Transfer Procedure. Subject to the provisions of Section 6.3 and uponproviding the Company with written notice, Holder may transfer all or part ofthis Warrant or the Shares issuable upon exercise of this Warrant to anytransferee, provided, however, in connection with any such transfer, Holder willgive the Company notice of the portion of the Warrant being transferred with thename, address and taxpayer identification number of the transferee and Holderwill surrender this Warrant to the Company for reissuance to thetransferee(s) (and Holder if applicable).
6.6 Notices. All notices and other communications from the Company to theHolder, or vice versa, shall be in writing and shall be deemed delivered andeffective when given personally or mailed by first-class registered or certifiedmail or by overnight courier, postage prepaid (or on the first business dayafter transmission by email), at such address as may have been furnished to theCompany or Holder, as the case may be, in writing by the Company or such holderfrom time to time.
All notices to Holder shall be addressed as follows until the Company receivesnotice of a change in address in accordance with this Section 6.6:
SWK Funding LLC
Attn: Chief Executive Officer
14755 Preston Road, Suite 105
Dallas, TX 75254
With a copy (which shall not constitute notice) to:
Holland & Knight LLP200 Crescent Ct., Suite 1600Dallas, TX 75201Telephone: 214-964-9500Email: [XXX]
Notice to the Company shall be addressed as follows until Holder receives noticeof a change in address in accordance with this Section 6.6:
Aziyo Biologics, Inc.,12510 Prosperity Drive, Suite 370Silver Spring, Maryland 20904Attention: [XXX]Email: [XXX]
With a copy (which shall not constitute notice) to:
Latham & Watkins LLP200 Clarendon StreetBoston, Massachusetts 02116
6.7 Waiver. This Warrant and any term hereof may be changed, waived,discharged or terminated only by an instrument in writing signed by the partyagainst which enforcement of such change, waiver, discharge or termination issought.
6.8 Attorney's Fees. In the event of any dispute between the partiesconcerning the terms and provisions of this Warrant, the party prevailing insuch dispute shall be entitled to collect from the other party all costsincurred in such dispute, including reasonable attorneys' fees.
6.9 Counterparts; Electronic Signatures. This Warrant may be executed incounterparts with the same effect as if all parties had executed the samedocument. All counterparts shall be construed together and shall constitute asingle agreement. Further, the parties hereto consent and agree that thisWarrant may be signed and/or transmitted by e-mail of any .pdf file, .jpeg file,or any other electronic or image file, or any "electronic signature" as definedunder the U.S. Electronic Signatures in Global and National Commerce Act or theNew York Electronic Signatures and Records Act, which includes any electronicsignature provided using Orbit, Adobe Sign, DocuSign, or any other similarplatform identified by the parties hereto and reasonably available at no undueburden or expense to the Agent), except to the extent the Agent requiresotherwise. Any such electronic signatures shall be valid, effective and legallybinding as if such electronic signatures were handwritten signatures and shallbe deemed to have been duly and validly delivered for all purposes hereunder. Noparty hereto shall raise the use of e-mail or other electronic transmission todeliver a signature or the fact that any signature or agreement or amendment wastransmitted or communicated through the use of e-mail or other electronictransmission as a defense to the formation or enforceability of a contract andeach such party forever waives any such defense.
6.10 Governing Law. This Warrant shall be governed by and construed inaccordance with the laws of the State of New York, without giving effect to itsprinciples regarding conflicts of law.
[Remainder of page intentionally blank; signature pages follow.]
IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the day andyear first above written.
AZIYO BIOLOGICS, INC.,a Delaware corporation
By: /s/ Matt FergusonName: Matt FergusonTitle: Chief Financial Officer
[Signature Page to Warrant]
SWK FUNDING LLC
By: SWK Holdings Corporation, its sole Manager
By: /s/ Winston Black Name: Winston Black Title: Chief Executive Officer
[Signature Page to Warrant]
NOTICE OF EXERCISE
The undersigned, pursuant to the provisions set forth in the attached Warrant(No.____), hereby irrevocably elects to purchase (check applicable box):
___ ________ First Tranche Shares or Second Tranche Shares, as applicablecovered by such Warrant.
___ The undersigned herewith makes payment of the full purchase price for suchShares at the price per share provided for in such Warrant, which is$___________. Such payment takes the form of (check applicable box or boxes):
___ $__________ in lawful money of the United States; and/or
___ the cancellation of such number of Shares as is necessary, in accordancewith the formula set forth in Section 1.2, to exercise this Warrant with respectto _______ Shares (using a Fair Market Value of $_______ per Share for purposesof this calculation) purchasable pursuant to the cashless exercise procedure setforth in Section 1.2.
The undersigned requests that the certificates for such Shares be issued in thename of, and delivered to whoseaddress is .
By its execution below and for the benefit of the Company, Holder herebyrestates each of the representations and warranties in Article 4 of the Warrantas of the date hereof.
AZIyo biologics, inc.,
SWK FUNDING LLC, as Agent, Sole Lead Arranger and Sole Bookrunner,
the financial institutions party hereto from time to time as Lenders
Dated as of August 10, 2022
[Aziyo] Credit Agreement
Table of Contents
Section 1 Definitions; Interpretation. 11.1 Definitions 11.2 Interpretation 15
Section 2 Credit Facility. 152.1 Term Loan Commitments 152.2 Loan Procedures 162.2.1 Initial Advance 162.2.2 Subsequent Term Loan 162.3 Commitments Several 162.4 Indebtedness Absolute; No Offset; Waiver 162.5 Loan Accounting 172.5.1 Recordkeeping 172.5.2 Notes 172.6 Payment of Interest 172.6.1 Interest Rates 172.6.2 Payments of Interest and Principal 182.7 Fees 192.8 Prepayment 192.8.1 Mandatory Prepayment 192.8.2 Voluntary Prepayment 192.9 Repayment of Term Loan 202.9.1 Revenue-Based-Payment 202.9.2 Principal 222.10 Payment 222.10.1 Making of Payments 222.10.2 Application of Payments and Proceeds 222.10.3 Set-off 222.10.4 Proration of Payments 22
Section 3 Yield Protection. 233.1 Taxes 233.2 Increased Cost 263.3 [Reserved 273.4 Manner of Funding; Alternate Funding Offices 273.5 Conclusiveness of Statements; Survival 27
Section 4 Conditions Precedent. 274.1 Prior Debt 284.2 General 284.3 Fees 294.4 Representations, Warranties, Defaults 294.5 Diligence 294.6 Corporate Matters 304.7 Closing Date Warrant 304.8 [Reserved] 30
[Aziyo] Credit Agreement
Section 5 Representations and Warranties. 305.1 Organization 305.2 Authorization; No Conflict 305.3 Validity; Binding Nature 305.4 Financial Condition 315.5 No Material Adverse Effect 315.6 Litigation 315.7 Ownership of Properties; Liens 315.8 Capitalization 315.9 Pension Plans 315.10 Investment Company Act 325.11 No Default 325.12 Margin Stock 325.13 Taxes 325.14 Solvency 325.15 Environmental Matters 325.16 Insurance 335.17 Information 335.18 Intellectual Property; Products and Services 335.19 Restrictive Provisions 345.20 Labor Matters 345.21 Material Contracts; Leased Real Estate 345.22 Compliance with Laws; Health Care Laws 355.23 Existing Indebtedness; Investments, Guarantees and Certain 36 Contracts5.24 Affiliated Agreements 365.25 Names; Locations of Offices, Records and Collateral; Deposit 36 Accounts5.26 Non-Subordination 365.27 Broker's or Finder's Commissions 365.28 Anti-Terrorism; OFAC 375.29 Security Interest 375.30 Survival 37
Section 6 Affirmative Covenants. 376.1 Information 376.1.1 Annual Report 386.1.2 Interim Reports 386.1.3 Quarterly Review Meeting 386.1.4 Revenue-Based-Payment Amount Reconciliation 396.1.5 Compliance Certificate 396.1.6 [Reserved] 396.1.7 Notice of Default; Litigation 396.1.8 FiberCel Net Liability Amount. 406.1.9 [Reserved] 406.1.10 Projections 416.1.11 Updated Schedules to Guarantee and Collateral Agreement 416.1.12 Other Information 416.2 Books; Records; Inspections 416.3 Conduct of Business; Maintenance of Property; Insurance 426.4 Compliance with Laws; Payment of Taxes and Liabilities 436.5 Maintenance of Existence 436.6 Employee Benefit Plans 43
[Aziyo] Credit Agreement
6.7 Environmental Matters 436.8 Further Assurances 446.9 Compliance with Health Care Laws 446.10 Cure of Violations 456.11 Corporate Compliance Program 456.12 Payment of Debt 46
Section 7 Negative Covenants. 477.1 Debt 477.2 Liens 487.3 Dividends; Redemption of Equity Interests 497.4 Mergers; Consolidations; Asset Sales 497.5 Modification of Organizational Documents 507.6 Use of Proceeds 507.7 Transactions with Affiliates 507.8 Inconsistent Agreements 517.9 Business Activities 517.10 Investments 517.11 Restriction of Amendments to Certain Documents 527.12 Fiscal Year 527.13 Financial Covenants 527.13.1 Minimum Consolidated Unencumbered Liquid Assets 527.13.2 Minimum Aggregate Revenue 537.14 Deposit Accounts 537.15 Subsidiaries 537.16 Regulatory Matters 547.17 Name; Permits; Dissolution; Insurance Policies; Disposition of 54 Collateral; Taxes; Trade Names; Location of Assets; Change of Chief Executive Office7.18 Truth of Statements 55
Section 8 Events of Default; Remedies. 558.1 Events of Default 558.1.1 Non-Payment of Credit 558.1.2 Default Under Other Debt 558.1.3 Bankruptcy; Insolvency 558.1.4 Non-Compliance with Loan Documents 558.1.5 Representations; Warranties 568.1.6 Pension Plans 568.1.7 Judgments 568.1.8 Invalidity of Loan Documents or Liens 568.1.9 Invalidity of Subordination Provisions 568.1.10 Change of Control 578.1.11 Certificate Withdrawals, Adverse Audit Results, and Other 57 Matters8.1.12 Material Adverse Effect 578.2 Remedies 57
Section 9 Agent. 589.1 Appointment; Authorization 589.2 Delegation of Duties 589.3 Limited Liability 599.4 Reliance 59
[Aziyo] Credit Agreement
9.5 Notice of Default 599.6 Credit Decision 609.7 Indemnification 609.8 Agent Individually 609.9 Successor Agent 619.10 Collateral and Guarantee Matters 619.11 Intercreditor and Subordination Agreements. 629.12 Actions in Concert 62
Section 10 Miscellaneous. 6210.1 Waiver; Amendments 6210.2 Notices 6310.3 Computations 6310.4 Costs; Expenses 6310.5 Indemnification by Borrower 6410.6 Marshaling; Payments Set Aside 6410.7 Non-liability of Lenders 6510.8 Assignments 6510.8.1 Assignments 6510.9 Participations 6710.10 Confidentiality 6710.11 Captions 6810.12 Nature of Remedies 6810.13 Counterparts; Electronic Signatures 6810.14 Severability 6810.15 Entire Agreement 6810.16 Successors; Assigns 6910.17 Governing Law 6910.18 Forum Selection; Consent to Jurisdiction 6910.19 Waiver of Jury Trial 6910.20 Patriot Act 7010.21 Independent Nature of Relationship 7010.22 Approved AR Loan Facility. 70
[Aziyo] Credit Agreement
Annex I Commitments and Pro Rata Term Loan SharesAnnex II Notice Addresses
Exhibit A Form of Assignment AgreementExhibit B Form of Compliance CertificateExhibit C Form of Note
Schedule 1.1 Pending Acquisitions as of the Closing DateSchedule 4.1 Prior DebtSchedule 5.1 Jurisdictions of QualificationSchedule 5.7 Ownership of Properties; LiensSchedule 5.8 CapitalizationSchedule 5.16 InsuranceSchedule 5.18(a) Borrower's Registered Intellectual PropertySchedule 5.18(b) Products and Required PermitsSchedule 5.21 Material ContractsSchedule 5.25A NamesSchedule 5.25B Places of BusinessSchedule 5.27 Broker's CommissionsSchedule 7.7 Transactions with AffiliatesSchedule 7.14 Deposit Accounts
[Aziyo] Credit Agreement
This Credit Agreement (as may be amended, restated, supplemented, or otherwisemodified from time to time, this "Agreement") dated as of August 10, 2022 (the"Closing Date"), among AZIYO BIOLOGICS, INC., a Delaware corporation("Borrower"), the financial institutions party hereto from time to time aslenders (each a "Lender" and collectively, the "Lenders") and SWK Funding LLC, aDelaware limited liability company (in its individual capacity, "SWK"), as Agentfor all Lenders.
In consideration of the mutual agreements herein contained, the parties heretoagree as follows:
Section 1 Definitions; Interpretation.
When used herein the following terms shall have the following meanings:
Account Control Agreement means, individually and collectively, any accountcontrol or similar agreement(s) entered into from time to time at Agent'srequest, among a Loan Party, Agent and any third party bank or financialinstitution at which such Loan Party maintains a Deposit Account.
Acquisition means any transaction or series of related transactions for thepurpose of or resulting, directly or indirectly, in (a) the acquisition of allor substantially all of the assets of a Person, or of all or substantially allof any business or division of a Person, (b) the acquisition of in excess offifty percent (50%) of the capital stock, partnership interests, membershipinterests or equity of any Person, or otherwise causing any Person to become aSubsidiary, (c) the acquisition of a product license or a product line(excluding, for purposes of Section 7.10 hereof, any pending Acquisitions as ofthe Closing Date as set forth on Schedule 1.1 hereto), or (d) a merger,amalgamation or consolidation or any other combination (other than a merger,amalgamation, consolidation or combination that effects a Disposition) withanother Person (other than a Person that is already a Subsidiary).
Affiliate of any Person means (a) any other Person which, directly orindirectly, controls or is controlled by or is under common control with suchPerson, (b) any managing member, manager, officer or director of such Person and(c) with respect to any Lender, any entity administered or managed by suchLender or an Affiliate or investment advisor thereof which is engaged in making,purchasing, holding or otherwise investing in commercial loans. For purposes ofthe definition of the term "Affiliate", a Person shall be deemed to be"controlled by" any other Person if such Person possesses, directly orindirectly, power to vote ten percent (10%) or more of the securities (on afully diluted basis) having ordinary voting power for the election of directorsor managers or power to direct or cause the direction of the management andpolicies of such Person whether by contract or otherwise. Unless expresslystated otherwise herein, neither Agent nor any Lender shall be deemed anAffiliate of Borrower, any Loan Party or any Affiliate thereof.
Agent means SWK in its capacity as administrative and collateral agent for allLenders hereunder and any successor thereto in such capacity.
Aggregate Revenue shall have the meaning set forth in Section 2.9.1(a).
Agreement shall have the meaning set forth in the Preamble.
Approved AR Loan Facility shall have the meaning set forth in Section 10.22.
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Approved Fund means (a) any fund, trust or similar entity that invests incommercial loans in the ordinary course of business and is advised or managed by(i) a Lender, (ii) an Affiliate of a Lender, (iii) the same investment advisorthat manages a Lender or (iv) an Affiliate of an investment advisor that managesa Lender or (b) any finance company, insurance company or other financialinstitution which temporarily warehouses loans for any Lender or any Persondescribed in clause (a) above.
Assignment Agreement means an agreement substantially in the form of Exhibit A.
Authorization shall have the meaning set forth in Section 5.22(b).
Board means Borrower's board of directors or such similar governing body.
Borrower shall have the meaning set forth in the Preamble.
Business Day means any day on which commercial banks are open for commercialbanking business in Dallas, Texas.
CanGaroo RM Product means the version of Borrower's CanGaroo Envelope productembedded with the antibiotics rifampin and minocycline.
Capital Lease means, with respect to any Person, any lease of (or otheragreement conveying the right to use) any real or personal property by suchPerson that, in conformity with GAAP, is accounted for as a capital lease and asa liability on the balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of Debt,maturing not more than one year after such time, issued or guaranteed by theUnited States Government or any agency thereof, (b) commercial paper, orcorporate demand notes, in each case (unless issued by a Lender or its holdingcompany) rated at least "A-l" by Standard & Poor's Ratings Group or "P-l" byMoody's Investors Service, Inc., (c) any certificate of deposit (or time depositrepresented by a certificate of deposit) or banker's acceptance maturing notmore than one year after such time, or any overnight Federal funds transactionthat is issued or sold by any Lender (or by a commercial banking institutionthat is a member of the Federal Reserve System or is a U.S. branch of a foreignbanking institution and has a combined capital and surplus and undivided profitsof not less than $500,000,000), (d) any repurchase agreement entered into withany Lender (or commercial banking institution of the nature referred to inclause (c) above) which (i) is secured by a fully perfected security interest inany obligation of the type described in any of clauses (a) through (c) above and(ii) has a market value at the time such repurchase agreement is entered into ofnot less than one-hundred percent (100%) of the repurchase obligation of suchLender (or other commercial banking institution) thereunder, (e) money marketaccounts or mutual funds which invest exclusively or substantially in assetssatisfying the foregoing requirements, (f) cash, and (g) other short term liquidinvestments approved in writing by Agent.
Cash Gross Profit means, for any applicable period, the sum of (i) Gross Profitfor such period, plus (ii) Intangible Asset Amortization Expense, for suchperiod, each as determined in accordance with GAAP and/or consistent with pastpractices.
Change of Control means the occurrence of any of the following, unless suchaction has been consented to in advance in writing by Agent in its solediscretion:
(i) any Person acquires the direct or indirect ownership of more than fiftypercent (50%) of the issued and outstanding total combined voting EquityInterests of Borrower;
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(ii) Borrower shall at any time fail to own, directly or indirectly, onehundred percent (100%) of the Equity Interests of each of its Subsidiaries;
(iii) any "change in/of control" or "sale" or "disposition" or "merger" or"amalgamation" or similar event as defined in any certificate of incorporationor formation or statement of designations or bylaws or operating agreement, asapplicable, of Borrower or in the Approved AR Loan Facility; or
(iv) the sale of all or substantially all of the assets of Borrower or anyof its Subsidiaries, or any merger, amalgamation, consolidation or acquisitionby Borrower or any of its Subsidiaries which does not result in such Personbeing the sole surviving entity.
Closing Date shall have the meaning set forth in the Preamble.
Closing Date Warrant means that certain warrant issued to SWK by Borrower on theClosing Date.
CMS means the Centers for Medicare and Medicaid Services of the United States ofAmerica.
Collateral has the meaning set forth in the Guarantee and Collateral Agreement.
Collateral Access Agreement means an agreement in form and substance reasonablysatisfactory to Agent pursuant to which a mortgagee or lessor of real propertyon which Collateral (or any books and records) is stored or otherwise located,or a warehouseman, processor or other bailee of Inventory or other propertyowned by any Loan Party, acknowledges the Liens of Agent and waives (or, ifapproved by Agent, subordinates) any Liens held by such Person on such property,and, in the case of any such agreement with a mortgagee or lessor, permits Agentreasonable access to any Collateral stored or otherwise located thereon
Collateral Documents means, collectively, the Guarantee and CollateralAgreement, the IP Security Agreement, any Collateral Access Agreement, anymortgage delivered in connection with the Loan from time to time, any AccountControl Agreement and each other agreement or instrument pursuant to or inconnection with which any Loan Party or any other Person grants a Lien in anyCollateral to Agent for the benefit of Agent and Lenders, each as amended,restated or otherwise modified from time to time.
Commitment means, as to any Lender, such Lender's Pro Rata Term Loan Share.
Compliance Certificate means a certificate substantially in the form ofExhibit B.
Consolidated Net Income means, with respect to any Person and its Subsidiaries,for any period, the consolidated net income (or loss) of such Person and itsrespective Subsidiaries for such period, as determined under GAAP.
Consolidated Unencumbered Liquid Assets means as of any date of determination(i) any cash and Cash Equivalent Investment owned by Loan Parties, on aconsolidated basis, which are not the subject of any Lien or other arrangementwith any creditor to have its claim satisfied out of the asset (or proceedsthereof) prior to the general creditors of Borrower and such Subsidiaries otherthan Liens permitted under Section 7.2 hereof, minus (ii) the aggregate amountof Borrower's accounts payable which are unpaid more than one hundred eighty(180) days beyond trade terms consistent with Borrower's past practice, plus(iii) any unused availability under the Approved AR Loan Facility, minus(iv) the FiberCel Net Liability Amount.
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Contingent Obligation means any agreement, undertaking or arrangement by whichany Person guarantees, endorses or otherwise becomes or is contingently liableupon (by direct or indirect agreement, contingent or otherwise, to provide fundsfor payment, to supply funds to or otherwise to invest in a debtor, or otherwiseto assure a creditor against loss) any indebtedness, obligation or otherliability of any other Person (other than by endorsements of instruments in thecourse of collection), or guarantees the payment of dividends or otherdistributions upon the shares of any other Person. The amount of any Person'sobligation in respect of any Contingent Obligation shall be deemed to be theamount for which the Person obligated thereon is reasonably expected to beliable or responsible.
Contract Rate means, as it relates to the calculation of interest due and owingon any Payment Date, a rate per annum equal to (a) the Term SOFR Rate, plus(b)(i) eight and three-quarters of one percent (8.75%) if Borrower has notelected the PIK Interest option in accordance with Section 2.6.2 hereof inrelation to such Payment Date, or (ii) four and three-quarters of one percent(4.75%) if Borrower has elected the PIK Interest option in accordance withSection 2.6.2 hereof in relation to such Payment Date (the "ApplicableMargin"), provided, however, the Applicable Margin shall decrease to (x) sevenand three-quarters of one percent (7.75%) for purposes of clause (b)(i) aboveand (y) three and three-quarters of one percent (3.75%) for purposes of clause(b)(ii) above (aa) permanently for any Fiscal Quarter immediately following aFiscal Quarter during which Borrower has issued Subordinated Debt on termsreasonably satisfactory to Agent (including the execution of a subordinationagreement in favor of Agent, if applicable) or Equity Interests in a transactionor series of transactions, resulting in net cash proceeds to Borrower of atleast $10,000,000, in excess of the net cash proceeds required pursuant toSection 6.1.8(a)(i) hereof, or prior to the final determination of the FiberCelNet Liability Amount, subject to the Borrower's election pursuant toSection 6.1.8(a)(ii) (the "Subsequent Capital Raise"), and each Fiscal Quarterthereafter, and (bb) for any one (1) full Fiscal Quarter immediately followingany Fiscal Quarter during which Borrower has achieved Consolidated UnencumberedLiquid Assets of at least the sum of the Operating Burn for the four(4) consecutive Fiscal Quarters immediately prior to such Quarter then ended.
Controlled Group means all members of a controlled group of corporations and allmembers of a controlled group of trades or businesses (whether or notincorporated) under common control which, together with a Loan Party, aretreated as a single employer under Section 414 of the IRC or Section 4001 ofERISA.
Copyrights has the meaning set forth in the Guarantee and Collateral Agreement.
Debt of any Person means, without duplication, (a) all indebtedness of suchPerson for borrowed money, (b) all indebtedness evidenced by bonds, debentures,notes or similar instruments, (c) all obligations of such Person as lessee underCapital Leases which have been or should be recorded as liabilities on a balancesheet of such Person in accordance with GAAP, (d) all obligations of such Personto pay the deferred purchase price of property or services (excluding tradeaccounts payable in the ordinary course of business), other than royaltypayments or cash milestone payments made or to be made by such Person from timeto time in connection with an Acquisition, (e) all indebtedness secured by aLien on the property of such Person, whether or not such indebtedness shall havebeen assumed by such Person (with the amount thereof being measured as thelesser of (x) the aggregate unpaid amount of such indebtedness and (y) the fairmarket value of such property), (f) all reimbursement obligations, contingent orotherwise, with respect to letters of credit (whether or not drawn), banker'sacceptances and surety bonds issued for the account of such Person, other thanobligations that relate to trade accounts payable in the ordinary course ofbusiness, (g) all Hedging Obligations of such Person, (h) all ContingentObligations of such Person in respect of Debt of others, (i) all indebtedness ofany partnership of which such Person is a general partner except to the extentsuch Person is not liable for such Debt, and (j) all obligations of such Personunder any synthetic lease transaction, where such obligations are consideredborrowed money indebtedness for Tax purposes but the transaction is classifiedas an operating lease in accordance with GAAP.
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Debtor Relief Law means, collectively: (a) Title 11 of the United States Code,11 U.S.C. 101 et. seq., as amended from time to time, and (b) all other UnitedStates or foreign applicable liquidation, conservatorship, bankruptcy,moratorium, rearrangement, receivership, insolvency, reorganization or similardebtor relief laws from time to time in effect affecting the rights of creditorsgenerally, in each case as amended from time to time.
Default means any event that, if it continues uncured, will, with the lapse oftime or the giving of notice or both, constitute an Event of Default.
Default Rate means a rate per annum equal to the lesser of (i) three percent(3%) over the Contract Rate, or (ii) the maximum rate of interest permitted tobe charged by applicable laws, directives or regulations governing thisAgreement until paid.
Deposit Account means, individually and collectively, any bank or otherdepository accounts of a Loan Party.
Disposition means, as to any asset or right of any Loan Party, (a) any sale,lease, assignment or other transfer (other than to any other Loan Party), butspecifically excluding any license or sublicense, (b) any loss, destruction ordamage thereof or (c) any condemnation, expropriation, confiscation,requisition, seizure or taking thereof, in each case excluding (i) the sale ofinventory or Product in the ordinary course of business, (ii) any issuance ofEquity Interests by Borrower, (iii) any Disposition of obsolete or unusedequipment and (iv) any other Disposition where the Net Cash Proceeds of anysale, lease, assignment, transfer, condemnation, expropriation, confiscation,requisition, seizure or taking do not in the aggregate exceed $250,000 in anyFiscal Year.
Division means, with respect to any Person which is an entity, the division ofsuch Person into two (2) or more separate such Persons, with the dividing Personeither continuing or terminating its existence as part of such division,including as contemplated under Section 18-217 of the Delaware Limited LiabilityAct for limited liability companies formed under Delaware law, or any analogousaction taken pursuant to any other applicable law with respect to anycorporation, limited liability company, partnership or other entity. The word"Divide," when capitalized, shall have a correlative meaning.
Dollar and $ mean lawful money of the United States of America.
Elapsed Period has the meaning set forth in Section 2.9.1(a).
Environmental Claims means all claims, however asserted, by any GovernmentalAuthority or other Person alleging potential liability or responsibility forviolation of any Environmental Law, or for release or injury to the environmentor any Person or property.
Environmental Laws means all present or future foreign, federal, state or locallaws, statutes, common law duties, rules, regulations, ordinances and codes,together with all administrative orders, directed duties, requests, licenses,authorizations and permits of, and agreements with, any Governmental Authority,in each case relating to any matter arising out of or relating to the effect ofthe environment on health and safety, or pollution or protection of theenvironment or workplace, including any of the foregoing relating to thepresence, use, production, generation, handling, transport, treatment, storage,disposal, distribution, discharge, release, control or cleanup of any HazardousSubstance.
Equity Interests means, with respect to any Person, its equity ownershipinterests, its common stock and any other capital stock or other equityownership units of such Person authorized from time to time, and any othershares, options, interests, participations or other equivalents (howeverdesignated) of or in such Person, whether voting or nonvoting, including,without limitation, common stock, options, warrants, preferred stock, phantomstock, membership units (common or preferred), stock appreciation rights,membership unit appreciation rights, convertible notes or debentures, SAFE's orsimilar instruments, stock purchase rights, membership unit purchase rights andall securities convertible, exercisable or exchangeable, in whole or in part,into any one or more of the foregoing.
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ERISA means the Employee Retirement Income Security Act of 1974, as amended fromtime to time.
Event of Default means any of the events described in Section 8.1.
Excluded Taxes has the meaning set forth in Section 3.1(a).
Exempt Accounts means any Deposit Accounts, securities accounts or other similaraccounts (i) into which there are deposited no funds other than those intendedsolely to cover compensation to employees of the Loan Parties (and relatedcontributions to be made on behalf of such employees to health and benefitplans) plus balances for outstanding checks for compensation and suchcontributions from prior periods; (ii) constituting employee withholdingaccounts and contain only funds deducted from pay otherwise due to employees forservices rendered to be applied toward the Tax obligations of such Person or itsemployees, or (iii) into which there are deposited no funds other than thosereceived in trust or in escrow, or as cash collateral to secure performance.
Exit Fee has the meaning set forth in Section 2.7(b).
FATCA means Sections 1471 through 1474 of the IRC, as of the date of thisAgreement (or any amended or successor version that is substantively comparableand not materially more onerous to comply with) and any current or futureregulations or official interpretations thereof, any agreements entered intopursuant to Section 1471(b)(1) of the IRC, any fiscal, Tax or regulatorylegislation, rules or official practices adopted pursuant to anyintergovernmental agreement, treaty or convention among Governmental Authoritiesand implementing Sections 1471 through 1474 of the IRC.
FD&C Act means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301 etseq., as amended, and all applicable regulations promulgated by the FDA.
FDA means the Food and Drug Administration of the United States of America.
FDA Law and Regulation means the provisions of the FD&C Act and all applicableregulations promulgated by the FDA.
FDA Products means any finished products sold by Borrower or any of the otherLoan Parties for itself or for a third party that are subject to applicableHealth Care Laws.
Federal Funds Effective Rate means, for any day, the greater of (a) the ratecalculated by the Federal Reserve Bank of New York based on such day's Federalfunds transactions by depositary institutions (as determined in such manner asthe Federal Reserve Bank of New York shall set forth on its public website fromtime to time) and published on the next succeeding day on which commercial banksare open for commercial banking business in New York, New York, by the FederalReserve Bank of New York as the Federal funds effective rate and (b) 1.00%.
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FiberCel Litigation means any pending, threatened or future claims againstBorrower or any Affiliate related to or arising from Borrower's June 2021 recallof a single lot of Borrower's product FiberCel.
FiberCel Net Liability Amount means the amount equal to (i) the aggregate amountrequired to be paid by Borrower pursuant to a legally binding and enforceablesettlement or similar agreement pertaining to the FiberCel Litigation and anylegal costs associated therewith (in each case net of (a) any insuranceproceeds, third party reimbursements or third party indemnity payments receivedby or on behalf of Borrower in connection with the FiberCel Litigation and(b) without duplication of clause (a), any such amounts described in clause(a) not yet paid by the applicable insurance provider or third party to or forthe benefit of Borrower that have otherwise been specifically acknowledged inwriting by such insurance provider or third party), minus (ii) the amount bywhich (a) the Consolidated Unencumbered Liquid Assets (without giving effect toclause (iv) in the definition thereof) as of the applicable date ofdetermination of the FiberCel Net Liability Amount exceeded the (b) OperatingBurn for the four (4) prior, consecutive Fiscal Quarters then ended.
Fiscal Quarter means a calendar quarter of a Fiscal Year.
Fiscal Year means the fiscal year of Borrower, which period shall be the twelve(12) month period ending on December 31 of each year.
Foreign Lender means any Lender that is not a "United States person" within themeaning of Section 7701(a)(30) of the IRC.
FRB means the Board of Governors of the Federal Reserve System or any successorthereto.
GAAP means generally accepted accounting principles in effect in the UnitedStates of America set forth from time to time in the opinions and pronouncementsof the Accounting Principles Board and the American Institute of CertifiedPublic Accountants and statements and pronouncements of the Financial AccountingStandards Board (or agencies with similar functions of comparable stature andauthority within the U.S. accounting profession), which are applicable to thecircumstances as of the date of determination.
Governmental Authority means any nation or government, any state or otherpolitical subdivision thereof, and any agency, branch of government, departmentor Person exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government and any corporation orother Person owned or controlled (through stock or capital ownership orotherwise) by any of the foregoing, whether domestic or foreign. GovernmentalAuthority shall include any agency, branch or other governmental body chargedwith the responsibility and/or vested with the authority to administer and/orenforce any Health Care Laws.
Gross Profit means, for any applicable period, (i) Aggregate Revenue, for suchperiod, minus (ii) costs of goods sold, for such period, determined inaccordance with GAAP and consistent with past practices.
Guarantee and Collateral Agreement means the Guarantee and Collateral Agreementdated as of the Closing Date executed by each Loan Party signatory thereto infavor of Agent for the benefit of Lenders.
Hazardous Substances means hazardous waste, pollutant, contaminant, toxicsubstance, oil, hazardous material, chemical or other substance regulated by anyEnvironmental Law.
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Health Care Laws mean all foreign, federal and state fraud and abuse lawsrelating to the regulation of healthcare products, pharmaceutical products,laboratory facilities and services, healthcare providers, healthcareprofessionals, healthcare facilities, clinical research facilities or healthcarepayors, in each case, as applicable, including but not limited to (i) thefederal Anti-Kickback Statute (42 U.S.C. (1320a-7b(b))), the civil False ClaimsAct (31 U.S.C. 3729 et seq.), TRICARE (10 U.S.C. Section 1071 et seq.),Section 1320a-7 and 1320a-7a of Title 42 of the United States Code and theregulations promulgated pursuant to such statues; (ii) the Health InsurancePortability and Accountability Act of 1996 (Pub. L. No. 104-191), as amended bythe Health Information Technology for Economic and Clinical Health Act of 2009,and the regulations promulgated thereunder, (iii) Medicare (Title XVIII of theSocial Security Act) and the regulations promulgated thereunder; (iv) Medicaid(Title XIX of the Social Security Act) and the regulations promulgatedthereunder; (v) the FD&C Act and all applicable regulations issued thereunder bythe FDA (including FDA Law and Regulation); (vi) quality, safety andaccreditation standards and requirements of all applicable foreign and domesticfederal, provincial or state laws, directives, regulations or regulatory bodies,in each case, as applicable; (vii) all applicable licensure laws, directives andregulations; (viii) all applicable professional standards regulating healthcareproviders, healthcare professionals, healthcare facilities, clinical researchfacilities or healthcare payors, and (ix) any and all other applicable healthcare laws (whether foreign or domestic), regulations, directives, manualprovisions, policies and administrative guidance, including those related to thecorporate practice of medicine, fee-splitting, state anti-kickback orself-referral prohibitions, in each case, as applicable, and each of clauses(i) through (ix) as may be amended from time to time.
Hedging Obligation means, with respect to any Person, any liability of suchPerson under any interest rate, currency or commodity swap agreement, capagreement or collar agreement, and any other agreement or arrangement designedto protect a Person against fluctuations in interest rates, currency exchangerates or commodity prices. The amount of any Person's obligation in respect ofany Hedging Obligation shall be deemed to be the incremental obligation thatwould be reflected in the financial statements of such Person in accordance withGAAP.
Indemnified Taxes has the meaning set forth in Section 3.1(a).
Intangible Asset Amortization Expense means, for any applicable period,amortization expense relating to intangible assets Borrower acquired in itsacquisition of all of the commercial assets of CorMatrix Cardiovascular, Inc. in2017, or any other amortizable intangible assets acquired subsequent to theClosing Date, each determined in accordance with GAAP and consistent with pastpractices.
Intercreditor Agreement means individually and collectively, (i) that certainIntercreditor Agreement, dated as of the Closing Date, by and among theBorrower, Ligand Pharmaceuticals Incorporated, any revolving loan lender withrespect to an Approved AR Loan Facility in effect from time to time, and theAgent and (ii) any other intercreditor agreement that may be executed from timeto time in connection with any Approved AR Loan Facility, in form and substanceacceptable to Agent in its sole discretion.
Intellectual Property has the meaning set forth in the Guarantee and CollateralAgreement.
Interest Expense means for any Person and its Subsidiaries for any period theconsolidated interest expense of such Person and its Subsidiaries for suchperiod (including all imputed interest on Capital Leases).
Inventory has the meaning set forth in the Guarantee and Collateral Agreement.
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Investment means, with respect to any Person, (a) the purchase of any debt orequity security of any other Person, (b) the making of any loan or advance toany other Person, (c) becoming obligated with respect to a Contingent Obligationin respect of obligations of any other Person (other than travel and similaradvances to employees in the ordinary course of business) or (d) the making ofan Acquisition.
IP Security Agreement means the Intellectual Property Security Agreement datedon or about the Closing Date by each Loan Party signatory thereto in favor ofAgent for the benefit of Lenders.
IRC means the Internal Revenue Code of 1986, as amended.
IRS means the United States Internal Revenue Service.
Legal Costs means, with respect to any Person, all reasonable, duly documented,out-of-pocket fees and charges of any counsel, accountants, auditors,appraisers, consultants and other professionals to such Person, and all courtcosts and similar legal expenses.
Lenders has the meaning set forth in the Preamble.
Lien means, with respect to any Person, any interest granted by such Person inany real or personal property, asset or other right owned or being purchased oracquired by such Person which secures payment or performance of any obligationand shall include any mortgage (whether legal or equitable), lien, encumbrance,charge, pledge, assignment by way of security or other security interest of anykind, whether arising by contract, as a matter of law, by judicial process orotherwise.
Ligand Royalty Agreement means that certain Royalty Agreement, dated as ofMay 31, 2017, by and between Aziyo Med, LLC, a Delaware limited liabilitycompany and Ligand Pharmaceuticals Incorporated, a Delaware corporation, asamended, restated, supplemented or otherwise modified from time to time inaccordance with the Intercreditor Agreement, and any related documents executedin connection therewith, including but not limited to the guaranty agreement byand between Borrower and Ligand Pharmaceuticals Incorporated.
Ligand Royalty Payments means the regularly scheduled payments by Aziyo Med,LLC, a Delaware limited liability company, to Ligand on a non-accelerated basispursuant to Section 2.02 of the Ligand Royalty Agreement as in effect on theClosing Date (including adjustments for any one-time or extraordinary expensesas mutually agreed upon by Borrower and Agent). For the avoidance of doubt,payments subject to Section 2.03 of the Ligand Royalty Agreement do notconstitute Ligand Royalty Payments.
Loan or Loans means, individually and collectively the Term Loan and any otheradvances made by Agent and Lenders in accordance with the Loan Documents.
Loan Documents means this Agreement, any Notes, Intercreditor Agreement, anysubordination agreements, the Collateral Documents, the Post-Closing Agreementand all documents, instruments and agreements delivered in connection with theforegoing.
Loan Party means Borrower and each of its Subsidiaries, if any.
Margin Stock means any "margin stock" as defined in Regulation T, U or X of theFRB.
Material Adverse Effect means (a) a material adverse change in, or a materialand adverse effect upon, the financial condition of Loan Parties taken as awhole, (b) a material impairment of the ability of any Loan Party to perform anyof its payment Obligations under any Loan Document or (c) a material and adverseeffect upon any material portion of the Collateral under the CollateralDocuments or upon the legality, validity, binding effect or enforceabilityagainst any Loan Party of any material Loan Document.
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Material Contract has the meaning assigned in Section 5.21 hereof.
Multiemployer Pension Plan means a multiemployer plan, as defined inSection 4001(a)(3) of ERISA, to which Borrower or any member of the ControlledGroup may have any liability.
Net Cash Proceeds means, with respect to any Disposition, the aggregate cashproceeds (including cash proceeds received pursuant to policies of insurance andby way of deferred payment of principal pursuant to a note, installmentreceivable or otherwise, but only as and when received) received by any LoanParty pursuant to such Disposition net of (i) the reasonable direct costsrelating to such Disposition (including sales commissions and legal, accountingand investment banking fees, commissions and expenses), (ii) any portion of suchproceeds deposited in an escrow account pursuant to the documentation relatingto such Disposition (provided that such amounts shall be treated as Net CashProceeds upon their release from such escrow account to and receipt by theapplicable Loan Party), (iii) Taxes and other governmental costs and expensespaid or reasonably estimated by a Loan Party to be payable as a result thereof(after taking into account any available tax credits or deductions and any taxsharing arrangements), (iv) amounts required to be applied to the repayment ofany Debt (together with any interest thereon, premium or penalty and any otheramount payable with respect thereto) secured by a Lien that has priority overthe Lien, if any, of Agent on the asset subject to such Disposition,(v) reserves for purchase price adjustments and retained liabilities reasonablyexpected to be payable by the Loan Parties in connection therewith establishedin accordance with GAAP (provided that upon the final determination of theamount paid in respect of such purchase price adjustments and retainedliabilities, the actual amount of purchase price adjustments and retainedliabilities paid is less than such reserves, the difference shall, at such time,constitute Net Cash Proceeds) and (vi)(A) with respect to any Dispositiondescribed in clauses (a), (b) or (c) of the definition thereof, all moneyactually applied within one-hundred eighty (180) days to replace such assets tobe used in the business of Loan Parties, and (B) with respect to anyDisposition, all money actually applied within one-hundred eighty (180) days torepair or replace the assets in question or to repair or reconstruct damagedproperty or property affected by loss, destruction, damage, condemnation,expropriation, confiscation, requisition, seizure or taking.
Net Sales means the gross amount billed or invoiced by Loan Parties for Servicesand for the sale of Products (including products and services ancillary thereto)to independent customers, less deductions for (a) quantity, trade, cash or otherdiscounts, allowances, credits or rebates (including customer rebates) actuallyallowed or taken, (b) amounts deducted, repaid or credited by reason ofrejections or returns of goods and government mandated rebates, or because ofchargebacks or retroactive price reductions, and (c) Taxes, tariffs, duties orother governmental charges or assessments (including any sales, value added orsimilar taxes other than an income tax) levied, absorbed or otherwise imposed onor with respect to the production, sale, transportation, delivery or use ofProducts. A Product or Service shall be considered sold and/or provided whenbilled or invoiced. To the extent applicable, components of Net Sales shall bedetermined in the ordinary course of business in accordance with historicalpractice and using the accrual method of accounting in accordance with GAAP. Forthe purposes of calculating Net Sales, Lenders and Agent understand and agreethat (i) Affiliates of Borrower shall not be regarded as independent customersand (ii) Net Sales shall not include Products distributed for productdevelopment purposes, including for use in pre-clinical trials.
Note means a promissory note substantially in the form of Exhibit C.
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Obligations means all liabilities, indebtedness and obligations (monetary(including post-petition interest, allowed or not) or otherwise) of any LoanParty under this Agreement, any other Loan Document or any other document orinstrument executed in connection herewith or therewith which are owed to anyLender or Affiliate of a Lender, in each case howsoever created, arising orevidenced, whether direct or indirect, absolute or contingent, now or hereafterexisting, or due or to become due. For the avoidance of doubt, "Obligations"shall include Borrower's obligation to pay any amounts due under Sections 2.7and 2.8.2 and payable on such date of determination. Notwithstanding theforegoing, Obligations shall not include any obligations under the Closing DateWarrant or any other warrant or equity instrument.
OFAC means the U.S. Department of Treasury's Office of Foreign Asset Control.
Operating Burn means, for any period being measured, the product of (x) -1 and(y) the sum of (i) aggregate net cash used in operating activities fromoperations of Loan Parties, (ii) expenditures for property, plant and equipment,and (iii) any Ligand Royalty Payments, less (iv) any one-time or extraordinaryexpenses made within such measurement period, as mutually agreed upon by Agentand Borrower, in each case as determined from the cash flow statement providedby Borrower and in accordance with GAAP.
Paid in Full, Pay in Full or Payment in Full means, with respect to anyObligations, the payment in full in cash of all such Obligations (other thancontingent indemnification obligations, yield protection and expensereimbursement to the extent no claim giving rise thereto has been asserted inrespect of contingent indemnification obligations, and to the extent no amountstherefor have been asserted, in the case of yield protection and expensereimbursement obligations, which Obligations shall survive the Payment in Fullof the Obligations).
Patents has the meaning set forth in the Guarantee and Collateral Agreement.
Payment Date means the fifteenth (15th) day of each of February, May, August andNovember (or the next succeeding Business Day to the extent such 15th day is nota Business Day), commencing with November 15, 2022.
PBGC means the Pension Benefit Guaranty Corporation and any entity succeeding toany or all of its material functions under ERISA.
Pension Plan means a defined benefits "pension plan", as such term is defined inSection 3(2) of ERISA, which is subject to Title IV of ERISA (other than aMultiemployer Pension Plan), and to which Borrower or any member of theControlled Group may have any liability, including any liability by reason ofhaving been a substantial employer within the meaning of Section 4063 of ERISAat any time during the preceding five years, or by reason of being deemed to bea contributing sponsor under Section 4069 of ERISA.
Permit means, with respect to any Person, any permit, approval, clearance,authorization, license, registration, certificate, concession, grant, franchise,variance or permission from, and any other contractual obligations with, anyGovernmental Authority, including without limitation all registrations withGovernmental Authorities.
Permitted Liens means Liens permitted by Section 7.2.
Person means any natural person, corporation, partnership, trust, limitedliability company, association, Governmental Authority or unit, or any otherentity, whether acting in an individual, fiduciary or other capacity.
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PIK Interest has the meaning set forth in Section 2.6.2.
Post-Closing Agreement means that certain Post-Closing Agreement, dated as ofthe Closing Date, and executed by Borrower, as the same may be modified, amendedor restated from time to time.
Prior Debt means the Debt listed on Schedule 4.1.
Pro Rata Term Loan Share means, with respect to any Lender, the applicablepercentage (as adjusted from time to time in accordance with the terms hereof)specified opposite such Lender's name on Annex I which percentage represents theaggregate percentage of the Term Loan Commitment held by such Lender, whichpercentage shall be with respect to the outstanding balance of the Term Loan asof any date of determination after the Term Loan Commitment has terminated.
Product means any products manufactured, sold, developed, tested or marketed byBorrower or any of its Subsidiaries, including, without limitation, thoseproducts set forth on Schedule 5.18(b) (as updated from time to time inaccordance with Section 6.1.2); provided, however, that if Borrower shall failto comply with the obligations under Section 6.1.2 to give notice to Agent andupdate Schedule 5.18(b) prior to manufacturing, selling, developing, testing ormarketing any new Product, any such improperly undisclosed Product shall bedeemed to be included in this definition; and provided, further, that productsmanufactured by Borrower for unaffiliated third parties shall not be deemed"Products" hereunder.
Registered Intellectual Property means all applications, registrations andrecordings for or of Patents, Trademarks or Copyrights filed by a Loan Partywith any Governmental Authority, all internet domain name registrations owned bya Loan Party, and all proprietary software owned by a Loan Party.
Required Lenders means Lenders having an aggregate Pro Rata Term Loan Share inexcess of fifty percent (50%), collectively.
Required Permit means a Permit (a) required under applicable law for thebusiness of Borrower or any of its Subsidiaries or necessary in themanufacturing, importing, exporting, possession, ownership, warehousing,marketing, promoting, sale, labeling, furnishing, distribution or delivery ofgoods or services under any laws applicable to the business of Borrower or anyof its Subsidiaries (including, without limitation, any applicable Health CareLaws), and (b) required by any Person from which Borrower or any of itsSubsidiaries have received an accreditation.
Responsible Officer means the chief executive officer, chief operating officer,or chief financial officer of a Person, or any other officer havingsubstantially the same authority and responsibility; or, with respect tocompliance with financial covenants or delivery of financial information, thechief financial officer, the chief technology officer, the chief informationofficer, the treasurer or the controller of a Person, or any other officerhaving substantially the same authority and responsibility, and in all casessuch person shall be listed on an incumbency certificate delivered to Agent, inform and substance acceptable to Agent in its sole discretion.
Revenue-Based-Payment Amount has the meaning set forth in Section 2.9.1(a).
Royalties means the amount of any and all royalties, license fees and any otherpayments or income of any type recognized as revenue in accordance with GAAP byLoan Parties with respect to the sale of Products or the provision of servicesby independent licensees of Borrower and/or its Subsidiaries, including any suchpayments characterized as a share of net profits, any up-front or lump sumpayments, any milestone payments, commissions, fees or any other similaramounts, less deductions for amounts deducted, repaid or credited by reason ofadjustments to the sales upon which royalty amounts are based, regardless of thereason for such adjustment to such sales. For the purposes of calculatingRoyalties, Lenders and Agent understand and agree that Affiliates of Borrowershall not be regarded as independent licensees.
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Services means services provided by Borrower or any Affiliate of Borrower toun-Affiliated Persons, including without limitation any sales, consulting,marketing, commercialization and any other healthcare-related services.
SOFR shall mean a rate equal to the secured overnight financing rate asadministered by the SOFR Administrator.
SOFR Administrator shall mean the Federal Reserve Bank of New York (or asuccessor administrator of the secured overnight financing rate).
Solvent means, as to any Person at any time, that (a) the fair value of thetangible and intangible property of such Person is greater than the amount ofsuch Person's liabilities (including disputed, contingent, unmatured andunliquidated liabilities); (b) the present fair saleable value of the tangibleand intangible property of such Person is not less than the amount that will berequired to pay the probable liability of such Person on its debts as theybecome absolute and matured; (c) such Person is able to pay its debts and otherliabilities (including subordinated, disputed, contingent, unmatured andunliquidated liabilities) as they mature in the normal course of business;(d) such Person does not intend to, and does not believe that it will, incurdebts or liabilities beyond such Person's ability to pay as such debts andliabilities mature; and (e) such Person is not engaged in business or atransaction, and is not about to engage in business or a transaction, for whichsuch Person's property would constitute unreasonably small capital.
Subordinated Debt means any Debt incurred by Borrower and/or any other LoanParty that is subordinated to the Obligations pursuant to a subordinationagreement entered into between Agent, any applicable Loan Party and thesubordinated creditor(s) upon terms acceptable to Agent in its sole discretion.
Subsequent Term Loan means the Term Loan, if any, made to the Borrower pursuantto Section 2.2.2.
Subsequent Term Loan Conditions means the occurrence of both (i) Borrowerachieving Cash Gross Profit in an amount equal to or greater than $6,000,000 foreach of the two (2) most recently-completed Fiscal Quarters, and (ii) Borrowerreceiving clearance from the FDA under Section 510(k) of the FD&C Act to marketthe CanGaroo RM Product.
Subsidiary means, with respect to any Person, a corporation, partnership,limited liability company or other entity of which such Person owns, directly orindirectly, such number of outstanding shares or other equity interests as tohave more than fifty percent (50%) of the ordinary voting power for the electionof directors or other managers of such corporation, partnership, limitedliability company or other entity. Unless the context otherwise requires, eachreference to Subsidiaries herein shall be a reference to direct and indirectSubsidiaries of Borrower.
SWK has the meaning set forth in the Preamble.
Tax or Taxes has the meaning set forth in Section 3.1(a).
Term Loan has the meaning set forth in Section 2.1.
Term Loan Commitment means $25,000,000.
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Term Loan Maturity Date means August 10, 2027.
Term SOFR Administrator shall mean the CME Group Benchmark AdministrationLimited (CBA) (or a successor administrator of the Term SOFR Reference Rateselected by Lender in its reasonable discretion).
Term SOFR Rate shall mean the Term SOFR Reference Rate for a three (3) monthperiod that is two (2) Business Days prior to each Payment Date (such day, thePeriodic Term SOFR Determination Day"), and effective on the Payment Dateimmediately following such determination date and continuing to but notincluding the next succeeding Payment Date, as such rate is published by theTerm SOFR Administrator; provided, however, that if as of 5:00 p.m. (New YorkCity time) on any Periodic Term SOFR Determination Day the Term SOFR ReferenceRate has not been published by the Term SOFR Administrator, then Term SOFR willbe the Term SOFR Reference Rate for such three (3) month period, as published bythe Term SOFR Administrator on the first preceding Business Day for which suchTerm SOFR Reference Rate was published by the Term SOFR Administrator.Notwithstanding the foregoing, (i) if at any time Agent determines (whichdetermination shall be conclusive absent manifest error) that the Term SOFR Rateis no longer available for determining interest rates for loans or notes similarto the Loans, then Agent shall, in consultation with Borrower, endeavor toestablish an alternate rate of interest to the Term SOFR Rate that gives dueconsideration to the then prevailing market convention for determining a rate ofinterest for loans or notes similar to the Loans in the United States at suchtime, and, if requested by Agent, Agent and Lenders at such time party heretoand the Borrower shall enter into an amendment to this Agreement to reflect suchalternate rate of interest and such other related changes to this Agreement asmay be applicable (including, for the avoidance of doubt, any amendments to thedefinition of "Contract Rate" to ensure that the interest rate payable byBorrower hereunder is substantially similar to the interest rate that wouldotherwise be paid prior to the selection of such alternate rate of interest),and (ii) in no event shall the "Term SOFR Rate" or any such alternate rate ofinterest to the Term SOFR Rate ever be less than two and three-quarters of onepercent (2.75%)
Term SOFR Reference Rate shall mean the forward-looking term rate based on SOFR.
Termination Date means the earlier to occur of (a) the Term Loan Maturity Date,or (b) the date upon which the Loan and all other Obligations are Paid in Full,whether as a result of (i) the prepayment of the Term Loan and all Obligationsthrough any other mandatory or voluntary prepayment of the Term Loan in full,(ii) the contractual acceleration of the Loan hereunder, (iii) the accelerationof the Loan by Agent in accordance with this Agreement, or (iv) otherwise.
Trademarks has the meaning set forth in the Guarantee and Collateral Agreement.
Uniform Commercial Code means the Uniform Commercial Code as in effect in theState of New York; provided that if perfection or the effect of perfection ornon-perfection or the priority of any security interest in any Collateral isgoverned by the Uniform Commercial Code as in effect in a jurisdiction otherthan the State of New York, "Uniform Commercial Code" means the UniformCommercial Code as in effect from time to time in such other jurisdiction forpurposes of the provisions hereof relating to such perfection, effect ofperfection or non-perfection or priority.
U.S. Lender means any Lender that is a "United States person" within the meaningof Section 7701(a)(30) of the IRC.
Wholly-Owned Subsidiary means, as to any Person, another Person all of theEquity Interests of which (except directors' qualifying shares) are at the timedirectly or indirectly owned by such Person and/or another Wholly-OwnedSubsidiary of such Person.
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(a) In the case of this Agreement and each other Loan Document, (i) themeanings of defined terms are equally applicable to the singular and pluralforms of the defined terms; (ii) Annex, Exhibit, Schedule and Section referencesare to such Loan Document unless otherwise specified; (iii) the term "including"is not limiting and means "including but not limited to"; (iv) in thecomputation of periods of time from a specified date to a later specified date,the word "from" means "from and including"; the words "to" and "until" each mean"to but excluding", and the word "through" means "to and including"; (v) unlessotherwise expressly provided in such Loan Document, (A) references to agreementsand other contractual instruments shall be deemed to include all subsequentamendments, restatements and other modifications thereto, but only to the extentsuch amendments, restatements and other modifications are not prohibited by theterms of any Loan Document, and (B) references to any statute, directive orregulation shall be construed as including all statutory and regulatoryprovisions amending, replacing, supplementing or interpreting such statute,directive or regulation; (vi) this Agreement and the other Loan Documents mayuse several different limitations, tests or measurements to regulate the same orsimilar matters, all of which are cumulative and each shall be performed inaccordance with its terms and (vii) this Agreement and the other Loan Documentsare the result of negotiations among and have been reviewed by counsel to Agent,Borrower, Lenders and the other parties hereto and thereto and are the productsof all parties; accordingly, they shall not be construed against Borrower, Agentor Lenders merely because of Borrower's, Agent's or Lenders' involvement intheir preparation. Except where otherwise expressly provided in the LoanDocuments, in any instance where the approval, consent or the exercise ofAgent's judgment is required, the granting or denial of such approval or consentand the exercise of such judgment shall be (x) within the sole and absolutediscretion of Agent and/or Lenders; and (y) deemed to have been given only by aspecific writing intended for such purpose executed by Agent.
(b) For purposes of converting any amount reported or otherwise denominatedin any currency other than Dollars to Dollars under or in connection with theLoan Documents, Agent shall calculate such currency conversion via theapplicable exchange rate identified and normally published by BloombergProfessional Service as the applicable exchange rate as of the close of currencytrading on each trading date during the applicable period of measurement, or, ifsuch currency conversion deals exclusively with a particular date ofdetermination, as of the close of currency trading on such date of determination(or the following trading date to the extent no currency trading took place onsuch date of determination). If Bloomberg Professional Service no longer reportssuch currency exchange rate, Agent shall select another nationally-recognizedcurrency exchange rate reporting service selected by Agent in good faith.
(c) If at any time any change in GAAP would affect the computation of anyfinancial ratio or requirement set forth in any Loan Document, and either theBorrower or the Required Lenders shall so request, the Agent, the Lenders andthe Borrower shall negotiate in good faith to amend such ratio or requirement topreserve the original intent thereof in light of such change in GAAP (subject tothe approval of the Required Lenders); provided that, until so amended, (i) suchratio or requirement shall continue to be computed in accordance with GAAP priorto such change therein and (ii) the Borrower shall provide to the Agent and theLenders financial statements and other documents required under this Agreementor as reasonably requested hereunder setting forth a reconciliation betweencalculations of such ratio or requirement made before and after giving effect tosuch change in GAAP.
Section 2 Credit Facility.
2.1 Term Loan Commitments.
On and subject to the terms and conditions of this Agreement, each Lender,severally and for itself alone, agrees to make a multi-draw term loan toBorrower (each such loan, individually and collectively, a "Term Loan") in anamount equal to such Lender's applicable Pro Rata Term Loan Share of the TermLoan Commitment. The Commitments of Lenders to make any portion of the Term Loanshall terminate concurrently with the making of such portion of the Term Loan,such portion terminated to equal (i) on the Closing Date, the amount of the TermLoan set forth in Section 2.2.1, and (ii) on the date of the making of theSubsequent Term Loan, the amount of the Subsequent Term Loan set forth inSection 2.2.2. The Loan is not a revolving credit facility, and therefore anyamount thereof that is repaid or prepaid by Borrower, in whole or in part, maynot be re-borrowed.
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2.2 Loan Procedures.
2.2.1 Initial Advance.
On the Closing Date, each Lender shall advance to Borrower an amount equal toits Pro Rata Share of Twenty-One Million and No/100 Dollars ($21,000,000), uponBorrower's satisfaction of the conditions to closing described in Section 4 ofthis Agreement.
2.2.2 Subsequent Term Loan.
So long as no Material Adverse Effect, Default or Event of Default has occurredand is continuing or would be caused thereby and the Subsequent Term LoanConditions have been satisfied on or before the Fiscal Quarter endingSeptember 30, 2023, upon Agent's receipt of a written request from Borrower, onor before the date that the financial statements with respect to such FiscalQuarter are required to be delivered in accordance with Section 6.1.2(a) hereof,for a subsequent advance of the Term Loan, each Lender shall make one(1) additional advance (within five (5) Business Days of receipt by Agent ofsuch written request for advance) to Borrower in the amount equal to, but notless than, such lender's Pro Rata Share of Four Million and No/100 Dollars($4,000,000).
2.3 Commitments Several.
The failure of any Lender to make the initial Term Loan on the Closing Date orthe Subsequent Term Loan in accordance with Section 2.2.2 above shall notrelieve any other Lender of its obligation (if any) to make its Loan on theapplicable date, but no Lender shall be responsible for the failure of any otherLender to make any Term Loan to be made by such other Lender.
2.4 Indebtedness Absolute; No Offset; Waiver.
The payment obligations of Borrower hereunder are absolute and unconditional,without any right of rescission, set-off, counterclaim or defense for any reasonagainst Agent and Lenders to the maximum extent permitted by applicable law. Asof the Closing Date, the Loan has not been compromised, adjusted, extended,satisfied, rescinded, set-off or modified, and the Loan Documents are notsubject to any litigation, dispute, refund, claims of rescission, set-off,netting, counterclaim or defense whatsoever, including but not limited to,claims by or against any Loan Party or any other Person. Payment of theObligations by Borrower, shall be made only by wire transfer, in Dollars, and inimmediately available funds when due and payable pursuant to the terms of thisAgreement and the other Loan Documents, is not subject to compromise,adjustment, extension, satisfaction, rescission, set-off, counterclaim, defense,abatement, suspension, deferment, deductible, reduction, termination ormodification, whether arising out of transactions concerning the Loan, orotherwise. Without limitation to the foregoing, to the fullest extent permittedunder applicable law and notwithstanding any other term or provision containedin this Agreement or any other Loan Document, Borrower hereby waives (and shallcause each Loan Party to waive) (a) presentment, protest and demand, notice ofdefault (except as expressly required in the Loan Documents), notice of intentto accelerate, notice of acceleration, notice of protest, notice of demand andof dishonor and non-payment of the Obligations, (b) any requirement of diligenceor promptness on Agent's part in the enforcement of its rights under theprovisions of this Agreement and any other Loan Document, (c) any rights, legalor equitable, to require any marshaling of assets or to require foreclosuresales in a particular order, (d) all notices of every kind and description whichmay be required to be given by any statute or rule of law except as specificallyrequired hereunder, (e) the benefit of all laws now existing or that mayhereafter be enacted providing for any appraisement before sale or any portionof the Collateral, (f) all rights of homestead, exemption, redemption,valuation, appraisement, stay of execution, notice of election to mature ordeclare due the whole of the Obligations in the event of foreclosure of theLiens created by the Loan Documents, (g) the pleading of any statute oflimitations as a defense to any demand under any Loan Document and (h) anydefense to the obligation to make any payments required under the LoanDocuments, it being agreed and acknowledged that such payment obligations areunconditional and irrevocable. Borrower further acknowledges and agrees (i) toany substitution, subordination, exchange or release of any security or therelease of any party primarily or secondarily liable for the payment of theLoan; (ii) that Agent shall not be required to first institute suit or exhaustits remedies hereon against others liable for repayment of all or any part ofthe Loan, whether primarily or secondarily (collectively, the "Obligors"), or toperfect or enforce its rights against any Obligor or any security for the Loan;and (iii) that its liability for payment of the Loan shall not be affected orimpaired by any determination that any security interest or lien taken by Agentfor the benefit of Agent and Lenders to secure the Loan is invalid orunperfected. Borrower acknowledges, warrants and represents in connection witheach waiver of any right or remedy of Borrower contained in any Loan Document,that it has been fully informed with respect to, and represented by counsel ofits choice in connection with, such rights and remedies, and all such waivers,and after such advice and consultation, has presently and actually intended,with full knowledge of its rights and remedies otherwise available at law or inequity, to waive or relinquish such rights and remedies to the full extentspecified in each such waiver.
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2.5 Loan Accounting.
Agent, on behalf of each Lender, shall record in its records the date and amountof the Loan made by each Lender, each prepayment and repayment thereof. Theaggregate unpaid principal amount so recorded shall be final, binding andconclusive absent manifest error. The failure to so record any such amount orany error in so recording any such amount shall not, however, limit or otherwiseaffect the Obligations of Borrower hereunder or under any Note to repay theprincipal amount of the Loans hereunder, together with all interest accruingthereon.
At the request of any Lender, the Loan of such Lender shall be evidenced by aNote, with appropriate insertions, payable to such Lender in a face principalamount equal to such Lender's Pro Rata Term Loan Share and payable in suchamounts and on such dates as are set forth herein.
2.6 Payment of Interest.
2.6.1 Interest Rates.
(a) The outstanding principal balance under the Loan shall bear interest ata per annum rate of interest equal to the Contract Rate (as may be adjusted fromtime to time in accordance with this Section 2.6.1). Whenever, subsequent to thedate hereof, the Term SOFR Rate is increased or decreased (as determined on thedate that is two (2) Business Days prior to each Payment Date), the ContractRate, as set forth herein, shall be similarly changed effective as of suchsubsequent Payment Date, without notice or demand of any kind by an amount equalto the amount of such change in the Term SOFR Rate on the date that is two(2) Business Days prior to each such Payment Date. The interest due on theprincipal balance of the Loan outstanding as of any Payment Date shall becomputed for the actual number of days elapsed during the period in question onthe basis of a year consisting of three hundred sixty (360) days and shall becalculated by determining the daily principal balance outstanding for each dayof such period in question. The daily rate shall be equal to 1/360th times theContract Rate. If any statement furnished by Agent for the amount of a paymentdue exceeded the actual amount that should have been paid because the Term SOFRRate decreased and such decrease was not reflected in such statement, Borrowershall make the payment specified in such statement from Agent and Borrower shallreceive a credit for the overpayment, which credit shall be applied towards thenext subsequent payment due hereunder. If any statement furnished by Agent forthe amount of a payment due was less than the actual amount that should havebeen paid because the Term SOFR Rate increased and such increase was notreflected in such statement, Borrower shall make the payment specified in suchstatement from Agent and Borrower shall be required to pay any resultingunderpayment with the next subsequent payment due hereunder.
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(b) Borrower recognizes and acknowledges that any default on any payment,or portion thereof, due hereunder or to be made under any of the other LoanDocuments, will result in losses and additional expenses to Agent in servicingthe Loan, and in losses due to Lenders' loss of the use of funds not timelyreceived. Borrower further acknowledges and agrees that in the event of any suchDefault, Lenders would be entitled to damages for the detriment proximatelycaused thereby, but that it would be extremely difficult and impracticable toascertain the extent of or compute such damages. Therefore, upon the Term LoanMaturity Date and/or upon the occurrence and during the existence of an Event ofDefault (or upon any acceleration), interest shall automatically accruehereunder, without notice to Borrower, at the Default Rate. The Default Rateshall be calculated and due from the date that the Default occurred which led tothe Event of Default without regard to any grace or cure period as may beapplicable and shall be payable upon demand.
(c) Notwithstanding anything herein to the contrary, if at any time theinterest rate for any Loan (if applicable), together with all fees, charges andother amounts that are treated as interest on such Loan under applicable law(collectively, "charges"), shall exceed the maximum lawful rate (the "MaximumRate") that may be contracted for, charged, taken, received or reserved by theLender holding such Loan in accordance with applicable law, the rate of interestpayable in respect of such Loan hereunder (if applicable), together with allcharges payable in respect of the Loan, shall be limited to the Maximum Rate. Tothe extent lawful, the interest and charges that would have been paid in respectof such Loan but were not paid as a result of the operation of thisSection shall be cumulated and the interest (if any) and charges payable to suchLender in respect of other Loans or periods shall be increased (but not abovethe amount collectible at the Maximum Rate therefor) until such cumulatedamount, together with interest thereon at the Federal Funds Effective Rate foreach day to the date of repayment, shall have been received by such Lender. Anyamount collected by such Lender that exceeds the maximum amount collectible atthe Maximum Rate shall be applied to the reduction of the principal balance ofsuch Loan or refunded to the Borrower so that at no time shall the interest (ifany) and charges paid or payable in respect of such Loan exceed the maximumamount collectible at the Maximum Rate.
2.6.2 Payments of Interest and Principal.
Borrower shall pay to Lenders all accrued interest on the Loan in arrears oneach Payment Date (subject to Borrower's rights in relation to PIK Interest inrelation to any Payment Date as set forth in this Section 2.6.2), upon aprepayment of such Loan in accordance with Section 2.8 and at maturity in cash.So long as no Event of Default shall have occurred and be continuing on anyPayment Date occurring prior to (i) November 15, 2024 if the Subsequent TermLoan Conditions were not satisfied or (ii) November 17, 2025 if the SubsequentTerm Loan Conditions were satisfied, Borrower, at its option, may elect, uponnot less than ten (10) Business Days' prior written notice to Agent to pay toAgent, for the benefit of Lenders, a portion of the interest due on such PaymentDate in-kind ("PIK Interest") at a rate per annum of four and one-half of onepercent (4.5%). For the avoidance of doubt, any such PIK Interest shall be addedto the outstanding principal balance of the Term Loan effective as of theapplicable Payment Date. Any partial prepayment of the Loan shall be applied ininverse order of maturity and so shall not reduce the amount of any quarterlyprincipal amortization payment required pursuant to Section 2.9.1 (but thisshall not be construed as permitting any partial prepayment other than as may beexpressly permitted elsewhere in this Agreement).
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(a) Exit Fee. Upon the Termination Date, Borrower shall pay an exit fee(the "Exit Fee") to Agent, for the benefit of Lenders, in an amount equal to sixand one half of one percent (6.50%) multiplied by the aggregate amount of theTerm Loan funded hereunder on or prior to such date, which Exit Fee shall bedeemed fully earned and non-refundable on the Termination Date.
2.8.1 Mandatory Prepayment.
(a) Borrower shall prepay the Obligations, or any portion thereof, asapplicable, (which shall include the amounts due and payable underSection 2.7(b) hereof to the extent such prepayment results in a prepayment infull of the Term Loan) until paid in full within two (2) Business Days after thereceipt by a Loan Party of any Net Cash Proceeds from any Disposition, in anamount equal to such Net Cash Proceeds.
(b) In connection with any prepayment of the Term Loan made pursuant tothis Section 2.8.1, Borrower shall pay to Agent, for the benefit of Lenders, anyamounts that would otherwise be due and payable on such date had Borrowervoluntarily prepaid the Obligations pursuant to Section 2.8.2 (in addition toany such prepayment of the Term Loan and related Obligations).
(c) To the extent the aggregate consideration of all assets sold orotherwise disposed of in any Fiscal Year pursuant to suchSection 7.4(b) (iii) exceeds $1,000,000 in such Fiscal Year, Borrower shall,within five (5) Business Days of such sale or disposition, make a mandatory TermLoan prepayment in an amount equal to the difference between (i) the product of(a) the outstanding principal balance of the Loan immediately prior to such saleor disposition, and (b) the quotient of (x) the Cash Gross Profit of Borrowergenerated by the assets sold or otherwise disposed of during the twelve (12)month period most-recently ended immediately prior to such sale or disposition,and (y) the Cash Gross Profit of Borrower for the twelve (12) month periodmost-recently ended immediately prior to such sale or disposition, and (ii) thedifference between (i) $1,000,000 and (ii) the aggregate consideration of allassets sold and or otherwise disposed of pursuant to Section 7.4(b)(iii) withinsuch Fiscal Year. For the avoidance of doubt, any Net Cash Proceeds received inexcess of the payment required pursuant to this Section 2.8.1(c) shall beretained by the Borrower.
2.8.2 Voluntary Prepayment.
(a) Subject to clause (b) below, Borrower may, on at least five(5) Business Days' written notice or telephonic notice (followed on the sameBusiness Day by written confirmation thereof) to Agent (which shall promptlyadvise each Lender thereof) not later than 12:00 noon Dallas time on such day,prepay the Term Loan and all related Obligations in whole (but not in part) atany time prior to the Term Loan Maturity Date. Such notice to Agent shallspecify the amount and proposed date of such prepayment, and the application ofsuch amounts to be prepaid shall be applied in accordance withSection 2.9.1(b) or 2.10.2 (as applicable).
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(b) If Borrower makes a prepayment of the Term Loan under Section 2.8.2(a),it shall pay to Agent, for the benefit of Lenders, the following amounts (inaddition to any such prepayment of the Term Loan and related Obligations) on thedate of such prepayment: (i) if such prepayment is made prior to the firstanniversary of the Closing Date, an amount equal to (A) two percent (2.0%) ofthe aggregate amount of the Term Loan so prepaid plus (B) an amount equal to theaggregate interest that would have accrued pursuant to this Agreement inrelation to the aggregate amount of the Term Loan so prepaid from the date ofsuch prepayment through the first anniversary of the Closing Date assuming astatic Contract Rate equal to the Contract Rate in effect on such date ofprepayment, (ii) if such prepayment is made on or after the first anniversary ofthe Closing Date but prior to the second anniversary of the Closing Date, twopercent (2.0%) of the aggregate amount of the Term Loan so prepaid, and (iii) ifsuch prepayment is made on or after the second anniversary of the Closing Date,zero percent (0%) of the aggregate amount of the Term Loan so prepaid.
(c) For the avoidance of doubt, a permitted payment under thisSection 2.8.2 is independent of and in addition to Revenue-Based-Payment Amountsthat are credited toward the principal of the Loans under Section 2.9.1(b).Notwithstanding anything set forth herein or in any other Loan Documents to thecontrary, any prepayment of the Loans other than via the application ofRevenue-Based-Payment Amounts made pursuant to Section 2.9.1 or Section 2.10.2,as applicable, shall be limited and governed by this Section 2.8.2.
2.9 Repayment of Term Loan.
2.9.1 Revenue-Based-Payment Amount.
(a) During the period commencing on the date hereof until the Obligationsare Paid in Full, Borrower promises to pay to Agent, for the account of eachLender according to its Pro Rata Term Loan Share, an amount based on apercentage of the aggregate of the Net Sales, Royalties and any other income orrevenue realized by Borrower and/or its Subsidiaries, on a consolidated basis,in accordance with GAAP (collectively, the "Aggregate Revenue") in each FiscalQuarter (the "Revenue-Based-Payment Amount"), which will be applied to theObligations as provided in clause (b) below. The Revenue-Based-Payment Amountwith respect to each Fiscal Quarter shall be applied by Borrower on the PaymentDate next following the end of such Fiscal Quarter in accordance with clause(b) below. Commencing with the Fiscal Quarter beginning January 1, 2022, theRevenue-Based-Payment Amount with respect to each Fiscal Quarter shall be equalto:
(i) the aggregate Revenue-Based-Payment Amounts payable during the periodcommencing as of January 1 of the Fiscal Year of which such Fiscal Quarter ispart, through the end of such Fiscal Quarter (such elapsed portion of the FiscalYear, the "Elapsed Period"), calculated as the sum of:
(A) One hundred percent (100%) of Aggregate Revenue during the ElapsedPeriod up to and including $10,000,000; plus
(B) Seventy-five percent (75%) of Aggregate Revenue during the ElapsedPeriod greater than $10,000,000; minus
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(ii) the aggregate amount of Revenue-Based-Payment Amounts, if any, paid toAgent, for the benefit of Lenders, pursuant to this Section 2.9.1, with respectto each prior Fiscal Quarter in such Fiscal Year; provided that theRevenue-Based-Payment Amount is payable solely upon Aggregate Revenue in a givenFiscal Year, and will not be calculated on a cumulative, year-over-year basis.
(b) So long as no Event of Default has occurred and is continuing and untilthe Obligations have been Paid in Full, on each Payment Date the applicableRevenue Based Payment Amount will be applied in the following priority:
(i) FIRST, to the payment of all fees, costs, expenses and indemnities dueand owing to Agent pursuant to Sections 2.7, 3.1, 3.2, 10.4 and/or 10.5 underthis Agreement or otherwise pursuant to the Collateral Documents, and any otherObligations owing to Agent in respect of sums advanced by Agent to preserve orprotect the Collateral or to preserve or protect its security interest in theCollateral;
(ii) SECOND, to the payment of all fees, costs, expenses and indemnitiesdue and owing to Lenders in respect of the Loans and Commitments pursuant toSections 2.7, 3.1, 3.2, 10.4 and/or 10.5 under this Agreement or otherwisepursuant to the Collateral Documents, pro rata based on each Lender's Pro RataTerm Loan Share, until Paid in Full;
(iii) THIRD, to the payment of all accrued but unpaid interest in respectof the Loans as of such Payment Date pursuant to Sections 2.6 under thisAgreement, pro rata based on each Lender's Pro Rata Term Loan Share, until Paidin Full;
(A) to the extent the Subsequent Term Loan Conditions were not satisfied, as itrelates to each Payment Date on or after the Payment Date occurring inNovember 15, 2024, to the payment of all principal of the outstanding Loans, prorata based on each Lender's Pro Rata Term Loan Share, in an amount equal to fivepercent (5%) multiplied by the aggregate amount of the Term Loan fundedhereunder and outstanding as of such date of determination, or
(B) to the extent the Subsequent Term Loan Conditions were satisfied, as itrelates to each Payment Date on or after the Payment Date occurring inNovember 17, 2025, to the payment of all principal of the outstanding Loans, prorata based on each Lender's Pro Rata Term Loan Share, in an amount equal toseven and one-half of one percent (7.5%) multiplied by the aggregate amount ofthe Term Loan funded hereunder and outstanding as of such date of determination;and
(v) FIFTH, all remaining amounts to be retained by Borrower.
In the event that the Revenue-Based-Payment Amount in relation to any PaymentDate is insufficient for payment of the amounts set forth in clauses(b)(i) through (b)(iii) above for such Payment Date, Borrower shall pay anamount equal to the extent of such insufficiency, in immediately availablefunds, within five (5) Business Days of request by Agent.
(c) In the event that Borrower makes any adjustment to Aggregate Revenueafter it has been reported to Agent, and such adjustment results in anadjustment to the Revenue-Based-Payment Amount due to the Lenders pursuant tothis Section 2.9.1, Borrower shall so notify Agent and such adjustment shall becaptured, reported and reconciled with the next scheduled report and payment ofRevenue-Based-Payment Amount hereunder. Notwithstanding the foregoing, Agent andBorrower shall discuss and agree on the amount of any such adjustment prior toit being given effect with respect to future Revenue-Based-Payment Amounts.
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Notwithstanding the foregoing, the outstanding principal balance of the TermLoan and all other Obligations then due and owing shall be Paid in Full on theTermination Date.
2.10.1 Making of Payments.
All payments of principal, interest, fees and other amounts, shall be made inimmediately-available funds, via wire transfer as directed by Agent in writing,not later than 1:00 p.m. Dallas time on the date due, and funds received afterthat hour shall be deemed to have been received by Agent on the followingBusiness Day. Not later than two (2) Business Days prior to each Payment Date,Agent shall provide to Borrower and each Lender a quarterly statement with theamounts payable by Borrower to Agent on such Payment Date in accordance withSection 2.9.1(b) hereof, which shall include, for additional clarity, Agent'scalculation of the Revenue-Based-Payment Amount for the prior Fiscal Quarter,which statement shall be binding on Borrower absent manifest error, and Borrowershall be entitled to rely on such quarterly statement in relation to its paymentobligations on such Payment Date.
2.10.2 Application of Payments and Proceeds Following an Event of Default.
Following the occurrence and during the continuance of an Event of Default, orif the Obligations have otherwise become or have been declared to becomeimmediately due and payable in accordance with this Agreement, thennotwithstanding anything herein or in any other Loan Document to the contrary,Agent shall apply all or any part of payments in respect of the Obligations andproceeds of Collateral, in each case as received by Agent, to the payment of theObligations in the order and priority as determined by Agent in its solediscretion.
Borrower agrees that Agent and each Lender and its Affiliates have all rights ofset-off and bankers' lien provided by applicable law, and in addition thereto,Borrower agrees that at any time an Event of Default exists, Agent and eachLender may, to the fullest extent permitted by applicable law, apply to thepayment of any Obligations of Borrower hereunder then due, any and all balances,credits, deposits, accounts or moneys of Borrower then or thereafter with Agentor such Lender. Notwithstanding the foregoing, no Lender shall exercise anyrights described in the preceding sentence without the prior written consent ofAgent.
2.10.4 Proration of Payments.
If any Lender shall obtain any payment or other recovery (whether voluntary,involuntary, by application of set-off or otherwise, on account of principal of,interest on or fees in relation to any Loan, but excluding any payment pursuantto Section 3.1, 3.2, 10.5 or 10.8) in excess of its applicable Pro Rata TermLoan Share of payments and other recoveries obtained by all Lenders on accountof principal of, interest on or fees in relation to such Term Loan then held bythem, then such Lender shall purchase from the other Lenders such participationsin the Loans held by them as shall be necessary to cause such purchasing Lenderto share the excess payment or other recovery ratably with each of them;provided that if all or any portion of the excess payment or other recovery isthereafter recovered from such purchasing Lender, the purchase shall berescinded and the purchase price restored to the extent of such recovery.
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Section 3 Yield Protection.
(a) All payments of principal and interest on the Loans and all otheramounts payable hereunder by or on behalf of Borrower to or for the account ofAgent or any Lender shall be made free and clear of and without deduction forany present or future income, excise, stamp, documentary, property or franchisetaxes and other taxes, fees, duties, levies, withholdings or other similarcharges imposed by any Governmental Authority that is a taxing authority ("Tax"or "Taxes"), excluding (i) taxes imposed on or measured by Agent's or anyLender's net income (however denominated) or gross profits, and franchise taxes,imposed by any jurisdiction (or subdivision thereof) under the laws of whichAgent or such Lender is organized or in which Agent or such Lender conductsbusiness or, in the case of any Lender, in which its applicable lending officeis located at the time such Lender acquires its initial interest in any TermLoan Commitment, (ii) any branch profit taxes imposed by the United States ofAmerica or any similar tax imposed by any other jurisdiction in which Agent or aLender is located or conducts business; (iii) in the case of any Foreign Lender,any withholding tax that is imposed on amounts payable to such Foreign Lender atthe time such Foreign Lender becomes a party to this Agreement or designates anew lending office; (iv) any United States federal backup withholding tax; and(v) taxes imposed under FATCA; (vi) Taxes attributable to a Lender's failure tocomply with Section 3.1(c) and (d) or a Foreign Lender's inability to providethe applicable IRS Form set forth in Section 3.1(c) to Borrower and Agent;(vii) with respect to Agent or any Lender, Taxes imposed as a result of apresent or former connection between such Agent or Lender and the jurisdictionimposing such Tax (other than connections arising from such Agent or Lenderhaving executed, delivered, become a party to, performed its obligations under,received payments under, received or perfected a security interest under,engaged in any other transaction pursuant to or enforced any Loan Document, orsold or assigned an interest in any Loan or Loan Document); and (viii) in thecase of a Lender, U.S. federal withholding Taxes, if any and not otherwiseincluded in clauses (i) through (vii), imposed on amounts payable to or for theaccount of such Lender with respect to an applicable interest in a Loan orCommitment pursuant to a law in effect on the date on which such Lender acquiressuch interest in the Loan or Commitment or changes its lending office (items inclauses (i) through (viii), "Excluded Taxes", and all Taxes, other than ExcludedTaxes, imposed on or with respect to any payment made by or on account of anyobligation of the Borrower under any Loan Document, "Indemnified Taxes"). If anywithholding or deduction from any payment to be made by Borrower hereunder isrequired in respect of any Taxes pursuant to any applicable law, rule orregulation, then Borrower shall: (w) make such withholding or deduction; (x) paydirectly to the relevant Governmental Authority the full amount required to beso withheld or deducted; (y) as promptly as practicable forward to Agent theoriginal or a certified copy of an official receipt or other documentationreasonably satisfactory to Agent evidencing such payment to such GovernmentalAuthority; and (z) if the withholding or deduction is with respect toIndemnified Taxes, pay to Agent for the account of Lenders such additionalamount or amounts as is necessary to ensure that the net amount actuallyreceived by each Lender will equal the full amount such Lender would havereceived had no such withholding or deduction of Indemnified Taxes beenrequired.
(b) Borrower shall indemnify Agent and each Lender for any IndemnifiedTaxes paid by Agent or such Lender, as applicable, on or with respect to anypayment by or on account of any obligation of Borrower hereunder, and anyadditions to Tax, penalties and interest paid by Agent or such Lender withrespect to such Indemnified Taxes; provided that Borrower shall not have anyobligation to indemnify any party hereunder for any Indemnified Taxes oradditions to Tax, penalties or interest with respect thereto that result from orare attributable to such party's own fraud, gross negligence or willfulmisconduct. Payment under this Section 3.1(b) shall be made within thirty (30)days after the date Agent or the Lender, as applicable, makes written demandtherefor; provided, however, that if such written demand is made more thanone-hundred eighty (180) days after the earlier of (i) the date on which Agentor the Lender, as applicable, pays such Indemnified Taxes or additions to Tax,penalties or interest with respect thereto and (ii) the date on which theapplicable Governmental Authority makes written demand on Agent or such Lender,as applicable, for payment of such Indemnified Taxes or additions to Tax,penalties or interest with respect thereto, then Borrower shall not be obligatedto indemnify Agent or such Lender for such Indemnified Taxes or additions toTax, penalties or interest with respect thereto.
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(c) Any Lender that is entitled to an exemption from or reduction ofwithholding Tax with respect to payments made under any Loan Document shalldeliver to the Borrower and the Agent, at the time or times reasonably requestedby the Borrower or the Agent, such properly completed and executed documentationreasonably requested by the Borrower or the Agent as will permit such paymentsto be made without withholding or at a reduced rate of withholding. In addition,any Lender, if reasonably requested by the Borrower or the Agent, shall deliversuch other documentation prescribed by applicable law or reasonably requested bythe Borrower or the Agent as will enable the Borrower or the Agent to determinewhether or not such Lender is subject to backup withholding or informationreporting requirements. Notwithstanding anything to the contrary in thepreceding two sentences, the completion, execution and submission of suchdocumentation (other than such documentation set forth in paragraphs (c)(i),(c)(ii) and (d) of this Section) shall not be required if in the Lender'sreasonable judgment such completion, execution or submission would subject suchLender to any material unreimbursed cost or expense or would materiallyprejudice the legal or commercial position of such Lender.
(i) Each Foreign Lender that is a party hereto on the Closing Date orbecomes an assignee of an interest under this Agreement under Section 10.8.1after the Closing Date (unless such Lender was already a Lender hereunderimmediately prior to such assignment) shall deliver to Borrower and Agent on orprior to the date on which such Foreign Lender becomes a party to thisAgreement:
(1) Two duly completed and executed originals of IRS Form W-8BEN (or IRS Form W-8BENE) claiming exemption from withholding of Taxes under an income tax treaty to which the United States of America is a party;
(2) two duly completed and executed originals of IRS Form W-8ECI;
(3) a certificate in form and substance reasonably satisfactory to Agent and Borrower claiming entitlement to the portfolio interest exemption under Section 881(c) of the IRC and certifying that such Foreign Lender is not (w) a conduit entity participating in a conduit financing arrangement as defined in Treasury Regulation 1.881-3, (x) a "bank" within the meaning of Section 881(c)(3)(A) of the IRC, (y) a "10 percent shareholder" of Borrower within the meaning of Section 881(c)(3)(B) of the IRC, or (z) a "controlled foreign corporation" described in Sections 881(c)(3)(C) and 864(d)(4) of the IRC (a "U.S. Tax Compliance Certificate"), together with two duly completed and executed originals of IRS Form W-8BEN (or IRS Form W-8BENE); or
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(4) if the Foreign Lender is not the beneficial owner of amounts paid to it hereunder, two duly completed and executed originals of IRS Form W-8IMY, each accompanied by a duly completed and executed IRS Form W-8ECI, IRS Form W-8BEN (or IRS Form W-8BENE), IRS Form W-9 or a U.S. Tax Compliance Certificate from each beneficial owner of such amounts claiming entitlement to exemption from withholding or backup withholding of Taxes; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner.
Each Lender shall (to the extent legally entitled to do so) provide updatedforms to Borrower and Agent on or prior to the date any prior form previouslyprovided under this clause (c) becomes obsolete or expires, after the occurrenceof an event requiring a change in the most recent form or certificationpreviously delivered by it pursuant to this clause (c) or from time to time ifrequested by Borrower or Agent.
(ii) Each U.S. Lender shall deliver to Agent and Borrower on or prior tothe date on which such Lender becomes a party to this Agreement (and from timeto time thereafter upon the request of Borrower or Agent) properly completed andexecuted originals of IRS Form W-9 certifying that such Lender is exempt frombackup withholding.
Notwithstanding anything to the contrary contained in this Agreement, Borrowershall not be required to pay additional amounts to or indemnify any Lenderpursuant to this Section 3.1 with respect to any Indemnified Taxes required tobe deducted or withheld (or any additions to Tax, penalties or interest withrespect thereto) (A) on the basis of the information, certificates or statementsof exemption provided by a Lender pursuant to this clause (c) and clause (d), or(B) if such Lender shall fail to comply with the certification requirements ofthis clause (c) and clause (d). For the avoidance of doubt, all references toIRS Forms in this clause (c) shall include, in each case, any successor form.
(d) Without limiting the foregoing, each Lender shall timely comply withany certification, documentation, information or other reporting necessary toestablish an exemption from withholding under FATCA and shall provide anydocumentation reasonably requested by Borrower or Agent sufficient for Borrowerand Agent to comply with their obligations under FATCA and to determine thatsuch Lender has complied with such applicable reporting requirements.
(e) If Agent or a Lender determines that it is entitled to or has receiveda refund or credit of any Taxes for which it has been indemnified by Borrower(or another Loan Party) or with respect to which Borrower (or another LoanParty) shall have paid additional amounts pursuant to this Section 3.1, it shallpromptly notify Borrower of such refund or credit, and promptly make anappropriate claim to the relevant Governmental Authority for such refund orcredit (if it has not previously done so). If Agent or a Lender receives arefund or credit (whether or not pursuant to such claim) of such Taxes, it shallpromptly pay over such refund or credit to Borrower (but only to the extent ofindemnity payments made, or additional amounts paid, by Loan Parties under thisSection 3.1 with respect to the Taxes giving rise to such refund or credit), netof all reasonable out-of-pocket and documented third-party expenses of the Agentor such Lender and without interest (other than any interest paid by therelevant Governmental Authority with respect to such refund or credit); providedthat Borrower, upon the request of Agent or such Lender, agrees to repay toAgent or such Lender the amount paid over to Borrower in the event Agent or suchLender is required to repay such refund to such Governmental Authority. ThisSection 3.1(e) shall not be construed to require Agent or any Lender to makeavailable its Tax returns (or any other information relating to its Taxes whichit deems confidential) to Borrower or any other Person or to alter its internalpractices or procedures with respect to the administration of Taxes.
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(f) Each party's obligations under this Section 3.1 shall survive theresignation or replacement of the Agent or any assignment of rights by, or thereplacement of, a Lender, the termination of the Commitments, and the repayment,satisfaction or discharge of all obligations under any Loan Document.
3.2 Increased Cost.
(a) If, after the Closing Date, the adoption of, or any change in, anyapplicable law, rule, directive or regulation, or any change in theinterpretation or administration of any applicable law, rule, directive orregulation by any Governmental Authority, central bank or comparable agencycharged with the interpretation or administration thereof (provided thatnotwithstanding anything herein to the contrary, the Dodd-Frank Wall StreetReform and Consumer Protection Act and all requests, rules, guidelines ordirectives thereunder or issued in connection therewith shall be considered achange in applicable law, regardless of the date enacted, adopted or issued), orcompliance by any Lender with any request or directive (whether or not havingthe force of law) issued after the Closing Date of any such authority, centralbank or comparable agency: (i) shall impose, modify or deem applicable anyreserve (including any reserve imposed by the FRB), special deposit or similarrequirement against assets of, deposits with or for the account of, or creditextended by any Lender; or (ii) shall impose on any Lender any other conditionaffecting its ability to make loans based on the Term SOFR Rate or itsobligation to make loans based on the Term SOFR Rate; and the result of anythingdescribed in clauses (i) and (ii) above is to increase the cost to (or to imposea cost on) such Lender of making or maintaining any loan based on the Term SOFRRate, or to reduce the amount of any sum received or receivable by such Lenderunder this Agreement or under its Note with respect thereto, then upon demand bysuch Lender (which demand shall be accompanied by a statement setting forth thebasis for such demand and a calculation of the amount thereof in reasonabledetail, a copy of which shall be furnished to Agent), and without duplication ofother payment obligations of Borrower hereunder (including pursuant toSection 3.1), Borrower shall pay directly to such Lender such additional amountas will compensate such Lender for such increased cost or such reduction, solong as such amounts have accrued on or after the day which is one-hundredeighty (180) days prior to the date on which such Lender first made demandtherefor; provided that if the event giving rise to such costs or reductions hasretroactive effect, such one-hundred eighty (180) day period shall be extendedto include the period of retroactive effect. For the avoidance of doubt,Section 3.2(a) and (b) will not apply to any such increased costs or reductionsresulting from Taxes, as to which Section 3.1 shall govern.
(b) If any Lender shall reasonably determine that any change after theClosing Date in, or the adoption or phase-in after the Closing Date of, anyapplicable law, rule, directive or regulation regarding capital adequacy, or anychange after the Closing Date in the interpretation or administration thereof byany Governmental Authority, central bank or comparable agency charged with theinterpretation or administration thereof, or the compliance by any Lender or anyPerson controlling such Lender with any request or directive issued after theClosing Date regarding capital adequacy (whether or not having the force of law)of any such authority, central bank or comparable agency (provided thatnotwithstanding anything herein to the contrary, the Dodd-Frank Wall StreetReform and Consumer Protection Act and all requests, rules, guidelines ordirectives thereunder or issued in connection therewith shall be considered achange in applicable law, regardless of the date enacted, adopted or issued),has or would have the effect of reducing the rate of return on such Lender's orsuch controlling Person's capital as a consequence of such Lender's obligationshereunder to a level below that which such Lender or such controlling Personcould have achieved but for such change, adoption, phase-in or compliance(taking into consideration such Lender's or such controlling Person's policieswith respect to capital adequacy) by an amount deemed by such Lender or suchcontrolling Person to be material, then from time to time, within five(5) Business Days of demand by such Lender (which demand shall be accompanied bya statement setting forth the basis for such demand and a calculation of theamount thereof in reasonable detail, a copy of which shall be furnished toAgent), Borrower shall pay to such Lender such additional amount as willcompensate such Lender or such controlling Person for such reduction, so long assuch amounts have accrued on or after the day which is one-hundred eighty (180)days prior to the date on which such Lender first made demand therefor; providedthat if the event giving rise to such costs or reductions has retroactiveeffect, such one-hundred eighty (180) day period shall be extended to includethe period of retroactive effect.
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(c) Each Lender agrees that, as promptly as practicable after the officerof such Lender responsible for administering its Loans, becomes aware of theoccurrence of an event or the existence of a condition that would entitle suchLender to receive payments under Section 3.1 or Section 3.2, it will, to theextent not inconsistent with the internal policies of such Lender and anyapplicable legal or regulatory restrictions, use reasonable efforts to (i) make,issue, fund or maintain its Loans through another office of such Lender, or(ii) take such other measures as such Lender may deem reasonable, if as a resultthereof the additional amounts which would otherwise be required to be paid tosuch Lender pursuant to Section 3.1 or Section 3.2 would be materially reducedand if, as determined by such Lender in its sole discretion, the making,issuing, funding or maintaining of such Loans through such other office or inaccordance with such other measures, as the case may be, would not otherwiseadversely affect such Loans or the interests of such Lender; provided that suchLender will not be obligated to utilize such other office pursuant to thisclause (c) unless Borrower agrees to pay all incremental expenses incurred bysuch Lender as a result of utilizing such other office as described above. Acertificate as to the amount of any such expenses payable by Borrower pursuantto this clause (c) (setting forth in reasonable detail the basis for requestingsuch amount) submitted by such Lender to Borrower (with a copy to Agent) shallbe conclusive absent manifest error.
3.4 Manner of Funding; Alternate Funding Offices.
Notwithstanding any provision of this Agreement to the contrary, each Lendershall be entitled to fund and maintain its funding of all or any part of itsLoans in any manner it may determine at its sole discretion. Each Lender may, ifit so elects, fulfill its commitment to make the Term Loan by causing any branchor Affiliate of such Lender to make such Loan; provided that in such event forthe purposes of this Agreement (other than Section 3.1) such Loan shall bedeemed to have been made by such Lender and the obligation of Borrower to repaysuch Loan shall nevertheless be to such Lender and shall be deemed held by it,to the extent of such Loan, for the account of such branch or Affiliate.
3.5 Conclusiveness of Statements; Survival.
Determinations and statements of any Lender pursuant to Section 3.1, 3.2, 3.3 or3.4 shall be conclusive absent demonstrable error. Lenders may use reasonableaveraging and attribution methods in determining compensation under Sections 3.1or 3.2, and the provisions of such Sections shall survive repayment of theLoans, cancellation of the Notes and termination of this Agreement.
Section 4 Conditions Precedent.
The obligation of each Lender to make its Loan hereunder is subject to thefollowing conditions precedent, each of which shall be reasonably satisfactoryin all respects to Agent.
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4.1 Prior Debt.
The Prior Debt, if any, (i) has been (or substantially concurrently with thefunding of the initial borrowing on the Closing Date will be) paid in full,(ii) Agent shall have received evidence that arrangements satisfactory to Agenthave been made for the termination and release of all related Liens, if any,granted in connection with such Prior Debt, or (iii) otherwise subject to anintercreditor arrangement or subordination agreement acceptable to Agent in itsreasonable discretion.
Borrower shall have delivered the following documents in form and substanceacceptable to Agent in its reasonable discretion (and, as applicable, dulyexecuted):
(a) Loan Documents. The Loan Documents to which any Loan Party is a party,each duly executed by a Responsible Officer of each Loan Party and the otherparties thereto (except Agent and the Lenders), and each other Person (exceptAgent and the Lenders) shall have delivered to Agent and Lenders the LoanDocuments to which it is a party, each duly executed and delivered by suchPerson and the other parties thereto (except Agent and the Lenders).
(b) Financing Statements. Properly completed Uniform Commercial Codefinancing statements and other filings and documents required by law or the LoanDocuments to provide Agent, for the benefit of Lenders, perfected first priorityLiens in the Collateral.
(c) Lien Searches. Copies of Uniform Commercial Code, foreign, state andcounty search reports listing all effective financing statements filed and otherLiens of record against any Loan Party, with copies of any financing statementsand applicable searches of the records of the U.S. Patent and Trademark Officeand the U.S. Copyright Office performed with respect to each Loan Party, all ineach jurisdiction reasonably determined by Agent.
(d) Collateral Access Agreements. Fully executed (except by Agent and theLenders) Collateral Access Agreements reasonably requested by Agent with respectto the Collateral.
(e) Payoff; Release. Payoff letters with respect to the repayment in fullof all Prior Debt (other than such Prior Debt to be subject to the IntercreditorAgreement), termination of all agreements relating thereto and the release ofall Liens granted in connection therewith, with Uniform Commercial Code or otherappropriate termination statements and documents effective to evidence theforegoing or authorization to file the same.
(f) Authorization Documents. For each Loan Party, such Person's (i) charter(or similar formation document), certified by the appropriate GovernmentalAuthority, (ii) good standing certificates in its jurisdiction of incorporation(or formation) and in each other jurisdiction where failure to maintain suchgood standing status would have a Material Adverse Effect, (iii) bylaws (orsimilar governing document), (iv) resolutions of its board of directors (orsimilar governing body) approving and authorizing such Person's execution,delivery and performance of the Loan Documents to which it is party, the ClosingDate Warrant and the transactions contemplated thereby, and (v) signature andincumbency certificates of its officers executing any of the Loan Documents, allcertified by its secretary or an assistant secretary (or similar officer) asbeing in full force and effect without modification, in form and substancereasonably satisfactory to Agent.
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(g) Opinions of Counsel. Opinions of counsel for each Loan Party in formand substance acceptable to Agent regarding certain closing matters, andBorrower hereby requests such counsel to deliver such opinions and authorizesAgent and Lenders to rely thereon.
(h) Insurance. Certificates or other evidence of insurance in effect asrequired by Section 6.3(c) and (d), with endorsements naming Agent as lenders'loss payee and/or additional insured, as applicable.
(i) Financials. The financial statements, projections and pro forma balancesheet described in Section 5.4.
(j) Consents. Evidence that all necessary consents, permits and approvals(governmental or otherwise) required for the execution, delivery and performanceby each Loan Party of the Loan Documents have been duly obtained and are in fullforce and effect.
(k) Other Documents. Such other certificates, documents and agreements asAgent or any Lender may reasonably request.
The Lenders and Agent shall have received all fees required to be paid, and allexpenses for which invoices have been presented (including Legal Costs),required to be paid under the Loan Documents on or before the Closing Date. Allsuch amounts will be paid with proceeds of the initial advance of the Term Loanand any previous expense deposits made with Agent on or before the Closing Dateand will be reflected in the funding instructions given by Borrower to Agent onor before the Closing Date; provided, that the costs, fees, and expenses ofAgent and any Lender, as of the Closing Date, inclusive of Legal Costs, shallnot exceed $150,000.
4.4 Representations, Warranties, Defaults.
As of the Closing Date, after giving effect to the making of the Loans, (a) allrepresentations and warranties of Borrower set forth in any Loan Document shallbe true and correct in all respects as if made on and as of the Closing Date(except for representations and warranties that specifically refer to an earlierdate, which shall be true and correct in all respects as of such earlier date)and (b) no Event of Default shall exist. The acceptance of the Term Loan byBorrower shall be deemed to be a certification by Borrower that the conditionsset forth in this Section 4.4 have been satisfied.
Agent and Lenders shall have completed their due diligence review of the LoanParties and their Subsidiaries, their assets, business, obligations and thetransactions contemplated herein, the results of which shall be satisfactory inform and substance to Lenders, including, without limitation, (i) an examinationof (A) Borrower's projected Aggregate Revenue for such periods as required byLenders, (B) such valuations of Borrower and its assets as Lenders shallrequire, and (C) the terms and conditions of all material obligations owed byBorrower, the results of which shall be satisfactory in form and substance toLenders; (ii) an examination of the Collateral, the financial statements and thebooks, records, business, obligations, financial condition and operational stateof Borrower, and Borrower shall have demonstrated to Agent's satisfaction, inits sole discretion, that (x) no operations of Borrower are the subject of anygovernmental investigation, evaluation or any remedial action which could resultin any expenditure or liability deemed material by Lenders, and (y) Borrower hasno liabilities or obligations (whether contingent or otherwise) that are deemedmaterial by Lenders.
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4.6 Corporate Matters.
All corporate and other proceedings, documents, instruments and other legalmatters in connection with the transactions contemplated by the Loan Documents(including, but not limited to, those relating to corporate and capitalstructures of Borrower) shall be satisfactory to Lenders in their solediscretion.
4.7 Closing Date Warrant.
Agent shall have received the fully executed Closing Date Warrant.
Section 5 Representations and Warranties.
To induce Agent and Lenders to enter into this Agreement and to induce Lendersto make the Loan hereunder, Borrower represents and warrants to Agent andLenders, as of the Closing Date and the date of the Subsequent Term Loan (ifany) made by Lenders pursuant to Section 2.2.2, that:
Each Loan Party is duly incorporated, validly existing and (if applicable) ingood standing under the laws of its state or country of jurisdiction as setforth on Schedule 5.1, and is duly qualified to carry on its business in eachjurisdiction set forth on Schedule 5.1, which are all of the jurisdictions inwhich failure to so qualify would reasonably be likely to have or result in aMaterial Adverse Effect. Each Loan Party has the power to own its assets andcarry on its business as it is being conducted.
5.2 Authorization; No Conflict.
Each Loan Party is duly authorized to execute and deliver each Loan Document towhich it is a party, to borrow or guaranty monies thereunder, as applicable, andto perform its Obligations under each Loan Document to which it is a party. Theexecution, delivery and performance by each Loan Party of this Agreement and theother Loan Documents to which it is a party, as applicable, and the transactionscontemplated therein, do not and will not (a) require any consent or approval ofany Governmental Authority (other than any consent or approval which has beenobtained and is in full force and effect), (b) conflict with (i) any provisionof any material applicable law (including any applicable Health Care Law),(ii) the charter, articles, by-laws or other organizational documents of suchLoan Party or (iii) (except as it relates to the documents governing the PriorDebt, each of which will be terminated and/or paid on the Closing Date) anyMaterial Contract, or any judgment, order or decree, which is binding upon anyLoan Party or any of its properties or (c) require, or result in, the creationor imposition of any Lien on any asset of any Loan Party (other than Liens infavor of Agent created pursuant to the Collateral Documents).
5.3 Validity; Binding Nature.
Each of this Agreement and each other Loan Document to which any Loan Party is aparty, as applicable, is the legal, valid and binding obligation of such LoanParty, enforceable against such Loan Party in accordance with its terms, subjectto bankruptcy, insolvency and similar laws affecting the enforceability ofcreditors' rights generally and to general principles of equity and concepts ofreasonableness.
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5.4 Financial Condition.
(a) The audited financial statements of Borrower for the Fiscal Year 2021and the unaudited financial statements of Borrower for the Fiscal Quarter endedJune 2022, copies of each of which have been delivered pursuant hereto, wereprepared in accordance with GAAP and present fairly in all material respects theconsolidated financial condition of Borrower as at such dates and the results ofits operations for the periods then ended.
(b) The consolidated financial projections (including an operating budgetand a cash flow budget) of Borrower delivered to Agent and Lenders on or priorto the Closing Date (i) were prepared by Borrower in good faith and (ii) wereprepared in accordance with assumptions for which Borrower believes it has areasonable basis, and the accompanying consolidated and consolidating pro formaunaudited balance sheet of Borrower as at the Closing Date, adjusted to giveeffect to the financings contemplated hereby as if such transactions hadoccurred on such date, is consistent in all material respects with suchprojections (it being understood that the projections are not a guaranty offuture performance and that actual results during the period covered by theprojections may materially differ from the projected results therein).
5.5 No Material Adverse Effect.
Since December 31, 2021, there has been no material adverse change in thefinancial condition, operations, assets, business or properties of Loan Parties.
Other than the FiberCel Litigation, no litigation (including derivativeactions), arbitration proceeding or governmental investigation or proceeding ispending or, to Borrower's knowledge, threatened against any Loan Party thatwould reasonably be expected to have, either individually or in the aggregate, aMaterial Adverse Effect. As of the Closing Date, other than any liabilityincidental to such litigation or proceedings, no Loan Party has any materialContingent Obligations not disclosed in the financial statements specified inSection 5.4(a).
5.7 Ownership of Properties; Liens.
Borrower and each other Loan Party owns, or leases or licenses, as applicable,all of its material properties and assets, tangible and intangible, of anynature whatsoever that it purports to own, or lease, as applicable (includingIntellectual Property), free and clear of all Liens and charges and claims(including infringement claims with respect to Intellectual Property), exceptPermitted Liens and as set forth on Schedule 5.7.
All issued and outstanding Equity Interests of Loan Parties are duly authorized,validly issued, fully paid, non-assessable, and such securities were issued incompliance in all material respects with all applicable state and federal lawsconcerning the issuance of securities. Schedule 5.8 sets forth the authorizedEquity Interests of each Loan Party as of the Closing Date as well as allPersons owning more than ten percent (10%) of the outstanding Equity Interestsin each such Loan Party as of the Closing Date.
5.9 Pension Plans.
No Loan Party has, nor to Borrower's knowledge has any Loan Party ever had, aPension Plan.
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5.10 Investment Company Act.
No Loan Party is an "investment company" or a company "controlled" by an"investment company" or a "subsidiary" of an "investment company", within themeaning of the Investment Company Act of 1940.
5.11 No Default.
No Event of Default or Default exists or would result from the incurrence byBorrower of any Debt hereunder or under any other Loan Document or as a resultof any Loan Party entering into the Loan Documents to which it is a party.
5.12 Margin Stock.
No Loan Party is engaged principally, or as one of its important activities, inthe business of extending credit for the purpose of purchasing or carryingMargin Stock. As of the Closing Date, no portion of the Obligations is secureddirectly or indirectly by Margin Stock.
Each Loan Party has filed, or caused to be filed, all income and other materialfederal, state and foreign tax returns and reports required by law to have beenfiled by it and has paid all federal and state and foreign income taxes and allother material taxes or governmental charges thereby shown to be owing, exceptany such taxes or charges (a) that are not delinquent or (b) that are beingdiligently contested in good faith by appropriate proceedings and for whichadequate reserves in accordance with GAAP have been set aside on its books.
On the Closing Date, and immediately prior to and after giving effect to theborrowing hereunder and the use of the proceeds hereof, Borrower is, and willbe, Solvent.
5.15 Environmental Matters.
The on-going operations of Loan Parties comply in all respects with allapplicable Environmental Laws, except for non-compliance which could not (ifenforced in accordance with applicable law) reasonably be expected to result ina Material Adverse Effect. Each Loan Party has obtained, and maintained in goodstanding, all licenses, permits, authorizations and registrations required underany Environmental Law and necessary for its respective ordinary courseoperations, and each Loan Party is in compliance with all material terms andconditions thereof, except where the failure to do so would not reasonably beexpected to result in a Material Adverse Effect. No Loan Party nor any of theirrespective properties or operations is subject to any outstanding written orderfrom or agreement with any federal, state, or local Governmental Authority, norsubject to any judicial or docketed administrative proceeding, respecting anyEnvironmental Law, Environmental Claim or Hazardous Substance. There are noHazardous Substances or other conditions or circumstances existing with respectto any property, or arising from operations prior to the Closing Date, of anyLoan Party that would reasonably be expected to result in a Material AdverseEffect. No Loan Party has underground storage tanks.
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Loan Parties and their respective properties are insured with financially soundand reputable insurance companies which are not Affiliates of any Loan Party, insuch amounts, with such deductibles and covering such risks as are customarilycarried by companies engaged in similar businesses and owning similar propertiesin localities where such Loan Parties operate, as applicable. A true andcomplete listing of such insurance as of the Closing Date, including issuers,coverages and deductibles, is set forth on Schedule 5.16.
All written information heretofore or contemporaneously herewith furnished inwriting by Borrower to Agent or any Lender for purposes of or in connection withthis Agreement and the transactions contemplated hereby, taken as a whole, is,and all written information hereafter furnished by or on behalf of Borrower toAgent or any Lender pursuant hereto or in connection herewith, taken as a whole,will be true and accurate in all material respects on the date as of which suchinformation, taken as a whole, is dated or certified, and none of suchinformation is or will be incomplete by omitting to state any material factnecessary to make such information not misleading in any material respect inlight of the circumstances under which made (it being recognized by Agent andLenders that any projections and forecasts provided by Borrower are based ongood faith estimates and assumptions believed by Borrower to be reasonable as ofthe date of the applicable projections or assumptions and that actual resultsduring the period or periods covered by any such projections and forecasts maydiffer from projected or forecasted results).
5.18 Intellectual Property; Products and Services.
(a) Schedule 5.18(a) (as updated from time to time in accordance withSection 6.1.2 hereof) accurately and completely lists all of Loan Parties'Registered Intellectual Property. Each Loan Party owns and possesses or has alicense or other right to use all Intellectual Property as is necessary for theconduct of the business of such Loan Party, without any infringement upon theintellectual property rights of others, except as otherwise set forth onSchedule 5.18(a) hereto.
(b) Schedule 5.18(b) (as updated from time to time in accordance withSection 6.1.2 hereof) accurately and completely lists all material Products andServices and all Required Permits in relation thereto.
(c) With respect to any Product or Service being tested, manufactured,marketed, sold, and/or delivered by Loan Parties, the applicable Loan Party hasreceived (or the applicable, authorized third parties have received), and suchProduct or Service is the subject of, all Required Permits needed in connectionwith the testing, manufacture, marketing, sale, and/or delivery of such Productor Service by or on behalf of Loan Parties as currently conducted, except wherethe failure to process any such Required Permit would not reasonably be expectedto have a Material Adverse Effect. During the past five (5) years, no Loan Partyhas received any written notice from any applicable Governmental Authority,specifically including the FDA and/or CMS, that such Governmental Authority isconducting an investigation or review (other than routine or ordinary-courseinspections) of any Loan Party's (x) manufacturing facilities, or Product, orany related sales or marketing activities and/or the Required Permits related tosuch Product, and (y) laboratory facilities, the processes for such Services, orany related sales or marketing activities and/or the Required Permits related tosuch Services. There are no material deficiencies or violations of applicableHealth Care Laws in relation to the manufacturing, processes, sales, marketing,or delivery of such Product or Services and/or the Required Permits related tosuch Product or Services, no Required Permit has been revoked or withdrawn, nor,to the best of Borrower's knowledge, has any such Governmental Authority issuedany order or recommendation stating that the development, testing,manufacturing, sales and/or marketing of such Product or Services by or onbehalf of Loan Parties should cease or be withdrawn from the marketplace, asapplicable.
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(d) Except as set forth on Schedule 5.18(b), (A) there have been no adverseclinical trial results in respect of any Product since the date on which theapplicable Loan Party acquired rights to such Product, and (B) there have beenno product recalls or voluntary product withdrawals from any market in respectof any Product since the date on which the applicable Loan Party acquired rightsto such Product.
(e) No Loan Party has experienced any significant failures in itsmanufacturing of any Product which caused any reduction in Products sold.
5.19 Restrictive Provisions.
No Loan Party is a party to any agreement or contract or subject to anyrestriction contained in its operative documents which would reasonably beexpected to have a Material Adverse Effect.
5.20 Labor Matters.
No Loan Party is subject to any labor or collective bargaining agreement. Thereare no existing or threatened strikes, lockouts or other labor disputesinvolving any Loan Party that singly or in the aggregate would reasonably beexpected to have a Material Adverse Effect. Hours worked by and payment made toemployees of each Loan Party are not in violation in any material respect of theFair Labor Standards Act or any other applicable law, rule, directive orregulation dealing with such matters. Each Loan Party has fully and timely madeany and all social benefits and pension contributions and payments required tobe made by such Loan Party according to any applicable law or agreement.
5.21 Material Contracts; Leased Real Estate.
(a) Material Contracts. Except for the agreements set forth on Schedule5.21 (collectively, the "Material Contracts"), as of the Closing Date there areno (i) employment agreements covering the management of any Loan Party,(ii) collective bargaining agreements or other labor agreements covering anyemployees of any Loan Party, (iii) agreements for managerial, consulting orsimilar services to which any Loan Party is a party or by which it is bound,(iv) agreements regarding any Loan Party, its assets or operations or anyinvestment therein to which such Loan Party and any of its equity holders are aparty, (v) patent licenses, trademark licenses, copyright licenses or otherlease or license agreements to which any Loan Party is a party, either as lessoror lessee, or as licensor or licensee (other than widely-available softwaresubject to "shrink-wrap" or "click-through" software licenses),(vi) distribution, marketing or supply agreements to which any Loan Party is aparty, (vii) customer agreements to which any Loan Party is a party,(viii) partnership agreements pursuant to which any Loan Party is a partner,limited liability company agreements pursuant to which any Loan Party is amember or manager, or joint venture agreements to which any Loan Party is aparty (in each case other than the applicable Loan Parties' organizationaldocuments), (ix) real estate leases, or (x) any other agreements or instrumentsto which any Loan Party is a party, in each case of clauses (i) through(x) above, the breach, nonperformance or cancellation of which, would reasonablybe expected to have a Material Adverse Effect.
(b) Leased Real Estate. Schedule 5.21 sets forth, with respect to each realestate lease agreement to which any Loan Party is a party as of the ClosingDate, the address of the subject property.
(c) No Conflicts. The consummation of the transactions contemplated by theLoan Documents will not give rise to a right of termination in favor of anyparty to any Material Contract (other than a Loan Party) which would reasonablybe expected to have, either individually or in the aggregate, a Material AdverseEffect.
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5.22 Compliance with Laws; Health Care Laws.
(a) Laws Generally. Each Loan Party is in compliance with, and isconducting and has conducted its business and operations in material compliancewith the requirements of all applicable laws, rules, regulations, directives,decrees, orders, judgments, and Permits, except where the failure to be incompliance would not reasonably be expected to have a Material Adverse Effect.
(b) Health Care Laws. Without limiting the generality of clause (a) above:
(i) No Loan Party is in violation of any applicable Health Care Laws,except for any such violation which would not reasonably be expected (eitherindividually and taken as a whole with any other violations) to have a MaterialAdverse Effect.
(ii) Each Loan Party (either directly or through one or more authorizedthird parties) has: (x) all licenses, consents, accreditations, certificates,permits, authorizations, approvals, franchises, registrations, qualificationsand other rights from, and has made all applicable declarations and filingswith, all applicable Governmental Authorities and self-regulatory authorities(each, an "Authorization") necessary to engage in the business conducted by it,except for such Authorizations with respect to which the failure to obtain wouldnot reasonably be expected to have a Material Adverse Effect, and (y) noknowledge that any Governmental Authority is considering limiting, suspending orrevoking any such Authorization, except where the limitation, suspension orrevocation of such Authorization would not reasonably be expected to have aMaterial Adverse Effect. All such Authorizations are valid and in full force andeffect and such Loan Party is in material compliance with the terms andconditions of all such Authorizations and with all applicable Health Care Lawsrespect to such Authorizations, except where failure to be in such compliance orfor an Authorization to be valid and in full force and effect would notreasonably be expected to have a Material Adverse Effect.
(iv) Except where any of the following would not reasonably be expected tohave a Material Adverse Effect, during the past five (5) years, no Loan Partyhas been, nor to the Borrower's best knowledge has been threatened to be,(i) excluded from U.S. health care programs pursuant to 42 U.S.C. 1320a-7 orany related regulations, (ii) "suspended" or "debarred" from selling products tothe U.S. government or its agencies pursuant to the Federal AcquisitionRegulation, relating to debarment and suspension applicable to federalgovernment agencies generally (48 C.F.R. Subpart 9.4), or other applicable laws,directives or regulations, or (iii) made a party to any other action by anyGovernmental Authority that may prohibit it from selling products to anygovernmental or other purchaser pursuant to any federal, state, local or foreignlaws, directives or regulations.
(v) During the past five (5) years, no Loan Party has received any writtennotice from the FDA, CMS, or any other Governmental Authority with respect to,nor to Borrower's best knowledge is there, any actual or threatenedinvestigation, inquiry, or administrative or judicial action, hearing, orenforcement proceeding by the FDA, CMS, or any other Governmental Authorityagainst any Loan Party regarding any violation of applicable law, except forsuch investigations, inquiries, or administrative or judicial actions, hearings,or enforcement proceedings which, individually and in the aggregate, would notreasonably be expected to result in a Material Adverse Effect.
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5.23 Existing Indebtedness; Investments, Guarantees and Certain Contracts.
Except as otherwise permitted pursuant to Section 7.1, no Loan Party (a) has anyoutstanding Debt, except Debt under the Loan Documents, or (b) owns or holds anyequity or long-term debt investments in, or has any outstanding advances to orany outstanding guarantees for the obligations of, or any outstanding borrowingsfrom, any other Person.
5.24 Affiliated Agreements.
Except as set forth on Schedule 7.7 and employment agreements entered into withemployees, managers, officers and directors from time to time in the ordinarycourse of business, (i) there are no existing or proposed agreements,arrangements, understandings or transactions between any Loan Party, on the onehand, and such Loan Party's members, managers, managing members, investors,officers, directors, stockholders, other equity holders, employees, orAffiliates or any members of their respective families, on the other hand, and(ii) to Borrower's knowledge, no manager, officer or director of any Loan Partyis directly or indirectly, indebted to or has any direct or indirect ownershipor voting interest in any Person with which any Loan Party has a businessrelationship or which competes with any Loan Party (except that any such Personsmay own equity interests in (but not exceeding five percent (5%) of theoutstanding equity interests of) any publicly traded company that may competewith Loan Parties)).
5.25 Names; Locations of Offices, Records and Collateral; Deposit Accounts.
No Loan Party has conducted business under or used any name (whether corporate,partnership or assumed) other than such names set forth on Schedule 5.25A. EachLoan Party is the sole owner(s) of all of its respective names listed onSchedule 5.25A, and any and all business conducted and invoices issued in suchnames are such Loan Party's sales, business and invoices. Each Loan Partymaintains, and since its formation has maintained, respective places of businessonly at the locations set forth on Schedule 5.25B, and all books and records ofLoan Parties relating to or evidencing the Collateral are located in and at suchlocations (other than (i) Deposit Accounts, (ii) Collateral in the possession ofAgent, for the benefit of Agent and Lenders, and (iii) other locations disclosedto Agent from time to time in writing). Schedule 7.14 lists all of Loan Parties'Deposit Accounts as of the Closing Date. All of the tangible Collateral islocated exclusively within the United States.
Subject to the Intercreditor Agreement, the payment and performance of theObligations by Loan Parties are not subordinated in any way to any otherobligations of such Loan Parties or to the rights of any other Person.
5.27 Broker's or Finder's Commissions.
Except as set forth in Schedule 5.27, no broker's, finder's or placement fee orcommission will be payable to any broker or agent engaged by any Loan Party orany of its officers, directors or agents with respect to the Loan or thetransactions contemplated by this Agreement except for fees payable to Agent andLenders. Borrower agrees to indemnify Agent and each Lender and hold eachharmless from and against any claim, demand or liability for broker's, finder'sor placement fees or similar commissions, whether or not payable by Borrower,alleged to have been incurred in connection with such transactions, other thanany broker's or finder's fees payable to Persons engaged by Agent and/orLenders.
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5.28 Anti-Terrorism; OFAC.
(a) No Loan Party nor any Person controlling or controlled by a Loan Party,nor, to Borrower's knowledge, any Person having a beneficial interest in a LoanParty, nor any Person for whom a Loan Party is acting as agent or nominee inconnection with this transaction (1) is a Person whose property or interest inproperty is blocked or subject to blocking pursuant to Section 1 of ExecutiveOrder 13224 of September 23, 2001, Blocking Property and ProhibitingTransactions With Persons Who Commit, Threaten to Commit, or Support Terrorism(66 Fed. Reg. 49079 (2001)), (2) engages in any dealings or transactionsprohibited by Section 2 of such executive order, or is otherwise associated withany such Person in any manner that violates of Section 2 of such executiveorder, or (3) is a Person on the list of Specially Designated Nationals andBlocked Persons or is in violation of the limitations or prohibitions under anyother OFAC regulation or executive order.
(b) No part of the proceeds of the Loan will be used, directly orindirectly, for any payments to any governmental official or employee, politicalparty, official of a political party, candidate for political office, or anyoneelse acting in an official capacity, in order to obtain, retain or directbusiness or obtain any improper advantage, in violation of the United StatesForeign Corrupt Practices Act of 1977, as amended.
5.29 Security Interest.
Each Loan Party has full right and power to grant to Agent, for the benefit ofitself and the other Lenders, a perfected, first priority (subject to PermittedLiens) security interest and Lien on the Collateral pursuant to this Agreementand the other Loan Documents, as applicable, subject to the following sentence.Upon the execution and delivery of this Agreement and the other Loan Documents,and upon the filing of the necessary financing statements and/or appropriatefilings and/or delivery of the necessary certificates evidencing any equityinterest, control and/or possession, as applicable, and delivery of anyagreements necessary to grant "control" under the UCC with respect to any assetswhich the priority or perfection of such security interest requires suchcontrol, without any further action, Agent will have a good, valid and firstpriority (subject to Permitted Liens) perfected Lien and security interest inthe Collateral, for the benefit of Lenders. Borrower is not party to anyagreement, document or instrument that conflicts with this Section 5.29.
Borrower hereby makes the representations and warranties contained herein withthe knowledge and intention that Agent and Lenders are relying and will relythereon. All such representations and warranties will survive the execution anddelivery of this Agreement, the closing and the making of the Loan.
Section 6 Affirmative Covenants.
Until all Obligations have been Paid in Full, Borrower agrees that, unless atany time Agent shall otherwise expressly consent in writing, it will:
Furnish to Agent (which shall furnish to each Lender):
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6.1.1 Annual Report.
Promptly when available and in any event within one hundred fifty (150) daysafter the close of each Fiscal Year: (a) a copy of the annual audited report ofBorrower and its Subsidiaries for such Fiscal Year, including therein (i) aconsolidated and consolidating balance sheet and statement of earnings and cashflows of Borrower and its Subsidiaries as at the end of and for such FiscalYear, certified without qualification (except for any qualification as to goingconcern, and qualifications relating to changes in accounting principles orpractices reflecting changes in GAAP and required or approved by Borrower'sindependent certified public accountants) by independent auditors of recognizedstanding selected by Borrower and reasonably acceptable to Agent, and (ii) acomparison with the previous Fiscal Year; and (b) upon Agent's reasonablerequest, a consolidated balance sheet of Borrower and its Subsidiaries as of theend of such Fiscal Year and consolidated statements of earnings and cash flowsfor Borrower and its Subsidiaries for such Fiscal Year, together with acomparison of actual results for such Fiscal Year with the budget for suchFiscal Year, each certified by the chief financial officer or another executiveofficer of Borrower; provided, that Agent shall be deemed to be in receipt ofthe information under this Section 6.1.1 once such information is uploaded tothe Electronic Data Gathering, Analysis, and Retrieval system ("EDGAR"), theSEC's public database.
6.1.2 Interim Reports.
(a) Promptly when available and in any event within forty-five (45) daysafter the end of each Fiscal Quarter, unaudited consolidated balance sheets ofLoan Parties as of the end of such Fiscal Quarter, together with consolidatedstatements of earnings and cash flows for such Fiscal Quarter and for the periodbeginning with the first day of such Fiscal Year and ending on the last day ofsuch Fiscal Quarter, together with a comparison with the corresponding period ofthe previous Fiscal Year and a comparison with the budget for such period of thecurrent Fiscal Year (which may be in preliminary form), certified by the chieffinancial officer or other executive officer of Borrower; provided, that Agentshall be deemed to be in receipt of the information under thisSection 6.1.2(a) once such information is uploaded to EDGAR, the SEC's publicdatabase.
(b) Together with each such quarterly report to be delivered pursuant toclause (a) above, Borrower shall provide to Agent (i) a written statement ofBorrower's management in setting forth a summary discussion of Borrower'sfinancial condition, changes in financial condition and results of operations,and (ii) updated Schedules to this Agreement, as applicable, setting forth anymaterial changes to the disclosures set forth in such schedules as most recentlyprovided to Agent or, as applicable, a written statement of Borrower'smanagement stating that there have been no changes to such disclosures as mostrecently provided to Agent; provided, that Agent shall be deemed to be inreceipt of the information under this Section 6.1.2(b) once such information isuploaded to EDGAR, the SEC's public database.
(c) Promptly when available and in any event within ten (10) days after theend of each Fiscal Quarter, a statement of prior Fiscal Quarter ConsolidatedUnencumbered Liquid Assets of Loan Parties, in form and substance reasonablyacceptable to Agent.
6.1.3 Quarterly Review Meeting.
Borrower as reasonably requested by Agent shall be available via teleconferenceas and when requested by Agent and no more frequently than quarterly for areview meeting.
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6.1.4 Revenue-Based-Payment Amount Reconciliation.
Upon Agent's request Borrower shall furnish to Agent, a report, in formacceptable to Agent, reconciling the Net Sales, Royalties, and all other revenuereported by Borrower to Agent during any reporting period to the AggregateRevenue reported by Borrower hereunder for such period and the amount ofRevenue-Based-Payment Amounts applied by Borrower in connection with suchperiod(s).
6.1.5 Compliance Certificate.
Contemporaneously with the furnishing of a copy of each annual audit reportpursuant to Section 6.1.1 and each set of quarterly statements pursuant toSection 6.1.2 (including, for the avoidance of doubt the quarterly statementsdelivered for the Fiscal Quarter ending December 31st of each year), a dulycompleted Compliance Certificate, with appropriate insertions, dated the date ofdelivery and corresponding to such annual report or such quarterly statements,and signed by the chief financial officer (or other executive officer) ofBorrower, containing computations, if applicable, showing compliance withSection 7.13 and a statement to the effect that such officer has not becomeaware of any Event of Default or Default that exists or, if there is any suchevent, describing it and the steps, if any, being taken to cure it.
6.1.7 Notice of Default; Litigation.
Promptly upon becoming aware of any of the following, written notice describingthe same and summarizing the steps being taken by Borrower or the applicableLoan Party affected thereby with respect thereto:
(a) the occurrence of an Event of Default;
(b) any litigation, arbitration or governmental investigation or proceedingnot previously disclosed by Borrower to Lenders which has been instituted or, tothe knowledge of Borrower, is threatened in writing against Borrower or anyother Loan Party or to which any of the properties of any thereof is subject,which in each case would reasonably be expected to have a Material AdverseEffect;
(c) the institution of any steps by any member of the Controlled Group orany other Person to terminate any Pension Plan, or the failure of any member ofthe Controlled Group to make a required contribution to any Pension Plan (ifsuch failure is sufficient to give rise to a Lien under Section 303(k) of ERISA)or to any Multiemployer Pension Plan, or the taking of any action with respectto a Pension Plan which could result in the requirement that Borrower or anyother Loan Party furnish a bond or other security to the PBGC or such PensionPlan, or the occurrence of any event with respect to any Pension Plan orMultiemployer Pension Plan which could result in the incurrence by any member ofthe Controlled Group of any material liability, fine or penalty (including anyclaim or demand for withdrawal liability or partial withdrawal from anyMultiemployer Pension Plan), or any material increase in the contingentliability of Borrower or any other Loan Party with respect to anypost-retirement welfare plan benefit, or any notice that any MultiemployerPension Plan is in reorganization, that increased contributions may be requiredto avoid a reduction in plan benefits or the imposition of an excise Tax, thatany such plan is or has been funded at a rate less than that required underSection 412 of the IRC, that any such plan is or may be terminated, or that anysuch plan is or may become insolvent;
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(e) any other event (including (i) any violation of any law, including anyEnvironmental Law, or the assertion of any Environmental Claim or (ii) theenactment or effectiveness of any law, rule or regulation) which wouldreasonably be expected to have a Material Adverse Effect; or
(f) to the extent, in each case, that it would reasonably be expected toresult in a Material Adverse Effect: (i) any suspension, revocation,cancellation or withdrawal of an Authorization required for Borrower or anyother Loan Party, is threatened or there is any basis for believing that suchAuthorization will not be renewable upon expiration or will be suspended,revoked, cancelled or withdrawn, (ii) Borrower or any other Loan Party entersinto any consent decree or order pursuant to any Health Care Law and Regulation,or becomes a party to any judgment, decree or judicial or administrative orderpursuant to any Health Care Law, (iii) receipt of any written notice or otherwritten communication from the FDA, CMS, or any other applicable GovernmentalAuthority alleging non-compliance with any applicable Health Care Law, (iv) theoccurrence of any violation of any applicable Health Care Law by Borrower or anyof the other Loan Parties in the development or provision of Services, andrecord keeping and reporting to the FDA or CMS that would reasonably be expectedto require or lead to an investigation, corrective action or enforcement,regulatory or administrative action, (v) the occurrence of any civil or criminalproceedings relating to Borrower or any of the other Loan Parties or any oftheir respective employees, which involve a matter within or related to theFDA's or CMS' jurisdiction, (vi) any officer, employee or agent of Borrower orany of the other Loan Parties is convicted or accused in writing of any crimefor which debarment is mandated or permitted by 21 U.S.C. 335a, or (vii) anyofficer, employee or agent of Borrower or any of the other Loan Parties has beenconvicted or accused in writing of any crime for which such Person could beexcluded from participating in any federal, provincial, state or local healthcare programs under Section 1128 of the Social Security Act or any similar lawor regulation.
6.1.8 FiberCel Net Liability Amount.
(a) (i) Promptly, upon becoming aware of the final FiberCel Net LiabilityAmount, notify Agent thereof, and within ninety (90) days of the finaldetermination of such FiberCel Net Liability Amount, issue Subordinated Debt onterms and conditions reasonably satisfactory to Agent (including the executionof a subordination agreement in favor of Agent) or Equity Interests in atransaction or series of transactions, resulting in net cash proceeds toBorrower of at least the FiberCel Net Liability Amount (with any amount raisedin excess of such FiberCel Net Liability Amount to be counted towards theSubsequent Capital Raise); and (ii) notwithstanding anything set forth in thisAgreement to the contrary, if prior to the final determination of the FiberCelNet Liability Amount, Borrower receives net cash proceeds from issuing EquityInterest or Subordinated Debt in an amount sufficient to satisfy the SubsequentCapital Raise, then Borrower, at its option, may allocate the amount of such netcash proceeds received to be applied pursuant to clause (a)(i) of thisSection 6.1.8instead of the Subsequent Capital Raise, and upon the finaldetermination of each of (x) the FiberCel Net Liability Amount and(y) satisfaction of the requirements of clause (a)(i) of this Section 6.1.8, anyexcess thereof shall count toward the Subsequent Capital Raise.
(b) On an ongoing basis, promptly upon becoming aware of any new materialinformation, provide Agent with any such material updates to the FiberCelLitigation, in each case subject to attorney-client privilege andconfidentiality.
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As soon as practicable, and in any event not later than sixty (60) days afterthe commencement of each Fiscal Year, financial projections on a monthly basisfor Loan Parties for such Fiscal Year prepared in a manner consistent with theprojections delivered by Borrower to Agent prior to the Closing Date orotherwise in a manner reasonably satisfactory to Agent, accompanied by acertificate of a chief financial officer (or other executive officer) ofBorrower on behalf of Borrower to the effect that (a) such projections wereprepared by them in good faith, (b) Borrower believes that it has a reasonablebasis for the assumptions contained in such projections, (c) such projectionshave been prepared in accordance with such assumptions and (d) such projectionshave been approved in writing by the Board as the operating plan for thesubsequent Fiscal Year.
6.1.11 Updated Schedules to Guarantee and Collateral Agreement.
Contemporaneously with the furnishing of each annual audit report pursuant toSection 6.1.1, updated versions of the Schedules to the Guarantee and CollateralAgreement showing information as of the date of such audit report (it beingagreed and understood that this requirement shall be in addition to the noticeand delivery requirements set forth in the Guarantee and Collateral Agreement).
6.1.12 Other Information.
Promptly, from time to time as Agent reasonably requests, Borrower shall deliveror shall cause to be delivered to Agent:
(a) copies of any reports, statements or written materials (other thanroutine communications (electronic or otherwise) between Borrower or itsAffiliates and such entities that are not material in nature) in relation to anyMaterial Contract;
(b) such other information concerning Borrower and any other Loan Party asAgent may reasonably request;
(c) copies of all material communication as well as other materialdocuments received by Loan Parties or any of their Subsidiaries from the FDA,CMS, or any other Governmental Authority; and
(d) copies of (x) any notices or other communications relating to anybreach, default, or event of default with respect to any Subordinated Debt,Approved AR Loan Facility, or Ligand Royalty Agreement and (y) any othermodifications or amendments entered into in relation to any Subordinated Debt,Approved AR Loan Facility, or Ligand Royalty Agreement.
6.2 Books; Records; Inspections.
Keep, and cause each other Loan Party to keep, its books and records inaccordance with sound business practices sufficient to allow the preparation offinancial statements in accordance with GAAP; permit, and cause each other LoanParty to permit (at any reasonable time and with reasonable notice), Agent orany representative thereof to, no more often than once on an annual basis priorto the occurrence of an Event of Default, inspect the properties and operationsof Borrower or any other Loan Party; and permit, and cause each other Loan Partyto permit, at any reasonable time and with reasonable notice (or at any timewithout notice if an Event of Default exists), Agent (accompanied by any Lender)or any representative thereof to visit any or all of its offices, to discuss itsfinancial matters with its officers and its independent auditors (and Borrowerhereby authorizes such independent auditors to discuss such financial matterswith any Lender or Agent or any representative thereof), and to examine (andphotocopy extracts from) any of its books or other records; and permit, andcause each other Loan Party to permit, (at any reasonable time and withreasonable notice) Agent and its representatives to inspect the Collateral andother tangible assets of Borrower or Loan Party, to perform appraisals of theequipment of Borrower or Loan Party, and to inspect, audit, check and makecopies of and extracts from the books, records, computer data, computerprograms, journals, orders, receipts, correspondence and other data relating toany Collateral.
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6.3 Conduct of Business; Maintenance of Property; Insurance.
(a) Borrower shall, and shall cause each other Loan Party to, (i) conductits business substantially in accordance with its current business practices,(ii) engage principally in the same or similar lines of business substantiallyas heretofore conducted and lines of business ancillary thereto, (iii) collectthe Royalties in the ordinary course of business, (iv) maintain all of itsCollateral used or useful in its business in good repair, working order andcondition (normal wear and tear excepted and except as may be disposed of in theordinary course of business and in accordance with the terms of the LoanDocuments), (v) from time to time to make all necessary repairs, renewals andreplacements to the Collateral; (vi) maintain and keep in full force and effectall material Permits and qualifications to do business and good standing in itsjurisdiction of formation and each other jurisdiction in which the ownership orlease of property or the nature of its business makes such Permits orqualification necessary and in which failure to maintain such Permits orqualification could reasonably be expected to be, have or result in a MaterialAdverse Effect; (vii) remain in good standing and maintain operations in alljurisdictions in which it is currently located, except where the failure toremain in good standing or maintain operations would not reasonably be expectedto be, have or result in a Material Adverse Effect, and (viii) maintain, complywith and keep in full force and effect all Intellectual Property and Permitsnecessary to conduct its business, except in each case where the failure tomaintain, comply with or keep in full force and effect could not reasonably beexpected to be, have or result in a Material Adverse Effect.
(b) Borrower shall maintain, and cause each other Loan Party to maintain,with responsible insurance companies, such insurance coverage as shall berequired by all laws, governmental regulations and court decrees and ordersapplicable to it and such other insurance, to such extent and against suchhazards and liabilities, as is (i) customarily maintained by Persons operatingin the same geographical region as Borrower that are (A) subject to applicableHealth Care Laws, or (B) otherwise delivering to customers products or servicessimilar to the Services (in each case, as determined by Agent in its reasonablediscretion), and (ii) otherwise in form, substance, and amounts acceptable toAgent in its reasonable discretion; provided that in any event, such insuranceshall, unless the Agent otherwise agrees, insure against all risks andliabilities of the type insured against as of the Closing Date and shall haveinsured amounts no less than, and deductibles no higher than, those amountsprovided for as of the Closing Date. Upon request of Agent or any Lender,Borrower shall furnish to Agent or such Lender a certificate setting forth inreasonable detail the nature and extent of all insurance maintained by Borrowerand each other Loan Party. Borrower shall cause each issuer of an insurancepolicy to provide Agent with an endorsement (x) showing Agent as a lender's losspayee with respect to each policy of property or casualty insurance and namingAgent as an additional insured with respect to each policy of liabilityinsurance promptly upon request by Agent, (y) providing that the insurancecarrier will endeavor to give at least thirty (30) days' prior written notice toBorrower and Agent (or ten (10) days' prior written notice with respect tononpayment of premium or if the Agent consents to such shorter notice) beforethe termination or cancellation of the policy prior to the expiration thereofand (z) reasonably acceptable in all other respects to Agent.
(c) Unless Borrower provides Agent with evidence of the continuinginsurance coverage required by this Agreement, Agent (upon reasonable advancenotice to Borrower) may purchase insurance at Borrower's expense to protectAgent's and Lenders' interests in the Collateral. This insurance shall protectBorrower's and each other Loan Party's interests. The coverage that Agentpurchases shall pay any claim that is made against Borrower or any other LoanParty in connection with the Collateral. Borrower may later cancel any insurancepurchased by Agent, but only after providing Agent with evidence that Borrowerhas obtained the insurance coverage required by this Agreement. If Agentpurchases insurance for the Collateral, as set forth above, Borrower will beresponsible for the reasonable costs of that insurance, including interest andany other charges that may be imposed with the placement of the insurance, untilthe effective date of the cancellation or expiration of the insurance, and suchcosts of the insurance may be added to the principal amount of the Loans owinghereunder.
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6.4 Compliance with Laws; Payment of Taxes and Liabilities.
(a) Comply, and cause each other Loan Party to comply, in all materialrespects with all applicable laws, rules, regulations, decrees, orders,judgments, licenses and permits, except where failure to comply would notreasonably be expected to have a Material Adverse Effect; (b) without limitingclause (a) above, ensure, and cause each other Loan Party to ensure, that noperson who Controls a Loan Party is (i) listed on the Specially DesignatedNationals and Blocked Person List maintained by OFAC, and/or any other similarlists maintained by OFAC pursuant to any authorizing statute, Executive Order orregulation or (ii) a Person designated under Section 1(b), (c) or (d) orExecutive Order No. 13224 (September 23, 2001), any related enabling legislationor any other similar Executive Orders; (c) without limiting clause (a) above,comply and cause each other Loan Party to comply, with all applicable BankSecrecy Act and anti-money laundering laws and regulations, (d) file, or causeto be filed, all federal income and material state and foreign Tax returns andreports required by law to be filed by any Loan Party, and (e) pay, and causeeach other Loan Party to pay, prior to delinquency, all federal income andmaterial state and foreign Taxes and other material governmental charges againstit or any of its property, as well as material claims of any kind which, ifunpaid, could become a Lien (other than a Permitted Lien) on any of itsproperty; provided that the foregoing shall not require Borrower or any otherLoan Party to pay any such tax, charge or claim so long as it shall contest thevalidity thereof in good faith by appropriate proceedings and shall set aside onits books adequate reserves with respect thereto in accordance with GAAP. Forpurposes of this Section 6.4, "Control" shall mean, when used with respect toany Person, (x) the direct or indirect beneficial ownership of fifty-one percent(51%) or more of the outstanding Equity Interests of such Person or (y) thepower to direct or cause the direction of the management and policies of suchPerson whether by contract or otherwise.
6.5 Maintenance of Existence.
Maintain and preserve, and (subject to Section 7.4) cause each other Loan Partyto maintain and preserve, (a) its existence and good standing in thejurisdiction of its organization and (b) its qualification to do business andgood standing in each jurisdiction where the nature of its business makes suchqualification necessary, other than any such jurisdiction where the failure tobe qualified or in good standing would not reasonably be expected to have aMaterial Adverse Effect.
6.6 Employee Benefit Plans.
Except to the extent that failure to do so would not be reasonably expected toresult in (a) a Material Adverse Effect or (b) liability in excess of $500,000of any Loan Party, maintain, and cause each other Loan Party to maintain, eachPension Plan (if any) in substantial compliance with all applicable requirementsof law and regulations.
6.7 Environmental Matters.
Except to the extent the failure to do so would not be reasonably expected toresult in a Material Adverse Effect, if any release or disposal of HazardousSubstances shall occur or shall have occurred on any real property or any otherassets of Borrower or any other Loan Party, cause, or direct the applicable LoanParty to cause, the prompt containment and removal of such Hazardous Substancesand the remediation of such real property or other assets as is necessary tocomply in all material respects with all Environmental Laws and to preserve thevalue of such real property or other assets. Without limiting the generality ofthe foregoing, except to the extent the failure to do so would not be reasonablyexpected to result in a Material Adverse Effect, Borrower shall, and shall causeeach other Loan Party to, comply with each valid federal or state judicial oradministrative order requiring the performance at any real property by Borroweror any other Loan Party of activities in response to the release or threatenedrelease of a Hazardous Substance.
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6.8 Further Assurances.
Take, and cause each other Loan Party to take, such actions as are necessary oras Agent or the Required Lenders may reasonably request from time to time toensure that the Obligations of Borrower and each other Loan Party under the LoanDocuments are secured by a perfected Lien in favor of Agent (subject only to thePermitted Liens) on substantially all of the assets of Borrower and eachSubsidiary of Borrower (as well as all equity interests of each Subsidiary ofBorrower) and guaranteed by all of the Subsidiaries of Borrower (including,promptly upon the acquisition or creation thereof, any Subsidiary of Borroweracquired or created after the Closing Date), in each case including (a) theexecution and delivery of guaranties, security agreements, pledge agreements,mortgages, deeds of trust, financing statements and other documents, and thefiling or recording of any of the foregoing; (b) the delivery of certificatedsecurities (if any) and other Collateral with respect to which perfection isobtained by possession but excluding (i) the requirement for the Loan Parties toexecute and deliver leasehold mortgages, and (ii) any other Excluded Collateralas defined in the Guarantee and Collateral Agreement; and (c) using commerciallyreasonable efforts to obtain and deliver executed Collateral Access Agreementsin relation to any foreign and domestic location where a material portion of theCollateral is held or otherwise stored from time to time.
6.9 Compliance with Health Care Laws.
(a) Without limiting or qualifying Section 6.4 or any other provision ofthis Agreement, Borrower will comply, and will cause each other Loan Party tocomply, in all material respects with all applicable Health Care Laws relatingto the operation of such Person's business, except where failure to comply wouldnot reasonably be expected to have a Material Adverse Effect.
(b) Borrower will, and will cause each other Loan Party to:
(i) Keep in full force and effect all Authorizations required to operatesuch Person's business under applicable Health Care Laws and maintain any otherqualifications necessary to conduct, arrange for, administer, provide servicesin connection with or receive payment for all applicable Services, except to theextent such failure to keep in full force and effect or maintain would notreasonably be expected to have a Material Adverse Effect.
(ii) Promptly furnish or cause to be furnished to the Agent, to the extentsuch matters would reasonably be expected to have a Material Adverse Effect,(w) copies of all reports of investigational/inspectional observations issued toand received by the Loan Parties or any of their Subsidiaries, and issued by anyGovernmental Authority relating to such Person's business, (x) copies of all FDAForm-483s and comparable inspectional observations and reports issued to andreceived by Loan Parties or any of their Subsidiaries and issued by anyGovernmental Authority, (y) copies of all material warning letters and materialuntitled letters as well as other material documents received by Loan Parties orany of their Subsidiaries from the FDA, CMS, or any other Governmental Authorityrelating to or arising out of the conduct applicable to the business of the LoanParties or any of their Subsidiaries that asserts past or ongoing lack ofcompliance with any Health Care Law or any other applicable foreign, federal,state or local law, directive or regulation of similar import and (z) notice ofany material investigation or material audit or similar proceeding by the FDA,CMS, or any other Governmental Authority (other than routine audits conducted inthe ordinary course of business).
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(iii) Promptly furnish or cause to be furnished to the Agent, with respectto matters that would reasonably be expected to have a Material Adverse Effect,(in such form as may be reasonably required by Agent) copies of allnon-privileged, reports, correspondence, pleadings and other communicationsrelating to any matter that could lead to the loss, revocation or suspension (orthreatened loss, revocation or suspension) of any material Authorization or ofany material qualification of any Loan Party or Subsidiary; provided that anyinternal reports to a Person's compliance "hot line" which are promptlyinvestigated and determined to be without merit need not be reported.
(iv) Promptly furnish or cause to be furnished to the Agent notice of allmaterial fines or penalties imposed by any Governmental Authority under anyHealth Care Law against any Loan Party or any of its Subsidiaries.
(v) Promptly furnish or cause to be furnished to the Agent notice of allmaterial allegations by any Governmental Authority (or any agent thereof) offraudulent activities of any Loan Party or any of its Subsidiaries in relationto the provision of clinical research or related services.
Notwithstanding anything to the contrary in any Loan Document, no Loan Party orany of its Subsidiaries shall be required to furnish to Agent or any Lenderpatient-related or other information, the disclosure of which to Agent or suchLender is prohibited by any applicable law.
6.10 Cure of Violations.
If there shall occur any breach of Section 6.9, Borrower shall take suchcommercially reasonable action as is necessary to validly challenge or otherwiseappropriately respond to such fact, event or circumstance within any timeframerequired by applicable Health Care Laws, and shall thereafter diligently pursuethe same.
6.11 Corporate Compliance Program.
Maintain, and will cause each other Loan Party to maintain on its behalf, acorporate compliance program reasonably acceptable to Agent to attempt to ensurecontinuing compliance in all material respects with all applicable Health CareLaws. Until the Obligations have been Paid in Full, Borrower will modify suchcorporate compliance program from time to time (and cause the other Loan Partiesand their Subsidiaries to modify their respective corporate compliance programs)as may be reasonable to attempt to ensure continuing compliance in all materialrespects with all applicable Health Care Laws. Borrower will permit Agent and/orany of its outside consultants to review such corporate compliance programs fromtime to time upon reasonable notice and during normal business hours ofBorrower. Notwithstanding anything to the contrary contained herein, the Agentacknowledges that the corporate compliance program of the Borrower in effect asof the Closing Date is reasonably acceptable to the Agent.
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6.12 Payment of Debt.
Except as otherwise prescribed in the Loan Documents, Borrower shall pay,discharge or otherwise satisfy when due and payable (subject to applicable graceperiods and, in the case of trade payables, to ordinary course of paymentpractices) all of its material obligations and liabilities, except when theamount or validity thereof is being contested in good faith by appropriateproceedings and appropriate reserves shall have been made in accordance withGAAP consistently applied.
6.13 Additional Subsidiaries.
(a) Additional Subsidiaries. Promptly after the creation or acquisition ofany Subsidiary (and, in any event, within thirty (30) days after such creationor acquisition, as such time period may be extended by Agent in its solediscretion), cause such Person to (i) become a Loan Party by delivering to Agenta duly executed supplement to the Guarantee and Collateral Agreement or suchother document as Agent shall approve for such purpose, (ii) grant a securityinterest in all Collateral (but not any Excluded Collateral as defined in theGuarantee and Collateral Agreement) owned by such Subsidiary by delivering toAgent a duly executed supplement to each applicable Collateral Document or suchother document as Agent shall reasonably deem appropriate for such purpose andcomply with the terms of each applicable Collateral Document, (iii) deliver toAgent such customary opinions, documents and certificates referred to inSection 4.2 as may be reasonably requested by Agent, (iv) deliver to Agent suchoriginal certificated Equity Interests or other certificates and stock or othertransfer powers evidencing the Equity Interests in such Person, (v) deliver toAgent such updated Schedules to the Loan Documents as reasonably requested byAgent with respect to such Person, (vi) using commercially reasonable efforts toobtain and deliver executed Collateral Access Agreements in relation to anyforeign and domestic location where a material portion of the Collateral is heldor otherwise stored from time to time, and (vii) deliver to Agent such otherdocuments as may be reasonably requested by Agent in order to comply with thisSection 6.13, all in form, content and scope reasonably satisfactory to Agent.
(b) Merger Subsidiaries. Notwithstanding the foregoing, to the extent anynew Subsidiary is created solely for the purpose of consummating a mergertransaction pursuant to an Acquisition permitted hereby, and such new Subsidiaryat no time holds any material assets or liabilities other than any mergerconsideration contributed to it contemporaneously with the closing of suchmerger transaction (provided, however, that such merger consideration shall notbe held by such new Subsidiary for more than five (5) Business Days without theapproval of Agent in its reasonable discretion), such new Subsidiary shall notbe required to take the actions set forth in Section 6.13(a) until theconsummation of such Acquisition (at which time, the surviving entity of therespective merger transaction shall be required to so comply withSection 6.13(a) within thirty (30) days of the consummation of such Acquisition,as such time period may be extended by Agent in its sole discretion).
6.14 SEC Registration.
Within thirty (30) days of the Closing Date, Borrower shall file a Form S-3Registration Statement with the Securities and Exchange Commission for anyissuance of Equity Interests or Subordinated Debt, on terms reasonablysatisfactory to Agent (including the execution of a subordination agreement infavor of Agent, if applicable) for an anticipated aggregate offering price equalto the lesser of (a) $20,000,000 and (b) the maximum amount the Borrower ispermitted to register pursuant to General Instruction I.B.6 of Form S-3.
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Section 7 Negative Covenants.
Until all Obligations have been Paid in Full, Borrower agrees that, unless atany time Agent shall otherwise expressly consent in writing, in its solediscretion, it will:
Not, and not permit any other Loan Party to, create, incur, assume or suffer toexist any Debt, except:
(a) Obligations under this Agreement and the other Loan Documents;
(b) Subordinated Debt approved by Agent;
(c) Debt secured by Liens permitted by Section 7.2(b), Section 7.2(d) orSection 7.2(n) and extensions, renewals and re-financings thereof; provided thatthe aggregate amount of all such Debt permitted under Section 7.2(d) at any timeoutstanding shall not exceed $250,000;
(d) Debt with respect to any Hedging Obligations incurred for bona fidehedging purposes and not for speculation;
(e) Debt (i) arising from customary agreements for indemnification relatedto sales of goods, licensing of intellectual property or adjustment of purchaseprice or similar obligations in any case incurred in connection with theacquisition or disposition of any business, assets or Subsidiary of Borrowerotherwise permitted hereunder, (ii) representing deferred compensation toemployees of any Loan Party incurred in the ordinary course of business, or(iii) representing trade payables incurred with suppliers in the ordinary courseof business and customer deposits and advance payments received in the ordinarycourse of business from customers for goods purchased in the ordinary course ofbusiness;
(f) Debt with respect to cash management obligations and other Debt inrespect of automatic clearing house arrangements, netting services, overdraftprotection and similar arrangements, in each case incurred in the ordinarycourse of business;
(g) Debt incurred in connection with surety bonds, performance bonds orletters of credit for worker's compensation, unemployment compensation and othertypes of social security and otherwise in the ordinary course of business orreferred to in Section 7.2(e);
(h) unsecured Debt (which for further clarity shall exclude accountspayable and other current liabilities incurred by Loan Parties in the ordinarycourse of business), in addition to the Debt listed above, in an aggregateoutstanding amount not at any time exceeding $250,000;
(i) Debt among the Loan Parties, subject to a subordination agreement, inform and substance acceptable to Agent in its sole discretion;
(j) Debt under (i) any Approved AR Loan Facility; provided that theaggregate amount at any time outstanding in relation to such Approved AR LoanFacility shall not exceed $8,000,000 without the written consent of Agent, or(ii) the Ligand Royalty Agreement;
(k) unsecured Debt incurred as a result of endorsing negotiable instrumentsreceived in the ordinary course of business; and
(l) Debt in connection with real property leases.
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Not, and not permit any other Loan Party to, create or permit to exist any Lienon any of its real or personal properties, assets or rights of whatsoever nature(whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the timedelinquent or thereafter payable without penalty or being diligently contestedin good faith by appropriate proceedings and, in each case, for which itmaintains adequate reserves in accordance with GAAP and with respect to which noexecution or other enforcement has occurred;
(b) Liens arising in the ordinary course of business (including withoutlimitation (i) Liens of carriers, warehousemen, mechanics, landlords andmaterialmen and other similar Liens imposed by law and (ii) Liens incurred inconnection with worker's compensation, unemployment compensation and other typesof social security or in connection with surety bonds, bids, tenders,performance bonds, trade contracts not for borrowed money, licenses, statutoryobligations and similar obligations) for sums not overdue or being diligentlycontested in good faith by appropriate proceedings and not involving anydeposits or advances or borrowed money or the deferred purchase price ofproperty or services and, in each case, for which it maintains adequate reservesin accordance with GAAP and with respect to which no execution or otherenforcement of which is effectively stayed;
(c) Liens securing the (i) Approved AR Loan Facility, or (ii) LigandRoyalty Agreement;
(d) (i) Liens arising in connection with Capital Leases (and attaching onlyto the property being leased), (ii) Liens on any property securing debt incurredfor the purpose of financing all or any part of the cost of acquiring orimproving such property; provided that any such Lien attaches to such propertywithin two hundred seventy (270) days of the acquisition or improvement thereofand attaches solely to the property so acquired or improved, and (iii) thereplacement, extension or renewal of a Lien permitted by one of the foregoingclauses (i) or (ii) in the same property subject thereto arising out of theextension, renewal or replacement of the Debt secured thereby (without increasein the amount thereof);
(e) Liens relating to litigation bonds and attachments, appeal bonds,judgments and other similar Liens arising in connection with any judgment oraward that is not an Event of Default hereunder;
(f) easements, rights of way, restrictions, minor defects or irregularitiesin title and other similar Liens not interfering in any material respect withthe ordinary conduct of the business of Borrower or any other Loan Party;
(g) Liens arising under the Loan Documents;
(h) any interest or title of a licensor, sublicensor, lessor or sublessorunder any license, lease, sublicense or sublease agreement entered into in thenormal course of business, only to the extent limited to the item licensed orleased;
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(i) (i) Liens of a collection bank arising under Section 4-210 ofthe Uniform Commercial Code on items in the course of collection and(ii) customary set off rights of deposit banks with respect to deposit accountsmaintained at such deposit banks or which are contained in standard agreementsfor the opening of an account with a bank;
(j) Liens arising from precautionary filings of financing statements underthe Uniform Commercial Code or similar legislation of any applicablejurisdiction in respect of operating leases permitted hereunder and entered intoby a Loan Party in the ordinary course of business;
(k) Liens attaching to cash earnest money deposits in connection with anyletter of intent or purchase agreement permitted hereunder or indemnificationother post-closing escrows or holdbacks;
(l) Liens incurred with respect to Hedging Obligations incurred for bonafide hedging purposes and not for speculation;
(m) Liens to secure obligations of a Loan Party to another Loan Party;
(n) Liens arising out of conditional sale, title retention, consignment orsimilar arrangements for the sale of goods in the ordinary course of business;
(o) Liens granted in the ordinary course of business on the unearnedportion of insurance premiums securing the financing of insurance premiums; and
(p) Liens in favor of customs and revenue authorities arising as a matterof law to secure payment of customs duties in connection with the importation ofgoods.
7.3 Dividends; Redemption of Equity Interests.
Not (a) declare, pay or make any dividend or distribution on any EquityInterests or other securities or ownership interests, other than dividends ordistributions declared, paid or made to a Loan Party or in the form of EquityInterests, (b) apply any of its funds, property or assets to the acquisition,redemption or other retirement of any Equity Interests or other securities orinterests or of any options to purchase or acquire any of the foregoing,(c) otherwise make any payments, dividends or distributions to any member,manager, managing member, stockholder, director or other equity owner in suchPerson's capacity as such other than in compliance with Section 7.7 hereof, or(d) make any payment of any management, service or related or similar fee to anyAffiliate or holder of Equity Interests of Borrower other than in compliancewith Section 7.7 hereof; provided, that (1) any Subsidiary may make dividends ordistributions to any Loan Party, and (2) Loan Parties may make payments toholders of Subordinated Debt in accordance with the terms of the applicablesubordination agreement.
7.4 Mergers; Consolidations; Asset Sales.
(a) Not be a party to any amalgamation or any other form of Division,merger or consolidation, unless agreed to by Agent in its sole discretion, norpermit any other Loan Party to be a party to any Division, amalgamation or anyother form of merger or consolidation, unless agreed to by Agent in itsreasonable discretion.
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(b) Not, and not permit any other Loan Party to, sell, transfer, disposeof, convey, lease or license any of its real or personal property assets orEquity Interests, except for (i) sales of Inventory in the ordinary course ofbusiness for at least fair market value, (ii) transfers, destruction or otherdisposition of obsolete or worn-out assets in the ordinary course of businessand (iii) at all times subject to Section 2.8.1(c), any other sales anddispositions of assets (excluding (A) any Equity Interests of Borrower or anySubsidiary or (B) sales of Inventory described in clause (i) above) for at leastfair market value (as determined by the Board), (iv) sales and dispositions toLoan Parties, (v) leases, licenses, subleases and sublicenses entered into inthe ordinary course of business, (vi) sales and exchanges of Cash EquivalentInvestments to the extent otherwise permitted hereunder, (vii) Liens expresslypermitted under Section 7.2 and transactions expressly permitted by clause(a) or Section 7.10, (viii) sales or issuances of Equity Interests by Borrower,(ix) issuances of Equity Interests by any Loan Party to any other Loan Party,(x) dispositions in the ordinary course of business consisting of theabandonment of intellectual property rights which, in the reasonable good faithdetermination of Borrower, are not material to the conduct of the business ofthe Loan Parties, (xi) a cancellation of any intercompany Debt among the LoanParties, (xii) a disposition which constitutes an insured event or pursuant to acondemnation, expropriation, "eminent domain" or similar proceeding,(xiii) sales and dispositions among Subsidiaries of Borrower, and(xiv) exchanges of existing equipment for new equipment that is substantiallysimilar to the equipment being exchanged and that has a value equal to orgreater than the equipment being exchanged.
(c) Notwithstanding any provision in this Agreement or any other LoanDocuments to the contrary, the prior consent of Agent shall not be required inconnection with (a) licenses of patent rights granted by Aziyo Med, LLC toCorMatrix pursuant to the Cross License Agreement, or (b) the licensing orsublicensing of Intellectual Property pursuant to collaborations, licenses orother strategic transactions with third parties executed (i) in the ordinarycourse of a Loan Party's business, (ii) on an arms-length basis and (iii) priorto the occurrence of an Event of Default.
7.5 Modification of Organizational Documents.
Not permit the charter, articles, by-laws or other organizational documents ofBorrower or any other Loan Party to be amended or modified in any way whichwould reasonably be expected to materially and adversely affect the interests ofAgent or any Lender. An amendment to Borrower's certificate of incorporation toincrease Borrower's authorized capital stock shall not be deemed to adverselyaffect the interests of Agent or any Lender.
7.6 Use of Proceeds.
Use the proceeds of the Loans solely to refinance the Prior Debt, if any, andotherwise for working capital, for fees and expenses related to the negotiation,execution, delivery and closing of this Agreement and the other Loan Documentsand the transactions contemplated hereby and thereby, and for other generalbusiness purposes of Borrower and its Subsidiaries.
7.7 Transactions with Affiliates.
Not, and not permit any other Loan Party to, enter into, or cause, suffer orpermit to exist any transaction, arrangement or contract with any of its otherAffiliates, which is on terms which are less favorable than are obtainable fromany Person which is not one of its Affiliates, other than (i) reasonablecompensation and indemnities to, benefits for, reimbursement of expenses of, andemployment arrangements with, officers, employees and directors in the ordinarycourse of business, (ii) transactions among Loan Parties, (iii) transactionspursuant to agreements in existence on the Closing Date and set forth onSchedule 7.7, and (iv) such transactions in which the value of sucharrangements, transactions, and contracts in the aggregate do not exceed$250,000 on an annual basis.
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7.8 Inconsistent Agreements.
Not, and not permit any other Loan Party to, enter into any agreement containingany provision which would (a) be violated or breached by any borrowing byBorrower hereunder or by the performance by Borrower or any other Loan Party ofany of its Obligations hereunder or under any other Loan Document, (b) prohibitBorrower or any other Loan Party from granting to Agent and Lenders a Lien onany of its assets (other than Permitted Liens) or (c) create or permit to existor become effective any encumbrance or restriction on the ability of any otherLoan Party to (i) pay dividends or make other distributions to Borrower or anyother Loan Party, or pay any Debt owed to Borrower or any other Loan Party,(ii) make loans or advances to Borrower or any other Loan Party or(iii) transfer any of its assets or properties to Borrower or any other LoanParty, other than, in the cases of clauses (b) and (c), (A) restrictions orconditions imposed by any agreement relating to purchase money Debt, CapitalLeases and other secured Debt or to leases and licenses permitted by thisAgreement if such restrictions or conditions apply only to the property orassets securing such Debt or the property leased or licensed, (B) customaryprovisions in leases and other contracts restricting the assignment thereof,(C) restrictions and conditions imposed by law, (D) those arising under any LoanDocument or any loan documents governing any Subordinated Debt, Approved AR LoanFacility, or Ligand Royalty Agreement and (E) customary provisions in contractsfor the disposition of any assets; providedthat the restrictions in any suchcontract shall apply only to the assets or Subsidiary that is to be disposed ofand such disposition is permitted hereunder.
7.9 Business Activities.
Not, and not permit any other Loan Party to, engage in any line of businessother than the businesses engaged in on the Closing Date and businessesreasonably related thereto or extensions thereof.
Not, and not permit any other Loan Party to, make or permit to exist anyInvestment in any other Person, except the following:
(a) The creation of any Wholly-Owned Subsidiary and contributions byBorrower to the capital of any Wholly-Owned Subsidiary of Borrower, so long asthe recipient of any such contribution has guaranteed the Obligations and suchguaranty is secured by a pledge of all of its equity interests and substantiallyall of its real and personal property, in each case in accordance withSection 6.14;
(b) Cash Equivalent Investments;
(c) bank deposits in the ordinary course of business;
(d) any purchase or other acquisition by Borrower or any Wholly-OwnedSubsidiary of Borrower of the assets or equity interests of any Subsidiary ofBorrower;
(e) transactions among Loan Parties permitted by Section 7.4;
(f) Hedging Obligations permitted under Section 7.1(d);
(g) lease, utility and other similar deposits made in the ordinary courseof business and trade credit extended in the ordinary course of business;
(h) Investments consisting of the non-cash portion or any deferred portionof the consideration received by a Loan Party in connection with any Dispositionpermitted under Section 7.4 in an aggregate amount not to exceed $5,000,000 atany time;
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(i) Investments permitted by Borrower or any Loan Party as a result of thereceipt of insurance and/or condemnation or expropriation proceeds in accordancewith the Loan Documents;
(j) Investments (i) received as a result of the bankruptcy orreorganization of any Person or taken in settlement of or other resolution ofclaims or disputes or (ii) in securities of customers and suppliers received inconnection with the bankruptcy or reorganization of, or settlement of delinquentaccounts and bona fide disputes with, customers and suppliers, and, in eachcase, extensions, modifications and renewals thereof;
(k) Investments in and loans to any Loan Party;
(l) Investments constituting (i) accounts receivable arising, (ii) tradedebt granted, or (iii) deposits made in connection with the purchase price ofgoods or services, in each case in the ordinary course of business;
(m) employee loans, travel advances and guarantees in accordance with theBorrower's usual and customary practices with respect thereto (if permitted byapplicable Laws);
(n) loans to employees, officers or directors relating to the purchase ofequity securities of Borrower's or its Subsidiaries pursuant to employee stockpurchase plans or agreements approved by Borrower's board of directors (or othergoverning body), but the aggregate of all such loans outstanding may not exceed$250,000 at any time; and
(o) Other investments in an amount not to exceed $250,000.
7.11 Restriction of Amendments to Certain Documents.
Not, nor permit any Loan Party to, amend or otherwise modify in any manner thatis materially adverse to the Lenders, or waive any material rights under, anyprovisions of any of (i) any loan documents governing any Subordinated Debt orApproved AR Loan Facility, or the Ligand Royalty Agreement (except that theterms of any document governing any Subordinated Debt, Approved AR LoanFacility, or Ligand Royalty Agreement may be amended, modified or otherwisewaived to the extent permitted under the applicable subordination agreement orIntercreditor Agreement that Agent is a party to in connection therewith), or(ii) any Material Contracts (or any replacements thereof) following theoccurrence and continuance of an Event of Default; in either case without thewritten approval of Agent, except for such amendments that would not bematerially adverse to the Agent or Lenders.
7.12 Fiscal Year.
Not change its Fiscal Year without prior written notice to Agent .
7.13 Financial Covenants
7.13.1 Minimum Consolidated Unencumbered Liquid Assets.
Not permit the Consolidated Unencumbered Liquid Assets, to be less than (a) atany time on or after the Closing Date and on or before October 10, 2022,$5,000,000 and (b) at any time thereafter, the greater of (i) $5,000,000, or(ii) the sum of the Operating Burn for the two (2) prior, consecutive FiscalQuarters then ended.
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7.13.2 Minimum Aggregate Revenue.
Not permit the Aggregate Revenue for the twelve (12) month period ending on thelast Business Day of any Fiscal Quarter set forth in the table below (designatedby "Q" in the table below) to be less than the applicable amount set forth inthe table below for such twelve (12) month period.
Minimum Aggregate Revenue as of the end of:
Q3 2022 $ 37,000,000 Q4 2022 $ 38,500,000 Q1 2023 $ 40,000,000 Q2 2023 and each Fiscal Quarter thereafter $ 41,000,000
; provided that, Borrower shall be deemed to be in compliance with thisSection 7.13.2 as it relates to any period of measure if, as of the applicabledate of determination, Borrower has Consolidated Unencumbered Liquid Assetsgreater than either (i) the outstanding principal balance of the Loan, or(ii) the aggregate Operating Burn for the twelve (12) month period ending onsuch date of determination.
7.14 Deposit Accounts.
Not, and not permit any other Loan Party, to maintain or establish any newDeposit Accounts other than (a) Exempt Accounts and (b) the Deposit Accounts setforth on Schedule 7.14 (which Deposit Accounts constitute all of the DepositAccounts, securities accounts or other similar accounts maintained by the LoanParties as of the Closing Date) without prior written notice to Agent. Upon therequest of Agent at any time following the occurrence of a Material AdverseEffect, Default or Event of Default, Borrower or such other applicable LoanParty shall promptly enter into an Account Control Agreement, in form andsubstance reasonably satisfactory to Agent, in relation to the DepositAccount(s) selected by Agent.
Not, and not permit any other Loan Party to, in each case without the priorwritten consent of Agent in its sole discretion, establish or acquire anySubsidiary unless (i) no Default or Event of Default has occurred and iscontinuing or would result therefrom, (ii) within thirty (30) days followingsuch formation or acquisition of any new Subsidiary, such Subsidiary shall haveassumed and joined each Loan Document as a Loan Party pursuant to documentationacceptable to Agent in its reasonable discretion and (iii) all other LoanParties shall have reaffirmed all Obligations as well as all representations andwarranties under the Loan Documents (except to the extent such representationsand warranties specifically relate to a prior date only).
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7.16 Regulatory Matters.
To the extent that any of the following would reasonably be expected to resultin a Material Adverse Effect, not, and not permit any other Loan Party to,(i) make, and use commercially reasonable efforts to not permit any officer,employee or agent of any Loan Party to make, any untrue statement of materialfact to the FDA or any Governmental Authority; fail to disclose a material factrequired to be disclosed to the FDA or any Governmental Authority; or commit amaterial act, make a material statement, or fail to make a statement that couldotherwise reasonably be expected to provide the basis for CMS or anyGovernmental Authority to undertake action against such Loan Party,(ii) commence any clinical studies in the United States or sponsor the conductof any clinical research in the United States, other than as required by anyapplicable law, (iii) introduce into commercial distribution any FDA Productswhich are, upon their shipment, adulterated or misbranded in violation of 21U.S.C. 331, (iv) permit any officer, employee or agent of any Loan Party tomake, any untrue statement of material fact to the FDA or any other GovernmentalAuthority, fail to disclose a material fact required to be disclosed to the FDAor any other Governmental Authority, that could otherwise reasonably be expectedto provide the basis for the FDA or any other Governmental Authority to invokeits policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, andIllegal Gratuities," as set forth in 56 Fed. Reg. 46191 (September 10, 1991), or(v) otherwise incur any material liability (whether actual or contingent) forfailure to comply with Health Care Laws.
7.17 Name; Permits; Dissolution; Insurance Policies; Disposition ofCollateral; Taxes; Trade Names; Location of Assets; Change of Chief ExecutiveOffice.
Borrower shall not, nor shall it permit any Loan Party to, (a) change itsjurisdiction of organization, change the jurisdiction in which its chiefexecutive office is located or change its corporate name without thirty (30)calendar days prior written notice to Agent, (b) amend, alter, suspend,terminate or make provisional in any material way, any Permit, the suspension,amendment, alteration or termination of which would reasonably be expected tobe, have or result in a Material Adverse Effect without the prior writtenconsent of Agent, which consent shall not be unreasonably withheld, (c) wind up,liquidate or dissolve (voluntarily or involuntarily) or commence or suffer anyproceedings seeking or that would result in any of the foregoing, (d) amend,modify, restate or change any insurance policy in a manner adverse to Agent orLenders or otherwise allow its aggregate products liability insurance coverageto be less than an amount that is commercially reasonable and consistent withcustomary industry practices, (e) change its federal tax employer identificationnumber or similar tax identification number under the relevant jurisdiction orestablish new or additional trade names without providing not less than thirty(30) days advance written notice to Agent, or (f) permit any of its materialtangible personal property to be located in or relocated to any jurisdiction inwhich Agent has not registered or perfected its security interest without thirty(30) calendar days prior written notice to Agent.
7.18 Truth of Statements.
Borrower shall not knowingly furnish to Agent or any Lender any certificate orother document that contains any untrue statement of a material fact or thatomits to state a material fact necessary to make it not misleading in light ofthe circumstances under which it was furnished.
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Section 8 Events of Default; Remedies.
8.1 Events of Default.
Each of the following shall constitute an Event of Default under this Agreement:
8.1.1 Non-Payment of Credit.
(a) Default in the payment when due of all outstanding Obligations on theTermination Date; (b) default in the payment of any Revenue-Based-Payment Amounton or before the applicable Payment Date; or (c) without duplication of clause(b) hereof, default, and continuance thereof for five (5) Business Days, in thepayment when due of any interest, fee, or other amount payable by any Loan Partyhereunder or under any other Loan Document.
8.1.2 Default Under Other Debt.
Any "Event of Default" (or such similar defined term) shall occur under theterms applicable to (a) any Debt of any Loan Party (excluding the Obligations)in an aggregate principal amount (for all such Debt so affected and includingundrawn committed or available amounts and amounts owing to all creditors underany combined or syndicated credit arrangement) exceeding $500,000, (b) theApproved AR Loan Facility, or (c) the Ligand Royalty Agreement.
8.1.3 Bankruptcy; Insolvency.
(a) Any Loan Party shall (i) be unable to pay its debts generally as theybecome due, (ii) file a petition under any insolvency statute, (iii) make ageneral assignment for the benefit of its creditors, (iv) commence a proceedingfor the appointment of a receiver, trustee, interim receiver, receiver andmanager, liquidator or conservator of itself or of the whole or any substantialpart of its property or shall otherwise be dissolved or liquidated, or (v) makean application or commence a proceeding seeking reorganization or liquidation orsimilar relief under any Debtor Relief Law or any other applicable law; or
(b) (i) a court of competent jurisdiction shall (A) enter an order,judgment or decree appointing a custodian, receiver, trustee, , interimreceiver, receiver and manager, liquidator or conservator of any Loan Party orthe whole or any substantial part of any of Loan Party's properties, which shallcontinue unstayed and in effect for a period of sixty (60) calendar days,(B) approve a petition or claim filed against any Loan Party seekingreorganization, liquidation, appointment of a receiver, interim receiver,liquidator, conservator, trustee or special manager or similar relief under theany Debtor Relief Law or any other applicable law, which is not dismissed withinsixty (60) calendar days or, (C) under the provisions of any Debtor Relief Lawor other applicable law or statute, assume custody or control of any Loan Partyor of the whole or any substantial part of any of Loan Party's properties, whichis not irrevocably relinquished within sixty (60) calendar days, or (ii) thereis commenced against any Loan Party any proceeding or petition seekingreorganization, liquidation or similar relief under any Debtor Relief Law or anyother applicable law or statute, which (A) is not unconditionally dismissedwithin sixty (60) calendar days after the date of commencement, or (B) is withrespect to which Borrower takes any action to indicate its approval of orconsent.
8.1.4 Non-Compliance with Loan Documents.
(a) Any failure by Borrower to comply with or to perform any covenant set forthin Section 7; or (b) failure by any Loan Party to comply with or to perform anyother provision of this Agreement or any other Loan Document applicable to it(and not constituting an Event of Default under any other provision of thisSection 8) and continuance of such failure described in this clause (b) forthirty (30) days after the earlier of any Loan Party becoming aware of suchfailure or notice thereof to Borrower from Agent or any Lender.
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8.1.5 Representations; Warranties.
Any representation or warranty made by any Loan Party herein or any other LoanDocument is false or misleading in any material respect when made, or anyschedule, certificate, financial statement, report, notice or other writingfurnished by any Loan Party to Agent or any Lender in connection herewith isfalse or misleading in any material respect on the date as of which the factstherein set forth are stated or certified.
8.1.6 Pension Plans.
(a) Institution of any steps by any Person to terminate a Pension Plan if as aresult of such termination any Loan Party or any member of the Controlled Groupcould be required to make a contribution to such Pension Plan, or could incur aliability or obligation to such Pension Plan, in excess of $500,000; (b) acontribution failure occurs with respect to any Pension Plan sufficient to giverise to a Lien under Section 303(k) of ERISA securing obligations in excess of$500,000; or (c) there shall occur any withdrawal or partial withdrawal from aMultiemployer Pension Plan and the withdrawal liability (without un-accruedinterest) to Multiemployer Pension Plans as a result of such withdrawal(including any outstanding withdrawal liability that Borrower or any other LoanParty or any member of the Controlled Group have incurred on the date of suchwithdrawal) exceeds $500,000.
Final, non-appealable judgments which exceed an aggregate of $500,000 (to theextent not adequately covered by insurance as to which the insurance company hasnot disclaimed liability (provided that customary "reservation of rights"letters shall not be deemed to be disclaimers of liability)) shall be renderedagainst any Loan Party and shall not have been paid, discharged or vacated orhad execution thereof stayed pending appeal within sixty (60) calendar daysafter entry or filing of such judgments.
8.1.8 Invalidity of Loan Documents or Liens.
(a) Any Loan Document shall cease to be in full force and effect otherwisein accordance with its express terms that results in a material diminution ofthe rights and remedies afforded to Agent and/or Lenders or any other securedparties thereunder; (b) any Loan Party (or any Person by, through or on behalfof any Loan Party) shall contest in any manner the validity, binding nature orenforceability of any Loan Document; or (c) any Lien created pursuant to anyLoan Document ceases to constitute a valid first priority perfected Lien(subject to Permitted Liens) on any material portion of the Collateral inaccordance with the terms thereof, or Agent ceases to have a valid perfectedfirst priority security interest (subject to Permitted Liens) in any materialportion of the Collateral pledged to Agent, for the benefit of Agent andLenders, pursuant to the Collateral Documents (other than, in each instance, asa result of any action or inaction by Agent).
8.1.9 Invalidity of Subordination Provisions.
Any subordination provision in any document or instrument governing anySubordinated Debt, any Approved AR Loan Facility, or the Ligand RoyaltyAgreement and any subordination provision in any intercreditor agreement orsubordination agreement in relation thereto shall cease to be in full force andeffect, or any Loan Party shall contest in any manner the validity, bindingnature or enforceability of any such provision
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8.1.10 Change of Control.
A Change of Control shall occur that does not result in Payment in Full inaccordance with Section 2.8.
8.1.11 Certificate Withdrawals, Adverse Audit Results, and Other Matters.
(a) The institution of any proceeding by FDA, CMS, or any other GovernmentalAuthority to order the withdrawal of any Product or Product category or Serviceor Service category from the market or to enjoin Borrower or any of itsAffiliates from manufacturing, marketing, selling, distributing, or otherwiseproviding any Product or Product category or Service or Service category thatwould reasonably be expected to have a Material Adverse Effect, (b) theinstitution of any action or proceeding by FDA, CMS, or any other GovernmentalAuthority to revoke, suspend, reject, withdraw, limit, or restrict any RequiredPermit held by Borrower or any of its Affiliates or any of theirrepresentatives, which, in each case, would reasonably be expected to have aMaterial Adverse Effect, (c) the commencement of any enforcement action againstBorrower or any of its Affiliates by FDA, CMS, or any other GovernmentalAuthority that would reasonably be expected to have a Material Adverse Effect,(d) the recall of any Products or Service from the market, the voluntarywithdrawal of any Products or Service from the market, or actions to discontinuethe sale of any Products or Service that, in either case, would reasonably beexpected to have a Material Adverse Effect, (e) the occurrence of adverse auditor inspection results in connection with a Product or Service which wouldreasonably be expected to have a Material Adverse Effect, or (f) the occurrenceof any event described in clauses (a) through (e) above that would otherwisecause Borrower to be excluded from participating in any federal, provincial,state or local health care programs under Section 1128 of the Social SecurityAct or any similar Health Care Law.
8.1.12 Material Adverse Effect.
Any Material Adverse Effect shall occur that is not otherwise provided for inthis Section 8.1.
(a) If any Event of Default described in Section 8.1.3 shall occur, theLoan and all other Obligations shall become immediately due and payable withoutpresentment, demand, protest or notice of any kind; and, if any other Event ofDefault shall occur and be continuing, Agent may, and upon the written requestof Required Lenders shall, declare all or any part of the Loans and otherObligations to be due and payable, whereupon the Loans and other Obligations(including without limitation the Exit Fee and any amounts due pursuant toSection 2.8 hereof, payable with respect thereto) shall become immediately dueand payable (in whole or in part, as applicable), all without presentment,demand, protest or notice of any kind. Agent shall use commercially reasonableefforts to promptly advise Borrower of any such declaration, but failure to doso shall not impair the effect of such declaration.
(b) In addition to the acceleration provisions set forth inSection 8.2(a) above, upon the occurrence and continuation of an Event ofDefault, Agent may (or shall at the request of Required Lenders) exercise anyand all rights, options and remedies provided for in any Loan Document, underthe Uniform Commercial Code, any other applicable foreign or domestic laws orotherwise at law or in equity, including, without limitation, the right to(i) apply any property of Borrower held by Agent to reduce the Obligations,(ii) foreclose the Liens created under the Loan Documents, (iii) realize upon,take possession of and/or sell any Collateral or securities pledged, with orwithout judicial process, (iv) exercise all rights and powers with respect tothe Collateral as Borrower might exercise, (v) collect and send noticesregarding the Collateral, with or without judicial process, (vi) by its ownmeans or with judicial assistance, enter any premises at which Collateral and/orpledged securities are located, or render any of the foregoing unusable ordispose of the Collateral and/or pledged securities on such premises without anyliability for rent, storage, utilities, or other sums, and Borrower shall notresist or interfere with such action, (vii) at Borrower's expense, require thatall or any part of the Collateral be assembled and made available to Agent, forthe benefit of Lenders, or Required Lenders at any place reasonably designatedby Agent or Required Lenders in its/their sole discretion, as applicable, and/orrelinquish or abandon any Collateral or securities pledged or any Lien thereon.
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(c) The enumeration of any rights and remedies in any Loan Document is notintended to be exhaustive, and all rights and remedies of Agent and Lendersdescribed in any Loan Document are cumulative and are not alternative to orexclusive of any other rights or remedies which Agent and Lenders otherwise mayhave. The partial or complete exercise of any right or remedy shall not precludeany other further exercise of such or any other right or remedy.
(d) Notwithstanding any provision of any Loan Document, Agent, in its solediscretion shall have the right, but not any obligation, at any time that LoanParties fail to do so, subject to any applicable cure periods permitted by orotherwise set forth in the Loan Documents, and from time to time, without priornotice, to: (i) discharge (at Borrower's expense) taxes or Liens affecting anyof the Collateral that have not been paid in violation of any Loan Document orthat jeopardize Agent's Lien priority in the Collateral; or (ii) make any otherpayment (at Borrower's expense) for the administration, servicing, maintenance,preservation or protection of the Collateral (each such advance or payment setforth in clauses (i) and (ii) herein, a "Protective Advance"). Agent shall bereimbursed for all Protective Advances pursuant to Section 2.9.1(c) and/orSection 2.10, as applicable, and any Protective Advances shall bear interest ata the Default Rate from the date such Protective Advance is paid by Agent untilit is repaid. No Protective Advance by Agent shall be construed as a waiver byAgent, or any Lender of any Default, Event of Default or any of the rights orremedies of Agent or any Lender under any Loan Document.
Section 9 Agent.
9.1 Appointment; Authorization.
Each Lender hereby irrevocably appoints, designates and authorizes Agent to takesuch action on its behalf under the provisions of this Agreement and each otherLoan Document and to exercise such powers and perform such duties as areexpressly delegated to it by the terms of this Agreement or any other LoanDocument, together with such powers as are reasonably incidental thereto.Notwithstanding any provision to the contrary contained elsewhere in thisAgreement or in any other Loan Document, Agent shall not have any duty orresponsibility except those expressly set forth herein, nor shall Agent have orbe deemed to have any fiduciary relationship with any Lender, and no impliedcovenants, functions, responsibilities, duties, obligations or liabilities shallbe read into this Agreement or any other Loan Document or otherwise existagainst Agent.
9.2 Delegation of Duties.
Agent may execute any of its duties under this Agreement or any other LoanDocument by or through agents, employees or attorneys-in-fact and shall beentitled to advice of counsel concerning all matters pertaining to such duties.Agent shall not be responsible for the negligence or misconduct of any agent orattorney-in-fact that it selects with reasonable care.
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9.3 Limited Liability.
None of Agent or any of its Affiliates, directors, officers, employees or agentsshall (a) be liable for any action taken or omitted to be taken by any of themunder or in connection with this Agreement or any other Loan Document or thetransactions contemplated hereby (except to the extent resulting from its owngross negligence or willful misconduct as determined by a court of competentjurisdiction), or (b) be responsible in any manner to any Lender for anyrecital, statement, representation or warranty made by any Loan Party orAffiliate of any Loan Party, or any officer thereof, contained in this Agreementor in any other Loan Document, or in any certificate, report, statement or otherdocument referred to or provided for in, or received by Agent under or inconnection with, this Agreement or any other Loan Document, or the validity,effectiveness, genuineness, enforceability or sufficiency of this Agreement orany other Loan Document (or the creation, perfection or priority of any Lien orsecurity interest therein), or for any failure of any Loan Party or any otherparty to any Loan Document to perform its Obligations hereunder or thereunder.Agent shall not be under any obligation to any Lender to ascertain or to inquireas to the observance or performance of any of the agreements contained in, orconditions of, this Agreement or any other Loan Document, or to inspect theproperties, books or records of any Loan Party or Affiliate of any Loan Party.
Agent shall be entitled to rely, and shall be fully protected in relying, uponany writing, resolution, notice, consent, certificate, affidavit, letter,telegram, facsimile, telex or telephone message, statement or other documentbelieved by it to be genuine and correct and to have been signed, sent or madeby the proper Person or Persons, and upon advice and statements of legal counsel(including counsel to any Loan Party), independent accountants and other expertsselected by Agent. Agent shall be fully justified in failing or refusing to takeany action under this Agreement or any other Loan Document unless it shall firstreceive such advice or concurrence of Required Lenders (or all Lenders ifexpressly required hereunder) as it deems appropriate and, if it so requests,confirmation from Lenders of their obligation to indemnify Agent against any andall liability and expense which may be incurred by it by reason of taking orcontinuing to take any such action. Agent shall in all cases be fully protectedin acting, or in refraining from acting, under this Agreement or any other LoanDocument in accordance with a request or consent of Required Lenders (or allLenders if expressly required hereunder) and such request and any action takenor failure to act pursuant thereto shall be binding upon each Lender.
9.5 Notice of Default.
Agent shall not be deemed to have knowledge or notice of the occurrence of anyEvent of Default or Default except with respect to defaults in the payment ofprincipal, interest and fees required to be paid to Agent for the account ofLenders, unless Agent shall have received written notice from a Lender orBorrower referring to this Agreement, describing such Event of Default orDefault and stating that such notice is a "notice of default". Agent will notifyLenders of its receipt of any such notice or any such default in the payment ofprincipal, interest and fees required to be paid to Agent for the account ofLenders. Agent shall take such action with respect to such Event of Default orDefault as may be requested by Required Lenders in accordance with Section 8.2;provided that unless and until Agent has received any such request, Agent may(but shall not be obligated to) take such action, or refrain from taking suchaction, with respect to such Event of Default or Default as it shall deemadvisable or in the best interest of Lenders.
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9.6 Credit Decision.
Each Lender acknowledges that Agent has not made any representation or warrantyto it, and that no act by Agent hereafter taken, including any review of theaffairs of Borrower and the other Loan Parties, shall be deemed to constituteany representation or warranty by Agent to any Lender. Each Lender represents toAgent that it has, independently and without reliance upon Agent and based onsuch documents and information as it has deemed appropriate, made its ownappraisal of and investigation into the business, prospects, operations,property, financial and other condition and creditworthiness of Borrower, andmade its own decision to enter into this Agreement and to extend credit toBorrower hereunder. Each Lender also represents that it will, independently andwithout reliance upon Agent and based on such documents and information as itshall deem appropriate at the time, continue to make its own credit analysis,appraisals and decisions in taking or not taking action under this Agreement andthe other Loan Documents, and to make such investigations as it deems necessaryto inform itself as to the business, prospects, operations, property, financialand other condition and creditworthiness of the Loan Parties. Except fornotices, reports and other documents expressly herein required to be furnishedto Lenders by Agent, Agent shall not have any duty or responsibility to provideany Lender with any credit or other information concerning the business,prospects, operations, property, financial or other condition orcreditworthiness of any Loan Party which may come into the possession of Agent.
Whether or not the transactions contemplated hereby are consummated, each Lendershall indemnify upon demand Agent and its Affiliates, directors, officers,employees and agents (to the extent not reimbursed by or on behalf of Borrowerand without limiting the obligation of Borrower to do so), based on suchLender's Pro Rata Term Loan Share, from and against any and all actions, causesof action, suits, losses, liabilities, damages and out-of-pocket expenses,including Legal Costs, except to the extent any thereof result from theapplicable Person's own gross negligence or willful misconduct, as determined bya court of competent jurisdiction. Without limitation of the foregoing, eachLender shall reimburse Agent upon demand for its ratable share of any costs orout-of-pocket expenses (including Legal Costs) incurred by Agent in connectionwith the preparation, execution, delivery, administration, modification,amendment or enforcement (whether through negotiations, legal proceedings orotherwise) of, or legal advice in respect of rights or responsibilities under,this Agreement, any other Loan Document, or any document contemplated by orreferred to herein, to the extent that Agent is not reimbursed for such expensesby or on behalf of Borrower. The undertaking in this Section 9.7 shall surviverepayment of the Loans, cancellation of the Notes, any foreclosure under, ormodification, release or discharge of, any or all of the Collateral Documents,termination of this Agreement and the resignation or replacement of Agent.
9.8 Agent Individually.
SWK and its Affiliates may make loans to, issue letters of credit for theaccount of, accept deposits from, acquire equity interests in and generallyengage in any kind of banking, trust, financial advisory, underwriting or otherbusiness with any Loan Party and any Affiliate of any Loan Party as though SWKwere not Agent hereunder and without notice to or consent of any Lender. EachLender acknowledges that, pursuant to such activities, SWK or its Affiliates mayreceive information regarding Loan Parties or their Affiliates (includinginformation that may be subject to confidentiality obligations in favor of anysuch Loan Party or such Affiliate) and acknowledge that Agent shall be under noobligation to provide such information to them. With respect to their Loans (ifany), SWK and its Affiliates shall have the same rights and powers under thisAgreement as any other Lender and may exercise the same as though SWK were notAgent, and the terms "Lender" and "Lenders" include SWK and its Affiliates, tothe extent applicable, in their individual capacities.
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9.9 Successor Agent.
Agent may resign as Agent at any time upon 30 days' prior notice to Lenders andBorrower (unless during the existence of an Event of Default such notice iswaived by Required Lenders). If Agent resigns under this Agreement, RequiredLenders shall, with (so long as no Event of Default exists) the consent ofBorrower (which shall not be unreasonably withheld or delayed), appoint fromamong Lenders a successor agent for Lenders. If no successor agent is appointedprior to the effective date of the resignation of Agent, Agent may appoint, onbehalf of, and after consulting with Lenders and (so long as no Event of Defaultexists) Borrower, a successor agent. Upon the acceptance of its appointment assuccessor agent hereunder, such successor agent shall succeed to all the rights,powers and duties of the retiring Agent and the term "Agent" shall mean suchsuccessor agent, and the retiring Agent's appointment, powers and duties asAgent shall be terminated. After any retiring Agent's resignation hereunder asAgent becomes effective, the provisions of this Section 9 and Sections 10.4 and10.5 shall continue to inure to its benefit as to any actions taken or omittedto be taken by it while it was Agent under this Agreement. If no successor agenthas accepted appointment as Agent by the date which is thirty (30) daysfollowing a retiring Agent's notice of resignation, the retiring Agent'sresignation shall nevertheless thereupon become effective and Lenders shallperform all of the duties of Agent hereunder until such time, if any, asRequired Lenders appoint a successor agent as provided for above; provided thatin the case of any collateral security held by Agent for the benefit of Lendersunder any of the Loan Documents, the retiring Agent shall continue so to holdsuch collateral security until such time as a successor Agent is appointed andthe provisions of this Section 9 and Sections 10.4 and 10.5 shall continue toinure to its benefit so long as retiring Agent shall continue to so hold suchcollateral security. Upon the acceptance of a successor's appointment as Agenthereunder, the retiring Agent shall be discharged from all of its duties andobligations hereunder or under the other Loan Documents in respect of theCollateral.
9.10 Collateral and Guarantee Matters.
Lenders irrevocably authorize Agent, at its option and in its discretion, (a) torelease any Lien granted to or held by Agent under any Collateral Document(i) when all Obligations have been Paid in Full; (ii) constituting property soldor to be sold or disposed of as part of or in connection with any sale or otherdisposition permitted hereunder (including by consent, waiver or amendment andit being agreed and understood that Agent may conclusively rely without furtherinquiry on a certificate of an officer of Borrower as to the sale or otherdisposition of property being made in compliance with this Agreement); or(iii) subject to Section 10.1, if approved, authorized or ratified in writing byRequired Lenders; (b) notwithstanding Section 10.1(a)(ii) hereof to release anyparty from its guaranty under the Guarantee and Collateral Agreement (i) whenall Obligations have been Paid in Full or (ii) if such party was sold or is tobe sold or disposed of as part of or in connection with any dispositionpermitted hereunder (including by consent, waiver or amendment and it beingagreed and understood that Agent may conclusively rely without further inquiryon a certificate of an officer of Borrower as to the sale or other dispositionbeing made in compliance with this Agreement); or (c) to subordinate itsinterest in any Collateral to any holder of a Lien on such Collateral which ispermitted by Section 7.2(d) (it being understood that Agent may conclusivelyrely on a certificate from Borrower in determining whether the Debt secured byany such Lien is permitted by Section 7.1). Upon request by Agent at any time,Lenders will confirm in writing Agent's authority to release, or subordinate itsinterest in, particular types or items of Collateral pursuant to thisSection 9.10.
Agent shall release any Lien granted to or held by Agent under any CollateralDocument (i) when all Obligations have been Paid in Full, (ii) in respect ofproperty sold or to be sold or disposed of as part of or in connection with anysale or other disposition permitted hereunder (it being agreed and understoodthat Agent may conclusively rely without further inquiry on a certificate of anofficer of Borrower as to the sale or other disposition of property being madein compliance with this Agreement) or (iii) subject to Section 10.1, if directedto do so in writing by Required Lenders.
In furtherance of the foregoing, Agent agrees to execute and deliver toBorrower, at Borrower's expense, such termination and release documentation asBorrower may reasonably request to evidence a Lien release that occurs pursuantto terms of this Section 9.10.
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9.11 Intercreditor and Subordination Agreements.
Each Lender hereby irrevocably appoints, designates and authorizes Agent toenter into one or more intercreditor agreements and/or subordination agreementsin relation to any other Debt of Borrower entered into in accordance with thisAgreement or as otherwise approved by Required Lenders, on its behalf and totake such action on its behalf under the provisions of any such agreement(subject to the last sentence of this Section 9.11). Each Lender further agreesto be bound by the terms and conditions of any such intercreditor agreement andsubordination agreement. Each Lender hereby authorizes Agent to issue blockagesnotices in connection with any such Debt of Borrower and such intercreditoragreement and subordination agreement, or any replacement intercreditoragreement and/or subordination agreement, in its discretion or, at the directionof Required Lenders.
9.12 Actions in Concert.
For the sake of clarity, each Lender hereby agrees with each other Lender thatno Lender shall take any action to protect or enforce its rights arising out ofthis Agreement, the Notes or any other Loan Document (including exercising anyrights of set-off) without first obtaining the prior written consent of Agentand Required Lenders, it being the intent of Lenders that any such action toprotect or enforce rights under this Agreement, the Notes and the other LoanDocuments shall be taken in concert and at the direction or with the consent ofAgent or Required Lenders.
Section 10 Miscellaneous.
10.1 Waiver; Amendments.
(a) Except as otherwise expressly provided in this Agreement, no amendment,modification or waiver of, or consent with respect to, any provision of thisAgreement or any of the other Loan Documents shall in any event be effectiveunless the same shall be in writing and signed by Borrower (with respect to LoanDocuments to which Borrower is a party), by Lenders having aggregate Pro RataTerm Loan Shares of not less than the aggregate Pro Rata Term Loan Sharesexpressly designated herein with respect thereto or, in the absence of suchexpress designation herein, by Required Lenders, and then any such amendment,modification, waiver or consent shall be effective only in the specific instanceand for the specific purpose for which given; provided, however, that:
(i) no such amendment, modification, waiver or consent shall, unless inwriting and signed by all of the Lenders directly affected thereby, in additionto Required Lenders and Borrower, do any of the following: (A) increase any ofthe Commitments (provided that only the Lenders participating in any suchincrease of the Commitments shall be considered directly affected by suchincrease), (B) extend the date scheduled for payment of any principal of (exceptas otherwise expressly set forth below in clause (C)), or interest on, the Loansor any fees or other amounts payable hereunder or under the other LoanDocuments, or (C) reduce the principal amount of any Loan, the amount or rate ofinterest thereon, or any fees or other amounts payable hereunder or under theother Loan Documents; and
(ii) no such amendment, modification, waiver or consent shall, unless inwriting and signed by all of the Lenders in addition to Borrower (with respectto Loan Documents to which Borrower is a party), do any of the following:(A) release any material guaranty under the Guarantee and Collateral Agreementor release all or substantially all of the Collateral granted under theCollateral Documents, except as otherwise specifically provided in thisAgreement or the other Loan Documents, (B) change the definition of RequiredLenders, (C) change any provision of this Section 10.1, (D) amend the provisionsof Section 2.10.2 or Section 2.10.4, or (E) reduce the aggregate Pro Rata TermLoan Shares required to effect any amendment, modification, waiver or consentunder the Loan Documents.
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(b) No amendment, modification, waiver or consent shall, unless in writingand signed by Agent, in addition to Borrower and Required Lenders (or allLenders directly affected thereby or all of the Lenders, as the case may be, inaccordance with the provisions above), affect the rights, privileges, duties orobligations of Agent (including without limitation under the provisions ofSection 9), under this Agreement or any other Loan Document.
(c) No delay on the part of Agent or any Lender in the exercise of anyright, power or remedy shall operate as a waiver thereof, nor shall any singleor partial exercise by any of them of any right, power or remedy preclude otheror further exercise thereof, or the exercise of any other right, power orremedy.
All notices hereunder shall be in writing (including via electronic mail) andshall be sent to the applicable party at its address shown on Annex II or atsuch other address as such party may, by written notice received by the otherparties, have designated as its address for such purpose. Notices sent byelectronic mail transmission shall be deemed to have been given when sent ifsent during regular business hours on a Business Day, otherwise, such deemeddelivery will be effective as of the next Business Day; notices sent by mailshall be deemed to have been given five (5) Business Days after the date whensent by registered or certified mail, first class postage prepaid; and noticessent by hand delivery or overnight courier service shall be deemed to have beengiven when received. Borrower, Agent and Lenders each hereby acknowledge that,from time to time, Agent, Lenders and Borrower may deliver information andnotices using electronic mail.
Unless otherwise specifically provided herein, any accounting term used in thisAgreement shall have the meaning customarily given such term in accordance withGAAP, and all financial computations hereunder shall be computed in accordancewith GAAP consistently applied. The explicit qualification of terms orcomputations by the phrase "in accordance with GAAP" shall in no way beconstrued to limit the foregoing. Notwithstanding any other provision containedherein, all terms of an accounting or financial nature used herein shall beconstrued, and all computations of amounts and ratios referred to herein shallbe made, without giving effect to any election under Statement of FinancialAccounting Standards 159 (Codification of Accounting Standards 825-10) to valueany Debt or other liabilities of any Loan Party or any Subsidiary at "fairvalue", as defined therein.
10.4 Costs; Expenses.
Borrower agrees to pay on demand the reasonable, out-of-pocket costs andexpenses of (a) Agent (including Legal Costs) in connection with (i) thepreparation, execution, syndication and delivery (including perfection andprotection of Collateral) of this Agreement, the other Loan Documents and allother documents provided for herein or delivered or to be delivered hereunder orin connection herewith, (ii) the administration of the Loans and the LoanDocuments, and (iii) any proposed or actual amendment, supplement or waiver toany Loan Document, and (b) Agent and Lenders (including Legal Costs) inconnection with the collection of the Obligations and enforcement of thisAgreement, the other Loan Documents or any such other documents. In addition,Borrower agrees to pay and to save Agent and Lenders harmless from all liabilityfor, any fees of Borrower's auditors in connection with any reasonable exerciseby Agent and Lenders of their rights pursuant to and to the extent provided inSection 6.2. All Obligations provided for in this Section 10.4 shall surviverepayment of the Loans, cancellation of the Notes, and termination of thisAgreement.
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10.5 Indemnification by Borrower.
In consideration of the execution and delivery of this Agreement by Agent andLenders and the agreement to extend the Commitments provided hereunder, Borrowerhereby agrees to indemnify, exonerate and hold Agent, each Lender and each ofthe officers, directors, employees, Affiliates and agents of Agent and eachLender (each a "Lender Party") free and harmless from and against any and allactions, causes of action, suits, losses, liabilities, damages and expenses,including Legal Costs (collectively, the "Indemnified Liabilities"), incurred byLender Parties or any of them as a result of, or arising out of, or relating toany Loan Party or any of their respective officers, directors or agents,including, without limitation, (a) any tender offer, merger, amalgamation,purchase of equity interests, purchase of assets or other similar transactionfinanced or proposed to be financed in whole or in part, directly or indirectly,with the proceeds of any of the Loans, (b) the use, handling, release, emission,discharge, transportation, storage, treatment or disposal of any HazardousSubstance at any property owned or leased by Borrower or any other Loan Party,(c) any violation of any applicable Environmental Laws with respect toconditions at any property owned or leased by any Loan Party or the operationsconducted thereon, (d) the investigation, cleanup or remediation of offsitelocations at which any Loan Party or their respective predecessors are allegedto have directly or indirectly disposed of Hazardous Substances, (e) theexecution, delivery, performance or enforcement of this Agreement or any otherLoan Document by any Lender Party, except to the extent any such IndemnifiedLiabilities result solely from the applicable Lender Party's own grossnegligence or willful misconduct as finally determined by a court of competentjurisdiction in a non-appealable judgment, or (f) such Person's generaloperation of its business including all product liability out of or inconnection with such Person's or any of its Affiliates or licensees manufactureuse or sale of a Product or the provision of a Service. If and to the extentthat the foregoing undertaking may be unenforceable for any reason, Borrowerhereby agrees to make the maximum contribution to the payment and satisfactionof each of the Indemnified Liabilities which is permissible under applicablelaw. All Obligations provided for in this Section 10.5 shall survive repaymentof the Loans, cancellation of the Notes, any foreclosure under, or anymodification, release or discharge of, any or all of the Collateral Documentsand termination of this Agreement. Notwithstanding the foregoing, thisSection 10.5 shall not apply with respect to Taxes other than any Taxes thatrepresent losses, claims, damages, etc. arising from any non-Tax claim.
10.6 Marshaling; Payments Set Aside.
Neither Agent nor any Lender shall be under any obligation to marshal any assetsin favor of Borrower or any other Person or against or in payment of any or allof the Obligations. To the extent that Borrower makes a payment or payments toAgent or any Lender, or Agent or any Lender enforces its Liens or exercises itsrights of set-off, and such payment or payments or the proceeds of suchenforcement or set-off or any part thereof are subsequently invalidated,declared to be fraudulent or preferential, set aside or required (includingpursuant to any settlement entered into by Agent or any Lender in itsdiscretion) to be repaid to a trustee, receiver, interim receiver, receiver andmanager, or any other party in connection with any bankruptcy, insolvency orsimilar proceeding, or otherwise, then (a) to the fullest extent permitted byapplicable law, to the extent of such recovery, the obligation hereunder or partthereof originally intended to be satisfied shall be revived and continued infull force and effect as if such payment had not been made or such enforcementor set-off had not occurred and (b) each Lender severally agrees to pay to Agentupon demand its ratable share of the total amount so recovered from or repaid byAgent to the extent paid to such Lender.
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10.7 Non-liability of Lenders.
The relationship between Borrower on the one hand and Lenders and Agent on theother hand shall be solely that of borrower and lender. Neither Agent nor anyLender shall have any fiduciary responsibility to Borrower. Neither Agent norany Lender undertakes any responsibility to Borrower to review or informBorrower of any matter in connection with any phase of Borrower's business oroperations. To the fullest extent permitted under applicable law, execution ofthis Agreement by Borrower constitutes a full, complete and irrevocable releaseof any and all claims which Borrower may have at law or in equity in respect ofall prior discussions and understandings, oral or written, relating to thesubject matter of this Agreement and the other Loan Documents. Neither Agent norany Lender shall have any liability with respect to, and Borrower hereby, to thefullest extent permitted under applicable law, waives, releases and agrees notto sue for, any special, indirect, punitive or consequential damages orliabilities.
(a) Any Lender may at any time assign to one or more Persons (other than aLoan Party and their respective Affiliates) (any such Person, an "Assignee") allor any portion of such Lender's Loans and Commitments, with the prior writtenconsent of Agent, and, so long as no Event of Default has occurred and iscontinuing, Borrower (which consents shall not be unreasonably withheld ordelayed), provided, however, that no such consent(s) shall be required:
(i) from Borrower for an assignment by a Lender to another Lender, anAffiliate of a Lender, an Approved Fund of a Lender, or any other financialinstitution (other than a vulture or distressed debt fund) that invests incommercial loans in the ordinary course of its business, but such Lender willgive written notice to Borrower of any such assignment;
(ii) from Agent for an assignment by a Lender to an Affiliate of a Lenderor an Approved Fund of a Lender;
(iii) from Borrower or Agent for an assignment by SWK, as a Lender, to anyPerson for which SWK Advisors LLC acts as an investment advisor (or any similartype of representation or agency) pursuant to a written agreement, but SWK willgive written notice to Borrower of any such assignment;
(iv) from Borrower or Agent for an assignment by a Lender of its Loans andits Note as collateral security to a Federal Reserve Bank or, as applicable, tosuch Lender's trustee for the benefit of its investors (but no such assignmentshall release any Lender from any of its obligations hereunder); or
(v) from Borrower, Agent or any Lender for (A) the assignment of SWK'sLoans and Commitments to a Permitted Assignee (as defined below) or (B) acollateral assignment by SWK of, and the grant by SWK of a security interest in,all of SWK's right, title and interest in, to and under each of the LoanDocuments, including, without limitation, all of SWK's rights and interests in,to and under this Agreement, the Obligations and the Collateral (collectively,the "Assigned Rights"), to a Permitted Assignee, provided that no suchcollateral assignment shall release SWK from any of its obligations under any ofthe Loan Documents. In connection with any enforcement of or foreclosure uponits security interests in any of the Assigned Rights, a Permitted Assignee, uponnotice to Borrower, SWK and the other Lenders, shall be entitled to substituteitself, or its designee, for SWK as a Lender under this Agreement. For purposeshereof, the term "Permitted Assignee" shall mean any lender to or funding sourceof SWK or its Affiliate, together with its successors, assigns or designees(including, without limitation, any purchaser or other assignee of the AssignedRights from such Person). Effective immediately upon the replacement of SWK as aLender under this Agreement by a Permitted Assignee in accordance with thisclause (v), SWK shall automatically be deemed to have resigned as Agent pursuantto Section 9.9 of this Agreement (without the need for Agent giving advancewritten notice of such resignation as required pursuant to such Section 9.9),and Required Lenders shall appoint a successor Agent in accordance withSection 9.9 of this Agreement.
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(b) From and after the date on which the conditions described above havebeen met, (i) such Assignee shall be deemed automatically to have become a partyhereto and, to the extent that rights and obligations hereunder have beenassigned to such Assignee pursuant to such Assignment Agreement, shall have therights and obligations of a Lender hereunder and (ii) the assigning Lender, tothe extent that rights and obligations hereunder have been assigned by itpursuant to such Assignment Agreement, shall be released from its rights (otherthan its indemnification rights) and obligations hereunder. Upon the request ofthe Assignee (and, as applicable, the assigning Lender) pursuant to an effectiveAssignment Agreement, Borrower shall execute and deliver to Agent for deliveryto the Assignee (and, as applicable, the assigning Lender) a Note in theprincipal amount of the Assignee's Pro Rata Term Loan Share (and, as applicable,a Note in the principal amount of the Pro Rata Term Loan Share retained by theassigning Lender). Each such Note shall be dated the effective date of suchassignment. Upon receipt by the assigning Lender of such Note, the assigningLender shall return to Borrower any prior Note held by it.
(c) Agent, acting solely for this purpose as an agent of Borrower, shallmaintain at one of its offices in the United States a copy of each AssignmentAgreement delivered to it and a register for the recordation of the names andaddresses of each Lender, and the Commitments of, and principal amount of theLoans (and stated interest) owing to, such Lender pursuant to the terms hereof.The entries in such register shall be, in the absence of manifest error,conclusive, and Borrower, Agent and Lenders may treat each Person whose name isrecorded therein pursuant to the terms hereof as a Lender hereunder for allpurposes of this Agreement, notwithstanding notice to the contrary. Suchregister shall be available for inspection by Borrower and any Lender, at anyreasonable time upon reasonable prior notice to Agent.
(d) Notwithstanding the foregoing provisions of this Section 10.8.1 or anyother provision of this Agreement, any Lender may at any time assign all or anyportion of its Loans and its Note (i) as collateral security to a FederalReserve Bank or, as applicable, to such Lender's trustee for the benefit of itsinvestors (but no such assignment shall release any Lender from any of itsobligations hereunder) and (ii) to (w) an Affiliate of such Lender which is atleast fifty percent (50%) owned (directly or indirectly) by such Lender or byits direct or indirect parent company, (x) its direct or indirect parentcompany, (y) to one or more other Lenders or (z) to an Approved Fund.
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Any Lender may at any time sell to one or more Persons participating interestsin its Loans, Commitments or other interests hereunder (any such Person, a"Participant"). In the event of a sale by a Lender of a participating interestto a Participant, (a) such Lender's obligations hereunder shall remain unchangedfor all purposes, (b) Borrower and Agent shall continue to deal solely anddirectly with such Lender in connection with such Lender's rights andobligations hereunder and (c) all amounts payable by Borrower shall bedetermined as if such Lender had not sold such participation and shall be paiddirectly to such Lender. No Participant shall have any direct or indirect votingrights hereunder except with respect to any event described in Section 10.1expressly requiring the unanimous vote of all Lenders or, as applicable, allaffected Lenders. Each Lender agrees to incorporate the requirements of thepreceding sentence into each participation agreement which such Lender entersinto with any Participant. Borrower agrees, to the fullest extent permitted byapplicable law, that if amounts outstanding under this Agreement are due andpayable (as a result of acceleration or otherwise), each Participant shall bedeemed to have the right of set-off in respect of its participating interest inamounts owing under this Agreement to the same extent as if the amount of itsparticipating interest were owing directly to it as a Lender under thisAgreement; provided that such right of set-off shall be subject to theobligation of each Participant to share with Lenders, and Lenders agree to sharewith each Participant, as provided in Section 2.10.4. Borrower also agrees thateach Participant shall be entitled to the benefits of Section 3 as if it were aLender (provided that a Participant shall not be entitled to such benefitsunless such Participant agrees, for the benefit of Borrower, to comply with thedocumentation requirements of Section 3.1(c) as if it were a Lender and complieswith such requirements, and provided, further, that no Participant shall receiveany greater compensation pursuant to Section 3 than would have been paid to theparticipating Lender if no participation had been sold). Any such Lendertransferring a participation shall, as an agent for Borrower, maintain in theUnited States a register to record the names, address, and interest, principaland other amounts owing to, each Participant. The entries in such register shallbe, in the absence of manifest error, conclusive, and Borrower, Agent and theLenders may treat each Person whose name is recorded therein pursuant to theterms hereof as a Participant hereunder for all purposes of this Agreement,notwithstanding notice to the contrary. Such participation register shall beavailable for inspection by the Agent or Borrower, at any reasonable time uponreasonable prior written notice from Agent or Borrower.
Agent and each Lender to maintain as confidential all information (including,without limitation, any information provided by Borrower pursuant to Sections6.1, 6.2 and 6.9) provided to them by any other party hereto and/or any otherLoan Party, as applicable, except that Agent and each Lender may disclose suchinformation (a) to Persons employed or engaged by Agent or such Lender or any oftheir Affiliates (including collateral managers of Lenders) in evaluating,approving, structuring or administering the Loans and the Commitments (providedthat such Persons have been informed of the covenants contained in thisSection 10.10); (b) to any assignee, funding source of Agent or any Lender, orparticipant or potential assignee or participant that has agreed to comply withthe covenants contained in this Section 10.10 (and any such assignee orparticipant or potential assignee or participant may disclose such informationto Persons employed or engaged by them as described in clause (a) above); (c) asrequired or requested by any federal or state regulatory authority or examiner,or any insurance industry association, or as reasonably believed by Agent orsuch Lender to be compelled by any court decree, subpoena or legal oradministrative order or process; (d) as, on the advice of Agent's or suchLender's counsel, is required by law; (e) in connection with the exercise of anyright or remedy under the Loan Documents or in connection with any litigation towhich Agent or such Lender is a party; (f) to any nationally recognized ratingagency or investor of a Lender that requires access to information about aLender's investment portfolio in connection with ratings issued or investmentdecisions with respect to such Lender; (g) that ceases to be confidentialthrough no fault of Agent or any Lender; (h) to a Person that is an investor orprospective investor in a Securitization that agrees that its access toinformation regarding Borrower and the Loans and Commitments is solely forpurposes of evaluating an investment in such Securitization and who agrees totreat such information as confidential; or (i) to a Person that is a trustee,collateral manager, servicer, noteholder or secured party in a Securitization inconnection with the administration, servicing and reporting on the assetsserving as collateral for such Securitization. For purposes of this Section,"Securitization" means a public or private offering by a Lender or any of itsAffiliates or their respective successors and assigns, of securities whichrepresent an interest in, or which are collateralized, in whole or in part, bythe Loans or the Commitments. In each case described in clauses (c), (d) and(e) (as such disclosure in clause (e) pertains to litigation only), where theAgent or Lender, as applicable, is compelled to disclose a Loan Party'sconfidential information, promptly after such disclosure the Agent or suchLender, as applicable, shall notify Borrower of such disclosure provided,however, that neither the Agent nor any Lender shall be required to notifyBorrower of any such disclosure (i) to any federal or state banking regulatoryauthority conducting an examination of the Agent or such Lender, or (ii) to theextent that it is legally prohibited from so notifying Borrower. Notwithstandingthe foregoing, Agent reserves the right to provide to industry tradeorganizations information necessary and customary for inclusion in league tablemeasurements.
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Captions used in this Agreement are for convenience only and shall not affectthe construction of this Agreement.
10.12 Nature of Remedies.
All Obligations of Borrower and rights of Agent and Lenders expressed herein orin any other Loan Document shall be in addition to and not in limitation ofthose provided by applicable law. No failure to exercise and no delay inexercising, on the part of Agent or any Lender, any right, remedy, power orprivilege hereunder, shall operate as a waiver thereof; nor shall any single orpartial exercise of any right, remedy, power or privilege hereunder preclude anyother or further exercise thereof or the exercise of any other right, remedy,power or privilege.
10.13 Counterparts; Electronic Signatures.
This Agreement and the other Loan Documents may be executed in counterparts withthe same effect as if all parties had executed the same document. Allcounterparts shall be construed together and shall constitute a singleagreement. Further, the parties hereto consent and agree that this Agreement andthe other Loan Documents may be signed and/or transmitted by e-mail of any .pdffile, .jpeg file, or any other electronic or image file, or any "electronicsignature" as defined under the U.S. Electronic Signatures in Global andNational Commerce Act or the New York Electronic Signatures and Records Act,which includes any electronic signature provided using Orbit, Adobe Sign,DocuSign, or any other similar platform identified by the parties hereto andreasonably available at no undue burden or expense to the Agent), except to theextent the Agent requires otherwise. Any such electronic signatures shall bevalid, effective and legally binding as if such electronic signatures werehandwritten signatures and shall be deemed to have been duly and validlydelivered for all purposes hereunder. No party hereto shall raise the use ofe-mail or other electronic transmission to deliver a signature or the fact thatany signature or agreement or amendment was transmitted or communicated throughthe use of e-mail or other electronic transmission as a defense to the formationor enforceability of a contract and each such party forever waives any suchdefense.
The illegality or unenforceability of any provision of this Agreement or anyinstrument or agreement required hereunder shall not in any way affect or impairthe legality or enforceability of the remaining provisions of this Agreement orany instrument or agreement required hereunder.
10.15 Entire Agreement.
This Agreement, together with the other Loan Documents, embodies the entireagreement and understanding among the parties hereto and supersedes all prior orcontemporaneous agreements and understandings of such Persons, verbal orwritten, relating to the subject matter hereof and thereof.
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10.16 Successors; Assigns.
This Agreement shall be binding upon Borrower, Lenders and Agent and theirrespective successors and assigns, and shall inure to the benefit of Borrower,Lenders and Agent and the successors and assigns of Lenders and Agent. No otherPerson shall be a direct or indirect legal beneficiary of, or have any direct orindirect cause of action or claim in connection with, this Agreement or any ofthe other Loan Documents. Borrower may not assign or transfer any of its rightsor Obligations under this Agreement without the prior written consent of Agentand each Lender.
10.17 Governing Law.
THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THEINTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BEPERFORMED ENTIRELY WITHIN SUCH STATE.
10.18 Forum Selection; Consent to Jurisdiction.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITHTHIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINEDEXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATESDISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDEDTHAT ANY SUITSEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, ATAGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHERPROPERTY MAY BE FOUND. EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TOTHE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATESDISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCHLITIGATION AS SET FORTH ABOVE. EACH PARTY FURTHER IRREVOCABLY CONSENTS TO THESERVICE OF PROCESS BY REGISTERED MAIL, U.S. FIRST CLASS POSTAGE PREPAID, OR BYPERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PARTY HEREBYEXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED UNDERAPPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYINGOF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE ANDANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
10.19 Waiver of Jury Trial.
EACH OF BORROWER, AGENT AND EACH LENDER, TO THE FULLEST EXTENT PERMITTED UNDERAPPLICABLE LAW, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ORPROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANYOTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENTDELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH ORTHEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITHANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BETRIED BEFORE A COURT AND NOT BEFORE A JURY.
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10.20 Patriot Act.
Each Lender that is subject to the USA Patriot Act (Title III of Pub. L. 107-56(signed into law October 26, 2001)) (the "Patriot Act"), and Agent (for itselfand not on behalf of any Lender), hereby notifies each Loan Party that, pursuantto the requirements of the Patriot Act, such Lender and Agent are required toobtain, verify and record information that identifies each Loan Party, whichinformation includes the name and address of each Loan Party and otherinformation that will allow such Lender or Agent, as applicable, to identifyeach Loan Party in accordance with the Patriot Act.
10.21 Independent Nature of Relationship.
Nothing herein contained shall constitute any Loan Party and SWK as apartnership, an association, a joint venture or any other kind of entity orlegal form or constitute any party the agent of the other. No party shall holditself out contrary to the terms of this Section 10.21 and no party shall becomeliable by any representation, act or omission of the other contrary to theprovisions hereof. No Loan Party, Lender, nor SWK has any fiduciary or otherspecial relationship with the other party hereto or any of its Affiliates. TheLoan Parties and SWK agree that SWK is not involved in or responsible for themanufacture, marketing or sale of any Product or the provision of any Service.
10.22 Approved AR Loan Facility.
Agent and Lenders acknowledge that Borrower may in the future seek a revolvingloan facility to be secured by a first lien security interest in Borrower'sInventory and accounts receivable generated by product sales in the normalcourse of business; provided that (a) any such loan facility will be (i)(x) in amaximum principal amount of $8,000,000, (y) subject to an advance rate of nogreater than eighty-five percent (85%) in respect of such accounts receivableand Inventory, in each case unless otherwise agreed to in writing by Agent inits sole discretion, and (ii) subject to an intercreditor agreement acceptableto Agent in its commercially-reasonable discretion, and (b) the material termsand conditions of such revolving loan facility shall be acceptable to Agent inits commercially-reasonable discretion (such revolving loan facility, togetherwith any replacement revolving loan facility as approved by Agent that issubject to an Intercreditor Agreement, collectively an "Approved AR LoanFacility"). So long as no Default or Event of Default has occurred and iscontinuing, Agent and Borrower agree to work together in good faith, and atBorrower's sole cost and expense, to negotiate and enter into such amendments tothis Agreement and such other Loan Documents as may be necessary to permit suchDebt owing under any Approved AR Loan Facility, to release and/or subordinatesuch Liens as may be necessary to effectuate any such Approved AR Loan Facility,and to enter into such third party documents as may be reasonably requested byBorrower and/or the revolving loan lender under any such Approved AR LoanFacility.
[Remainder of page intentionally blank; signature pages follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted and delivered by their duly authorized officers as of the date firstset forth above.
aziyo biologics, inc., a Delaware corporation
By: /s/ Matt Ferguson Name: Matt Ferguson Title: Chief Financial Officer
[Aziyo] Credit Agreement
AGENT AND LENDER:
SWK FUNDING LLC, a Delaware limited liability company, as Agent and a Lender
By: SWK Holdings Corporation, a Delaware corporation, its sole Manager
By: /s/ Winston Black Name: Winston Black Title: Chief Executive Officer
[Aziyo] Credit Agreement
Aug 11, 2022
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(EDGAR Online via COMTEX) -- 0001708527 false 0001708527 2022-08-11 2022-08-11 iso4217:USD xbrli:shares iso4217:USD xbrli:shares UNITED STATES SECURITIES AND...
On August 11, 2022, Aziyo Biologics, Inc. (the "Company") issued a press release. announcing its financial results for the quarter ended June 30, 2022.. The information in this Current Report on Form 8-K (including Exhibit 99.1). shall not be deemed "filed" for purposes of Section 18 of the Securities. Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to. the liabilities of that Section, nor shall it be deemed to be incorporated by. reference into any filing of the Company under the Securities Act of 1933, as. amended, or the Exchange Act, except as expressly set forth by specific. reference in such filing.. - August 11, 2022 - Aziyo Biologics, Inc. (Nasdaq: AZYO), a. commercial-stage regenerative medicine company, today provided a business update. and reported financial results for the second quarter June 30, 2022.. Net sales of core products were. $9.1 million in the second quarter of 2022, compared to $10.0 million for the. second quarter of 2021, and net sales of non-core products were $3.6 million in. the second quarter of 2022, compared to $2.2 million in the second quarter of. 2021.. Net sales from current products increased 20.3% in the second quarter of. 2022 compared to the corresponding prior year quarter, after excluding second. quarter 2021 sales of $1.7 million from discontinued product FiberCel.. Gross margin, excluding intangible asset. amortization (a measure not presented in accordance with U.S. generally accepted. accounting principles ("GAAP")) was 45.5% for the second quarter of 2022, as. compared to 53.1% in the second quarter of 2021.. The decline in gross margin was. primarily due to higher net sales of non-core products net sales in the second. quarter of 2022, which had lower gross margins.. All statements contained in this. press release that do not relate to matters of historical fact should be. considered forward-looking statements, including statements and information. concerning the Company's anticipated financial performance; possible or assumed. future results of operations, including descriptions of the Company's revenues,. profitability, outlook, guidance for the full year 2022 and overall business. strategy and expected success; expectations regarding the Company's operational. position, opportunities and deliverables, goals, strategies, priorities and. initiatives; and the timing of regulatory clearance and product launch.. Forward-looking statements are based on management's current assumptions and. expectations of future events and trends, which affect or may affect the. Company's business, strategy, operations or financial performance, and actual. results may differ materially from those expressed or implied in such statements. due to numerous risks and uncertainties.. Forward-looking statements are. inherently subject to risks and uncertainties, some of which cannot be predicted. or quantified, and other important factors that may cause actual results,. performance or achievements to differ materially from those contemplated or. implied in this press release, including, but not limited to, risks regarding. the Company's products and its ability to enhance, expand and develop its. products; the impact on the Company's business of the recall of a single lot of. its FiberCel product and the discontinuation of its sales by its distribution. partner; the Company's dependence on its commercial partners; the adverse. impacts of COVID-19 or adverse changes in economic conditions; physician. awareness of the distinctive characteristics, and acceptance by the medical. community, of the Company's products; the ability to obtain regulatory approval. or other marketing authorizations; and the Company's intellectual property. rights, and other important factors can be found in the "Risk Factors" section. of Aziyo's public filings with the Securities and Exchange Commission ("SEC"),. including Aziyo's Annual Report on Form 10-K for the year ended December 31,. 2021, as such factors may be updated from time to time in Aziyo's other filings. with the SEC, including, Aziyo's Quarterly Report on Form 10-Q for the quarterly. period ended June 30, 2022 to be filed with the SEC, accessible on the SEC's. website at www.sec.gov and the Investor Relations page of Aziyo's website at. https://investors.aziyo.com.. We calculate gross margin, excluding intangible asset. amortization, as gross profit, excluding amortization expense relating to. intangible assets we acquired in our acquisition of all of the commercial assets. of CorMatrix Cardiovascular, Inc. in 2017, divided by net sales.. Gross margin,. excluding intangible asset amortization, is a supplemental measure of our. performance, is not defined by or presented in accordance GAAP, has limitations. as an analytical tool and should not be considered in isolation or as an. alternative to our GAAP gross margin, gross profit or any other financial. performance measure presented in accordance with GAAP.. We present gross margin,. excluding intangible asset amortization, because we believe that it provides. meaningful supplemental information regarding our operating performance by. removing the impact of amortization expense, which is not indicative of our. overall operating performance.
Aziyo Biologics, Inc. (AZYO) SEC Filing 8-K Material Event for the period ending Thursday, August 11, 2022
·Total net sales of $12.6 million, a 3.9% increase compared to $12.2 million. in the second quarter of 2021oNet sales growth from existing products of 20.3%, after excluding Q2 2021 sales of discontinued product FiberCel·Co-founder and board member C. Randal Mills, Ph.D. named Chief Executive. OfficeroFollows appointment as Interim CEO in June 2022·Closed $25 million loan facility with SWK Corporation (“SWK Holdings”)“First, I want to thank the outstanding team at Aziyo for another. great performance,” said Dr. Randy Mills, CEO.. Net sales of core products were $9.1 million. in the second quarter of 2022, compared to $10.0 million for the second quarter of 2021, and net sales of non-core products were $3.6. million in the second quarter of 2022, compared to $2.2 million in the second quarter of 2021.. Net sales from current products. increased 20.3% in the second quarter of 2022 compared to the corresponding prior year quarter, after excluding second quarter 2021 sales. of $1.7 million from discontinued product FiberCel.. All statements contained in this press release that do not relate to matters of historical fact should. be considered forward-looking statements, including statements and information concerning the Company’s anticipated financial performance;. possible or assumed future results of operations, including descriptions of the Company’s revenues, profitability, outlook, guidance. for the full year 2022 and overall business strategy and expected success; expectations regarding the Company’s operational position,. opportunities and deliverables, goals, strategies, priorities and initiatives; and the timing of regulatory clearance and product launch.. Forward-looking statements are inherently subject. to risks and uncertainties, some of which cannot be predicted or quantified, and other important factors that may cause actual results,. performance or achievements to differ materially from those contemplated or implied in this press release, including, but not limited. to, risks regarding the Company’s products and its ability to enhance, expand and develop its products; the impact on the Company’s. business of the recall of a single lot of its FiberCel product and the discontinuation of its sales by its distribution partner; the. Company’s dependence on its commercial partners; the adverse impacts of COVID-19 or adverse changes in economic conditions; physician. awareness of the distinctive characteristics, and acceptance by the medical community, of the Company’s products; the ability to. obtain regulatory approval or other marketing authorizations; and the Company’s intellectual property rights, and other important. factors can be found in the “Risk Factors” section of Aziyo’s public filings with the Securities and Exchange Commission. (“SEC”), including Aziyo’s Annual Report on Form 10-K for the year ended December 31, 2021,. as such factors may be updated from time to time in Aziyo’s other filings with the SEC, including, Aziyo’s Quarterly Report. on Form 10-Q for the quarterly period ended June 30, 2022 to be filed with the SEC, accessible on the SEC’s website at www.sec.gov and the Investor Relations page of Aziyo’s website at https://investors.aziyo.com .. Gross margin, excluding intangible asset amortization, is a supplemental measure of our performance, is. not defined by or presented in accordance GAAP, has limitations as an analytical tool and should not be considered in isolation or as. an alternative to our GAAP gross margin, gross profit or any other financial performance measure presented in accordance with GAAP.. Three months ended June 30,Six months ended June 30,2022202120222021Net sales$12,638$12,160$24,133$25,044Gross profit4,8985,6149,17911,943Intangible asset amortization expense8498491,6981,698Gross profit, excluding intangible asset amortization$5,747$6,463$10,877$13,641Gross margin38.8%46.2%38.0%47.7%Gross margin percentage, excluding intangible asset amortization45.5%53.1%45.1%54.5% View differences made from one to another to evaluate Aziyo Biologics, Inc.'s financial trajectory Sample 10-K Year-over-Year (YoY) Comparison
Aziyo Biologics Reports Fourth Quarterand Full Year 2020 Financial Results. ·Despite continuing impact from COVID-19,total net sales of $12.5 million for the fourth quarter of 2020, representing a 3% increase over the fourth quarter of 2019 oCore Products net sales of $10.3 million in the fourth quarter of 2020, a 10% increaseover the fourth quarter of 2019 ·Total net sales of $42.7 million for thefull year 2020, down 0.5% compared to the full year 2019 oCore Products net sales of $36.2 million for full year 2020, a 17% increase over thefull year 2019 ·Cash balance of $39.5 million as of December31, 2020 Recent OperationalHighlights. The increase in gross margin in the fourth quarter of 2020 primarily resulted from growth in our higher-margin proprietaryproducts and improvements in production and inventory management.. Gross margin, excluding intangible asset amortization (a non-GAAP financial measure) was approximately 56% for the full year2020, as compared to 54% in the full year 2019.. All statements contained in this press release that do not relate to matters of historical fact should be consideredforward-looking statements, including statements and information concerning the Company’s anticipated financial performance;possible or assumed future results of operations, including descriptions of the Company’s revenues, profitability, outlook,guidance for the full year 2021 and overall business strategy and expected success; expectations regarding the Company’soperational position, opportunities and deliverables, goals, strategies, priorities and initiatives, including expectations regardingthe Company’s partnerships, pipeline, and anticipated new product launches, including platform opportunities and advancementwith respect to CanGaroo, and the potential results thereof.. The information in this Current Report on Form 8-K (includingExhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended(the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporatedby reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expresslyset forth by specific reference in such filing.
As previously announced on June 7, 2021, Aziyo Biologics, Inc.(the “Company” or “Aziyo”) issued a voluntary recall on June 2, 2021 pertaining to a single donor lot ofits FiberCel Fiber Viable Bone Matrix after learning of post-surgical infections in several patients treated with the product, includingsome patients that tested positive for tuberculosis.. Since issuing the recall, the Company has been working diligently withthe U.S. Food and Drug Administration (“FDA”) and the U.S. Centers for Disease Control and Prevention (“CDC”)to secure all identified unused product, ascertain the medical status of patients treated with the single donor lot, understand whetherthere is any relationship between the post-surgical infections and the FiberCel single donor lot used and determine the medical causeof these infections.. At this time, the Company believes that it has identified the 154 unitscomprising the product lot in question.. Working with state health agencies, the CDC has advised the Companythat it has contacted all patients treated with this lot of FiberCel to help ensure they are directed to appropriate medical treatment.Through its communications with the CDC, the Company has learned that eight patients who received the product from this lot have died,however, the cause of death is still being determined.. Samples of the recalled product have now undergone PCR analysis bya lab contracted by the CDC and tested positive for Mycobacterium tuberculosis .. As part of its continuing cooperation with the FDA and CDC and itsefforts to conduct a prompt and fulsome investigation into this matter, the Company has reviewed its processes for screening donors andproducing FiberCel and has not identified any deviations from its established protocols, which are based on industry standards and governmentrequirements.. Legal and Regulatory Update. N21C-06-166 EMD, againstthe Company and certain Medtronic entities, alleging that the plaintiff contracted tuberculosis following the implantation of Fibercelduring a spinal fusion operation and seeking unspecified compensatory and punitive damages and medical monitoring.. On June 17, 2021, the FDA initiated an inspection of the Company’sRichmond, California facility where FiberCel is produced, and that inspection is ongoing.. Forward-Looking Statements. All statements contained in this Form 8-K that do not relate to matters of historicalfact should be considered forward-looking statements, including statements and information concerning: the impact of the recall and suspensionof sales of FiberCel on the Company’s business; the outcome of or impact from any pending, or initiation of new, legal and regulatorymatters; and the potential for the identification of additional Fibercel units that result in post-surgical infections in patients treatedwith the product.. Forward-looking statements are based on management’s current assumptions and expectations of future events andtrends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results maydiffer materially from those expressed or implied in such statements due to numerous risks and uncertainties.. Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely onthese forward-looking statements as predictions of future events.
AZIYO BIOLOGICS, INC. : Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits (form 8-K) | MarketScreener ›
Item 1.01. Entry into a Material Definitive Agreement.. On August 10, 2022 , Aziyo Biologics, Inc., a Delaware corporation entered into a Credit Agreement, dated as of August 10, 2022, between Aziyo... | August 23, 2022
The Credit Agreement provides for (i) a senior secured term loan in. an aggregate amount of $21.0 million (the "Initial Term Loan") and (ii) an. additional tranche of term loan feature which permits the Borrower to borrow up. to an additional $4.0 million, subject to the achievement of specified. operational and financial metrics by September 30, 2023 (the "Additional Term. Loan" and, together with the Initial Term Loan, the "Term Loans") and (iii) the. establishment of a separate, new asset-based revolving facility of up to $8.0. million.. The Initial Term Loan was drawn on the Closing Date, and the Company used the. borrowings to repay outstanding amounts under the Company's existing amended and. restated term loan credit agreement with Midcap Financial Trust, as agent and. lender, and the other lenders party thereto (as amended, the "Existing Term. Loan") and the Company's amended and restated revolving credit agreement with. Midcap Funding IV Trust, as agent and lender, and the other lenders party. thereto (as amended, the "Existing Revolving Facility" and, together with the. Existing Term Loan, "Existing Credit Agreement").. Upon. termination of the Credit Agreement, the Company shall pay an exit fee equal to. 6.50% of the aggregate amount of Term Loans funded prior to such termination. date.. Subject to and effective upon the borrowing. by the Borrower of the Additional Term Loan, the Warrant will be exercisable for. up to an additional 30,075 shares of Common Stock.. The disclosure set forth in Item 1.01 of this Current Report on Form 8-K. regarding the termination of the Existing Credit Agreement is incorporated by. reference into this Item 1.02.. Financial Statements and Exhibits.
C.Contemporaneously with the sale of the Shares, (A) the parties hereto will execute and deliver a Registration Rights Agreement,. in the form attached hereto as Exhibit B (the “ Registration Rights Agreement ”), pursuant to which the. Company will agree to provide certain registration rights in respect of the Shares under the 1933 Act, and the rules and regulations. promulgated thereunder, and applicable state securities laws, and (B) the Company and HighCape (as defined below) shall, concurrently. with the purchase and sale of the Shares hereunder, enter into a registration rights waiver (the “ Investor Rights Agreement. Waiver ”), pursuant to which HighCape shall waive certain registration rights under the Investor Rights Agreement (as defined. below) relating to any registration statement filed by the Company pursuant to the Registration Rights Agreement covering the Shares.. “ Material Adverse Effect ” means. any change, event, condition, effect, development, state of facts, circumstance or occurrence (each, an “Effect”) that, individually. or when taken together with all other Effects, has had or would be reasonably likely to have, a material adverse effect on (i) the. assets, liabilities, results of operations, condition (financial or otherwise), earnings, business, prospects or properties of the Company. and its Subsidiaries taken as a whole, (ii) the legality or enforceability of any of the Transaction Documents or (iii) the. ability of the Company to perform its obligations under the Transaction Documents; provided , however , that in no event. shall any of the following Effects after the date hereof, alone or in combination with one another, be deemed to constitute, a Material. Adverse Effect: (1) any Effect resulting directly or indirectly from general business or economic conditions, except to the extent such. general business or economic conditions have a materially disproportionate effect on the Company as compared to companies in the Company’s. industry, (2) any change in the Company’s stock price or trading volume in and of itself (but not the underlying causes thereof),. or (3) any Effect caused by the announcement or pendency of the transactions contemplated by the Transaction Documents, or the identity. of any Investor or any of its Affiliates as the purchaser in connection with the transactions contemplated by this Agreement or the Registration. Rights Agreement (provided that this clause (3) shall not apply to the representations and warranties and related conditions contained. in the Transaction Documents that, by their terms, speak of the consequences arising out of the execution or performance of any of the. Transaction Documents or the consummation of the transactions contemplated thereby).. Anything in this Agreement or elsewhere herein or any other Transaction Document to. the contrary notwithstanding, it is understood and acknowledged by the Company that (i) none of the Investors has been asked by the Company. to agree, nor has any Investor agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”. securities based on securities issued by the Company or to hold any of the Securities for any specified term; or (ii) past or future. open market or other transactions by any Investor, specifically including, without limitation, Short Sales or “derivative”. transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of. the Company’s publicly-traded securities; (iii) any Investor, and counter-parties in “derivative” transactions to which. any such Investor is a party, directly or indirectly, presently may have a “short” position in the Common Stock; and (iv). each Investor shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”. transaction.. The Company agrees to indemnify and hold harmless each of the Investors, the officers, directors, partners,. members, managers and employees of each Investor, each Person who controls any such Investor (within the meaning of Section 15 of. the 1933 Act or Section 20 of the 1934 Act) and the officers, directors, partners, members, managers and employees of each such. controlling Person (each, an “ Investor Indemnified Party ”), from and against any and all losses, claims, damages,. liabilities, obligations, contingencies, costs and expenses, joint or several, to which such Investor Indemnified Party may suffer,. incur or become subject to as a result of or relating to in whole or in part (a) the inaccuracy in the representations and. warranties of the Company contained in this Agreement or the failure of the Company to perform its obligations hereunder or the. other Transaction Documents; or (b) any action instituted against the Investor Indemnified Party in any capacity, or any of them or. their respective Affiliates, by (i) any current or former shareholder of the Company who is not an Affiliate of such Investor. Indemnified Party, with respect to any of the transactions contemplated by the Transaction Documents or (ii) any other third-party. with respect to any of the transactions contemplated by the Transaction Documents), and will reimburse each Investor Indemnified. Party for legal and other expenses reasonably incurred as such expenses are reasonably incurred by such Investor Indemnified Party. in connection with investigating, defending, settling, compromising or paying such loss, claim, damage, liability, expense or. action; provided , however , that the Company will not be liable in any such case to the extent that any such loss,. claim, damage, liability or expense arises out of or is based upon (i) the failure of such Investor Indemnified Party (or its. related parties) to comply with the covenants and agreements contained herein, or (ii) the inaccuracy of any representations made by. such Investor Indemnified Party (or its related parties) herein.. After the Company has notified the Investor Indemnified Party of its. intention to undertake to defend or settle any such asserted liability, and for so long as the Company diligently pursues such. defense, the Company shall not be liable for any additional legal expenses incurred by the Investor Indemnified Party in connection. with any defense or settlement of such asserted liability; provided, however, that the Investor Indemnified Party shall be entitled. (a) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (b). if (i) the Company has failed to assume the defense or employ counsel reasonably acceptable to the Investor Indemnified Party within. ten (10) Business Days of when the Investor Indemnified Party provides the Company written notice of the claim or (ii) if the. defendants in any such action include both the Investor Indemnified Party and the Company and counsel to the Investor Indemnified. Party shall have concluded that there may be reasonable defenses available to the Investor Indemnified Party that are different from. or in addition to those available to the Company or if the interests of the Company reasonably may be deemed to conflict with the. interests of the Company, then the Investor Indemnified Party shall have the right to select a separate counsel and to assume such. legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and. other expenses related to such participation to be reimbursed by the Company as incurred.. Address:. 217 International Circle. City:. Hunt Valley. State:. MD. Zip Code:. 21030. Telephone:. ***. Facsimile:. ***. Email:. ***. Tax ID # or Social Security #:. ***. Name in which Shares should be issued:. Knollwood Investment Fund, LLC. INVESTOR:. /s/ Richard Emmitt. Richard Emmitt Investor Information Entity Name:. N/A. Contact Person:. Richard Emmitt. Address:. 5 Haytown Road. City:. Lebanon. State:. NJ. Zip Code:. 08833. Telephone:. ***. Facsimile:. ***. Email:. ***. Tax ID # or Social Security #:. ***. Name in which Shares should be issued:. Richard Emmitt. INVESTOR:. /s/ Andrew Joiner. Andrew Joiner Investor Information Entity Name:. N/A. Contact Person:. Andrew Joiner. Address:. 9962 Urbandale Lane. City:. Maple Grove. State:. MN. Zip Code:. 55311. Telephone:. ***. Facsimile:. ***. Email:. ***. Tax ID # or Social Security #:. ***. Name in which Shares should be issued:. Andrew Joiner. INVESTOR:. SCHULER EDUCATION FOUNDATION. By:. /s/ Jack W. Schuler. Name:. Jack W. Schuler. Title:. President Investor Information Entity Name:. Schuler Education Foundation. Contact Person:. Jack W. Schuler. Address:. 100 N. Field Drive, Suite #360. City:. Lake Forest. State:. IL. Zip Code:. 60045. Telephone:. ***. Facsimile:. ***. Email:. ***. Tax ID # or Social Security #:. ***. Name in which Shares should be issued:. Schuler Education Foundation. INVESTOR:. /s/ Matthew Strobeck. Matthew Strobeck Investor Information Entity Name:. N/A. Contact Person:. Matthew Strobeck. Address:. 45 Slate Farm Road. City:. Charlotte. State:. VT. Zip Code:. 05445. Telephone:. ***. Facsimile:. ***. Email:. ***. Tax ID # or Social Security #:. ***. Name in which Shares should be issued:. Matthew Strobeck. INVESTOR:. /s/ Matthew Strobeck. Matthew Strobeck, as custodian for Andrew Strobeck. N/A. Matthew Strobeck. 45 Slate Farm Road. Charlotte. VT. 05445. ***. ***. ***. Tax ID # or Social Security #:. “ Registrable Securities ” means. (i) the Class A Shares, (ii) the Conversion Shares (without giving effect to the Beneficial Ownership Limitation (as defined in the. Company’s certificate of incorporation, as amended from time to time in accordance with the terms thereof) or any other limitations. or restrictions on conversion of the Class B Shares), and (iii) any other shares of Class A Common Stock as a dividend or other distribution. with respect to, in exchange for or in replacement of any of the Class A Shares, the Class B Shares or the Conversion Shares; provided , however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to. maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) upon the first to occur of. (A) a Registration Statement with respect to the sale of such Registrable Securities being declared effective by the SEC under the 1933. Act and such Registrable Securities having been disposed of by the holder thereof in accordance with such effective Registration Statement,. (B) such Registrable Securities having been sold in accordance with Rule 144 (or another exemption from the registration requirements. of the 1933 Act) in a transaction in which the transferor’s rights under this Agreement are not assigned to the transferee pursuant. to Section 7(c), (C) such Registrable Securities becoming eligible for resale without volume or manner-of-sale restrictions and without. current public information requirements pursuant to Rule 144 and (D) the third anniversary of the Closing Date.. Subject to Section 2(d), if (A) a Registration Statement covering the Registrable Securities is not. declared effective by the SEC prior to the earlier of (i) five Business Days after the SEC informs the Company that no review of. such Registration Statement will be made or that the SEC has no further comments on such Registration Statement and (ii) the 75th. day after the Closing Date (or the 105 th day if the SEC reviews such Registration Statement) (the “ Effectiveness. Deadline ”), or (B) after a Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to. such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure. to update such Registration Statement), but excluding any Allowed Delay (as defined below) or, if the Registration Statement is on. Form S-1, for a period of fifteen (15) days following the date on which the Company files a post-effective amendment to incorporate. the Company’s Annual Report on Form 10-K (a “ Maintenance Failure ”), then the Company will make pro rata. payments to each Investor then holding Registrable Securities, as liquidated damages and not as a penalty, in an amount equal to 1%. of the aggregate amount paid pursuant to the Purchase Agreement by such Investor for such Registrable Securities then held by such. Investor for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should. have been effective (the “ Blackout Period ”).. (ii)Notwithstanding. anything to the contrary contained herein, the Company may, upon written notice to all holders of Registrable Securities included in. a Registration Statement, suspend the use of any Registration Statement, including any Prospectus that forms a part of a. Registration Statement, if the Company (X) determines that it would be required to make disclosure of material information in the. Registration Statement that the Company has a bona fide business purpose for preserving as confidential, (Y) the Company determines. it must amend or supplement the Registration Statement or the related Prospectus so that such Registration Statement or Prospectus. shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary. to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not. misleading or (Z) the Company has experienced or is experiencing some other material non-public event, including a pending. transaction involving the Company, the disclosure of which at such time, in the good faith judgment of the Company, would adversely. affect the Company; provided , however , in no event shall holders of Registrable Securities be suspended from selling. Registrable Securities pursuant to the Registration Statement for a period that exceeds 30 consecutive Trading Days or 60 total. Trading Days in any 180-day period (any such suspension contemplated by this Section 2(c)(ii), an “ Allowed. Delay ”).. (j) with a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation. of the SEC that may at any time permit the Investors to sell shares of Class A Common Stock to the public without registration, the Company. covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144,. until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders. thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as there are no longer Registrable Securities;. (ii) file with the SEC in a timely manner (without giving effect to any extensions pursuant to Rule 12b-25 under the 1933 Act or. any other applicable grace period) all reports and other documents required of the Company under the 1934 Act; and (iii) furnish. electronically to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by. the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of or electronic access to the Company’s. most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested. in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without. registration.. If any Investor is required under applicable securities laws to be described in a Registration. Statement as an “underwriter,” the Company shall, upon reasonable prior notice, make available, during normal business hours,. for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the. Investors and who are reasonably acceptable to the Company) (collectively, the “ Inspectors ”), all pertinent financial. and other records, and all other corporate documents and properties of the Company (collectively, the “ Records ”) as. may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a. reasonable time period, to supply all such information reasonably requested by the Inspectors (including, without limitation, in response. to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and. effectiveness of such Registration Statement for the sole purpose of enabling such Investor and its accountants and attorneys to conduct. such due diligence solely for the purpose of establishing a due diligence defense to underwriter liability under the 1933 Act; provided , however , that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to such Investor). or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the. Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any. Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable. subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally. available to the public other than by disclosure in violation of this Agreement or the Purchase Agreement.. An Investor may transfer or assign, in whole or from time to time. in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities (or Class B Shares upon. conversion of which Registrable Securities are issuable) by such Investor to such person, provided that (i) the Investor agrees in writing. with the transferee or assignee to assign such rights and a copy of such agreement is furnished to the Company within a reasonable time. after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice. of (A) the name and address of such transferee or assignee and (B) the securities with respect to which such registration rights are being. transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee. or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before the time the Company receives the. written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound. by all of the provisions contained herein applicable to an Investor in respect of the transferred securities; (v) such transfer shall. have been made in accordance with the applicable requirements of the Purchase Agreement and (vi) unless the transferee or assignee is. an Affiliate of, and after such transfer or assignment continues to be an Affiliate of, such Investor, the amount of Registrable Securities. (or issuable upon conversion of Class B Shares) transferred or assigned to such transferee or assignee represents at least $1.0 million. of Registrable Securities (based on the then-current market price of the Class A Common Stock).