Allurion Technologies, Inc 8-K, filed Apr 17, 2024
Allurion Technologies, Inc. (ALUR)
About this 8-K
Allurion Technologies, Inc filed this 8-K on April 17, 2024, reporting on events of April 14, 2024.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 3.02: Unregistered sale of equity
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
Note Purchase Agreement
On April 14, 2024, Allurion Technologies, Inc., a Delaware corporation (the “Company”), RTW Investments, LP (“RTW”), as agent for the purchasers (the “Purchasers”) party thereto from time to time (RTW in such capacity, the “Principal Purchaser”), and Acquiom Agency Services LLC (“Acquiom”), as collateral agent for the Purchasers and the Principal Purchaser, entered into a Note Purchase Agreement (the “Original Note Purchase Agreement”). Subsequently, on April 16, 2024, the Company, the Principal Purchaser, the Purchasers and Acquiom entered into the First Amendment to the Original Note Purchase Agreement (the “Amendment”; the Original Note Purchase Agreement, as amended by the Amendment, the “Amended Note Purchase Agreement”).
Pursuant to the Amended Note Purchase Agreement, the Company issued and sold $48 million aggregate principal amount of convertible senior secured notes (the “Notes”) to the Purchasers in a private placement transaction. The Company used the proceeds from the issuance of the Notes to refinance its outstanding obligations under the Fortress Credit Agreement (as defined below) in full and to pay fees and expenses in connection therewith and in connection with the transactions contemplated by the Amended Note Purchase Agreement. The Company has terminated and repaid in full the outstanding borrowings and other obligations under the Fortress Credit Agreement.
The Notes will bear interest at the annual rate of 6.0%, which interest is payable quarterly in cash or, at the Company’s option, in kind for the first three years. The maturity date for the Notes will be April 16, 2031. The Notes are guaranteed by Allurion Technologies, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Allurion Opco”), and certain other current and future subsidiaries of the Company, and are secured by substantially all the assets of the Company and the guarantors.
The Notes are convertible into shares of the Company's common stock, par value $0.0001 per share, at a Purchaser’s election at any time after the earliest of (i) the date on which Stockholder Approval (as defined below) is obtained, (ii) December 31, 2025, (iii) the date of a Fundamental Change Company Notice (as defined in the Amended Note Purchase Agreement), and (iv) the Make-Whole Fundamental Change Effective Date (as defined in the Amended Note Purchase Agreement), subject to certain terms and limitations in the Amended Note Purchase Agreement, based on the higher of (x) an initial conversion rate of 307.0797 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $3.26 per share, which represents a 35% premium to the trailing 30 day volume weighted average price (“VWAP”) of the Company's common stock on the New York Stock Exchange (the “NYSE”) as of the close of business on April 12, 2024) and (y) a 35% conversion premium to the lowest price per share in an equity financing for capital raising purposes ending on the date on which the Company has raised aggregate gross offering proceeds of at least $15,000,000 (the “Next Equity Financing”). Although the initial conversion price based on clause (x) above for the Notes is above the NYSE’s “Minimum Price” (as such term is defined in Section 312.03 of the NYSE Listed Company Manual), it is subject to a reset provision at the time of the Next Equity Financing that could result in the conversion price falling below such Minimum Price. Therefore, the Amended Note Purchase Agreement provides that unless and until requisite approval of the Company’s stockholders is obtained (“Stockholder Approval”), the Company will not deliver common stock upon conversion of the Notes in excess of 1% of the number of shares of the Company’s common stock outstanding as of April 14, 2024. The Company is required to include a proposal in its definitive proxy statement on Schedule 14A seeking Stockholder Approval no later than December 31, 2025. If the Company does not obtain Stockholder Approval at such meeting, it shall call a special meeting of stockholders each 90-day period thereafter at least two times, and thereafter at each subsequent annual meeting until Stockholder Approval is obtained or the Notes are no longer outstanding; provided, that shares of common stock issued upon conversion of the Notes prior to obtaining Stockholder Approval shall not be entitled to vote in favor of Stockholder Approval.
Subject to specified conditions, on or after April 16, 2028, the Notes are redeemable by us at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Pursuant to the terms of the Amended Note Purchase Agreement, each Purchaser is subject to a beneficial ownership conversion limitation such that no Purchaser shall be permitted to convert Notes to the extent it would result in such Purchaser and its affiliates beneficially owning more than 9.99% of the Company’s common stock.
Pursuant to the terms of the Amended Note Purchase Agreement, until the Notes are converted or repaid in full, RTW will be entitled to designate one representative who will serve as a non-voting board observer to the Company’s board of directors (the “Board”). The Company also must include an additional director nominee in the Company’s proxy statement for the election of the Class I directors at the Company’s 2024 annual meeting of stockholders, with the recommendation of the Board to vote in favor of such additional nominee as well as the “RTW Designated Director” (as defined in that certain Investor Rights and Lock-Up Agreement entered into as of August 1, 2023, by and among the Company and the investors party thereto). Such additional director nominee shall go through the Company’s director nomination process led by the Nominating and Corporate Governance Committee of the Board. RTW shall have the right to approve such additional nominee, with such approval not to be unreasonably withheld.
The Amended Note Purchase Agreement contains customary terms and covenants, including negative covenants, such as limitations on indebtedness, liens, disposition of assets and mergers. The Amended Note Purchase Agreement also contains financial maintenance covenants, which require (i) the Company and Allurion Opco to maintain not less than $12,500,000 in unrestricted cash in controlled accounts in the U.S. at all times, (ii) the Company to receive minimum trailing twelve-month consolidated Revenue (as defined in the Amended Note Purchase Agreement) at amounts designated in the Amended Note Purchase Agreement, tested quarterly beginning with the twelve-month period ending March 31, 2025, and (iii) the Company's and its subsidiaries’ consolidated business operations outside the United States to be profitable for the trailing three-month period, tested quarterly beginning with the three-month period
ending December 31, 2025. The Amended Note Purchase Agreement also contains customary events of default, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, bankruptcy and insolvency proceedings, cross-payment defaults and cross-acceleration to certain other material indebtedness agreements, and judgment default.
The issuance of the Notes was conducted in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and by Rule 506 of Regulation D, promulgated by the Securities and Exchange Commission (the “SEC”), and on similar exemptions under applicable state laws. Each Purchaser party to the Amended Note Purchase Agreement has represented that it is an “accredited investor” (as defined in Regulation D of the Securities Act) and that it is acquiring the Notes for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, and appropriate legends will be affixed to the Notes.
This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy any of the securities described herein and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The offer, issuance and sale of the Notes issued or issuable pursuant to the Amended Note Purchase Agreement have not been, and will not be, registered under the Securities Act or any state securities laws, and unless so registered, such securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws.
The foregoing descriptions of the Amended Note Purchase Agreement and the Amendment are not complete and are qualified in their entirety by reference to the complete text of the Original Note Purchase Agreement and the Amendment, which are filed as Exhibits 10.1 and 10.4 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference.
Amendment to Revenue Interest Financing Agreement
As previously announced, on February 9, 2023, Allurion Opco entered into the Revenue Interest Financing Agreement, dated as of February 9, 2023 (as modified by that certain Assignment and Assumption, dated April 27, 2023, that certain Assignment Agreement, dated as of July 28, 2023, that certain Company Assumption Agreement, dated as of August 1, 2023, and as otherwise amended, restated, amended and restated, supplemented and otherwise modified prior to the date hereof, the “Original RIFA”), with 4010 Royalty Investments ICAV, an Irish collective asset-management vehicle, for and on behalf of its sub-fund, 4010 Royalty Investments Fund 1, and 4010 Royalty Master Fund LP, a Cayman Islands limited partnership (as transferees of the investors initially party to the Original RIFA) (collectively, together with their successors and permitted assigns, the “Original RIFA Investors”).
On April 14, 2024, the Original RIFA was amended pursuant to the Omnibus Amendment (the “RIFA Amendment”) by and among the Company, Allurion Opco, Allurion Australia Pty Ltd, a proprietary limited company organized under the laws of Australia and a wholly-owned subsidiary of the Company, the Original RIFA Investors and RTW, to reflect certain modifications agreed between the parties thereto in connection with the Purchasers’ purchase of the Notes and the refinancing of the Fortress Credit Agreement. Among other things, the RIFA Amendment waived the existing event of default under the Original RIFA, increased the rate of revenue interest payments to be paid to RTW on all current and future products and digital solutions developed and to be developed by the Company (the “Royalty Rate”) for net sales under $100 million prior to December 31, 2026 from 6% to 12%, and increased the Royalty Rate on net sales in excess of $100 million on or after January 1, 2027 from 10% to 12%, subject to the terms and conditions of the RIFA Amendment.
The foregoing description of the RIFA Amendment is not complete and is qualified in its entirety by reference to the complete text of the RIFA Amendment, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Amendment to RTW Side Letter
As previously announced, the Company, Allurion Opco, RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd. and RTW Biotech Opportunities Operating Ltd. (as transferee from RTW Biotech Opportunities Ltd. (formerly known as RTW Venture Fund Limited)) (in each case, together with their successors and permitted assigns, the “Additional RIFA Investors”) entered into that certain letter agreement, dated as of May 2, 2023 (as modified by that certain Assignment Agreement, dated as of July 28, 2023, and that certain Assignment Agreement, dated as of April 9, 2024, the “Existing Side Letter”).
On April 14, 2024, the Company, Allurion Opco and the Additional RIFA Investors entered into the First Amendment to Amended and Restated Letter Agreement (the “Side Letter Amendment”) to reflect certain modifications to the Existing Side Letter in connection with the Purchasers’ purchase of the Notes. The Side Letter Amendment provides, among other things, that the Additional RIFA Investors may make a single election in certain circumstances to convert up to $7,500,000 of the purchase price that the Additional RIFA Investors paid for certain equity interests in the Company into an amount of financing provided by the Additional RIFA Investors to Allurion Opco pursuant to an additional revenue interest financing agreement with Allurion Opco.
The foregoing description of the Side Letter Amendment is not complete and is qualified in its entirety by reference to the complete text of the Side Letter Amendment, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
On April 16, 2024, the Company terminated and repaid in full the outstanding borrowings under the Credit Agreement and Guaranty, dated as of August 1, 2023 (as amended by Amendment No. 1 to the Credit Agreement and Guaranty, dated as of December 29, 2023,
the “Fortress Credit Agreement”), by and among the Company, Allurion Opco, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto (the “Lenders” and each, a “Lender”) and Fortress Credit Corp., as administrative agent for the Lenders, including the release of all guarantees and liens related thereto in connection with entering into the Fortress Credit Agreement and repaying in full all outstanding obligations of the Fortress Credit Agreement.
Item 3.02 Unregistered sales of Equity Securities
The information set forth under the heading "Note Purchase Agreement" in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02 in its entirety.
Item 7.01 Regulation FD Disclosure
On April 17, 2024, the Company issued a press release announcing the closing of the transactions contemplated by the Note Purchase Agreement. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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99.1* |
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Press Release issued by Allurion Technologies, Inc. on April 17, 2024. |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Furnished herewith.
# Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
+ Certain provisions or terms of this exhibit (including any exhibits or schedules thereto) have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally an unredacted copy of any such exhibit or schedule to the SEC upon its request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Allurion Technologies, Inc. |
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Date: |
April 17, 2024 |
By: |
/s/ Brendan Gibbons |
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Name: Brendan Gibbons |
EXECUTION VERSION
Exhibit 10.1
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) IS OF THE TYPE THAT THE REGISTRANT TREATS AS CONFIDNETIAL, THE DISCLOSURE OF WHICH WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY. |
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”) is entered into as of April 14, 2024 (the “Execution Date”) by and among Allurion Technologies, Inc., a Delaware corporation (formerly known as Allurion Technologies Holdings, Inc.) (together with its successors and permitted assigns, the “Company”), the purchasers from time to time party hereto (each, a “Purchaser” and, collectively, the “Purchasers”), RTW Investments, LP, as agent for the Purchasers (in such capacity, together with its successors and permitted assigns, the “Principal Purchaser”) and Acquiom Agency Services LLC, as collateral agent for the Purchasers and the Principal Purchaser (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”).
RECITALS
WHEREAS, the Purchasers are willing, pursuant to the terms and conditions of this Agreement, to purchase from the Company convertible senior secured notes in substantially the form attached hereto as Exhibit A (each as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Notes”) in an aggregate principal amount of up to $48,000,000 (the “Note Purchase Amount”);
WHEREAS, the Company’s direct subsidiary, Allurion Technologies, LLC, a Delaware limited liability company (formerly known as Allurion Technologies, Inc.) (together with its successors and permitted assigns, “Allurion Opco”), has previously entered into the Revenue Interest Financing Agreement, dated as of February 9, 2023 (as modified by that certain Assignment and Assumption, dated April 27, 2023, that certain Assignment Agreement, dated as of July 28, 2023, that certain Company Assumption Agreement, dated as of August 1, 2023, and as otherwise amended, restated, amended and restated, supplemented and otherwise modified prior to the date hereof, the “Original RIFA”), among 4010 Royalty Investments ICAV, an Irish collective asset-management vehicle, for and on behalf of its sub-fund, 4010 Royalty Investments Fund 1, and 4010 Royalty Master Fund LP, a Cayman Islands limited partnership (as transferees of the investors initially party to the Original RIFA) (collectively, together with their successors and permitted assigns, the “Original RIFA Investors”) and Allurion Opco, which is contemplated to be amended on the date hereof pursuant to the First Amendment to Revenue Interest Financing Agreement (the “RIFA Amendment”) among Allurion Opco, the Original RIFA Investors and RTW Investments, LP, as administrative agent (together with its successors and permitted assigns, the “RIFA Agent”), to reflect certain modifications agreed between the parties thereto in connection with the Purchasers’ purchase of the Notes;
WHEREAS, it is contemplated that (i) Allurion Opco and certain other Subsidiaries of the Company, as well as additional Subsidiaries of the Company that are required to do so in the future pursuant to the provisions of Section 7.4 hereof, will (A) guaranty the Company’s Obligations pursuant to the Guaranty (as defined below) and (B) secure their obligations in respect of this Agreement and the other Note Documents pursuant to the Security Agreement (as defined below)
and the other Collateral Documents (as defined below), and (ii) the Liens granted pursuant to the Security Agreement and the other Collateral Documents will rank pari passu with Liens that have been granted by the Company and the Guarantors in favor of the RIFA Agent securing obligations in respect of the RIFA (as defined below) and related agreements, in accordance with the terms of the Intercreditor Agreement (as defined below); and
WHEREAS, the Notes are subject to conversion into shares of Common Stock of the Company on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. DEFINITIONS.
1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the following respective meanings:
“1% Exception” has the meaning specified in Section 4.4(h) hereof.
“2023 10-K” has the meaning specified in Section 5.10(a) hereof.
“Additional Amounts” has the meaning specified in Section 13.13(a) hereof.
“Additional Interest” has the meaning specified in Section 14.2 hereof.
“Additional RIFA” means a revenue interest financing agreement with Allurion Opco in the form attached as Annex A to the Side Letter.
“Additional RIFA Investors” means RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd. and RTW Biotech Opportunities Operating Ltd. (as transferee from RTW Biotech Opportunities Ltd. (formerly known as RTW Venture Fund Limited)), in each case, together with their successors and permitted assigns.
“Additional Shares” means all shares of Common Stock issued or deemed to be issued by the Company after the date hereof, other than (a) the following shares of Common Stock and (b) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (a) and (b), collectively, “Exempted Securities”):
(i) as to any series of preferred stock, shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on such series of preferred stock;
(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that results in an adjustment to the Conversion Rate pursuant to Section 4.4;
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(iii) shares of Common Stock, Options or Convertible Securities issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company;
(iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities or Options, in each case, provided such issuance is pursuant to the terms of such Option or Convertible Security;
(v) shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a permitted debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors;
(vi) shares of Common Stock, Options or Convertible Securities issued to suppliers or third-party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors;
(vii) shares of Common Stock, Options or Convertible Securities issued as acquisition consideration pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved by the Board of Directors; or
(viii) shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license, development, original equipment manufacturer, marketing or other similar agreements or strategic partnerships approved by the Board of Directors.
“Adjustment Shares” has the meaning specified in Section 4.6(a) hereof.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or with respect to the Purchasers, any other investment fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or that shares the same management company or investment adviser with, the Purchasers. For purposes of this definition, “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities entitled to elect the board of directors or management board, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative to the foregoing. Unless expressly stated otherwise herein, no Purchaser shall be deemed an Affiliate of the Company.
“Agreement” has the meaning specified in the introductory paragraph.
“Allowable Grace Period” has the meaning specified in Section 14.4(n) hereof.
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“Allurion Australia” means Allurion Australia Pty Ltd, with Australian Company Number 658 546 117, a wholly-owned Subsidiary of Allurion Opco.
“Allurion France” means Allurion France SAS, a wholly-owned Subsidiary of Allurion Opco.
“Allurion Opco” has the meaning specified in the Recitals.
“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto.
“Applicable Law” means, with respect to any Person, all Laws, rules, regulations and orders of Governmental Entities applicable to such Person or any of its properties or assets.
“Attribution Parties” has the meaning set forth in Section 4.10 hereof.
“Australian Security Documents” means, collectively, (i) the Australian law governed general security agreement executed by Allurion Australia in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, to be entered into on or after the date hereof and (ii) the Australian law governed specific security agreement executed by Allurion Opco in favor of the Collateral Agent to be entered into on or after the date hereof and (iii) any document required to be delivered under or related to the foregoing.
“Authorizations” has the meaning set forth in Section 5.15(a) hereof.
“Authorized Denomination” means, with respect to a Note, an initial principal amount thereof equal to $1,000 or any integral multiple of $1.00 in excess thereof.
“Beneficial Ownership Limitation” has the meaning specified in Section 4.10 hereof.
“Board Observer” has the meaning set forth in Section 7.8 hereof.
“Board of Directors” means either the board of directors of the Company or any duly authorized committee of that board.
“Business” means, at any time, a collective reference to the businesses operated by the Company and its Subsidiaries at such time.
“Business Combination Event” has the meaning specified in Section 11.1 hereof.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Applicable Law to remain closed.
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“Capital Stock” means, for any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) the equity of such Person, but excluding any Indebtedness convertible into, or exchangeable into, such equity.
“Cash Interest” has the meaning specified in Section 3.2 hereof.
“Charter Documents” has the meaning specified in Section 5.4(a) hereof.
“Close of Business” means 5:00 p.m., New York City time.
“Closing” has the meaning specified in Section 2.3 hereof.
“Closing Date” has the meaning specified in Section 2.3 hereof.
“Collateral” has the meaning ascribed thereto in the Security Agreement.
“Collateral Agent” has the meaning specified in the introductory paragraph.
“Collateral Agent Fee Letter” has the meaning specified in Section 12.4(b) hereof.
“Collateral Documents” means, collectively, the Security Agreement, each Real Property Security Document, each Intellectual Property Security Agreement (as defined in the Security Agreement), each Foreign Security Document, and each other security agreement, control agreement or financing statement, registration, recordation, filing, instrument or approval required, entered into or recommended to grant, perfect and otherwise render enforceable Liens in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, for purposes of securing the Obligations, including (without limitation) pursuant to Section 7.5, in each case, as amended or otherwise modified from time to time.
“Commercially Reasonable and Diligent Efforts” means, with respect to the efforts to be expended with respect to the Products, such efforts and resources normally used by a reasonably prudent company in the medical device industry of a size and product portfolio comparable, and with similar resources available, to the Company and its Subsidiaries (provided that, except as would not reasonably be expected to result in a Material Adverse Effect, the number of full time sales representatives (including direct sales representatives, tele-sales representatives, consultants and customer care managers) of the Company with respect to the Product shall not fall below sixty (60) at any time after the Closing Date and shall not fall below seventy (70) at any time after December 31, 2024), with the marketing, sale and product development and research plans similar to similarly situated companies in the medical device industry, taken as a whole, in which medical device product is owned or licensed in the same manner as the Products, which medical device product is at a similar stage in its product life and of similar market and profit potential as the Products, taking into account efficacy, safety, approved labeling, the competitiveness of alternative products, pricing/reimbursement for the medical device product, the intellectual property and regulatory protection of the medical device product, the regulatory structure and the profitability of the medical device product, all as measured by the facts and circumstances in existence at the time such efforts are due.
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“Commission” or the “SEC” means the United States Securities and Exchange Commission.
“Commodity Account” means any commodity account, as such term is defined in Section 9-102 of the UCC.
“Common Equity” of any Person means the Capital Stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.
“Common Stock” means the Common Stock of the Company, par value $0.0001 per share, subject to Section 4.7 hereof.
“Common Stock Change Event” has the meaning specified in Section 4.7(a) hereof.
“Company” has the meaning specified in the introductory paragraph.
“Company Indemnified Parties” has the meaning specified in Section 14.9(b) hereof.
“Company Intellectual Property” has the meaning specified in Section 5.16 hereof.
“Company Party” means any of the Company and the Guarantors.
“Company Product” has the meaning specified in Section 5.15(a) hereof.
“Confidential Information” means any and all technical and non-technical non-public information provided by any Company Party or any Affiliate thereof to the Purchasers, the Principal Purchaser and/or the Collateral Agent (including, without limitation, any notices or other information provided pursuant to any Note Document), either directly or indirectly, and including any materials prepared on the basis of such information, whether in graphic, written, electronic or oral form, and marked or identified at the time of disclosure as confidential, or which by its context would reasonably be deemed to be confidential, including without limitation information relating to the technology, products and services of the Company and its Affiliates and any business, financial or customer information relating to the Company and its Affiliates; provided that, the existence and terms of this Agreement shall be deemed the Confidential Information of the Company.
“Contract” means any contract, agreement, commitment, instrument, license, sublicense, subcontract, real or personal property lease or sublease, note, indenture, mortgage, bond, letter of credit, guarantee, purchase order, or other legally binding business arrangement, whether written or oral, together with any amendments, restatements, supplements or other modifications thereto.
“Contractual Obligation” means, as to any Person, any obligation arising under any Contract.
“Controlled Account” has the meaning specified in Section 7.10(a) hereof.
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“Conversion Consideration” has the meaning specified in Section 4.3(b)(i) hereof.
“Conversion Date” has the meaning specified in Section 4.2(a) hereof.
“Conversion Notice” has the meaning specified in Section 4.2(a) hereof.
“Conversion Price” means, in respect of each Note, as of any date, $1,000 divided by the Conversion Rate in effect on such date (and calculated as appropriate for any Authorized Denomination in integral multiples of $1.00 in excess of $1,000).
“Conversion Rate” means the higher of: (i) 307.0797 shares of Common Stock per $1,000 principal amount of Notes and (ii) a number of shares of Common Stock per $1,000 principal amount of Notes equal to the quotient of $1,000, divided by 135% of the Next Equity Financing Price, in each case as the Conversion Rate may be subject to further adjustment as set forth herein. From the Closing Date until the date of the Next Equity Financing, the Conversion Rate will be the number reflected in clause (i). In each case, the Conversion Rate shall be calculated as appropriate for any Authorized Denomination in integral multiples of $1.00 in excess of $1,000.
“Convertible Securities” means any evidence of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable or exercisable for Common Stock, but excluding Options.
“Conversion Shares” has the meaning specified in Section 5.2(b) hereof.
“Copyright License” means any agreement, whether written or oral, providing for the grant of any right to use any Work under any Copyright.
“Copyrights” means (a) all proprietary rights afforded Works pursuant to Title 17 of the United States Code, including, without limitation, all rights in mask works, copyrights and original designs, and all proprietary rights afforded such Works by other countries for the full term thereof (and including all rights accruing by virtue of bilateral or international treaties and conventions thereto), whether registered or unregistered, including, but not limited to, all applications for registration, renewals, extensions, reversions or restorations thereof now or hereafter provided for by Law and all rights to make applications for registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to; and (b) all copyright rights under the copyright Laws of the United States and all other countries for the full term thereof (and including all rights accruing by virtue of bilateral or international copyright treaties and conventions), whether registered or unregistered, including, but not limited to, all applications for registration, renewals, extensions, reversions or restorations of copyrights now or hereafter provided for by Law and all rights to make applications for copyright registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Cut Back Securities” has the meaning specified in Section 14.3 hereof.
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“Daily VWAP” means the consolidated volume-weighted average price per share of the Common Stock as displayed under the heading “Bloomberg VWAP” on the Bloomberg page for the “˂equity˃ AQR” page corresponding to the “ticker” for such Common Stock (or its equivalent successor if Bloomberg ceases to publish such price or such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the Last Reported Sale Price on such Trading Day). The “volume weighted average price” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“Default” means any Event of Default and any event that, upon the giving of notice, the lapse of time or both, would constitute an Event of Default.
“Deposit Account” means any deposit account, as such term is defined in Section 9-102 of the UCC.
“Disposition” or “Dispose” means the sale, transfer, out-license, lease or other disposition (including any sale and leaseback transaction or any issuance by any Subsidiary of its Equity Interests other than to a Company Party) of any property included in the Collateral (or that would be Collateral if it were property of a Company Party) by any Company Party or any Subsidiary of the Company, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding the following (collectively, the “Permitted Transfers”): (a) the sale, lease, license, transfer or other disposition of inventory in the ordinary course of business, (b) the sale, lease, license, transfer or other disposition in the ordinary course of business of surplus, obsolete or worn out property no longer used or useful in the conduct of the Business of the Company and its Subsidiaries, (c) the abandonment or other disposition of IP Rights that are not material or are no longer used or useful in any material respect in the Business of the Company and its Subsidiaries, (d) licenses, sublicenses, leases or subleases (other than relating to IP Rights, in each case) granted to third parties in the ordinary course of business and not interfering with the Business of the Company and its Subsidiaries, (e) any Involuntary Disposition or any sale, lease, license or other disposition of property (other than, for the avoidance of doubt, IP Rights) in settlement of, or to make payment in satisfaction of, any property or casualty insurance, (f) dispositions consisting of the sale, transfer, assignment or other disposition of unpaid and overdue accounts receivable in connection with the collection, compromise or settlement thereof in the ordinary course of business and not as part of a financing transaction, (g) Permitted Licenses, (h) to the extent constituting Permitted Liens, (i) sales, leases, licenses, transfers or other dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such sale, lease, license, transfer or other disposition are promptly applied to the purchase price of similar replacement property, (j) to the extent constituting a Disposition, customary transfer pricing and cost-sharing arrangements (i.e., “cost-plus” arrangements) among the Company and its Subsidiaries that are in the ordinary course of business; and (k) the sale, transfer, issuance or other disposition of a de minimis number of shares of the Equity Interests of a Foreign Subsidiary of a Company Party in order to qualify members of the governing body of such Subsidiary if required by Applicable Law. It is understood and agreed that, notwithstanding anything to the contrary set forth in this definition, in no event shall a “Permitted Transfer” include any license of any Product (or any IP Rights associated therewith) other than Permitted Licenses.
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“Disqualified Capital Stock” means any Equity Interests that (a) by its terms, (b) by the terms of any security into which it is convertible or for which it is exchangeable, or (c) by contract or otherwise, is, or upon the happening of any event or passage of time would be, required to be redeemed, or is redeemable at the option of the holder thereof, in any such case on or prior to the date that is ninety-one (91) days after the Maturity Date; provided that only the portion of Equity Interests (or portion of security into which it is convertible or for which it is exchangeable) which is, or upon the happening of any event or passage of time would be, required to be redeemed, or is redeemable at the option of the holder thereof, on or prior to such date will be deemed to be Disqualified Capital Stock; provided further that if such Equity Interests are issued to any plan for the benefit of directors, managers, employees, officers or consultants of the Company or its Subsidiaries or by any such plan to such directors, managers, employees, officers or consultants, then such Equity Interests shall not constitute “Disqualified Capital Stock” solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations. Notwithstanding the preceding sentence, any Equity Interests that would constitute “Disqualified Capital Stock” solely because the holders thereof have the right to require the redemption or repurchase of such Equity Interests upon the occurrence of a change of control, fundamental change, delisting or an asset sale will not constitute “Disqualified Capital Stock” if the “asset sale,” “fundamental change”, “delisting” or “change of control” provisions applicable to such Equity Interests provide that the issuer thereof will not redeem or repurchase any such Equity Interests pursuant to such provisions prior to all other Obligations (other than contingent indemnification obligations for which no claim has been asserted) having been irrevocably paid in full in cash.
“Distributed Property” has the meaning specified in Section 4.4(c) hereof.
“Disqualification Events” has the meaning specified in Section 6.5 hereof.
“Domain Names” means all domain names and uniform resource locators (URLs) that are registered and/or owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the United States, any state of the United States or the District of Columbia.
“DPA” has the meaning specified in Section 5.13 hereof.
“Effective Date” means, with respect to a Fundamental Change or a Make-Whole Fundamental Change, as applicable, the date such Fundamental Change or Make-Whole Fundamental Change, as applicable, occurs or becomes effective.
“Effectiveness Deadline” has the meaning specified in Section 14.1 hereof
“Effectiveness Failure” has the meaning specified in Section 14.2 hereof.
“Equity Awards” has the meaning specified in Section 5.5(a) hereof.
“Equity Financing” has the meaning specified in Section 7.2 hereof.
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“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of Capital Stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of Capital Stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member, membership or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination; provided that Equity Interests shall not include Indebtedness that is convertible into or exchangeable for Equity Interests prior to such conversion.
“ERISA” means the Employee Retirement Income Security Act of 1974 as amended.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).
“Event of Default” has the meaning specified in Section 8.1 hereof.
“Ex-Dividend Date” means the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question from the Company or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market. For the avoidance of doubt, any alternative trading convention on the applicable exchange or market in respect of shares of the Common Stock under a separate ticker symbol or CUSIP number will not be considered “regular way” for this purpose.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Excluded Account” means, collectively, (i) accounts used exclusively for payroll, the withheld employee portion of payroll taxes and other employee wage and benefit payments, (ii) accounts used exclusively for escrow, trust, or other fiduciary arrangements established in the ordinary course and not in contemplation of this Agreement, (iii) accounts constituting cash collateral accounts subject to Permitted Liens and (iv) bank or similar deposit accounts with balances that at no time exceed $2,000,000 individually or $3,000,000 in the aggregate at any time for all such accounts; provided that no account used for collecting payments from customers, suppliers or clients of any Company Party or any Subsidiary of a Company Party shall constitute an “Excluded Account”.
“Excluded Subsidiary” means, collectively, (i) Immaterial Subsidiaries and (ii) any Subsidiary that the cost or burden of providing a guaranty or to create or perfect Liens over the assets of which would outweigh the benefit afforded to the Purchasers thereby, as determined in the Principal Purchaser’s sole but commercially reasonable discretion (it being understood and
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agreed that so long as any Subsidiary constitutes an “Excluded Subsidiary” under and as referred to in the RIFA, such Subsidiary shall constitute an “Excluded Subsidiary” hereunder).
“Execution Date” has the meaning specified in the introductory paragraph.
“Failure Period” has the meaning specified in Section 14.2 hereof.
“FCPA” has the meaning specified in Section 7.19(a) hereof.
“FDA” means the U.S. Food and Drug Administration or any successor agency or authority thereto.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.
“Fiduciary” has the meaning specified in Section 6.6 hereof.
“Filing Deadline” has the meaning specified in Section 14.1 hereof.
“Filing Failure” has the meaning specified in Section 14.2 hereof.
“Force Majeure Event” means military action or war (whether or not declared), terrorism, riot, fire, explosion, accident, flood, sabotage, changes in Applicable Laws, actions of Governmental Entities, pandemics (other than the current COVID-19 pandemic or any government response thereto), earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires, or other natural disasters or weather conditions.
“Foreign Security Documents” means any pledge, security or other collateral agreement pursuant to which the assets owned by a Foreign Subsidiary or the Equity Interests in such Foreign Subsidiary are made subject to a Lien in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, including but not limited to the French Security Documents and the Australian Security Documents, and which is governed by the laws of the jurisdiction in which such Foreign Subsidiary is formed, in each case in form and substance reasonably satisfactory to the Collateral Agent and in each case as amended, restated, supplemented or otherwise modified from time to time.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“Form of Assignment and Transfer” means the “Form of Assignment and Transfer” attached as Attachment 3 to the Form of Note attached hereto as Exhibit A.
“Form of Fundamental Change Purchase Notice” means the “Form of Fundamental Change Purchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.
“Form of Notice of Conversion” means the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.
“Fortress Credit Agreement” means the Credit Agreement and Guaranty, dated as of August 1, 2023, by and among the Company, Allurion Opco, as borrower, the subsidiary
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guarantors from time to time party thereto, as subsidiary guarantors, the lenders from time to time parties thereto, as lenders, and Fortress Credit Corp., as the administrative agent, as amended, restated, amended and restated, supplemented and otherwise modified from time to time prior to the date hereof.
“French Security Documents” means (i) any pledge of securities account agreement and any document relating thereto governed by French law (including but not limited to the statement of pledge and the pledge certificate) to be entered into on or after the date hereof between, among others, the Company as pledgor, the Collateral Agent and Allurion France as securities account holder and (ii) any document required to be delivered thereunder or relating thereto.
A “Fundamental Change” shall be deemed to have occurred at the time after the Notes are originally issued when any of the following occurs:
(1) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Company, its Subsidiaries or the employee benefit plans of the Company, its Subsidiaries or one or more Permitted Holders, has become, and has filed a Schedule TO or any schedule, form or other report under the Exchange Act disclosing that such “person” or “group” has become, the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Company’s Common Equity representing more than 50.0% of the voting power of the Company’s Common Equity; provided that no “person” or “group” shall be deemed to be the beneficial owner of any securities tendered pursuant to a tender or exchange offer made by or on behalf of such “person” or “group” until such tendered securities are accepted for purchase or exchange under such offer;
(2) consummation of (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) pursuant to which the Common Stock would be converted into, or exchanged for, or represent solely the right to receive, shares, stock, other securities, other property or assets (including cash or any combination thereof), (B) any share exchange, consolidation, merger, amalgamation or similar event involving the Company pursuant to which the Common Stock will be converted into, or exchanged for, or represent solely the right to receive, shares, stock, other securities, other property or assets (including cash or any combination thereof), or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one or more of the Company’s wholly owned Subsidiaries (without consideration of any director’s qualifying shares) (any such share exchange, consolidation, merger, amalgamation or similar event, transaction or series of transactions being referred to in this clause (2) as an “Event”); provided, however, that any such Event described in clause (A) or (B) above where the Persons that “beneficially owned,” directly or indirectly, the Company’s Common Equity immediately prior to such Event “beneficially own”, directly or indirectly, more than 50.0% of the total voting power of all outstanding classes of the Company’s Common Equity of the continuing or surviving Person or transferee or the parent thereof immediately after such Event and such holders’ proportional voting power immediately after such transaction vis-à-vis each other with respect to the securities such holders receive in such transaction will be in substantially the same proportions as their respective voting power vis-à-vis each other immediately prior to such transaction will not constitute a “Fundamental Change”;
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(3) the holders of the Common Stock approve any plan or proposal for the Company’s liquidation or dissolution; or
(4) the Common Stock ceases to be listed or admitted for trading on The New York Stock Exchange, NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select Market or the Nasdaq Global Market (or any successor to the foregoing) (each such exchange or market, a “Permitted Exchange”), unless the Common Stock (or such other Common Equity) have been accepted for listing or admitted for trading on another Permitted Exchange;
provided, however, that a transaction or event described in clause (1) or (2) above will not constitute a Fundamental Change if at least ninety percent (90%) of the consideration received or to be received by the holders of Common Stock (excluding cash payments for fractional shares or pursuant to dissenters’ rights), in connection with such transaction or event, consists of shares of common stock or other corporate Common Equity interests listed (or depositary receipts representing shares of common stock or other corporate Common Equity interests, which depositary receipts are listed) on any Permitted Exchange (or any of their respective successors), or that will be so listed when issued or exchanged in connection with such transaction or event, and such transaction or event constitutes a Common Stock Change Event whose Reference Property consists of such consideration.
If any transaction in which the Common Stock is replaced by the Common Equity of another entity occurs, following completion of any related Make-Whole Fundamental Change Period and any related Fundamental Change Purchase Date (or, in the case of a transaction that would have been a Make-Whole Fundamental Change but for the proviso immediately following numbered clause (4) to this definition, following the effective date of such transaction), references to the Company in this definition of “Fundamental Change” will apply to such other entity instead.
For the purposes of this definition, (x) any transaction or event described in both clause (1) and in clause (2) above (without regard to the proviso in clause (2)) will be deemed to occur solely pursuant to clause (2) above (subject to such proviso); and (y) whether a Person is a “beneficial owner,” whether shares are “beneficially owned,” and percentage beneficial ownership, will be determined in accordance with Rule 13d-3 under the Exchange Act.
“Fundamental Change Company Notice” has the meaning specified in Section 10.1(b) hereof.
“Fundamental Change Expiration Time” has the meaning specified in Section 10.1(d) hereof.
“Fundamental Change Purchase Date” has the meaning specified in Section 10.1(a) hereof.
“Fundamental Change Purchase Notice” has the meaning specified in Section 10.1(d) hereof.
“Fundamental Change Purchase Price” has the meaning specified in Section 10.1(a) hereof.
“GAAP” means generally accepted accounting principles as in effect as the standard financial accounting guidelines in the United States from time to time (consistently applied and on
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a basis consistent with the accounting policies, practices, procedures, valuation methods and principles used in preparing the Company’s financial statements), and any successor thereto; provided that, if a transition in such generally accepted accounting principles would substantively change the calculation of any financial covenant as set forth in this Agreement, then the parties to this Agreement shall mutually agree to amendments to this Agreement in order to cause the calculation of such financial covenant as determined after giving effect to such transition in generally accepted accounting principles to be substantially the same as the calculation of such financial covenant as determined under generally accepted accounting principles in effect as the standard financial accounting guidelines in the United States as of the Effective Date (it being understood and agreed that until such amendment is effective, such financial covenant shall continue to be determined under generally accepted accounting principles in effect as the standard financial accounting guidelines in the United States as of the Effective Date).
“Gastric Balloon” means a gastric balloon for weight loss owned or controlled by the Company, Allurion Opco, or any of their respective Subsidiaries and any derivatives, modifications and improvements thereto.
“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certification, accreditation, registration, clearance, exemption, filing or notice that is issued or granted by or from (or pursuant to any act of) any Governmental Entity, including any application or submission related to any of the foregoing.
“Governmental Entity” means the government of the United States, any other nation or any political subdivision thereof, whether state, local or otherwise, and any agency, authority (including supranational authority), commission, instrumentality, regulatory body, court, central bank or other Person exercising executive, legislative, judicial, Taxing, regulatory or administrative powers or functions of or pertaining to government, including each Patent Office, the FDA and any other government authority in any jurisdiction.
“Governmental Licenses” means all authorizations issuing from a Governmental Entity, including the FDA, based upon or as a result of applications to and requests for approval from a Governmental Entity for the right to manufacture, import, store, market, promote, advertise, offer for sale, sell, use and/or otherwise distribute a Product, which are owned by or licensed to the Company or any Subsidiary, acquired by the Company or any Subsidiary via assignment, purchase or otherwise or that the Company or any Subsidiary is authorized or granted rights under or to.
“Grace Period” has the meaning specified in Section 14.4(n) hereof.
“Guarantors” means (i) Allurion Opco, (ii) each Subsidiary (other than an Excluded Subsidiary) that owns more than a de minimis portion of the Collateral (including, for the avoidance of doubt, assets that would constitute “Collateral” if such Subsidiary and all other Subsidiaries were party to the Security Agreement) as of the Closing Date, including any Subsidiary that holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities, owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten
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(10) employees and (iii) any other Subsidiary of the Company that becomes a party to the Guaranty pursuant to Section 7.4.
“Guaranty” means that certain Guaranty, dated as of the Closing Date, executed in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, by the Company and the Guarantors, substantially in the form attached as Exhibit D hereto, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Hedging Agreements” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Immaterial Subsidiary” means, as of any date of determination, any Foreign Subsidiary of a Company Party (i) the unconsolidated assets of which does not exceed two and a half percent (2.5%) of the consolidated assets of the Company and its consolidated Subsidiaries as set forth in the financial statements most recently delivered pursuant to Section 5.10, and (ii) the unconsolidated revenues of which does not exceed two and a half percent (2.5%) of the consolidated revenues of the Company and its consolidated Subsidiaries as set forth in the financial statements most recently delivered pursuant to Section 5.10; provided that no Subsidiary of the Company Parties shall qualify as an Immaterial Subsidiary if (x) the assets or revenue of such Subsidiary taken together with the assets or revenue of all then existing Immaterial Subsidiaries exceeds seven and a half percent (7.5%) of the consolidated assets or revenue, as applicable, of the Company and its consolidated Subsidiaries or (y) such Subsidiary holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities, owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten (10) employees.
“Indebtedness” of any Person means (a) any obligation of such Person for borrowed money, (b) any obligation of such Person evidenced by a bond, debenture, note or other similar instrument, (c) any obligation of such Person to pay the deferred purchase price of property or services (except (i) trade accounts payable that arise in the ordinary course of business, (ii) payroll liabilities and deferred compensation, and (iii) any purchase price adjustment, royalty, earnout, milestone payments, contingent payment or deferred payment of a similar nature incurred in connection with any license, lease, contract research and clinic trial arrangements or acquisition),
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(d) any obligation of such Person as lessee under a capital lease (under GAAP as in effect on the date hereof), (e) any obligation of such Person to purchase securities or other property that arises out of or in connection with the sale of the same or substantially similar securities or property, (f) any non-contingent obligation of such Person to reimburse any other Person in respect of amounts paid under a letter of credit or other guaranty issued by such other Person, (g) any Indebtedness of others secured by a Lien on any asset of such Person, and (h) any Indebtedness of others guaranteed by such Person.
“Indemnified Party” has the meaning specified in Section 14.9(c) hereof.
“Indemnifying Party” has the meaning specified in Section 14.9(c) hereof.
“INHAM Exemption” has the meaning specified in Section 6.6(e) hereof.
“Intellectual Property” means all intellectual property, including but not limited to all proprietary information, trade secrets, Know-How, utility models; confidential information; inventions (whether patentable or unpatentable and whether or not reduced to practice or claimed in a pending patent application) and improvements thereto, Patents, registered or unregistered Trademarks, trade names and service marks (including all goodwill associated therewith), registered and unregistered Copyrights and all applications thereof.
“Intercompany Subordination Agreement” means a subordination agreement to be executed and delivered by the Company Parties and their applicable Subsidiaries, pursuant to which all obligations in respect of any Indebtedness owing to any such Person by the Company or any of its Subsidiaries shall be subordinated to the prior payment in full in cash of all Obligations, such agreement to be substantially in the form attached hereto as Exhibit E.
“Intercreditor Agreement” means the Equal Priority Intercreditor Agreement, dated as of the Closing Date, among the Collateral Agent, the Principal Purchaser and the RIFA Agent, and acknowledged and agreed to by the Company and the Guarantors.
“Interest Payment Date” means, with respect to the payment of interest on the Notes, each March 31, June 30, September 30, and December 31 of each year, beginning on June 30, 2024.
“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended.
“Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Company Party or any of its Subsidiaries.
“IP” has the meaning specified in Section 5.16 hereof.
“IP Rights” means, collectively, all Confidential Information, all Copyrights, all Copyright Licenses, all Domain Names, all Governmental Licenses, all applications and requests for Governmental Licenses, all Other Intellectual Property, all Other IP Agreements, all Patents, all Patent Licenses, all Patent Rights (including, for the avoidance of doubt, the Product Patent Rights), all Proprietary Databases, all Proprietary Software, all Trademarks, all Trademark
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Licenses, all Trade Secrets, all Websites, all Website Agreements and all Regulatory Approvals, in each case, which are owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, the Company, including (but not limited to) the items listed on Schedule 4.10(a) to the Original RIFA.
“Judgment” means any judgment, order, consent order, writ, injunction, citation, attachment, stipulation, award or decree of any nature.
“Key Countries” means Australia, Brazil, Canada, Chile, France, India, Italy, the People’s Republic of China, Saudi Arabia, Spain, United Arab Emirates, the United Kingdom, and the United States.
“Know-How” means all non-public information, results and data of any type whatsoever, in any tangible or intangible form (and whether or not patentable), including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, skill, experience, data and results (including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical study data and results), analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data.
“Knowledge of the Company” or “Knowledge” means the actual knowledge of the individuals listed on Schedule III hereto (or any successor to any such officer holding the same or substantially similar officer position at such time), after reasonable inquiry.
“Last Reported Sale Price” of the Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid and last ask prices per share or, if more than one in either case, the average of the average last bid and the average last ask prices per share) on that Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. The Last Reported Sale Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant Trading Day, the “Last Reported Sale Price” will be the last quoted bid price per share for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” will be the average of the mid-point of the last bid and last ask prices per share for the Common Stock on the relevant Trading Day from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose. Any such determination will be conclusive absent manifest error.
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Entity charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Entity, in each case, having the force of law.
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“License Agreement” means (i) each agreement identified on Schedule 6.8 to the RIFA as of the Effective Date (as defined in the RIFA) and (ii) any partnership agreement, license agreement or similar agreement entered into by the Company or any of its Subsidiaries, pursuant to which the Company or any of its Subsidiaries has granted a license or sublicense to any Third Party to develop, have developed, make, have made, seek Regulatory Approvals for, distribute, use, have used, import, sell, offer to sell, have sold or otherwise Commercialize any Product, which have been added to Schedule 6.8 to the RIFA in accordance with the terms thereof.
“Licensed Product Patent Rights” means all Product Patent Rights licensed or sublicensed to the Company or any of its Subsidiaries.
“Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property or other priority or preferential arrangement of any kind or nature whatsoever, in each case to secure payment of a debt or performance of an obligation, including any conditional sale or any sale with recourse.
“Maintenance Failure” has the meaning specified in Section 14.2 hereof.
“Make-Whole Fundamental Change” means (a) any event that is a Fundamental Change (subject to any exceptions or exclusions to the definition other than the exclusion in the proviso to clause (2) of the definition of “Fundamental Change”), or (b) the sending of a Redemption Notice pursuant to Section 10.5(e). For the avoidance of doubt, the sending of a Redemption Notice in respect of a redemption pursuant to Section 10.5(b)(ii) shall not constitute a Make-Whole Fundamental Change.
“Make-Whole Fundamental Change Effective Date” means (a) with respect to a Make-Whole Fundamental Change pursuant to clause (a) thereof, the date on which such Make-Whole Fundamental Change occurs or becomes effective and (b) with respect to a Make-Whole Fundamental Change pursuant to clause (b) thereof, the Redemption Notice Date.
“Make-Whole Fundamental Change Period” has the following meaning:
(a) in the case of a Make-Whole Fundamental Change pursuant to clause (a) of the definition thereof, the period from, and including, the Make-Whole Fundamental Change Effective Date up to, and including, the Close of Business on the Business Day immediately prior to the related Fundamental Change Purchase Date or, if such Make-Whole Fundamental Change is not also a Fundamental Change, the 35th Business Day immediately following the Make-Whole Fundamental Change Effective Date; and
(b) in the case of a Make-Whole Fundamental Change pursuant to clause (b) of the definition thereof, the period from, and including, the Redemption Notice Date (as specified pursuant to Section 10.5(e)) for the related Redemption to, and including, the Business Day immediately before the related Redemption Date;
provided, however, that if the Conversion Date for the conversion of a Note that has been called for Redemption occurs during the Make-Whole Fundamental Change Period for both a Make-Whole Fundamental Change occurring pursuant to clause (a) of the definition of
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“Make-Whole Fundamental Change” and a Make-Whole Fundamental Change resulting from such Redemption pursuant to clause (b) of such definition in respect of a redemption pursuant to Section 10.5(b)(i), then, notwithstanding anything to the contrary in Section 4.6, solely for purposes of such conversion, (x) such Conversion Date will be deemed to occur solely during the Make-Whole Fundamental Change Period for the Make-Whole Fundamental Change with the earlier Make-Whole Fundamental Change Effective Date; and (y) the Make-Whole Fundamental Change with the later Make-Whole Fundamental Change Effective Date will be deemed not to have occurred.
“Margin Stock” means “margin stock” within the meaning of Regulations U and X of the Federal Reserve Board as now and from time to time hereafter in effect.
“Market Disruption Event” means, if the Common Stock is listed for trading on the New York Stock Exchange or listed on another U.S. national or regional securities exchange, the occurrence or existence during the one half-hour period ending on the scheduled close of trading on any Scheduled Trading Day of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options, contracts or futures contracts relating to the Common Stock.
“Marketing Authorization” means, with respect to a Product, the Regulatory Approval required by Applicable Law to commercially distribute such Product in a country or region, including, to the extent required by Applicable Law for the commercial distribution of such Product, all pricing approvals and government reimbursement approvals.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the business, assets, properties, liabilities or financial condition of the Company and its Subsidiaries taken as a whole, (b) a material impairment of the rights and/or remedies of the Collateral Agent, the Principal Purchaser and/or the Purchasers under any Note Document to which it is a party or a material impairment in the perfection or priority of the Collateral Agent’s security interests in the Collateral, (c) an impairment of the ability of the Company Parties (taken as a whole) to perform their respective obligations under the Note Documents that could reasonably be expected to have a material adverse effect on the business, assets, properties, liabilities or financial condition of the Company and its Subsidiaries taken as a whole, or (d) a material adverse effect upon the legality, validity, binding effect or enforceability against any Company Party of any Note Document to which it is a party; provided that none of the following would constitute a “Material Adverse Effect”, except to the extent such changes have had a disproportionate effect on the Company or the Business relative to other participants in the medical device industry: (i) changes in laws or regulations or in the interpretations or methods of enforcement thereof; (ii) general economic changes in the medical device industry; or (iii) any Force Majeure Event.
“Material Contract” means (a) each Contract creating or evidencing any Material Indebtedness, (b) the Transaction Documents (as defined in the RIFA), (c) any Contract providing for the inbound or outbound license of material Intellectual Property, and (d) any other Contract to which the Company or any of its Subsidiaries is a party or a beneficiary from time to time, or to which any assets or properties of the Company or any of its Subsidiaries are bound (i) the absence or termination of which would reasonably be expected to have a Material Adverse Effect or (ii) without duplication, during any period of twelve (12) consecutive months, is reasonably expected
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to, directly or indirectly, (x) result in payments or receipts (including royalty, licensing or similar payments) made to the Company or any of its Subsidiaries in an aggregate amount in excess of $3,000,000, or (y) require payments or expenditures (including royalty, licensing or similar payments) to be made by the Company or any of its Subsidiaries in an aggregate amount in excess of $3,000,000, in each case, as amended, supplemented or otherwise modified from time to time.
“Material Indebtedness” means (i) Indebtedness pursuant to the RIFA and (ii) any other Indebtedness of the Company or any of its Subsidiaries, the outstanding principal amount of which, individually or in the aggregate, exceeds $5,000,000 (or the equivalent amount in other currencies).
“Maturity Date” has the meaning specified in Section 3.1 hereof.
“Maximum Rate” has the meaning specified in Section 13.12 hereof.
“Medicaid” means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth on Section 1396, et seq. of Title 42 of the United States Code.
“Medicare” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States Code.
“Multiemployer Plan” means any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“NAIC Annual Statement” has the meaning specified in Section 6.6(a) hereof.
“Next Equity Financing Price” means the lowest price at which the Company issues Additional Shares in connection with an equity financing for capital raising purposes after the date hereof and ending on the date on which the Company has raised aggregate gross offering proceeds of at least $15,000,000 (not including the surrender of indebtedness as part of the offering proceeds) from the sale of Additional Shares, subject to adjustment for any issuance or deemed issuance of Additional Shares in accordance with Section 4.12. In the event of an issuance or deemed issuance of Additional Shares without consideration, then the Company shall be deemed to have received an aggregate of one-tenth of a cent ($.001) of consideration for all such shares issued or deemed to be issued. For purposes of determining the Next Equity Financing Price, the consideration received by the Company for the issuance or deemed issuance of any Additional Shares shall be computed as follows:
(a) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest;
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(ii) insofar as it consists of assets other than cash (including the surrender of, or relief from, indebtedness), be computed at the fair market value thereof (or the principal amount or, if applicable, the accreted amount of any such indebtedness) at the time of such issue, as determined in good faith by the Board of Directors of the Company; and
(iii) in the event Additional Shares are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Company.
(b) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares deemed to have been issued relating to Options and Convertible Securities, shall be determined by dividing:
(i) The total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number, including pursuant to any “make-whole” adjustment or otherwise) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities;
provided, however, that if the conversion, exchange or exercise price of any Options or Convertible Securities at the time of issuance thereof is greater than the price at which Additional Shares are deemed issued (e.g., the issuance of a warrant issued at a premium in connection with a concurrent offering of Common Stock), then the exercise price and additional shares issuable under such derivative security shall be disregarded.
“Note Documents” means this Agreement, including the schedules and exhibits hereto, any Notes, the Collateral Documents, the Guaranty, the Intercreditor Agreement, the Perfection Certificate, the Intercompany Subordination Agreement, any other guaranty, security agreement, subordination agreement, intercreditor agreement or other present or future document, instrument, agreement or certificate identified as a “Note Document” or otherwise expressly required to be delivered pursuant to a Note Document or other amendment, waiver or modification of the foregoing, delivered to the Collateral Agent, the Principal Purchaser or any Purchaser by or on behalf of (and at the direction or request of) any Company Party in connection with this Agreement (including, without limitation, in connection with Section 7.4) or any of the other Note Documents, in each case, as amended or otherwise modified from time to time.
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“Note Purchase Amount” has the meaning specified in the Recitals.
“Notes” has the meaning specified in the Recitals.
“Notice of Default” has the meaning specified in Section 8.1(d) hereof.
“NYSE” has the meaning specified in Section 5.9 hereof.
“Obligations” means all amounts, obligations, liabilities, covenants and duties of every type and description owing by any Company Party to any Purchaser, the Principal Purchaser, the Collateral Agent and/or any indemnitee hereunder, arising out of, under, or in connection with, any Note Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money, including, without duplication, (a) the Notes, (b) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding, and (c) all other fees, expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to any Company Party under any Note Document.
“Offer Expiration Date” has the meaning specified in Section 4.4(e) hereof.
“Open of Business” means 9:00 a.m., New York City time.
“Option” means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
“Original RIFA” has the meaning specified in the Recitals.
“Original RIFA Investors” has the meaning specified in the Recitals.
“Other Intellectual Property” means all worldwide intellectual property rights, industrial property rights, proprietary rights and common-law rights, whether registered or unregistered, which are not otherwise included in Confidential Information, Copyrights, Copyright Licenses, Domain Names, Governmental Licenses, Other IP Agreements, Patents, Patent Licenses, Trademarks, Trademark Licenses, Proprietary Databases, Proprietary Software, Websites, Website Agreements and Trade Secrets, including, without limitation, all rights to and under all new and useful algorithms, concepts, data (including all clinical data relating to a Product), databases, designs, discoveries, inventions, know-how, methods, processes, protocols, chemistries, compositions, formulas, show-how, software (other than commercially available, off-the-shelf software that is not assignable in connection with a Change of Control), specifications for the Products, techniques, technology, trade dress and all improvements thereof and thereto, in each of the foregoing cases, which is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
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“Other IP Agreements” means any agreement, whether written or oral, providing for the grant of any right under any Confidential Information, Governmental License, application or request for a Governmental License, Proprietary Database, Proprietary Software, Trade Secret and/or any other IP Right, to the extent that the grant of any such right is not otherwise the subject of a Copyright License, Trademark License, Patent License or Website Agreement.
“Outstanding” means, with respect to the Notes any Notes executed and delivered by the Company except (a) Notes replaced pursuant to Section 13.14 hereof, on and after the time such Note is replaced (unless the Company receives proof satisfactory to them that such Note is held by a bona fide purchaser), (b) Notes converted pursuant to Section 4 hereof, on and after their Conversion Date, (c) Notes redeemed pursuant to Section 10.5, on and after the applicable Redemption Date, (d) any and all Notes, as of the Maturity Date, if the Company has deposited with the Purchasers thereof money sufficient to pay all of the Notes of such Purchaser then payable, and (e) any and all Notes owned by the Company or any other obligor upon the Notes, or for purposes of votes or consents, any Affiliate of the Company or of such other obligor.
“Owned Product Patent Rights” means Product Patent Rights which are owned by the Company or its Subsidiaries.
“Patent License” means any agreement, whether written or oral, providing for the grant of any right to use any Patent.
“Patent Office” means the applicable patent office, including the United States Patent and Trademark Office and any comparable foreign patent office, for any Patents.
“Patent Rights” means, collectively, with respect to a Person, all Patents issued or assigned to, and all Patent applications and registrations made by, such Person (whether established or registered or recorded in the United States or any other country or any political subdivision thereof), together with any and all (a) rights and privileges arising under applicable Law with respect to such Person’s use of any Patents, (b) inventions and improvements described and claimed therein, (c) reissues, divisionals, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (d) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (e) rights corresponding thereto throughout the world and (f) rights to sue for past, present or future infringements thereof, in each such case, related to the Products and which are owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, the Company or any Subsidiary, including without limitation those Patent Rights identified in Schedule 4.10(a) of the Original RIFA.
“Patents” means all letters patent and patent applications, industrial designs and design patent rights protected, created or arising under the Laws of the United States or in any other jurisdiction or under any international convention (and all letters patent that issue therefrom or from an application claiming priority therefrom) and all patent term extensions, supplementary protection certificates, reissues, reexaminations, extensions, substitutes, renewals, divisionals and continuations (including continuations-in-part and continuing prosecution applications) thereof, and including provisional applications and statutory invention registrations, for the full term
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thereof, together with the right to claim the priority thereto and the right to sue for past infringement of any of the foregoing.
“Pension Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is maintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to minimum funding standards under Section 412 of the Internal Revenue Code.
“Permits” means licenses, Governmental Licenses, certificates, accreditations, Regulatory Approvals, other authorizations, registrations, permits, consents, clearances and approvals required in connection with the conduct of the Business of the Company or any of its Subsidiaries or to comply with any Applicable Laws, and those issued by state governments for the conduct of the Business of the Company or any of its Subsidiaries.
“Perfection Certificate” means the Perfection Certificate, dated as of the Closing Date, executed by the Company Parties in favor of the Collateral Agent, the Principal Purchaser and the Purchasers and substantially in the form set forth of Exhibit F.
“Permitted Debt” means any of the following Indebtedness of the Company and its Subsidiaries (which, for purposes of determining whether such Indebtedness exceeds any maximum amount provided in the applicable clause below, shall be calculated on a consolidated basis with respect to the Company and its Subsidiaries):
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“Permitted Holder” means RTW Investments, LP, together with its Affiliates, any Person (including any investment fund or vehicle) managed by it or its Affiliates and any other “person” or “group” subject to aggregation of the Company’s Capital Stock with the aforementioned person under Section 13(d) of the Exchange Act.
“Permitted Licensee” means a Third Party counterparty to a license entered into in the ordinary course of the Company’s Business in the development, manufacture, or commercialization of any Product.
“Permitted Liens” means:
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“Permitted Refinancing” means, with respect to any Indebtedness not prohibited from being refinanced, extended, renewed or replaced hereunder, any refinancings, extensions, renewals and replacements of such Indebtedness; provided that such refinancing, extension, renewal or replacement (a) shall be incurred by the same obligor as the Indebtedness being so refinanced and (b) shall not (i) increase the outstanding principal amount of the Indebtedness being refinanced, extended, renewed or replaced, (ii) contain terms relating to outstanding principal amount, amortization, maturity, collateral security (if any) or subordination (if any), or other material terms that are less favorable in any material respect to the Company and its Subsidiaries or the Purchasers than the terms of any agreement or instrument governing the Indebtedness being refinanced, extended, renewed or replaced, (iii) have an applicable interest rate or equivalent yield that exceeds the interest rate or equivalent yield of the Indebtedness being refinanced, extended, renewed or replaced, (iv) require or result in any Lien that is not a Permitted Lien, or (v) contain any new requirement to give guaranties that was not an existing requirement of the Indebtedness being refinanced, extended, renewed or replaced; provided further that after giving effect to such refinancing, extension, renewal or replacement, no Default or Event of Default shall have occurred and be continuing (or could reasonably be expected to immediately occur) as a result thereof.
“Permitted Transfer” has the meaning specified in the definition of “Disposition”.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.
“Personal Information” has the meaning specified in Section 7.20 hereof.
“PIK Interest” has the meaning specified in Section 3.2 hereof.
“PIK Termination Date” has the meaning specified in Section 3.2 hereof.
“Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (including a Pension Plan) that is maintained for employees of the Company or, in the case of any Pension Plan, any ERISA Affiliate or to which the Company or, in the case of any Pension Plan, any ERISA Affiliate is required to contribute on behalf of any of its employees.
“Preferred Shares” has the meaning specified in Section 5.5 hereof.
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“Prefunded Warrant” means a warrant to purchase shares of Common Stock for $0.001 in form and substance mutually agreeable to the Company and the Principal Purchaser.
“Principal Purchaser” has the meaning specified in the introductory paragraph; provided, however, in the event that RTW and its Affiliates no longer hold more than 20.0% of the principal amount of Notes Outstanding or if a Purchaser (together with its Affiliates) other than RTW and its Affiliates holds more of the Notes Outstanding than RTW and its Affiliates, the Requisite Purchasers shall appoint a successor to the Principal Purchaser reasonably acceptable to the Company within thirty (30) days following the date of the relevant transfer or assignment and, subject to Section 7.8(d), such successor shall assume the rights and obligations of the Principal Purchaser under and in connection with the Note Documents; provided, further, that if a successor Principal Purchaser has not been appointed within such thirty (30) day period, the Requisite Purchasers shall assume the role of Principal Purchaser hereunder.
“Product Commercialization and Development Activities” means, with respect to any Product, any combination of (i) research, development, manufacturing, quality compliance, use, sale, licensing, importation, exportation, shipping, storage, handling, designing, labeling, marketing, promotion, supply, dispensing, distribution, testing, packaging, purchasing or other commercialization activity, (ii) receipt of payment or other remuneration in respect of any of the foregoing (including, without limitation, in respect of licensing, royalty or similar payments) or (iii) any similar or other activities the purpose of which is to commercially exploit such Product.
“Product Material Contract” means any Material Contract relating to the Products.
“Product Patent Rights” means any Patent Rights relating to the Products, including the Owned Product Patent Rights and the Licensed Product Patent Rights.
“Product Plan” means the Commercialization (as defined in the Original RIFA) plan with respect to the Products presented to Investor (as defined in the Original RIFA) during diligence in connection with the Original RIFA, as set forth on Schedule 1.3 to the Original RIFA.
“Products” means (a) the Gastric Balloon and a suite of related and complementary digital products, and (b) any and all current and future products, digital solutions, and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by the Company or any of its Subsidiaries.
“Proprietary Databases” means any material non-public proprietary database or information repository that is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Proprietary Software” means any proprietary software (other than any software that is generally commercially available, off-the-shelf and/or open source) including, without limitation, the object code and source code forms of such software and all associated documentation, which is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“PTE” has the meaning specified in Section 6.6(a) hereof.
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“Purchase Price” has the meaning specified in Section 2.2 hereof.
“Purchaser Indemnified Party” has the meaning specified in Section 14.9(a) hereof.
“Purchasers” has the meaning specified in the introductory paragraph.
“QPAM Exemption” has the meaning specified in Section 6.6(d) hereof.
“Qualified Successor Entity” means, with respect to a Business Combination Event, a corporation; provided, however, that a limited liability company, limited partnership or other similar entity shall also constitute a Qualified Successor Entity with respect to such Business Combination Event if either (a) such Business Combination Event constitutes a Common Stock Change Event whose Reference Property consists solely of cash in U.S. dollars or (b) both of the following conditions are satisfied: (i) either (x) such limited liability company, limited partnership or other similar entity, as applicable, is treated as a corporation or is a direct or indirect, wholly owned subsidiary of, and disregarded as an entity separate from, a corporation, in each case for U.S. federal income tax purposes; or (y) the Company has received an opinion of a nationally recognized tax counsel to the effect that such Business Combination Event will not be treated as an exchange under Section 1001 of the U.S. Internal Revenue Code of 1986, as amended, for holders or beneficial owners of the Notes; and (ii) such Business Combination Event constitutes a Common Stock Change Event whose Reference Property consists solely of any combination of cash in U.S. dollars and shares of common stock or other corporate Common Equity of an entity that is (x) treated as a corporation for U.S. federal income tax purposes; (y) duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; and (z) the direct or indirect parent of the limited liability company, limited partnership or similar entity.
“Quarterly Payment Date” means each March 31, May 15, August 15 and November 15 (provided if any such date is not a Business Day, the Quarterly Payment Date shall be the next succeeding Business Day).
“Real Property Security Documents” means any landlord consents, bailee letters, any mortgage or deed of trust or any other real property security document executed or required hereunder to be executed by any Company Party and granting a security interest in real property owned or leased (as tenant) by any Company Party in favor of Collateral Agent for the benefit of the Collateral Agent, the Principal Purchaser and the Purchasers for purposes of securing the Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time.
“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or a duly authorized committee thereof, statute, contract or otherwise).
“Redemption” means the repurchase of any Note by the Company pursuant to Section 10.5.
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“Redemption Date” means the date fixed for the repurchase of any Notes by the Company pursuant to a Redemption in accordance with Section 10.5(c).
“Redemption Notice” has the meaning specified in Section 10.5(e) hereof.
“Redemption Notice Date” means, with respect to a Redemption, the date on which the Company sends the Redemption Notice for such Redemption pursuant to Section 10.5(e).
“Redemption Price” means the cash price payable by the Company to redeem any Note upon its Redemption, calculated pursuant to Section 10.5(d).
“Reference Property” has the meaning specified in Section 4.7(a) hereof.
“Reference Property Unit” has the meaning specified in Section 4.7(a) hereof.
“Register” has the meaning specified in Section 13.3(b) hereof.
“Registrable Securities” has the meaning specified in Section 14.1 hereof.
“Registration Statement” has the meaning specified in Section 14.1 hereof.
“Regulatory Agency” means a Governmental Entity with responsibility for the approval of the marketing and sale of medical devices or other regulation of medical devices in any jurisdiction.
“Regulatory Approvals” means, collectively, all regulatory approvals, registrations, certificates, clearances, authorizations, permits and supplements thereto, as well as associated materials (including the product dossier) pursuant to which any Product may be researched, tested, developed, manufactured, marketed, sold and distributed in a jurisdiction, issued by the appropriate Regulatory Agency.
“Relevant Laws” has the meaning specified in Section 5.15(a) hereof.
“Relevant Taxing Jurisdiction” has the meaning specified in Section 13.13(a) hereof.
“Report” has the meaning specified in Section 7.9(a) hereof.
“Reporting Period” means the period commencing on the Closing Date and ending on the earliest of: (a) the date as of which the Purchasers may sell all of the Conversion Shares under Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirements under Rule 144(c)(1) (or any successor thereto) promulgated under the Securities Act; (b) the first anniversary of the conversion of all of the Notes, and (c) the date on which such Purchaser shall have sold all of the Conversion Shares.
“Requisite Purchasers” means Purchasers holding a majority of the aggregate principal amount of the Notes then Outstanding.
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“Responsible Officer” of any Person means each of the president, chief executive officer, chief financial officer and similar officer of such Person. Any document delivered hereunder that is signed by a Responsible Officer of a Company Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Company Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Company Party.
“Restriction Termination Date” has the meaning specified in Section 14.3 hereof.
“Revenue” means, for any applicable fiscal period, consolidated total gross revenues of the Company and its Subsidiaries for such fiscal period resulting from the sale of Products in connection with Product Commercialization and Development Activities in the ordinary course of business, as recognized on the income statement of the Company and its Subsidiaries for such fiscal period, determined on a consolidated basis in accordance with GAAP, less the sum of (a) all discounts and allowances (including chargebacks, shelf stock adjustments and allowances), (b) amounts repaid or credited by reason of rejection, returns or recalls, rebates or bona fide price reductions, (c) rebates and similar payments actually made with respect to sales paid for by Federal or state Medicaid, Medicare or similar U.S. or non-US governmental programs, (d) excise Taxes, customs duties, customs levies and import fees imposed on the sale, importation, use or distribution of any Products, (e) all one-time, extraordinary or non-recurring payments of any type or nature, in each case to the extent included in the computation of consolidated total gross revenues of the Company and its Subsidiaries for such fiscal period and (f) any accounts receivable (or equivalent) that (x) in the case of any such account receivable issued to or payable by a Person located or resident in the U.S., have been outstanding in excess of sixty (60) days from the earlier of (A) the date of invoice for such account receivable and (B) the date of shipment of any Products covered by such account receivable, (y) in the case of any such account receivable issued to or payable by a Person located or resident outside the U.S., have been outstanding in excess of one hundred twenty (120) days from the earlier of (A) the date of invoice for such account receivable and (B) the date of shipment of any Products covered by such account receivable, or (z) have been written off as uncollectible (or equivalent) or, pursuant to applicable policies or practices of the Company or any of its Subsidiaries, as the case may be, should be written off as uncollectible (or equivalent).
“RIFA” means, collectively, (a) the Original RIFA (including as modified by the RIFA Amendment) and (b) to the extent that the Additional RIFA has been executed by the Additional RIFA Investors and Allurion Opco pursuant to the terms of the Side Letter, the Additional RIFA.
“RIFA Agent” has the meaning specified in the Recitals.
“RIFA Amendment” has the meaning specified in the Recitals.
“RIFA Closing Date” means the “Closing Date” as such term is defined in the Original RIFA.
“RIFA Investors” means, collectively, (i) the Original RIFA Investors and (ii) to the extent that the Additional RIFA has been executed by the Additional RIFA Investors and Allurion Opco pursuant to the terms of the Side Letter, the Additional RIFA Investors.
“RTW” means RTW Investments, LP., a Delaware limited partnership.
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“Rule 144” has the meaning specified in Section 14.7 hereof.
“Sanction” means any sanction administered or enforced by the United States government (including, without limitation, the Office of Foreign Assets Control of the United States Department of the Treasury), the United Nations Security Council, the European Union, His Majesty’s Treasury (“HMT”) or other relevant sanctions authority.
“Scheduled Trading Day” means for all purposes other than for purposes of determining amounts due upon conversion, a day that is scheduled to be a Trading Day on the principal U.S. national securities exchange or market on which the Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, then, for these purposes, “Scheduled Trading Day” means a Business Day.
“SEC Reports” has the meaning specified in Section 5.10(a) hereof.
“SEC Restrictions” has the meaning specified in Section 14.3 hereof.
“Securities Account” means any “securities account” (as such term is defined in Article 8 of the UCC) or other account to or for the credit or account of any Company Party to which a financial asset is or may be credited in accordance with an agreement under which the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Security Agreement” means that certain Security Agreement, dated as of the Closing Date, executed in favor of the Collateral Agent, for the benefit of the Purchasers and the Principal Purchaser, by each of the Company Parties, substantially in the form attached as Exhibit C hereto.
“Side Letter” means that certain letter agreement, dated as of May 2, 2023 (as modified by (a) that certain Assignment Agreement, dated as of July 28, 2023, (b) that certain Assignment Agreement, dated as of April 9, 2024, and (c) that certain First Amendment to Amended and Restated Letter Agreement, dated as of the Closing Date (the “Side Letter Amendment”), among, among others, the Company, Allurion Opco and the Additional RIFA Investors to reflect certain modifications agreed between the parties thereto in connection with the Purchasers’ purchase of the Notes), among the Additional RIFA Investors, the Company and Allurion Opco, pursuant to which, among other things, the Additional RIFA Investors may make a single election in certain circumstances to convert up to $7,500,000 of the purchase price that the Additional RIFA Investors paid for certain equity interests in the Company into an amount of financing provided by the Additional RIFA Investors to Allurion Opco pursuant to the Additional RIFA.
“Significant Subsidiary” means, with respect to any Person, a Subsidiary of such Person that would constitute a “significant subsidiary” as such term is defined in Article 1, Rule 1-02(w) of Regulation S-X, promulgated pursuant to the Securities Act, as in effect on the original date of issuance of the Notes.
“Similar Law” has the meaning specified in Section 6.6 hereof.
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“Source” has the meaning specified in Section 6.6 hereof.
“Spin-Off” has the meaning specified in Section 4.4(c) hereof.
“Spin-Off Valuation Period” has the meaning specified in Section 4.4(c) hereof.
“Staff” has the meaning specified in Section 14.1 hereof.
“Stock Price” has the meaning specified in Section 4.6(c) hereof.
“Stockholder Approval” has the meaning specified in Section 7.8(c) hereof
“Subsidiary” means with respect to any Person (a) any entity as to which such Person directly or indirectly owns outstanding voting securities with power to vote fifty percent (50%) or more of the outstanding Voting Stock of such entity or (b) any entity as to which fifty percent (50%) or more of its outstanding Voting Stock are directly or indirectly owned, controlled or held by such Person with power to vote such securities. Unless stated otherwise, “Subsidiary” shall be understood to refer to a Subsidiary of the Company.
“Successor Company” has the meaning specified in Section 11.1(a) hereof.
“Successor Parent Entity” has the meaning specified in Section 11 hereof.
“Tax” or “Taxes” means any U.S. federal, state or local or non-U.S. tax, levy, impost, duty, assessment or withholding or other similar fee, deduction or charge, including all excise, sales, use, value added, transfer, stamp, documentary, filing, recordation and other fees imposed by any taxing authority (and interest, fines, penalties and additions related thereto).
“Tender/Exchange Offer Valuation Period” has the meaning specified in Section 4.4(e) hereof.
“Territory” means worldwide, in each case, whether imposed directly or through withholding and whether or not disputed.
“Third Party” means any Person other than (a) the Company or its Subsidiaries, (b) the Purchasers and (c) an Affiliate of the Purchasers (as applicable).
“Trade Secrets” means any data or information that is not commonly known by or available to the public, and which (a) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other Persons who can obtain economic value from its disclosure or use, (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, and (c) which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Trademark License” means any agreement, written or oral, providing for the grant of any right to use any Trademark.
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“Trademarks” means all statutory and common-law trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications to register in connection therewith, protected, created or arising under the Laws of the United States, under the Laws of any other country or jurisdiction, under any international convention, under the Laws of any state thereof or any political subdivision thereof, or otherwise, for the full term and all renewals thereof, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Trading Day” means a Scheduled Trading Day on which (a) trading in the Common Stock generally occurs on the New York Stock Exchange or, if the Common Stock is not then listed on the New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded and (b) there is no Market Disruption Event. If the Common Stock is not so listed or traded, then, for these purposes, “Trading Day” means a Business Day.
“Transfer Taxes” has the meaning specified in Section 13.13(b) hereof.
“Treasury Management Arrangement” means any agreement or other arrangement governing the provision of treasury or cash management services, including deposit accounts (as defined in Article 9 of the UCC), investment accounts or other accounts in which funds are held or invested to or for the credit or account of the Company, netting services, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting, direct debit, cash concentration, trade finance services and other cash management services.
“UCC” means the Uniform Commercial Code as in effect from time to time in New York; provided that, if, with respect to any financing statement or by reason of any provisions of Applicable Law, the perfection or the effect of perfection or non-perfection of the security interests or any portion thereof granted pursuant to the Security Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“USPTO” has the meaning specified in Section 5.16 hereof.
“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
“Website Agreements” means all agreements between the Company and/or any Subsidiary and any other Person pursuant to which such Person provides any services relating to the hosting, design, operation, management or maintenance of any Website, including without limitation, all
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agreements with any Person providing website hosting, database management or maintenance or disaster recovery services to the Company and/or any Subsidiary and all agreements with any domain name registrar, as all such agreements may be amended, supplemented or otherwise modified from time to time.
“Websites” means all websites that the Company or any Subsidiary shall operate, manage or control through a Domain Name, whether on an exclusive basis or a nonexclusive basis, including, without limitation, all content, elements, data, information, materials, hypertext markup language (HTML), software and code, works of authorship, textual works, visual works, aural works, audiovisual works and functionality embodied in, published or available through each such website and all IP Rights in each of the foregoing.
“Work” means any work or subject matter that is subject to protection pursuant to Title 17 of the United States Code.
1.2 Rules of Interpretation. Unless the context otherwise requires, in this Agreement and the other Note Documents:
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1.3 Currency References. All amounts referred to in this Agreement and the other Note Documents are in United States Dollars unless otherwise noted.
2. NOTE PURCHASE.
2.1 Purchase and Sale. Upon the terms and subject to the conditions herein contained, the Company agrees to sell to each Purchaser, and each Purchaser agrees to purchase from the Company, Notes in consideration for the Purchase Price payable by each such Purchaser.
2.2 Purchase Price. At or prior to the Closing Date, each Purchaser will pay the purchase price set forth on such Purchaser’s signature pages attached hereto (the “Purchase Price”) by wire transfer of immediately available funds in accordance with wire instructions provided by the Company to the Purchasers at least two days prior to the Closing Date. On or before the Closing Date, the Company will issue and deliver the Notes, in each case against delivery of the Purchase Price.
2.3 Closing. Subject to the satisfaction of the closing conditions set forth in Section 9, the closing with respect to the transactions contemplated in Section 2 hereof with respect to the Note Purchase Amount (the “Closing”) shall take place remotely via the exchange of documents and signatures on the second Trading Day after the Execution Date (the “Closing Date”), or at such other time as the Company and Purchasers may agree.
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3. TERM; REPAYMENT; INTEREST.
3.1 Term. The then-outstanding principal of the Notes, all accrued and unpaid interest thereon and any and all other sums payable to the Purchasers hereunder shall be due and payable in full on the seventh anniversary of the Closing Date (the “Maturity Date”).
3.2 Interest. The Notes will bear cash interest at a rate of 6.0% per year until maturity (the “Cash Interest”) except as otherwise provided in Section 10.5(h). Interest on the Notes will accrue from, and including, the most recent date on which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from, and including, the Closing Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Interest will be paid quarterly in arrears on each Interest Payment Date. Notwithstanding the foregoing, for Interest Payment Dates on or prior to the third anniversary of the Closing Date (the “PIK Termination Date”), the Company may elect to defer payment of accrued but unpaid interest on the unpaid principal amount of the Notes and the amount of such deferred accrued but unpaid interest shall be added to the principal amount of the outstanding Notes (the “PIK Interest”). The Company shall be required to give written notice to the Principal Purchaser to elect no later than five (5) Business Days prior to each applicable Interest Payment Date whether it shall pay Cash Interest or PIK Interest. If the Company fails to give timely written notice to elect a form of interest payment for any Interest Payment Date on or prior to the PIK Termination Date, then the Company will be deemed to have elected PIK Interest for such Interest Payment Date. Any PIK Interest on the Notes will increase the principal amount of the Notes by an amount equal to the amount of PIK Interest for the applicable period (rounded up to the nearest whole dollar). Any references to the principal amount of any Note herein and in the other Note Documents shall be deemed to mean the then current principal amount as increased by any PIK Interest, and references to accrued but unpaid interest shall not include any interest provided for as PIK Interest. Following an increase in the principal amount of the outstanding Notes as a result of PIK Interest, the Notes will bear interest at a rate of 6.0% per year on such increased principal amount from and after the date of such increase. Notwithstanding anything to the contrary in this Note Purchase Agreement, the Notes or the other Note Documents, (i) the payment of accrued and unpaid interest in connection with any redemption of the Notes pursuant to Section 10.5 or on the Maturity Date shall be made solely in cash and (ii) the payment of accrued and unpaid interest in connection with any conversion of the Notes pursuant to Section 4.3 shall be made in the form of PIK Interest as described in Section 4.3(d).
4. CONVERSION
4.1 Right to Convert. Subject to and upon compliance with the provisions herein, each Purchaser shall have the right, at such Purchaser’s option, to convert all of its Notes or, on one or more occasions, any portion thereof having a principal amount equal to $1,000 or an integral multiple of $1.00 in excess thereof, in accordance with this Section 4, on any date and at any time (x) after the earliest of (i) the date on which Stockholder Approval is obtained, (ii) December 31, 2025, (iii) the date of a Fundamental Change Company Notice and (iv) the Make-Whole Fundamental Change Effective Date and (y) prior to the Close of Business on the second Scheduled Trading Day immediately preceding the Maturity Date. Subject to and upon compliance with the provisions herein, prior to the earliest date set forth in clause (x) of the preceding sentence, each Purchaser shall have the right, at such Purchaser’s option, to convert all
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of its Notes or, on one or more occasions, any portion thereof having a principal amount equal to $1,000 or an integral multiple of $1.00, in accordance with this Section 4, on any date and at any time prior to the Close of Business on the second Scheduled Trading Day immediately preceding the Maturity Date, provided that any such conversions of Notes may only be effected prior to the earliest date set forth in clause (x) of the preceding sentence to the extent that such conversions would not require payment of cash in lieu of delivering shares of Common Stock pursuant to Section 4.11.
4.2 Conversion Procedures.
(a) Generally. To exercise the conversion privilege with respect to any Note, the Purchaser of such Note shall:
(i) complete and manually or electronically sign a conversion notice in the form set forth in the Form of Notice of Conversion (the “Conversion Notice”);
(ii) deliver the Conversion Notice, which is irrevocable, and the Note to the Company;
(iii) if required, furnish appropriate endorsements and transfer documents; and
(iv) if required, pay all transfer or similar taxes as set forth in Section 4.2(d).
Notwithstanding anything herein or in the Notes to the contrary, (A) if the Company calls any Note for Redemption pursuant to Section 10.5, then (x) the Purchaser of such Note may not convert such Note after the Close of Business on the Business Day immediately before the applicable Redemption Date, except to the extent the Company fails to pay the Redemption Price for such Note in accordance with this Agreement, and (y) so long as such Purchaser satisfies all of the applicable requirements set forth above with respect to such Note (except any requirement to deliver to the Company the original of such converted Note) prior to the Close of Business on the Business Day immediately before the applicable Redemption Date, such Purchaser shall be deemed to have properly exercised such conversion right as of such date, provided that the Company shall not be obligated to actually issue shares of Common Stock until such Purchaser complies with the remainder of this Section 4.2; and (B) if a Note has been submitted for repurchase pursuant to a Fundamental Change Purchase Notice, such Note may not be converted except to the extent such Fundamental Change Purchase Notice is withdrawn in accordance with Section 10.1(g) hereof prior to the relevant Fundamental Change Expiration Time. A Purchaser of the Notes shall deliver to the Company the original Note so-converted pursuant to this Section 4 as promptly as practicable after delivery of the Conversion Notice with respect to such Note.
For any Note, the date on which the Purchaser of such Note satisfies all of the applicable requirements set forth above with respect to such Note (except for any requirement to deliver to the Company such original of such converted Note) shall be the “Conversion Date” with respect to such Note, and upon such Conversion Date, conversion shall be deemed to have been effected
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as to any such Note; provided that the Company shall not be obligated to actually issue shares of Common Stock until such Purchaser delivers to the Company the original of such converted Note.
For the avoidance of doubt, until a Purchaser is deemed to become the holder of record of shares of Common Stock, if any, issuable upon conversion of such Purchaser’s Notes as contemplated in the immediately preceding sentence, such Purchaser shall not have any rights as a holder of shares of Common Stock with respect to such shares of Common Stock issuable upon conversion of such Notes. At the Close of Business on the Conversion Date for a Note, the converting Purchaser shall be deemed the holder of the shares of Common Stock issuable upon conversion of such Note and the converting Purchaser shall no longer be the holder of such Note.
(b) Endorsement. Any Notes surrendered for conversion shall, unless shares of Common Stock issuable on conversion are to be issued in the same name as the registration of such Notes, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Purchaser or its duly authorized attorney.
(c) Partially Converted Notes. If any Notes in a denomination greater than $1,000 shall be surrendered for partial conversion, the Company shall execute and deliver to the Purchaser of the Notes so surrendered, without charge, new Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Notes.
(d) Taxes Due upon Conversion. If a Purchaser converts a Note, the Company will pay any documentary, stamp GST/HST or similar issue or transfer tax due on the issue of any shares of Common Stock upon the conversion, unless the tax is due because the Purchaser requests that any shares be issued in a name other than the Purchaser’s name, in which case the Purchaser will pay that tax.
4.3 Settlement Upon Conversion.
(a) Settlement in Common Stock. Upon the conversion of any Note, the Company shall settle such conversion by delivering, as provided in this Section 4, shares of Common Stock, together, if applicable, with cash in lieu of fractional shares as provided in Section 4.3(b).
(b) Conversion Consideration.
(i) Generally. The type and amount of consideration (the “Conversion Consideration”) due in respect of each $1,000 principal amount of a Note converted will be a number of shares of Common Stock equal to the Conversion Rate in effect on the Conversion Date for such conversion.
(ii) Cash in Lieu of Fractional Shares. If, upon conversion of a Note, the number of shares of Common Stock deliverable pursuant to Section 4.3(b)(i) upon such conversion is not a whole number, then such number will be rounded down to the nearest whole number and the Company will deliver, in addition to the other consideration due upon such conversion, cash in lieu of the
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related fractional share in an amount equal to the product of (A) such fraction and (B) the Last Reported Sale Price on the Conversion Date for such conversion (or, if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(iii) Conversion of Multiple Notes by a Single Purchaser. If a Purchaser converts more than one (1) Note on a single Conversion Date, then the Conversion Consideration due in respect of such conversion will be computed based on the total principal amount of Notes converted on such Conversion Date by such Purchaser.
(c) Delivery of the Conversion Consideration. Except as set forth in Section 4.2, Section 4.4, Section 4.6 or Section 4.7, the Company will pay or deliver, as applicable, to the Purchaser the Conversion Consideration due upon the conversion of any of its Notes on or before the second (2nd) Business Day immediately after the Conversion Date for such conversion.
(d) Accrued but Unpaid Interest. Accrued but unpaid interest to but not including the Conversion Date of a Note converted in accordance with Section 4.2 hereof shall be due and payable by the Company in the form of PIK Interest, which will be added to the principal amount of such Note in the determination of the related Conversion Consideration pursuant to Section 4.3(b), and the Company will not adjust the Conversion Rate to account for any such accrued and unpaid interest on such Note.
4.4 Adjustment of Conversion Rate. The Conversion Rate will be adjusted as described in this Section 4.4, except that the Company shall not make any adjustment to the Conversion Rate if each Purchaser participates (other than in the case of a share split or share combination), at the same time and upon the same terms as holders of the Common Stock and as a result of holding the Notes, in any of the transactions described below without having to convert its Notes, as if it held a number of shares of Common Stock equal to the applicable Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Purchaser.
(a) If the Company issues exclusively shares of Common Stock as a dividend or distribution on all or substantially all shares of Common Stock, or if the Company effects a share split or share combination in respect of the Common Stock, the Conversion Rate will be adjusted based on the following formula:
CR1 = CR0 x |
OS1 |
OS0 |
where,
CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Record Date of such dividend or distribution, or immediately prior to the Open of Business on the effective date of such share split or combination, as applicable;
CR1 = the Conversion Rate in effect immediately after the Open of Business on such Record Date or such effective date, as applicable;
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OS0 = the number of shares of Common Stock outstanding immediately prior to the Open of Business on such Record Date or such effective date, as applicable, before giving effect to such dividend, distribution, share split or share combination, as applicable; and
OS1 = the number of shares of Common Stock that would be outstanding immediately after giving effect to such dividend or distribution, or immediately after the effectiveness of such share split or share combination, as applicable.
Any adjustment made under this Section 4.4(a) shall become effective immediately after the Open of Business on the Record Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such share split or share combination. If any dividend or distribution of the type described in this Section 4.4(a) is declared but not so paid or made or any share split or share combination of the type described in this Section 4.4(a) is announced but not consummated, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution or to effect such share split or share combination, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or share split or share combination had been announced.
(b) If the Company issues to all or substantially all holders of the Common Stock any rights, options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which Sections 4.4(c)(with respect to Distributed Property, but not Spin-off) and 4.4(g) will apply) entitling them to subscribe for or purchase shares of Common Stock, at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, the Conversion Rate will be increased based on the following formula:
CR1 = CR0 x |
OS0 + X |
OS0 + Y |
CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Record Date for such issuance;
CR1 = the Conversion Rate in effect immediately after the Open of Business on such Record Date;
OS0 = the number of shares of Common Stock outstanding immediately prior to the Open of Business on such Record Date;
X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
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Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance.
Any increase made under this Section 4.4(b) will be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the Open of Business on the Record Date for such issuance. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are not delivered upon the expiration of such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the increase in the Conversion Rate with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, or if such rights, options or warrants are not exercised prior to their expiration, the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such issuance had not occurred.
For purposes of this Section 4.4(b) hereof, in determining whether any rights, options or warrants entitle the holders of the Common Stock to subscribe for or purchase shares of Common Stock at a price per share less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.
(c) If the Company distributes “shares” (which term, for purposes of this Section 4.4(c), shall be deemed to mean Capital Stock), evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its shares or other securities, to all or substantially all holders of the Common Stock, excluding:
(i) dividends, distributions or issuance (including share splits) as to which an adjustment is effected (or would have been effected without regard to the 1% Exception) pursuant to Section 4.4(a) hereof or Section 4.4(b) hereof;
(ii) dividends or distributions paid exclusively in cash as to which an adjustment is effected (or would have been effected without regard to the 1% Exception) pursuant to Section 4.4(d) hereof;
(iii) Spin-Offs, as to which the provisions set forth below in this Section 4.4(c) shall apply;
(iv) dividends or distributions of Reference Property in exchange for or upon conversion of the Common Stock in a Common Stock Change Event;
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(v) tender offers and exchange offers as to which an adjustment is effected (or would have been effected without regard to the 1% Exception) set forth below in this Section 4.4(e); and
(vi) rights under any shareholder rights plan of the Company (except as set forth in Section 4.4(g) hereof);
(any of such shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants to acquire Capital Stock or other securities of the Company, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
SP |
SP - FMV |
where,
CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Record Date for such distribution;
CR1 = the Conversion Rate in effect immediately after the Open of Business on such Record Date;
SP = the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Record Date for such distribution; and
FMV = the fair market value (as determined by the Board of Directors) of Distributed Property distributed with respect to each outstanding share of Common Stock as of the Open of Business on the Record Date for such distribution.
If “FMV” (as defined above) is equal to or greater than the “SP” (as defined above), in lieu of the foregoing increase, each Purchaser shall receive, in respect of each $1,000 principal amount of Notes it holds, at the same time and upon the same terms as holders of the Common Stock, the amount and kind of Distributed Property that such Purchaser would have received as if such Purchaser owned a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Open of Business on the Record Date for the distribution.
Any increase made pursuant to the immediately preceding formula in this Section 4.4(c) will become effective immediately after the Open of Business on the Record Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such distribution had not been declared.
With respect to an adjustment pursuant to this Section 4.4(c) where there has been a payment of a dividend or other distribution on the Common Stock of any class or series of shares, or any similar equity interest, of or relating to any Subsidiaries of the
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Company or business units of the Company, and such shares or similar equity interest are or is listed, admitted for trading or quoted (or will be listed, admitted for trading or quoted upon the consummation of the distribution) on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate will be increased based on the following formula:
CR1 = CR0 x |
FMV0 + MP0 |
MP0 |
where,
CR0 = the Conversion Rate in effect immediately before the Close of Business on the last Trading Day of the Spin-Off Valuation Period for such Spin-Off;
CR1 = the Conversion Rate in effect immediately after the Close of Business on the last Trading Day of the Spin-Off Valuation Period;
FMV0 = the average of the Last Reported Sale Prices of the shares or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period (the “Spin-Off Valuation Period”) beginning on, and including, the Ex-Dividend Date for such Spin-Off (such average to be determined as if references to Common Stock in the definitions of Last Reported Sale Price, Trading Day and Market Disruption Event were instead references to such shares or equity interests); and
MP0 = the average of the Last Reported Sale Prices of the Common Stock over the Spin-Off Valuation Period.
Any increase made pursuant to the immediately preceding formula in this Section 4.4(c), will be calculated as of the Close of Business on the last Trading Day of the Spin-Off Valuation Period but will be given effect immediately after the Open of Business on the Record Date for the Spin-Off, with retroactive effect. If a Note is converted and the Conversion Date occurs during the Spin-Off Valuation Period, then, notwithstanding anything to the contrary herein or in the Notes, the Company will, if necessary, delay the settlement of such conversion until the second Business Day after the last Trading Day of the Spin-Off Valuation Period.
(d) If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate shall be adjusted based on the following formula:
CR1 = CR0 x |
SP |
SP - D |
where,
CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Record Date for such dividend or distribution;
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CR1 = the Conversion Rate in effect immediately after the Open of Business on the Record Date for such dividend or distribution;
SP = the average of the Last Reported Sale Prices of the Common Stock on the three consecutive Trading Day period immediately preceding the Record Date for such dividend or distribution; and
D = the amount in cash per share that the Company distributes to all or substantially all holders of the Common Stock.
If “D” (as defined above) is equal to or greater than “SP” (as defined above), then, in lieu of the foregoing increase, each Purchaser shall receive, for each $1,000 principal amount of Notes it holds, at the same time and upon the same terms as holders of Common Stock, the amount of cash that such Purchaser would have received if such Purchaser had owned a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Open of Business on the Record Date for such cash dividend or distribution. Any increase under this Section 4.4(d) shall become effective immediately after the Open of Business on the Record Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for the Common Stock (other than solely pursuant to an odd-lot offer pursuant to Rule 13e-4(h)(5) under the Exchange Act), to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (such last date, the “Offer Expiration Date”), the Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
AC + (SP1 x OS1) |
OS0 x SP1 |
where,
CR0 = the Conversion Rate in effect immediately prior to the Close of Business on the Offer Expiration Date;
CR1 = the Conversion Rate in effect immediately after the Close of Business on the Offer Expiration Date;
AC = the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for Common Stock purchased in such tender or exchange offer;
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OS0 = the number of shares of Common Stock outstanding immediately prior to the expiration time of the tender or exchange offer on the Offer Expiration Date (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);
OS1 = the number of shares of Common Stock outstanding immediately after the expiration time of the tender or exchange offer on the Offer Expiration Date (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and
SP1 = the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Offer Expiration Date (the “Tender/Exchange Offer Valuation Period”);
provided, however, that the Conversion Rate will in no event be adjusted down pursuant to this Section 4.4(e), except to the extent provided in the last sentence of this paragraph. The adjustment to the Conversion Rate pursuant to this Section 4.4(e) will be calculated as of the Close of Business on the last Trading Day of the Tender/Exchange Offer Valuation Period but will be given effect immediately after Close of Business on the Offer Expiration Date, with retroactive effect. If a Note is converted and the Conversion Date occurs on the Offer Expiration Date or during the Tender/Exchange Offer Valuation Period, then, notwithstanding anything to the contrary in this Agreement or the Notes, the Company will, if necessary, delay the settlement of such conversion until the second (2nd) Business Day after the last day of the Tender/Exchange Offer Valuation Period. To the extent such tender or exchange offer is announced but not consummated (including as a result of the Company being precluded from consummating such tender or exchange offer under applicable law), or any purchases or exchanges of Common Stock in such tender or exchange offer are rescinded, the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect had the adjustment been made on the basis of only the purchases or exchanges of Common Stock, if any, actually made, and not rescinded, in such tender or exchange offer.
(f) Special Settlement Provisions.
Notwithstanding anything to the contrary herein or in the Notes, if a Purchaser converts a Note and:
(1) the Record Date, effective date or Offer Expiration Date for any event that requires an adjustment to the Conversion Rate under any of Section 4.4(a) through (e) hereof occurs, but an adjustment to the
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Conversion Rate for such event has not yet become effective as of such Conversion Date;
(2) the Conversion Consideration due upon such conversion includes any whole shares of Common Stock; and
(3) such Common Stock is not entitled to participate in such event (because they were not held on the related Record Date or otherwise),
then, solely for purposes of such conversion, (x) the Company will, without duplication, give effect to such adjustment on such Conversion Date; and (y) if the date the Company is otherwise required to deliver the Conversion Consideration due upon such conversion is before the first date on which the amount of such adjustment can be determined, then the Company will delay the settlement of such conversion until the second (2nd) Business Day after such first date.
In addition, notwithstanding anything to the contrary herein, if:
(i) a Conversion Rate adjustment for any dividend or distribution becomes effective on any Record Date pursuant to Section 4.4(a) through (e);
(ii) a Note is to be converted;
(iii) the Conversion Date for such conversion occurs on or after such Ex-Dividend Date and on or before the related Record Date;
(iv) the Conversion Consideration due upon such conversion includes any whole shares of Common Stock based on a Conversion Rate that is adjusted for such dividend or distribution; and
(v) such shares of Common Stock would be entitled to participate in such dividend or distribution,
then, although the Company will otherwise treat such Purchaser as the holder of record of such shares of Common Stock on the Conversion Date, the Company shall not permit such Purchaser to participate in such event on account of such shares of Common Stock; provided, however, and for the avoidance of doubt, if such Conversion Rate does not include any adjustment for such dividend or distribution, such Purchaser shall be entitled to participate in such dividend or distribution as if such Purchaser were a holder of shares of Common Stock equal to the shares of Common Stock into which such Purchaser’s Notes are converted.
(g) Poison Pill. If a Purchaser converts a Note, the Purchaser converting such Note will receive, in addition to any shares of Common Stock to which it is entitled in connection with such conversion, the rights under any shareholders rights plan of the Company in effect at such time, unless prior to the applicable Conversion Date, the rights have separated from the Common Stock, in which case, the Conversion Rate will be adjusted at the time of separation as if the Company distributed to all holders of the
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Common Stock, Distributed Property as described in Section 4.4(c) hereof, subject to readjustment in the event of the expiration, termination or redemption of such rights. In all other cases, the issuance of rights pursuant to a rights plan will not result in an adjustment to the Conversion Rate pursuant to Section 4.4(c) hereof.
(h) Deferral of Adjustments. Notwithstanding anything to the contrary herein, the Company will not be required to adjust the Conversion Rate unless such adjustment would require an increase or decrease of at least one percent (1%) in the Conversion Rate; provided, however, that the Company shall carry forward any adjustment that is less than one percent (1%) of the Conversion Rate, shall take such carried-forward adjustments into account in any subsequent adjustment, and shall make such carried-forward adjustments, regardless of whether the aggregate adjustment is less than one percent (1%), (i) annually on the anniversary of the first date of issue of the Notes; and (ii) otherwise, (1) on each Conversion Date; and (2) if a Fundamental Change occurs or the Company calls the Notes for Redemption, in each case unless such adjustment has already been made. The provisions of this Section 4.4(h) are referred to as the “1% Exception.”
(i) Limitation on Adjustments. Except as stated in this Section 4.4, the Company will not adjust the Conversion Rate for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or the right to purchase Common Stock or such convertible or exchangeable securities. Notwithstanding anything herein or in the Notes to the contrary, if the application of the formulas in Section 4.4(a) through (e) hereof would result in a decrease in the Conversion Rate, then, except to the extent of any readjustment to the Conversion Rate, no adjustment to the Conversion Rate will be made (other than as a result of a reverse share split or share combination).
In addition, notwithstanding anything to the contrary herein, the Conversion Rate will not be adjusted:
(i) on account of share repurchases that are not tender offers referred to in Section 4.4(e) hereof, including structured or derivative transactions, or transactions pursuant to a share repurchase program approved by the Board of Directors or otherwise;
(ii) upon the issuance of any Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in Common Stock under any plan;
(iii) upon the issuance of any Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan, program or agreement of or assumed by the Company or any of its Subsidiaries;
(iv) upon the issuance of any Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not
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described in Section 4.4(i) through (iii) above and outstanding as of the date the Notes were first issued;
(v) for a change in the par value of the Common Stock; or
(vi) for accrued and unpaid interest on the Notes, if any.
In addition, the Company will not undertake any action that would result in the Company being required, pursuant to this Agreement, to adjust the Conversion Rate such that the Conversion Price per share of Common Stock will be less than the par value per share of Common Stock.
(j) For purposes of this Section 4.4, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractional Common Stock.
(k) Whenever the Company is required to calculate or make adjustments to the Conversion Rate, the Company will do so to the nearest 1/10,000th of a Common Stock, rounding any additional decimal places up or down in a commercially reasonable manner.
4.5 Discretionary and Voluntary Adjustments.
(a) Discretionary Adjustments. Whenever any provision of this Agreement requires the Company to calculate the Last Reported Sale Prices or any function thereof over a span of multiple days (including the Stock Price for purposes of a Make-Whole Fundamental Change), the Company will make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the effective date, Record Date, Ex-Dividend Date or Offer Expiration Date, as applicable, of the event occurs, at any time during the period when such Last Reported Sale Prices or function thereof is to be calculated.
(b) Voluntary Adjustments. To the extent permitted by applicable law and applicable requirements of the New York Stock Exchange, the Company is permitted to increase the Conversion Rate of the Notes by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Company’s best interest. To the extent permitted by applicable law and applicable requirements of the New York Stock Exchange, the Company may also (but is not required to) increase the Conversion Rate to avoid or diminish income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event.
4.6 Adjustment to Conversion Rate Upon Conversion in Connection with a Make-Whole Fundamental Change.
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(a) Increase in the Conversion Rate. If a Make-Whole Fundamental Change occurs and a Purchaser elects to convert its Notes during the related Make-Whole Fundamental Change Period, then the Company shall, to the extent provided herein, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional shares of Common Stock (the “Adjustment Shares”), as described in this Section 4.6.
(b) Cash Mergers. Notwithstanding anything to the contrary herein, if the consideration paid to holders of the Common Stock in any Make-Whole Fundamental Change described in clause (2) of the definition of “Fundamental Change” is comprised entirely of cash, then, for any conversion of Notes with a Conversion Date that is on or after the Make-Whole Fundamental Change Effective Date, then (i) in respect of all conversions whose Conversion Date occurs on or after the Make-Whole Fundamental Change Effective Date, the Conversion Consideration due upon the conversion of a Note shall be calculated based solely on the Stock Price for such Make-Whole Fundamental Change and shall be deemed to be a cash amount per $1,000 principal amount of converted Notes equal to the applicable Conversion Rate (including any adjustment as described in this Article 4) multiplied by such Stock Price; and (ii) the Company’s conversion obligation will be determined and paid to Purchasers in cash on the fifth (5th) Business Day following the applicable Conversion Date. Otherwise, the Company will settle any conversion of the Notes following the Make-Whole Fundamental Change Effective Date in accordance with Section 4.3 hereof (but subject to Section 4.4 hereof).
(c) Determining the Number of Adjustment Shares. The number of Adjustment Shares, if any, by which the Conversion Rate will be increased for a Purchaser that converts its Notes during a Make-Whole Fundamental Change Period shall be determined by reference to the table attached as Schedule I hereto, based on the Make-Whole Fundamental Change Effective Date and the price (the “Stock Price”) paid (or deemed paid) per share of Common Stock in the Make-Whole Fundamental Change, as determined under the two immediately following sentences. In the case of a Make-Whole Fundamental Change described in clause (2) of the definition of “Fundamental Change,” where holders of the Company’s Common Stock receive only cash in such Make-Whole Fundamental Change, the Stock Price shall be the cash amount paid per share of Common Stock. Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common Stock over the 5 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Make-Whole Fundamental Change Effective Date.
(d) Interpolation and Limits. The exact Stock Prices and Make-Whole Fundamental Change Effective Dates may not be set forth in the table in Schedule I, in which case:
(i) if the Stock Price is between two Stock Prices in the table or the Make-Whole Fundamental Change Effective Date is between two dates in the table, the number of Adjustment Shares shall be determined by a straight-line interpolation between the number of Adjustment Shares set forth for the higher and
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lower Stock Prices and the earlier and later dates, as applicable, based on a 365- or 366-day year, as applicable;
(ii) if the Stock Price is greater than $13.50 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table in Schedule I hereof), no Adjustment Shares will be added to the Conversion Rate; and
(iii) if the Stock Price is less than $2.4122 per share (subject to adjustments in the same manner as the Stock Prices set forth in the column headings of the table in Schedule I hereof), no Adjustment Shares will be added to the Conversion Rate.
Notwithstanding the foregoing, in no event will the Conversion Rate be increased on account of a Make-Whole Fundamental Change to exceed 107.4796 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustments in the same manner as the Conversion Rate is required to be adjusted as set forth in Section 4.4 hereof.
The Stock Prices set forth in the column headings of the table in Schedule I hereto shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise required to be adjusted as set forth in Section 4.4 or pursuant to the definition of “Conversion Rate”. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Adjustment Shares set forth in such table shall be adjusted in the same manner and at the same time as the Conversion Rate is required to be adjusted as set forth in Section 4.4 or pursuant to the definition of “Conversion Rate”.
(e) Notices. The Company shall notify the Purchasers of any Make-Whole Fundamental Change Effective Date occurring pursuant to clause (a) of the definition thereof, no later than five Business Days after such Make-Whole Fundamental Change Effective Date.
4.7 Effect of Recapitalization, Reclassification, Consolidation, Merger, Amalgamation or Sale.
(a) Common Stock Change Event. In the case of:
(i) any recapitalization, reclassification or change of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a split, subdivision or combination);
(ii) any consolidation, merger, amalgamation or combination involving the Company;
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(iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and its Subsidiaries substantially as an entirety; or
(iv) any statutory share exchange;
and, in each case, as a result of which the Common Stock would be converted into, or exchanged for, or represent solely the right to receive, shares, stock, other securities, other property or assets (including cash or any combination thereof) (such shares, stock, securities, property or assets, “Reference Property,” and the amount and kind of Reference Property that a holder of one share of Common Stock would be entitled to receive on account of such transaction, a “Reference Property Unit”) (any such event, a “Common Stock Change Event”), then, notwithstanding anything to the contrary herein or in the Notes, from and after the effective time of such Common Stock Change Event, (A) the consideration due upon conversion of any Notes will be determined in the same manner as if each reference to any number of shares of Common Stock in this Article 4 were instead a reference to the same number of Reference Property Units, (B) for purposes of Section 10.5(b), each reference to any number of shares of Common Stock in such Section (or in any related definitions) will instead be deemed to be a reference to the same number of Reference Property Units and (C) for purposes of the definition of “Fundamental Change” and “Make-Whole Fundamental Change,” the terms “Common Stock” and “common equity” will be deemed to mean the common equity, if any, forming part of such Reference Property. If any Reference Property Unit consists entirely of cash, then the Company will settle all such conversions within five Business Days of the relevant Conversion Date. For these purposes, the Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities will be the fair value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the Company (or in the case of cash denominated in U.S. Dollars, the face amount thereof). The Company (and such other Persons, if any, specified in the immediately following paragraph) shall, as a condition precedent to such Common Stock Change Event execute and deliver to the Purchasers a form of amendment hereto in form reasonably satisfactory to the Requisite Purchasers giving effect to the provisions of this Section 4.7.
The Company shall not become a party to any Common Stock Change Event unless its terms are consistent with this Section 4.7. If the Reference Property in respect of any Common Stock Change Event includes, in whole or in part, shares of common equity, such amendment described in the first paragraph of this Section 4.7(a) shall provide for adjustments which shall be as nearly equivalent to the adjustments provided for in this Section 4 with respect to the portion of the Reference Property consisting of such common equity in the judgment of the Board of Directors or the board of directors of the successor Person. If, in the case of any such Common Stock Change Event, the Reference Property receivable thereupon by a holder of Common Stock includes shares of stock, securities or other property or assets (excluding cash ) of a Person other than the successor or purchasing Person, as the case may be, in such Common Stock Change Event, then such amendment shall also be executed by such other Person if such other Person is an Affiliate of the Company or the successor or purchasing Person.
(b) Composition of the Reference Property Unit. If the Reference Property in any Common Stock Change Event consists of more than a single type of consideration (determined based in part upon any form of shareholder election), then the
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composition of the Reference Property Unit will be deemed to be the weighted average, per share of Common Stock, of the types and amounts of consideration actually received by the holders of Common Stock. The Company shall notify Purchasers of the weighted average as soon as practicable after such determination is made.
4.8 Certain Covenants. The Company covenants that all shares of Common Stock that may be issued upon conversion of Notes shall be issued in book-entry format, shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights and free from any tax, lien or charge (other than transfer taxes arising due to a change in registered owner). The Company shall list or cause to have quoted any Common Stock to be issued upon conversion of Notes on each national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted.
4.9 Notice to Purchasers.
(a) Notice to Purchasers Prior to Certain Actions. The Company shall deliver written notices of the events specified below at the times specified below and containing the information specified below unless, in each case, (i) pursuant to this Agreement, the Company is already required to deliver notice of such event containing at least the information specified below at an earlier time or (ii) the Company, at the time it is required to deliver a notice, does not have knowledge of all of the information required to be included in such notice, in which case, the Company shall (A) deliver notice at such time containing only the information that it has knowledge of at such time (if it has knowledge of any such information at such time), and (B) promptly upon obtaining knowledge of any such information not already included in a notice delivered by the Company, deliver notice to each Purchaser containing such information. In each case, the failure by the Company to give such notice, or any defect therein, shall not affect the legality or validity of such event.
(i) Issuances, Distributions, and Dividends and Distributions. If the Company (A) announces any issuance of any rights, options or warrants that would require an adjustment in the Conversion Rate pursuant to Section 4.4(b) hereof, (B) authorizes any distribution that would require an adjustment in the Conversion Rate pursuant to Section 4.4(c) hereof (including any separation of rights from the Common Stock described in Section 4.4(g) hereof), or (C) announces any dividend or distribution that would require an adjustment in the Conversion Rate pursuant to Section 4.4(d) hereof, then the Company shall deliver to the Purchasers, as promptly as practicable after the holders of the Common Stock are notified of such event, notice describing such issuance, dividend or distribution, as the case may be, and stating the expected Record Date for such issuance, dividend or distribution, as the case may be. In addition, the Company shall deliver to the Purchasers written notice if the consideration included in such issuance, dividend or distribution, or the Record Date of such issuance, dividend or distribution, as the case may be, changes.
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(ii) Tender and Exchange Offers. If the Company announces any tender or exchange offer that could require an adjustment in the Conversion Rate pursuant to Section 4.4(e) hereof, the Company shall deliver to the Purchasers on the day it announces such tender or exchange offer, and, if the Company is required to file with the Commission a Schedule TO in connection with such tender or exchange offer, an additional written notice (A) when the Company first files such Schedule TO, which notice shall include the address at which such Schedule TO is available on the Commission’s EDGAR system (or any successor thereto), and (B) whenever the Company files an amendment to such Schedule TO, which notice shall include the address at which such amendment is available on the Commission’s EDGAR system (or any successor thereto).
(iii) Voluntary Increases. If the Company increases the Conversion Rate pursuant to Section 4.5(b), the Company shall deliver notice to the Purchasers at least two Scheduled Trading Days prior to the date on which such increase will become effective, which notice shall state the date on which such increase will become effective and the amount by which the Conversion Rate will be increased.
(iv) Insolvency, Dissolutions, Liquidations and Winding-Ups. If there is a voluntary or involuntary insolvency, bankruptcy, dissolution, liquidation or winding-up of the Company, the Company shall deliver notice to the Purchasers as promptly as possible, but in any event prior to the earlier of (A) the date on which such insolvency, bankruptcy, dissolution, liquidation or winding-up, as the case may be, is expected to become effective or occur, and (B) the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such insolvency, bankruptcy, dissolution, liquidation or winding-up, as the case may be, which notice shall state the expected effective date and record date for such event, as applicable, and the amount and kind of property that a holder of one share of Common Stock is expected to be entitled, or may elect, to receive in such event. The Company shall deliver an additional written notice to Purchasers, as promptly as practicable, whenever the expected effective date or record date, as applicable, or the amount and kind of property that a holder of one Common Stock is expected to be entitled to receive in such event, changes.
(v) Defaults. If there is any event that is, or would after the passage of time, constitute an Event of Default under Section 8, the Company shall deliver notice to the Purchasers as promptly as practicable.
4.10 Beneficial Ownership Conversion Limits. Notwithstanding Section 4.1, any Purchaser shall not have the right to convert all or any portion of the Notes held by such Purchaser pursuant to Section 4.1 or otherwise, to the extent that immediately prior to, or immediately after giving effect to such conversion such Purchaser (together with its Affiliates and any other Persons whose beneficial ownership would be aggregated with such Purchaser and its Affiliates (such Persons, collectively, the “Attribution Parties”)), would beneficially own Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
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foregoing sentence, the number of shares of Common Stock beneficially owned by such Purchaser and its Affiliates and Attribution Parties shall not include the number of shares of Common Stock that would be issuable upon (a) conversion of the non-converted portion of the Notes beneficially owned by such Purchaser or any of its Affiliates or Attribution parties and (b) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company in each case to the extent subject to a limitation on conversion or exercise analogous to the Beneficial Ownership Limitation, beneficially owned by such Purchaser or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 4.10, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by each Purchaser that the Company is not representing to such Purchaser that such calculation is in compliance with Section 13(d) of the Exchange Act and such Purchaser is solely responsible for any schedules required to be filed in accordance therewith. For purposes of this Section 4.10, in determining the number of outstanding shares of Common Stock, each Purchaser may rely on the number of outstanding shares of Common Stock as reflected in (i) the Company’s most recent periodic or annual report filed with the SEC, as the case may be, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company setting forth the number of shares of Common Stock outstanding. Upon the written request of any Purchaser, the Company shall, within one Trading Day, confirm orally and in writing to such Purchaser the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company by such Purchaser or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to such Purchaser. The “Beneficial Ownership Limitation” shall initially be 9.99% of the number of shares of Common Stock outstanding immediately prior to, and immediately after giving effect to, the conversion of all or any portion of the Notes. The Principal Purchaser, upon written notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions in this Section 4.10 to any other percentage specified not in excess of 9.99% as specified in such notice. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. To the extent that any transferee of such Purchaser shall be subject to the provisions of this Section 4.10, such transferee shall so affirm to the Company in writing prior to or concurrently with the transfer of Notes to such transferee.
4.11 Applicable Stock Exchange Restrictions. Notwithstanding anything in this Article 4 to the contrary, the Company shall not issue any shares of Common Stock pursuant to the terms of this Agreement to the extent the issuance of such shares of Common Stock would exceed 9,579,130 shares of Common Stock (as adjusted for any share split, share combination, reclassification or similar transaction relating to the Common Stock occurring after the date of this Agreement) (the “Conversion Cap”), except that such limitation shall not apply in the event that the Company obtains Stockholder Approval. In the event that the Company is prohibited from issuing any shares of Common Stock upon conversion of any Notes pursuant to the immediately preceding sentence (shares in excess of the Conversion Cap, the “Conversion Cap Shares”), the Company shall pay cash in lieu of delivering such Conversion Cap Shares at a price per share equal to the average of Daily VWAPs of the Common Stock for the five Trading Days ending on the Trading Day immediately preceding the Conversion Date for such conversion. If the Company pays cash in lieu of delivering shares of Common Stock pursuant to this Section 4.11, it will notify the converting Purchaser of the maximum number of shares it will deliver per $1,000 principal
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amount (and accrued and unpaid interest thereon) of converted Note in respect of the relevant conversion. Upon providing the Purchaser with such notice, the Purchaser shall have the right to void any or all portion of the attempted conversion and restore such principal and interest that will not be converted.
4.12 Deemed Issue of Additional Shares. For purposes of adjusting the Conversion Rate in connection with determining the Next Equity Financing Price, the Company shall be deemed to have issued Additional Shares in such financing transaction(s) in the following circumstances:
(a) If the Company at any time or from time to time after the date hereof shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities), then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Conversion Rate, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Company upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Conversion Rate computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Rate as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Conversion Rate to an amount that exceeds the lower of (i) the Conversion Rate in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Conversion Rate that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.
(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Conversion Rate (either because the consideration per share of the Additional Shares did not trigger such an adjustment or because such Option or Convertible
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Security was issued before the date hereof), are revised after the date hereof as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Company upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares subject thereto shall be deemed to have been issued effective upon such increase or decrease becoming effective.
(d) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Company upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Conversion Rate shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Section 4.12). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Company upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Conversion Price that would result under the terms of this Section 4.12 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price that such issuance or amendment took place at the time such calculation can first be made.
5. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Purchasers, the Principal Purchaser and the Collateral Agent as of the Closing Date as follows:
5.1 Organization, Good Standing and Qualification. The Company and each other Company Party (a) is duly incorporated or organized, validly existing and (to the extent the concept is applicable in the relevant jurisdiction) in good standing under the laws of its jurisdiction of incorporation or organization, (b) is qualified to do business and, to the extent such concept is recognized in such jurisdictions as are applicable, is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a Material Adverse Effect and (c) has all requisite corporate or other power and authority, and has all Governmental Approvals necessary to, to own its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted.
5.2 Corporate Power and Authority; Valid Issuance of Shares.
(a) Each Company Party has all requisite corporate or other organizational power and has taken all necessary corporate or other organizational action required for the due authorization, execution, delivery and performance by such Company Party of this Agreement and the other Note Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby. The execution,
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delivery and performance by each Company Party of this Agreement and the other Note Document to which it is a party and the consummation by each Company Party of the transactions contemplated hereby, have been duly authorized by the Board of Directors (or equivalent governing body) and no further consent or authorization of such Company Party, its Board of Directors (or equivalent governing body) or its shareholders (or equivalent equity owner) is required. This Agreement has been duly executed and delivered by the Company, and the other instruments referred to herein, including the other Note Documents, to which any Company Party is a party will be duly executed and delivered by such Company Party, and each such instrument or Note Document constitutes or will constitute a legal, valid and binding obligation of such Company Party enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(b) The shares of Common Stock underlying the Notes (the “Conversion Shares”) have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, the Conversion Shares will be validly issued, fully paid and non-assessable, and shall be free and clear of all encumbrances (other than restrictions on transfer under the Note Documents arising under applicable federal and state securities laws), and will not be subject to preemptive rights or other similar rights of shareholders of the Company.
(c) The Notes have been duly and validly authorized by all necessary corporate action, have been duly and validly executed and delivered, and constitute valid and binding obligations of the Company.
5.3 Consents. Neither the execution, delivery or performance of this Agreement or the other Note Documents by the Company or any other Company Party party thereto, nor the consummation by it of the obligations and transactions contemplated hereby and thereby (including, without limitation, the issuance, the reservation for issuance and the delivery of the Conversion Shares and the provision to the Collateral Agent, the Principal Purchaser and the Purchasers of the rights contemplated by the Note Documents) requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than filings required under applicable U.S. federal and state securities laws.
5.4 No Conflicts.
(a) The execution, delivery and performance of this Agreement and the other Note Documents and the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance, the reservation for issuance and the delivery of the Conversion Shares and the provision to the Collateral Agent, the Principal Purchaser and the Purchasers of the rights contemplated hereby or by the other Note Documents) will not (i) result in a violation of the certificate and articles of incorporation, as amended, or the by-laws, as amended, or any equivalent organizational document of the Company or any Subsidiary (the “Charter Documents”) or require the approval of the
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Company’s shareholders, (ii) violate, conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any Material Contract, (iii) result in a violation of or require any shareholder or other approval under any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal or state securities laws, and any rules, regulations, instruments, notices, blanket orders and policies published and/or promulgated thereunder or any regulations of any self-regulatory organizations to which any Company Party (or any other Subsidiary) or its securities are subject, as such may be amended from time to time) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected, (iv) result in a violation of or require shareholder approval under any rule or regulation of the New York Stock Exchange that has not been so obtained, or (v) result in the creation of any encumbrance upon any of the Company’s or any of its Subsidiary’s assets (other than Permitted Liens), except under clauses (ii), (iii) and (v) any violation, breach, default or encumbrance as would not result in a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is (i) in violation of its Charter Documents, (ii) in default (and no event has occurred which, with notice or lapse of time or both, would cause the Company or any Subsidiary to be in default) under, nor has there occurred any event giving others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any Subsidiary is a party, nor has the Company or any Subsidiary received written notice of a claim that it is in default under, or that it is in violation of, any Material Contract (whether or not such default or violation has been waived), (iii) in violation of, or in receipt of written notice that it is in violation of, any law, ordinance or regulation of any Governmental Entity, except where the violation would not result in a Material Adverse Effect, and (iv) in violation of any order of any Governmental Entity having jurisdiction over the Company or any Subsidiary or any of the Company’s or any Subsidiary’s properties or assets, except where the violation would not result in a Material Adverse Effect.
5.5 Capitalization.
(a) As of the Execution Date, the authorized capital stock of the Company consists of 1,000,000,000 of shares of Common Stock and 100,000,000 of shares of preferred stock, par value per share, $0.0001 (“Preferred Shares”). As of March 31, 2024, (i) 47,898,737 shares of Common Stock were issued and outstanding; (ii) no Preferred Shares were issued and outstanding; and (iii) 4,509,834 shares of Common Stock were issuable (and such number was reserved for issuance) upon exercise of options to purchase or other equity awards in respect of shares of Common Stock (the “Equity Awards”) outstanding as of such date.
(b) As of March 31, 2024, except for the Equity Awards and the Company’s public warrants to purchase an aggregate 18,759,696 shares and privately held warrants to purchase an aggregate 403,658 shares, there were no options, warrants or other rights to acquire equity securities from the Company.
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5.6 Subsidiaries. Set forth on Schedule IV is a complete and accurate list as of the date hereof of each Subsidiary, together with (a) such Subsidiary’s jurisdiction of organization and (b) the percentage of the Equity Interests in such Subsidiary directly or indirectly owned by the Company. Except for any Guarantors, no Subsidiary owns any portion of the Collateral, holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities, owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten (10) employees.
5.7 Material Contracts. Each Material Contract is the legal, valid and binding obligation of the Company or a Subsidiary thereof, as the case may be, enforceable against the Company or such Subsidiary, as the case may be, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. The Company and each Subsidiary, as the case may be, is in compliance with all material terms of the Material Contracts to which it is party, and there has not occurred any breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any Person, or any combination thereof, would constitute a breach, violation or default by the Company or any Subsidiary under any such Material Contract or, to the Knowledge of the Company, by any other Person to any such contract, except where such breach, violation or default would not have a Material Adverse Effect. Neither the Company nor any Subsidiary has been notified that any party to any Material Contract intends to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the transactions contemplated hereby or otherwise.
5.8 [Reserved].
5.9 New York Stock Exchange. The Common Stock is listed on the New York Stock Exchange (“NYSE”) and, at the time of the issuance, the Company shall have filed a Supplemental Listing Application with NYSE with respect to the Conversion Shares and shall have received no objection thereto from NYSE. To the Company’s Knowledge, there are no proceedings to revoke or suspend such listing or the listing of the Conversion Shares. The Company is in compliance with the requirements of NYSE for continued listing of the Common Stock thereon and any other NYSE listing and maintenance requirements, and the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including the issuance of the Conversion Shares) will not result in any noncompliance by the Company with any such requirements.
5.10 SEC Reports; Financial Statements; Shell Company Status.
(a) The Company’s Common Stock is registered under Section 12(b) of the Exchange Act. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2023 (the foregoing materials, together with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 10-K”), including the exhibits thereto and documents incorporated by
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reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis (except for the Company’s quarterly report for the period ended June 30, 2023 on Form 10-Q filed October 20, 2023) or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and, in each case, to the rules promulgated thereunder, as applicable, and none of the SEC Reports, when filed, except to the extent that information contained in any SEC Report has been revised or superseded by a later filed SEC Report filed and made publicly available prior to the date of this Agreement contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) The financial statements and the related notes of the Company included in the SEC Reports have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of and for the dates thereof and the consolidated results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. There is no transaction, arrangement, or other relationship between the Company or any Subsidiary and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in SEC Reports and is not so disclosed and would have or reasonably be expected to result in a Material Adverse Effect.
(c) The Company is not an issuer identified in Rule 144(i)(1) under the Securities Act.
5.11 Disclosure Controls and Procedures; Internal Controls Over Financial Reporting.
(a) The Company has established and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are effective in all material respects to ensure that material information relating to the Company, including any consolidated Subsidiaries, is made known to its principal executive officer and principal financial officer by others within those entities. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2023. The 2023 10-K includes conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of December 31, 2023.
(b) The Company maintains internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and such internal control over financial reporting is effective. During the most recently completed fiscal
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quarter for the three months ended December 31, 2023, there have been no significant changes in the Company’s internal control over financial reporting or, to the Company’s Knowledge, in other factors that could significantly affect the Company’s internal control over financial reporting.
5.12 Absence of Litigation. There is no claim, action, suit, arbitration, investigation or other proceeding pending against, or to the Knowledge of the Company, threatened against or affecting, the Company, any Subsidiary or any of the Company’s or any Subsidiary’s properties or, to the Knowledge of the Company, any of its respective officers or directors before any Governmental Entity, in each case other than legal proceedings that are not reasonably expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty relating to the Company or any Subsidiary. There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the Commission or any other applicable securities regulator of the Company or any Subsidiary or any current or former director or officer of the Company or any Subsidiary. The Company has not received any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act and, to the Knowledge of the Company, the SEC has not issued any such order.
5.13 CFIUS. None of the Company or any Subsidiary engages in (a) the design, fabrication, development, testing, production or manufacture of one or more “critical technologies” within the meaning of the Defense Production Act of 1950, as amended, including all implementing regulations thereof (the “DPA”); (b) the ownership, operation, maintenance, supply, manufacture, or servicing of “covered investment critical infrastructure” within the meaning of the DPA (where such activities are covered by column 2 of Appendix A to 31 C.F.R. Part 800); or (c) the maintenance or collection, directly or indirectly, of “sensitive personal data” of U.S. citizens within the meaning of the DPA. None of the Company or any Subsidiary has any current intention of engaging in such activities in the future.
5.14 Valid Issuance of Shares. The outstanding shares in the capital of the Company have been duly and validly issued and are fully paid and non-assessable. Such shares, and all outstanding options and other securities of the Company have been issued in compliance with the registration and prospectus delivery requirements of the Securities Act, and the registration and qualification requirements of applicable state securities laws, or in compliance with applicable exemptions therefrom, and all other provisions of applicable federal and state securities laws, and any rules, regulations, instruments, notices, blanket orders and policies published and/or promulgated thereunder, including, without limitation, anti-fraud provisions.
5.15 Compliance with Laws.
(a) Except as would not result in a Material Adverse Effect, (i) each of the Company and its Subsidiaries is and has been in compliance with statutes, laws, ordinances, rules and regulations applicable to such Person for the ownership, testing, development, manufacture, packaging, processing, use, labeling, storage, or disposal of any product manufactured by or on behalf of such Person or out-licensed by such Person
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(a “Company Product”), including without limitation, the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq., the Public Health Service Act, 42 U.S.C. § 262, similar laws of other Governmental Entities and the regulations promulgated pursuant to such laws (collectively, “Relevant Laws”); (ii) each of the Company and its Subsidiaries possesses all licenses, certificates, approvals, authorizations, permits and supplements or amendments thereto required by any such Relevant Laws and/or for the ownership of its properties or the conduct of its business as it relates to a Company Product and as described in the SEC Reports (collectively, “Authorizations”) and such Authorizations are valid and in full force and effect and such Person is not in violation of any term of any such Authorizations; (iii) none of the Company and its Subsidiaries has received any written notice of adverse finding, warning letter or other written correspondence or notice from the FDA or any other Governmental Entity alleging or asserting noncompliance with any Relevant Laws or Authorizations relating to a Company Product; (iv) none of the Company and its Subsidiaries has received written notice of any ongoing claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Entity or third party alleging that any Company Product, operation or activity related to a Company Product is in violation of any Relevant Laws or Authorizations or has any Knowledge that any such Governmental Entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding, nor, to the Knowledge of the Company and/or its Subsidiaries, has there been any noncompliance with or violation of any Relevant Laws by such Person that would reasonably be expected to require the issuance of any such written notice or result in an investigation, corrective action, or enforcement action by the FDA or similar Governmental Entity with respect to a Company Product; (v) none of the Company and its Subsidiaries has received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations or has any Knowledge that any such Governmental Entity has threatened or is considering such action with respect to a Company Product; and (vi) each of the Company and its Subsidiaries has filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Relevant Laws or Authorizations and all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission).
(b) To the Knowledge of the Company and/or its Subsidiaries, none of the Company, its Subsidiaries and any of their respective directors, officers, employees or agents, has made, or caused the making of, any materially false statements on, or material omissions from, any other records or documentation prepared or maintained to comply with the requirements of the FDA or any other Governmental Entity.
(c) The clinical studies and tests conducted by the Company and/or its Subsidiaries or on behalf of the Company and/or its Subsidiaries, have been, and, if still pending, are being, conducted in all material respects pursuant to all Relevant Laws and Authorizations, and none of the Company and its Subsidiaries has received any notices or correspondence from any Governmental Entity requiring the termination, suspension or
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material modification of any clinical study or test conducted by or on behalf of the Company or its Subsidiaries.
5.16 Intellectual Property Matters. Each of the Company and its Subsidiaries owns, possesses, licenses or has other rights to use, on reasonable terms, all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property (collectively, the “IP”) necessary for the conduct of such Person’s business as now conducted or as proposed in the SEC Reports to be conducted (the “Company Intellectual Property”), except for such IP the failure of which to own or have a license or other right to use would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. To the Knowledge of the Company and/or any of its Subsidiaries, there are no rights of third parties to any Company Intellectual Property, other than as licensed by the Company or any other Company Party. To the Knowledge of the Company and its Subsidiaries, there is no infringement by third parties of any Company Intellectual Property. There is no pending or, to the Knowledge of the Company and/or any of its Subsidiaries, threatened action, suit, proceeding or claim by others challenging the Company’s and/or its Subsidiaries’ rights in or to any Company Intellectual Property that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. There is no pending or, to the Company’s and/or any of its Subsidiaries’ Knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Company Intellectual Property that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. There is no pending or, to the Company’s or its Subsidiaries’ Knowledge, threatened action, suit, proceeding or claim by others that the Company and/or any of its Subsidiaries infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. None of the Company and its Subsidiaries is aware of any facts required to be disclosed to the U.S. Patent and Trademark Office (“USPTO”) that have not been disclosed to the USPTO and that would preclude the grant of a patent in connection with any patent application of the Company Intellectual Property or that could reasonably be expected to form the basis of a finding of invalidity with respect to any issued patents of the Company Intellectual Property.
5.17 Absence of Changes. Since December 31, 2023: (a) there has not been any Material Adverse Effect or any event or events that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect; and (b) there has not been any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of shares.
5.18 Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Charter Documents or the laws of its state of incorporation that is or could become applicable to each Purchaser as a result of such Purchaser and the Company fulfilling their obligations or exercising their rights under this Agreement, including without limitation as a result of the Company’s issuance of the Conversion Shares and such Purchaser’s ownership of the Conversion Shares.
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5.19 Investment Company Act; Margin Stock. Neither the Company nor any of its Subsidiaries is or will become, as a result of the transactions contemplated hereby, an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company”, within the meaning of the Investment Company Act of 1940. Neither the Company nor any of its Subsidiaries (a) is or will be engaged principally, or as one of its important activities, in extending credit for purpose of, whether immediate or ultimate, purchasing or carrying Margin Stock, (b) shall use the proceeds of the Notes, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any indebtedness that was originally incurred to purchase or carry any Margin Stock, for the purpose of extending credit to any other person for the purpose of purchasing or carrying any Margin Stock or for any other purpose that might cause any Note to be considered a “purpose credit” within the meaning of Regulation T, U or X of the Federal Reserve Board or (c) has taken or permitted to be taken or will take any action that might cause any Note Document to violate Regulation T, U or X of the Federal Reserve Board.
5.20 Ownership of Properties.
(a) The Company and each of its Subsidiaries has valid and legal title to, or valid leasehold interests in, all property necessary or used in the ordinary conduct of its business, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The property of the Company and each of its Subsidiaries is subject to no Liens other than Permitted Liens.
5.21 Disclosure. The Company understands and confirms that the Purchaser will rely on the foregoing representations in effecting transactions in securities of the Company. No representation or warranty by the Company contained in this Agreement, when taken as a whole and together with the SEC Reports, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; provided that with respect to any projections and forward-looking information and information of a general economic or industry nature contained in such materials, the Company represents only that such information was based upon good faith estimates and assumptions believed by the Company to be reasonable at the time made, it being recognized by the Purchasers that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material. The Company acknowledges and agrees that the Purchaser does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 6 hereof.
5.22 Insurance. Each of the Company and each Guarantor are insured by financially sound and reputable insurers against loss or damage of the kinds customarily insured against by Persons of comparable size engaged in the same or similar business.
5.23 Taxes. The Company and each of its Subsidiaries has (A) filed all income and other material Tax returns and reports required by to have been filed by it (including in its
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capacity as a withholding agent), (B) paid all income and other material Taxes required to be paid by it (including in its capacity as a withholding agent), and (C) provided adequate accruals, charges and reserves in accordance with GAAP in their applicable financial statements in respect of all Taxes not yet due and payable, except, in each case, any such Taxes that are being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, severally but not jointly, represents and warrants to the Company as follows as of the Closing Date:
6.1 Investigation; Economic Risk. Each Purchaser acknowledges that it has had an opportunity to discuss the business, affairs and current prospects of the Company with its officers. Each Purchaser further acknowledges having had access to information about the Company that it has requested. Each Purchaser acknowledges that it is able to fend for itself in the transactions contemplated by this Agreement and has the ability to bear the economic risks of its investment pursuant to this Agreement. Each Purchaser further acknowledges that it has obtained its own attorneys, business advisors and tax advisors as to legal, business and tax advice (or has decided not to obtain such advice) and has not relied on the Company or any of its Subsidiaries for such advice.
6.2 Purchase for Own Account. Each Note issued to each Purchaser and the securities issuable upon exercise or conversion thereof will be acquired by such Purchaser for its own account, not as a nominee or agent, and not with a view to or in connection with the sale or distribution of any part thereof.
6.3 Exempt from Registration; Restricted Securities. Each Purchaser understands that the sale of the Notes will not be registered under the Securities Act on the grounds that the sale provided for in this Agreement is exempt from registration under of the Securities Act, and that the reliance on such exemption is predicated in part on each Purchaser’s representations set forth in this Agreement. Each Purchaser understands that the Notes and the Conversion Shares are restricted securities within the meaning of Rule 144 under the Securities Act and must be held indefinitely unless they are subsequently registered or an exemption from such registration is available.
6.4 Accredited Investor. Each Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D of the Securities and Exchange Commission.
6.5 No Disqualification Events. No (a) Purchaser, (b) any of their directors, executive officers, other officers that may serve as a director or officer of any company in which a Purchaser invests, general partners or managing members, nor (c) to Purchaser’s knowledge, any beneficial owner of the Company’s voting equity securities (in accordance with Rule 506(d) of the Securities Act held by a Purchaser is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act (“Disqualification Events”)), except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed reasonably in advance of a Closing in writing in reasonable detail to the Company.
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6.6 Source of Funds. Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:
(a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (NAIC) (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or
(b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
(d) the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14, as amended (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c), (f) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d); or
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(e) the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (d), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or
(f) the Source is or constitutes assets of a governmental plan; or
(g) the Source is one or more employee benefit plans subject to Title I of ERISA, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or
(h) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of Title I of ERISA.
As used in this Section 6.6, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.
If the Purchaser is (1) an “employee benefit plan” within the meaning of Section 3(3) of ERISA that is subject to Title I of ERISA, (2) an individual retirement account described in Section 408(a) of the Code or any other “plan” described in and subject to Section 4975 of the Code, (3) any “governmental plan” or a non-electing “church plan” as defined under Title I of ERISA subject to laws, rules, or regulations that are similar to the fiduciary or prohibited transaction rules of Title I of ERISA (“Similar Law”), or (4) an entity deemed to hold assets of any of the foregoing under 29 C.F.R. 2510.3-101, as modified by Section 3(42) of ERISA, or Similar Law, each of the Purchaser and its authorized fiduciary (the “Fiduciary”) represents, acknowledges and agrees that (A) the Company and its Affiliates are not “fiduciaries” within the meaning of Section 3(21)(A) of ERISA or Similar Law with respect to the Purchaser as a result of the Purchaser’s acquisition or holding of the Notes, and the Fiduciary has not relied on, and is not relying on, any advice of any such person with respect to the Purchaser’s acquisition and holding of the Notes, and (B) the execution and delivery of this Agreement and the acquisition and holding of the Notes hereunder do not violate any law, regulation, constituent documents or policy applicable to such Purchaser.
7. COVENANTS.
From and after the Closing Date until the Notes are repaid or converted in full:
7.1 Negative Covenants. Neither the Company nor any Subsidiary shall, without the prior written consent of the Requisite Purchasers, take any of the following actions:
(a) create, incur, assume or suffer to exist any Lien on or with respect to any of its assets, except Permitted Liens (provided that the security interests of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the
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Collateral Agent, pursuant to the Collateral Documents shall not be subordinated to the Liens securing any Permitted Debt);
(b) create, incur, assume or suffer to exist any Indebtedness, except Permitted Debt;
(c) make any Disposition (other than, for the avoidance of doubt, Permitted Transfers) unless (i) the consideration paid in connection therewith shall be in an amount not less than the fair market value of the property disposed of, (ii) no Default or Event of Default shall have occurred and be continuing both immediately prior to and after giving effect to such Disposition, (iii) such transaction does not involve the sale or other disposition of a minority Equity Interest in any Subsidiary (other than to another Grantor), and (iv) such transaction does not involve a sale, transfer, license or other disposition of Product assets or rights included in the Collateral or any assets that would constitute Collateral if owned by a Company Party (or, in each case, any IP Rights associated therewith) in any of the Key Countries or any state or political subdivision thereof;
(d) engage in any material line of business other than the development, manufacture, marketing, sale and commercialization of the Allurion™ Gastric Balloon and related hardware accessories and services and its Virtual Care Suite services, as described in the 2023 10-K;
(e) make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or redemption, cash settlement or acquisition for value (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of any Indebtedness of the Company or any Subsidiary (other than exchanging any such Indebtedness for capital stock (other than Disqualified Capital Stock) or the proceeds from the sale of capital stock (other than Disqualified Capital Stock)), other than, so long as the Company is in compliance on a pro forma basis with the covenant in Section 7.22(a) after giving effect thereto, (i) a Permitted Refinancing contemplated by clause (p) of the definition of “Permitted Debt” and (ii) the prepayment of Indebtedness contemplated by clauses (a), (b), (j) or (n) of the definition of “Permitted Debt”, as permitted pursuant to the terms thereof;
(f) (i) amend, modify or change its Charter Documents in a manner materially adverse to the rights or remedies of the Purchasers, the Principal Purchaser and/or the Collateral Agent under the Note Documents, (ii) without providing ten (10) days prior notice to the Principal Purchaser (which shall promptly notify the Purchasers of the same) and the Collateral Agent, change its fiscal year, (iii) without providing ten (10) days prior notice to the Principal Purchaser (which shall promptly notify the Purchasers of the same) and the Collateral Agent, change its name, state of organization or form of organization or its Federal taxpayer identification number or its organizational identification number or (iv) amend, modify or change the Product Plan without the prior written consent of the Purchasers;
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(g) enter into any Contract, or grant any right to any other Person, in any case that would conflict with the Note Documents or serve or operate to limit or circumscribe any of the Purchasers’ or Collateral Agent’s rights under the Note Documents (or the Purchasers’ or Collateral Agent’s ability to exercise any such rights) or create, incur, assume or suffer to exist any Lien upon any Collateral or any assets that would constitute “Collateral” if owned by a Company Party (other than Permitted Liens) to secure the Obligations, or agree to do or suffer to exist any of the foregoing (for the avoidance of doubt, not including the Intercreditor Agreement);
(h) enter into any Contract, grant any right to any other Person with respect to the Products or amend or waive any requirements under any agreement with respect to the Products that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; or
(i) increase the size of the Board of Directors to more than seven members on or prior to December 31, 2024 without the prior written consent of the Principal Purchaser, such consent not to be unreasonably withheld.
7.2 Equity Financing. By no later than [***], the Company shall have raised at least $15,000,000 in aggregate gross cash proceeds (not including the surrender of indebtedness as offering proceeds) from the offering and sale of Additional Shares (the “Equity Financing”).
7.3 Maintenance of Insurance. The Company shall, and shall cause its Subsidiaries to, (a) carry and maintain in full force and effect, at the expense of the Company or such Subsidiary, as applicable, and with financially sound and reputable insurance companies that are not Affiliates of the Company, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and of such types and in such amounts as are customarily carried under similarly circumstances by such other Persons, (b) furnish to the Collateral Agent, upon reasonable request from the Collateral Agent (acting at the direction of the Principal Purchaser), information presented in reasonable detail as to the insurance so carried, including copies of all such insurance policies, and (c) use commercially reasonable efforts to ensure, or cause others to ensure, that all such insurance policies required by this Section 7.3 provide that they shall not be terminated, cancelled or materially changed in a manner adverse to the insured Person without at least thirty (30) days’ (or ten (10) days’ for nonpayment of premium) prior written notice to the Company or its Subsidiary, as applicable, and the Collateral Agent. Subject to Section 7.23, the loss payable clauses or provisions in such insurance policies shall be endorsed in favor of and made payable to the Collateral Agent as its interests may appear and such policies shall name the Collateral Agent as “additional insured” or “lender loss payee”, as applicable. Receipt of notice of cancellation or modification of any such insurance policies or reduction of coverage or amounts thereunder shall entitle the Collateral Agent (acting at the direction of the Principal Purchaser) to renew any such policies, cause the coverage and amounts thereof to be maintained at levels required pursuant to the first sentence of this Section 7.3 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Company (payable on demand).
7.4 Guarantee of Obligations and Giving Security. The Company shall, and shall cause the other Company Parties (including Allurion Opco, Allurion France and Allurion
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Australia) to, (a) on the Closing Date, enter into the Security Agreement and the Guaranty and (b) after the Closing Date, cause each of its direct and indirect Subsidiaries (other than any Excluded Subsidiary), whether now existing or hereafter created, that acquires or owns more than a de minimis portion of the Collateral (including, for the avoidance of doubt, any assets that would constitute “Collateral” if such Subsidiary were party to the Security Agreement) after the Closing Date (or that ceases to be an Excluded Subsidiary after the Closing Date) to enter into a joinder or supplement to the Security Agreement to become a grantor thereunder and a joinder or supplement to the Guaranty to become a guarantor thereunder within thirty (30) days thereof (or sixty (60) days thereof solely in the case such Subsidiary is not a “United States person” (as defined in Section 7701(a)(30) of the Internal Revenue Code and the rules and regulations thereunder from time to time)) (in each case, as may be extended by the Collateral Agent (acting at the direction of the Principal Purchaser)), (c) grant to the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, a continuing security interest in all of their respective right, title and interest in, to and under the Collateral whether now or hereafter existing and any and all “proceeds” thereof (as such term is defined in the UCC), in each case, as collateral security for the prompt and complete payment and performance when due of the Obligations, (d) guaranty the due and punctual payment when due of the Obligations and (e) take such other actions (including (x) delivering to the Collateral Agent certificated Equity Interests together with undated transfer powers executed in blank, applicable control agreements, applicable intellectual property security agreements and other instruments, (y) causing the parent of any Subsidiary to execute and deliver a pledge agreement in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, in respect of all outstanding issued Equity Interests of such Subsidiary and (z) delivering such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered on the Closing Date or as the Collateral Agent (acting at the direction of the Principal Purchaser) shall reasonably request and as shall be necessary to create, perfect, and maintain in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, a valid and enforceable first priority Lien (subject to Permitted Liens) on the Collateral of the Company and each of its Subsidiaries (other than Excluded Subsidiaries for so long as they remain Excluded Subsidiaries) as collateral security for the Obligations.
On the Closing Date, the Company authorizes and consents to the Collateral Agent filing, including with the Secretary of State of the State of Delaware any other applicable jurisdiction, one or more financing statements (and continuation statements with respect to such financing statements when applicable) or other similar instruments, registrations or documents, in each case, suitable for filing under the UCC (or equivalent law) of all jurisdictions as may be necessary or, in the opinion of the Collateral Agent (acting at the direction of the Principal Purchaser), desirable to evidence and to perfect and maintain the perfection of, the grant and pledge of the security interests in the Collateral granted by each grantor to the Collateral Agent pursuant to the Security Agreement. For the avoidance of doubt, as set forth further herein, the Collateral Agent shall be authorized but not obligated to file any financing statements (and continuation statements with respect to such financing statements when applicable) or other similar instruments, registrations or documents and the Company shall, at the reasonable request of the Principal Purchaser, file any financing statements (and continuation statements with respect to such financing statements when applicable) or other similar instruments, registrations or documents necessary to create, perfect and maintain the perfection of, the grant and pledge of the security interests in the Collateral granted by each grantor. The Collateral Agent shall be authorized but
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not obligated to file or record any financing statement, continuation statement, amendment or otherwise in connection with the creation, perfection, continuation or maintenance of any security interest or lien or the perfection thereof. The Collateral Agent shall not have any liability or responsibility for the creation, maintenance, continuation or perfection of any security interest or lien or the lapse of any security interest or lien or the perfection thereof, nor shall the Collateral Agent have any liability or responsibility for any party’s failure to create, perfect, continue or maintain any lien or security interest.
7.5 Further Assurances.
(b) The Company shall cooperate and provide assistance as reasonably requested by each of the parties hereto, at the expense of the requesting party (except as otherwise set forth herein), in connection with any litigation, arbitration, investigation or other proceeding (whether threatened, existing, initiated or contemplated prior to, on or after the Closing Date) to
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which the requesting party, any of its Affiliates or controlling persons or any of their respective officers, directors, equityholders, controlling persons, managers, agents or employees is or may become a party or is or may become otherwise directly or indirectly affected or as to which any such Persons have a direct or indirect interest, in each case relating to any Note Document or the transactions contemplated herein or therein, but in all cases excluding any litigation brought by the Company (for itself or on behalf of any Company Indemnified Party) against the Collateral Agent, the Principal Purchaser and/or the Purchasers or brought by the Collateral Agent, the Principal Purchaser and/or the Purchasers (for itself or on behalf of any Purchaser Indemnified Party) against the Company.
(c) In the event that the Company or any of its Subsidiaries acquires any fee interest in any real property having a fair market value in excess of $500,000, then, upon the written request of the Collateral Agent (acting at the direction of the Principal Purchaser), the Company or any such Subsidiary shall execute and deliver a mortgage with respect to such acquired real property to secure the Obligations.
7.6 Intellectual Property Rights. The Company and its Subsidiaries shall use Commercially Reasonable and Diligent Efforts in each of the Key Countries to: (a) take any and all actions, and prepare, execute, deliver and file any and all agreements, documents and instruments, that are reasonably necessary or desirable to preserve diligently and maintain the IP Rights related to any Products in such countries, including payment of maintenance fees or annuities, at the sole expense of the Company, (b) diligently defend (and enforce) the IP Rights related to any Products in such countries against infringement or interference by any other Person, and against any claims of invalidity or unenforceability (including by bringing any legal action for infringement or defending any counterclaim of invalidity or action of a Third Party for declaratory judgment of non-infringement or non-interference), (c) diligently defend against any claim or action in such countries by any other Person that the manufacture, use, marketing, sale, offer for sale, importation or distribution of the Products as currently contemplated infringes on any patent or other intellectual property rights of any other Person or constitutes misappropriation of any other Person’s trade secrets or other intellectual property rights, and (d) when available in respect of any Product and where applicable, apply for regulatory or data exclusivity where available in countries in which sales of such Product occurs. The Company shall not exercise and enforce its applicable rights in any manner that would result in a breach of this Agreement.
7.7 Commercialization of the Products.
(a) The Company and its Subsidiaries shall use Commercially Reasonable and Diligent Efforts to prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or desirable to secure and maintain Marketing Authorization in each of the Key Countries for the Products. The Company shall not withdraw or abandon, or fail to take any action necessary to prevent the withdrawal or abandonment of, Marketing Authorization in each of the Key Countries for the Products. The Company shall use Commercially Reasonable and Diligent Efforts, itself or through one or more Affiliates or Permitted Licensees, to Commercialize the Products in each of the Key Countries in which it has a Marketing Authorization in accordance with the Product Plan.
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(b) The Company shall, and shall cause each of its Subsidiaries to, use Commercially Reasonable and Diligent Efforts to comply with all material terms and conditions of and fulfill all material obligations under each Product Material Contract (including, without limitation, each License Agreement) to which any of them is party. Upon the occurrence of a breach of any such Product Material Contract by any other party thereto, which could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company shall use Commercially Reasonable and Diligent Efforts to seek to enforce all of its (or its Affiliates’) rights and remedies thereunder.
7.8 Board Matters; 2024 Annual Meeting.
(a) Until the Notes are repaid or converted in full, RTW shall have the right to designate one representative who shall serve as a non-voting observer (the “Board Observer”) at all meetings of the Company’s Board of Directors and committees of the Board of Directors. Such Board Observer shall be entitled to all board briefing materials and shall be entitled to attend all meetings of the Board of Directors and committees thereof; provided, however, that such Board Observer shall agree to hold in confidence all information so provided; provided, further, that the Company may exclude the Board Observer from access to any material or meeting or any portion thereof as it deems appropriate, in good faith, to (i) preserve the attorney-client privilege between the Company and its counsel, (ii) avoid a conflict of interest between the Company, on the one hand, and RTW and the other Purchasers or their Affiliates, on the other hand, (iii) avoid the disclosure of trade secrets or non-financial highly confidential information, or (iv) hold a “closed” or “executive” session of the Board of Directors or any committee thereof.
(b) The Company shall include an additional director nominee in the Company’s proxy statement for the election of the Class I directors at the 2024 Annual Meeting of Stockholders, with the recommendation of the Company’s Board of Directors to vote in favor of such additional nominee as well as the “RTW Designated Director” (as defined in that certain Investor Rights and Lock-Up Agreement entered into as of August 1, 2023, by and among the Company and the investors party thereto). Such additional nominee shall go through the Company’s director nomination process led by its Nominating and Corporate Governance Committee. RTW shall have the right to approve such additional nominee, with such approval not to be unreasonably withheld.
(c) The Company shall include a proposal in a definitive proxy statement on Schedule 14A seeking stockholder approval no later than December 31, 2025 to allow the Company to settle conversions of Notes in accordance with this Agreement without giving effect to the provisions of Section 4.11 hereof (the “Stockholder Approval”) and the Company shall use commercially reasonable efforts to secure Stockholder Approval, including by including the recommendation of the Company’s Board of Directors that such proposal is approved and the solicitation by the Company of proxies from its stockholders in connection therewith in the same manner as all other management proposals in such proxy statement, and the voting of proxies of all management appointed proxyholders in favor of such proposal. If the Company does not obtain the Stockholder Approval at such meeting, the Company shall call a special meeting of stockholders each ninety (90) days thereafter at least two times, and thereafter at each subsequent annual meeting to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the Notes are no longer outstanding. Shares of Common Stock issued
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upon conversion of Notes pursuant to this Agreement prior to the Company obtaining Stockholder Approval shall not be entitled to vote in favor of Stockholder Approval.
(d) Notwithstanding any provision to the contrary in this Agreement, (i) the rights of RTW under this Section 7.8 shall not be assignable under any circumstances, and (ii) if RTW and its Affiliates cease to hold more than 20.0% of the principal amount of Notes Outstanding, the rights of RTW under this Section 7.8 shall automatically cease and be of no further effect.
7.9 Reporting. From and after the Closing Date:
7.10 Cash Management. Each Company Party shall, and shall cause each of its Subsidiaries to:
(a) subject to Section 7.23, maintain at all times all Deposit Accounts, Securities Accounts, Commodity Accounts, lockboxes and similar accounts (other than Excluded Accounts) to be held by each Company Party with a bank or financial institution that has executed and delivered to and in favor of the Collateral Agent, for the benefit of the Purchasers, the Principal
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Purchaser and the Collateral Agent, a customary “springing” account control agreement, in form and substance reasonably acceptable to the Collateral Agent (each such Deposit Account, Securities Account, Commodity Account, lockbox or similar account, a “Controlled Account”);
(b) subject to Section 7.23, maintain each such Controlled Account as a cash collateral account, with each such cash collateral account and all cash, checks and other similar items of payment held in any such account to be Collateral securing payment of the Obligations, and each Company Party shall have granted a Lien and security interest to the Collateral Agent, for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, over such Controlled Accounts;
(c) subject to Section 7.23, deposit promptly, and in any event no later than five (5) Business Days after the date of receipt thereof, all cash, checks, drafts or other similar items of payment relating to or constituting payments made in respect of any and all accounts receivable, Contracts or any other rights and interests into one or more Controlled Accounts or Excluded Accounts; and
(d) at any time after the occurrence and during the continuance of an Event of Default, at the request of the Collateral Agent (acting at the direction of the Principal Purchaser), direct all payments constituting proceeds of accounts receivable to be directed into lockbox accounts pursuant to agreements in form and substance reasonably satisfactory to the Collateral Agent (acting at the direction of the Principal Purchaser).
7.11 Existence. The Company shall, and shall cause each of its Subsidiaries to, (a) preserve and maintain its existence and all Governmental Approvals necessary or material to the conduct of its business, (b) preserve and maintain each of its rights, franchises and privileges unless failure to do any of the foregoing could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (c) qualify and remain qualified in good standing in each jurisdiction where the failure to preserve and maintain such qualification could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, including appointing and employing such agents or attorneys in each jurisdiction where it shall be necessary to take action under this Agreement, and (d) comply in all material respects with its Charter Documents.
7.12 Payment of Obligations. The Company will, and will cause each other Company Party to, pay and discharge: (a) prior to the date on which penalties attach thereto, all federal and state and other Taxes imposed upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Company Party, (b) as the same shall become due and payable, all lawful claims which, if unpaid, would by Law become a Lien upon any Collateral, and (c) prior to the date on which such Indebtedness shall become delinquent or in default, all material Indebtedness, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.
7.13 Maintenance of Properties. The Company shall, and shall cause each of its Subsidiaries to, maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition (ordinary wear and
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tear and casualty and condemnation events excepted) except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and shall make all necessary repairs thereto and renewals and replacements thereof, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
7.14 Books and Records. The Company shall, and shall cause each of its Subsidiaries to, maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Company Party or such Subsidiary, as the case may be. The Company shall, and shall cause each of its Subsidiaries to, maintain such books of record and account in material conformity with all applicable requirements of any Governmental Entity having regulatory jurisdiction over such Company Party or such Subsidiary, as the case may be.
7.15 Use of Proceeds. The Company shall use the proceeds of the issuance of the Notes to refinance outstanding obligations under the Fortress Credit Agreement in full and to pay fees and expenses in connection therewith and with the transactions contemplated hereby. In no event shall the proceeds from the issuance of the Notes be used to fund any activities of or business with any Person, or in any country, territory or region, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as a Purchaser or otherwise) of Sanctions or otherwise in contravention of any Law or of any Note Document.
7.16 ERISA Compliance. The Company shall, and shall cause its Subsidiaries to, do each of the following: (a) maintain each Plan in compliance with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Law, (b) cause each Pension Plan that is qualified under Section 401(a) of the Internal Revenue Code to maintain such qualification, and (c) make all contributions required to be made by the Company and its Subsidiaries to any Pension Plan subject to Section 412 or Section 430 of the Internal Revenue Code, in each case, except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
7.17 Compliance with Material Contracts. The Company shall, and shall cause its Subsidiaries to, comply in all respects with each Contractual Obligation of such Person, except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
7.18 Compliance with Laws. The Company shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and shall, or shall cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises, permits or registrations reasonably necessary in connection with the conduct of the Company’s and its Subsidiaries’ respective businesses.
7.19 Anti-Corruption Laws; Anti-Terrorism Laws.
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(a) None of the Company, any of its Subsidiaries, and any of their respective directors, officers, employees or agents shall, directly or indirectly, engage in any activity which would constitute a violation of the U.S. Foreign Corrupt Practices Act (the “FCPA”) or make, offer, promise or authorize any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority or (iii) securing any improper advantage, in the case of clauses (i), (ii) and (iii) above in order to assist the Company or any of its Affiliates in obtaining or retaining business for or with, or directing business to, any Person.
(b) Neither the Company nor any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries permit any Affiliate controlled by the Company to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person who is subject to Sanctions. Neither the Company nor any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries permit any Affiliate controlled by the Company to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Person who is subject to Sanctions, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Person who is subject to Sanctions, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
7.20 Data Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers employees and/or other Third Parties (collectively, “Personal Information”), the Company shall, and shall cause its Subsidiaries to, maintain compliance in all material respects with all Applicable Laws in all relevant jurisdictions, including the General Data Protection Regulation, the Company’s and its Subsidiaries’ privacy policies and the requirements of any contracts or codes of conduct to which the Company’s or any of its Subsidiaries is a party, except for any such events that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Company shall maintain commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. The Company shall, and shall cause its Subsidiaries to, maintain compliance in all material respects with all Applicable Laws relating to data loss, theft and breach of security notification obligations, except for any such event that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
7.21 Products. In connection with the development, testing, manufacture, marketing or sale of each and any Product by the Company or any Subsidiary thereof, the Company shall, or shall cause its Subsidiaries to, comply in all material respects with all Permits.
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7.22 Financial Covenants.
(a) The Company or Allurion Opco shall at all times maintain a minimum aggregate balance of twelve million and five hundred thousand dollars ($12,500,000) in unrestricted cash in one or more Controlled Accounts maintained with one or more commercial banks or similar deposit-taking institutions in the U.S.; provided that until the date which is forty-five (45) days after the Closing Date (or such longer period as the Collateral Agent (acting at the direction of the Principal Purchaser) may agree), such balance may be held in an account in the name of the Company or Allurion Opco which is not a Controlled Account and maintained with one or more commercial banks or similar deposit-taking institution in the U.S.
(b) As of the last day of each fiscal quarter set forth below, the Company and its Subsidiaries shall have received consolidated Revenue for the period of twelve (12) consecutive months ending on the last day of such fiscal quarter, determined on the basis of the financial statements in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable, covering the relevant period, in an aggregate amount not less than the corresponding amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending |
TTM Revenue |
March 31, 2025 |
$51,074 |
June 30, 2025 |
$53,600 |
September 30, 2025 |
$55,745 |
December 31, 2025 |
$58,500 |
March 31, 2026 |
$60,779 |
June 30, 2026 |
$63,220 |
September 30, 2026 |
$65,740 |
December 31, 2026 |
$67,275 |
March 31, 2027 |
$69,091 |
June 30, 2027 |
$71,665 |
September 30, 2027 |
$74,339 |
December 31, 2027 |
$77,366 |
March 31, 2028 |
$79,455 |
June 30, 2028 |
$82,414 |
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September 30, 2028 |
$85,490 |
December 31, 2028 |
$88,971 |
March 31, 2029 |
$91,373 |
June 30, 2029 |
$94,777 |
September 30, 2029 |
$98,313 |
December 31, 2029 |
$102,317 |
March 31, 2030 |
$105,079 |
June 30, 2030 |
$108,993 |
September 30, 2030 |
$113,060 |
December 31, 2030 |
$117,664 |
March 31, 2031 |
$120,841 |
(c) Commencing on December 31, 2025 and on the last day of each fiscal quarter ending thereafter during the term of the Notes, the Company’s and its Subsidiaries’ consolidated business operations conducted outside of the United States shall be profitable, as measured on a GAAP basis for the three-month period ended on each such date, determined on the basis of the financial statements in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable, covering the relevant period; provided, that such profitability shall be calculated by (i) deducting non-cash fair value remeasurements (e.g. the RIFA, earn out and derivatives), depreciation and amortization expense and stock compensation expense to determine adjusted net income and (ii) to the extent mutually agreed upon by the Principal Purchaser and the Company (it being agreed that the Principal Purchaser shall not unreasonably withhold its agreement to the same), adjusting the following total company line items by contributions directly attributable to potentially generating sales in the United States: revenue, cost of goods sold, sales and marketing, quality and regulatory, clinical trial and general and administrative matters (e.g. employees hired to generate U.S. sales, marketing costs specific to launching or selling in the U.S., U.S. clinical trial or related expenses, and human resources or finance personnel related to U.S.-specific hiring and accounting); provided that, notwithstanding the foregoing in this Section 7.22(c), solely with respect to the last day of each fiscal quarter ending on March 31, 2026 and March 31, 2027, so long as the Company’s and its Subsidiaries’ consolidated business operations conducted outside of the United States for such fiscal quarter do not have a net loss of greater than $6 million and $2 million, respectively (calculated as set forth above in this Section 7.22(c)), this Section 7.22(c) shall be deemed satisfied for such fiscal quarter.
7.23 Other Post-Closing Date Matters. The Company will, and will cause each of its Subsidiaries to, take each of the actions set forth on Schedule II within the time period
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prescribed therefor on such schedule (as such time period may be extended by the Principal Purchaser in its sole discretion).
7.24 No Hedging. Prior to the pricing of the Next Equity Financing Price, no Purchaser or any of its Affiliates shall enter into or engage in any hedge, swap, short sale, derivative transaction or other agreement or arrangement that transfers to any third party, directly or indirectly, in whole or in part, any of the economic consequences of ownership of any shares of Common Stock issuable or issued upon conversion of any of the Notes (other than, for the avoidance of doubt, transfers of Notes permitted by this Agreement).
8. DEFAULT.
8.1 Events of Default. For purposes of this Agreement, the term “Event of Default” means the occurrence of any of the following:
(a) default in any payment of interest on any Note when due and payable, and the default continues for a period of ten (10) consecutive calendar days;
(b) default in the payment of the principal or premium, if any, on any Note (including the Redemption Price and Fundamental Change Purchase Price ) when due and payable on the Maturity Date, upon required repurchase, redemption, upon declaration of acceleration or otherwise;
(c) (i) failure by the Company to comply with its obligations under Section 4 hereof to convert the Notes upon exercise of a Purchaser’s conversion right or (ii) failure by the Company to issue a notice in accordance with the provisions of Section 10.1 hereof, and, in each case of clauses (i) and (ii), any such failure continues for three (3) consecutive Business Days;
(d) failure by any Company Party to comply with any of its other agreements contained in the Notes, this Agreement or any other Note Document (other than (i) a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section 8.1 specifically provided and (ii) Section 14, the failure to comply with which shall be governed solely by the terms of Section 14 and shall not constitute an Event of Default), and such failure continues for a period of thirty (30) days after written notice from the Purchasers comprising at least the Requisite Purchasers, the Principal Purchaser and/or the Collateral Agent (acting at the direction of the Principal Purchaser) of such default, which notice shall state that it is a “Notice of Default” hereunder;
(e) any representation or warranty made by any Company Party under or in connection with this Agreement or any other Note Document shall prove to have been incorrect in any material respect when made;
(f) any Company Party or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable after giving effect to any applicable grace or cure period as originally provided by the terms of such Indebtedness;
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(g) the occurrence and continuation of a default by the Company or any Subsidiary with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any Material Indebtedness, whether such Indebtedness now exists or shall hereafter be created resulting in such Indebtedness becoming or being declared due and payable or resulting in such Indebtedness being required to be repurchased, prepaid, defeased or redeemed;
(h) the Company or any Significant Subsidiary of the Company commences a voluntary case or other proceeding seeking insolvency, bankruptcy, liquidation, winding up, administration, reorganization, arrangement, adjustment, protection or other relief or composition with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency, reorganization, relief of debtors or other similar law, including any proceeding under applicable corporate law seeking compromise or arrangement of, or stay of proceedings to enforce, some or all of the debts, now or hereafter in effect or seeking the appointment of a trustee, receiver, receiver-manager, administrator, liquidator, custodian, monitor or other similar official of the Company or such Significant Subsidiary of the Company or any substantial part of the Company’s or such Significant Subsidiary of the Company’s property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall admit in writing its inability to pay its debts generally or make a general assignment for the benefit of creditors, or shall become insolvent or fail generally to pay its debts as they become due;
(i) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary of the Company seeking insolvency, bankruptcy, liquidation, winding up, administration, reorganization, arrangement, adjustment, protection or other relief or composition with respect to the Company or such Significant Subsidiary of the Company or its debts under any bankruptcy, insolvency, reorganization, relief of debtors or other similar law including any proceeding under applicable corporate law seeking compromise or arrangement of, or stay of proceedings to enforce, some or all of the debts, now or hereafter in effect or seeking the appointment of a trustee, receiver, receiver-manager, administrator, liquidator, custodian, monitor or other similar official of the Company or such Significant Subsidiary of the Company or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) consecutive days; or
(j) there is entered against the Company or a Subsidiary which is not an Immaterial Subsidiary a final, enforceable and non-appealable judgment by a court of competent jurisdiction for the payment of money in an aggregate amount exceeding $10,000,000 (or the equivalent amount in other currencies) (to the extent not covered by independent third-party insurance (as to which the relevant insurance company has been notified of the claim and has not denied coverage) or another indemnity obligation from a third party which, to the Knowledge of the Company, is solvent and which third party has been notified of the claim under such indemnification obligation and not disputed that it is liable for such claim) and such judgment or order is not satisfied, vacated, discharged or stayed or bonded for a period of forty-five (45) consecutive days.
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8.2 Acceleration; Rescission and Annulment.
(a) After the occurrence and during the continuance of an Event of Default, the Requisite Purchasers or the Principal Purchaser at the direction of the Requisite Purchasers may declare 100% of the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes then Outstanding to be due and payable immediately. If an Event of Default specified in Section 8.1(h) or Section 8.1(i) with respect to the Company occurs and is continuing, 100% of the principal of, premium, if any, and accrued and unpaid interest, if any, on all Notes shall automatically become due and payable.
(b) Notwithstanding anything to the contrary herein, the provisions of Section 8.2(a), however, are subject to the conditions that if, at any time after the principal of, premium, if any, and accrued and unpaid interest, if any, on, the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained as herein provided:
(i) rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and
(ii) any and all Events of Default under this Agreement, other than the non-payment of the principal of the Notes that became due because of the acceleration, shall have been cured, waived or otherwise remedied as provided herein,
then, the Requisite Purchasers, by written notice to the Company, may waive all defaults and Events of Default with respect to the Notes (other than a default or an Event of Default resulting from the failure to pay the Fundamental Change Purchase Price or Redemption Price, to pay or deliver, as the case may be, the number of shares of Common Stock due upon conversion of a Note, or with respect to another covenant or provision of this Agreement or the Notes that cannot be modified or amended without the consent of each affected Purchaser) and may rescind and annul the declaration of acceleration resulting from such defaults or Events of Default (other than those resulting from the failure to pay the Fundamental Change Purchase Price or Redemption Price, to pay or deliver, as the case may be, the number of shares of Common Stock due upon conversion of a Note, or with respect to another covenant or provision of this Agreement or the Notes that cannot be modified or amended without the consent of each affected Purchaser) and their consequences; provided, however, that no such rescission or annulment will extent to or will affect any subsequent default or shall impair any right consequent on such default.
8.3 Control by Majority. At any time, the Requisite Purchasers may direct in writing the time, method and place of conducting any proceeding for any remedy available to the Principal Purchaser or of exercising any trust or power conferred on the Principal Purchaser. However, the Principal Purchaser may refuse to follow any direction that conflicts with law or this Agreement or that the Principal Purchaser determines to be unduly prejudicial to the rights of a Purchaser, or that would involve the Principal Purchaser in personal liability. Prior to taking any action hereunder, the Principal Purchaser will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
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8.4 Limitation on Suits. No Purchaser may pursue a remedy with respect to this Agreement or the Notes unless:
(a) such Purchaser has previously delivered to the Principal Purchaser written notice that an Event of Default has occurred and is continuing;
(b) Purchasers holding at least 25% of the aggregate principal amount of the then Outstanding Notes deliver to the Principal Purchaser a written request that the Principal Purchaser pursue a remedy with respect to such Event of Default;
(c) such Purchaser or Purchasers have offered and, if requested, provided to the Principal Purchaser reasonable indemnity satisfactory to the Principal Purchaser against any loss, liability or other expense of compliance with such written request;
(d) the Principal Purchaser has not complied with such written request within sixty (60) days after receipt of such written request and offer of indemnity or security; and
(e) during such 60-day period, the Requisite Purchasers did not deliver to the Principal Purchaser a direction inconsistent with such written request.
9. CONDITIONS PRECEDENT. This agreement shall become effective and binding upon the parties hereto on the Execution Date only if the following conditions precedent have been satisfied:
(a) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received (i) a counterpart of this Agreement signed on behalf of each party hereto and (ii) a Note payable to each Purchaser signed by the Company;
(b) The Company shall have delivered to the Purchasers, the Principal Purchaser and the Collateral Agent (i) evidence reasonably satisfactory to the Purchasers, the Principal Purchaser and the Collateral Agent of, substantially concurrently with the Closing, (A) the repayment by Allurion Opco of the outstanding obligations under the Fortress Credit Agreement (other than obligations which expressly survive payoff and termination under the terms of the Fortress Credit Agreement) and the termination of all commitments thereunder, (B) the irrevocable termination and release of all Liens encumbering any of the assets and property of the Company Parties related thereto and the irrevocable termination of all guaranties provided by the Company Parties and any Subsidiaries of the Company Parties related thereto, (C) the Company Parties not having any Indebtedness other than the Obligations and Permitted Debt and (D) the Company Parties not having any Liens other than Permitted Liens and (ii) customary payoff documentation relating to the foregoing in form and substance reasonably satisfactory to the Purchasers (including UCC-3 termination statements and termination and release documents to be filed relating to intellectual property security agreements, in each case, as may be necessary to release all Liens (other than Permitted Liens) and other rights of any Person in any collateral described in the Collateral Documents previously granted by any Person);
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(c) Each of the Company and each other Company Party shall have executed and delivered to the Collateral Agent the Collateral Documents to which it is a party, including all Short-Form IP Security Agreements, Real Property Security Documents and any other agreements, documents or instruments required to be provided under any Collateral Document on the Closing Date;
(d) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received a certificate, dated as of the Closing Date, duly executed and delivered by a Responsible Officer of each Company Party, as to (i) the true and complete copies of the charter documents and by-laws (or formation document or other equivalent document), including all amendments thereto, of such Company Party, (ii) the resolutions of the Board of Directors (or equivalent decision-making body) of such Company Party then in full force and effect approving the execution, delivery and performance of this Agreement and each other Note Document to which it is or is to be a party and the transactions contemplated hereby and thereby, (iii) a copy of a good standing certificate or the equivalent thereof (to the extent such concepts are recognized in such jurisdictions as are applicable), dated a date reasonably close to the Closing Date, for such Company Party and (iv) a list of the officers and directors (or managing member, general partner or equivalent Person authorized to act with respect to each Note Document) of such Company Party authorized to sign agreements, including the Note Documents, together with their specimen signatures, which certificate the Collateral Agent, the Principal Purchaser and the Purchasers may conclusively rely upon;
(e) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received, subject to Section 7.23, (i) all documents, instruments, financing statements or similar registration forms and notices of security properly registered, recorded and filed in all places, (ii) all lien, litigation and other searches conducted as of a recent date prior to the Closing Date in all jurisdictions and (iii) all financing statements (naming each Company Party as a debtor and the Collateral Agent as a secured party), consents, approvals, acknowledgements, confirmations, undertakings, subordinations, discharges, waivers, directions, negotiable documents of title and other documents and instruments, in each case, which are desirable (as determined by the Collateral Agent (acting at the direction of the Principal Purchaser)) or necessary to make effective the security interests created by the Collateral Documents and to ensure the perfection and the first-ranking priority of such security interest subject only to Permitted Liens;
(f) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received opinions of counsel to the Company and the other Company Parties addressed to the Purchasers, the Principal Purchaser and the Collateral Agent relating to the status and capacity of the Company and the other Company Parties, the due authorization, execution and delivery and the validity and enforceability of the Note Documents to which any Company Party is a party, and, subject to Section 7.23, perfection of the security granted pursuant to the Collateral Documents to which any Company Party is a party, and such other matters as the Purchasers may reasonably request;
(g) Subject to Section 7.23, the Collateral Agent shall have received certificates of insurance evidencing that the insurance required to be maintained pursuant
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to Section 7.3 is in full force and effect, naming the Collateral Agent, for the benefit of itself and the Purchasers and the Principal Purchaser, as additional insured and lender loss payee thereunder, in each case, in form and substance reasonably satisfactory to the Purchasers, the Principal Purchaser and the Collateral Agent;
(h) Each of the Purchasers, the Principal Purchaser and the Collateral Agent shall have received (or shall substantially contemporaneously with the issuance of the Notes on the Closing Date receive) for its account, all fees, costs and expenses (including any counsel fees) due and payable pursuant to Section 13.10;
(i) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received evidence satisfactory to the Purchasers that, immediately after giving effect to the issuance of the Notes and the consummation of the other transactions contemplated under the Note Documents to occur on the Closing Date, the Company is in compliance with the covenant set forth in Section 7.22(a);
(j) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received evidence satisfactory to the Purchasers that the Company and its Subsidiaries have received Revenue for the period of twelve (12) consecutive months ending on the last day of the fiscal quarter ending December 31, 2023 in an aggregate amount not less than $53,466,930;
(k) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received evidence that the Company Parties have obtained all Governmental Approvals and third party permits, licenses, approvals and consents necessary in connection with the execution, delivery and performance of the Note Documents by the Company Parties, the consummation by the Company Parties of their obligations in respect of the issuance of the Notes and the other transactions contemplated under the Note Documents or the operation and conduct of the business of the Company Parties and the ownership of their properties (including their Product Commercialization and Development Activities);
(l) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received a certificate, dated as of the Closing Date and in form satisfactory to the Purchasers, duly executed and delivered by a Responsible Officer of the Company certifying that: (i) as of the Closing Date, (x) the representations and warranties set forth in each Note Document that are qualified by materiality, Material Adverse Effect or the like are, in each case, true and correct as of the Closing Date; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date, (y) the representations and warranties set forth in each Note Document that are not qualified by materiality, Material Adverse Effect or the like are, in each case, true and correct in all material respects as of the Closing Date; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date, and (z) no Event of Default has occurred and is continuing, or could reasonably be expected to result from the issuance of the Notes or the consummation of any transactions contemplated under the Note Documents to occur on the Closing Date, and (ii) all of the
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conditions set forth in this Article 9 have been satisfied (or waived in writing by the Collateral Agent, the Principal Purchaser and the Purchasers) except to the extent such condition relates to the satisfaction or approval in form or substance of any documents by the Collateral Agent, the Principal Purchaser and the Purchasers;
(m) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received a solvency certificate substantially in the form of Exhibit G, duly executed and delivered by the chief financial or accounting Responsible Officer of the Company, dated as of the Closing Date, in form and substance reasonably satisfactory to the Purchasers;
(n) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received a fully completed Perfection Certificate, in form and substance reasonably satisfactory to the Collateral Agent, the Principal Purchaser and the Purchasers;
(o) The Collateral Agent, the Principal Purchaser and the Purchasers shall have received, as applicable, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act and 31 C.F.R. § 1010.230;
(p) The Collateral Agent shall have received the delivery of all certificates (in the case of Equity Interests that are securities (as defined in the UCC)) evidencing the issued and outstanding Equity Interests owned by the Company and/or any of its Subsidiaries that are required to be pledged under the Collateral Documents, which certificates in each case shall be accompanied by undated instruments of transfer duly executed in blank, or, in the case of Equity Interests that are uncertificated securities (as defined in the UCC), confirmation and evidence satisfactory to the Collateral Agent, the Principal Purchaser and the Purchasers that the security interest required to be pledged therein under the Collateral Documents has been transferred to and perfected by the Collateral Agent for the benefit of itself, the Principal Purchaser and the Purchasers in accordance with Articles 8 and 9 of the UCC; provided that those certificated Equity Interests and undated instruments of transfer required to be delivered after the Closing Date pursuant to Section 7.23 shall be delivered on or before the applicable dates provided in Section 7.23 and shall be subject to the terms and conditions of Section 7.23;
(q) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received (i) the Intercreditor Agreement duly executed by the Company Parties, (ii) the RIFA Amendment duly executed by Allurion Opco and (iii) the Side Letter Amendment duly executed by the Company and Allurion Opco; and
(r) The Purchasers, the Principal Purchaser and the Collateral Agent shall have received such other documents as any Purchaser, the Principal Purchaser and/or the Collateral Agent shall have reasonably requested in connection with this Agreement and the other Note Documents.
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10. REPURCHASE AND REDEMPTION.
10.1 Repurchase Offer by the Company upon a Fundamental Change.
(a) If a Fundamental Change occurs at any time, then the Company shall make an offer to each Purchaser to purchase for cash all of such Purchaser’s Notes on a date (the “Fundamental Change Purchase Date”) specified by the Company that is not less than 20 Business Days or more than 35 Business Days following the date on which the Company delivers the Fundamental Change Company Notice, at a purchase price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to, but excluding, the Fundamental Change Purchase Date (the “Fundamental Change Purchase Price”) and, prior to the Fundamental Change Expiration Time, the Purchaser shall have the right, at such Purchaser’s option, to accept the Company’s offer in respect of any or all of such Purchaser’s Notes, or any portion thereof in an Authorized Denomination.
(b) On or before the fifth (5th) Business Day after the occurrence of a Fundamental Change, the Company shall provide to all Purchasers a written notice (the “Fundamental Change Company Notice”) of the occurrence of such Fundamental Change, the offer of the Company to purchase for cash all of the Purchaser’s Notes and the option of the Purchasers arising as a result thereof. Such notice shall be sent in accordance with Section 13.5 hereof. Each Fundamental Change Company Notice shall specify:
(i) the events causing the Fundamental Change;
(ii) the Effective Date of the Fundamental Change and the related Make-Whole Fundamental Change;
(iii) the offer of the Company to purchase for cash all of the Purchaser’s Notes pursuant to Section 10.1;
(iv) the last date on which a Purchaser may accept the purchase offer pursuant to Section 10.1;
(v) the Fundamental Change Purchase Price;
(vi) the Fundamental Change Purchase Date;
(vii) the applicable Conversion Rate and any adjustments to the applicable Conversion Rate resulting from the Fundamental Change (including as a result of a Make-Whole Fundamental Change), if applicable;
(viii) if applicable, that the Notes with respect to which a Fundamental Change Purchase Notice has been delivered by a Purchaser may be converted only if such Purchaser withdraws the Fundamental Change Purchase Notice;
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(ix) that the Purchasers must exercise the purchase right prior to the Fundamental Change Expiration Time;
(x) that the Purchasers shall have the right to withdraw any Notes surrendered for purchase prior to the Fundamental Change Expiration Time; and
(xi) any procedures that Purchasers must follow to require the Company to purchase their Notes.
(c) No failure of the Company to give the foregoing notices and no defect therein shall limit the Purchasers’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to Section 10.1, except to the extent Purchaser is prejudiced thereby.
(d) Following the offer by the Company to purchase the Notes in accordance with the Fundamental Change Company Notice, the Purchaser shall have the right, at the option of such Purchaser, to accept the offer of the Company to purchase the Notes under Section 10.1 by delivering to the Company of a duly completed notice (the “Fundamental Change Purchase Notice”), in the form set forth in Attachment 2 to the Form of Note attached hereto as Exhibit A, prior to Close of Business on the Business Day immediately preceding the Fundamental Change Purchase Date (the “Fundamental Change Expiration Time”).
(e) The Fundamental Change Purchase Notice in respect of any Notes to be purchased shall state:
(i) the portion of the principal amount of such Notes to be purchased, which must be $1,000 or an integral multiple of $1.00 in excess thereof; and
(ii) that such Notes are to be purchased by the Company pursuant to the applicable provisions of the Notes and this Agreement.
(f) Upon receipt by the Company of a Fundamental Change Purchase Notice specified in Section 10.1(b), the Purchaser of the Note in respect of which such Fundamental Change Purchase Notice was given shall (unless such Fundamental Change Purchase Notice is withdrawn in accordance with Section 10.1(g)) thereafter be entitled to receive solely the Fundamental Change Purchase Price in cash with respect to such Note. Such Fundamental Change Purchase Price shall be paid to such Purchaser on the later of (x) the applicable Fundamental Change Purchase Date (provided the conditions in this Section 10.1 have been satisfied, and subject to extensions to comply with applicable law) and (y) the time of delivery of such Note to the Company by the Purchaser thereof in the manner required by Section 10.1 (which, for the avoidance of doubt, may occur after the Fundamental Change Expiration Time).
(g) A Fundamental Change Purchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Company in
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accordance with the Fundamental Change Company Notice at any time prior to the Fundamental Change Expiration Time specifying:
(i) the principal amount of the withdrawn Notes, which must be $1,000 or an integral multiple of $1.00 in excess thereof, with respect to which such notice of withdrawal is being submitted;
(ii) if previously delivered, the certificate numbers of the withdrawn Notes; and
(iii) the principal amount, if any, of each Note that remains subject to the Fundamental Change Purchase Notice which must be $1,000 or an integral multiple of $1.00 in excess thereof.
The Company will promptly return to the respective Purchasers thereof any Notes with respect to which a Fundamental Change Purchase Notice has been withdrawn in compliance with the provisions of this Section 10.1. If not previously delivered, following the Fundamental Change Expiration Time, (unless such Fundamental Change Purchase Notice is withdrawn in accordance with Section 10.1(g)), the Purchaser shall be obligated to deliver the subject Notes in accordance with Section 10.1.
10.2 Deposit of Fundamental Change Purchase Price or Redemption Price. Prior to 12:00 p.m., New York City time, on the later of (x) Fundamental Change Purchase Date or Redemption Date and (y) the date the Purchaser delivers the subject Notes, the Company shall deposit with the Purchasers an amount of money (in immediately available funds if deposited on such Business Day) sufficient to pay the Fundamental Change Purchase Price or the Redemption Price, as applicable, of all the Notes or portions thereof that are to be purchased as of the Fundamental Change Purchase Date or Redemption Date, as applicable. If the applicable Purchasers are wired cash sufficient to pay the Fundamental Change Purchase Price or the Redemption Price of the Notes for which a Fundamental Change Purchase Notice or Redemption Notice has been tendered and not withdrawn in accordance with this Agreement on the Fundamental Change Purchase Date or Redemption Date, as applicable, then, as of such Fundamental Change Purchase Date or Redemption Date (a) such Notes will cease to be outstanding and interest will cease to accrue thereon (whether or not such Notes have been delivered to the Company) and (b) all other rights of a Purchaser in respect thereof will terminate (other than the right to receive the Fundamental Change Purchase Price or the Redemption Price, as applicable, and any previously accrued and unpaid interest on such Notes upon delivery of such Notes).
10.3 Notes Purchased or Redeemed in Whole or in Part. Any Note that is to be purchased or redeemed pursuant to this Section 10, whether in whole or in part, shall be surrendered to the Company (with due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the Purchaser thereof or such Purchaser’s attorney duly authorized in writing) and, to the extent that only a part of the Note so surrendered is to be purchased or redeemed, the Company shall execute and deliver to the Purchaser of such Note, without service charge, a new Note or Notes, of any Authorized Denomination as requested by such Purchaser (or in the case of a Redemption, the Company) in aggregate principal amount equal
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to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not purchased or redeemed.
10.4 Covenant To Comply with Applicable Laws upon Purchase of Notes. In connection with any offer to purchase Notes under Section 10.1, the Company shall, in each case if required by law, (a) comply with Rule 13e-4, Regulation 14E and any other tender offer rules under the Exchange Act that may then be applicable, (b) file a Schedule TO or any other required schedule under the Exchange Act and (c) otherwise comply with all U.S. federal or state securities laws applicable to the Company in connection with such purchase offer, in each case, so as to permit the rights and obligations under this Section 10 to be exercised in the time and in the manner specified under this Section 10.
10.5 Right of the Company to Redeem the Notes after the Fourth Anniversary of the Closing Date.
(a) Except as provided in Section 10.5(b)(ii), the Company may not redeem the Notes at its option at any time before the fourth anniversary of the Closing Date.
(b) Subject to the terms of this Section 10.5, (i) on or after the fourth anniversary of the Closing Date, the Company has the right, at its election, to redeem all, or any portion of the Notes in an Authorized Denomination, at any time and from time to time during such period, for a cash purchase price equal to the Redemption Price, but only if the Last Reported Sale Price per Common Stock exceeds one hundred fifty percent (150%) of the Conversion Price on each of at least twenty (20) Trading Days (whether or not consecutive) during the thirty (30) consecutive Trading Days ending on, and including, the Trading Day immediately before the Redemption Notice Date for such Redemption; and (ii) following the occurrence of a Fundamental Change, on or after the end of any Make-Whole Fundamental Change Period relating to such Fundamental Change, the Company has the right, at its election, to redeem all, but not less than all, of the Notes for a cash purchase price equal to the Redemption Price.
(c) The Redemption Date for any Redemption will be a Business Day of the Company’s choosing that is no more than twenty (20), nor less than five (5), Scheduled Trading Days after the Redemption Notice Date for such Redemption; provided that in the case of a Redemption pursuant to Section 10.5(b)(ii), the Redemption Date may not be prior to the Business Day following the end of any Make-Whole Fundamental Change Period.
(d) The “Redemption Price” for any Note called for Redemption is an amount in cash equal to the principal amount of such Note plus accrued and unpaid interest on such Note to, but excluding, the Redemption Date for such Redemption.
(e) To call any Notes for Redemption, the Company must send to each Purchaser of such Notes a written notice of such Redemption (a “Redemption Notice”). Such Redemption Notice must state:
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(i) that the Notes have been called for Redemption, and briefly describing the Company’s Redemption right under this Agreement;
(ii) the Redemption Date for such Redemption;
(iii) the Redemption Price per Note for such Redemption;
(iv) that Notes called for Redemption may be converted at any time before the Close of Business on the Business Day immediately before the Redemption Date (or, if the Company fails to pay the Redemption Price due on such Redemption Date in full, at any time until such time as the Company pays such Redemption Price in full);
(v) the Conversion Rate in effect on the Redemption Notice Date for such Redemption and a description and quantification of any adjustments to the Conversion Rate that may result from such Redemption; and
(vi) that Notes called for Redemption must be delivered to the Company for the Purchaser thereof to be entitled to receive the Redemption Price.
(f) If less than all Notes then outstanding are called for Redemption, then:
(i) the Notes will be selected by the Company pro rata from each Purchaser based on the amount of Notes originally purchased by each Purchaser; and
(ii) if only a portion of a Note is subject to Redemption and such Note is converted in part following delivery of the Redemption Notice, then the converted portion of such Note will be deemed to be from the portion of such Note that was subject to Redemption.
(g) Without limiting the Company’s obligation to deposit the Redemption Price by the time proscribed by Section 10.2, the Company will cause the Redemption Price for a Note (or portion thereof) subject to Redemption to be paid to the Purchaser thereof on or before the later of (i) the applicable Redemption Date; and (ii) the date such Note is delivered to the Company. Notes called for Redemption must be delivered to the Company for the Purchaser thereof to be entitled to receive the Redemption Price.
(h) Notwithstanding the foregoing, to the extent that any portion of the Notes called for Redemption cannot be converted prior to the Redemption Date due to the Beneficial Ownership Limitation, such portion of the Notes that cannot be converted shall, at the option of the holder thereof, (1) instead be converted into Prefunded Warrants representing an equivalent number of conversion shares in excess of the Beneficial Ownership Limitation or (2) shall not be redeemed and shall remain Outstanding, but from and after the Redemption Date, (i) such portion of the Notes that cannot be converted shall accrue interest at a rate of 0.0% with respect to the principal amount outstanding of such
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non-redeemed portion of the Notes and (ii) (x) the covenants set forth in this Section 7 shall cease to be applicable to the Company and its Subsidiaries and to have further force and effect, and (y) all security interests in the collateral granted to secure the Obligations in favor of the Collateral Agent, the Principal Purchaser and the other Purchasers pursuant to the Note Documents shall be released and discharged and the Collateral Agent shall, at the sole expense of the Company, take such actions as are reasonably requested by the Company to evidence the release and discharge of such security interests.
11. SUCCESSOR COMPANY
11.1 Company May Consolidate, Etc. on Certain Terms. The Company shall not amalgamate or consolidate with, consummate a binding share exchange with, merge with or into or sell, convey, transfer or lease all or substantially all of the consolidated properties and assets of the Company and its Subsidiaries, taken as a whole, to another Person (a “Business Combination Event”), unless:
(a) the resulting, surviving transferee or successor Person (the “Successor Company”), if not the Company, shall be a Qualified Successor Entity that is classified as a corporation for U.S. federal (and applicable state and local) income tax purposes, organized or incorporated and existing under the laws of the United States of America (or any State thereof or the District of Columbia) and the Successor Company (if not the Company) shall expressly assume, by an amendment in form and substance reasonably acceptable to the Requisite Purchasers, all of the obligations of the Company under the Notes and this Agreement; and
(b) immediately after giving effect to such transaction, no default or Event of Default shall have occurred and be continuing under this Agreement with respect to the Notes.
Notwithstanding the foregoing, in the event that upon the occurrence of any such amalgamation, consolidation, binding share exchange, merger, amalgamation, sale conveyance or transfer permitted by this Section 11, the Notes would become convertible into, or exchangeable for, securities issued by a Person that is classified as a corporation for U.S. federal (and applicable state and local) income tax purposes and that is the direct or indirect parent entity (the “Successor Parent Entity”) of the Successor Company in such transaction, such Successor Parent Entity shall expressly assume, by an amendment in form and substance reasonably acceptable to the Requisite Purchasers, all of the obligations of the Company under the Notes and this Agreement, and such Successor Parent entity shall thereafter be deemed to be the “Successor Company” for all purposes under this Agreement (including this Section 11) and the Notes.
11.2 Rights of Successor Company. Upon any such amalgamation, consolidation, merger, amalgamation, conveyance, share exchange, transfer or lease, the Successor Company (if not the Company) shall succeed to, and may exercise every right and power of the Company under this Agreement, and (except in the case of a lease) the Company shall be discharged from its Obligations except in the case of any such lease.
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11.3 Successor Corporation to Be Substituted. In case of any such amalgamation, consolidation, merger, amalgamation, share exchange, conveyance, transfer or lease and upon the assumption by the Successor Company (if other than the Company), by an amendment to this Agreement, executed and delivered to the Purchasers and reasonably satisfactory in form and substance to the Requisite Purchasers, of the due and punctual payment of the principal of and premium (including any Fundamental Change Purchase Price and Redemption Price), if any, accrued and unpaid interest, if any, on all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of this Agreement to be performed by the Company under this Agreement, such Successor Company shall succeed to and be substituted for, and may exercise every right and power of, the Company under this Agreement, with the same effect as if it had been named herein as the party of the first part. All the Notes so issued shall in all respects have the same legal rank and benefit under this Agreement as the Notes theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Notes had been issued at the date of the execution hereof. In the event of any such amalgamation, consolidation, merger, amalgamation, share exchange, conveyance or transfer (but not in the case of a lease), the Person named as the “Company” in the first paragraph of this Agreement as of the date hereof or any successor that shall thereafter have become such in the manner prescribed in this Section 11 may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its Obligations.
12. COLLATERAL AGENT
12.1 Appointment of Collateral Agent.
(a) By acceptance of the Notes, the Purchasers and the Principal Purchaser hereby designate, make, constitute and appoint Acquiom Agency Services LLC as the collateral agent and as Purchasers’ and the Principal Purchasers’ true and lawful attorney-in-fact acting in its capacity as collateral agent, to be the “Collateral Agent”, “Agent” or “Representative”, as the case may be, under the Note Documents and with respect to guarantees provided under the Guaranty and the Collateral Documents pursuant to which, and the Collateral in which, a security interest is to be granted in favor of the Collateral Agent for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent. In connection with the foregoing, the Collateral Agent may take such actions under the provisions of the Note Documents and exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of the Note Documents, together with such actions and powers as are reasonably incidental thereto. The Collateral Agent hereby accepts such appointments and, in such capacity, agrees to hold any security granted to it as collateral for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent in accordance with the terms of the Note Documents. The provisions of this Section 12.1 are solely for the benefit of the Collateral Agent, the Principal Purchaser and the Purchasers, and none of the Company, any Subsidiaries of the Company or any other Person shall have any rights as a third party beneficiary of any of the provisions hereof.
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(b) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall be appointed as the attorney-in-fact of the Company and the other Company Parties subject to and in accordance with the provisions of the Collateral Documents.
12.2 Powers; Rights; General Immunity.
(a) Rights, Powers, Privileges and Duties of Collateral Agent. Without limiting Section 12.1 hereof, the Collateral Agent: (i) shall be named as the Collateral Agent under the Note Documents with respect to the Collateral in which security interests are to be granted in favor of Collateral Agent for the benefit of the Purchasers, the Principal Purchaser and the Collateral Agent, and any other documents relevant thereto, and (ii) shall be named in such capacity as a party plaintiff in any suit to foreclose or otherwise realize upon any such collateral or to enforce the rights granted to Collateral Agent as the secured party under any of the Note Documents. The Collateral Agent may at any time request written direction from the Principal Purchaser with respect to any action to be taken (or not taken) by the Collateral Agent pursuant to any of the Note Documents, including, without limitation, the execution and delivery of any termination, release or such other document requested by the Company pursuant to the Security Agreement, and the parties hereto acknowledge that the Collateral Agent shall, aside from certain ministerial matters, only act on the direction of the Principal Purchaser. The Collateral Agent may consult with counsel of its selection and the advice of such counsel or any opinion of such counsel shall be full and complete authorization in respect of any action taken, suffered or omitted to be taken. All rights, powers, protections, immunities and indemnities afforded to the Collateral Agent in this Agreement shall apply to the Collateral Agent in each of the Note Documents as if the same were set forth therein, mutatis mutandis.
(b) No Responsibility for Certain Matters. The Collateral Agent shall not be responsible for: (i) the execution, effectiveness, genuineness, validity, enforceability, collectability, granting, continuation, maintenance or perfection of any security interest in the Collateral or otherwise granted in connection with the transactions contemplated by the Note Documents, (ii) the effectiveness, validity or enforceability of this Agreement or of any other Note Document, or (iii) any action taken or omitted to be taken by Collateral Agent in good faith with respect to the Collateral, including cash Collateral. Notwithstanding anything in the Note Documents to the contrary, and for the avoidance of doubt, the Collateral Agent shall not have any responsibility or liability for preparing, recording, filing, re-recording, or re-filing any financing statement, perfection statement, continuation statement or other instrument in any public office or for otherwise ensuring the perfection, continuation or maintenance of any security interest granted herein or therein.
12.3 Exculpatory Provisions; Agent Rights.
(a) Neither the Collateral Agent nor any other Person acting as the Collateral Agent’s attorney, agent or sub-agent hereunder will be liable for any acts or omissions or for any error of judgment or mistake of fact or law. The Collateral Agent shall not have any duties or obligations except those expressly set forth herein or in the other
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Note Documents, and its duties hereunder shall be administrative in nature. The permissive right of the Collateral Agent to take permitted actions under the Note Documents shall not be construed as an obligation or duty to do so. Without limiting the generality of the foregoing, the Collateral Agent:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Note Documents; provided that the Collateral Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Collateral Agent to liability or that is contrary to any Note Document or governing law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any bankruptcy or other insolvency law or that may effect a forfeiture, modification or termination of property of a defaulting lender in violation of any such Applicable Law. For purposes of clarity, phrases such as “satisfactory to”, “approved by”, “acceptable to”, “as determined by”, “in the discretion of”, “selected by” and “requested by” the Collateral Agent and phrases of similar import authorize and permit the Collateral Agent to approve, disapprove, determine, act or decline to act in its sole discretion;
(iii) shall not, except as expressly set forth herein, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its affiliates that is communicated to or obtained by the Collateral Agent or any affiliate or agent thereof; and
(iv) shall not have any liability or responsibility for any conversion or calculation performed in connection herewith or any information used in connection with any such conversion or calculation or for the action (or inaction) of any Person hereunder or under any other Note Document.
(b) The Collateral Agent shall not be liable for any action taken or not taken by it: (x) with the written direction of any Purchaser, (y) as directed by a court of competent jurisdiction. The Collateral Agent shall be deemed not to have knowledge of any Event of Default unless and until written notice describing such Event of Default is given to the Collateral Agent in writing by the Company or a Purchaser.
(c) The Collateral Agent shall not be responsible for or have any duty to ascertain, investigate or inquire into: (i) any statement, warranty or representation made in or in connection with this Agreement or any other Note Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Note Document or any other agreement, instrument or document, or
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(v) the satisfaction of any condition set forth in any Note Document or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent; or (vi) whether the Requisite Purchasers have directed the Collateral Agent.
(d) In no event shall the Collateral Agent be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.
(e) None of the provisions of the Note Documents shall require the Collateral Agent to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties thereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
(f) In no event shall the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, pandemic, epidemic or disease, loss or malfunctions of utilities, communications or computer (software and hardware) services, or other causes reasonably beyond its control; it being understood that the Collateral Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
(g) The Collateral Agent shall not be responsible for and makes no representation as to the enforceability, validity or adequacy of any Note Document or for any security grant therein.
(h) The Collateral Agent shall be entitled to conclusively rely upon, and shall not incur any liability for relying upon, any notice, direction, request, certificate, consent, statement, instrument, opinion, document or other writing. The Collateral Agent also may conclusively rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person and shall not incur any liability for relying thereon. The Collateral Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Collateral Agent shall have no liability or responsibility for any action (or inaction) taken in reliance on any notice, direction, request, certificate, consent, statement, instrument, opinion, document or other writing, including any direction of the Principal Purchaser or any Purchaser.
(i) The Collateral Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Note Document by or through any one or more sub-agents appointed by the Collateral Agent. The Collateral Agent and
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any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective related parties. The Collateral Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Collateral Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
12.4 Indemnification; Fees; Purchaser Backstop.
(a) The Company hereby agrees to indemnify and hold harmless the Collateral Agent from any and all losses, damages, liabilities, Taxes, claims and related expenses (including, without limitation, fees and expenses of any counsel for the Collateral Agent) incurred by the Collateral Agent or asserted against the Collateral Agent by the Company, any guarantor, any Purchaser, the Principal Purchaser or any Person arising out of, in connection with or resulting from this Agreement or any other Note Documents or the transactions contemplated under any Note Document (including, without limitation, enforcement of this Agreement and the indemnification provided herein); provided that such indemnity shall not be available to the extent that such losses, claims, damages, liabilities or related expenses resulted solely from (i) the gross negligence or willful misconduct of the Collateral Agent or any of its sub-agents or (ii) any disputes solely among the Collateral Agent and its sub-agents that do not arise from any act or omission of the Company or any Guarantor, in each of clauses (i) and (ii), as determined by a court of competent jurisdiction in a final non-appealable order.
(b) The Collateral Agent and the Company shall have entered into a fee letter agreement in form and substance reasonably satisfactory to the Collateral Agent and the Company (the “Collateral Agent Fee Letter”). The Company covenants and agrees to pay to the Collateral Agent for its services (and any expenses, including attorney’s fees) in accordance with the Collateral Agent Fee Letter, dated as of the date hereof, by and between the Collateral Agent and the Company. The Collateral Agent Fee Letter is and shall be a Note Document for all purposes, and the Company agrees to pay fees and costs as and when due under the Collateral Agent Fee Letter and any amounts due thereunder shall be considered Indebtedness under the Note Documents secured by the Collateral.
(c) To the extent that the Company for any reason fails to indefeasibly pay any amount owed to the Collateral Agent hereunder or under any Note Document, each Purchaser, jointly and severally, agrees to indemnify, defend and hold harmless the Collateral Agent and pay (or reimburse) to the Collateral Agent (or any such attorney, agent, counsel or subagent) such unpaid amount.
12.5 Resignation; Appointment of Successor Collateral Agent. The Collateral Agent may, at any time, resign as collateral agent and designate a date for resignation. The Purchasers agree to appoint a successor collateral agent on or prior to the date set for resignation. If no such successor has been appointed upon the date set for the resignation, the current collateral agent may appoint a successor collateral agent at the sole expense of the Company (including, without limitation, petitioning a court of competent jurisdiction for a successor).
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12.6 Merger. Any corporation into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any corporation succeeding to the corporate trust and agency business of the Collateral Agent shall be the successor of the Collateral Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
12.7 [Reserved].
12.8 Ratification. Any Person who becomes a Purchaser shall, upon becoming a Purchaser, be deemed to have consented to and confirmed the Collateral Agent as the Collateral Agent of the Purchasers, as the case may be, under and in connection with the relevant Note Document and to have ratified, as of the date it becomes a Purchaser, all actions taken by the Collateral Agent in such capacity.
12.9 Survival. The rights, protections and indemnities provided to the Collateral Agent hereunder (and under any Note Document) shall survive the termination of this Agreement and the other Note Documents, the satisfaction of any Indebtedness and obligations of the Company hereunder or under any other Note Document and the earlier resignation or removal of the Collateral Agent. The indemnity provisions, rights and protections set forth in this Article 12 are in addition to any other rights of the Collateral Agent and are not in diminution or limitation of other remedies or causes of action that the Collateral Agent may have under this Agreement, the other Note Documents or in law or equity.
13. MISCELLANEOUS.
13.1 [Reserved].
13.2 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of New York without regard to provisions regarding choice of laws. Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, in the Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Note Documents to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court. Each of the Company, the Principal Purchaser and the Purchasers irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Note Documents or the actions of the Principal Purchaser or any Purchaser in the negotiation, administration, performance or enforcement thereof.
13.3 Successors and Assigns.
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(a) Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto. Except as contemplated by Section 11, without the prior written consent of the Requisite Purchasers, the Company may not assign any of its rights or obligations under this Agreement, any Note or any other Note Document. Any Purchaser may assign, without the consent of the Company, its Notes together with its obligations and rights under the Note Documents to any Person, including to any third party or to one or more of its Affiliates. This Agreement and the other Note Documents shall be binding upon, inure to the benefit of and be enforceable by, the parties hereto and their respective permitted successors and assigns. Any purported assignment in violation of this Section 13.3(a) shall be null and void.
(b) The Company shall maintain a copy of the assignment documentation provided to it by any Purchaser (or any registered assign) and a register for the recordation of the names and addresses of the Purchasers, and the principal amounts (and stated interest) of each Note owing to each Purchaser (or any registered assign) pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Company and each Purchaser (and registered assign) shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Purchaser hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Purchaser (or registered assign) at any reasonable time and from time to time upon reasonable prior notice.
13.4 Entire Agreement. This Agreement and the Notes, and the Exhibits and Schedules hereto and thereto (all of which are hereby expressly incorporated herein by this reference) constitute the entire understanding and agreement between the parties with regard to the subjects hereof and thereof.
13.5 Notices. All notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be deemed delivered, given and received when delivered (by hand, by courier or express delivery service or by e-mail) to the address or e-mail address set forth beneath the name of such party on its signature page to this Agreement (or to such other address or e-mail address as such party will have specified in a written notice given to the other parties hereto). Notice shall be deemed given when sent electronically (via email), provided that a confirming copy of such notice shall be sent in print form, unless the sender receives an acknowledgement of receipt of the electronic notice (e.g., reply email). In the event that notice is given to the Company, a courtesy copy, which shall not constitute notice, shall also be provided to:
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
Attention: Jim Barri; Paul Rosie; Mohammed Alvi
Email: JBarri@goodwinlaw.com; PRosie@goodwinlaw.com;
MAlvi@goodwinlaw.com
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13.6 Amendments and Termination. Any term of this Agreement and any Note may be amended only with the written consent of the Company, the Principal Purchaser and the Requisite Purchasers. However, no amendment may, without the consent of all affected Purchasers (a) reduce the percentage of Purchasers required to take or approve any action hereunder or thereunder; (b) reduce the amount or change the time of payment of any amount owing or payable with respect to any Note or change the rate of interest or the manner of calculation of interest payable with respect to any Note; (c) alter or modify in any respect, or waive, the provisions with respect to the conversion or redemption of the Notes; or (d) except as contemplated by Section 11 herein, consent to any assignment of the Company’s rights under the Note Documents.
13.7 Titles and Subtitles. The titles of the sections and clauses of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
13.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Electronic delivery of an executed counterpart of a signature page (including, without limitation, by e-mail of a scanned signature page or electronic signature via DocuSign) shall be effective as delivery of an original executed counterpart.
13.9 Severability. Should any provision of this Agreement be determined to be illegal or unenforceable, such determination shall not affect the remaining provisions of this Agreement.
13.10 Expenses. The Company agrees to reimburse each of the Purchasers, the Principal Purchaser and the Collateral Agent (i) at the Closing for its reasonable and documented costs and expenses (including fees and expenses of one (1) outside counsel for the Purchasers and one (1) outside counsel for the Collateral Agent and additional counsel in each applicable foreign jurisdiction) actually incurred in connection with the transactions contemplated hereby, any due diligence related thereto and the preparation, execution, delivery, perfection, administration and negotiation of the Note Documents and the transactions contemplated thereunder and (ii) from time to time for its reasonable and documented costs and expenses (including fees and expenses of one (1) outside counsel for the Purchasers, taken as a whole, and one (1) outside counsel for the Collateral Agent and additional counsel in each applicable foreign jurisdiction) in connection with the transactions contemplated hereby and the perfection, administration and enforcement of the Note Documents.
13.11 Allocation of Payments. The Purchasers acknowledge that the Notes are pari passu obligations against each of the other Notes. Each payment of interest or principal on the Notes shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid balances of principal outstanding thereunder. If any Purchaser shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest under any of his, her or its Notes or other obligations hereunder in an amount in excess of his, her or its pro rata share thereof as provided herein, then such Purchaser shall forthwith pay such excess to the Principal Purchaser which amount the Principal Purchaser shall thereupon pay to the Purchasers on a pro rata basis.
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13.12 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Note Document, the interest paid or agreed to be paid under the Note Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If any Purchaser shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Notes or, if it exceeds such unpaid principal, refunded to the Company. In determining whether the interest contracted for, charged, or received by the Purchasers exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
13.13 Payments on Notes; Tax Matters.
(a) All payments made in respect of this Agreement (including, without limitation, the payment of any amounts in respect of principal, interest and delivery of any shares of Common Stock) shall be made in full without set off, compensation or counterclaim, and without any deduction or withholding, unless such deduction or withholding is required by law or regulation or by governmental policy having the force of law. If any taxes levied by or on behalf of any other jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the Company is, for tax purposes, organized or resident or doing business or through which payment is made or deemed to be made (each such jurisdiction, subdivision or authority, as applicable, a “Relevant Taxing Jurisdiction”) are required to be deducted or withheld from any payments or deliveries made under or with respect to this Agreement, then (i) the Company will pay to each Purchaser under this Agreement such additional amounts (the “Additional Amounts”), (other than U.S. federal withholding Taxes imposed on payments to the Purchaser (x) pursuant to a law in effect on the date on which such Purchaser acquires an interest in the Notes or (y) as a result of such Purchaser’s failure to provide Internal Revenue Service Form W-8 or Internal Revenue Service Form W-9, as applicable), as may be necessary to ensure that the net amount received by such Purchaser after such withholding or deduction (and after withholding or deducting any taxes on the Additional Amounts) will equal the amounts that would have been received by such Purchaser had no such deduction or withholding occurred), (ii) the Company shall make such deductions or withholdings, and (iii) the Company shall immediately pay the full amount deducted or withheld to the relevant governmental entity or taxation authority in accordance with law.
(b) The Company will pay and indemnify each Purchaser for any present or future stamp, issue, registration, transfer, court, documentary, excise or property taxes (“Transfer Taxes”) levied by any Relevant Taxing Jurisdiction in connection with the execution, delivery, registration, issuance or enforcement of this Agreement or the receipt of any payments or deliveries (including of any Notes) with respect to this Agreement.
(c) The Company shall indemnify each Purchaser for the full amount of taxes (including, without limitation, any withholding) or Transfer Taxes (including, without limitation, any taxes or Transfer Taxes imposed on such Purchaser by any jurisdiction on amounts payable by the Company under this Section 13.13) paid by such
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Purchaser and any liability (including penalties, interest and expenses) arising from or with respect to such taxes or Transfer Taxes, whether or not they were correctly or legally asserted. Payment under this indemnification shall be made within 30 days from the date such Purchaser makes written demand for it. A certificate as to the amount of such taxes or Transfer Taxes submitted to the Company by such Purchaser shall be conclusive evidence, absent manifest error, of the amount due from the Company to such Purchaser.
(d) If the Company is required to make any deduction or withholding from any payments or deliveries with respect to this Agreement, then the Company will deliver to the applicable Purchaser official tax receipts (or, if, after expending reasonable efforts, the Company is unable to obtain such receipts, other evidence of payments evidencing the remittance to the relevant tax authorities of the amounts so deducted or withheld).
(e) Except for any taxes or Transfer Taxes imposed on the Purchasers in respect of any amounts payable by the Company under this Section 13.13, the Company will not be required to pay Additional Amounts to any Purchaser or to indemnify any Purchaser for any taxes or Transfer Taxes imposed on such Purchaser solely by reason of the existence of any present or former connection between such Purchaser and the Relevant Taxing Jurisdiction (other than a connection resulting from the acquisition or holding of the Notes or from the receipt or enforcement of payments or deliveries thereunder), including such Purchaser being or having been a national, domiciliary or resident, or treated as a resident, of, or being or having been physically present or engaged in a trade or business, or having had a permanent establishment in, such Relevant Taxing Jurisdiction.
(f) If any Purchaser receives a refund of any taxes or Transfer Taxes as to which it has been indemnified by the Company or with respect to which the Company has paid Additional Amounts, in each case, pursuant to this Section 13.13, it shall pay to the Company an amount equal to such refund (but only to the extent of indemnity payments made, or Additional Amounts paid, under this Section 13.13 with respect to the taxes or Transfer Taxes giving rise to such refund), net of all out-of-pocket expenses (including any taxes) of such Purchaser and without interest (other than any interest paid by the relevant taxing authority with respect to such refund), provided that the Company agrees promptly to repay the amount paid over to it (plus any penalties, interest or other charges imposed by the relevant taxing authority) to such Purchaser in the event such Purchaser is required to repay such refund to such taxing authority. The applicable Purchaser shall, at the Company’s reasonable request, provide the Company with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the Relevant Taxing Jurisdiction (provided that such Purchaser may delete any information therein that it considers to be confidential). Notwithstanding anything to the contrary, in no event will any Purchaser be required to pay any amount to the Company pursuant to this Section 13.13 the payment of which would place such Purchaser in a less favorable net after tax position than such Purchaser would have been in if the tax subject to indemnification (or in respect of which Additional Amounts were paid) and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or Additional Amounts giving rise to such refund or reduction had never been paid. In addition, this Section 13.13 shall not be construed to require any Purchaser to make
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available its tax returns (or any other information relating to taxes which it deems confidential) to the Company or any other Person, to arrange its affairs in any particular manner or to claim any available refund.
(g) All references in this Agreement to any payment on, or delivery with respect to, this Agreement will, to the extent that Additional Amounts or indemnification payments are payable in respect thereof, be deemed to include the payment of such Additional Amounts and indemnification payments.
(h) The Company agrees (i) to pay any and all stamp, court or documentary, intangible, recording, filing or similar Taxes that arise in respect of this Agreement or the Notes, and (ii) that absent a change in applicable U.S. tax law after the date hereof, it will not treat any conversion of the Notes into Conversion Shares pursuant to the terms of Section 4 as a taxable transaction for U.S. federal income tax purposes without the prior written consent of the Purchasers (not to be unreasonably withheld, conditioned or delayed).
(i) Except as otherwise required by a governing U.S. federal, state, or local tax authority, the Company and each Purchaser agrees to treat each of the Notes, for U.S. federal income tax purpose, as a convertible debt instrument that is not subject to the application of the rules of Treasury Regulation Section 1.1275-4. For U.S. federal income tax purposes, the Company and each Purchaser hereby agrees to treat (i) the Notes as issued with original issue discount and (ii) except as otherwise required by a governing U.S. federal, state or local tax authority (x) the issue price of the Notes as the original principal amount and, except as subsequently redetermined pursuant to Treasury Regulation Section 1.1272-1(c)(6), the yield on the Notes as 6% compounded annually from the time of issuance to the Maturity Date (this clause (ii) constituting the payment schedule for purposes of this Section 13.13(i)). The Company and each Purchaser agree to file all tax returns in accordance with such treatment and not to take any position inconsistent with such treatment on any tax return, refund claim, or other tax filing unless otherwise required by a governing U.S. federal, state or local tax authority.
(j) The Company shall not merge, convert or take any other action that could result in the Company being classified as an entity other than an entity classified as a corporation for U.S. federal income tax purposes.
(k) The obligations set forth in this Section 13.13 will survive the termination of this Agreement.
13.14 Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note is surrendered to the Company, then, subject to the immediately succeeding sentence, the Company shall execute and deliver in exchange therefor a new Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company (a) evidence to its satisfaction of the destruction, loss or theft of any Note and (b) such security or indemnity as may be required by it to save it and any of its agents harmless and such other reasonable requirements as may be imposed by the Company as permitted by Section 8-405 of the UCC have been satisfied, then, in the absence of notice to the Company that such Note has been
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acquired by a bona fide purchaser, the Company shall execute in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 13.14, the Company may require payment by the applicable Purchaser of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.
Every new Note issued pursuant to this Section 13.14 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 13.14 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
13.15 Accounting Matters. It is the intent of the parties hereto that this Agreement and the Notes will not give rise to derivative or “mark-to-market” liability accounting. To the extent that such accounting treatment is required, the parties will use commercially reasonable efforts to make such modifications to the Agreement and the Note as may be reasonably required to eliminate such accounting treatment, provided that no such revisions shall substantively affect the rights or obligations of the parties hereunder.
14. REGISTRATION RIGHTS OF PURCHASERS.
14.1 Mandatory Registration. The Company shall prepare, and, as soon as practicable but in no event later than 45 days after the Closing Date (the “Filing Deadline”), file with the Commission a Registration Statement (the “Registration Statement”) under the Securities Act on appropriate form covering the resale of the full amount of the Conversion Shares (the “Registrable Securities”). If eligible, the Company shall file the Registration Statement on Form S-3 ASR pursuant to Rule 462(e) under the Securities Act. If the Company is not at the time of filing eligible to use Rule 462(e) under the Securities Act, then the Company shall use commercially reasonable efforts to have the Registration Statement declared effective by the Commission as soon as practicable, but in no event later than the date (the “Effectiveness Deadline”), which shall be either (a) in the event that the Commission does not review the Registration Statement, 90 days after the Closing Date, or (b) in the event that the Commission reviews the Registration Statement, 120 days after the Closing Date (but in any event, no later than three Business Days following the Commission indicating that it has no further comments on the Registration Statement). Subject to any comments from the staff of the Commission (the “Staff”), such Registration Statement shall include the plan of distribution attached hereto as Exhibit B; provided, however, that no Purchaser shall be named as an “underwriter” in the Registration Statement without the Purchaser’s prior written consent. Such Registration Statement shall not
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include any shares of Common Stock or other securities for the account of any other holder without the prior written consent of the Requisite Purchasers.
14.2 Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statement. If either: (a) a Registration Statement covering all of the Registrable Securities required to be covered thereby and required to be filed by the Company pursuant to this Agreement is: (i) not filed with the Commission on or before the Filing Deadline (a “Filing Failure”), or (ii) not declared effective by the Commission on or before the Effectiveness Deadline (an “Effectiveness Failure”), or (b) on any day during the Reporting Period and after the Effectiveness Deadline, sales of all of the Registrable Securities required to be included on such Registration Statement cannot be made (other than (i) during an Allowable Grace Period or (ii) if the Registration Statement is on Form S-1, for a period of 15 days following the date the Company files a post-effective amendment to incorporate the Company’s Annual Report on Form 10-K) pursuant to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to such Registration Statement or to register a sufficient number of shares of Common Stock) (a “Maintenance Failure”), then, in satisfaction of the damages to any holder of Registrable Securities by reason of any such delay in or reduction of its ability to sell the underlying shares of Common Stock, the Company shall pay to each holder of Registrable Securities relating to such Registration Statement additional interest (“Additional Interest”) on the Notes in the same manner as the interest on such Note pursuant to Section 3.2 for each day (x) from the day a Filing Failure occurs until such Filing Failure is cured; (y) from the day an Effectiveness Failure occurs until such Effectiveness Failure is cured; and (z) from the day a Maintenance Failure occurs until such Maintenance Failure is cured (each such period referred to in clause (x), (y) or (z), a “Failure Period”). Additional Interest will accrue at a rate per annum equal to 0.25% for the first 90 days of any Failure Period and thereafter at a rate per annum equal to 0.50%. No Additional Interest shall be required following the termination of the Reporting Period.
14.3 Rule 415; Cutback. If at any time the Staff takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Purchaser to be named as an “underwriter,” the Company shall use its reasonable best efforts to persuade the Commission that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Purchasers is an “underwriter.” In the event that, despite the Company’s commercially reasonable efforts and compliance with the terms of this Section 14.3, the Staff refuses to alter its position, the Company shall (a) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Securities”) and/or (b) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the Staff may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name any Purchaser as an “underwriter” in such Registration Statement without the prior written consent of such Purchaser. Any cutback imposed on the Purchasers pursuant to this Section 14.3 shall be allocated among the Purchasers on a pro rata basis, unless the SEC Restrictions otherwise require or provide or the Purchasers otherwise agree. No Additional Interest shall accrue as to any Cut Back Securities until such date as the Company is able to effect the registration of
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such Cut Back Securities in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Securities). From and after the Restriction Termination Date applicable to any Cut Back Securities, all of the provisions of this Section 14 (including the Additional Interest provisions in Section 14.2) shall again be applicable to such Cut Back Securities; provided, however, that (x) the Filing Deadline for the Registration Statement including such Cut Back Securities shall be twenty (20) Business Days after such Restriction Termination Date, and (y) the Effectiveness Deadline with respect to such Cut Back Securities shall be the 90th day immediately after the Restriction Termination Date or the 120th day if the Staff reviews such Registration Statement.
14.4 Related Obligations. At such time as the Company is obligated to file a Registration Statement with the Commission pursuant to Section 14.1 hereof, the Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations (to the extent applicable):
(a) The Company shall submit to the Commission, within three (3) Business Days after the Company learns that no review of a particular Registration Statement will be made by the staff of the Commission or that the staff has no further comments on a particular Registration Statement, as the case may be, a request for acceleration of effectiveness of such Registration Statement to a time and date not later than two Business Days after the submission of such request. The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times with respect to each Purchaser’s Registrable Securities until the expiration of the Reporting Period. The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any 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 prospectuses, in the light of the circumstances in which they were made) not misleading.
(b) The Company shall prepare and file with the Commission such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective at all times during the Reporting Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.
(c) Upon request of a Purchaser, the Company shall furnish to such Purchaser without charge, (i) promptly after the Registration Statement including such Purchaser’s Registrable Securities is prepared and filed with the Commission, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, and if requested by the Purchaser, all exhibits and each preliminary prospectus, (ii) upon the effectiveness
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of any Registration Statement, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Purchaser may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Purchaser may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities.
(d) The Company shall notify the Purchasers in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and upon request deliver one copy of such supplement or amendment to the Purchasers (or such other number of copies as the Purchasers may reasonably request). Unless such information is publicly available, the Company shall also promptly notify the Purchasers in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Purchasers by email on the same day of such effectiveness), (ii) of any request by the Commission for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.
(e) The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Purchaser who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of notice of the initiation or threat of any proceeding for such purpose.
(f) [Reserved.]
(g) [Reserved.]
(h) The Company shall hold in confidence and not make any disclosure of information concerning the Purchasers provided to the Company unless and solely to the extent (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement. The Company agrees that it shall, upon learning that disclosure of such
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information concerning the Purchasers is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Purchasers and allow the Purchasers, at each Purchaser’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order preventing disclosure of, such information.
(i) The Company shall cooperate with the Purchasers and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Purchasers may reasonably request and registered in such names as the Purchasers may request.
(j) If requested by a Purchaser, the Company shall, as soon as practicable, (i) incorporate in a prospectus supplement or post-effective amendment such information as the Purchaser reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by the Purchaser.
(k) The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(l) The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission in connection with any registration hereunder.
(m) Within two (2) Business Days after a Registration Statement that covers Registrable Securities is declared effective by the Commission, the Company shall deliver to the transfer agent for such Registrable Securities (with copies to the Purchasers) confirmation that such Registration Statement has been declared effective by the Commission.
(n) Notwithstanding anything to the contrary herein, at any time after the Effectiveness Deadline, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided that the Company shall promptly (i) notify the Purchasers in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public
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information to the Purchasers) and the date on which the Grace Period will begin, and (ii) notify the Purchasers in writing of the date on which the Grace Period ends; provided further, that the Grace Periods shall not exceed an aggregate of thirty (30) Trading Days during any 365-day period and the first day of any Grace Period must be at least fifteen (15) days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Purchasers receive the notice referred to in clause (i) and shall end on and include the later of the date the Purchasers receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 14.4(e) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 14.4(d) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of any Purchaser in accordance with the terms of this Agreement in connection with any sale of Registrable Securities with respect to which a Purchaser has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement (unless an exemption from such prospectus delivery requirement exists), prior to the Purchaser’s receipt of the notice of a Grace Period and for which the Purchaser has not yet settled.
(o) Neither the Company nor any Subsidiary or Affiliate thereof shall identify any Purchaser as an underwriter in any public disclosure or filing with the Commission or any applicable Permitted Exchange without the prior written consent of such Purchaser, and any Purchaser being deemed an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement.
14.5 Obligations of the Purchasers.
(a) At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Purchaser in writing of any information the Company requires from such Purchaser in order to have that Purchaser’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Purchaser that the Purchaser shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request, including the completion of a selling shareholder questionnaire.
(b) Each Purchaser, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless the Purchaser has notified the Company in writing of the Purchaser’s election to exclude all of the Purchaser’s Registrable Securities from such Registration Statement.
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(c) Each Purchaser agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 14.4(e) or the first sentence of Section 14.4(d), the Purchaser will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Purchaser’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 14.4(e) or the first sentence of Section 14.4(d) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of the Purchaser in accordance with the terms of this Agreement in connection with any sale of Registrable Securities with respect to which the Purchaser has entered into a contract for sale prior to the Purchaser’s receipt of a notice from the Company of the happening of any event of the kind described in Section 14.4(e) or the first sentence of Section 14.4(d) and for which the Purchaser has not yet settled.
(d) Each Purchaser covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
14.6 Expenses of Registration. All reasonable expenses incurred in connection with registrations, filings or qualifications pursuant to this Section 14, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company. Notwithstanding the foregoing, in no event shall the Company be responsible for underwriting discounts, commissions, placement agent fees or other similar expenses payable with respect to Registrable Securities being sold or offered for sale by the Purchasers.
14.7 Reports under the Exchange Act. With a view to making available to the Purchasers the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit the Purchasers to sell Registrable Securities to the public without registration (“Rule 144”), the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in Rule 144, during the Reporting Period;
(b) file with the Commission in a timely manner all reports and other documents (other than Current Reports on Form 8-K) required of the Company pursuant to Section 13 or 15(d) of the Exchange Act; and
(c) furnish to the Purchasers, so long as any Purchaser owns Registrable Securities, promptly upon request during the Reporting Period: (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, and (iii) such other information as may be reasonably requested to permit the Purchasers to sell Registrable Securities pursuant to Rule 144 without registration.
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14.8 Assignment of Registration Rights. The rights under this Section 14 shall be automatically assignable by a Purchaser to any transferee of all or any portion of the Purchaser’s Registrable Securities if: (a) the Purchaser 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; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned; (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws; (d) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (e) such transfer shall have been made in accordance with the applicable requirements of this Agreement, including without limitation, Section 13.3(a) hereof. Following any such transfer in accordance with this Section 14.8, the Company shall thereafter use commercially reasonable efforts to amend or supplement the selling shareholder table contained in the Registration Statement to reflect such change in beneficial ownership of the affected Registrable Securities.
14.9 Indemnification.
(a) Company Indemnification. The Company will indemnify each Purchaser who holds Registrable Securities (if Registrable Securities held by such Purchaser are included in the securities as to which such registration is being effected), the Principal Purchaser, each Purchaser’s and the Principal Purchaser’s respective officers and directors, partners, members, employees and each person controlling such Purchaser and the Principal Purchaser within the meaning of Section 15 of the Securities Act (each, a “Purchaser Indemnified Party”), against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any untrue statement (or alleged untrue statement) of a material fact contained in any Registration Statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such Registration Statement, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (ii) any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration; and in each case, the Company will reimburse each such Purchaser and Principal Purchaser, each of its respective officers and directors, partners, members, employees and each person controlling such Purchaser and the Principal Purchaser, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on (A) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Purchaser, the Principal Purchaser or controlling person, and stated to be specifically for use therein, (B) the use by a Purchaser
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or the Principal Purchaser of an outdated or defective prospectus after the Company has notified such Purchaser or Principal Purchaser in writing that the prospectus is outdated or defective or (C) a Purchaser’s (or any other indemnified person’s) failure to send or give a copy of the prospectus or supplement (as then amended or supplemented), if required, pursuant to Rule 172 under the Securities Act (or any successor rule) to the Persons asserting an untrue statement or alleged untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such prospectus or supplement.
(b) Purchaser Indemnification. Each Purchaser holding Registrable Securities will, if Registrable Securities held by such Purchaser are included in the securities as to which such registration is being effected, severally and not jointly, indemnify the Company, each of its directors and officers, each person who controls the Company within the meaning of Section 15 of the Securities Act, each of its officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act (“Company Indemnified Parties”), against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, and only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Purchaser and stated to be specifically for use therein, or (ii) any violation by such Purchaser of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to such Purchaser, and, in each case, such Purchaser will reimburse the Company Indemnified Parties for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action; provided that the indemnity agreement contained in this Section 14.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such indemnifying Purchaser. The liability of any Purchaser for indemnification under this Section 14.9(b) in its capacity as a seller of Registrable Securities shall not exceed the amount of net proceeds to such Purchaser of the securities sold in any such registration.
(c) Notice and Procedure. Each party entitled to indemnification under this Section 14.9 (each, an “Indemnified Party”) shall give written notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided, further, that the failure
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of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided, further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section 14.9 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall, to the extent permitted by applicable law, contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the untrue statement or omission that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided that, in no event shall any contribution by a Purchaser hereunder exceed the proceeds from the offering received by such Purchaser. The amount paid or payable by a party as a result of any loss, claim, damage or liability shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 14.9 was available to such party in accordance with its terms.
(e) Survival. The obligations of the Company and the Purchasers under this Section 14.9 shall survive completion of any offering of Registrable Securities in a Registration Statement and the termination of this Agreement. The indemnity and contribution agreements contained in this Section 14.9 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of other remedies or causes of action that the parties may have under this Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have executed this Note Purchase Agreement to be effective as of the date first above written.
ALLURION TECHNOLOGIES, INC., as the Company
By: _/s/ Shantanu Gaur________________
Name: Shantanu Gaur
Title: Chief Executive Officer
Address: 11 Huron Drive
Suite 200
Natick, MA 01760
Email: cgeberth@allurion.com;
sgaur@allurion.com
Signature Page to Note Purchase Agreement
ACQUIOM AGENCY SERVICES LLC, as the Collateral Agent
By: _/s/ Shon McCraw-Davis___________
Name: Shon McCraw-Davis
Title: Director
Address: 950 17th St Suite 1400, Denver, CO
80202
Attn: Shon McCraw-Davis
Email: SMccrawDavis@srsacquiom.com
Signature Page to Note Purchase Agreement
RTW INVESTMENTS, LP, as the Principal Purchaser
By: _/s/ Roderick Wong______________
Name: Roderick Wong, M.D.
Title: Managing Partner
Address: 40 10th Avenue, Floor 7
New York, New York 10014
Email: legalops@rtwfunds.com
Signature Page to Note Purchase Agreement
RTW MASTER FUND, LTD., as a Purchaser
By: __/s/ Darshan Patel_________________
Name: Darshan Patel
Title: Director
Address: 40 10th Avenue, Floor 7
New York, New York 10014
Email: legalops@rtwfunds.com
Note Principal Purchased at Closing:
$___26,458,723.00___________________
Signature Page to Note Purchase Agreement
RTW INNOVATION MASTER FUND, LTD., as a Purchaser
By: _/s/ Darshan Patel_________________
Name: Darshan Patel
Title: Director
Address: 40 10th Avenue, Floor 7
New York, New York 10014
Email: legalops@rtwfunds.com
Note Principal Purchased at Closing:
$___20,323,625.00_____________
Signature Page to Note Purchase Agreement
RTW BIOTECH OPPORTUNITIES OPERATING LTD., as a Purchaser
By: RTW Investments, LP, its Investment Manager
By: _/s/ Roderick Wong ________________
Name: Roderick Wong, M.D.
Title: Managing Partner
Address: 40 10th Avenue, Floor 7
New York, New York 10014
Email: legalops@rtwfunds.com
Note Principal Purchased at Closing:
$__1,217,652.00__________________
Signature Page to Note Purchase Agreement
Schedule I
The following table sets forth the number of Adjustment Shares by which the Conversion Rate shall be increased pursuant to Section 4.6 based on the Stock Price and the dates set forth below.
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Schedule II
Post-Closing Date Matters
Schedule III
Individuals of the Company
Schedule IV
Subsidiaries of the Company
Name of Subsidiary |
Owner |
Jurisdiction of Organization |
Percentage Ownership by Owner |
Allurion Technologies, LLC |
Allurion Technologies, Inc. |
Delaware |
100% |
Allurion Australia Pty Ltd. |
Allurion Technologies, LLC |
New South Wales |
100% |
Allurion France SAS |
Allurion Technologies, LLC |
France |
100% |
Allurion Hong Kong Ltd. |
Allurion Technologies, LLC |
Hong Kong |
100% |
Allurion Italy, Srl |
Allurion Technologies, LLC |
Italy |
100% |
Allurion Mexico S. de R.L de C.V. |
Allurion Technologies, LLC |
Mexico |
99% |
Allurion Mexico S. de R.L de C.V. |
Allurion UK Ltd. |
Mexico |
1% |
Allurion Spain, Srl |
Allurion Technologies, LLC |
Spain |
100% |
Allurion UK Ltd. |
Allurion Technologies, LLC |
United Kingdom |
100% |
Allurion Middle East Medical Instruments Trading LLC |
Allurion Technologies, LLC |
United Arab Emirates |
49% |
Allurion Middle East Medical Instruments Trading LLC |
Shuraa Management & Consultancy, LLC |
United Arab Emirates |
51% |
EXHIBIT A
FORM OF NOTE
[FORM OF FACE OF NOTE]
THIS NOTE AND THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF ALLURION TECHNOLOGIES, INC., A DELAWARE CORPORATION (THE “COMPANY”), THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, IF SUCH EXEMPTION IS AVAILABLE, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(D) ABOVE, THE COMPANY RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX PURPOSES. FOR INFORMATION REGARDING THE ISSUE DATE, ISSUE PRICE, STATED REDEMPTION PRICE AT MATURITY AND YIELD TO MATURITY, PLEASE CONTACT THE COMPANY AT THE COMPANY’S OFFICE, ATTENTION: [ ].
Allurion Technologies, Inc.
6.0% Convertible Senior Secured Notes due 2031
Principal Amount $ [ ]
Allurion Technologies, Inc., a Delaware corporation (the “Company”), promises to pay to [ ] or registered assigns, the principal amount of [add principal amount in words] $[ ], on the seventh anniversary of the Closing Date (the “Maturity Date”).
Interest Payment Dates: March 31, June 30, September 30, and December 31 of each year, commencing on June 30, 2024.
Additional provisions of this Note are set forth on the other side of this Note.
IN WITNESS WHEREOF, Allurion Technologies, Inc. has caused this instrument to be signed manually or electronically by one of its duly authorized Officers.
ALLURION TECHNOLOGIES, INC.
By: ______________________________
Name:
Title:
[FORM OF REVERSE OF NOTE]
Allurion Technologies, Inc.
6.0% Convertible Senior Secured Notes due 2031
This Note is one of a duly authorized issue of securities of the Company (herein called the “Notes”), issued under the Note Purchase Agreement dated as of April 14, 2024 (the “Note Purchase Agreement”) by and among the Company, the Purchasers party thereto, and Acquiom Agency Services LLC, as collateral agent for the Purchasers and the Principal Purchaser, and reference is hereby made to the Note Purchase Agreement for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company and the holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. In the event of a conflict between the terms of the Note Purchase Agreement and this Note, the terms of the Note Purchase Agreement shall govern.
The Notes will bear cash interest at a rate of 6.0% per year until maturity (the “Cash Interest”) except as otherwise provided in Section 10.5(h). Interest on the Notes will accrue from, and including, the most recent date on which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from, and including, the Closing Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Interest will be paid quarterly in arrears on each Interest Payment Date. Notwithstanding the foregoing, on or prior to the third anniversary of the Closing Date, the Company may elect to defer payment of accrued but unpaid interest on the unpaid principal amount of the Notes and the amount of such deferred accrued but unpaid interest shall be added to the principal amount of the outstanding Notes (the “PIK Interest”). The Company shall be required to give written notice to the Principal Purchaser to elect no later than five (5) Business Days prior to each Interest Payment Date prior to the third anniversary of the Closing Date whether it shall pay Cash Interest or PIK Interest. If the Company fails to give timely written notice to elect a form of interest payment, then the Company will be deemed to have elected PIK Interest for such Interest Payment Date. Any PIK Interest on the Notes will increase the principal amount of the Notes by an amount equal to the amount of PIK Interest for the applicable period (rounded up to the nearest whole dollar). Any references to the principal amount of any Note herein shall mean the then current principal amount as increased by any PIK Interest, and references to accrued but unpaid interest shall not include any interest provided for as PIK Interest. Following an increase in the principal amount of the outstanding Notes as a result of PIK Interest, the Notes will bear interest on such increased principal amount from and after the date of such increase. Notwithstanding anything to the contrary in this Note Purchase Agreement or the Notes, the payment of accrued and unpaid interest in connection with any redemption of the Notes pursuant to Section 10.5 or on the Maturity Date shall be made solely in cash.
This Note does not benefit from a sinking fund.
As provided in and subject to the provisions of the Note Purchase Agreement, upon the occurrence of a Fundamental Change the holder of this Note will have the right, at such holder’s option, to require the Company to purchase this Note, or any portion of this Note such that the principal amount of this Note that is not purchased equals $1,000 or an integral multiple of $1.00 in excess thereof, on the Fundamental Change Purchase Date at a price equal to the Fundamental Change Purchase Price for such Fundamental Change Purchase Date.
A-10
As provided in and subject to the provisions of the Note Purchase Agreement, the holder hereof has the right, at its option, to convert this Note or a portion of this Note such that the principal amount of this Note that is not converted equals $1,000 or an integral multiple of $1.00 in excess thereof, into an amount of shares of Common Stock and cash in lieu of fractional interests in shares of Common Stock as determined in accordance with Article 4 of the Note Purchase Agreement. Accrued but unpaid interest on a Note will be paid in respect of Notes submitted for conversion in accordance with Section 4.3 of the Note Purchase Agreement.
As provided in and subject to the provisions of the Note Purchase Agreement, the Company has the right to redeem the Notes.
The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.
The Note Purchase Agreement permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the holders of the Notes to be effected under the Note Purchase Agreement at any time by the Company, the Principal Purchaser and the Requisite Purchasers. The Note Purchase Agreement also contains provisions permitting the Requisite Purchasers to waive certain past defaults under the Note Purchase Agreement and their consequences. Any such waiver by the holder of this Note shall be conclusive and binding upon such holder and upon all future holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Note Purchase Agreement, the holder of this Note shall not have the right to institute any proceeding with respect to the Note Purchase Agreement, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such holder shall have previously given the Principal Purchaser written notice of a continuing Event of Default with respect to the Note, Purchasers holding at least 25% of the aggregate principal amount of the then Outstanding Notes deliver to the Principal Purchaser a written request that the Principal Purchaser pursue a remedy with respect to such Event of Default and offered the Principal Purchaser indemnity satisfactory to it, and the Principal Purchaser shall have failed to institute any such proceeding, for sixty (60) days after receipt of such notice, request and offer of indemnity, and shall not have received from the Requisite Purchasers a direction inconsistent with such request. The foregoing shall not apply to any suit instituted by the holder of this Note for the enforcement of any payment of the principal hereof, premium, if any, or interest hereon, the Fundamental Change Purchase Price, and the amount of shares of Common Stock due upon conversion of this Note or after the respective due dates expressed in the Note Purchase Agreement.
No reference herein to the Note Purchase Agreement and no provision of this Note or of the Note Purchase Agreement shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal of (including the Fundamental Change Purchase Price), premium, interest on and the amount of shares of Common Stock due upon conversion of this Note at the time, place and rate, and in the coin and currency herein prescribed.
As provided in the Note Purchase Agreement and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Register, upon surrender of this Note for
A-11
registration of transfer to the Company, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or its attorney duly authorized in writing, and thereupon a new Note of this series and of like tenor for the same aggregate principal amount will be issued to the designated transferee.
The Notes are issuable only in registered form without coupons in denominations of $1,000 and integral multiples of $1.00 in excess thereof. As provided in the Note Purchase Agreement and subject to certain limitations therein set forth, the Notes are exchangeable for a like aggregate principal amount of Notes and of like tenor of a different authorized denomination, as requested by the holder surrendering the same.
Prior to due presentment of this Note for registration of transfer, the Company and any agent of the Company may treat the Person in whose name the Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
The Notes will be secured by the Collateral on the terms and subject to the conditions set forth in the Note Purchase Agreement and the Collateral Documents. The Notes are guaranteed as set forth in the Guaranty.
Customary abbreviations may be used in the name of a holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act).
No service charge shall be made for any such registration of transfer or exchange, but the Company may require proof of payment of any transfer tax or other governmental charge payable in connection therewith.
All defined terms used in this Note that are defined in the Note Purchase Agreement shall have the meanings assigned to them in the Note Purchase Agreement. If any provision of this Note limits, qualifies or conflicts with a provision of the Note Purchase Agreement, such provision of the Note Purchase Agreement shall control.
A-12
ATTACHMENT 1
[FORM OF NOTICE OF CONVERSION]
To: Allurion Technologies, Inc.
The undersigned owner of this Note hereby irrevocably exercises the option to convert this Note, or a portion hereof (whose principal amount equals $1,000 or an integral multiple of $1.00 in excess thereof) below designated, into an amount of shares of Common Stock and cash in lieu of fractional interests in shares of Common Stock in accordance with the terms of the Note Purchase Agreement referred to in this Note, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon conversion, together with any Notes representing any unconverted principal amount hereof, be paid and/or issued and/or delivered, as the case may be, to the registered holder hereof unless a different name is indicated below.
Subject to certain exceptions set forth in the Note Purchase Agreement, if this notice is being delivered during the period after the Close of Business on a regular Record Date to the Open of Business on the Interest Payment Date corresponding to such regular Record Date, this notice must be accompanied by payment of an amount equal to the interest payable on such Interest Payment Date on the principal amount of this Note to be converted. If any shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect to such issuance and transfer as set forth in the Note Purchase Agreement.
Principal amount to be converted (if less than all):
$
Dated:
Signature(s)
(Sign exactly as your name appears on the other side of this Note)
Fill in if a check is to be issued, or shares of Common Stock or Notes are to be registered, otherwise than to or in the name of the registered holder of this Note.
(Name)
(Address)
Please print name and address
(including zip code)
(Social Security or other Taxpayer
Identifying Number)
Dated:
A-13
Signature(s)
(Sign exactly as such Person’s name appears above)
A-14
ATTACHMENT 2
[FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE]
To: Allurion Technologies, Inc.
The undersigned registered owner of this Note hereby requests and instructs Allurion Technologies, Inc. to pay to the registered holder hereof, in accordance with the applicable provisions of the Note Purchase Agreement referred to in this Note, the Fundamental Change Purchase Price on the Fundamental Change Purchase Date pursuant to Section 10.1 of such Note Purchase Agreement.
Principal amount to be purchased (if less than all):
$
Certificate number (if Notes are in certificated form)
Dated:
Signature(s)
(Sign exactly as your name appears on the other side of this Note)
Social Security or Other Taxpayer Identification Number
A-15
ATTACHMENT 3
[FORM OF ASSIGNMENT AND TRANSFER]
For value received, _____________________________________ hereby sell(s), assign(s) and transfer(s) unto _________________________________________________________________ (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints ___________________________________________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
The undersigned hereby certifies that such transfer complies with Section 13.3 of the Note Purchase Agreement.
In connection with any transfer of the within Note, the undersigned confirms that such Note is being transferred:
□ To Allurion Technologies, Inc. or a subsidiary thereof; or
□ Pursuant to a registration statement which has become effective under the Securities Act of 1933, as amended; or
□ To a qualified institutional buyer in compliance with Rule 144A under the Securities Act of 1933, as amended, if such exemption from registration is available; or
□ Pursuant to an exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended, or any other available exemption from the registration requirements of the Securities Act of 1933, as amended.
TO BE COMPLETED BY PURCHASER IF THE THIRD BOX ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
Date: |
Signed: |
Unless one of the above boxes is checked, the Company will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered holder thereof, provided that if the fourth box is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably request to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Company shall not be obligated to register this Note in the name of any Person other than the holder hereof unless and until the conditions to any such transfer of registration set forth herein shall have been satisfied.
Dated:
____________________________________
____________________________________
Signature(s)
(Sign exactly as your name appears on the other side of this Note)
EXHIBIT B
PLAN OF DISTRIBUTION
The selling stockholders, which shall include donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its own account;
to or through underwriters or broker-dealers;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions;
short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC;
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
through agreements between broker-dealers and the selling stockholders to sell a specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; and
any other method permitted by applicable law.
The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the pledgees, transferees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of shares of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the shares of our common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into options or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to each such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the shares of common stock offered by them will be the purchase price of the shares of common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of shares of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.
The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the shares of our common stock or interests therein may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the shares of common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement and (2) the date on which all of the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.
EXHIBIT C
FORM OF SECURITY AGREEMENT
[See Attached]
EXHIBIT D
FORM OF GUARANTY
[See Attached]
EXHIBIT E
FORM OF INTERCOMPANY SUBORDINATION AGREEMENT
[See Attached]
EXHIBIT F
FORM OF PERFECTION CERTIFICATE
[See Attached]
EXHIBIT G
FORM OF SOLVENCY CERTIFICATE
[See Attached]
EXECUTION VERSION
Exhibit 10.2
OMNIBUS AMENDMENT
This Omnibus Amendment (this “Amendment”), dated as of April 14, 2024, is among 4010 Royalty Investments ICAV, an Irish collective asset-management vehicle, for and on behalf of its sub-fund, 4010 Royalty Investments Fund 1, and 4010 Royalty Master Fund, LP, a Cayman Islands limited partnership (each and collectively, together with its and their successors and permitted assigns, the “Investor”), Allurion Technologies, LLC, a Delaware limited liability company (the “Company”), Allurion Technologies, Inc., a Delaware corporation (formerly known as Allurion Technologies Holdings, Inc.) (“Parent”), Allurion Australia Pty Ltd, a proprietary limited company organized under the laws of Australia (“Allurion Australia”), and RTW Investments, LP, as agent for the Investor (in such capacity, together with its successors and permitted assigns, the “Agent”). Each of the Company, Parent, Allurion Australia, the Investor and the Agent is referred to in this Amendment as a “Party” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Existing RIFA (defined below).
WHEREAS, Allurion Technologies, Inc. (the “Original Company Party”), RTW Master Fund, Ltd., an exempted company incorporated in the Cayman Islands with limited liability, RTW Innovation Master Fund, Ltd., an exempted company incorporated in the Cayman Islands with limited liability, and RTW Biotech Opportunities Ltd., (formerly known as RTW Venture Fund Limited), an investment company limited by shares incorporated under the laws of Guernsey (collectively, the “Original Investors”), entered into a Revenue Interest Financing Agreement dated as of February 9, 2023 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing RIFA”, the Existing RIFA as amended hereby, the “RIFA”), pursuant to which the Original Company Party secured financing from the Investor, and the Investor provided financing, upon and subject to the terms and conditions set forth in the Existing RIFA;
WHEREAS, at the Closing, the Original Company Party merged with and into the Company, with the Company as the surviving entity in such merger, and the Company assumed all of the Original Company Party’s rights, title, interests, and obligations under the Existing RIFA pursuant to that certain Company Assumption Agreement dated August 1, 2023 among the Original Investors, the Original Company Party, and the Company;
WHEREAS, the Original Investors assigned to RTW Royalty III DAC, a designated activity company limited by shares incorporated under the laws of Ireland with registered number 737361 and registered office at 2nd Floor, Palmerston House, Denzille Lane, Dublin 2, Ireland (the “Interim Assignee”), and the Interim Assignee assumed, all of the Original Investors’ rights, title, interests, and obligations under the Existing RIFA pursuant to that certain Assignment and Assumption dated April 27, 2023 among the Original Investors and the Interim Assignee;
WHEREAS, the Interim Assignee assigned to the Investor, and the Investor assumed, all of the Interim Assignee’s rights, title, interests, and obligations under the Existing RIFA pursuant
to that certain Assignment Agreement dated July 28, 2023 among the Interim Assignee and the Investors;
WHEREAS, in connection with the Existing RIFA, (i) the Company, Parent, and the Agent are party to the Security Agreement, dated as of August 1, 2023 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Security Agreement”), (ii) the Company, Parent and Allurion Australia are party to the Guaranty, dated as of August 1, 2023, in favor of Agent for itself and on behalf of and for the ratable benefit of the Investor (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Guaranty”; the Existing Guaranty, together with the Existing RIFA and the Existing Security Agreement, the “Existing Documents”) and (iii) Fortress Credit Corp., as administrative agent under the Term Loan Agreement, and Agent are party to the Intercreditor Agreement, dated as of August 1, 2023, which is acknowledged and agreed to by the Company (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Intercreditor Agreement”);
WHEREAS, the Company intends, concurrently with the execution of this Amendment, to refinance the Indebtedness under the Term Loan Documents with a portion of the proceeds pursuant to that certain Note Purchase Agreement, to be dated on the date hereof (the “Note Purchase Agreement”), among Parent, certain Affiliates of the Investor, as purchasers (the “Purchasers”), RTW Investments, LP, as agent for the Purchasers (in such capacity, together with its successors and permitted assigns, the “Principal Purchaser”), and Acquiom Agency Services LLC, as the collateral agent (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”) (such refinancing, the “Refinancing”);
WHEREAS, in connection with the Refinancing, (i) the parties to the Existing Intercreditor Agreement intend to terminate the Existing Intercreditor Agreement and (ii) the Collateral Agent, the Principal Purchaser and the Agent intend to enter into an Equal Priority Intercreditor Agreement, to be dated on the date hereof (the “Equal Priority Intercreditor Agreement”), and the Company, Parent and Allurion Australia intend to acknowledge and agree thereto, pursuant to which, among other things, the Collateral Agent and the Agent set out their relative rights and remedies in connection with the RIFA and the Note Purchase Agreement;
WHEREAS, the Company acknowledges that an Event of Default under the Existing RIFA has occurred and is continuing under clause (e) of the definition of “Event of Default” in the Existing RIFA resulting from the occurrence of an event of default under the Term Loan Documents in existence as of the date hereof in respect of a breach of Section 10.01 of the Term Loan Agreement arising after January 1, 2024 (the “Existing Event of Default”), and, as a consequence of the occurrence and the continuation of the Existing Event of Default, Agent and the Investor are entitled to exercise certain rights and remedies under the Existing RIFA; the Company has requested that Agent and the Investor waive the Existing Event of Default and the Investor and the Agent have agreed to such request, subject to the terms and conditions set forth herein; and
WHEREAS, in connection with the Refinancing and the execution of the Equal Priority Intercreditor Agreement, the Parties desire to amend each of the Existing Documents in accordance with the terms set forth in this Amendment and to waive the Existing Event of Default.
2
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the Parties hereby agree to be legally bound as follows:
3
For purposes of determining compliance with the conditions specified in this Section 2, each Investor that has signed this Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to an Investor unless the Agent shall have received written notice from such Investor prior to the proposed Amendment Effective Date specifying its objection thereto.
The Agent shall give notice to the Company and each Investor of the effectiveness of this Amendment on the Amendment Effective Date, and such notice shall be conclusive and binding.
4
5
6
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
7
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the day and year first written above.
ALLURION TECHNOLOGIES, LLC, a Delaware limited liability company, as Company
By: ___/s/ Shantanu Gaur_____________
Name: Shantanu Gaur
Title: Chief Executive Officer
ALLURION TECHNOLOGIES, INC., a Delaware corporation, as Parent
By: ___/s/ Shantanu Gaur_____________
Name: Shantanu Gaur
Title: Chief Executive Officer
EXECUTED by ALLURION )
AUSTRALIA PTY LTD ACN )
658 546 117 in accordance with )
section 127(1) of the Corporations )
Act 2001 (Cth) by authority of its )
directors: )
)
)
___/s/ Shantanu Gaur____________ ) __ /s/ Chris Geberth____________
Signature of director ) Signature of director
)
)
___ Shantanu Gaur _____________ ) _Chris Geberth________________
Name of director (block letters) ) Name of director (block letters)
|
[Signature Page to Omnibus Amendment]
4010 ROYALTY INVESTMENTS, ICAV, FOR AND ON BEHALF OF ITS SUB-FUND, 4010 ROYALTY INVESTMENTS FUND 1,
as Investor
By: __ _/s/ Roderick Wong___________
Name: Roderick Wong, M.D.
Title: Director
4010 ROYALTY MASTER FUND, LP,
as Investor
By: ___/s/ Roderick Wong ____________
Name: Roderick Wong, M.D.
Title: Director
RTW INVESTMENTS, LP,
as Agent
By: ___/s/ Roderick Wong _____________
Name: Roderick Wong, M.D.
Title: Managing Partner
|
[Signature Page to Omnibus Amendment]
Exhibit A
Amendment to Existing RIFA
Execution VersionEXECUTION VERSION
Confidential Draft
REVENUE INTEREST FINANCING AGREEMENT
among
ALLURION TECHNOLOGIES, INC.LLC
and
RTW MASTER FUND, LTD., RTW INNOVATION MASTER FUND, LTD., and RTW VENTURE FUND LIMITED
4010 ROYALTY INVESTMENTS, ICAV, FOR AND ON BEHALF OF ITS SUB-FUND, 4010 ROYALTY INVESTMENTS FUND 1, and 4010 ROYALTY MASTER FUND, LP
Dated as of February 9, 2023
as amended by the
OMNIBUS AMENDMENT,
dated as of April 14, 2024
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|
|
TABLE OF CONTENTS
Page
ARTICLE I DEFINED TERMS AND RULES OF CONSTRUCTION 1
Section 1.1 Defined Terms 1
Section 1.2 Rules of Construction 3335
ARTICLE II REVENUE INTEREST FINANCING 3436
Section 2.1 Investment Amount 3436
Section 2.2 No Assumed Obligations 3437
Section 2.3 Excluded Assets 3437
ARTICLE III Payments On Account OF THE REVENUE INTEREST Financing 3537
Section 3.1 Payments on Account of the Revenue Interest Financing 3537
Section 3.2 Mode of Payment/Currency Exchange 3639
Section 3.3 Product Payment Reports and Record Retention 3639
Section 3.4 Audits 3739
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE Company 3840
Section 4.1 Organization 3841
Section 4.2 No Conflicts 3841
Section 4.3 Authorization 3941
Section 4.4 Ownership 3942
Section 4.5 Governmental and Third Party Authorizations 3942
Section 4.6 No Litigation 3942
Section 4.7 Solvency 4042
Section 4.8 No Brokers’ Fees 4043
Section 4.9 Compliance with Laws 4043
Section 4.10 Intellectual Property Matters 4043
Section 4.11 Margin Stock 4346
Section 4.12 Material Contracts 4346
Section 4.13 Bankruptcy 4447
Section 4.14 Office Locations; Names 4447
Section 4.15 Financial Statements; No Material Adverse Effect 4447
Section 4.16 No Default 4548
Section 4.17 Insurance 4548
Section 4.18 ERISA Compliance 4548
Section 4.19 Subsidiaries 4648
Section 4.20 Perfection of Security Interests in the Collateral 4649
Section 4.21 Sufficiency of Collateral 4649
Section 4.22 Disclosure 4649
Section 4.23 Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act 4749
Section 4.24 Data Security; Data Privacy 4750
Section 4.25 Compliance 4851
Section 4.26 Labor Matters 5153
Section 4.27 Taxes 5153
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE Investor 5154
Section 5.1 Organization 5154
i
Section 5.2 No Conflicts 5154
Section 5.3 Authorization 5254
Section 5.4 Governmental and Third Party Authorizations 5254
Section 5.5 No Litigation 5255
Section 5.6 No Brokers’ Fees 5255
Section 5.7 Funds Available 5255
Section 5.8 Access to Information 5255
ARTICLE VI Affirmative COVENANTS 5355
Section 6.1 Collateral Matters; Guarantors. 5355
Section 6.2 Update Meetings 5357
Section 6.3 Notices 5457
Section 6.4 Public Announcement 5659
Section 6.5 Further Assurances 5760
Section 6.6 IP Rights 5761
Section 6.7 Existence 5861
Section 6.8 Commercialization of the Products 5861
Section 6.9 Financial Statements 5862
Section 6.10 Payment of Obligations 5963
Section 6.11 Maintenance of Properties 6063
Section 6.12 Maintenance of Insurance 6063
Section 6.13 Books and Records 6063
Section 6.14 Use of Proceeds 6064
Section 6.15 ERISA Compliance 6064
Section 6.16 Compliance with Material Contracts 6064
Section 6.17 Compliance with Laws 6164
Section 6.18 Anti-Corruption Laws; Anti-Terrorism Laws 6164
Section 6.19 Data Privacy 6165
Section 6.20 Products 6265
Section 6.21 Tax 6265
Section 6.22 Convertible Notes 6469
Section 6.23 Board Governance 6469
Section 6.24 Company Assumption 6570
ARTICLE VII NEGATIVE COVENANTS 6573
Section 7.1 Liens 6573
Section 7.2 Indebtedness 6573
Section 7.3 Dispositions 6573
Section 7.4 Change in Nature of Business 6573
Section 7.5 Prepayment of Other Indebtedness 6573
Section 7.6 Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity; Certain Amendments 6674
Section 7.7 Burdensome Actions 6674
Section 7.8 Affiliates 6675
ARTICLE VIII THE CLOSING 6775
Section 8.1 Closing 6775
Section 8.2 Closing Deliverables of the Company 6775
Section 8.3 Conditions to the Investor’s Obligations 6876
ii
ARTICLE IX CONFIDENTIALITY 7078
Section 9.1 Confidentiality; Permitted Use 7078
Section 9.2 Exceptions 7078
Section 9.3 Permitted Disclosures 7078
Section 9.4 Return of Confidential Information 7179
ARTICLE X INDEMNIFICATION 7179
Section 10.1 Indemnification by the Company 7179
Section 10.2 Indemnification by the Investor 7280
Section 10.3 Procedures 7280
Section 10.4 Other Claims 7381
Section 10.5 Exclusive Remedies 7482
Section 10.6 Certain Limitations 7482
ARTICLE XI EVENTS OF DEFAULT REMEDIES 7583
Section 11.1 Remedies Upon Event of Default 7583
ARTICLE XII MISCELLANEOUS 7583
Section 12.1 Survival 7583
Section 12.2 Specific Performance 7583
Section 12.3 Notices 7684
Section 12.4 Successors and Assigns 7785
Section 12.5 Independent Nature of Relationship 7785
Section 12.6 Expenses 7785
Section 12.7 Appointment of the Agent 7886
Section 12.8 Entire Agreement 7886
Section 12.9 Governing Law 7886
Section 12.10 Waiver of Jury Trial 7987
Section 12.11 Severability 7987
Section 12.12 Counterparts 7988
Section 12.13 Amendments; No Waivers 8088
Section 12.14 No Third Party Rights 8088
Section 12.15 Table of Contents and Headings 8088
Exhibit A Form of Press Release
Exhibit B Form of Compliance Certificate
Exhibit C Example of Calculation of Included Product Payment Amount
Exhibit D Form of Joinder Agreement
Exhibit EC Form of Intercreditor Agreement
Exhibit FD Form of Security Agreement
Exhibit GE Form of Company Assumption Agreement
Exhibit HF Form of Guaranty
Exhibit G Form of Intercompany Subordination Agreement
Annex I Example of Calculation of Included Product Payment Amount
Annex II Internal Rate of Return Calculation
Schedule 1 Post-Amendment Effective Date Matters
iii
REVENUE INTEREST FINANCING AGREEMENT
This Revenue Interest Financing Agreement (this “Agreement”) dated as of February 9, 2023 (the “Effective Date”) is among Allurion Technologies, Inc.LLC, a Delaware corporationlimited liability company (the “Company”), and RTW Master Fund, Ltd., an exempted company incorporated in the Cayman Islands with limited liability, RTW Innovation Master Fund, Ltd., an exempted company incorporated in the Cayman Islands with limited liability, and RTW Venture Fund Limited, an investment company limited by shares incorporated under the laws of Guernsey4010 Royalty Investments ICAV, an Irish collective asset-management vehicle, for and on behalf of its sub-fund, 4010 Royalty Investments Fund 1, and 4010 Royalty Master Fund, LP, a Cayman Islands limited partnership (each and collectively, the “Investor”), as amended by the Omnibus Amendment, dated as of April 14, 2024 (the “Omnibus Amendment”). Each of the Company and the Investor is referred to in this Agreement as a “Party” and collectively as the “Parties”.
RECITALS
WHEREAS, the Company is developing Products (as defined in Section 1.1) for the purposes of sale in the Territory; and
WHEREAS, the Company desires to secure financing from the Investor, and the Investor has indicated its willingness to provide financing, upon and subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINED TERMS AND RULES OF CONSTRUCTION
Section 1.1 Defined Terms. The following terms, as used herein, shall have the following respective meanings:
“Acquired Debt” means Indebtedness (a) of a Person existing at the time such Person becomes a Subsidiary (which is not also a Guarantor) through the acquisition of the Equity Interests in such Subsidiary, (b) assumed by a Subsidiary (which is not also a Guarantor) in connection with the acquisition by such Subsidiary of assets from such Person or (c) of a Person at the time such Person merges or amalgamates with or into or consolidates or otherwise combines with any Subsidiary (which is not also a Guarantor), in each case so long as (i) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary or such acquisition, merger, amalgamation or consolidation, as the case may be, (ii) no Default or Event of Default shall have occurred and be continuing or would result from such acquisition, merger, amalgamation or consolidation, as the case may be and (iii) the Company does not guarantee or assume any such Indebtedness.
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“Additional Revenue Interest Financing Agreement” means a revenue interest financing agreement with the Company in the form attached as Annex A to the Letter Agreement.
“Additional RIFA Investors” means RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd. and RTW Biotech Opportunities Operating Ltd. (as successor in interest of RTW Biotech Opportunities Ltd. (formerly known as RTW Venture Fund Limited)), in each case, together with their successors and permitted assigns.
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or with respect to the Investor, any other investment fund or registered investment company now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or that shares the same management company or investment adviser with, the Investor. For purposes of this definition, “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities entitled to elect the Board of Directors or management board, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative to the foregoing.
“Agent” has the meaning set forth in Section 12.7.
“Agreement” has the meaning set forth in the preamble.
“Allurion Australia” means Allurion Australia Pty Ltd, with Australian Company Number 658 546 117, a wholly-owned Subsidiary of the Company.
“Allurion France” means Allurion France SAS, a wholly-owned Subsidiary of the Company.
“Amendment Effective Date” has the meaning set forth in the Omnibus Amendment.
“Annual Net Sales” means, with respect to any Calendar Year, the aggregate amount of worldwide Net Sales for that Calendar Year.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Company or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto.
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“Applicable Law” means, with respect to any Person, all Laws, rules, regulations and orders of Governmental Authorities applicable to such Person or any of its properties or assets.
“Applicable Tiered Percentage” means the percentage based on the applicable portion of Annual Net Sales and the measurement date as set forth in the chart below:
Payment Tiers based on Annual Net Sales |
Prior to or on December 31, 2026 |
On or after January 1, 2027 |
A. Portion of Annual Net Sales less than or equal to $100,000,000 |
6.012.0% |
10.012.0% |
B. Portion of Annual Net Sales exceeding $100,000,000 and less than or equal to $200,000,000 |
3.0% |
8.0% |
C. Portion of Annual Net Sales in excess of $200,000,000 |
0.5% |
0.5% |
provided that if the Company does not receive Marketing Authorization from the FDA for the Gastric Balloon for the treatment of adults with obesity prior to or on June 30, 2025, the Applicable Tiered Percentage on the portion of Annual Net Sales less than or equal to $100,000,000 will increase to 12.0% beginning on July 1, 2025, and remain at 12.0% until the Company receives such Marketing Authorization from the FDA, at which time the Applicable Tiered Percentage on the portion of Annual Net Sales less than or equal to $100,000,000 would revert commencing the next Calendar Year to the scheduled Applicable Tiered Percentage at such time based on the chart above. By way of example, if such Marketing Authorization is received from the FDA at any time in 2025 after June 30, 2025, then the Applicable Tiered Percentage shall revert from 12% to 6% starting January 1, 2026, and if such Marketing Authorization is received from the FDA at any time in 2026, then the Applicable Tiered Percentage shall revert from 12% to 10% starting January 1, 2027.
“Arbiter” has the meaning set forth in Section 6.21(b).
“Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal year ended December 31, 2021, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Company and its Subsidiaries, including the notes thereto, audited by independent public accountants of recognized national standing and prepared in conformity with GAAP.
“Australian Security Documents” means, collectively, (i) the Australian law governed general security agreement executed on or after the Amendment Effective Date by Allurion Australia in favor of the Agent, for the benefit of the Investor and (ii) the Australian law governed specific security agreement executed on or after the Amendment Effective Date by Allurion Opco in favor of the Agent, for the benefit of the Investor, (iii) any document required to be delivered under or related to the foregoing and (iv) any amendments, restatements, supplements, waivers and other modifications to any of the foregoing.
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“Bankruptcy Event” means the occurrence of any of the following in respect of a Person: (a) such Person shall generally not, shall be unable to, or an admission in writing by such Person of its inability to, pay its debts as they come due or a general assignment by such Person for the benefit of creditors; (b) the filing of any petition or answer by such Person seeking to adjudicate itself as bankrupt or insolvent, or seeking for itself any liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of such Person or its debts under any Applicable Law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization, examination, relief of debtors or other similar Applicable Law now or hereafter in effect, or seeking, consenting to or acquiescing in the entry of an order for relief in any case under any such Applicable Law, or the appointment of or taking possession by a receiver, trustee, custodian, liquidator, examiner, assignee, sequestrator or other similar official for such Person or for any substantial part of its property; (c) corporate or other entity action taken by such Person to authorize any of the actions set forth in clause (a) or clause (b) above; or (d) without the consent or acquiescence of such Person, the commencement of an action seeking entry of an order for relief or approval of a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar Applicable Law, or the filing of any such petition against such Person, or, without the consent or acquiescence of such Person, the commencement of an action seeking entry of an order appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person, in each case where such petition or order shall remain unstayed or shall not have been stayed or dismissed within ninety (90) days from entry thereof.
“Board of Directors” means (a) with respect to a company or corporation, the board of directors of the company or corporation or any committee thereof duly authorized to act on behalf of such board, (b) with respect to a partnership, the Board of Directors of the general partner of the partnership, (c) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof, and (d) with respect to any other Person, the board or committee of such Person serving a similar function.
“Business” means, at any time, a collective reference to the businesses operated by the Company and its Subsidiaries at such time.
“Business Combination Agreement” means that certain Business Combination Agreement, dated as of the date hereof, among Compute Health Acquisition Corp., a Delaware corporation, Compute Health Corp., a Delaware corporation, Merger Sub 2, Parent and Allurion Technologies, Inc., a Delaware corporation, as amended, restated, supplemented or otherwise modified from time to time.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Applicable Law to remain closed.
“Calendar Quarter” means (a) for the first calendar quarter, (i) if the Closing Date occurs before July 1, 2023, then the period beginning on the Closing Date and ending on the last day of the calendar quarter in which the Closing Date falls or (ii) if the Closing Date occurs on or after July 1, 2023, then the period beginning on July 1, 2023 and ending on September 30, 2023,
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and (b) thereafter each successive period of three (3) consecutive calendar months ending on December 31, March 31, June 30, September 30.
“Calendar Year” means (a) for the first calendar year, (i) if the Closing Date occurs before July 1, 2023, then the period beginning on the Closing Date and ending on December 31, 2023 or (ii) if the Closing Date occurs on or after July 1, 2023, then the period beginning on July 1, 2023 and ending on December 31, 2023, (b) for each calendar year of the Payment Term thereafter, each successive period beginning on January 1 and ending twelve (12) consecutive calendar months later on December 31, and (c) for the last year of the Payment Term, the period beginning on January 1 of the year in which this Agreement expires or terminates and ending on the effective date of expiration or termination of this Agreement.
“CDA” means that certain Mutual Confidentiality Agreement by and between the Company and RTW Investments, LP, effective as of November 23, 2022.
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“Change of Control Payment” has the meaning set forth in Section 3.1(c).
“Closing” has the meaning set forth in Section 8.1.
“Closing Date” has the meaning set forth in Section 8.1.
“Collateral Documents” has the meaning ascribed theretomeans, collectively, the Security Agreement, each Real Property Security Document, each Intellectual Property Security Agreement (as defined in the Security Agreement.), each Foreign Security Document, and each other security agreement, control agreement or financing statement, registration, recordation, filing, instrument or approval required, entered into or recommended to grant, perfect and otherwise render enforceable Liens in favor of the Agent for the benefit of the Investor, for purposes of securing the Obligations, including (without limitation) pursuant to Section 6.5, in each case, as amended or otherwise modified from time to time.
“Commercialization” means, on a country-by-country basis, any and all activities with respect to the manufacture, distribution, marketing, detailing, promotion, selling and securing of reimbursement of Products in a country after Marketing Authorization for a Product in that country has been obtained, which shall include, as applicable, post-marketing approval studies, post-launch marketing, promoting, detailing, marketing research, distributing, customer service, selling the Products, importing, exporting or transporting the Products for sale, and regulatory compliance with respect to the foregoing. When used as a verb, “Commercialize” means to engage in Commercialization.
“Commercially Reasonable and Diligent Efforts” means, with respect to the efforts to be expended with respect to the Products, such efforts and resources normally used by a reasonably prudent company in the medical device industry of a size and product portfolio comparable, and with similar resources available, to the Company and its Subsidiaries (provided that the number of full time sales representatives (including direct sales representatives and, tele-sales representatives, consultants and customer care managers) of the Company with respect to the Product shall not fall below sixty (60) at any time after December 31, 2023 and shall not fall below seventy (70) at any time after December 31, 2024), with the marketing, sale and product development and research plans similar to similarly situated companies in the medical device industry, taken as a whole, in which medical device product is owned or licensed in the same manner as the Products, which medical device product is at a similar stage in its product life and of similar market and profit potential as the Products, taking into account efficacy, safety, approved labeling, the competitiveness of alternative products, pricing/reimbursement for the medical device product, the intellectual property and regulatory protection of the medical device product,
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the regulatory structure and the profitability of the medical device product, all as measured by the facts and circumstances in existence at the time such efforts are due.
“Commodity Account” means any commodity account, as such term is defined in Section 9-102 of the UCC.
“Company” has the meaning set forth in the preamble.
“Company Indemnification Obligations” has the meaning set forth in Section 10.1.
“Company Indemnified Party” has the meaning set forth in Section 10.2.
“Company Party” means any of the Company and the Guarantors.
“Comparable Yield” has the meaning set forth in Section 6.21(a).
“Compliance Certificate” means a certificate substantially in the form of Exhibit B.
“Confidential Information” means any and all technical and non-technical non-public information provided by either Party to the other (including, without limitation, the reports provided pursuant to Section 3.2 and any notices or other information provided pursuant to Section 6.3), either directly or indirectly, and including any materials prepared on the basis of such information, whether in graphic, written, electronic or oral form, and marked or identified at the time of disclosure as confidential, or which by its context would reasonably be deemed to be confidential, including without limitation information relating to a Party’s technology, products and services, and any business, financial or customer information relating to a Party. The existence and terms of this Agreement shall be deemed the Confidential Information of both Parties. For clarity, this Agreement shall supersede the CDA and the CDA shall cease to be of any force and effect following the execution of this Agreement; provided, however, that all information falling within the definition of “Confidential Information” set forth in the CDA shall also be deemed Confidential Information disclosed pursuant to this Agreement, and the use and disclosure of such Confidential Information following the date of this Agreement shall be subject to the provisions of ARTICLE IX.
“Contract” means any contract, agreement, commitment, instrument, license, sublicense, subcontract, real or personal property lease or sublease, note, indenture, mortgage, bond, letter of credit, guarantee, purchase order, or other legally binding business arrangement, whether written or oral, together with any amendments, restatements, supplements or other modifications thereto.
“Contractual Obligation” means, as to any Person, any obligation arising under any Contract.
“Convertible Notes” means the Convertible Unsecured Promissory Notes issued by the Company from time to time pursuant to that certain Convertible Note Purchase Agreement, dated as of December 22, 2021, among the Company and the Investors party thereto, as amended, restated, supplemented or otherwise modified from time to time.
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“Copyright License” means any agreement, whether written or oral, providing for the grant of any right to use any Work under any Copyright.
“Copyrights” means (a) all proprietary rights afforded Works pursuant to Title 17 of the United States Code, including, without limitation, all rights in mask works, copyrights and original designs, and all proprietary rights afforded such Works by other countries for the full term thereof (and including all rights accruing by virtue of bilateral or international treaties and conventions thereto), whether registered or unregistered, including, but not limited to, all applications for registration, renewals, extensions, reversions or restorations thereof now or hereafter provided for by Law and all rights to make applications for registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to; and (b) all copyright rights under the copyright Laws of the United States and all other countries for the full term thereof (and including all rights accruing by virtue of bilateral or international copyright treaties and conventions), whether registered or unregistered, including, but not limited to, all applications for registration, renewals, extensions, reversions or restorations of copyrights now or hereafter provided for by Law and all rights to make applications for copyright registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Cover” or “Covering” means, with reference to a Patent and a product, composition, article of manufacture, or method, that the manufacture, practice, use, offer for sale, sale or importation of the product, composition, article of manufacture, or method, would infringe a Valid Claim of such Patent, or with respect to a Valid Claim of a pending application for Patent, would infringe such Valid Claim if it were issued in the form pending, in each case in the country in which such activity occurs without a license thereto (or ownership thereof).
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Deposit Account” means a “any deposit account” (as defined in Article 9 of the Uniform Commercial Code), investment account or other account in which funds are held or invested to or for the credit or account of the Company, as such term is defined in Section 9-102 of the UCC.
“Designated Jurisdiction” means any country, territory or region to the extent that such country, territory or region is the subject of any Sanction.
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“De-SPAC Transaction” means the Mergers (as defined in the Business Combination Agreement) and each other transaction contemplated by the Business Combination Agreement.
“Disposition” or “Dispose” means the sale, transfer, out-license, lease or other disposition (including any Sale and Leaseback Transaction or any issuance by any Subsidiary of its Equity Interests other than to a Company Party) of any property included in the Collateral (or that would be Collateral if it were property of an Obligor) by any Company Party or any Subsidiary of the Company, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding the following (collectively, the “Permitted Transfers”): (a) the sale, lease, license, transfer or other disposition of inventory in the ordinary course of business, (b) the sale, lease, license, transfer or other disposition in the ordinary course of business of surplus, obsolete or worn out property no longer used or useful in the conduct of the Business of the Company and its Subsidiaries, (c) the abandonment or other disposition of IP Rights that are not material or are no longer used or useful in any material respect in the Business of the Company and its Subsidiaries, (d) licenses, sublicenses, leases or subleases (other than relating to IP Rights, in each case) granted to third parties in the ordinary course of business and not interfering with the Business of the Company and its Subsidiaries, (e) any Involuntary Disposition or any sale, lease, license or other disposition of property (other than, for the avoidance of doubt, IP Rights) in settlement of, or to make payment in satisfaction of, any property or casualty insurance, (f) dispositions consisting of the sale, transfer, assignment or other disposition of unpaid and overdue accounts receivable in connection with the collection, compromise or settlement thereof in the ordinary course of business and not as part of a financing transaction, (g) Permitted Licenses, (h) to the extent constituting Permitted Liens, (i) sales, leases, licenses, transfers or other dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such sale, lease, license, transfer or other disposition are promptly applied to the purchase price of similar replacement property, (j) to the extent constituting a Disposition, customary transfer pricing and cost-sharing arrangements (i.e., “cost-plus” arrangements) among the Company and its Subsidiaries that are in the ordinary course of business; and (k) the sale, transfer, issuance or other disposition of a de minimis number of shares of the Equity Interests of a Foreign Subsidiary of a Company Party in order to qualify members of the governing body of such Subsidiary if required by Applicable Law. It is understood and agreed that, notwithstanding anything to the contrary set forth in this definition, in no event shall a “Permitted Transfer” include any license of any Product (or any IP Rights associated therewith) other than Permitted Licenses.
“Disputes” has the meaning set forth in Section 4.10(i).
“Disqualified Capital Stock” means any Equity Interests that (i) by its terms, (ii) by the terms of any security into which it is convertible or for which it is exchangeable, or (iii) by contract or otherwise, is, or upon the happening of any event or passage of time would be, required to be redeemed, or is redeemable at the option of the holder thereof, in any such case on or prior to the date that is ninety-one (91) days after the Legal Maturity Date; provided that only the portion of Equity Interests (or portion of security into which it is convertible or for which it is exchangeable) which is, or upon the happening of any event or passage of time would be, required to be redeemed, or is redeemable at the option of the holder thereof, on or prior to such date will
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be deemed to be Disqualified Capital Stock; and provided further that if such Equity Interests are issued to any plan for the benefit of directors, managers, employees, officers or consultants of the Company or its Subsidiaries or by any such plan to such directors, managers, employees, officers or consultants, such Equity Interests shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations. Notwithstanding the preceding sentence, any Equity Interests that would constitute Disqualified Capital Stock solely because the holders thereof have the right to require the redemption or repurchase of such Equity Interests upon the occurrence of a Change of Control, fundamental change, delisting or an asset sale will not constitute Disqualified Capital Stock if the “asset sale,” “fundamental change”, “delisting” or “Change of Control” provisions applicable to such Equity Interests provide that the issuer thereof will not redeem or repurchase any such Equity Interests pursuant to such provisions prior to all other Obligations (other than contingent indemnification obligations for which no claim has been asserted) having been irrevocably paid in full in cash.
“Dollar” or the sign “$” means United States dollars.
“Domain Names” means all domain names and URLs that are registered and/or owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the United States, any state of the United States or the District of Columbia.
“Effective Date” has the meaning set forth in the preamble hereto.
“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member, membership or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974 as amended.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to Section 412 of the Internal Revenue Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) the withdrawal of the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in
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Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) by the Company or any ERISA Affiliate from a Multiemployer Plan, (d) the filing by the plan administrator of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Sections 4041 of ERISA, (e) the institution by the PBGC of proceedings under Section 4042 of ERISA to terminate a Pension Plan, (f) the determination that any Multiemployer Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA or is insolvent, within the meaning of Section 4245 of ERISA, or has been terminated, within the meaning of Section 4041A of ERISA, (g) the determination that any Pension Plan is in at-risk status within the meaning of Section 303 of ERISA, or (h) the imposition of any liability pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA upon the Company or any ERISA Affiliate.
“Event of Default” means any of the events set forth below:
(a) Non-Payment. The Company or any Guarantor (if any) fails to pay any amounts to the Investor hereunder when and as the same shall become due and payable; provided that the Company or such Guarantor shall have the right to cure such failure within five (5) Business Days if the Company and the Guarantors have not failed to make any payment hereunder on the due date therefor more than three times;
(b) Covenants. If (i) any Company Party fails to perform or observe any covenant or agreement (not specified in subsection (a) above) contained in any Transaction Document on its part to be performed or observed, and, in the case of any failure that is capable of cure, such failure continues unremedied for a period of thirty (30) or more days; and (ii) such failure (without giving effect to any qualifications as to “materiality” “Material Adverse Effect” or any words of similar meaning) could reasonably be expected to have a Material Adverse Effect;
(c) Representations and Warranties. If (i) any representation or warranty made or deemed made by or on behalf of the Company or any other Company Party in or in connection with this Agreement or any other Transaction Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Transaction Document or any amendment or modification hereof or thereof, shall: (A) prove to have been incorrect when made or deemed made to the extent that such representation or warranty contains any materiality or Material Adverse Effect qualifier; or (B) prove to have been incorrect in any material respect when made or deemed made to the extent that such representation or warranty does not otherwise contain any materiality or Material Adverse Effect qualifier; and (ii) such inaccuracy (without giving effect to any qualifications as to “materiality” “Material Adverse Effect” or any words of similar meaning) could reasonably be expected to have a Material Adverse Effect;
(d) Bankruptcy Event. (i) The Company or any Company Party (A) institutes or consents to the institution of any proceeding under any Debtor Relief Law or makes an assignment for the benefit of creditors, (B) applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property, or (C) becomes unable or admits in writing its inability or fails
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generally to pay its debts as they become due; (ii) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; (iii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within sixty (60) calendar days after its issue or levy; or (iv) any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or
(e) Indebtedness. Any Company Party (i) fails to pay when due beyond any grace period provided with respect thereto (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) any Indebtedness (other than the Obligations hereunder) in excess of $15,000,000 (or its foreign currency equivalent) or (ii) fails to perform or observe any covenant or agreement to be performed or observed by it contained in any agreement or in any instrument evidencing any of its Indebtedness (other than the Obligations hereunder) of $15,000,000 or more and, as a result of such failure, any other party to that agreement or instrument is entitled to exercise the right to accelerate the maturity of any Indebtedness thereunder.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Excluded Account” means, collectively, (i) accounts used exclusively for payroll, the withheld employee portion of payroll taxes and other employee wage and benefit payments, (ii) accounts used exclusively for escrow, trust, or other fiduciary arrangements established in the ordinary course and not in contemplation of this Agreement, (iii) accounts constituting cash collateral accounts subject to Permitted Liens and (iv) bank or similar deposit accounts with balances that at no time exceed $2,000,000 individually or $3,000,000 in the aggregate at any time for all such accounts; provided that no account used for collecting payments from customers, suppliers or clients of any Company Party or any Subsidiary of a Company Party shall constitute an “Excluded Account”.
“Excluded Liabilities and Obligations” has the meaning set forth in Section 2.2.
“Excluded Subsidiary” means, collectively, (i) Immaterial Subsidiaries and (ii) any Subsidiary that the cost or burden of providing a guaranty or to create or perfect Liens over the assets of which would outweigh the benefit afforded to the Investor thereby, as determined in the Investor’s sole but commercially reasonable discretion (it being understood and agreed that so long as any Subsidiary constitutes an “Excluded Subsidiary” under and as referred to in the Term LoanNPA Documents, such Subsidiary shall constitute an Excluded Subsidiary hereunder).
“FDA” means the U.S. Food and Drug Administration or any successor agency or authority thereto.
“Final Comparable Yield” has the meaning set forth in Section 6.21(b).
“Final Payment Amount” means as of any date of determination, the amount equal to the sum of (i) the applicable amount payable under Section 3.1(f), less the aggregate of all of
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the payments of the Company in respect of the Revenue Interests (including any Under Performance Payment) made to the Investor prior to such date, plus (ii) any other Obligations payable by the Company Parties under this Agreement and the other Transaction Documents (if any).
“Final Schedule 6.21(e)” has the meaning set forth in Section 6.21(b).
“Financial Statements” means the Audited Financial Statements and the Interim Financial Statements.
“Force Majeure Event” means military action or war (whether or not declared), terrorism, riot, fire, explosion, accident, flood, sabotage, changes in Applicable Laws, actions of Governmental Authorities, pandemics (other than the current COVID-19 pandemic or any government response thereto), earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires, or other natural disasters or weather conditions.
“Foreign Security Documents” means any pledge, security or other collateral agreement pursuant to which the assets owned by a Foreign Subsidiary or the Equity Interests in such Foreign Subsidiary are made subject to a Lien in favor of the Agent, for the benefit of the Investor, including but not limited to the French Security Documents and the Australian Security Documents, and which is governed by the laws of the jurisdiction in which such Foreign Subsidiary is formed, in each case in form and substance reasonably satisfactory to the Agent and in each case as amended, restated, supplemented or otherwise modified from time to time.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“French Security Documents” means (i) the financial securities account pledge agreement governed by French law (including but not limited to the statement of pledge and the pledge certificate) executed on or after the Amendment Effective Date by and among, among others, the Company, as pledgor, the Agent, the Collateral Agent and Allurion France, as securities account holder, and (ii) any document required to be delivered thereunder or relating thereto.
“Fundamental Representations” means those representations and warranties of the Company set forth in Section 4.1 (Organization), Section 4.2 (No Conflicts), Section 4.3 (Authorization), Section 4.4 (Ownership), Section 4.8 (No Broker’s Fees), Section 4.10 (Intellectual Property Matters), Section 4.13 (Bankruptcy), Section 4.20 (Perfection of Security Interests) and Section 4.23 (Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act).
“GAAP” means generally accepted accounting principles in effect as the standard financial accounting guidelines in the United States from time to time (consistently applied and on a basis consistent with the accounting policies, practices, procedures, valuation methods and principles used in preparing the Company’s financial statements), and any successor thereto; provided that if a transition in such generally accepted accounting principles would substantively change the recognition of revenue with respect to Net Sales (as currently defined) and its calculation as set forth this Agreement, then the Parties shall mutually agree to amendments to this Agreement in order to cause the amount of Revenue Interests as determined after giving effect to such transition in generally accepted accounting principles to be substantially the same as the
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amount of Revenue Interests as determined under generally accepted accounting principles in effect as the standard financial accounting guidelines in the United States as of the Effective Date.
“Gastric Balloon” means a gastric balloon for weight loss owned or controlled by the Company, the Parent, or any of their respective Subsidiaries as of the Effective Date or during the Payment Term, and any derivatives, modifications and improvements thereto.
“Governmental Authority” means the government of the United States, any other nation or any political subdivision thereof, whether state, local or otherwise, and any agency, authority (including supranational authority), commission, instrumentality, regulatory body, court, central bank or other Person exercising executive, legislative, judicial, Taxing, regulatory or administrative powers or functions of or pertaining to government, including each Patent Office, the FDA and any other government authority in any jurisdiction.
“Governmental Licenses” means all authorizations issuing from a Governmental Authority, including the FDA, based upon or as a result of applications to and requests for approval from a Governmental Authority for the right to manufacture, import, store, market, promote, advertise, offer for sale, sell, use and/or otherwise distribute a Product, which are owned by or licensed to the Company or any Subsidiary, acquired by the Company or any Subsidiary via assignment, purchase or otherwise or that the Company or any Subsidiary is authorized or granted rights under or to.
“Grantors” means the Company and the Guarantors.
“Guarantors” means (i) from and after the Closing, the Parent, (ii) each Subsidiary (other than an Excluded Subsidiary) that owns any materialmore than a de minimis portion of the Collateral as of the Closing Date, including any Subsidiary that holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities, owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten (10) employees, and (iii) any other Subsidiary of the Company that executes and delivers a Joinder Agreement pursuant to Section 6.1.
“Guaranty” means that certain Guaranty, dated as of the Closing DateAugust 1, 2023, executed in favor of the Investor by Merger Sub 2, theby Parent, the Company and each of the other Guarantors in favor of the Agent, for the benefit of the Investor, substantially in the form attached as Exhibit HF hereto, as modified by the Omnibus Amendment and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Hard Cap” means two hundred sixty percent (260%) of the Investment Amount.
“Hedging Agreements” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency
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options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Immaterial Subsidiary” means, as of any date of determination, any Foreign Subsidiary of a Company Party (i) the unconsolidated assets of which does not exceed two and a half percent (2.5%) of the consolidated assets of Parent and its consolidated Subsidiaries as set forth in the financial statements most recently delivered pursuant to Sections 6.9(a) or (b), as applicable, and (ii) the unconsolidated revenues of which does not exceed two and a half percent (2.5%) of the consolidated revenues of Parent and its consolidated Subsidiaries as set forth in the financial statements most recently delivered pursuant to Sections 6.9(a) or (b), as applicable; provided that no Subsidiary of the Company Parties shall qualify as an Immaterial Subsidiary if (x) the assets or revenue of such Subsidiary taken together with the assets or revenue of all then existing Immaterial Subsidiaries exceeds seven and a half percent (7.5%) of the consolidated assets or revenue, as applicable, of Parent and its consolidated Subsidiaries or (y) such Subsidiary holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities, owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten (10) employees.
“Indebtedness” of any Person means (a) any obligation of such Person for borrowed money, (b) any obligation of such Person evidenced by a bond, debenture, note or other similar instrument, (c) any obligation of such Person to pay the deferred purchase price of property or services (except (i) trade accounts payable that arise in the ordinary course of business, (ii) payroll liabilities and deferred compensation, and (iii) any purchase price adjustment, royalty, earnout, milestone payments, contingent payment or deferred payment of a similar nature incurred in connection with any license, lease, contract research and clinic trial arrangements or acquisition), (d) any obligation of such Person as lessee under a capital lease (under GAAP as in effect on the date hereof), (e) any obligation of such Person to purchase securities or other property that arises out of or in connection with the sale of the same or substantially similar securities or property, (f) any non-contingent obligation of such Person to reimburse any other Person in respect of amounts paid under a letter of credit or other guaranty issued by such other Person, (g) any Indebtedness of others secured by a Lien on any asset of such Person, and (h) any Indebtedness of others guaranteed by such Person; provided that intercompany loans among the Company, Parent, or any of their respective Subsidiaries shall not constitute Indebtedness.
“Indemnified Taxes” means all Taxes imposed on or with respect to any payment made by or on account of any obligation of the Company under a Transaction Document.
“Initial Draft Comparable Yield” has the meaning set forth in Section 6.21(b).
“Initial Draft Schedule 6.21(e)” has the meaning set forth in Section 6.21(b).
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“Intellectual Property” means all intellectual property, including but not limited to all proprietary information, trade secrets, Know-How, utility models; confidential information; inventions (whether patentable or unpatentable and whether or not reduced to practice or claimed in a pending patent application) and improvements thereto, Patents, registered or unregistered Trademarks, trade names and service marks (including all goodwill associated therewith), registered and unregistered Copyrights and all applications thereof.
“Intercompany Subordination Agreement” means a subordination agreement to be executed and delivered by the Company Parties and their applicable Subsidiaries, pursuant to which all obligations in respect of any Indebtedness owing to any such Person by the Parent, the Company or any of their respective Subsidiaries shall be subordinated to the prior payment in full in cash of all Obligations, such agreement to be substantially in the form attached hereto as Exhibit G.
“Intercreditor Agreement” means that certain Equal Priority Intercreditor Agreement, dated as of the ClosingAmendment Effective Date, by and between the Term Loan Agent and RTW Investments, LP, as agent for the InvestorNPA Agent, the Principal Purchaser and the Agent, and acknowledged and agreed to by Merger Sub 2, each Guarantor, and any future GuarantorParent, the Company and Allurion Australia, in substantially the form attached hereto as Exhibit EC, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Interim Financial Statements” means the unaudited consolidated balance sheet of the Company and its Subsidiaries for the nine monthnine-month period year ended September 30, 2022, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such period of the Company and its Subsidiaries, including the notes thereto (if any).
“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended.
“Internal Revenue Service” means the United States Internal Revenue Service.
“Investment Amount” has the meaning set forth in Section 2.1.
“Investor” has the meaning set forth in the preamble.
“Investor Indemnification Obligations” has the meaning set forth in Section 10.2.
“Investor Indemnified Party” has the meaning set forth in Section 10.1.
“Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Party or any of its Subsidiaries.
“IP Rights” means, collectively, all Confidential Information, all Copyrights, all Copyright Licenses, all Domain Names, all Governmental Licenses, all applications and requests for Governmental Licenses, all Other Intellectual Property, all Other IP Agreements, all Patents, all Patent Licenses, all Patent Rights (including, for the avoidance of doubt, the Product Patent
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Rights), all Proprietary Databases, all Proprietary Software, all Trademarks, all Trademark Licenses, all Trade Secrets, all Websites, all Website Agreements and all Regulatory Approvals, in each case, which are owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, the Company, including (but not limited to) the items listed on Schedule 4.10(a).
“Joinder Agreement” means, collectively or individually, as the context requires, (i) a joinder agreement substantially in the form of Exhibit DA to the Guaranty and (ii) an accession agreement substantially in the form of Exhibit A to the Security Agreement, in each case, executed and delivered by each Subsidiary in accordance with the provisions of Section 6.1.
“Judgment” means any judgment, order, consent order, writ, injunction, citation, attachment, stipulation, award or decree of any nature.
“Key Countries” means Australia, Brazil, Canada, Chile, France, India, Italy, the People’s Republic of China, Saudi Arabia, Spain, United Arab Emirates, the United Kingdom, and the United States.
“Know-How” means all non-public information, results and data of any type whatsoever, in any tangible or intangible form (and whether or not patentable), including databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, skill, experience, data and results (including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical study data and results), analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data.
“Knowledge” means, with respect to the Company, (a) for purposes of Article IV, the knowledge, after due inquiry, as of the date of this Agreement, of any of the officers of the Company identified on Schedule 1.1, and (b) for all other purposes of this Agreement, the knowledge, after due inquiry, as of a specified time, of any of the officers of the Company identified on Schedule 1.1 or any successor to any such officer holding the same or substantially similar officer position at such time.
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case, having the force of law.
“Legal Maturity Date” means December 31, 2030.
“Letter Agreement” means that certain letter agreement, dated as of February 9, 2023, by and among the Parent (as successor to Compute Health Acquisition Corp., a Delaware corporation), Merger Sub 2the Parent, the Company, the ParentCompany (as successor to Allurion Technologies, Inc., a Delaware corporation), the Additional RIFA Investors, and the Investor, dated as of the date hereof.as (i) amended and restated by that certain amended and restated letter agreement, dated as of May 2, 2023, (ii) assigned by that certain assignment agreement, dated as
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of July 28, 2023, and (iii) assigned by that certain assignment agreement, dated as of April 9, 2024, and as may be further amended, restated, supplemented and otherwise modified from time to time in accordance with its terms.
“License Agreement” means (i) each agreement identified on Schedule 6.8 as of the Effective Date and (ii) any New License Agreements, which may be added to Schedule 6.8. “Licensed Product Patent Rights” means all Product Patent Rights licensed or sublicensed to the Company or any of its Subsidiaries.
“Licensee” means, with respect to any Products, a Third Party to whom the Company, the Parent, or any of their respective Subsidiaries has granted a license or sublicense (or any Third Party to whom such Third Party has granted a license or sublicense) to develop, have developed, make, have made, seek Regulatory Approvals for, distribute, use, have used, import, sell, offer to sell, have sold or otherwise Commercialize such Products under the applicable License Agreement.
“Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property or other priority or preferential arrangement of any kind or nature whatsoever, in each case to secure payment of a debt or performance of an obligation, including any conditional sale or any sale with recourse.
“Loss” means any loss, assessment, award, cause of action, claim, charge, Tax, cost, expense (including reasonable expenses of investigation and reasonable attorneys’ fees), fine, judgment, liability, obligation or penalty; provided, however that Loss shall not include any lost profits or revenue or consequential, punitive, special or incidental damages except (a) the amount of any Revenue Interests that are not received by the Investor due to failure by any Third Party to make payment thereof (other than resulting from any matter described in Section 10.1(a), (b), (c) or (d)) and (b) any lost profits or revenue or consequential, punitive, special or incidental damages awarded against or payable by Investor to a Third Party in connection with a claim or action for which the Company is required to indemnify Investor pursuant to Section 10.1.
“Marketing Authorization” means, with respect to a Product, the Regulatory Approval required by Applicable Law to commercially distribute such Product in a country or region, including, to the extent required by Applicable Law for the commercial distribution of such Product, all pricing approvals and government reimbursement approvals.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the business, assets, properties, liabilities or financial condition of the Company and its Subsidiaries taken as a whole, (b) a material impairment of the rights and/or remedies of the Investor under any Transaction Document to which it is a party or a material impairment in the perfection or priority of the Investor’s security interests in the Collateral, (c) an impairment of the ability of the Company Parties (taken as a whole) to perform their respective obligations under the Transaction Documents that could reasonably be expected to have a material adverse effect on the business, assets, properties, liabilities or financial condition of the Company and its Subsidiaries taken as a whole, or (d) a material adverse effect upon the legality, validity, binding effect or enforceability against any Company Party of any Transaction Document to which
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it is a party; provided, that none of the following would constitute a Material Adverse Effect, except to the extent such changes have had a disproportionate effect on the Company or the Business relative to other participants in the medical device industry: (i) changes in laws or regulations or in the interpretations or methods of enforcement thereof; (ii) general economic changes in the medical device industry; or (iii) any Force Majeure Event.
“Material Contract Counterparty” means a counterparty to any Material Contract.
“Material Contracts” means (a) each Contract creating or evidencing any Material Indebtedness, (b) the Term LoanNPA Documents, (c) any Contract providing for the inbound or outbound license of material Intellectual Property, and (d) any other Contract to which Parent or any of its Subsidiaries is a party or a beneficiary from time to time, or to which any assets or properties of Parent or any of its Subsidiaries are bound (i) the absence or termination of which would reasonably be expected to have a Material Adverse Effect or (ii) without duplication during any period of twelve (12) consecutive months is reasonably expected to, directly or indirectly, (x) result in payments or receipts (including royalty, licensing or similar payments) made to Parent or any of its Subsidiaries in an aggregate amount in excess of $3,000,000, or (y) require payments or expenditures (including royalty, licensing or similar payments) to be made by Parent or any of its Subsidiaries in an aggregate amount in excess of $3,000,000, in each case, as amended, supplemented or otherwise modified from time to time.
“Material Indebtedness” means (i) Indebtedness pursuant to the Term LoanNPA Documents and (ii) any other Indebtedness of the Company, the Parent or any of their respective Subsidiaries, the outstanding principal amount of which, individually or in the aggregate, exceeds $1,000,000 (or the equivalent amount in other currencies).
“Maturity Payment” has the meaning set forth in Section 3.1(d).
“Merger Sub 2” means Compute Health LLC, a Delaware limited liability company, as successor in interest to the Company following consummation of the transactions in connection with the De-SPAC Transaction, whereby, at the Closing, the Company shall merge with and into Merger Sub 2, with Merger Sub 2 as the surviving entity in such merger.
“Methodology” has the meaning set forth in Section 6.21(c).
“Minimum Return Date” means the date on which the Investor have received aggregate payments on account of the Revenue Interests equal to 100% of the Investment Amount.
“Multiemployer Plan” means any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Net Sales” means, with respect to each Product, for any period of determination and without duplication, the sum of: (a) “net revenue” with respect to the sale by the Company, the Parent, or any of their respective Subsidiaries, and any of their respective Licensees (each, a “Selling Party”) of such Product, as reported in such Selling Party’s (or its successor’s) periodic reports filed with the SEC (or its foreign equivalent) on Form 10-Q and Form 10-K (as applicable,
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or its foreign equivalent); and (b) for any sales of such Product by a Selling Party that are not reported in such Selling Party’s (or its successor’s) periodic reports filed with the SEC (or its foreign equivalent) on Form 10-Q and Form 10-K (as applicable, or its foreign equivalent) under the preceding clause (a) as “net revenue”, then “net sales” of each such Product shall be calculated in such case as the difference between (notwithstanding anything to the contrary and for the avoidance of doubt, no “net sales” calculated in the preceding clause (a) shall be included in the “net sales” calculation pursuant to clause (b)): (i) the gross amount billed, invoiced or otherwise recognized as revenue in accordance with GAAP with respect to sales or other dispositions to a Third Party of such Product by the Selling Parties, minus (ii) the following deductions:
(a) rebates, credits or allowances actually granted for damaged or defective products, returns or rejections of such Product or recalls, or for retroactive price reductions and billing errors;
(b) normal and customary trade, cash, quantity and other customary discounts, allowances and credits (including chargebacks) given to Third Parties in the ordinary course;
(c) sales Taxes, duties, VAT Taxes and other Taxes to the extent imposed upon and paid with respect to the sales price (and excluding in each case Taxes based on income or franchise Taxes of any kind);
(d) freight, duty, postage, shipping and transportation or shipping insurance expense and other transportation charges directly related to the distribution of such Product;
(e) non-affiliated brokers or agent commissions, distribution services agreement fees and other similar amounts allowed or paid to Third Party distributors, including specialty distributors of such Product;
(f) rebates made with respect to sales paid for by any Governmental Authority (including, without limitation, Medicaid and Medicare), their agencies and purchasers and reimbursers, managed health care organizations, or to trade customers;
(g) the portion of administrative fees paid during the relevant time period to group purchasing organizations relating to such Product;
(h) any invoiced amounts that are not collected by a Selling Party, including bad debts; and
(i) any customary or similar payments related to the foregoing (a) – (h) that apply to the sale or disposition of medical device products.
For clarity, Net Sales will not include any sales to an Affiliate (unless such Affiliate is the final end-user of such Product), but will include subsequent sales or dispositions of Products to a Third Party. In the case of any sale or other disposal for value, such as barter or counter-trade, of such Product, or part thereof, other than in an arm’s length transaction exclusively for cash, Net Sales shall be calculated as above on the value of the non-cash consideration received or the fair
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market price (if higher) of such Product in the country of sale or disposal, as determined in accordance with GAAP.
“New License Agreement” means any partnership agreement, license agreement or similar agreement entered into by the Company, the Parent, or any of their respective Subsidiaries, pursuant to which the Company, the Parent, or any of their respective Subsidiaries has granted a license or sublicense to any Third Party to develop, have developed, make, have made, seek Regulatory Approvals for, distribute, use, have used, import, sell, offer to sell, have sold or otherwise Commercialize any Product.
“Note Purchase Agreement” has the meaning set forth in the definition of “NPA Documents”.
“NPA Agent” has the meaning set forth in the definition of “NPA Documents”.
“NPA Documents” means, collectively, (i) that certain Note Purchase Agreement, to be dated on or about the Amendment Effective Date (the “Note Purchase Agreement”), among the Parent, the purchasers from time to time party thereto (each, a “Purchaser”, and collectively, the “Purchasers”), RTW Investments, LP, as agent for the Purchasers thereunder (in such capacity, together with its successors and permitted assigns, the “Principal Purchaser”), and Acquiom Agency Services LLC, as collateral agent for the Purchasers and the Principal Purchaser (in such capacity, together with its successors and permitted assigns, the “NPA Agent”), and (ii) each Note and each of the other Note Documents (each, as defined in the Note Purchase Agreement).
“Objection Notice” has the meaning set forth in Section 6.21(b).
“Obligations” means all liabilities, obligations, covenants and duties of any the Company Parties arising under this Agreement or any other Transaction Document with respect to the payment of the Revenue Interests (including any Under Performance Payment) up to the Hard Cap, and the obligations of the Company to pay any interest accrued on any unpaid Revenue Interests or the Final Payment Amount and reimburse or indemnify the Investor for any Losses incurred by the Investor in connection with the enforcement of its rights under this Agreement.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Omnibus Amendment” has the meaning set forth in the preamble.
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement, and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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“Other Intellectual Property” means all worldwide intellectual property rights, industrial property rights, proprietary rights and common-law rights, whether registered or unregistered, which are not otherwise included in Confidential Information, Copyrights, Copyright Licenses, Domain Names, Governmental Licenses, Other IP Agreements, Patents, Patent Licenses, Trademarks, Trademark Licenses, Proprietary Databases, Proprietary Software, Websites, Website Agreements and Trade Secrets, including, without limitation, all rights to and under all new and useful algorithms, concepts, data (including all clinical data relating to a Product), databases, designs, discoveries, inventions, know-how, methods, processes, protocols, chemistries, compositions, formulas, show-how, software (other than commercially available, off-the-shelf software that is not assignable in connection with a Change of Control), specifications for the Products, techniques, technology, trade dress and all improvements thereof and thereto, in each of the foregoing cases, which is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Other IP Agreements” means any agreement, whether written or oral, providing for the grant of any right under any Confidential Information, Governmental License, application or request for a Governmental License, Proprietary Database, Proprietary Software, Trade Secret and/or any other IP Right, to the extent that the grant of any such right is not otherwise the subject of a Copyright License, Trademark License, Patent License or Website Agreement.
“Owned Product Patent Rights” means Product Patent Rights which are owned by the Company or its Subsidiaries.
“Parent” means Allurion Technologies Holdings, Inc., a Delaware corporation.
“Party” or “Parties” has the meaning set forth in the preamble.
“Patent License” means any agreement, whether written or oral, providing for the grant of any right underto use any Patent.
“Patent Office” means the applicable patent office, including the United States Patent and Trademark Office and any comparable foreign patent office, for any Patents.
“Patent Rights” means, collectively, with respect to a Person, all Patents issued or assigned to, and all Patent applications and registrations made by, such Person (whether established or registered or recorded in the United States or any other country or any political subdivision thereof), together with any and all (a) rights and privileges arising under applicable Law with respect to such Person’s use of any Patents, (b) inventions and improvements described and claimed therein, (c) reissues, divisionsdivisionals, continuations, renewals, extensions and continuations-in-part thereof and amendments thereto, (d) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including damages and payments for past, present or future infringements thereof, (e) rights corresponding thereto throughout the world and (f) rights to sue for past, present or future infringements thereof, in each such case, related to the Products and which are owned or controlled by, issued or licensed to, licensed by, or hereafter acquired or licensed by, the Company or any Subsidiary, including without limitation those Patent Rights identified in Schedule 4.10(a).
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“Patents” means all letters patent and patent applications, industrial designs and design patent rights protected, created or arising under the Laws of the United States or in any other jurisdiction or under any international convention (and all letters patent that issue therefrom or from an application claiming priority therefrom) and all patent term extensions, supplementary protection certificates, reissues, reexaminations, extensions, substitutes, renewals, divisionsdivisionals and continuations (including continuations-in-part and continuing prosecution applications) thereof, and including provisional applications and statutory invention registrations, for the full term thereof, together with the right to claim the priority thereto and the right to sue for past infringement of any of the foregoing.
“Payment Term” means the time period commencing on the Closing Date and expiring on the earlier of (a) the date upon which the Investor has received in full cash payments in respect of the Revenue Interests totaling the Final Payment Amount, (b) the date upon which the Investor has received the payment amounts required by and set forth in Section 3.1(f)(i), (ii) or (iii), or (c) the Legal Maturity Date; provided that the Payment Term shall be deemed to extend until any Obligations that arise prior to the end of the Payment Term are fully paid.
“Pension Plan” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is maintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to minimum funding standards under Section 412 of the Internal Revenue Code.
“Permits” means licenses, Governmental Licenses, certificates, accreditations, Regulatory Approvals, other authorizations, registrations, permits, consents, clearances and approvals required in connection with the conduct of the Company’s or any Subsidiary’s Business or to comply with any Applicable Laws, and those issued by state governments for the conduct of the Company’s or any Subsidiary’s Business.
(a) Indebtedness under the Term LoanNPA Documents in an aggregate principal amount not to exceed the amount permitted under the Intercreditor Agreement and as amended or refinanced in accordance with the Intercreditor Agreement$48,000,000 plus any PIK Interest (as defined in the Note Purchase Agreement);
(b) Indebtedness under the Transaction Documents;
(c) Indebtedness incurred by the Company or its Subsidiaries consisting of (i) the financing of the payment of insurance premiums solely in respect of insurance policies described in Section 6.12 insuring assets or businesses of a Company Party that are written or arranged in such Company Party’s ordinary course of business and which are payable within one (1) year and (ii) customer deposits and advance payments received in the ordinary course of business or consistent with past practice from customers for goods or services purchased in the ordinary course of business or consistent with past practice;
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(d) Indebtedness owed to (including obligations in respect of letters of credit for the benefit of) any Person providing worker’s compensation, health, disability or other employee benefits or property, casualty or liability insurance to the Company or any Subsidiary incurred in connection with such Person providing such benefits or insurance pursuant to customary reimbursement or indemnification obligations to such Person, in each case, incurred in the ordinary course of business;
(e) Indebtedness in respect of performance, indemnity, bid, stay, customs, appeal, replevin and surety bonds, performance and completion guarantees and other similar bonds or guarantees, trade contracts, government contracts and leases, in each case incurred in the ordinary course of business not to exceed $500,000 in the aggregate at any time outstanding, but excluding guaranties with respect to any obligations for borrowed money;
(f) Indebtedness arising from (A) the honoring by a bank or other financial institution of a check, draft, or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business; provided that such Indebtedness is extinguished within five (5) Business Days of notification to the Company of its incurrence and (B) Treasury Management Arrangements in the ordinary course of business;
(g) letters of credit, bankers’ acceptances, guarantees or other similar instruments or obligations issued or relating to liabilities or obligations incurred in the ordinary course of business; provided, that, (i) the aggregate outstanding amount of such letters of credit issued thereunder shall not exceed $500,000 at any time outstanding and (ii) no such Indebtedness shall be permitted to be incurred in reliance on this clause (g) by Allurion France;
(h) Indebtedness in respect of Hedging Agreements in an aggregate notional amount for all such Hedging Agreements not to exceed $1,500,000 (or the equivalent amount in other currencies) at any time outstanding; provided, that, such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view”;
(i) to the extent constituting Indebtedness, customary transfer pricing and cost-sharing arrangements (i.e., “cost-plus” arrangements) among the Company and its Subsidiaries that are in the ordinary course of business;
(j) Acquired Debt, provided that the aggregate outstanding amount of all of the Acquired Debt shall not exceed $2,500,000 at any one time outstanding[reserved];
(k) Indebtedness consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred to finance the acquisition, repair, improvement or construction of fixed or capital assets of such Person in the ordinary course of business, provided that the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time of such acquisition, repair, improvement or construction
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is made); provided, that, (A) the total of all such Indebtedness for all such Persons taken together shall not exceed an aggregate principal amount of $3,000,000 (or the equivalent amount in other currencies) at any one time outstanding, (B) such Indebtedness when incurred shall not exceed the purchase price of (or the repair, improvement or constructions costs for) the asset(s) financed, and (C) no such Indebtedness shall be refinanced, renewed or extended for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing, renewal or extension;
(l) Guarantees of thea Company and its SubsidiariesParty in respect of Indebtedness and other obligations of theof another Company and any SubsidiaryParty otherwise permitted hereunder; provided that any subrogation claims of any such guarantying Company Party shall be subordinated to the Obligations on terms satisfactory to the Investor acting reasonably (it being understood and agreed that so long as such Indebtedness is subordinated to the Obligations in a manner at least as favorable to the Investor as the subordination provisions required by the Term Loan Documents, such subordination provisions shall be acceptable to the Investor);pursuant to the Intercompany Subordination Agreement;
(m) credit card Indebtedness in an aggregate principal amount not to exceed $1,000,000 at any time outstanding; provided that the aggregate amount of such Indebtedness incurred in reliance on this clause (l) by Allurion France shall not exceed $250,000;
(n) to the extent constituting Indebtedness, customary transfer pricing and cost-sharing arrangements (i.e., “cost-plus” arrangements) among the Company and its Subsidiaries that are in the ordinary course of business[reserved];
(o) other unsecured Indebtedness not otherwise permitted under clauses (a) through (n) in an aggregate principal amount not to exceed $2,000,000 at any time outstanding[reserved];
(p) Indebtedness of a Company Party owing to another Company Party; provided that, in each case, such Indebtedness shall be subordinated to the Obligations onpursuant to the Intercompany Subordination Agreement or on other terms satisfactory to the InvestorCollateral Agent (acting at the direction of the Principal Purchaser) acting reasonably (it being understood and agreed that so long as such Indebtedness is subordinated to the Obligations in a manner at least as favorable to the Investor as the subordination provisions required by the Term Loan Documents, such subordination provisions shall be acceptable to the Investor);;
(q) Indebtedness incurred by the Company Parties incurred in compliance with Section 2 of the Letter Agreement in an aggregate amount not to exceed the limit set forth in the Intercreditor Agreement; and $7,500,000;
(r) other unsecured Indebtedness not otherwise permitted under clauses (a) through (q) in an aggregate principal amount not to exceed $2,000,000 at any time outstanding; provided that no such Indebtedness shall be permitted to be incurred in reliance on this clause (r) by Allurion France; and
(rs) Permitted Refinancings of Permitted Debt (other than clauses (c)(ii), (d), and (f) of this definition of “Permitted Debt”).
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“Permitted Licensee” means a Third Party counterparty to a license entered into in the ordinary course of the Company’s Business in the development, manufacture, or commercialization of any Product.
(a) no Default or Event of Default has occurred or is continuing at the time of entry into such license;
(b) the license constitutes an arms-length transaction, the terms of which, on their face, do not provide for a sale or assignment from the Company, the Parent, or any of their respective Subsidiaries to a Third Party of any intellectual property that, at the time of execution of such license, comprises a portion of the Collateral (or assets that would constitute Collateral if owned by a Company Party), and do not restrict the ability of the Company or any of its Subsidiaries, as applicable, to pledge, grant a Lien on or assign or otherwise transfer such intellectual property (in each case other than customary non-assignment provisions that restrict the assignability of the license but do not otherwise restrict the ability of the Company or any Subsidiary (as applicable) to pledge, grant a Lien on or assign any such intellectual property); and
(c) in the case of any exclusive license to Commercialize the Products, the Company delivers to the Investor a copy of the final executed exclusive license promptly upon consummation thereof, subject to reasonable redaction to comply with obligations of confidentiality.
(a) Liens created in favor of the InvestorAgent pursuant to the Transaction Documents;
(b) any Lien on any property or asset of any Company Party or any of its Subsidiaries existing on the Closing Date and set forth on Schedule 1.2, provided that (i) no such Lien shall extend to any other property or asset of any Company Party or any of their Subsidiaries and (ii) any such Lien shall secure only those obligations which it securessecured on the Closing Date and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;
(c) inchoate Liens for ad valorem property Taxes not yet delinquent;
(d) Liens in respect of property of the Company imposed by Applicable Law which were (i) were incurred in the ordinary course of business (including, but not limited to, carriers’, warehousemen’s, distributors’, wholesalers’, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business) (ii) do not secure Indebtedness for borrowed money, and (iii) secure payment obligations (i) not then due, (ii) that if due, are not yet overdue by more than thirty (30) days, (iii) that if overdue by more than thirty (30) days, are being contested in good faith by appropriate proceedings and for which adequate reserves have been established and maintained in accordance with GAAP or (iv) with respect to which the failure to
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make payment could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(e) Liens incurred in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other forms of governmental insurance or benefits, insurance, surety bonds, or other obligations of a like nature or to secure the performance of letters of credit, banker’s acceptances, bids, tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business, other than any Lien imposed by ERISA which has resulted or would result in liability, together with any other Lien imposed by ERISA, in an aggregate amount in excess of $1,000,000;
(f) Liens for Taxes, assessments and governmental charges that are not delinquent or remain payable without any interest or penalty or that are being contested in good faith and with due diligence by appropriate proceedings and for which adequate reserves have been established and maintained in accordance with GAAP;
(g) banker’s liens for collection or rights of set off or similar rights and remedies as to funds maintained with depositary institutions; provided that such funds are not established or deposited for the purpose of providing collateral for any Indebtedness and are not subject to restrictions on access by the Company in excess of those required by applicable banking regulations;
(h) Liens on assets and rights that do not constitute any portion of the Collateral (or assets that would constitute Collateral if owned by a Company Party);
(i) Liens in favor of the Company or any Subsidiary;
(j) Liens on property or Equity Interests of another Person existing at the time such other Person becomes a Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger, amalgamation or consolidation and do not extend to any assets other than those of the Person that becomes a Subsidiary of the Company and provided, further that such Liens were granted to secure repayment of Acquired Debt.[reserved];
(k) Liens on property of a Person existing at the time of acquisition thereof by the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Subsidiary and provided, further that such Liens were granted to secure repayment of Acquired Debt.[reserved];
(l) Liens on Equity Interests of Subsidiaries that are not Guarantors;
(m) Liens securing judgments for the payment of money not constituting an Event of Default under clause (f) of the definition thereof;
(n) Liens securing Indebtedness permitted to be incurred under clause (k) of the definition of “Permitted Debt” covering only the assets acquired with or financed by such Indebtedness; provided that individual financings provided by one lender may be cross collateralized to other financings provided by such lender or its Affiliates;
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(o) customary Liens incurred in the ordinary course of business to secure obligations in respect of payment processing services, business credit card programs, and netting services, overdrafts and related liabilities arising from treasury, depositary and cash management services;
(p) Liens on insurance policies, premiums and proceeds thereof, or other deposits, to secure insurance premium financings with respect to unearned premiums and other liabilities to insurance carriers;
(q) Liens on specific items of inventory or other goods (and the proceeds thereof) of the Company and its Subsidiaries securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(r) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;
(s) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
(t) any interest or title of a lessor or licensor under any lease, sublease, license or sublicense entered into by the Company or any Subsidiary entered into in the ordinary course of its business;
(u) Liens on cash collateral securing hedging agreements entered into for bona fide hedging purposes in the ordinary course of business and not for speculative purposes; and
(v) survey exceptions, encumbrances, ground leases, easements (including reciprocal easement agreements), or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects or irregularities in title and similar encumbrances) as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(w) (i) Liens securing or arising out of Judgments or notices of lis pendens and associated rights related to litigation with respect to which such Person shall then be proceeding with an appeal or other proceedings for review, or in respect of which the period within which such appeal or proceedings may be initiated shall not have expired, and Liens on litigation proceeds securing obligations to pay expenses incurred in connection with such litigation and (ii) Liens arising from Judgments that do not constitute an Event of Default;
(x) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary on deposit with or in possession of such bank;
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(y) any interest or title of a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense;
(z) Liens on equipment or inventory of the Company or any Subsidiary granted in the ordinary course of business to the Company’s or such Subsidiary’s supplier at which such equipment or inventory is located;
(aa) Liens arising from precautionary Uniform Commercial CodeUCC financing statements regarding operating leases or consignments and other precautionary UCC financing statements or similar filings;
(bb) Liens on any assets held by a trustee (i) under any indenture or other debt instrument where the proceeds of the securities issued thereunder are held in escrow pursuant to customary escrow arrangements pending the release thereof, and (ii) under any indenture pursuant to customary discharge, redemption or defeasance provisions;
(cc) Liens of (i) a collection bank arising under Section 4-210 of the Uniform Commercial CodeUCC (or any analogous statutory provision of applicable foreign Law) on items in the course of collection and which arise from general banking conditions, (ii) attaching to commodity trading accounts or other commodities brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking or other financial institution arising as a matter of law or under customary general terms and conditions encumbering deposits or other funds maintained with a financial institution (including the right of setoff) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institutions general terms and conditions;
(dd) Liens securing Indebtedness permitted to be incurred under clause (a) of the definition of “Permitted Debt” so long as such Liens are subject to the Intercreditor Agreement;
(ee) Liens securing Indebtedness permitted to be incurred under clause (q) of the definition of “Permitted Debt” so long as such Liens are subject to the Intercreditor Agreement; and
(ff) Liens on deposits or other amounts held in escrow to secure payments (contingent or otherwise) payable by the Company or any Subsidiary with respect to (i) the settlement, satisfaction, compromise or resolution or judgments, litigation, arbitration or other Disputes and (ii) any commercial contracts for manufacturing, production and other service arrangements entered into in the ordinary course of business.;
(gg) Liens on property or Equity Interests of another Person existing at the time such other Person becomes a Subsidiary of the Company; provided that such liens were in existence prior to the contemplation of the relevant merger, amalgamation or consolidation and do not extent to any assets other than those of the Person that becomes a Subsidiary of the Company;
(hh) (ff) Liens solely on any cash earnest money deposits made by the Company or any of its Subsidiaries in connection with any letter of intent or purchase agreement in connection with the acquisition of all or substantially all the Equity Interests or assets, or assets constituting a line of business of another Person; and
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(ii) cash collateral accounts serving as collateral in connection with Indebtedness permitted pursuant to clause (g) of “Permitted Debt” in an amount up to 105% of such Indebtedness.
“Personal Information” has the meaning set forth in Section 4.24(b).
“PIPE Transaction” means the acquisition by RTW of $15,000,000 worth of common shares of the Parent in a private placement, to occur in connection with the De-SPAC Transaction and the transactions contemplated by this Agreement.
“Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (including a Pension Plan) that is maintained for employees of the Company or, in the case of any Pension Plan, any ERISA Affiliate or to which the Company or, in the case of any Pension Plan, any ERISA Affiliate is required to contribute on behalf of any of its employees.
“Prepayment Amount” has the meaning set forth in Section 3.1(e).
“Principal Purchaser” has the meaning set forth in the definition of “NPA Documents”.
“Product Commercialization and Development Activities” means, with respect to any Product, any combination of (i) research, development, manufacturing, quality compliance, use, sale, licensing, importation, exportation, shipping, storage, handling, designing, labeling, marketing, promotion, supply, dispensing, distribution, testing, packaging, purchasing or other commercialization activity, (ii) receipt of payment or other remuneration in respect of any of the
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foregoing (including, without limitation, in respect of licensing, royalty or similar payments) or (iii) any similar or other activities the purpose of which is to commercially exploit such Product.
“Product Material Contract” means any Material Contract relating to the Products.
“Product Patent Rights” means any Patent Rights relating to the Products, including the Owned Product Patent Rights and the Licensed Product Patent Rights.
“Product Payment Amount” means, for each Calendar Quarter, an amount equal to the Applicable Tiered Percentage(s) multiplied by the applicable portion of Quarterly Net Sales for such Calendar Quarter. For clarity, the Applicable Tiered Percentage used to calculate the Product Payment Amount for a given Calendar Quarter will be based on the aggregate Net Sales in the Territory billed or invoiced in such Calendar Quarter and all prior Calendar Quarters in the applicable Calendar Year, and more than one Applicable Tiered Percentage may apply to any given Calendar Quarter if there are Net Sales in multiple payment tiers (as reflected in the definition of Applicable Tiered Percentage) during such Calendar Quarter. The Product Payment Amount for each Quarterly Payment Date shall be determined in a manner consistent with the example of such calculation set forth in Exhibit CAnnex I.
“Product Plan” means the Commercialization plan with respect to the Products presented to Investor during diligence, as set forth on Schedule 1.3.
“Products” means (a) the Gastric Balloon and a suite of related and complementary digital products, and (b) any and all current and future products, digital solutions, and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by the Company or any of its Subsidiaries.
“Proprietary Databases” means any material non-public proprietary database or information repository that is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Proprietary Software” means any proprietary software (other than any software that is generally commercially available, off-the-shelf and/or open source) including, without limitation, the object code and source code forms of such software and all associated documentation, which is owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Purchaser” has the meaning set forth in the definition of “NPA Documents”.
“Purpose” has the meaning set forth in Section 9.1.
“Quarterly Net Sales” means, with respect to any Calendar Quarter, the aggregate amount of Net Sales in the Territory for that Calendar Quarter.
“Quarterly Payment Date” means each March 31, May 15, August 15 and November 15 following the end of the first Calendar Quarter after the Closing Date (provided if any such date is not a Business Day, the Quarterly Payment Date shall be the next succeeding Business Day).
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“Quarterly Statements” has the meaning set forth in Section 6.9(b).
“Real Property Security Documents” means any landlord consents, bailee letters, any mortgage or deed of trust or any other real property security document executed or required hereunder to be executed by any Company Party and granting a security interest in real property owned or leased (as tenant) by any Company Party in favor of the Agent, for the benefit of the Investor, for purposes of securing the Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time.
“Recipient” has the meaning set forth in Section 9.1.
“Regulatory Agency” means a Governmental Authority with responsibility for the approval of the marketing and sale of medical devices or other regulation of medical devices in any jurisdiction.
“Regulatory Approvals” means, collectively, all regulatory approvals, registrations, certificates, clearances, authorizations, permits and supplements thereto, as well as associated materials (including the product dossier) pursuant to which any Product may be researched, tested, developed, manufactured, marketed, sold and distributed in a jurisdiction, issued by the appropriate Regulatory Agency.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has been waived.
“Responsible Officer” means the chief executive officer, president, chief financial officer, chief operating officer, senior vice president, general counsel, managing director, vice president of finance, treasurer, assistant treasurer or controller of a Company Party and, solely for purposes of the delivery of certificates pursuant to this Agreement, the secretary or any assistant secretary of a Company Party. Any document delivered hereunder that is signed by a Responsible Officer of a Company Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Company Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Company Party.
“Revenue Interests” means, for the period during the Payment Term, all of the Company’s rights, title and interest in and to, free and clear of any and all Liens (other than Liens securing Indebtedness under clause (a), (b) and (q) of the definition of “Permitted Debt”), that portion of the Annual Net Sales of the Company in an amount equal to the Product Payment Amount for each Calendar Quarter during the Payment Term.
“RTW” means RTW Investments, LP, a Delaware limited partnership.
“Safety Notices” means any recalls, field notifications, market withdrawals, warnings, “dear doctor” letters, investigator notices, safety alerts or other notices of action issued or instigated by the Company, any Subsidiary or any Governmental Authority relating to an alleged lack of safety or regulatory compliance of the Products.
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“Sale and Leaseback Transaction” means, with respect to any Party or any Subsidiary, any arrangement, directly or indirectly, with any Person whereby the Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.
“Sanction(s)” means any sanction administered or enforced by the United States government (including, without limitation, OFAC), the United Nations Security Council, the European Union, HerHis Majesty’s Treasury (“HMT”) or other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission or any successor agency or authority thereto.
“Securities Account” means a “securities account” (as defined in Article 8 of the Uniform Commercial CodeUCC) or other account to or for the credit or account of any Company Party to which a financial asset is or may be credited in accordance with an agreement under which the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.
“Security Agreement” means that certain Security Agreement, dated as of the Closing DateAugust 1, 2023, executed in favor of RTW Investments, LP, as agent for the Investor, by Merger Sub 2 andby the Company, each of the Guarantors (including Parent) party thereto and the Agent, substantially in the form of Exhibit FD, as modified by the Omnibus Amendment and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Selling Party” has the meaning set forth in the definition of “Net Sales.”
“Set-off” means any set-off, off-set, reduction or similar deduction.
“Statement Period” has the meaning set forth in Section 6.9(b).
“Subsidiary” means, with respect to any Person, (a) any entity as to which such Person directly or indirectly owns outstanding voting securities with power to vote fifty percent (50%) or more of the outstanding Voting Stock of such entity or (b) any entity as to which fifty percent (50%) or more of its outstanding Voting Stock are directly or indirectly owned, controlled or held by such Person with power to vote such securities. As of the Effective Date, the Subsidiaries of the Company are set forth on Schedule 4.19. Unless stated otherwise, “Subsidiary” shall be understood to refer to a Subsidiary of the Company.
“Tax” or “Taxes” means any U.S. federal, state, or local or non-U.S. tax, levy, impost, duty, assessment or withholding or other similar fee, deduction or charge, including all excise, sales, use, value added, transfer, stamp, documentary, filing, recordation and other fees imposed by any taxing authority (and interest, fines, penalties and additions related thereto).
“Territory” means worldwide, in each case, whether imposed directly or through withholding and whether or not disputed.
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“Term Loan Agent” has the meaning set forth in the definition of “Term Loan Documents”.
“Term Loan Documents” means that certain Credit and Guaranty Agreement to be dated on or about the Closing Date, among Merger Sub 2, Parent, the Subsidiary Guarantors party thereto, the Lenders from time to time parties thereto and Fortress Credit Corp., as the Administrative Agent (in such capacity, the “Term Loan Agent”) and each other Loan Document (as defined therein).
“Third Party” means any Person other than (a) the Company or its Subsidiaries, (b) the Investor, (c) the Parent or its Subsidiaries, (d) an Affiliate of the Investor (as applicable).
“Third Party Claim” means any claim, action, suit or proceeding by a Third Party, excluding any lender, officer, directors, employee or agent or other representative of a Party, including any investigation by any Governmental Authority.
“Trade Secrets” means any data or information that is not commonly known by or available to the public, and which (a) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other Persons who can obtain economic value from its disclosure or use, (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, and (c) which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Trademark License” means any agreement, written or oral, providing for the grant of any right to use any Trademark.
“Trademarks” means all statutory and common-law trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications to register in connection therewith, protected, created or arising under the Laws of the United States, under the Laws of any other country or jurisdiction, under any international convention, under the Laws of any state thereof or any political subdivision thereof, or otherwise, for the full term and all renewals thereof, which are owned by or licensed to the Company or any Subsidiary or with respect to which the Company or any Subsidiary is authorized or granted rights under or to.
“Transaction Documents” means (i) this Agreement, including the exhibits hereto, (ii) the Letter Agreement, (iii) the Intercreditor Agreement, (iv) the Security Agreement, (v) the Guaranty, (vi) any Joinder Agreement, any related ancillary documents or agreements executed, or to be executed, by any Company Party, and, if elected by the Investor pursuant to the Letter(vii) the Intercompany Subordination Agreement, (viii) to the extent that the Additional Revenue Interest Financing Agreement (as defined inhas been executed by the Additional RIFA Investors and the Company pursuant to the terms of the Letter Agreement). , the Additional Revenue Interest Financing Agreement, (ix) any other guaranty, security agreement, subordination agreement, intercreditor agreement or other present or future document, instrument, agreement or certificate
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identified as a “Transaction Document” or otherwise expressly required to be delivered pursuant to a Transaction Document or other amendment, waiver or modification of the foregoing, delivered to the Agent or the Investor by or on behalf of (and at the direction or request of) any Company Party in connection with this Agreement or any of the other Transaction Documents, in each case, as amended or otherwise modified from time to time.
“Transaction Expenses” means the aggregate amount of any and all documented out-of-pocket fees and expenses reasonably incurred by or on behalf of, or paid directly by, the Investor in connection with the diligence of the transactions contemplated hereby, and the negotiation, preparation and execution of the Transaction Documents; provided, however, that the Transaction Expenses shall not exceed $250,000.
“Treasury Management Arrangement” means any agreement or other arrangement governing the provision of treasury or cash management services, including Deposit Accounts, netting services, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting, direct debit, cash concentration, trade finance services and other cash management services.
“U.S.” or “United States” means the United States of America, its 50 states, each territory and possession thereof and the District of Columbia.
“UCC” means the Uniform Commercial Code as in effect from time to time in New York; provided, that, if, with respect to any financing statement or by reason of any provisions of Applicable Law, the perfection or the effect of perfection or non-perfection of the security interests or any portion thereof granted pursuant to the Security Agreement is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“Under Performance Payment” has the meaning set forth in Section 3.1(b).
“Valid Claim” shall mean: (a) any claim of an issued and unexpired Patent, that shall not have been withdrawn, lapsed, abandoned, revoked, canceled or disclaimed, or held invalid or unenforceable by a court, Governmental Authority, national or regional patent office or other appropriate body that has competent jurisdiction in a decision being final and unappealable or unappealed within the time allowed for appeal; and (b) a claim of a pending Patent application that is filed and being prosecuted in good faith and that has not been finally abandoned or finally rejected and which has been pending for no more than five (5) years from its filing date.
“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency.
“Website Agreements” means all agreements between the Company and/or any Subsidiary and any other Person pursuant to which such Person provides any services relating to
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the hosting, design, operation, management or maintenance of any Website, including without limitation, all agreements with any Person providing website hosting, database management or maintenance or disaster recovery services to the Company and/or any Subsidiary and all agreements with any domain name registrar, as all such agreements may be amended, supplemented or otherwise modified from time to time.
“Websites” means all websites that the Company or any Subsidiary shall operate, manage or control through a Domain Name, whether on an exclusive basis or a nonexclusive basis, including, without limitation, all content, elements, data, information, materials, hypertext markup language (HTML), software and code, works of authorship, textual works, visual works, aural works, audiovisual works and functionality embodied in, published or available through each such website and all IP Rights in each of the foregoing.
“Work” means any work or subject matter that is subject to protection pursuant to Title 17 of the United States Code.
Section 1.2 Rules of Construction. Unless the context otherwise requires, in this Agreement:
(a) An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP. Notwithstanding anything in this Agreement to the contrary, any obligations of a Person under a lease that is not (or would not be) required to be classified and accounted for as a capital lease obligation on a balance sheet of such Person (whether or not on such balance sheet prior to December 31, 2018) under GAAP as in effect prior to December 31, 2018, shall not be treated as a capital lease obligation as a result of the adoption of changes in GAAP or changes in the application of GAAP (including as a result of FASB ASC Update No. 2016-02, Leases (Topic 842)) and shall continue to be treated as an operating lease.
(b) Words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders.
(c) The definitions of terms shall apply equally to the singular and plural forms of the terms defined.
(d) The terms “include”, “including” and similar terms shall be construed as if followed by the phrase “without limitation”.
(e) Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth herein or in any of the other Transaction Documents) and include any annexes, exhibits and schedules attached thereto.
(f) References to any Applicable Law shall include such Applicable Law as from time to time in effect, including any amendment, modification, codification, replacement or reenactment thereof or any substitution therefor.
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(g) References to any Person shall be construed to include such Person’s successors and permitted assigns (subject to any restrictions on assignment, transfer or delegation set forth herein or in any of the other Transaction Documents), and any reference to a Person in a particular capacity excludes such Person in other capacities.
(h) The word “will” shall be construed to have the same meaning and effect as the word “shall”.
(i) The words “hereof”, “herein”, “hereunder” and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision hereof, and Article, Section and Exhibit references herein are references to Articles and Sections of, and Exhibits to, this Agreement unless otherwise specified.
(j) In the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and each of the words “to” and “until” means “to but excluding”.
(k) Where any payment is to be made, any funds are to be applied or any calculation is to be made under this Agreement on a day that is not a Business Day, unless this Agreement otherwise provides, such payment shall be made, such funds shall be applied and such calculation shall be made on the succeeding Business Day, and payments shall be adjusted accordingly.
(l) Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth herein or in any of the other Transaction Documents) and include any annexes, exhibits and schedules attached thereto.
ARTICLE II
REVENUE INTEREST FINANCING
Section 2.1 Investment Amount. Subject to the terms and conditions set forth herein, at the Closing, subject to the performance of the obligations set forth in Section 8.2 and the satisfaction or waiver of the conditions set forth in Section 8.3, the Investor shall pay (or cause to be paid) to the Company, or the Company’s designee, the sum of forty million Dollars ($40,000,000) (the “Investment Amount”), in immediately available funds by wire transfer to an account designated in writing by the Company to the Investor prior to such funding; provided, that the Investor shall have the right to, at its option, fund the Investment Amount on a net basis less the reimbursement owed by the Company pursuant to Section 8.3(d)(ii).
Section 2.2 No Assumed Obligations. Notwithstanding any provision in this Agreement or any other writing to the contrary, the Investor is not assuming any liability or obligation of the Company or any of the Company’s Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter. All such liabilities and obligations shall be
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retained by and remain liabilities and obligations of the Company or the Company’s Affiliates, as the case may be (the “Excluded Liabilities and Obligations”).
Section 2.3 Excluded Assets. The Investor does not, pursuant to any of the Transaction Documents, purchase, acquire or accept any assets or contract rights of the Company, or any other assets of the Company, other than its rights with respect to the Revenue Interests and, to the extent provided in the Transaction Documents, the other Collateral. The Company has sole authority and responsibility for the research, development and Commercialization of the Products.
ARTICLE III
Payments On Account OF THE REVENUE INTEREST Financing
Section 3.1 Payments on Account of the Revenue Interest Financing. During the Payment Term:
(a) In consideration of the Investor paying the Investment Amount hereunder, on each Quarterly Payment Date, the Company shall pay the applicable Product Payment Amount to the Investor or the Investor’s designee. The Company shall have the right, at any time and from time to time, to make voluntary prepayments to the Investor or the Investor’s designee, and such payments shall be credited against the Hard Cap and the Under Performance Payments set forth in Section 3.1(b). This Agreement shall be in full force and effect for the duration of the Payment Term.
(b) If the Investor has not received payments equal to one hundred percent (100%) of the Investment Amount by December 31, 2027 (after giving effect to any payments made on or prior to such date), the Company shall, within thirty (30) calendar days of December 31, 2027, make a cash payment to the Investor or the Investor’s designee in an amount equal to one hundred percent (100%) of the Investment Amount less the aggregate amount of all of the payments by the Company in respect of the Revenue Interests made to the Investor prior to such date (the “Under Performance Payment”).
(c) Upon the occurrence of a Change of Control, the Company shall promptly make a cash payment to the Investor or the Investor’s designee in an amount equal to the Hard Cap less the aggregate amount of all of the payments by the Company in respect of the Revenue Interests made to the Investor prior to such date (the “Change of Control Payment”).[reserved].
(d) If the Investor has not received payments equal to two hundred forty percent (240%) of the Investment Amount by the Legal Maturity Date (after giving effect to any payments made on or prior to the Legal Maturity Date), the Company shall, within thirty (30) calendar days of the Legal Maturity Date, make a cash payment to the Investor or the Investor’s designee in an amount equal to two hundred forty percent (240%) of the Investment Amount less the aggregate amount of all of the payments by the Company in respect of the Revenue Interests made to the Investor prior to such date (the “Maturity Payment”).
(e) Prior to March 31, 2026, the Company may make a cash payment to the Investor or the Investor’s designee in an amount equal to one hundred sixty-five percent (165%) ofthe sum of (i) the Investment Amount less the aggregate amount of all of the payments by the
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Company in respect of the Revenue Interests made to the Investor prior to such dateand (ii) the amount that the Investors would need to receive to yield an internal rate of return on the Investment Amount equal to 20%, as determined at the time of such payment in a manner consistent with the example of such calculation set forth in Annex II (the “Prepayment Amount”).
(f) Once the Investor has received (i) payments under Section 3.1(a) and, if required, Section 3.1(b), in an aggregate amount equal to the Hard Cap, (ii) the amounts due pursuant to Section 3.1(c)[reserved], or (iii) (A) if an Event of Default has occurred and is continuing, the Hard Cap or (B) if no Event of Default has occurred and is continuing, the amounts due pursuant to Section 3.1(d) or Section 3.1(e), in each case (i), (ii) and (iii), along with all of the other Obligations owed by the Company Parties under this Agreement and the other Transaction Documents, (1) the Company shall have no further obligations to the Investor with respect to the Revenue Interests, and the Investor will not be entitled to any additional payments in respect of the Revenue Interests and (2) each of the Transaction Documents shall terminate (to the extent that the Additional Revenue Interest Financing Agreement has been executed by the Additional RIFA Investors and the Company pursuant to the terms of the Letter Agreement, then solely to the extent relating to this Agreement and not to the Additional Revenue Interest Financing Agreement). Immediately upon termination of this Agreement pursuant to this Section 3.1(f), (x) all Liens on the Collateral granted to the Investor pursuant to this Agreement and the other Transaction Documents shall automatically be released, without the delivery of any instrument or performance of any act by any Person, (y) the Company shall be permitted, and is hereby authorized, to terminate any financing statement which has been filed pursuant to the Transaction Documents in connection with this Agreement, and (z) the Investor shall promptly make any filings and execute and deliver to, or at the direction of, the Company, at the Company’s sole cost and expense, all other releases and other documents as the Company shall reasonably request to evidence any such release. ; provided that, notwithstanding the foregoing, to the extent that the Additional Revenue Interest Financing Agreement has been executed by the Additional RIFA Investors and the Company pursuant to the terms of the Letter Agreement, then until the equivalent provision in the Additional Revenue Interest Financing Agreement results in termination of the Additional Revenue Interest Financing Agreement, (1) all Liens on the Collateral granted to the Additional RIFA Investors pursuant to the Additional Revenue Interest Financing Agreement and the other Transaction Documents shall continue and shall not be automatically released by this Section 3.1(f), (2) no financing statement shall be terminated which has been filed pursuant to the Transaction Documents in connection with the Additional Revenue Interest Financing Agreement and (3) no releases or other documents evidencing a release with respect to the Additional Revenue Interest Financing Agreement shall be provided or obtained.
(g) All Product Payment Amounts and any other Obligations required to be paid but not paid to the Investor on each Quarterly Payment Date shall bear interest at a rate of one percent (1.0%) per month from the due date until paid in full or, if less, the maximum interest rate permitted by Applicable Law. In addition, in the event that an Event of Default has occurred, and for so long as it is occurring, interest shall accrue on the Final Payment Amount that remains unpaid at a rate of one percent (1.0%) per month from the date on which Company receives notice from the Investor of such Event of Default until the Final Payment Amount is paid in full or, if less, the maximum interest rate permitted by Applicable Law. Any such overdue payment shall, when made, be accompanied by, and credited first to, all interest so accrued.
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(h) The Company shall make all payments to the Investor in immediately available funds by wire transfer to an account designated in writing by the Investor to the Company prior to such payments.
(i) Any amounts deducted or withheld pursuant to Section 6.21 shall be treated as paid to the Investor for all purposes of the Transaction Documents.
Section 3.2 Mode of Payment/Currency Exchange. All payments made by a Party hereunder shall be made by deposit of U.S. Dollars by wire transfer in immediately available funds into the applicable account. With respect to sales outside the U.S., for the purpose of calculating Net Sales for the purposes of determining the Revenue Interests payable under Section 3.1, Net Sales shall be calculated, if pursuant to a License Agreement, in the currency set forth therein, or otherwise in the currency of sale, and then such amounts shall be converted into U.S. Dollars at the monthly rate of exchange utilized by the Company, in accordance with GAAP, fairly applied and as employed on a consistent basis throughout the Company’s operations. Should the Company change its foreign currency translation methodology, the new methodology will be disclosed in writing to the Investor promptly following implementation. For clarity, to the extent that the Company receives a payment from a Third Party in U.S. Dollars on which Revenue Interests are payable to the Investor under Section 3.1, the foregoing currency exchange rates shall not apply to such amount, and in particular the Company will have no obligation to re-calculate any currency conversion that was employed in connection with such Third Party payment.
Section 3.3 Product Payment Reports and Record Retention. On or prior to each Quarterly Payment Date, the Company shall deliver to the Investor (i) a written report of the amount of gross sales of the Products in each country during the applicable Calendar Quarter, an itemized calculation of Net Sales on a country-by-country basis and a calculation of the amount of the Product Payment Amount due under Section 3.1(a) in respect of the applicable Calendar Quarter, showing the Applicable Tiered Percentage(s) applied thereto and a calculation of the Under Performance Payment (if any) pursuant to Section 3.1(b) or the Maturity Payment (if any) pursuant to Section 3.1(d), and (ii) copies of the most recent quarterly statements for each Deposit Account, Securities Account and any other bank account or securities account of the Company and each other Grantor and (iii) a Compliance Certificate relating to each of the items described in clauses (i) and (ii) of this sentence. For three (3) years after each sale of the Products made by the Company, the Parent, or any of their respective Subsidiaries, the Company shall keep (and shall ensure that the Parent or the applicable Subsidiary shall keep) complete and accurate records of such sale in sufficient detail to confirm the accuracy of the applicable Revenue Interests paid pursuant to Section 3.1(a). The Company shall use commercially reasonable efforts to include, in each contract of the Company for the distribution, marketing or selling of the Products entered into on or after the Closing Date, obligations reasonably appropriate to ensure that the counterparty to such contract shall furnish to the Company all information necessary for the Company to comply with this Section 3.3 and calculate the Revenue Interests that are payable as set forth in this Agreement.
Section 3.4 Audits.
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(a) Upon the written request of the Investor, and not more than once in each Calendar Year (so long as no Default or Event of Default has occurred and is continuing), the Company shall permit an independent certified public accounting firm of national prominence selected by the Investor, and reasonably acceptable to the Company, to have access to and to review, during normal business hours and upon not less than thirty (30) days’ prior written notice, the relevant documents and records of the Company and its Subsidiaries as may reasonably be necessary to verify the accuracy and timeliness of the reports and payments (including calculation and payment of any Revenue Interests) made by the Company under this Agreement. Such review may cover the records for sales or other dispositions of the Products, and Net Sales in any Calendar Year ending no earlier than the first day of the previous Calendar Year. The accounting firm shall be permitted to prepare and disclose to the Investor a written report stating only whether Revenue Interests paid to the Investor hereunder and the reports provided by the Company relating to such Revenue Interests required hereunder are correct or incorrect and the specific details concerning any discrepancies. Notwithstanding the foregoing, after the occurrence and during the continuance of a Default or Event of Default, the Investor shall have the right, as often, at such times and with such prior notice, as the Investor shall determine, in its reasonable discretion, to have an independent certified public accounting firm of national prominence selected by the Investor review the relevant documents and records of the Company and its Subsidiaries.
(b) If such accounting firm reasonably concludes that any Revenue Interests were owed and were not paid when due during such period pursuant to the provisions of this Agreement, the Company shall pay any late or unpaid Revenue Interests within sixty (60) days after the date the Investor delivers to the Company a notice including the accounting firm’s written report and requesting such payment. If the amount of the underpayment (exclusive of interest accrued thereon pursuant to Section 3.1(a)) is greater than the lesser of (i) ten percent (10%) of the total amount actually owed for the period audited or (ii) one million dollars ($1,000,000), then the Company shall in addition (i) reimburse the Investor for all reasonable costs and fees of the accounting firm related to such audit and (ii) pay interest accrued on such amount of the underpayment at a rate of one percent (1%) per month from the initial due date until paid in full or, if less, the maximum interest rate permitted by Applicable Law. In the event of overpayment, any amount of such overpayment shall be fully creditable against Revenue Interests payable for the immediately succeeding Calendar Quarter(s). If the overpayment is not fully applied prior to the final quarterly Revenue Interests payment due hereunder, the Investor shall promptly refund to the Company an amount equal to any such remaining overpayment. The Investor shall (i) treat all information that it receives under this Section 3.3 or under any License Agreement of the Company in accordance with the provisions of ARTICLE IX and (ii) cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with the Company obligating such firm to retain all such information in confidence pursuant to such confidentiality agreement, in each case except to the extent necessary for the Investor to enforce its rights under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE Company
Except as set forth in the disclosure schedules attached hereto, the Company hereby represents and warrants to the Investor as of the Effective Date and as of the Closing Date as follows:
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Section 4.1 Organization. The Company is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing under the laws of the State of Delaware and has all powers and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted. The Company is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or good standing is required by Applicable Law (except where the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect).
Section 4.2 No Conflicts.
(a) None of the execution and delivery by the Company of any of the Transaction Documents to which the Company is party, the performance by the Company of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will: (i) contravene or conflict with, result in a violation of, any Applicable Law or any Judgment, permit or license of any Governmental Authority to which the Company or any of its Subsidiaries or any of their respective assets or properties may be subject or bound, except where any such event could not, individually or when aggregated with other such events, reasonably be expected to result in a Material Adverse Effect, (ii) contravene or conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy (including termination, cancellation or acceleration) or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (A) any term or provision of any Material Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets or properties is bound or committed or (B) any term or provision of any of the organizational documents of the Company or any of its Subsidiaries; or (iii) except as provided in any of the Transaction Documents to which it is party, result in or require the creation or imposition of any Lien on the Collateral, other than Permitted Liens.
(b) The Company has not granted, nor does there exist, any Lien on the Transaction Documents or the Collateral, other than Permitted Liens.
Section 4.3 Authorization. The Company has all powers and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of the Transaction Documents to which the Company is party and the performance by the Company of its obligations hereunder and thereunder have been duly authorized by the Company. Each of the Transaction Documents to which the Company is party has been duly executed and delivered by the Company. Each of the Transaction Documents to which the Company is party constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
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Section 4.4 Ownership. The Company is the exclusive owner of all right, title (legal and equitable) and interest in, to and under the Collateral, free and clear of all Liens, other than Permitted Liens. The Revenue Interests sold, assigned, transferred, conveyed and granted to the Investor on the Closing Date and the other Collateral have not been pledged, sold, assigned, transferred, conveyed or granted by the Company to any other Person (other than Permitted Liens). The Company has full right to sell, assign, transfer, convey and grant the Revenue Interests, and the full right to grant the other Collateral, to the Investor. Upon the sale, assignment, transfer, conveyance and granting by the Company of the Revenue Interests to the Investor, the Investor shall acquire good and marketable title to the Revenue Interests free and clear of all Liens, other than Permitted Liens, and shall be the exclusive owners of the Revenue Interests. The Company has not caused, and to the Knowledge of the Company no other Person has caused, the claims and rights of the Investor created by any Transaction Document in and to the Revenue Interests or the Collateral to be subordinated to any creditor or any other Person (except as set forth in the Intercreditor Agreement).
Section 4.5 Governmental and Third Party Authorizations. The execution and delivery by the Company of the Transaction Documents to which the Company is party, the performance by the Company of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder (including the sale, assignment, transfer, conveyance and granting of the Revenue Interests to the Investor) do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except for applicable filings under U.S. securities laws, and those previously obtained or made or to be obtained or made on the Closing Date.
Section 4.6 No Litigation. There is no action, suit, arbitration proceeding, claim, citation, summons, subpoena, or other proceeding (whether civil, criminal, administrative, regulatory, or informal, and including by or before a Governmental Authority), or to the Knowledge of the Company any investigation, pending or, to the Knowledge of the Company threatened, by or against the Company or any of its Subsidiaries, at law or in equity, that (i) if adversely determined, could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or (ii) challenges or seeks to prevent or delay the consummation of any of the transactions contemplated by any of the Transaction Documents to which the Company is party.
Section 4.7 Solvency. The Company has determined that, and by virtue of its entering into the transactions contemplated by the Transaction Documents to which the Company is party and its authorization, execution and delivery of the Transaction Documents to which the Company is party, the Company’s incurrence of any liability hereunder or thereunder or contemplated hereby or thereby is in its own best interests. Upon consummation of the transactions contemplated by the Transaction Documents and the application of the proceeds therefrom, (a) the fair saleable value of the Company’s assets will be greater than the sum of its debts, liabilities and other obligations, including known contingent liabilities, (b) the present fair saleable value of the Company’s assets will be greater than the amount that would be required to pay its probable liabilities on its existing debts, liabilities and other obligations, including known contingent liabilities, as they become absolute and matured, (c) the Company will be able to realize upon its assets and pay its debts, liabilities and other obligations, including known
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contingent obligations, as they mature, (d) the Company will not have unreasonably small capital with which to engage in its business and will not be unable to pay its debts as they mature, (e) the Company has not incurred, will not incur and does not have any present plans or intentions to incur debts or other obligations or liabilities beyond its ability to pay such debts or other obligations or liabilities as they become absolute and matured, (f) the Company will not have become subject to any Bankruptcy Event and (g) the Company will not have been rendered insolvent within the meaning of any Applicable Law. No step has been taken or is intended by the Company or, to its Knowledge, any other Person to make the Company subject to a Bankruptcy Event.
Section 4.8 No Brokers’ Fees. The Company has not taken any action that would entitle any person or entity to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
Section 4.9 Compliance with Laws. None of the Company or any of its Subsidiaries (a) has violated or is in violation of, or, to the Knowledge of the Company, is under investigation with respect to or has been threatened to be charged with or been given notice of any violation of, any Applicable Law or any Judgment, permit or license granted, issued or entered by any Governmental Authority or (b) is subject to any Judgment, permit or license granted, issued or entered by any Governmental Authority, in each case, that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Each of the Company and each Subsidiary of the Company is in compliance in all material respects with the requirements of all Applicable Laws.
Section 4.10 Intellectual Property Matters.
(a) Schedule 4.10(a) sets forth an accurate and complete list of the Company’s currently subsisting Patent Rights, including a complete and accurate list of the currently subsisting Owned Product Patent Rights. The Company does not have any Licensed Product Patent Rights. For each Patent Right set forth on Schedule 4.10(a), the Company has indicated: (i) the application number (if any); (ii) the patent or registration number (if any); (iii) the country or other jurisdiction where such Patent Right was issued, registered, or filed; (iv) the scheduled expiration date of any issued Patent Right, including a notation if such scheduled expiration date includes a term extension or supplementary protection certificate; and (v) the registered owner thereof.
(b) The Company is the sole and exclusive owner of all right, title and interest in each of the Owned Product Patent Rights. The Owned Product Patent Rights are not subject to any encumbrance, Lien or claim of ownership by any Third Party (other than Liens securing Indebtedness permitted to be incurred under clause (a) of the definition of “Permitted Debt”), and, to the Knowledge of the Company, there are no facts that would preclude the Company from having unencumbered title to the Owned Product Patent Rights. Neither the Company nor its Subsidiaries has received any notice of any claim by any Third Party challenging the ownership of the rights of the Company in and to the Owned Product Patent Rights.
(c) To the Knowledge of the Company, (i) (A) no Owned Product Patent Right set forth on Schedule 4.10(a) and (B) no material Owned Product Patent Right has lapsed, expired been abandoned, or otherwise been terminated, except for any such material issued Owned Product
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Patent Right that expired in accordance with its statutory terms or any material Owned Product Patent Right applications that terminated by operation of law.
(d) To the Knowledge of the Company, there are no unpaid maintenance fees, annuities or other like payments that are overdue with respect to the Owned Product Patent Rights.
(e) To the Knowledge of the Company, each of the Owned Product Patent Rights correctly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Product Patent Right was issued or is pending. Each such inventor has executed an assignment assigning their entire right, title and interest in and to such Patent Rights and the inventions embodied, described and/or claimed therein, to the Company or to an entity that has in turn executed an assignment assigning their entire right, title and interest in and to such Patent Rights and the inventions embodied, described and/or claimed therein, to the Company, and each such assignment has been duly recorded at the United States Patent and Trademark Office. To the Knowledge of the Company, there is not any Person who is or claims to be an inventor of any of the Owned Product Patent Rights who is not a named inventor thereof. Neither the Company nor its Subsidiaries has received any notice from any Person who is or claims to be an inventor of any of the Owned Product Patent Rights who is not a named inventor thereof.
(f) To the Knowledge of the Company, each of the Product Patent Rights set forth on Schedule 4.10(a) is valid, enforceable and in full force and effect. Neither the Company nor its Subsidiaries has received any opinion of counsel that any of the Patent Rights is, and, to the Knowledge of the Company, no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) could, individually or in the aggregate, reasonably be expected to result in any of the Patent Rights becoming, invalid or unenforceable. Neither the Company nor its Subsidiaries has received any notice of any claim by any Third Party challenging the validity or enforceability of any of the Patent Rights.
(g) To the Knowledge of the Company, each individual associated with the filing and prosecution of the Owned Product Patent Rights has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known by such individual to be material to patentability of each such Owned Product Patent Right, in those jurisdictions where such duties exist.
(h) There is at least one valid claim in each of the Owned Product Patent Rights set forth on Schedule 4.10(a) Covering the Products that would be infringed by the Company’s or any Subsidiary’s Commercialization of the Products but for the Company’s and the Subsidiaries’ rights in such Patent Rights.
(i) To the Knowledge of the Company, except for information disclosed to the applicable Patent Office during prosecution of the Owned Product Patent Rights, there are no Patents, published patent applications, articles, abstracts or other prior art deemed material to patentability of any of the inventions claimed in the Owned Product Patent Rights, or that would otherwise reasonably be expected to materially adversely affect the validity or enforceability of any of the claims of such Owned Product Patent Rights.
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(j) There is no pending or, to the Knowledge of the Company, threatened opposition, interference, reexamination, injunction, claim, suit, action, citation, summons, subpoena, hearing, inquiry, investigation (by the International Trade Commission or otherwise), complaint, arbitration, mediation, demand, decree or other dispute, disagreement, proceeding, claim or inter partes review (in each case, other than standard patent prosecution before a Patent Office) (collectively, “Disputes”) challenging the legality, validity, enforceability or ownership of any of the Patent Rights set forth on Schedule 4.10(a) or that would result in any Set-off against the payments due to the Investor under this Agreement. To the Knowledge of the Company, there are no Disputes by or with any Third Party against the Company involving the Product Patent Rights. The Patent Rights set forth on Schedule 4.10(a) are not subject to any outstanding injunction, Judgment, ruling, challenge, settlement or other disposition of a Dispute.
(k) Except as disclosed on Schedule 4.10(k), to the Knowledge of the Company, and except as separately disclosed to the Investor, there is no pending or threatened, and no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) would result in or serve as a basis for any, action, suit or proceeding, or any investigation or claim, and the Company has not received any written notice of the foregoing, that claims that the manufacture, use, marketing, sale, offer for sale, importation or distribution of the Products as currently contemplated infringes on any Patent or other intellectual property rights of any other Person or constitutes misappropriation of any other Person’s trade secrets or other intellectual property rights. Except as disclosed on Schedule 4.10(k), the Company has not received any notice of any claim by any Third Party asserting that the Company’s Commercialization of the Products infringes such Third Party’s Patents.
(l) To the Knowledge of the Company, none of the conception, development and reduction to practice of the inventions claimed in the Owned Product Patent Rights has constituted or involved the misappropriation of trade secrets or other rights or property of any Third Party.
(m) No Company Party has filed any disclaimer, other than a terminal disclaimer, or made or permitted any other voluntary reduction in the scope of any Owned Product Patent Right other than by patent claim amendments that occurred during the normal course of patent prosecution of any such owned Product Patent Right.
(n) To the Knowledge of the Company, no Third Party’s Patent has been, or is, or will be, infringed by the Company’s Commercialization of the Products. To the Knowledge of the Company, no Patent Rights other than the Product Patent Rights would limit or prohibit in any material respect the Company’s Commercialization of the Products. The Company has not received any opinion of counsel regarding infringement or non-infringement of any Third Party’s Patents by the Company’s Commercialization of the Products.
(o) To the Knowledge of the Company, there are no pending, published patent applications owned by any Third Party, which the Company does not have the right to use, which, if issued with claims reasonably likely to issue, would limit or prohibit in any material respect the Company’s Commercialization of the Products.
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(p) To the Knowledge of the Company, no Third Party is infringing any of the issued Patent Rights. Neither the Company nor its Subsidiaries has put any Third Party on notice of any infringement of the issued Patent Rights.
(q) There are no Copyrights, Trademarks, Trade Secrets or domain names material to the Commercialization of the Products by the Company.
(r) To the Knowledge of the Company, the Product Patent Rights constitute all of the Patents necessary for the Commercialization of the Products.
Section 4.11 Margin Stock. The Company is not engaged in the business of extending credit for the purpose of buying or carrying margin stock, and no portion of the Investment Amount shall be used by the Company for a purpose that violates Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.
Section 4.12 Material Contracts.
(a) Schedule 4.12(a) hereto contains a list of the Material Contracts as of the date hereof and as of the Closing Date. As of the date hereof and as of the Closing Date, the Company has provided a true and complete copy of each Material Contract to the Investor.
(b) Except as separately disclosed in writing to the Investor, neither the Company nor, to the Knowledge of the Company, any Material Contract Counterparty is in material breach or material default of any Material Contract and no circumstances or grounds exist that would, upon the giving of notice, the passage of time or both, give rise (i) to a claim by the Company or any Material Contract Counterparty of a material breach or material default of any Material Contract, or (ii) to a right of rescission, termination, revision, or set-off by any Person, in, to or under any Material Contract. The Company has not received from, or delivered to, any Material Contract Counterparty, any notice alleging a breach or default under any Material Contract.
(c) Each Material Contract is a valid and binding obligation of the Company and, to the Knowledge of the Company, of the applicable Material Contract Counterparty, enforceable against each of the Company and, to the Knowledge of the Company, each applicable Material Contract Counterparty in accordance with its terms, except as may be limited by general principles of equity (regardless of whether considered in a proceeding at law or in equity) and by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting creditors’ rights generally. The Company has not received any notice from any Material Contract Counterparty or any other Person challenging the validity or enforceability of any Material Contract. Neither the Company, nor to the Knowledge of the Company, any other Person, has delivered or intends to deliver any notice to the Company or a Material Contract Counterparty challenging the validity or enforceability of any Material Contract.
(d) There are no settlements, covenants not to sue, consents, judgements, orders or similar obligations which: (i) restrict the rights of the Company or any of its Subsidiaries from using any Intellectual Property relating to the research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale
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of the Products (in order to accommodate any third party Intellectual Property or otherwise), or (ii) permit any Third Parties to use any Intellectual Property of the Company.
Section 4.13 Bankruptcy. Neither the Company nor, to the Knowledge of the Company, any Material Contract Counterparty is contemplating or planning to commence any case, proceeding or other action relating to such Material Contract Counterparty’s bankruptcy, insolvency, liquidation or dissolution or reorganization.
Section 4.14 Office Locations; Names.
(a) The chief place of business, the chief executive office and each office where each Grantor keeps its records regarding the Collateral are, as of the date hereof and as of the Closing Date, each located at 11 Huron Drive, Natick, Massachusetts 01760.
(b) As of the date hereof, neither the Company nor any of its Subsidiaries (or any predecessor by merger or otherwise) has, within the five (5) year period preceding the date hereof, had a name that differs from its name as of the date hereof.
Section 4.15 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (iii) show all material Indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries as of the date thereof, including material liabilities for Taxes, commitments and Indebtedness to the extent required by GAAP. The Interim Financial Statements (A) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (B) fairly present in all material respects the financial condition of the Company and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, and (C) show all material Indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries as of the date thereof, including material liabilities for Taxes, material commitments and Indebtedness to the extent required by GAAP, subject, in the case of clauses (A), (B) and (C) of this sentence, to the absence of footnotes and to normal year-end audit adjustments.
(b) From the date of the Audited Financial Statements to and including the Closing Date, there has been no Disposition by any Company Party or any Subsidiary, or any Involuntary Disposition, of any material part of the business or property of any Company Party or any Subsidiary, and no purchase or other acquisition by any of them of any business or property (including any Equity Interests of any other Person) material to any Company Party or any Subsidiary, in each case, which is not reflected in the Financial Statements or in the notes thereto and has not otherwise been disclosed in writing to the Investor on or prior to the Closing Date.
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to result in a Material Adverse Effect.
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Section 4.16 No Default.
(a) Neither any Company Party nor any Subsidiary is in default (with or without notice or lapse of time, or both) under or with respect to any Contractual Obligation that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b) No Default or Event of Default has occurred and is continuing.
Section 4.17 Insurance. The properties of the Company and each of its Subsidiaries are insured with financially sound and reputable insurance companies which are not Affiliates of such Persons, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or the applicable Subsidiary operates.
Section 4.18 ERISA Compliance.
(a) Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) each Plan is in compliance with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Laws, and (ii) each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Internal Revenue Code, an application for such a letter is currently being processed by the Internal Revenue Service or is entitled to rely on the opinion or advisory letter issued by the Internal Revenue Service to the sponsor of a preapproved plan document and, to the Knowledge of the Company, nothing has occurred that would prevent, or cause the loss of, such tax-qualified status.
(b) There are no pending or, to the Knowledge of the Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The Company has not engaged in any prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan, in any case, that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(c) Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) no ERISA Event has occurred with respect to any Pension Plan, (ii) the Company and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, and (iii) neither the Company nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums due but not delinquent under Section 4007 of ERISA.
Section 4.19 Subsidiaries. Set forth on Schedule 4.19 is a complete and accurate list as of the date hereof and as of the Closing Date of each Subsidiary of the Company, together with (a) such Subsidiary’s jurisdiction of organization and (b) the percentage of the Equity Interests in such Subsidiary owned by the Company. Except for any Guarantors, no Subsidiary of the Company or the Parent owns any portion of the Collateral, holds or maintains any Regulatory Approval necessary or required for any Product commercialization and development activities,
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owns or operates any manufacturing or similar facility involved in Product commercialization and development activities, owns or licenses any material Intellectual Property, holds inventory or receivables, books revenue, or has more than ten (10) employees.
Section 4.20 Perfection of Security Interests in the Collateral. The Collateral Documents, once executed and delivered by the parties thereto, create valid security interests in, and Liens on, the Collateral purported to be covered thereby to the extent such security interests may be created pursuant to Article 9 of the UCC, which security interests and Liens will be, upon the timely and proper filings, deliveries, notations and other actions contemplated in the Collateral Documents, perfected security interests and Liens (to the extent that such security interests and Liens can be perfected by such filings, deliveries, notations and other actions), prior to all other Liens other than Permitted Liens.
Section 4.21 Sufficiency of Collateral. The Collateral comprises all material rights and assets relating to the Products, now owned or hereafter acquired, that is owned or controlled by the Company.
Section 4.22 Disclosure. The Company has disclosed to the Investor all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether written or oral) by or on behalf of the Company or its Subsidiaries to the Investor in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Transaction Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that, with respect to financial projections, estimates, budgets or other forward-looking information, the Company represents, and represents on behalf of the Company Parties, only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time such information was prepared (it being understood that such information is as to future events and is not to be viewed as facts, is subject to significant uncertainties and contingencies, many of which are beyond the control of the Company and its Subsidiaries, that no assurance can be given that any particular projection, estimate, budget or forecast will be realized and that actual results during the period or periods covered by any such projections, estimate, budgets or forecasts may differ significantly from the projected results and such differences may be material).
Section 4.23 Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act.
(a) Sanctions Concerns. No Company nor any Subsidiary, nor, to the Knowledge of the Company, any director, officer, employee, agent, Parent, Subsidiary of Parent, or representative thereof, is an individual or entity that is, or is owned or controlled by, any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.
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(b) Anti-Corruption Laws. Neither the Company nor, to the Knowledge of the Company, any of the Company’s directors, officers, employees or agents have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act (the “FCPA”)), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company, the Parent or any of their SubsidiariesAffiliates in obtaining or retaining business for or with, or directing business to, any person. Neither the Company nor, to the Knowledge of the Company, any of its directors, officers, employees or agents have made or authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any Law, rule or regulation. The Company further represents that it has maintained, and has caused each of the Parent, each Subsidiary, and each Subsidiary of the Parent to maintain, systems of internal controls (including accounting systems, purchasing systems and billing systems) to ensure compliance with all Anti-Corruption Laws. The Company and its Subsidiaries have conducted their business in compliance with all Anti-Corruption Laws, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
(c) PATRIOT Act. To the extent applicable, the Company and each Subsidiary is in compliance, with the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time.
Section 4.24 Data Security; Data Privacy.
(a) The Company has not experienced any material breach of security of unauthorized access by third parties of any Personal Information in its possession, custody, or control.
(b) In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation, any customers, prospective customers employees and/or other Third Parties (collectively “Personal Information”), the Company is and has been, to the Knowledge of Company, in compliance in all material respects with all Applicable Laws in all relevant jurisdictions, including (if applicable) the General Data Protection Regulation, the Company’s privacy policies and the requirements of any contracts or codes of conduct to which the Company is a party, except for any such event that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Company has commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. The Company is and has been, to the Knowledge of the Company, in compliance in all material respects with all Laws relating to data loss, theft and breach of security notification obligations, except for any such event that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
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Section 4.25 Compliance.
(a) (A) The Company and its Subsidiaries possess all Permits, including Regulatory Approvals from the FDA and other Governmental Authorities required for the conduct of their business as currently conducted, except where the failure to so possess could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and all such Permits are in full force and effect, except where the failure to be in full force and effect could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
(ii) Except as disclosed on Schedule 4.25(a)(ii), the Company and its Subsidiaries have not received any written communication from any Governmental Authority regarding any failure to materially comply with any Laws, including any terms or requirements of any Regulatory Approval and, to the Knowledge of the Company, there are no facts or circumstances that are reasonably likely to give rise to any revocation, withdrawal, suspension, cancellation, material limitation, termination or adverse modification of any Regulatory Approval, in each case, except for any such event that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect;
(iii) None of the officers, directors, employees or, to the Knowledge of the Company, Parent, any Subsidiary of the Parent or the Company, or any agent or consultant involved in any Regulatory Approval or filings associated therewith, has been convicted of any crime or engaged in any conduct for which debarment is authorized by 21 U.S.C. Section 335a nor, to the Knowledge of the Company, are any debarment proceedings or investigations pending or threatened against the Company or any Subsidiary or any of their respective officers, employees or agents;
(iv) None of the officers or directors, or, to the Knowledge of the Company, employees of the Company, the Parent, or any Subsidiary of the Parent or the Company, or any agent or consultant has (A) made an untrue statement of material fact or fraudulent statement to any Regulatory Agency or failed to disclose a material fact required to be disclosed to a Regulatory Agency; or (B) committed an act, made a statement, or failed to make a statement that would provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed. Regulation 46191 (September 10, 1991);
(v) All applications, notifications, submissions, information, claims, reports and statistics and other data and conclusions derived therefrom, utilized as the basis for or submitted in connection with any and all requests for a Regulatory Approval from the FDA or other Governmental Authority relating to the Company or any Subsidiary, their business operations and the Products, when submitted to the FDA or other Governmental Authority were true, complete and correct in all material respects as of the date of submission or any required updates, changes, corrections or modifications to such applications, submissions, information and data have been submitted to the FDA or other Governmental Authority;
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(vi) All preclinical studies and clinical trials conducted by or on behalf of the Company and its Subsidiaries that have been submitted to any Governmental Authority, including the FDA and its counterparts worldwide, in connection with any request for a Regulatory Approval, are being or have been conducted in compliance in all material respects with the required experimental protocols and Applicable Laws;
(vii) Since January 1, 2021, all Products have been manufactured, transported, stored and handled in all material respects in accordance with current good manufacturing practices applicable from time to time and Applicable Laws;
(viii) Neither the Company, the Parent, nor any Subsidiary of the Company or the Parent has received any written notice that any Governmental Authority, including without limitation the FDA, the Office of the Inspector General of HHS or the United States Department of Justice, has commenced or, to the Knowledge of the Company, threatened to initiate any action against the Company, the Parent, or a Subsidiary of the Company or the Parent, any action to enjoin the Company, the Parent, or a Subsidiary of the Company or the Parent, their officers, directors, employees, and agents, from conducting its business at any facility owned or used by it or for any material civil penalty, injunction, seizure or criminal action that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
(ix) Neither the Company, the Parent, nor any Subsidiary of the Company or the Parent has received from the FDA, at any time since January 1, 2021, a Warning Letter, Form FDA 483, “Untitled Letter,” or similar written correspondence or notice alleging violations of Laws and regulations enforced by the FDA, or any comparable correspondence from any other Governmental Authority with regard to any Products or the manufacture, processing, packaging or holding thereof, the subject of which communication is unresolved and if determined adversely to the Company, the Parent, or such Subsidiary could reasonably be expected to be material to such entity;
(x) Since January 1, 2021, (A) there have been no Safety Notices, (B) to the Knowledge of the Company, there are no unresolved material product complaints with respect to any Products, in each case, which could reasonably be expected to be material to the Company, and (C) to the Knowledge of the Company, there are no facts or circumstance that (with or without notice or lapse of time, or both) could, individually or in the aggregate, reasonably be expected to result in (1) a material Safety Notice with respect to any Products, or (2) a termination or suspension of marketing of any Products (if approved);
(xi) Except as disclosed on Schedule 4.25(a)(xi), since commercial launch of the Products, to the Knowledge of the Company there has been no instance of death associated with any of the Products; and
(xii) Except as disclosed on Schedule 4.25(a)(xii), to the Knowledge of the Company, no facts or circumstances exist that (with or without notice or lapse of time, or both) could, individually or in the aggregate, reasonably be expected to result in the
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Company’s failure to obtain Marketing Authorization from the FDA for the Gastric Balloon for the treatment of adults with obesity.
(b) All of the Products that exist as of the date hereof and as of the Closing Date are listed on Schedule 4.25(b). Since January 1, 2021, the operation of the Business of the Company and its Subsidiaries with respect to the Products, including the manufacture, import, labeling, and distribution of the Products, has been in compliance with all Permits and Applicable Laws, except where a failure to so comply could not reasonably be expected to result in a Material Adverse Effect.
(c) Without limiting the generality of Section 4.25(a)(i) and (ii) above, with respect to any Products being tested or manufactured by the Company and its Subsidiaries, as of the date hereof and as of the Closing Date, to the Knowledge of the Company, neither the Company nor any Subsidiary has received any written notice from any applicable Governmental Authority, including the FDA, that such Governmental Authority is conducting an investigation or review of (A) the Company and its Subsidiaries’ (or any third party contractors therefor) manufacturing facilities and processes for manufacturing such Products or the marketing and sales of such Products, in each case which have identified any material deficiencies or violations of Laws or the Permits related to the manufacture, marketing and/or sales of such Products that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or (B) any such Regulatory Approval that would result in a revocation or withdrawal of such Regulatory Approval, nor has any such Governmental Authority issued any order or recommendation stating that the development, testing, manufacturing, marketing or sales of such Products by the Company and its Subsidiaries should cease or that such Products should be withdrawn from the marketplace; and
(d) Since January 1, 2021, neither the Company nor any Subsidiary of the Company has experienced any significant failures in the manufacturing of any Products for commercial sale that has had or could reasonably be expected to result in, if such failure occurred again, a Material Adverse Effect.
Section 4.26 Labor Matters. There are no existing or, to the Knowledge of the Company, threatened strikes, lockouts or other labor Disputes involving the Company or any Subsidiary that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, hours worked by and payments of compensation made by the Company and its Subsidiaries to their respective employees are not in violation of the Fair Labor Standards Act or any other Applicable Law, rule or regulation dealing with such matters.
Section 4.27 Taxes. The Company and each of its Subsidiaries has (A) filed all income and other material Tax returns and reports required by to have been filed by it (including in its capacity as a withholding agent), (B) paid all income and other material Taxes required to be paid by it (including in its capacity as a withholding agent), and (C) provided adequate accruals, charges and reserves in accordance with GAAP in their applicable financial statements in respect of all Taxes not yet due and payable, except, in each case, any such Taxes that are being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE Investor
The Investor hereby represents and warrants separately (and not jointly) to the Company as of the Effective Date and the date of each Closing as follows:
Section 5.1 Organization. The Investor is an exempted company or an investment company limited by shares, as applicable, duly organized, validly existing and in good standing under the Laws of its state of formation and has all powers and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted.
Section 5.2 No Conflicts. None of the execution and delivery by the Investor of any of the Transaction Documents to which it is party, the performance by it of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy (including termination, cancellation or acceleration) or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (i) any Applicable Law or any Judgment, permit or license of any Governmental Authority to which the Investor or any of its assets or properties may be subject or bound, (ii) any term or provision of any contract, agreement, indenture, lease, license, deed, commitment, obligation or instrument to which the Investor is a party or by which the Investor or any of its assets or properties is bound or committed or (iii) any term or provision of any of the organizational documents of the Investor, except in the case of clause (i) where any such event could not reasonably be expected to result in a material adverse effect on the ability of the Investor to consummate the transactions contemplated by the Transaction Documents.
Section 5.3 Authorization. The Investor has all powers and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of the Transaction Documents to which the Investor is party, and the performance by it of its obligations hereunder and thereunder, have been duly authorized by it. Each of the Transaction Documents to which the Investor is party has been duly executed and delivered by it. Each of the Transaction Documents to which the Investor is party constitutes the legal, valid and binding obligation of it, enforceable against it in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.
Section 5.4 Governmental and Third Party Authorizations. The execution and delivery by the Investor of the Transaction Documents to which it is party, the performance by it of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except as described in Section 4.5.
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Section 5.5 No Litigation. There is no action, suit, arbitration proceeding, claim, citation, summons, subpoena, investigation or other proceeding (whether civil, criminal, administrative, regulatory, investigative or informal and including by or before a Governmental Authority) pending or, to the knowledge of the Investor, threatened by or against the Investor, at law or in equity, that challenges or seeks to prevent or delay or which, if adversely determined, would prevent or delay the consummation of any of the transactions contemplated by any of the Transaction Documents to which it is party.
Section 5.6 No Brokers’ Fees. The Investor has not taken any action that would entitle any person or entity to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.
Section 5.7 Funds Available. As of the date hereof, the Investor has sufficient funds on hand or under commitment to satisfy its obligations to pay the Investment Amount due and payable on the Closing Date. The Investor acknowledges and agrees that its obligations under this Agreement are not contingent on obtaining financing.
Section 5.8 Access to Information. The Investor acknowledges that it has (a) reviewed such documents and information relating to the Revenue Interests, the other Collateral and the Products and (b) had the opportunity to ask such questions of, and to receive answers from, representatives of the Company, in each case, as it deemed necessary to make an informed decision to purchase, acquire and accept the Revenue Interests in accordance with the terms of this Agreement. The Investor has such knowledge, sophistication and experience in financial and business matters that it is capable of evaluating the risks and merits of purchasing, acquiring and accepting the Revenue Interests in accordance with the terms of this Agreement.
ARTICLE VI
Affirmative COVENANTS
The Parties hereto covenant and agree as follows:
Section 6.1 Collateral Matters; Guarantors.
(a) On or prior to the Closing DateAmendment Effective Date (or such longer period as the Investor may agree), the Company shall, and willshall cause each of the Parent and the other Guarantors (including Allurion France SAS and Allurion Australia Pty Ltd.), Allurion France, Allurion Australia and the other Grantors to, enter into the Omnibus Amendment relating to the Security Agreement (and become a party to the Guaranty as Guarantor)the Security Agreement if not already a party thereto) and/or any Foreign Security Documents necessary or, in the opinion of the Investor, desirable to evidence and to perfect and maintain the perfection of, the grant and pledge of the security interests by each Company Party in the Collateral, pursuant to which the Company and the GuarantorsGrantors shall grant to the Investor, (i) a continuing security interest of second priorityfirst priority (subject to Permitted Liens) (which security interest shall be pari passu with the security interest of first priority granted pursuant to and/or in connection with the NPA Documents) in all of their respective right, title and interest in, to and under the Collateral whether now or hereafter existing and subject to the Intercreditor Agreement, and any and all “proceeds” thereof (as such term is defined in the UCC), in each case, as collateral
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security for the prompt and complete payment and performance when due of the Secured Obligations (as defined in the Security Agreement). In addition, on or prior to the Closing Date, the ParentAmendment Effective Date (or such longer period as the Investor may agree), the Company shall cause each of the Parent, Allurion Australia and each other Guarantor shallto enter into the Omnibus Amendment relating to the Guaranty (and the Guaranty if not already a party thereto), pursuant to which each Guarantor shall guarantee the prompt performancedue and punctual payment of the Obligations. The Company shall (1) cause any Subsidiaryeach of its direct and indirect Subsidiaries (other than any Excluded Subsidiary) that may acquire or own any materialmore than a de minimis portion of the Collateral after the Closing Date (or that ceases to be an Excluded Subsidiary after the Closing Date) to enter into a Joinder Agreement to become a party to the Guaranty as Guarantor and to the Security Agreement as Grantor within thirty (30) days thereof (or sixty (60) days thereof solely in the case such Subsidiary is not a “United States person” (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time)). (in each case, as may be extended by the Agent), (2) the parent of any Subsidiary to execute and deliver a pledge in favor of the Agent, for the benefit of the Investor, in respect of all outstanding issued Equity Interests of such Subsidiary and (3) take such other actions (including delivering to the Agent certificated Equity Interests together with undated transfer powers executed in blank, applicable control agreements, applicable intellectual property security agreements and other instruments, and delivering such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered on the Closing Date or the Amendment Effective Date or as the Agent or the Investor shall reasonably request) as shall be necessary or reasonably desirable by the Agent or the Investor to create, perfect and maintain in favor of the Agent, for the benefit of the Investor, a valid and enforceable first priority Lien (subject to Permitted Liens) on the Collateral of the Company and each of its Subsidiaries (other than Excluded Subsidiaries for so long as they remain Excluded Subsidiaries) as collateral security for the Obligations.
(b) Subject to the occurrence of the Closing, the Company authorizes and consents to the Investor or the Agent filing, including with the Secretary of State of the State of Delaware and any other applicable jurisdiction, one or more financing statements (and continuation statements with respect to such financing statements when applicable), or other similar instruments, registrations, or documents, in each case suitable for filing under the UCC (or equivalent law) of all jurisdictions as may be necessary or, in the opinion of the Investor or the Agent, desirable to evidence and to perfect and maintain the perfection of, the grant and pledge of the security interests in the Collateral granted by each Grantor to the Investor pursuant to the Security Agreement; provided that the Investor will provide the Company with a reasonable opportunity to review any such. For the avoidance of doubt, the Agent shall be authorized but not obligated to file any financing statements (or similar documents) prior to filing and the collateral identified in any such financing shall be limited to a legally sufficient description of the “and continuation statements with respect to such financing statements when applicable) or other similar instruments, registrations or documents and, at the reasonable request of the Agent or the Investor, the Company shall file any financing statements (and continuation statements with respect to such financing statements when applicable) or other similar instruments, registrations or documents necessary to create, perfect and maintain the perfection of, the grant and pledge of the security interests in the Collateral”, as defined herein granted by each grantor. For greater certainty, the Investor will not file this Agreement in connection with the filing of any such financing statements
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(or similar documents) but may file a summary or memorandum of this Agreement if required under Applicable Laws providing for such filing. For sake of clarification, the foregoing statements in this Section 6.1 shall not bind either Party regarding the reporting of the transactions contemplated hereby for GAAP or SEC reporting purposes.
Section 6.2 Update Meetings. During the Payment Term, but subject to ARTICLE IX, the Investor shall be entitled to a quarterly update call or meeting (at the Investor’s election, in person, via teleconference or videoconference or at a location reasonably designated by the Company) to discuss:
(a) the reports delivered by the Company pursuant to Section 3.3;
(b) an annual business plan and budget of the Company and its Subsidiaries containing, among other things, quarterly revenue and cash flow projections for the next year;
(c) copies of any detailed audit reports, management letters or recommendations submitted to the Board of Directors (or the audit committee of the Board of Directors) of the Company by its independent auditor in connection with the accounts or books of the Company or any Subsidiary, or any audit of any of them;
(d) copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other material inquiry by such agency regarding financial or other operational results of any Guarantor or any Company Party and copies of any material written correspondence or any other material written communication from the FDA or any other regulatory body;
(e) the progress of sales and product development and marketing efforts made by the Company pursuant to the Product Plan;
(f) the status and the historical and potential performance of the Products;
(g) any material regulatory or Patent developments; or
(h) such other matters that the Investor reasonably deems appropriate.
Any information disclosed by either Party during such update meetings or calls or provided to the Investor pursuant to its request shall be considered “Confidential Information” of the disclosing Party subject to the terms of ARTICLE IX. Notwithstanding the foregoing, after the occurrence and during the continuance of a Default or an Event of Default, the Investor shall have the right, as often, at such times and with such prior notice as the Investor shall determine in its reasonable discretion, to have such update meetings at the Company’s headquarters or inspect any records and operations of the Company and its Subsidiaries.
Section 6.3 Notices.
(a) To the extent permitted by Applicable Law, promptly after receipt by the Company of notice of any material action, suit, claim, demand, Dispute, investigation, arbitration
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or other legal proceeding (commenced or threatened) involving or related to the Products, the transactions contemplated by any Transaction Document, or to the Revenue Interests, the Company shall, subject to any confidentiality obligations to any Third Party, (i) inform the Investor in writing of the receipt of such notice and the substance thereof and (ii) if such notice is in writing, furnish the Investor with a copy of such notice and any related materials with respect thereto reasonably requested by the Investor, and if such notice is not in writing, furnish to the Investor a written summary describing in reasonable detail the substance thereof.
(b) To the extent permitted by Applicable Law, promptly following receipt by the Company of any written notice, claim or demand challenging the legality, validity, enforceability or ownership of any of the IP Rights included in the Collateral or that are material assets or rights related to the Product, or pursuant to which any Third Party commences or threatens any action, suit or other proceeding against the Company, the Parent, or any of their respective Subsidiaries and relating to the Products, the Company shall, subject to any confidentiality obligation to any Third Party, (i) inform the Investor in writing of such receipt and (ii) furnish the Investor with a copy of such notice, claim or demand, or if such notice is not in writing, furnish to the Investor a written summary describing in reasonable detail the contents thereof.
(c) The Company shall promptly (and in any event within ten (10) Business Days) provide the Investor with copies of any material information, reports and notices if the contents of such information, report or notice could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(d) The Company shall provide the Investor with prompt written notice after the Company has Knowledge of any of the following: (i) the occurrence of a Bankruptcy Event in respect of the Company or any Material Contract Counterparty to any Product Material Contract (or to the extent it could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, any Material Contract Counterparty to any other Material Contract); (ii) any material breach or default (in each case, with or without notice or lapse of time, or both) by the Company of or under any covenant, agreement or other provision of any Transaction Document; (iii) any representation or warranty made by the Company in any of the Transaction Documents or in any certificate delivered to the Investor pursuant to this Agreement shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made; or (iv) any change, effect, event, occurrence, state of facts, development or condition with respect to the assets of the Company and its Subsidiaries, taken as a whole, that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(e) The Company shall promptly notify the Investor of the occurrence of a Change of Control.
(f) The Company shall notify the Investor in writing not less than five (5) Business Days prior to any change in, or amendment or alteration of, any Company Party’s (i) legal name, (ii) form of legal entity or (iii) jurisdiction of organization.
(g) The Company shall notify the Investor of any ERISA Event promptly (and in any event, within ten (10) Business Days) following the Company becoming aware of such ERISA Event.
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(h) The Company shall promptly (and in any event, within ten (10) days) notify the Investor of (i) the termination of any Product Material Contract other than upon its scheduled termination date; (ii) the receipt by any Company Party or any of their respective Subsidiaries from a counterparty asserting a default by the Company or any of its Affiliates under any Material Contract where such alleged default, if accurate, would permit such counterparty to terminate such Material Contract; (iii) the entering into of any new Product Material Contract by a Company Party or any of their respective Subsidiaries; or (iv) any material amendment to a Product Material Contract in any manner adverse to the Investor.
(i) The Company shall promptly notify the Investor of the occurrence of a Default or Event of Default.
(j) The Company shall promptly notify the Investor of the occurrence of any event with respect to the assets of the Company or any Subsidiary of the Company that could reasonably be expected to result in a Material Adverse Effect.
Each notice pursuant to clauses (a) through (j) of this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the Company setting forth details of the occurrence referred to therein and stating what action the applicable Company Party has taken and proposes to take with respect thereto. Such statement shall set forth the actions the applicable Company Party has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.3(h) or Section 6.3(i) shall describe with particularity any and all provisions of this Agreement and any other Transaction Document that have been breached.
Section 6.4 Public Announcement.
(a) As soon as reasonably practicable following the date hereof, one or both of the Parties may issue a mutually agreed to press release substantially in the applicable form attached hereto as Exhibit A. Except as required by Applicable Law (including disclosure requirements of the SEC, the Nasdaq Stock Market or any other stock exchange on which securities issued by the Company, the Parent, or any of their respective Subsidiaries are traded) or for statements that are materially consistent with all or any portion of a previously approved public disclosure, neither Party shall make any other public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party (which in the case of the Investor, shall be the Investor) with a copy of the proposed text of such announcement sufficiently in advance of the scheduled release to afford such other Party a reasonable opportunity to review and comment upon the proposed text.
(b) The Parties shall coordinate in advance with each other in connection with the filing of this Agreement (including proposed redaction of certain provisions of this Agreement) with the SEC, the Nasdaq Stock Market or any other stock exchange or Governmental Authority on which securities issued by the Company, the Parent, or any of their respective Subsidiaries are traded, and each Party shall use reasonable efforts to seek confidential treatment for the terms of this Agreement proposed to be redacted, if any; provided that each Party shall ultimately retain control over what information such Party will disclose to the SEC, the Nasdaq Global Select
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Market or any other stock exchange or Governmental Authority, as the case may be, and provided further that the Parties shall use their reasonable efforts to file redacted versions with any Governmental Authorities which are consistent with redacted versions previously filed with any other Governmental Authorities. Other than such obligation, neither Party (nor its Affiliates) shall be obligated to consult with or obtain approval from the other Party with respect to any filings with the SEC, the Nasdaq Stock Market or any other stock exchange or Governmental Authority. For clarity, once a public announcement or other disclosure is made by a Party in accordance with this Section 6.4, then no further consent or compliance with this Section 6.4 shall be required for any substantially similar disclosure thereafter.
Section 6.5 Further Assurances.
(a) During the Payment Term, the Company shall, and shall cause each of its direct and indirect Subsidiaries (including any newly formed or newly acquired Subsidiaries) to promptly, upon the reasonable request of the Agent or the Investor, at the Company’s sole cost and expense, (i) execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Transaction Documents necessary or otherwise deemed by the Agent or the Investor reasonably necessary for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except as permitted by the applicable Transaction DocumentDocuments, or obtain, or cause to be obtained, any consents or waivers as may be necessary in connection therewith; (ii) deliver or cause to be delivered to the InvestorAgent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Investor as the Investor shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Transaction Documents; and (iii) upon the exercise by the Investor or the Agent of any power, right, privilege or remedy pursuant to any Transaction Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority, execute and deliver all applications, certifications, instruments and other documents and papers that the Investor or the Agent may reasonably require or which is necessary in order to carry out the intent and purposes of this Agreement and the other Transaction Documents and to establish and protect the rights, interests and remedied created, or intended to be created, in favor of the Agent, for the benefit of the Investor, hereby and thereby. In addition, during the Payment Term, the Company shall promptly, at its sole cost and expense, execute and deliver to the InvestorAgent such further instruments and documents, and take such further action as the Investor may, at any time and from time to time, reasonably request or which is necessary in order to carry out the intent and purpose of this Agreement and the other Transaction Documents and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of the Agent, for the benefit of the Investor, hereby and thereby.
(b) The Company and the Investor shall cooperate and provide assistance as reasonably requested by each of the Parties hereto, at the expense of the requesting Party (except as otherwise set forth herein), in connection with any litigation, arbitration, investigation or other proceeding (whether threatened, existing, initiated or contemplated prior to, on or after the date hereof) to which the requesting party, any of its Affiliates or controlling persons or any of their respective officers, directors, equityholders, controlling persons, managers, agents or employees is or may become a party or is or may become otherwise directly or indirectly affected or as to
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which any such Persons have a direct or indirect interest, in each case relating to any Transaction Document, the transactions contemplated herein or therein or the Revenue Interests, but in all cases excluding any litigation brought by the Company (for itself or on behalf of any Company Indemnified Party) against the Investor or the Agent or brought by the InvestorAgent or the Investor (for itself or on behalf of any Investor Indemnified Party) against the Company.
(c) Each Party shall comply with all Applicable Laws with respect to the Transaction Documents and the Revenue Interests except where any non-compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.In the event that the Company or any of its Subsidiaries acquires any fee interest in any real property having a fair market value in excess of $500,000, then, upon the written request of the Investor, the Company or any such Subsidiary shall execute and deliver a mortgage with respect to such acquired real property to secure the Obligations.
Section 6.6 IP Rights. The Company and its Subsidiaries shall use Commercially Reasonable and Diligent Efforts in each of the Key Countries to: (a) take any and all actions, and prepare, execute, deliver and file any and all agreements, documents and instruments, that are reasonably necessary or desirable to preserve diligently and maintain the IP Rights related to any Products in such countries, including payment of maintenance fees or annuities, at the sole expense of the Company, (b) diligently defend (and enforce) the IP Rights related to any Products in such countries against infringement or interference by any other Person, and against any claims of invalidity or unenforceability (including by bringing any legal action for infringement or defending any counterclaim of invalidity or action of a Third Party for declaratory judgment of non-infringement or non-interference), (c) diligently defend against any claim or action in such countries by any other Person that the manufacture, use, marketing, sale, offer for sale, importation or distribution of the Products as currently contemplated infringes on any patent or other intellectual property rights of any other Person or constitutes misappropriation of any other Person’s trade secrets or other intellectual property rights, and (d) when available in respect of any Product and where applicable, apply for regulatory or data exclusivity where available in countries in which sales of such Product occurs. The Company shall not exercise and enforce its applicable rights in any manner that would result in a breach of this Agreement.
Section 6.7 Existence. The Company shall, and shall cause each of its Subsidiaries to, (a) preserve and maintain its existence, other than the consummation of the Second Merger (as defined in the Business Combination Agreement), and all Governmental Licenses necessary or material to the conduct of its business, (b) preserve and maintain each of its rights, franchises and privileges unless failure to do any of the foregoing could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (c) qualify and remain qualified in good standing in each jurisdiction where the failure to preserve and maintain such qualification could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, including appointing and employing such agents or attorneys in each jurisdiction where it shall be necessary to take action under this Agreement, and (d) comply in all material respects with its organizational documentsOrganizational Documents.
Section 6.8 Commercialization of the Products.
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(a) The Company and its Subsidiaries shall use Commercially Reasonable and Diligent Efforts to prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or desirable to secure and maintain Marketing Authorization in each of the Key Countries for the Products. The Company shall not withdraw or abandon, or fail to take any action necessary to prevent the withdrawal or abandonment of, Marketing Authorization in each of the Key Countries for the Products. The Company shall use Commercially Reasonable and Diligent Efforts, itself or through one or more Affiliates or Permitted Licensees, to Commercialize the Products in each of the Key Countries in which it has a Marketing Authorization in accordance with the Product Plan.
(b) The Company shall, and shall cause the Parent and each of their respective Subsidiaries to, use Commercially Reasonable and Diligent Efforts to comply with all material terms and conditions of and fulfill all material obligations under each Product Material Contract (including, without limitation, each License Agreement) to which any of them is party. Upon the occurrence of a breach of any such Product Material Contract by any other party thereto, which could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company shall use Commercially Reasonable and Diligent Efforts to seek to enforce all of its (or its Affiliates’) rights and remedies thereunder.
Section 6.9 Financial Statements.
(a) During the Payment Term, to the extent not already filed publicly with the SEC, the Company shall deliver to the Investor, in form and detail reasonably satisfactory to the Investor as soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Parent, (x) a consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any qualification or exception as to the scope of such audit (except for a qualification or an exception to the extent related to the maturity or refinancing of borrowings under Permitted Debt or this Agreement); provided, that to the extent the components of such financial statements relating to a prior fiscal period are separately audited by different independent public accounting firms, the audit report of any such accounting firm may contain a qualification or exception as to scope of such financial statements as they relate to such components and (y) to the extent there are material differences between the consolidated financial condition and results of operation of the Parent and its Subsidiaries, on the one hand, and the Company and its Subsidiaries, on the other hand, an unaudited reconciliation prepared by the Company showing the differences in such results for such period; and
(b) During the Payment Term, to the extent not already filed publicly with the SEC, the Company shall deliver to the Investor, as soon as available, and in any event within forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of the Company (or, if earlier, when required to be filed with the SEC) (the “Statement Period”), (x) a consolidated balance sheet of the Parent and its Subsidiaries as at the end of such fiscal quarter,
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and the related consolidated statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Parent’s and the Company’s fiscal year then ended, setting forth, in each case in comparative form, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail (the “Quarterly Statements”) and (y) to the extent there are material differences between the consolidated financial condition and results of operation of the Parent and its Subsidiaries, on the one hand, and the Company and its Subsidiaries, on the other hand, an unaudited reconciliation prepared by the Company showing the differences in such results for such period.
Section 6.10 Payment of Obligations. Company will, and will cause each other Company Party shallto, pay and discharge all of their respective obligations and liabilities (a) prior to the date on which penalties attach thereto, all federal and state and other Taxes imposed upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Company Party, (b) as the same shall become due and payable, all lawful claims which, if unpaid, would by Law become a Lien upon any Collateral, and (c) prior to the date on which such Indebtedness shall become delinquent or in default, all material Indebtedness, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.
Section 6.11 Maintenance of Properties. Each of theThe Company shall, and shall cause each of its Subsidiaries shallto, maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition (ordinary wear and tear and casualty and condemnation events excepted) except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and shall make all necessary repairs thereto and renewals and replacements thereof, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
Section 6.12 Maintenance of Insurance. EachThe Company shall, and shall cause its Subsidiaries to, (a) carry and maintain in full force and effect, at the expense of the Company and its Subsidiaries shall maintainor such Subsidiary, as applicable, and with financially sound and reputable insurance companies that are not Affiliates of the Company, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, and of such types and in such amounts as are customarily carried under similar circumstances by such other Persons., (b) furnish to the Agent, upon reasonable request from the Agent, information presented in reasonable detail as to the insurance so carried, including copies of all such insurance policies, and (c) use commercially reasonable efforts to ensure, or cause others to ensure, that all such insurance policies required by this Section 6.12 provide that they shall not be terminated, cancelled or materially changed in a manner adverse to the insured Person without at least thirty (30) days’ (or ten (10) days’ for nonpayment of premium) prior written notice to the Company or its Subsidiary, as applicable, and the Agent. Subject to Section 6.26, the loss payable clauses or provisions in such insurance policies shall be endorsed in favor of and made payable to the Agent as its interests may appear and such policies shall name the Agent as “additional insured” or “loss payee”, as applicable. Receipt of notice of cancellation or modification of any such insurance policies or reduction of
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coverage or amounts thereunder shall entitle the Agent to renew any such policies, cause the coverage and amounts thereof to be maintained at levels required pursuant to the first sentence of this Section 6.12 or otherwise to obtain similar insurance in place of such policies, in each case at the expense of the Company (payable on demand).
Section 6.13 Books and Records. Each of theThe Company shall, and shall cause each of its Subsidiaries shallto, maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Company Party or such Subsidiary, as the case may be. Each of theThe Company shall, and shall cause each of its Subsidiaries shallto, maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over such Company Party or such Subsidiary, as the case may be.
Section 6.14 Use of Proceeds. The Company and its Subsidiaries, taken as a whole, shall use substantially all of the Investment Amount to support the development and Commercialization of Products, including the Commercialization of Products in accordance with the Product Plan. In no event, however, shall the Investment Amount be used to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Investor or otherwise) of Sanctions or otherwise in contravention of any Law or of any Transaction Document.
Section 6.15 ERISA Compliance. Each of theThe Company shall, and shall cause its Subsidiaries shallto, do each of the following: (a) maintain each Plan in compliance with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Law, (b) cause each Pension Plan that is qualified under Section 401(a) of the Internal Revenue Code to maintain such qualification, and (c) make all contributions required to be made by the Company and its Subsidiaries to any Pension Plan subject to Section 412 or Section 430 of the Internal Revenue Code, in each case, except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 6.16 Compliance with Material Contracts. Each of theThe Company shall, and shall cause its Subsidiaries shallto, comply in all respects with each Contractual Obligation of such Person, except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 6.17 Compliance with Laws. The Company shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and shall, or shall cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises, permits or registrations reasonably necessary in connection with the conduct of the Company’s and its Subsidiaries’ respective businesses.
Section 6.18 Anti-Corruption Laws; Anti-Terrorism Laws.
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(a) NeitherNone of the Company, any of its Subsidiaries, nor any of their respective directors, officers, employees or agents shall, directly or indirectly, engage in any activity which would constitute a violation of the FCPA or make, offer, promise or authorize any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the FCPA), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its AffiliateAffiliates in obtaining or retaining business for or with, or directing business to, any personPerson.
(b) Neither the Company nor any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries permit any Affiliate controlled by the Company to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person who is subject to Sanctions. Neither the Company nor any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries, permit any Affiliate controlled by the Company to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Person who is subject to Sanctions, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Person who is subject to Sanctions, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
Section 6.19 Data Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer across national borders) and/or use of any Personal Information, the Company shall, and shall cause its Subsidiaries to, maintain compliance in all material respects with all Applicable Laws in all relevant jurisdictions, including the General Data Protection Regulation, the Company’s and its Subsidiaries’ privacy policies and the requirements of any contracts or codes of conduct to which the Company’s or any of its Subsidiaries is a party, except for any such events that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Company shall maintain commercially reasonable physical, technical, organizational and administrative security measures and policies in place to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure. The Company shall, and shall cause its Subsidiaries to, maintain compliance in all material respects with all Applicable Laws relating to data loss, theft and breach of security notification obligations, except for any such event that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 6.20 Products. In connection with the development, testing, manufacture, marketing or sale of each and any Product by the Company or any Subsidiary thereof, the Company or such Subsidiary shallshall, or shall cause its Subsidiaries to, comply in all material respects with all Permits.
Section 6.21 Tax.
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(a) The Parties agree that (i) for U.S. federal and applicable state and local income Tax purposes, the transactions contemplated by this Agreement are intended to constitute a debt instrument that is, before the Omnibus Amendment is, in part, subject to U.S. Treasury Regulations under Section 1.1275-4(b) governing contingent payment debt instruments. , (ii) as soon as reasonably practicable after the Omnibus Amendment, the Parties shall cooperate in good faith to determine whether the Omnibus Amendment constitutes a deemed exchange of this Agreement under U.S. Treasury Regulations Section 1.1001-3 (a “Deemed Exchange”), and (iii) in the event the Omnibus Amendment constitutes a Deemed Exchange, the Parties shall treat (A) the Deemed Exchange as a tax-free recapitalization within the meaning of Section 368(a)(1)(E) of the Code and (B) the transactions contemplated by this Agreement from and after the Omnibus Amendment as a debt instrument that is a contingent payment debt instrument subject to U.S. Treasury Regulations under Section 1.1275-4.
(b) This paragraph (b) applies before the Omnibus Amendment and in the event that the parties determine that the Omnibus Amendment does not constitute a Deemed Exchange.
(bi) Within ninety (90) days after the date of this AgreementEffective Date, the Company shall prepareprepared and deliverdelivered to the Investor a draft determination of the comparable yield and a projected payment schedule under Section 1.1275-4(b) (the “Initial Draft Comparable Yield”) and the amount of interest payments qualifying for the “portfolio interest” exemption under Sections 871, 881 and 1441(c)(9) of the Code to bewhich was set forth on Schedule 6.21(e), and which shall bewas consistent with the Methodology defined in paragraph (ce) below (the “Initial Draft Schedule 6.21(e)”).
(ii) The Company shallagreed to use reasonable best efforts, following the date of this Agreement, to notify the Investor of any material developments regarding its preparation, delivery and determination of the Initial Draft Comparable Yield. If the Investor disagrees with the Initial Draft Comparable Yield or Initial Draft Schedule 6.21(e), the Investor may, within thirty (30) days after delivery of the Initial Draft Comparable Yield and Initial Draft Schedule 6.21(e), deliver a notice (the “Objection Notice”) to the Company to such effect, specifying those items as to which the Investor disagrees and setting forth the Investor’s proposed determination of the comparable yield and projected payment schedule and amounts to be set forth on Schedule 6.21(e), as applicable. If the Objection Notice is duly delivered, the Investor and Company shall, during the twenty (20) days following such delivery, negotiate in good faith to reach agreement on the disputed items in order to determine the comparable yield and projected payment schedule and amounts to be set forth on Schedule 6.21(e). In the event that the Company and Investor are unable to reach agreement with respect to any disputed items within a period of twenty (20) days after the Company’s receipt of such Objection Notice from the Investor, all such disputed items shall be referred to a nationally recognized accounting firm mutually agreed upon by the Company and Investor (the “Arbiter”) for final resolution, which resolution shall not be inconsistent with the Methodology. The determination of the Arbiter shall be final and binding upon the Parties and the fees, costs and expenses of the Arbiter shall be borne equally by the Company and Investor. The Initial Draft Comparable Yield, as prepared by the Company if no Objection Notice has been given, as adjusted pursuant to any agreement between the Company and the Investor, or as determined by the Arbiter, shall be the final determination of the comparable yield and a projected payment schedule
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(as applicable, the “Final Comparable Yield”). The Initial Draft Schedule 6.21(e), as prepared by the Company if no Objection Notice has been given, as adjusted pursuant to any agreement between the Company and the Investor, or as determined by the Arbiter, shall be the final determination of the amounts to be set forth on Schedule 6.21(e) (as applicable, the “Final Schedule 6.21(e)”). The Company shall provide the Investor with prompt written notice of any adjustments to the Final Comparable Yield that are required (if any) pursuant to Treasury Regulation 1.1275-4(b)(6) to reflect changes to the Company’s determination of the comparable yield and the projected payment schedule.
(c) In the event the parties determine that the Omnibus Amendment constitutes a Deemed Exchange:
(i) Within forty five (45) days after the Amendment Effective Date, the Company shall prepare and deliver to the Investor a draft schedule with the information necessary under Treasury Regulations Section 1.1275-4 and the amount of interest payments qualifying for the “portfolio interest” exemption under Sections 871, 881 and 1441(c)(9) of the Internal Revenue Code (the “New Schedule”), which shall be consistent with the Methodology defined in paragraph (e) below.
(ii) The parties will cooperate in good faith to determine the subsection under Treasury Regulations Section 1.1275-4 that applies to the debt instrument.
(iii) The dispute resolution procedures described in Section 6.21(b)(ii) shall apply mutatis mutandis.
(d) The Company shall ensure that the Investor receives all information reasonably requested by the Investor that is necessary to complete its tax reporting (including with respect to information requests about the Final Comparable Yield or the New Schedule).
(ce) The Parties intend that the provisions of Treasury Regulation 1.1275-2(a)(1) apply, subject to the exceptions in Treasury Regulation 1.1275-2(a)(2), to treat any payments on the debt instrument as first, a payment of any accrued and any unpaid original issue discount at such time and second, a payment of principal (including for purposes of the rules applicable to “applicable high yield discount obligations”). The Parties shall treat any payments on the debt instrument, assuming for this purpose no Prepayment Amount has been paid prior to December 31, 2025, as (i) first, a payment of any accrued and unpaid original issue discount qualifying for the “portfolio interest” exemption under Sections 871, 881 and 1441(c)(9) of the Code (which in no event shall be less than the amount of accrued and unpaid original issue discount that would have accrued on the debt instrument under Section 1272 of the Code and the Treasury Regulations thereunder had it instead provided for two payments (as reasonably adjusted upon consultation and agreement with the Investor to account for a Deemed Exchange, if any): (x) a payment in an amount equal to the Investment Amount on December 31, 2027 and (y) a payment in an amount equal to (I) two hundred and forty percent (240%) of the Investment Amount less (II) the amount of the payment described in clause (x), paid on the Legal Maturity Date in complete satisfaction of the Obligations); (ii) thereafter, a payment of any accrued and unpaid original issue discount or interest other than amounts reflected under (i) above; and (iii) thereafter, a repayment of the outstanding principal amount of the debt instrument (such treatment, collectively, the
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“Methodology”). Notwithstanding the Methodology and Final Schedule 6.21(e) or New Schedule, as applicable, in the event a payment of the Prepayment Amount is made pursuant to Section 3.1(e), or a payment is made pursuant to Section 3.1(c) or Section 11.1, the Parties agree to treat the portion of such payment in excess of the Investment Amount as qualifying for the “portfolio interest” exemption under Sections 871, 881 and 1441(c)(9). The Parties agree not to take and to not cause or permit their Affiliates to take, any position that is inconsistent with this Section 6.21(ce) on any Tax return or for any other Tax purpose unless otherwise required by Applicable Law.
(df) On or prior to the Closing Date, the Investor shall provide the Company with executed copies of (i) an IRS Form W-8IMY from the Investor, accompanied by an IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W 8BEN-E, or IRS Form W-9 from each beneficial owner, as applicable and (ii) a certificate to the effect that (A) the Investor is the sole record owner of the Investment Amount and any amounts or other consideration payable pursuant to the terms of this Agreement, (B) its direct or indirect partners/members are the sole beneficial owners of the Investment Amount and any amounts or other consideration payable pursuant to the terms of this Agreement, and (C) none of the Investor’s direct or indirect partners or members is a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Company within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Company as described in Section 881(c)(3)(C) of the Code. For the avoidance of doubt, the obligation to provide forms and certificates set forth in this Section 6.21(df) shall also apply to the Investor’s successors or permitted assigns.
(eg) Unless either (i) required by a change in Applicable Law or (ii) either (A) the Investor (or its successors or permitted assigns) fails to timely provide the forms and certificates described in Section 6.21(df) or (B) any such form or certificate described in Section 6.21(df) subsequently becomes invalid or incorrect (after notice from the Company and a reasonable opportunity to cure), the deduction and withholding for any Taxes with respect to payments by or on account of any obligation of the Company under this Agreement shall be made in accordance with the Methodology, which will be reflected in the Final Schedule 6.21(e) or the New Schedule, as applicable (and, for the avoidance of doubt, no deduction or withholding shall be made with respect to amounts described in Section 6.21(c)(ie)) and be consistent with the treatment set forth in the penultimate sentence of Section 6.21(ce) (and, for the avoidance of doubt, no deduction or withholding shall be made with respect to amounts described in that sentence). To the extent any Taxes in respect of any amounts payable to the Investor pursuant to this Agreement are deducted and withheld in accordance with the Final Schedule 6.21(e) or New Schedule, as applicable, (i) the Company shall make such withholding and timely pay such amount to the applicable Governmental Authority and (ii) the Company shall use commercially reasonable efforts to provide the Investor with a receipt evidencing such payment or other evidence of such payment reasonably satisfactory to the Investor. If as a result of a change in Applicable Law the Company is required to withhold any Tax in respect of any amounts payable to the Investor pursuant to this Agreement other than as provided in the Final Schedule 6.21(e) or New Schedule, as applicable, the Company shall (x) provide the Investor with prior notice of its intent to withhold, and (y) cooperate to reduce or eliminate any such withholding in advance of such payment. To the extent any such Taxes are nevertheless so deducted and withheld, (I) the Company shall make such withholding and timely pay such amount to the applicable Governmental Authority and (II) the Company shall use commercially reasonable efforts to provide the Investor with a receipt
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evidencing such payment or other evidence of such payment reasonably satisfactory to the Investor.
(fh) The Investor (and any Affiliate thereof) agrees to indemnify, defend and hold harmless the Company (and any Affiliate thereof) for any Indemnified Taxes (including any Losses attributable to such Indemnified Taxes) in respect of any failure to deduct or withhold on payments made pursuant to any of the Transaction Documents (other than any penalties arising as a result of the Company’s failure to withhold in accordance with the Final Schedule 6.21(e)) or New Schedule, as applicable.
(gi) Each Party’s obligations under this Section 6.21 shall survive the termination of this Agreement and the repayment, satisfaction or discharge of all obligations under this Agreement.
Section 6.22 Convertible Notes. Prior to the Closing, the Company shall ensure that the obligations of the Company to each holder of the Convertible Notes shall have been converted into common Equity Interests of the Company, and the Company shall have no outstanding Indebtedness or other obligations thereunder (other than contingent indemnification obligations for which no claim has been made in writing).
Section 6.23 Board Governance. Company will ensure that (a) the Investor shall have the right to designate one director (the “Designated Director”) to the Board of Directors of the Parent, which director shall initially be Nick Lewin, and (b) the Designated Director shall have the right to be a member of any and all committees of the Board of Directors of the Parent. Upon the removal or resignation of the initial Designated Director, Company will ensure that the Investor shall have the right to designate a replacement director until such time as all Obligations have been paid by the Company. Notwithstanding anything to the contrary herein, the right of the Investor shall not be assignable under any circumstances to any Person other than RTW or its Affiliates.
Section 6.24 Company Assumption. Prior to or at the Closing, the Company shall ensure that Merger Sub 2 executes and delivers to the Investor a Company Assumption Agreement substantially in the form of Exhibit GE hereto.
Section 6.25 Cash Management. Each Company Party shall, and shall cause each of its Subsidiaries to:
(a) subject to Section 6.26, maintain at all times all Deposit Accounts, Securities Accounts, Commodity Accounts, lockboxes and similar accounts (other than Excluded Accounts) to be held by each Company Party with a bank or financial institution that has executed and delivered to and in favor of the Agent, for the benefit of the Investor, a customary “springing” account control agreement, in form and substance reasonably acceptable to the Agent (each such Deposit Account, Securities Account, Commodity Account, lockbox or similar account, a “Controlled Account”);
(b) subject to Section 6.26, maintain each such Controlled Account as a cash collateral account, with each such cash collateral account and all cash, checks and other similar
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items of payment held in any such account to be Collateral securing payment of the Obligations, and each Company Party shall have granted a Lien and security interest to the Agent, for the benefit of the Investor, over such Controlled Accounts;
(c) subject to Section 6.26, deposit promptly, and in any event no later than five (5) Business Days after the date of receipt thereof, all cash, checks, drafts or other similar items of payment relating to or constituting payments made in respect of any and all accounts receivable, Contracts or any other rights and interests into one or more Controlled Accounts or Excluded Accounts; and
(d) at any time after the occurrence and during the continuance of an Event of Default, at the request of the Agent, direct all payments constituting proceeds of accounts receivable to be directed into lockbox accounts pursuant to agreements in form and substance reasonably satisfactory to the Agent.
Section 6.26 Other Post-Amendment Effective Date Matters. The Company will, and will cause each of its Subsidiaries to, take each of the actions set forth on Schedule 1 within the time period prescribed therefor on such schedule (as such time period may be extended by the Investor in its sole discretion).
ARTICLE VII
NEGATIVE COVENANTS
During the Payment Term, no Company Party shall, nor shall it permit any Subsidiary to, without the prior written consent of the Investor, directly or indirectly:
Section 7.1 Liens. Create, incur, assume or suffer to exist any Lien upon any Collateral or any asset that would constitute Collateral if owned by a Company Party, whether now owned or hereafter acquired, other than the Permitted Liens.
on or with respect Section 7.2 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness without the prior written consent of the Investorto any of its assets, except Permitted DebtLiens (provided, that (a) the security interests of the Investor’sAgent, for the benefit of the Investor, pursuant to the Security AgreementCollateral Documents shall not be subordinated to the Liens securing any Permitted Debt other than Indebtedness under clause (a) of the definition of “Permitted Debt” and (b) such Permitted Debt shall not be subject to any Lien other than with respect to clause (aa) and (dd) of the definition of “Permitted Lien”).
Section 7.2 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except Permitted Debt.
Section 7.3 Dispositions. Make any Disposition (other than, for the avoidance of doubt, Permitted Transfers) unless (i) the consideration paid in connection therewith shall be in an amount not less than the fair market value of the property disposed of, (ii) no Default or Event of Default shall have occurred and be continuing both immediately prior to and after giving effect to such Disposition, (iii) such transaction does not involve the sale or other disposition of a minority Equity Interest in any Subsidiary (other than to another Grantor), and (iv) such
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transaction does not involve a sale, transfer, license or other disposition of Product assets or rights included in the Collateral or any assets that would constitute Collateral if owned by a Company Party (or, in each case, any IP Rights associated therewith) in any of the Key Countries or any state or political subdivision thereof.
Section 7.4 Change in Nature of Business. Engage in any material line of business other than the discovery, development, manufacture or, marketing, sale and commercialization of medical devicesthe Allurion™ Gastric Balloon and related hardware accessories and services and its Virtual Care Suite services, as described in the Parent’s Annual Report on Form 10-K for the year ended December 31, 2023.
Section 7.5 Prepayment of Other Indebtedness. Prior to the Minimum Return Date, make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or redemption, cash settlement or acquisition for value (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of any Indebtedness of the Company or any Subsidiary (other than exchanging any such Indebtedness for capital stock (other than Disqualified Capital Stock) or the proceeds from the sale of capital stock (other than Disqualified Capital Stock)), other than (a) Indebtednessa Permitted Refinancing contemplated by clause (as) of the definition of “Permitted Debt” as permitted pursuant to the terms thereof, (b) Indebtedness contemplated by clauses (a), (b), (k) or (q) of the definition of “Permitted Debt”, subject to the limitations under the Intercreditor Agreement, and (b)as permitted pursuant to the terms thereof and (c) the prepayment of Indebtedness contemplated by payments by the Company to the Investor comprising the Prepayment Amount pursuant to Section 3.1(e) and Section 3.1(f).
Section 7.6 Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity; Certain Amendments.
(a) Other than in connection with the De-SPAC Transaction, amend, modify or change its Organization Documents in a manner materially adverse to the rights or remedies of the Investor under the Transaction Documents.
(b) Without providing ten (10) days prior notice to the Investor and the Agent, change its fiscal year.
(c) Other than in connection with the De-SPAC Transaction, without providing ten (10) days prior notice to the Investor and the Agent, change its name, state of organization or form of organization or its Federal Taxpayer Identification Numbertaxpayer identification number or its organizational identification number.
(d) Amend, modify or change the Product Plan without the prior written consent of the Investor.
Section 7.7 Burdensome Actions.
(a) The Company and its Subsidiaries shall not enter into any Contract, or grant any right to any other Person, in any case that would conflict with the Transaction Documents or serve or operate to limit or circumscribe any of the Investor’s or the Agent’s rights under the
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Transaction Documents (or the Investor’s or the Agent’s ability to exercise any such rights) or create, incur, assume or suffer to exist any Lien upon any Collateral or any assets that would constitute “Collateral” if owned by a Company Party (other than Permitted Liens) to secure the Obligations, or agree to do or suffer to exist any of the foregoing (for the avoidance of doubt, not including the Intercreditor Agreement). Without limiting the generality of the foregoing, theno Company Party shall not enter into, or permit to exist, any Contractual Obligation that encumbers or restricts the ability of any Company Party to (i) pledge its property pursuant to the Transaction Documents or (ii) perform any of its obligations under the Transaction Documents or any Product Material Contract in any material respect. Notwithstanding anything to the contrary in this Agreement, the Company shall not take any action or abstain from taking any action, directly or indirectly, which action or abstinence would have the effect of altering the terms and conditions of this Agreement or the other Transaction Documents (or any ancillary documents thereto) in a manner that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b) The Company and its Subsidiaries shall not enter into any Contract, grant any right to any other Person with respect to the Products or amend or waive any requirements under any agreement with respect to the Products that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 7.8 Affiliates. The Company shall not permit any Affiliate to own (a) any portion of the Collateral (other than, in the case of a Subsidiary, pursuant to a Permitted Transfer), (b) any material assets or rights related to the Product (other than, in the case of a Subsidiary, pursuant to a Permitted Transfer), or (c) any assets that generate Net Sales.
ARTICLE VIII
THE CLOSING
Section 8.1 Closing. Subject to the terms of this Agreement, the closing of the transactions contemplated hereby (the “Closing”) shall take place on the date of the closing of the PIPE Transaction concurrent with the closing of the De-SPAC Transaction (the “Closing Date”).
Section 8.2 Closing Deliverables of the Company. At the Closing, the Company shall deliver or cause to be delivered to the Investor the following (collectively, the “Closing Documents”):
(a) Transaction Documents. Receipt by the Investor of executed counterparts (including by electronic means) of the Security Agreement, the Intercreditor Agreement, the Guaranty, and the other Transaction Documents, in each case duly executed and delivered to the Investor by each party thereto (other than the Investor) and in form and substance reasonably satisfactory to the Investor, together with all documents required to be delivered or filed under the Security Agreement and evidence satisfactory to the Investor that arrangements have been made with respect to all registrations, notices or actions required under the Security Agreement to be effected (including any UCC financing statements), given or made in order to establish a valid and perfected second priority security interest in the Collateral in accordance with the terms of the Security Agreement and the Intercreditor Agreement.
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(b) Organization Documents, Resolutions, Etc. Receipt by the Investor of the following, in form and substance reasonably satisfactory to the Investor:
(i) copies of the certificate of incorporation of each Grantor certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and the other Organization Documents, in each case certified by a secretary or assistant secretary (or, if such entity does not have a secretary or assistant secretary, a Responsible Officer) of such Grantor to be true and correct as of the Closing Date;
(ii) resolutions of the governing body of each of Grantor as the Investor may reasonably require, authorizing and approving the execution, delivery and performance by such Grantor of the Transaction Documents and the transactions contemplated hereby and thereby;
(iii) such incumbency certificates and/or other certificates of Responsible Officers of each Grantor as the Investor may reasonably require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Transaction Documents to which such Grantor is a party; and
(iv) a certificate of good standing (or local equivalent) for each Grantor from the secretary of state or equivalent Governmental Authority in the jurisdiction of organization of such Grantor (to the extent applicable in such jurisdiction) obtained as of a date no later than five (5) days prior to the Closing Date.
(c) Opinions of Counsel. Receipt by the Investor of a written legal opinion of Goodwin Procter LLP, addressed to the Investor, dated the Closing Date and in form and substance reasonably satisfactory to the Investor.
(d) Perfection and Priority of Liens. Receipt by the Investor of the following:
(i) searches of Uniform Commercial Code filings in the jurisdictions within the United States where a filing would need to be made in order to perfect the Investor’s security interest in the Collateral and copies of the financing statements on file in such jurisdictions, it being understood that such searches shall reveal that no Liens exist on the Collateral other than Permitted Liens or Liens to be discharged on the Closing Date;
(ii) financing statements naming each Grantor as a debtor and each Investor as the secured party, or other similar instruments, registrations, or documents, in each case suitable for filing, filed under the UCC (or equivalent law) of all jurisdictions as may be necessary or, in the opinion of the Investor, desirable to perfect the Liens of the Investors pursuant to the Security Agreement;
(iii) one or more Intellectual Property security agreements to evidence the Investor’s security interest in any IP Rights relating to the Products and the goodwill and general intangibles of the Company relating thereto or represented thereby and any other
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agreement, document or instrument required to be provided under the Security Agreement on the Closing Date, duly executed and delivered by the applicable Grantor.
(iv) searches of ownership of, and Liens on, the Product Patent Rights of each Grantor in the appropriate U.S. governmental offices.
(e) Financial Statements. Receipt by the Investor, to the extent not already filed publicly with the SEC, within each Statement Period between the date hereof and the Closing, the applicable Quarterly Statement.
(f) Data Room. Receipt by the Investor of an electronic copy of all of the information and documents posted to the electronic data room established by the Company with respect to the transactions contemplated by this Agreement as of the date hereof.
(g) Other. Such other documents, instruments, reports, statements and information as may be reasonably requested by the Investor, in each case, in form and substance reasonably satisfactory to the Investor.
Section 8.3 Conditions to the Investor’s Obligations. The obligations of the Investor to consummate the transactions contemplated hereunder on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
(a) Responsible Officer’s Certificate. Receipt by the Investor of a certificate of a Responsible Officer of the Company certifying that:
(i) (A) the representations and warranties set forth in Article IV (other than the Fundamental Representations) were true and correct in all material respects as of the Effective Date and are true and correct in all material respects as of the Closing Date (or, if made as of a specific date, as of such date); provided, that to the extent that any such representation or warranty is qualified by the term “material” or “Material Adverse Effect” such representation or warranty (as so written, including the term “material” or “Material Adverse Effect”) was true and correct in all respects as of the Effective Date and is true and correct in all respects as of the Closing Date (or, if made as of a specific date, as of such date), as applicable and (B) the Fundamental Representations were true and correct in all respects as of the Effective Date and are true and correct in all respects as of the Closing Date (or, if made as of a specific date, as of such date);
(ii) The Company has performed and complied in all material respects with all, and has not been in material breach of any, agreements, covenants, obligations and conditions required to be performed and complied by it under this Agreement at or prior to the Closing Date; and
(iii) There has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has resulted, or would reasonably be likely to result, in a Material Adverse Effect.
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(b) No Judgments. There shall not have been issued and be in effect any Judgment of any Governmental Authority enjoining, preventing or restricting the consummation of the transactions contemplated by this Agreement.
(c) Closing Documents. Receipt by the Investor of the Closing Documents.
(d) Attorney Costs; Due Diligence Expenses. At or prior to (i) the Effective Date, the Company shall have paid the Transaction Expenses, and (ii) the Closing Date, the Company shall have paid the aggregate amount of any and all other documented out-of-pocket fees and expenses reasonably incurred by or on behalf of, or paid directly by, the Investor in connection with the diligence of the transactions contemplated hereby, the negotiation, preparation and execution of the Transaction Documents, and the consummation of the transactions contemplated hereby, incurred prior to or at the Closing Date, not to exceed an additional $750,000; provided that the condition set forth in this clause (d)(ii) will be satisfied by the transfer by the Investor of an amount equal to the Investment Amount minus the amount owed by the Company under this clause (d)(ii).
(e) Concurrent Transactions. The Pipe Transaction and the De-SPAC Transaction shall have closed, and the Parent shall have entered into a Joinder Agreement to become a party to the Guaranty as Guarantor and to the Security Agreement as Grantor.
(f) Convertible Notes. The Convertible Notes shall have been converted into common Equity Interests of the Company, and the Company shall have no outstanding Indebtedness or other obligations thereunder (other than contingent indemnification obligations for which no claim has been made in writing).
(g) Company Assumption Agreement. Merger Sub 2 shall have executed and delivered to the Investor a Company Assumption Agreement substantially in the form of Exhibit GE hereto.
ARTICLE IX
CONFIDENTIALITY
Section 9.1 Confidentiality; Permitted Use. During the Payment Term and for a period of three (3) years thereafter, each Party shall maintain in strict confidence all Confidential Information and materials disclosed or provided to it by the other Party, except as approved in writing in advance by the disclosing Party, and shall not use or reproduce the disclosing Party’s Confidential Information for any purpose other than as required to carry out its obligations and exercise its rights pursuant to this Agreement (the “Purpose”). The Party receiving such Confidential Information (the “Recipient”) agrees to institute measures to protect the Confidential Information in a manner consistent with the measures it uses to protect its own most sensitive proprietary and confidential information, which must not be less than a reasonable standard of care. Notwithstanding the foregoing, the Recipient may permit access to the disclosing Party’s Confidential Information to those of its employees or authorized representatives having a need to know such information for the Purpose and who have signed confidentiality agreements or are otherwise bound by confidentiality obligations at least as restrictive as those contained herein. Each Party shall be responsible for the breach of this Agreement by its employees or authorized
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representatives. Each Party shall immediately notify the other Party upon discovery of any loss or unauthorized disclosure of the other Party’s Confidential Information.
Section 9.2 Exceptions. The obligations of confidentiality and non-use set forth in Section 9.1 shall not apply to any portion of Confidential Information that the Recipient or its Affiliates can demonstrate was: (a) known to the general public at the time of its disclosure to the Recipient or its Affiliates, or thereafter became generally known to the general public, other than as a result of actions or omissions of the Recipient, its Affiliates, or anyone to whom the Recipient or its Affiliates disclosed such portion; (b) known by the Recipient or its Affiliates, prior to the date of disclosure by the disclosing Party; (c) disclosed to the Recipient or its Affiliates on an unrestricted basis from a source unrelated to the disclosing Party and not known by the Recipient or its Affiliates to be under a duty of confidentiality to the disclosing Party; or (d) independently developed by the Recipient or its Affiliates by personnel that did not use the Confidential Information of the disclosing Party in connection with such development.
Section 9.3 Permitted Disclosures. The obligations of confidentiality and non-use set forth in Section 9.1 shall not apply to the extent that the receiving Party or its Affiliates:
(a) is required to disclose Confidential Information pursuant to: (i) an order of a court of competent jurisdiction; (ii) Applicable Laws; (iii) regulations or rules of a securities exchange; (iv) requirement of a Governmental Authority for purposes related to development or commercialization of a Product, or (v) the exercise by each Party of its rights granted to it under this Agreement or its retained rights or as required to perfect Investor’s rights under the Transaction Documents;
(b) discloses such Confidential Information solely on a “need to know basis” to Affiliates, potential or actual: acquirers, merger partners, licensees, permitted assignees, collaborators (including Licensees), subcontractors, investment bankers, limited partners, lenders, or other financial partners, and their respective directors, employees, contractors and agents;
(c) provides a copy of this Agreement or any of the other Transaction Documents to the extent requested by an authorized representative of a U.S. or foreign Tax authority; or
(d) discloses Confidential Information in response to a routine audit or examination by, or a blanket document request from, a Governmental Authority; provided that (A) such Third Party or person or entity in clause (b) agrees to confidentiality and non-use obligations with respect thereto at least as stringent as those specified for in this ARTICLE IX; and (B) in the case of clauses (a)(i) through (iv) and clause (c), to the extent permitted by Applicable Law, the Recipient shall provide prior written notice thereof to the disclosing Party and provide the opportunity for the disclosing Party to review and comment on such required disclosure and request confidential treatment thereof or a protective order therefor; and provided, further that the Recipient will use reasonable efforts to secure confidential treatment of such information and the Confidential Information disclosed shall be limited to that information which is legally required to be disclosed.
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Notwithstanding anything set forth in this Agreement, prior to any foreclosure on the Collateral, the Investor and the Investor shall not file any patent application based upon or using the Confidential Information of the Company provided hereunder.
Section 9.4 Return of Confidential Information. Each Party shall return or destroy, at the other Party’s instruction, all Confidential Information of the other Party in its possession upon termination or expiration of this Agreement; provided, however, that each Party shall be entitled to retain one (1) copy of such Confidential Information of the other Party for legal archival purposes and/or as may be required by Applicable Law and neither Party shall be required to return, delete or destroy Confidential Information or any electronic files or any information prepared by such Party that have been backed-up or archived in the ordinary course of business consistent with past practice.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification by the Company. The Company agrees to indemnify and hold the Investor and its, the Agent, their respective Affiliates and any and all of their respective partners, directors, managers, members, officers, employees, agents and controlling persons (each, a “Investor Indemnified Party”) harmless from and against, and will pay to each Investor Indemnified Party the amount of, any and all Losses awarded against or incurred or suffered by such Investor Indemnified Party arising out of (a) any breach of any representation, warranty or certification made by the Company in any of the Transaction Documents or certificates given by the Company to the Investor in writing pursuant to this Agreement or any other Transaction Document, (b) any breach of or default under any covenant or agreement by the Company to the Investor pursuant to any Transaction Document, (c) any Excluded Liabilities and Obligations and (d) any fees, expenses, costs, liabilities or other amounts incurred or owed by the Company to any brokers, financial advisors or comparable other Persons retained or employed by it in connection with the transactions contemplated by this Agreement (collectively, the “Company Indemnification Obligations”); provided, however, that the foregoing shall exclude any indemnification to any Investor Indemnified Party (i) that results from the bad faith, gross negligence or willful misconduct of such Investor Indemnified Party, (ii) to the extent resulting from acts or omissions of the Company based upon the written instructions from any Investor Indemnified Party or (iii) for any matter to the extent of, and in respect of, which any Company Indemnified Party would be entitled to indemnification under Section 10.2.
Section 10.2 Indemnification by the Investor. The Investor agrees to indemnify and hold each of the Company, its Affiliates and any and all of their respective partners, directors, managers, members, officers, employees, agents and controlling Persons (each, a “Company Indemnified Party”) harmless from and against, and will pay to each Company Indemnified Party the amount of, any and all Losses awarded against or incurred or suffered by such Company Indemnified Party arising out of (a) any breach of any representation, warranty or certification made by the Investor in any of the Transaction Documents or certificates given by the Investor in writing pursuant hereto or thereto, (b) any breach of or default under any covenant or agreement by the Investor pursuant to any Transaction Document and (c) any fees, expenses, costs, liabilities or other amounts incurred or owed by the Investor to any brokers, financial advisors or
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comparable other Persons retained or employed by it in connection with the transactions contemplated by this Agreement (collectively, the “Investor Indemnification Obligations”); provided, however, that the foregoing shall exclude any indemnification to any Company Indemnified Party (i) that results from the gross negligence, bad faith or willful misconduct of such Company Indemnified Party, (ii) to the extent resulting from acts or omissions of the Investor based upon the written instructions from any Company Indemnified Party or (iii) for any matter to the extent of, and in respect of, which any Investor Indemnified Party would be entitled to indemnification under Section 10.1.
Section 10.3 Procedures. If any Third Party Claim shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to Section 10.1 or Section 10.2, the indemnified party shall, promptly after receipt of notice of the commencement of any such Third Party Claim, notify the indemnifying party in writing of the commencement thereof, enclosing a copy of all papers served, if any; provided, that the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under Section 10.1 or Section 10.2 unless, and only to the extent that, the indemnifying party is actually prejudiced by such omission. In the event that any Third Party Claim is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof in accordance with this Section 10.3, the indemnifying party will be entitled, at the indemnifying party’s sole cost and expense, to participate therein. In any such Third Party Claim, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the sole cost and expense of such indemnified party unless (a) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (b) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (c) the named parties to any such Third Party Claim (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of counsel to the indemnifying party. It is agreed that the indemnifying party shall not, in connection with any Third Party Claim or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties. The indemnifying party shall not be liable for any settlement of any Third Party Claim effected without its written consent, but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any Loss by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or discharge of any pending or threatened Third Party Claim in respect of which any indemnified party is or would have been a party and indemnity would have been sought hereunder by such indemnified party, unless such settlement, compromise or discharge, as the case may be, (i) includes an unconditional written release of such indemnified party, in form and substance reasonably satisfactory to the indemnified party, from all liability on claims that are the subject matter of such claim or proceeding, (ii) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any indemnified party and (iii) does not impose any continuing material obligation or restrictions on such indemnified party.
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Section 10.4 Other Claims. A claim by an indemnified party under this ARTICLE X for any matter not involving a Third Party Claim and in respect of which such indemnified party seeks indemnification hereunder may be made by delivering, in good faith, a written notice of demand to the indemnifying party, which notice shall contain (a) a description and the amount of any Losses incurred or suffered by the indemnified party (and the method of computation of such Losses), (b) a statement that the indemnified party is entitled to indemnification under this ARTICLE X for such Losses and a reasonable explanation of the basis therefor, and (c) a demand for payment in the amount of such Losses. For all purposes of this Section 10.4, the Company shall be entitled to deliver such notice of demand to the Investor on behalf of the Company Indemnified Parties, and the Investor shall be entitled to deliver such notice of demand to the Company on behalf of the Investor Indemnified Parties. Within thirty (30) days after receipt by the indemnifying party of any such notice, the indemnifying party may deliver to the indemnified party that delivered the notice a written response in which the indemnifying party (a) agrees that the indemnified party is entitled to the full amount of the Losses claimed in the notice from the indemnified party; (b) agrees that the indemnified party is entitled to part, but not all, of the amount of the Losses claimed in the notice from the indemnified party; or (c) indicates that the indemnifying party disputes the entire amount of the Losses claimed in the notice from the indemnified party. If the indemnified party does not receive such a response from the indemnifying party within such thirty (30)-day period, then the indemnifying party shall be conclusively deemed to have agreed that the indemnified party is entitled to the full amount. If the indemnifying party and the indemnified party are unable to resolve any Dispute relating to any amount of the Losses claimed in the notice from the indemnified party within thirty (30) days after the delivery of the response to such notice from the indemnifying party, then the parties shall be entitled to resort to any legal remedy available to such party to resolve such Dispute that is provided for in this Agreement, subject to all the terms, conditions and limitations of this Agreement.
Section 10.5 Exclusive Remedies. The indemnification afforded by this ARTICLE X shall be the sole and exclusive remedy for any and all Losses awarded against or incurred or suffered by the Investor Indemnified Parties against the Company in connection with the Company Indemnification Obligations and the Company Indemnified Parties against the Investor in connection with the Investor Indemnification Obligations under Section 10.1(a) or Section 10.2, as applicable, in each case other than any Company Indemnification Obligations or Investor Indemnification Obligations, as applicable, resulting from (a) the gross negligence, the bad faith or willful misconduct of the other Party or (b) acts or omissions based upon the written instructions from the other Party; provided that nothing in this Section 10.4 shall alter or affect the rights of the either Party to specific performance by the other Party under the Transaction Documents or the rights of the Investor to exercise remedies under the Transaction Documents after an Event of Default or other rights of creditors under the UCC or any other Applicable Law.
Section 10.6 Certain Limitations. The indemnification afforded by this ARTICLE X shall be subject to the following limitations:
(a) With respect to indemnification by the Company pursuant to Section 10.1(a), the Company’s maximum liability for any Loss suffered by an Investor Indemnified Party (other than any Loss resulting from a Third Party Claim) shall not exceed an amount (the “Company Indemnification Cap”) equal to (i) the Hard Cap and the amount of all of the other
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Obligations owed by the Company Parties to the Investor under this Agreement and the other Transaction Documents (other than the indemnification amounts payable under Section 10.1(a)) as of the date of determination, minus (ii) the aggregate amount of all of the payments collected or received by the Investor (and any direct or indirect transferee of the Investor to whom any interest in the Revenue Interests is transferred) hereunder as of such date of determination (other than (A) any payments collected or received as a reimbursement of expenses incurred by any Investor Indemnified Party (including attorney’s fees) and (B) any indemnification payments collected or received pursuant to Section 10.1(a)), minus (iii) the aggregate amount collected or received by the Investor (and any direct or indirect transferee of the Investor to whom any interest in the Revenue Interests is transferred) pursuant to the exercise of its rights under Section 10.1(a) (without duplication of any amounts collected or received pursuant to clause (ii)) prior to such date of determination to the extent such amount was not collected or received in connection with a Third Party Claim. Notwithstanding the foregoing, the Company Indemnification Cap shall not apply to any Loss suffered by any Investor Indemnified Party in connection with a Third Party Claim.
(b) With respect to indemnification by the Investor pursuant to Section 10.2, the Investor’s maximum liability shall not exceed an amount equal to the excess (if any) of (i) the aggregate amount of all of the payments collected or received by the Investor from the Company prior to the date of determination (excluding any amounts collected or received as a reimbursement of expenses incurred by the Investor or any indemnification amounts collected or received in connection with a Third Party Claim) over (ii) the Investment Amount.
ARTICLE XI
EVENTS OF DEFAULT REMEDIES
Section 11.1 Remedies Upon Event of Default. If any Event of Default under clause (d) of the definition thereof has occurred and is continuing, the Company shall immediately pay the Hard Cap (less the aggregate of all of the payments of the Company in respect of the Revenue Interests made to the Investor prior to such date, plus any other Obligations payable by the Company Parties under this Agreement and the other Transaction Documents) to the Investor or the Investor’s designee without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration or any other notice or declaration of any kind, all of which are hereby expressly waived by the Company and each Guarantor who at any time ratifies or approves this Agreement. In addition, if any other Event of Default has occurred and is continuing, the Investor may, without notice to the Company or any other Guarantor, declare any or all of the Hard Cap (less the aggregate of all of the payments of the Company in respect of the Revenue Interests made to the Investor prior to such date, plus any other Obligations payable by the Company Parties under this Agreement and the other Transaction Documents) immediately due and payable (and all of such amounts shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration or any other notice or declaration of any kind, all of which are hereby expressly waived by the Company and each Guarantor who at any time ratifies or approves this Agreement) orand the Investor or the Agent may otherwise exercise all rights and remedies available to it under the Transaction Documents and Applicable Law.
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ARTICLE XII
MISCELLANEOUS
Section 12.1 Survival. All representations, warranties and covenants made herein and in any other Transaction Document or any certificate delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing. The rights hereunder to indemnification and payment of Losses under ARTICLE X or to specific performance under Section 12.2 based on such representations, warranties and covenants shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time (whether before or after the execution and delivery of this Agreement or the Closing) in respect of the accuracy or inaccuracy of or compliance with, any such representation, warranty or covenant. Any Obligations that arose prior to the expiration of the Payment Term shall survive such expiration.
Section 12.2 Specific Performance. Each of the Parties hereto acknowledges that irreparable damage would occur, and the other Party hereto may not have adequate remedy at law, if the other Party fails to perform any of its obligations under any of the Transaction Documents. In such event, each of the Parties hereto agrees that the other Party hereto shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Agreement, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Supreme Court of the State of New York sitting in New York County, provided that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then in the United States District Court of the Southern District of New York or any other New York state court, this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief. The Parties further agree not to assert that a remedy of specific performance is unenforceable, invalid, contrary to Applicable Law or inequitable for any reason.
Section 12.3 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be effective (a) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (b) upon receipt when sent by an overnight courier (costs prepaid and receipt requested), (c) on the date personally delivered to an authorized officer of the party to which sent or (d) on the date transmitted by electronic transmission (other than facsimile transmission) with a confirmation of receipt, in all cases, with a copy emailed to the recipient at the applicable address, addressed to the recipient as follows:
if to the Company, to:
Allurion Technologies Inc.LLC
11 Huron Drive
Natick, MA 01760
Attn: Chris Geberth, Shantanu Gaur
cgeberth@allurion.com; sgaur@allurion.com
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with a copy to (which shall not constitute notice):
Goodwin Procter LLP
500 Broadway Suite #500
Santa Monica, CA 90401
Attn: Kris Ring; Mohammed Alvi
Email: kring@goodwinlaw.com; malvi@goodwinlaw.com
if to the Investor, to:
RTW4010 Royalty Investments ICAV, for and on behalf of its sub-fund, 4010 Royalty Investments Fund 1, and 4010 Royalty Master Fund, Ltd., RTW Innovation Master Fund, Ltd., and RTW Venture Fund LimitedLP
c/o RTW Investments, LP
40 10th Avenue, Floor 7
New York, NY 10014
Attn: Roderick Wong and Ovid Amadi
Email: rw@rtwfunds.com; oa@rtwfunds.com and legalops@rtwfunds.com
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
555 Mission Street
San Francisco, CA 94105
Attn: Ryan A. Murr; Todd J. Trattner
Email: rmurr@gibsondunn.com; ttrattner@gibsondunn.com
Each Party hereto may, by notice given in accordance herewith to the other Party hereto, designate any further or different address to which subsequent notices, consents, waivers and other communications shall be sent.
Section 12.4 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except in connection with the De-SPAC Transaction and pursuant to the Company Assumption Agreement, the Company shall not be entitled to assign any of its obligations and rights under this Agreement without the prior written consent of the Investor. After the Closing Date, the Investor may assign any of its obligations and rights hereunder to any other Person without the consent of the Company. The Investor shall give notice of any such assignment to the Company promptly after the occurrence thereof. The Company shall maintain a “register” at one of its offices in the United States for the recordation of the name and address of, and the amounts owing to, the Investor from time to time. Notwithstanding anything to the contrary contained in this Agreement, no assignment of any interest of the Investor in the rights and obligations hereunder shall be effective until such assignment is recorded in such register and, consistent with the foregoing, the Company shall record any such assignment in its register and treat the party recorded in such register as the Investor under this Agreement, notwithstanding notice to the contrary. This Section 12.4 is intended to be construed so that the Obligations are at all times maintained in “registered form” within the meaning of U.S. Treasury Regulations
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Section 5f.103-1(c) (or any other successor provision of such regulations) and U.S. Proposed Treasury Regulations Section 1.163-5(b) and to comply with other requirements of applicable Tax law. The Company shall be under no obligation to reaffirm any representations, warranties or covenants made in this Agreement or any of the other Transaction Documents. Any purported assignment of rights or obligations in violation of this Section 12.4 will be void.
Section 12.5 Independent Nature of Relationship. The relationship between the Company and the Investor is solely that of lender and borrower, and neither the Company nor any of the Investor has any fiduciary or other special relationship with the any of the Investor and their Affiliates on the one hand, or the Company and its Affiliates on the other hand. Nothing contained herein or in any other Transaction Document shall be deemed to constitute the Company and the Investor as a partnership, an association, a joint venture or any other kind of entity or legal form. The Parties agree that they shall not take any inconsistent position with respect to such treatment in a filing with any Governmental Authority.
Section 12.6 Expenses. On the date hereof, the Company shall reimburse the Investor and the Agent for the Transaction Expenses. Upon the earlier of (a) (i) the Closing, (ii) termination of this Agreement, or (iii) termination of any of the transactions contemplated hereby, including the PIPE Transaction or the De-SPAC Transaction, or (b) August 7, 2023, if the Closing does not occur by such date, the Company shall reimburse the Investor the aggregate amount of any and all other documented out-of-pocket fees and expenses reasonably incurred by or on behalf of, or paid directly by, the Investor in connection with the diligence of the transactions contemplated hereby, and the negotiation, preparation and execution of the Transaction Documents, and to consummate the transactions contemplated hereby, not to exceed an additional $750,000. The Company agrees to reimburse each of the Investor and the Agent (i) on the Amendment Effective Date for its reasonable and documented costs and expenses (including fees and expenses of one (1) outside counsel for the Investor and the Agent, taken as a whole, and additional counsel in each applicable foreign jurisdiction) actually incurred in connection with the transactions contemplated hereby, any due diligence related thereto and the preparation, execution, delivery, perfection, administration and negotiation of the Transaction Documents and the transactions contemplated thereunder and (ii) from time to time for its reasonable and documented costs and expenses (including fees and expenses of one (1) outside counsel for the Investor and one (1) outside counsel for the Agent and additional counsel in each applicable foreign jurisdiction) in connection with the transactions contemplated hereby and the perfection, administration and enforcement of the Transaction Documents. In addition, but without duplication of the Company’s indemnification obligations pursuant to ARTICLE X, the Company agrees to promptly pay or reimburse the Agent and the Investor for all of their reasonable and documented out-of-pocket costs and expenses (including the out-of-pocket fees and expenses of legal counsel, but limited to, in the case of legal counsel, the reasonable and documented (in reasonable detail) charges and disbursements of one lead counsel for the Agent and Investor, together, and one additional local outside counsel in each material jurisdiction or discipline in each case for the Agent and Investor together and, in the case of actual conflict of interest, one additional such set of applicable counsel)) in connection with any enforcement or collection proceedings, including with respect to the Collateral, during the continuance of an Event of Default.
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Section 12.7 Appointment of the Agent. Each Investor hereby irrevocably appoints RTW Investments, LP as the administrative agent for the Investor (together with any successor) (its successors and permitted transferees and assigns, the “Agent”) as the administrative agent hereunder and authorizes the Agent to (i) execute and deliver the Transaction Documents and accept delivery thereof on its behalf from the Company, Parent or any of its Subsidiaries, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Agent under such Transaction Documents and (iii) exercise such powers as are reasonably incidental thereto.
Section 12.8 Entire Agreement. This Agreement, together with the Exhibits hereto (which are incorporated herein by reference) and the other Transaction Documents, constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the Parties hereto with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits hereto or the other Transaction Documents) has been made or relied upon by either Party hereto.
Section 12.9 Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OR CHOICE OF FORUM OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(b) Each of the Parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by Applicable Law, in such federal court. Each of the Parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.
(c) Each of the Parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in Section 12.9(b). Each of the Parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each of the Parties hereto irrevocably consents to service of process in the manner provided for notices in Section 12.3. Nothing in this Agreement will affect the right of any Party hereto to serve process in any other manner permitted by Applicable Law. Each of the Parties hereto waives personal service of any summons, complaint or other process, which may be made by any other means permitted by New York law.
Section 12.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 12.10.
Section 12.11 Severability. If one or more provisions of this Agreement are held to be invalid, illegal or unenforceable by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, which shall remain in full force and effect, and the Parties hereto shall replace such invalid, illegal or unenforceable provision with a new provision permitted by Applicable Law and having an economic effect as close as possible to the invalid, illegal or unenforceable provision. Any provision of this Agreement held invalid, illegal or unenforceable only in part or degree by a court of competent jurisdiction shall remain in full force and effect to the extent not held invalid, illegal or unenforceable.
Section 12.12 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by the other Party hereto. Any counterpart may be executed by facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed an original.
Section 12.13 Amendments; No Waivers. This Agreement or any term or provision hereof may be amended, supplemented, restated, waived, changed or modified if, and only if, such amendment, supplement, restatement, change or modification is in writing and signed by both the Company and the Investor, or in the case of a waiver signed by the Party against whom the waiver is to be effective. No failure or delay by either Party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No notice to or demand on either Party hereto in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval hereunder shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or
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approval thereafter to be granted hereunder. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.
Section 12.14 No Third Party Rights. Other than the Parties and the Agent, no Person will have any legal or equitable right, remedy or claim under or with respect to this Agreement. This Agreement may be amended or terminated, and any provision of this Agreement may be waived, without the consent of any Person who is not a Party. The Company shall enforce any legal or equitable right, remedy or claim under or with respect to this Agreement for the benefit of the Company Indemnified Parties and the Investor and/or the Agent shall enforce any legal or equitable right, remedy or claim under or with respect to this Agreement for the benefit of the Investor Indemnified Parties.
Section 12.15 Table of Contents and Headings. The Table of Contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
Allurion Technologies Inc.LLC
By:
Name:
Title:
[Signature Page to Revenue Interest Financing Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
RTW MASTER FUND, LTD.
By:
Name: Roderick Wong, M.D.
Title: Director
RTW INNOVATION MASTER FUND, LTD.
By: ______________________________
Name: Roderick Wong, M.D.
Title: Director
RTW VENTURE FUND LIMITED
By: RTW Investments, LP, its Investment Manager
By: ______________________________
Name: Roderick Wong, M.D.
Title: Managing Partner
Exhibit B
Amendment to Existing Security Agreement
[See Attached]
[Signature Page to Revenue Interest Financing Agreement]
Exhibit C
Amendment to Existing Guaranty
[See Attached]
[Signature Page to Revenue Interest Financing Agreement]
Execution Version
Exhibit 10.3
FIRST AMENDMENT TO AMENDED AND RESTATED LETTER AGREEMENT
This First Amendment to Amended and Restated Letter Agreement (this “Amendment”), dated as of April 14, 2024, is made by and among Allurion Technologies, Inc. (formerly known as Allurion Technologies Holdings, Inc.), a Delaware corporation (the “Company”), Allurion Technologies, LLC (formerly known as Compute Health LLC), a Delaware limited liability company (“Opco”), RTW Master Fund, Ltd., an Exempted Company incorporated in the Cayman Islands with limited liability (“RTW Master”), RTW Innovation Master Fund, Ltd., an Exempted Company incorporated in the Cayman Islands with limited liability (“RTW Innovation”), RTW Biotech Opportunities Operating Ltd, an investment company limited by shares incorporated under the laws of Guernsey (“RTW Biotech Operating”), 4010 Royalty Investments ICAV, an Irish collective asset-management vehicle, for and on behalf of its sub‑fund, 4010 Royalty Investments Fund 1 (the “4010 ICAV”), and 4010 Royalty Master Fund, LP, a Cayman Islands limited partnership (the “4010 Fund”, and, collectively with the 4010 ICAV, the “Additional Investors”, and, each, an “Additional Investor”, and the RTW Master, RTW Innovation, RTW Biotech Operating and the Additional Investors, collectively, the “Investors”, and, each, an “Investor”). Each of the Company, Opco, RTW Master, RTW Innovation, RTW Biotech, 4010 ICAV and 4010 Fund is referred to in this Amendment as a “Party” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Existing Letter Agreement (as defined below) unless otherwise specified.
RECITALS
WHEREAS, Compute Health Acquisition Corp., a Delaware corporation (the “Original Company Party”), the Company, Opco, Allurion Technologies, Inc., a Delaware corporation (the “Original ATI Party”), RTW Master, RTW Innovation and RTW Biotech Opportunities Ltd (formerly known as RTW Venture Fund Limited), an investment company limited by shares incorporated under the laws of Guernsey (“RTW Biotech”, and, collectively with RTW Master and RTW Innovation, the “Original Subscribers”, and, each, an “Original Subscriber”), entered into that certain letter agreement, dated as of February 9, 2023 (as (i) amended and restated by that certain amended and restated letter agreement, dated as of May 2, 2023, (ii) assigned by that certain Assignment Agreement, dated as of July 28, 2023 (the “July 2023 Letter Agreement Assignment Agreement”), by and among the Original Subscribers and the Additional Investors, and (iii) assigned by that certain Assignment Agreement, dated as of April 9, 2024 (the “2024 Letter Agreement Assignment Agreement”), by and between RTW Biotech and RTW Biotech Operating, and as the same may be amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing Letter Agreement”, and the Existing Letter Agreement as amended hereby, the “Letter Agreement”);
WHEREAS, at the Closing, (i) the Original Company Party merged with and into the Company, with the Company as the surviving entity in such merger, and (ii) the Original ATI Party merged with and into Opco;
WHEREAS, the Original ATI Party and the Original Subscribers entered into a Revenue Interest Financing Agreement, dated as of February 9, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “RIFA”);
WHEREAS, the Original Subscribers assigned to RTW Royalty III DAC, a designated activity company limited by shares incorporated under the laws of Ireland with registered number 737361 and registered office at 2nd Floor, Palmerston House, Denzille Lane, Dublin 2, Ireland (the “Interim Assignee”), and the Interim Assignee assumed, all of the Original Subscribers’ rights, title, interests, and obligations under the RIFA pursuant to that certain Assignment and Assumption, dated April 27, 2023, among the Original Subscribers and the Interim Assignee;
WHEREAS, the Interim Assignee assigned to the Additional Investors, and the Additional Investors assumed, all of the Interim Assignee’s rights, title, interests, and obligations under the RIFA (the “July 2023 RIFA Assignment”) pursuant to that certain Assignment Agreement, dated July 28, 2023, among the Interim Assignee and the Additional Investors;
WHEREAS, concurrent with the July 2023 RIFA Assignment, the Original Subscribers assigned to the Additional Investors, and the Additional Investors assumed, the Original Subscribers’ rights, title, interests, and obligations under Section 3, Section 10 and Section 12 of the Letter Agreement pursuant to the July 2023 Letter Agreement Assignment Agreement;
WHEREAS, RTW Biotech assigned to RTW Biotech Operating, and RTW Biotech Operating assumed, all of RTW Biotech’s rights, title, interests, and obligations under the Letter Agreement pursuant to the 2024 Letter Agreement Assignment Agreement;
WHEREAS, Opco intends to refinance the Indebtedness (as defined in the RIFA) under the Term Loan Documents (as defined in the RIFA) with a portion of the proceeds pursuant to that certain Note Purchase Agreement (as defined in the RIFA), concurrently with an amendment to the RIFA (the “Refinancing”);
WHEREAS, the Parties desire to amend the Existing Letter Agreement and the Additional Revenue Interest Financing Agreement concurrently with amending the RIFA; and
WHEREAS, the Parties desire to amend the Existing Letter Agreement in accordance with the terms set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the Parties hereby agree to be legally bound as follows:
AMENDMENT
2
The Investors shall give notice to the Company and Opco of the effectiveness of this Amendment.
3
4
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
5
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.
COMPANY:
ALLURION TECHNOLOGIES, INC.
By: _/s/ Shantanu Gaur
Name: Shantanu Gaur
Title: Chief Executive Officer
OPCO:
ALLURION TECHNOLOGIES, LLC
By: _/s/ Shantanu Gaur
Name: Shantanu Gaur
Title: Chief Executive Officer
Allurion Technologies, Inc.
Allurion Technologies, LLC
RTW
First Amendment to Amended and Restated Letter Agreement
Signature Page
INVESTORS:
RTW MASTER FUND, LTD
By: __/s/ Darshan Patel
Name: Darshan Patel
Title: Director
RTW INNOVATION MASTER FUND, LTD.
By: __/s/ Darshan Patel
Name: Darshan Patel
Title: Director
RTW BIOTECH OPPORTUNITIES OPERATING LTD
By: RTW Investments, LP,
its Investment Manager
By: _/s/ Roderick Wong
Name: Roderick Wong, M.D.
Title: Managing Partner
Allurion Technologies, Inc.
Allurion Technologies, LLC
RTW
First Amendment to Amended and Restated Letter Agreement
Signature Page
4010 ROYALTY INVESTMENTS, ICAV,
FOR AND ON BEHALF OF ITS SUB‑FUND, 4010 ROYALTY INVESTMENTS FUND 1
By: RTW Investments, LP,
its Investment Manager
By: _/s/ Roderick Wong______________
Name: Roderick Wong, M.D.
Title: Managing Partner
Allurion Technologies, Inc.
Allurion Technologies, LLC
RTW
First Amendment to Amended and Restated Letter Agreement
Signature Page
4010 ROYALTY MASTER FUND, LP
By: RTW Investments, LP,
its Investment Manager
By: _/s/ Roderick Wong
Name: Roderick Wong, M.D.
Title: Managing Partner
Allurion Technologies, Inc.
Allurion Technologies, LLC
RTW
First Amendment to Amended and Restated Letter Agreement
Signature Page
Annex A
Form of Additional Revenue Interest Financing Agreement
[See attached.]
Annex A
Execution Version
Exhibit 10.4
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
This First Amendment to Note Purchase Agreement (this “Amendment”), dated as of April 16, 2024, is among Allurion Technologies, Inc., a Delaware corporation (formerly known as Allurion Technologies Holdings, Inc.) (together with its successors and permitted assigns, the “Company”), the purchasers party to the Existing Note Purchase Agreement (as defined below) (each, a “Purchaser” and, collectively, the “Purchasers”), RTW Investments, LP, as agent for the Purchasers (in such capacity, together with its successors and permitted assigns, the “Principal Purchaser”), and Acquiom Agency Services LLC, as collateral agent for the Purchasers and the Principal Purchaser (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”). Each of the Company, the Purchasers, the Principal Purchaser and the Collateral Agent is referred to in this Amendment as a “Party” and collectively as the “Parties”. Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Existing Note Purchase Agreement (as defined below).
WHEREAS, the Company, the Purchasers, the Principal Purchaser and the Collateral Agent entered into a Note Purchase Agreement dated as of April 14, 2024 (the “Existing Note Purchase Agreement”, the Existing Note Purchase Agreement as amended hereby, the “Note Purchase Agreement”), pursuant to which the Purchasers agreed to purchase the Notes from the Company, upon and subject to the terms and conditions set forth in the Existing Note Purchase Agreement (including the satisfaction of the closing conditions set forth in Section 9 of the Existing Note Purchase Agreement); and
WHEREAS, the Parties desire to amend the Existing Note Purchase Agreement in accordance with the terms set forth in this Amendment.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the Parties hereby agree to be legally bound as follows:
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.
ALLURION TECHNOLOGIES, INC., as the Company
By: /s/ Shantanu Gaur
Name: Shantanu Gaur
Title: Chief Executive Officer
|
[Signature Page to First Amendment to Note Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.
ACQUIOM AGENCY SERVICES LLC, as the Collateral Agent
By: _/s/ Shon McCraw-Davis___________
Name: Shon McCraw-Davis
Title: Director
[Signature Page to First Amendment to Note Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.
RTW INVESTMENTS, LP, as the Principal Purchaser
By: __/s/ Roderick Wong________________
Name: Roderick Wong, M.D.
Title: Managing Partner
[Signature Page to First Amendment to Note Purchase Agreement]
RTW MASTER FUND, LTD., as a Purchaser
By: ___/s/ Darshan Patel_________________
Name: Darshan Patel
Title: Director
[Signature Page to First Amendment to Note Purchase Agreement]
RTW INNOVATION MASTER FUND, LTD., as a Purchaser
By: _/s/ Darshan Patel_________________
Name: Darshan Patel
Title: Director
[Signature Page to First Amendment to Note Purchase Agreement]
RTW BIOTECH OPPORTUNITIES OPERATING LTD., as a Purchaser
By: RTW Investments, LP, its Investment Manager
By: ___/s/ Roderick Wong________________
Name: Roderick Wong, M.D.
Title: Managing Partner
[Signature Page to First Amendment to Note Purchase Agreement]
Exhibit 99.1
Allurion Closes $48 Million Convertible Senior Secured Note Financing
with RTW Investments
NATICK, Mass. – April 17, 2024 – Allurion Technologies, Inc. (NYSE: ALUR) (“Allurion” or the “Company”), a company dedicated to ending obesity, today announced the closing of a $48 million convertible senior secured note financing with certain entities managed by RTW Investments, LP (“RTW”). Proceeds will be used to repay in full the Company’s obligations under its existing term loan with Fortress Credit Corp., reducing the Company’s interest expense and increasing operational flexibility.
Management anticipates this transaction will better position the business for the future. Of note, the convertible notes reduce the interest rate on the Company’s debt to 6%, lengthen the maturity over Allurion’s existing term loan by nearly four years, from June 2027 to April 2031, and allow for interest payments to be made in-kind for the first three years. The net benefit of these changes, together with the amended terms of Allurion’s existing Royalty Interest Financing Agreement with RTW, extends the Company’s expected cash runway in advance of the AUDACITY FDA trial read-out, which is anticipated by year-end.
"RTW’s investment underscores our shared belief in the long-term potential of the Allurion Program,” said Dr. Shantanu Gaur, Founder and CEO of Allurion. “Our impressive clinical results and continued growth in procedural volume in our foreign markets give us confidence that Allurion will be a significant player in obesity management. The investment furthers our long-term partnership with RTW and provides us additional flexibility to achieve our long-term goals,” Dr. Gaur continued.
“We are pleased to strengthen our relationship with Allurion as it continues its mission to end obesity around the world. The Allurion Program is a proven weight-loss method, and we eagerly await the results of its U.S. FDA trial,” said Roderick Wong, M.D., Managing Partner and Chief Investment Officer of RTW Investments, LP.
About the Notes
The notes bear interest at the rate of 6% per annum, with the Company’s option to pay interest in kind for the first three years, and mature on April 16, 2031. The notes may be converted at the option of the noteholders into common stock of Allurion, subject to certain conditions and limitations, at a 35% conversion premium to the lower of (i) the 30-day VWAP at signing and (ii) the price per share in the Company’s next equity offering. The Company has agreed to customary registration rights with respect to the shares of common stock issuable upon conversion of the notes. The notes may be redeemed by Allurion at its option under certain circumstances following the fourth anniversary of the date of issuance.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Additional information about the notes and the terms of the note purchase agreement will be filed with the U.S. Securities and Exchange Commission (the “SEC”) and will be available on the SEC’s website at www.sec.gov.
About Allurion
Allurion is dedicated to ending obesity. The Allurion Program is a weight loss platform that features the Allurion Gastric Balloon, the world’s first and only swallowable, procedure-less intragastric balloon for weight loss, and offers access to the Allurion Virtual Care Suite, including the Allurion Mobile App for consumers, Allurion Insights for health care providers featuring the Coach Iris AI Platform, and the Allurion Connected Scale. The Allurion Virtual Care Suite is also available to providers separately from the Allurion Program to help customize, monitor and manage weight loss therapy for patients regardless of their treatment plan: gastric balloon, surgical, medical or nutritional. The Allurion Gastric Balloon is an investigational device in the United States.
For more information about Allurion and the Allurion Virtual Care Suite, please visit www.allurion.com
Allurion is a trademark of Allurion Technologies, Inc. in the United States and countries around the world.
About RTW
RTW Investments, LP is a global, full life-cycle investment firm and company builder that focuses on identifying transformational and disruptive innovations across the biopharmaceutical and medical technologies sectors. As a leading partner of industry and academia, RTW combines deep scientific expertise with a solution-oriented investment approach to support emerging medical therapies and the companies and/or academics developing them.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of the U.S. federal and state securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,”
“plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions and include statements regarding the simplification of Allurion’s capital structure, availability of cash runway, operational flexibility, procedure growth, Allurion’s expectations for, and market acceptance of, the Allurion Program, and Allurion’s ability to compete with other weight loss products, improve its market position, scale its business and achieve long-term goals. Forward-looking statements are predictions, projections and other statements about future events that reflect the current beliefs and assumptions of Allurion’s management based on information currently available to them and, as a result, are subject to risks and uncertainties. Many factors could cause actual future results or developments to differ materially from the forward-looking statements in this communication, including but not limited to (i) the ability of Allurion to obtain and maintain regulatory approvals for and successfully commercialize the Allurion Program, including the Allurion Balloon and the Allurion Virtual Care Suite (“VCS”), (ii) the timing of, and results from, our clinical studies and trials, (iii) the evolution of the markets in which Allurion competes, (iv) the ability of Allurion to defend its intellectual property, (v) the impact of the COVID-19 pandemic, the Russia and Ukraine war, and the Israel-Hamas conflict on Allurion’s business, (vi) Allurion’s expectations regarding its market opportunities, including those for the VCS platform, (vii) the risk of economic downturns and a changing regulatory landscape in the highly competitive industry in which Allurion operates, and (viii) the ability of Allurion to comply with the covenants and terms and conditions of the note purchase agreement. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of Allurion’s Annual Report on Form 10-K filed on March 26, 2024 and other documents filed by Allurion from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Allurion assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Allurion does not give any assurance that it will achieve its expectations.
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Contacts
Global Media:
Cedric Damour, PR Manager
Allurion Technologies, Inc.
+33 7 84 21 02 20
cdamour@allurion.com
Investors
Mike Cavanaugh, Investor Relations
ICR Westwicke
+1 617 877-9641
mike.cavanaugh@westwicke.com