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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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|
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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||
|
|
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The
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Item 1.01
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Entry into a Material Definitive Agreement.
|
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Item 1.02
|
Termination of a Material Definitive Agreement.
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Item 1.03
|
Bankruptcy or Receivership.
|
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Item 2.03.
|
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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Item 5.07.
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Submission of Matters to a Vote of Security Holders
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1.
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Despite approximately 36% of the Company's outstanding shares of common stock entitled to vote voting "FOR" the Merger Agreement, the proposal to adopt the Merger Agreement was not approved by the affirmative vote of the holders of a majority of the Company’s outstanding shares of common stock entitled to vote thereon as of the Record Date.
|
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Votes For
|
Votes Against
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Abstentions
|
Broker Non-Votes
|
|||
|
1,118,566
|
109,960
|
13,025
|
—
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2.
|
The proposal to approve, on an advisory basis, the compensation that may be paid or become payable to the Company’s named executive officers in connection with or following the consummation of the Merger was approved by a majority of the votes cast.
The votes were cast for this matter as follows:
|
|
Votes For
|
Votes Against
|
Abstentions
|
Broker Non-Votes
|
|||
|
940,417
|
271,638
|
29,496
|
—
|
|
3.
|
The proposal to adjourn the Special Meeting if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting or any adjournment or postponement thereof, was approved by a majority of the votes cast. The votes were cast for this matter as follows:
|
|
Votes For
|
Votes Against
|
Abstentions
|
Broker Non-Votes
|
|||
|
1,056,746
|
173,603
|
11,202
|
—
|
|
10.1
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||
|
10.2
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||
|
10.3
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||
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10.4
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||
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104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document).
|
|
|
TIMBER PHARMACEUTICALS, INC.
|
||
|
Date: November 17, 2023
|
By:
|
/s/ John Koconis
|
|
Name:
|
John Koconis
|
|
|
Title:
|
Chief Executive Officer
|
|
Exhibit 10.1
ASSET PURCHASE AGREEMENT
among
LEO PHARMA A/S, and
LEO SPINY MERGER SUB, INC.,
as Buyers
and
TIMBER PHARMACEUTICALS, INC.,
TIMBER PHARMACEUTICALS, LLC, and
BIOPHARMX, INC.
as Sellers
dated as of
November 17, 2023
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
Section 1.01 Definitions 1
Section 1.02 Other Definitional and Interpretative Provisions 13
ARTICLE II PURCHASE AND SALE 13
Section 2.01 Purchase and Sale of Assets 13
Section 2.02 Excluded Assets 16
Section 2.03 Assumed Liabilities 17
Section 2.04 Excluded Liabilities 17
Section 2.05 Assignment of Contracts 18
Section 2.06 Assignment of Assets 19
Section 2.07 Further Conveyances and Assumptions 20
Section 2.08 Purchase Price 21
Section 2.09 Certain Tax Matters 21
ARTICLE III CLOSING 22
Section 3.01 Closing 22
Section 3.02 Closing Deliverables 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS 23
Section 4.01 Organization and Qualification of Sellers 23
Section 4.02 Authority of Sellers 24
Section 4.03 No Conflicts; Consents 24
Section 4.04 Title to Purchased Assets 24
Section 4.05 Assets Necessary to Business 25
Section 4.06 Intellectual Property; IT Assets 25
Section 4.07 Assigned Contracts 28
Section 4.08 Real Property 29
Section 4.09 Tangible Personal Property Leases 29
Section 4.10 Inventory 29
Section 4.11 Compliance With Laws; Permits 29
Section 4.12 Litigation 30
Section 4.13 Privacy Matters 30
Section 4.14 Employee Benefit Plans; Labor Matters 31
Section 4.15 Taxes 34
Section 4.16 Key Suppliers 34
Section 4.17 Insurance 35
Section 4.18 Finders’ Fees 35
Section 4.19 No Other Representations and Warranties 35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 35
Section 5.01 Organization of Buyers. 36
Section 5.02 Authority of Buyers. 36
Section 5.03 No Conflicts; Consents 36
Section 5.04 Finders’ Fees 36
Section 5.05 Available Funds 37
Section 5.06 Litigation 37
Section 5.07 Independent Investigation 37
Section 5.08 Non-Reliance 37
ARTICLE VI BANKRUPTCY COURT MATTERS 37
Section 6.01 Competing Transactions 37
Section 6.02 Bankruptcy Court Filings 37
ARTICLE VII COVENANTS 39
Section 7.01 Conduct of Business Prior to the Closing 39
Section 7.02 Access to Information 40
Section 7.03 Notice of Certain Events 41
Section 7.04 Employees and Employee Benefits 42
Section 7.05 Confidentiality 44
Section 7.06 Consents 44
Section 7.07 Books and Records 44
Section 7.08 Public Announcements 44
Section 7.09 Further Assurances 45
Section 7.10 Wrong Pockets 45
Section 7.11 DIP Financing 45
Section 7.12 No Successor Liability 46
Section 7.13 Name Change 46
ARTICLE VIII CONDITIONS TO CLOSING 47
Section 8.01 Conditions to Obligations of All Parties 47
Section 8.02 Conditions to Obligations of Buyers. 47
Section 8.03 Conditions to Obligations of Sellers 49
ARTICLE IX TERMINATION 50
Section 9.01 Termination 50
Section 9.02 Backup Bidder 52
Section 9.03 Effect of Termination 52
Section 9.04 Breakup Fee; Expense Reimbursement 52
ARTICLE X MISCELLANEOUS 54
Section 10.01 Notices 54
Section 10.02 No Survival of Representations and Warranties 55
Section 10.03 Expenses 55
Section 10.04 Entire Agreement 55
Section 10.05 Headings 55
Section 10.06 Severability 55
Section 10.07 Binding Effect; Benefit; Assignment. 56
Section 10.08 No Third Party Beneficiaries 56
Section 10.09 Amendment and Waivers 56
Section 10.10 Governing Law; Jurisdiction; Waiver of Jury Trial 56
Section 10.11 Specific Performance 57
Section 10.12 Counterparts; Effectiveness 57
Exhibit A DIP Loan Agreement
Exhibit B Bidding Procedures Order
Exhibit C Bidding Procedures
Exhibit D Sale Order
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “Agreement”), dated as of November 17, 2023, is entered into among Timber Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, Timber Pharmaceuticals, LLC (“Timber LLC”), a Delaware limited liability company, BioPharmX, Inc. (“BioPharmX”), a Nevada corporation], together with the Company, Timber LLC and BioPharmX, the “Sellers”, and each being a “Seller”), and LEO Pharma A/S, a Danish Aktieselskab (“LEO Pharma”) and LEO Spiny Merger Sub, Inc. (“LEO Spiny” and together with LEO Pharma, “Buyers”), a Delaware corporation.
RECITALS
WHEREAS, the Sellers are engaged in the development of non-systemic treatments for rare dermatologic diseases including congenital ichthyosis, including X-linked recessive CI and autosomal recessive CI and other sclerotic skin diseases, through the development of the Company Products (the “Business”);
WHEREAS, Sellers wish to sell and assign to Buyers, and Buyers wish to purchase and assume from Sellers, substantially all the assets of the Business, subject to the terms and conditions set forth herein pursuant to Sections 363 and 365 of the Bankruptcy Code (as defined below) and subject to, among other things, (i) consideration by the Sellers of alternative bids (if any) submitted following entry of the Bidding Procedures Order (as defined below) and (ii) the entry of the Sale Order (as defined below);
WHEREAS, Sellers and Buyers anticipate effecting the sale of substantially all the assets of the Business through and as part of a case (the “Bankruptcy Case”) filed under title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”); and
WHEREAS, the Bridge Lender (as defined below) and DIP Lender (as defined below) have authorized Buyers to credit bid the Obligations (as defined in the DIP Loan Agreement) pursuant to Section 362(k) of the Bankruptcy Code in connection with the sale of substantially all of the assets of the Business to Buyers as part of the Bankruptcy Case on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. The following terms have the meanings specified or referred to in this ARTICLE I:
“Action” means any action, cause of action, claim, demand, litigation, suit, summons, subpoena, inquiry, investigation, audit, hearing, originating application to a tribunal, arbitration or other legal proceeding of any nature, civil, criminal, regulatory, administrative or otherwise, whether in equity or at law, in contract, in tort or otherwise.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purpose of this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of voting securities or partnership or other ownership interests, by Contract or otherwise.
“Agreement” has the meaning set forth in the preamble.
“Ancillary Documents” means the DIP Loan Agreement, the Bill(s) of Sale, the Assignment and Assumption Agreement(s), Intellectual Property Assignment(s), and any other agreements, instruments and documents required to be delivered at the Closing.
“Applicable Withholding Certificate” means a properly completed and validly executed IRS Form W-9 of the Company, Timber LLC and BioPharmX certifying that such Person is a United States person within the meaning of Section 7701(a)(30) of the Code and not subject to backup withholding.
“Apportioned Taxes” has the meaning set forth in Section 2.09(c).
“Assigned Contracts” has the meaning set forth in Section 2.01(c).
“Assignment and Assumption Agreement” has the meaning set forth in Section 3.02(a)(ii).
“Assignment and Assumption Notice” has the meaning set forth in Section 6.02(c).
“Assumed Liabilities” has the meaning set forth in Section 2.03.
“Assumed Purchase Orders” has the meaning set forth in Section 2.01(d).
“Assumed Purchase Order Liabilities” has the meaning set forth in Section 2.03(e).
“Auction” means the auction contemplated by the Bidding Procedures Order.
“Avoidance Action Claims” means any claims or causes of action held by Sellers’ bankruptcy estates under chapter 5 of the Bankruptcy Code.
“Bankruptcy Case” has the meaning set forth in the recitals.
“Bankruptcy Code” has the meaning set forth in the recitals.
“Bankruptcy Court” has the meaning set forth in the recitals.
“Backup Bidder” means the party whose bid is determined to be the next highest bid after the bid of the Successful Bidder at the Auction.
“Backup Bid Outside Date” has the meaning set forth in Section 9.02.
“Bidding Procedures” means the bidding procedures approved by the Bankruptcy Court pursuant to the Bidding Procedures Order, in the form of Exhibit C attached hereto subject to (a) immaterial modifications or clarifications or (b) such other changes to which Buyers and Sellers reasonably agree to in writing.
“Bidding Procedures Order” means an order of the Bankruptcy Court approving, among other things, the Bidding Procedures for conducting a sale and auction of the Purchased Assets, and authorizing Sellers’ performance of their obligations under this Agreement, in the form of Exhibit B attached hereto with (a) immaterial modifications or clarifications or (b) such other changes to which Buyers and Sellers reasonably agree to in writing.
“Bill of Sale” has the meaning set forth in Section 3.02(a)(i).
“Books and Records” has the meaning set forth in Section 2.01(m).
“Breakup Fee” has the meaning set forth in Section 9.04(a).
“Bridge Lender” means LEO US Holding, Inc.
“Bridge Loan Agreement” means that certain Secured Bridge Loan Agreement, dated as of August 30, 2023 entered into between the Company, Timber LLC and BioPharmX, as borrowers, and LEO US Holding, as holder, as amended on October 27, 2023.
“Bridge Loan Amount” means $6,500,000, plus any accrued and unpaid interest thereon.
“Business” has the meaning set forth in the recitals.
“Business Data” has the meaning set forth in Section 4.13.
“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in Copenhagen, Denmark, New York, New York, or Wilmington, Delaware are authorized or required by applicable Law to close.
“Buyers” has the meaning set forth in the preamble.
“Buyers’ Closing Certificate” has the meaning set forth in Section 8.03(d).
“Buyer Material Adverse Effect” means any Effect that, individually or in the aggregate, has had, or would reasonably be expected to have, a material adverse effect on Buyers’ ability to consummate the transactions contemplated by this Agreement on or before the End Date or to timely perform any of their obligations under this Agreement.
“Clinical Data” means all original or, if originals do not exist, true, complete and accurate copies of, data, files (including data files), reports, plans, operating records, protocols, work papers and other documents in any form (including in paper or electronically stored formats), including (a) clinical study and manufacturing processes records; (b) records, files (including data files) and documents related to research, preclinical and clinical testing and studies (including in vivo and in vitro studies and indication development data) conducted by or on behalf of each Seller or any of its Subsidiaries, including scientific, preclinical and clinical data, laboratory notebooks, procedures, tests, dosage information, criteria for patient selection, safety and efficacy and study protocols; (c) investigators brochures, and (d) all pharmacovigilance and other safety records, in each case, in all forms, including in paper or electronically stored formats, in which they are stored or maintained, and all data and information included or referenced therein.
“Closing” has the meaning set forth in Section 3.01.
“Closing Date” has the meaning set forth in Section 3.01.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Product” means the programs TMB-001, TMB-003, BPX-01 and BPX-04.
“Company Product Registrations” has the meaning set forth in Section 2.01(a).
“Company SEC Documents” means all reports, schedules, forms, statements, certifications, prospectuses, registration statements and other documents, together with any exhibits and schedules thereto and other information incorporated therein, required to be filed with or furnished to the U.S. Securities and Exchange Commission by the Company.
“Competing Transaction” means any plan, agreement or arrangement, other than this Agreement, the effect and/or results of which involve the recapitalization or acquisition of Sellers or of substantially all of the assets of Sellers by any Person other than Buyers.
“Consulting Agreement” means each consulting, service provider, change in control or other agreement between any of the Sellers, on the one hand, and any Independent Contractor, on the other hand.
“Contracts” means, with respect to any Person, any legally binding contract, subcontract, agreement, lease, sublease, license, commitment, sale or purchase order, indenture, note, bond, loan, mortgage, deed of trust, insurance policy, instrument or other arrangement, commitment or undertaking, whether written or oral, to which such Person is a party or by which such Person or such Person’s properties or assets are bound.
“Copyrights” means any writings and other works (including literary, pictorial and graphic works), whether copyrightable or not, in any jurisdiction (domestic and foreign), and any and all copyright rights, whether registered or not, and registrations or applications for registration of copyrights in any jurisdiction (domestic and foreign), and any renewals or extensions thereof.
“Cure Costs” means monetary amounts that must be paid and obligations that otherwise must be satisfied under Sections 365(b)(l)(A) and (B) of the Bankruptcy Code in connection with the assumption and/or assignment of any Assigned Contract, as agreed upon by the parties hereto or determined by the Bankruptcy Court pursuant to the procedures in the Bidding Procedures Order.
“Designated Parties” has the meaning set forth in Section 2.01(i).
“DIP Lender” means LEO US Holding, Inc., a Delaware corporation.
“DIP Loan” has the meaning set forth in Section 7.11(a).
“DIP Loan Agreement” means that certain Senior Secured Superpriority Priming Debtor-in-Possession Credit Agreement between LEO US Holding, as lender and Sellers as borrowers, in the form attached hereto as Exhibit A, as the same may be amended, restated, supplemented or refinanced from time to time in accordance with the terms of this Agreement.
“DIP Obligations” has the meaning set forth in Section 3.02(b)(i).
“Disclosure Schedules” means the Disclosure Schedules delivered by Sellers and Buyers concurrently with the execution and delivery of this Agreement.
“Dollars or $” means the lawful currency of the United States.
“Effect” means any event, state of facts, circumstance, change, occurrence, development, condition or effect.
“Employee” means any employee of the Business, including any individual engaged through a Third Party professional employer organization to perform services on behalf or for the benefit of any of the Sellers.
“Employee Plan” means any (i) “employee benefit plan” as defined in Section 3(3) of ERISA, (ii) compensation, employment, consulting, independent contractor, severance, termination protection, change in control, indemnification, loan, transaction bonus, retention or similar plan, agreement, arrangement, program or policy or (iii) other plan, agreement, arrangement, program or policy providing for compensation, bonuses, profit-sharing, equity or equity-based compensation or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangement), medical, dental, vision, hospitalization, prescription or fringe benefits, life insurance, relocation or expatriate benefits, perquisites, disability or sick leave benefits, employee assistance program, supplemental unemployment benefits or post-employment or retirement benefits (including compensation, pension, employee stock ownership, stock purchase, stock option, health, medical or insurance benefits, and any plan maintained under Section 401(k) of the Code), in each case (A) whether or not written, and (B) that is sponsored, maintained, administered, contributed to, required to be contributed to or entered into by the Sellers or any of their ERISA Affiliates or for which the Sellers or any of their Subsidiaries has or would be reasonably expected to have any current or future liability. The term “Employee Plan” includes any PEO Plan plans, programs, policies and arrangements sponsored or maintained by a Third Party professional employer organization in which current or former employees, officers or directors of the Sellers or any of their ERISA Affiliates are eligible to participate in connection with their service to the Sellers or any of their ERISA Affiliates.
“Employment Agreement” means each management, employment, severance, retention, relocation, repatriation, expatriation, change in control or similar agreement or offer letter between any of the Sellers, on the one hand, and any current or former Employee, on the other hand.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any person which is (or at any relevant time was or will be) a member of a “controlled group of corporations” with, under “common control” with, or a member of an “affiliated service group” with the Company as such terms are defined in Sections 414(b), (c), (m) or (o) of the Code.
“End Date” has the meaning set forth in Section 9.01(b)(ii).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Assets” has the meaning set forth in Section 2.02.
“Excluded Contracts” has the meaning set forth in Section 2.02(a).
“Excluded Liabilities” has the meaning set forth in Section 2.04.
“Expense Reimbursement” has the meaning set forth in Section 9.04(a).
“FCPA” has the meaning set forth in Section 4.11.
“Final Order” means an order of the Bankruptcy Court or other court of competent jurisdiction (a) as to which no appeal, notice of appeal, motion to amend or make additional findings of fact, motion to alter or amend judgment, motion for rehearing or motion for new trial, request for stay, motion or petition for reconsideration, application or request for review, or other similar motion, application, notice or request (collectively, a “Challenge”) has been timely filed, or, if any of the foregoing has been timely filed, it has been disposed of in a manner that upholds and affirms the subject order in all respects without the possibility for further Challenge thereon; (b) as to which the time for instituting or filing a Challenge shall have expired; and (c) as to which no stay is in effect.
“GAAP” means generally accepted accounting principles in the United States as in effect on the date of this Agreement.
“Governmental Authority” means any transnational, domestic or foreign federal, state, provincial, local or other governmental, regulatory or administrative authority, department, court, agency, board, commission or official, including any political subdivision thereof, or any other governmental or quasi-governmental (including self-regulatory) authority or instrumentality.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“Independent Contractor” means any independent contractor, consultant or other service provider (other than an employee) who provides personal services to any of the Sellers.
“Insurance Policies” means Sellers’ commercial general liability, umbrella liability, property, and workers compensation and employer liability policies. For the avoidance of doubt, “Insurance Policies” does not include directors and officers, fiduciary, or employment practices liability insurance policies.
“Intellectual Property Rights” means any and all (i) Trademarks, (ii) Patents, (iii) Trade Secrets, information, knowledge, experience, skills, drawings, blue prints, utility models, technology, inventions, discoveries and improvements, (iv) Copyrights, (v) moral rights, data and database rights, design rights, industrial property rights, publicity rights and privacy rights, (vi) all forms and types of computer software (including source code, object code, firmware, development tools, files, records and data and all documentation related to any of the foregoing), (vii) any other intellectual property or proprietary rights and (viii) all rights under or relating to any of the foregoing granted under any Contract.
“Intellectual Property Agreements” means all Intellectual Property Rights owned by a Third Party and licensed or sublicensed to any of the Sellers, including consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written or oral, relating to any Intellectual Property Rights to which any Seller is a party, beneficiary or otherwise bound.
“Intellectual Property Assets” means all Intellectual Property Rights that are owned by Sellers or held for use in the conduct of the Business as currently conducted or proposed to be conducted, including, without limitation, all Intellectual Property Rights owned or held for use by Sellers relating to the Company Products and the “Timber Pharmaceuticals” company name and any underlying trademarks, whether or not registered, together with all (i) royalties, fees, income, payments, and other proceeds now or hereafter due or payable to Sellers with respect to such Intellectual Property Rights; and (ii) claims and causes of action with respect to such Intellectual Property Rights, whether accruing before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal or equitable relief for past, present, or future infringement, misappropriation, or other violation thereof.
“Intellectual Property Assignment” has the meaning set forth in Section 3.02(a)(iii).
“Intellectual Property Registrations” means all Intellectual Property Assets owned by Sellers that are subject to any issuance, registration, or application by or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued Patents, registered Trademarks, domain names and Copyrights, and pending applications for any of the foregoing.
“Inventory” has the meaning set forth in Section 2.01(e).
“IRS” means the U.S. Internal Revenue Service.
“IT Assets” means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, and all associated documentation owned by any of the Sellers or licensed or leased by any of the Sellers.
“Key Suppliers” has the meaning set forth in Section 4.16.
“Knowledge of Sellers or Sellers' Knowledge” or any other similar knowledge qualification, means the actual knowledge of the individuals listed in Section 1.01(a) of the Disclosure Schedules, in each case after making reasonable inquiry.
“Law” means any federal, state, local or foreign law, statute, code, constitution, principle of common law, ordinance, rule, regulation, guidance, guideline, judgment, decree, injunction, ruling, order, procedure, decision or other requirement of any Governmental Authority.
“Leased Real Property” means all real property leased by any of the Sellers under any Lease, together with all rights, title and interest of the Sellers in and to leasehold improvements relating thereto, including security deposits, reserves or prepaid rents paid in connection therewith.
“Leases” means each lease, sublease or license under which any Seller leases, subleases or licenses any real property (whether as lessor or lessee).
“LEO Pharma” has the meaning set forth in the preamble.
“LEO Spiny” has the meaning set forth in the preamble.
“LEO US Holding” means LEO US Holding, Inc., a Delaware corporation which is an Affiliate of Buyers.
“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Lien” means, with respect to any property or asset, any mortgage, lien, license, pledge, hypothecation, encroachment, occupancy right, preemptive right, charge, security interest, community property interest, encumbrance or other adverse claim of any kind in respect of such property or asset, including the interest of a vendor, lessor or other Third Party under any conditional sale agreement, license agreement, asset purchase agreement, capital lease or other title retention agreement relating to such property or asset.
“Marketing Application” means a “new drug application” as defined in the FDCA and 21 C.F.R. Part 314.
“Necessary Consent” has the meaning set forth in Section 2.06(b).
“Patent” means any national or multinational statutory invention registrations, patents and patent applications issued or applied for in any jurisdiction, including all certificates of invention, provisionals, nonprovisionals, substitutions, divisionals, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates, reexaminations, patents of addition, utility models, inventors’ certificates and the equivalents of any of the foregoing in any jurisdiction, and all inventions disclosed in each such registration, patent or patent application.
“PEO Plan” means a plan, program, policy or arrangement sponsored or maintained by a Third Party professional employer organization.
“Permits” means each grant, license, franchise, permit, easement, variance, exception, exemption, waiver, consent, certificate, registration, accreditation, approval, authorization, concession, decree, confirmation, qualification or other similar authorization of any Governmental Authority.
“Permitted Liens” means (i) Liens for Taxes not yet due or delinquent or the validity or amount of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (ii) materialmen’s, mechanics’, carriers’, workers’, warehousemen’s, repairers’ and similar Liens arising in the ordinary course of business, securing obligations as to which there is no default and which are not yet due and payable, or the validity or amount of which is being contested in good faith by appropriate proceedings which have the effect of preventing the forfeiture or sale of the property subject thereto and for which adequate reserves have been established in accordance with GAAP, (iii) Liens to secure payment of workers’ compensation, unemployment insurance, social security or other social security legislation (other than Liens imposed by ERISA), (iv) with respect to real property, any nonmonetary Lien or other requirement or restriction arising under any zoning, entitlement, building, conservation restriction and other land use and environmental applicable Law, but only if the same are not being violated by the current use of such real property or the operation of the Business, and (v) Liens created in favor of Buyers and Affiliates of Buyers, including, without limitation, Liens to secure payment of any obligations under the DIP Loan Agreement or the Bridge Loan Agreement.
“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or a Governmental Authority.
“Personal Information” means any information relating to an identified or identifiable individual or household, or that is otherwise regulated under applicable Law.
“Personal Property Leases” has the meaning set forth in Section 4.09.
“Petition Date” has the meaning set forth in Section 6.02(a).
“Post-Closing Tax Period” has the meaning set forth in Section 2.09(c).
“Potential Actions” has the meaning set forth in Section 2.01(i).
“Pre-Closing Tax Period” has the meaning set forth in Section 2.09(c).
“Previously Omitted Contract” has the meaning set forth in Section 2.05(d).
“Previously Omitted Contract Designation” has the meaning set forth in Section 2.05(d).
“Previously Omitted Contract Notice” has the meaning set forth in Section 2.05(d).
“Privacy Laws” has the meaning set forth in Section 4.13.
“Process” or “Processing” means any operation or set of operations whether or not by automatic means, including, but not limited to, collection, recording, organization, storage, retention, access, adaptation, alteration, retrieval, consultation, use, disclosure, dissemination, making available, alignment, combination, blocking, deleting, erasure, or destruction.
“Purchase Price” has the meaning set forth in Section 2.08.
“Purchased Assets” has the meaning set forth in Section 2.01.
“Reference Date” means January 1, 2019.
“Representatives” means with respect to any Person, such Person’s officers, directors, employees, investment bankers, attorneys, accountants, consultants, agents and other advisors or representatives.
“Sanctions” has the meaning set forth in Section 4.11.
“Sale Hearing” means the hearing at which the Bankruptcy Court considers approval of the Sale Order pursuant to Sections 105, 363 and 365 of the Bankruptcy Code.
“Sale Motion” has the meaning set forth in Section 6.02(a).
“Sale Order” means an order entered by the Bankruptcy Court or other court of competent jurisdiction in the form of Exhibit D attached hereto or as otherwise reasonably agreed to between Buyers and Sellers, subject to (a) immaterial modifications or clarifications or (b) such other changes to which Buyers and Sellers reasonably agree to in writing.
“Security Incident” means (a) any unauthorized access, acquisition, interruption, alteration or modification, loss, theft, corruption or other unauthorized Processing of Personal Information or Business Data, or (b) any breach of the security of or other unauthorized access to or use of or other compromise to the integrity or availability of the IT Assets.
“Service Provider” means any director or officer of any of the Sellers, or any Employee or individual Independent Contractor.
“Seller” and “Sellers” has the meaning set forth in the preamble.
“Seller Closing Certificates” has the meaning set forth in Section 8.02(j).
“Seller Material Adverse Effect” means any Effect that, individually or in the aggregate, a material adverse effect on: (i) the assets, Liabilities, business, operations, properties, condition (financial or otherwise) or results of operations of the Business, taken as a whole; provided that, for purposes of the foregoing clause (i), no such Effect to the extent resulting from, attributable to or arising out of any of the following occurring after the date hereof shall be taken into account in determining whether a Seller Material Adverse Effect has occurred or would reasonably be expected to occur: (A) changes in general economic conditions in the United States, (B) changes in securities or financial market conditions in the United States, (C) changes in general conditions in the industry in which the Sellers and their Subsidiaries operate, (D) acts of war, sabotage or terrorism (whether the commencement or escalation thereof) or pandemics or natural disasters involving the United States, (E) changes in general political or social conditions in the United States, (F) changes in Laws affecting the Sellers or the Business (it being understood and agreed that this clause (F) shall not apply with respect to any representation or warranty the purpose of which is to address compliance with applicable Laws), (G) changes in GAAP affecting any of the Sellers (it being understood and agreed that this clause (G) shall not apply with respect to any representation or warranty the purpose of which is to address compliance with GAAP), (H) changes in the trading price or trading volume of the Shares, in and of itself (it being understood and agreed that this clause (H) shall not apply with respect to any Effects giving rise or contributing to such change that are not otherwise excluded from this definition of Seller Material Adverse Effect, (I) the failure to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period, in and of itself (it being understood and agreed that this clause (I) shall not apply with respect to any Effects giving rise or contributing to such change that are not otherwise excluded from this definition of “Seller Material Adverse Effect”), (J) the announcement of this Agreement or the transactions contemplated hereby in accordance with the terms hereof (it being understood and agreed that this clause (J) shall not apply with respect to any representation or warranty the purpose of which is to address the consequences of the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby or the performance of obligations hereunder), (K) the sale process of the Business to the extent in accordance with the terms of the Bidding Procedures Order; or (ii) the Sellers’ ability to consummate the transactions contemplated by this Agreement on or before the End Date. For the avoidance of doubt, each of the following events shall be deemed to constitute a Seller Material Adverse Effect: (i) failure of any ongoing clinical study of a Company Product to meet its primary endpoint, including failure of the ASCEND Study (TMB01-301) to meet its primary endpoint at the conclusion of such study (proportion of subjects with ≥2-point improvement from Baseline in IGA scores in the treatment area at week 12 relative to placebo) at the pre-specified significance level of 0.01; (ii) the clinical data resulting from the ASCEND Study (TMB01-301) (including by taking into account data integrity, data completeness, GCP compliance, and readiness of clinical sites for inspection by applicable Governmental Authorities) is not reasonably likely to be accepted by the U.S. Food and Drug Administration as support for a Marketing Application; (iii) the U.S. Investigational New Drug application for TMB-001 is on clinical hold for safety reasons.
“Subsidiary” means, with respect to any Person, any other Person of which such Person or any of its Subsidiaries (i) is a general partner or holds a majority of the voting interests of a partnership or (ii) holds securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other corporate bodies performing similar functions (or, if there are no such ownership interests having ordinary voting power, 50% or more of the equity interests) which are at any time, directly or indirectly, owned or controlled by such Person.
“Successful Bidder” means the prevailing party at the conclusion of the Auction.
“Successor” has the meaning set forth in Section 9.04(b).
“Tangible Personal Property” has the meaning set forth in Section 2.01(f).
“Tax” means (i) any federal, state, local, foreign or supranational income, gains, alternative or add-on minimum tax, base erosion and anti-abuse, minimum, diverted profits, gross income, withholding, estimated, gross receipts, sales, use, ad valorem, value added, goods and services, transfer, franchise, fringe benefit, capital stock, profits, license, registration, payroll, social security (or equivalent) or any other applicable social contribution, employment, unemployment, workers’ compensation, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible), commercial rent, financial transaction, stamp, stamp duty, environmental, windfall profit, unclaimed property and other tax of any kind, repayments of any grants, subsidies, state aid or similar amounts received or deemed received from any Governmental Authority, any customs duties, escheat obligations and any other fees, contributions, governmental charges, levies, excises, duties or assessments of any kind whatsoever in the nature of a tax, together with any interest, penalty, inflation linkage or addition thereto imposed by applicable Law and (ii) any penalty (and interest with respect thereto) imposed for the failure to timely file, properly to file or timely to file any Tax Return in accordance with applicable Law.
“Tax Law” means all applicable Laws relating to or regulating the assessment, determination, reporting, collection or imposition of Taxes.
“Tax Return” means any report, return, declaration, statement, information return, claim for refund, declaration of estimated payments, voucher or other document, together with any schedule and attachment thereto and any amendment thereof, filed or required to be filed with any Taxing Authority in connection with Taxes, including the determination, assessment, reporting, withholding, collection or payment of any Taxes.
“Taxing Authority” means any Governmental Authority having jurisdiction over or responsibility for the assessment, determination, collection or administration of Taxes or Tax Law.
“Third Party” means any Person, including as defined in Section 13(d) of the Exchange Act, other than Buyers or any of their Affiliates.
“Trade Secrets” means trade secrets and all other confidential know-how and confidential information and rights in any jurisdiction (domestic and foreign), including confidential recipes, ideas, formulae, formulations, compositions, specifications, techniques, data, results, methods, processes, schematics, prototypes, models, designs, customer lists and supplier lists.
“Trademarks” means trademarks, service marks, trade names, service names, business marks, brand names, certification marks, trade dress, logos, corporate names, trade styles, domain names and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications (including intent-to-use applications) in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application.
“Transfer Taxes” has the meaning set forth in Section 2.09(b).
“Transferred Employees” has the meaning set forth in Section 7.04(a).
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.
Section 1.02 Other Definitional and Interpretative Provisions. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits, Annexes and Schedules are to Articles, Sections, Exhibits, Annexes and Schedules of this Agreement unless otherwise specified. All Exhibits, Annexes and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit, Annex or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. “Extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if.” References to any applicable Law shall be deemed to refer to such applicable Law as amended from time to time and to any rules, regulations or interpretations promulgated thereunder. References to any Contract are to that Contract as amended, modified, supplemented, extended or renewed from time to time in accordance with the terms hereof and thereof; provided that with respect to any Contract listed on the Disclosure Schedule, all such amendments, modifications, supplements, extensions and renewals must also be listed in the appropriate Section thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any applicable Law. References to “foreign” or words of similar import shall be deemed to refer to any jurisdictions outside the United States. Unless otherwise specifically indicated, all references to “dollars” and “$” will be deemed references to the lawful currency of the United States of America. Unless otherwise specified, the words “made available to Buyer” or “provided to Buyer” (or words of similar import) mean the documents that were, as of at least two Business Days prior to the date hereof, (a) posted to the data room maintained by the Sellers or their Representatives in connection with the transactions contemplated by this Agreement (provided that Buyers or their Representatives had access to such documents in such data room and such documents were not removed from such data room prior to the date hereof), (b) otherwise provided to Buyers or their Representatives in response to a diligence request from Buyers or their Representatives or (c) included as an exhibit to Company SEC Documents that were filed on or after October 1, 2022.
ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyers, and Buyers shall purchase from Sellers, as determined and allocated between Buyers in their sole discretion, free and clear of any Liens other than Permitted Liens, all of Sellers’ right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible, wherever located and whether now existing or hereafter acquired (other than the Excluded Assets), which relate to, or are used or held for use in connection with, the Business (collectively, the “Purchased Assets”), including, without limitation, the following:
(a) the Company Products, including all Company Product registrations and related registration information (including all Permits related to the ASCEND Study (TMB01-301) and Investigational New Drug applications) (the “Company Product Registrations”);
(b) to the extent assignable pursuant to Sections 363 and 365 of the Bankruptcy Code, all Intellectual Property Assets that are owned by Sellers, including the company names “Timber” and “Timber Pharmaceuticals”;
(c) to the extent assignable pursuant to Sections 363 and 365 of the Bankruptcy Code, and subject to Section 2.05, all Contracts, including Intellectual Property Agreements, which are set forth in Section 2.01(c) of the Disclosure Schedules, and in connection with which an order has been entered by the Bankruptcy Court (which may be the Sale Order), authorizing the assumption and assignment of such Contracts by Buyers (the “Assigned Contracts”);
(d) the sale, work or purchase orders owed to trade vendors or service providers of the Sellers in respect of the Business that are issued in the ordinary course of business and outstanding as of the Closing Date, which are set forth in Section 2.01(c) and Section 2.01(d) of the Disclosure Schedules (the “Assumed Purchase Orders”), as may be amended by Seller prior to Closing to reflect any such Assumed Purchase Orders that are entered into in the ordinary course of business after the date hereof and remain outstanding as of the Closing;
(e) all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories related to the Business or any Purchased Asset (“Inventory”);
(f) all furniture, fixtures, equipment, devices, machinery, tools, supplies and other tangible personal property related to the Business or any Purchased Asset, including, without limitation, the items listed in Section 2.01(f) of the Disclosure Schedules (the “Tangible Personal Property”);
(g) to the extent assignable pursuant to Sections 363 and 365 of the Bankruptcy Code, all Permits related to the Business which are held by Sellers and all of Sellers’ pending applications for Permits related to the Business, including, without limitation, all Permits, and other applications for Permits related to the Business as currently conducted or to the ownership and use of the Purchased Assets (other than the Company Product Registrations);
(h) the IT Assets, including, without limitation, the items listed in Section 2.01(h) of the Disclosure Schedules;
(i) all rights to any Actions of any nature available to or being pursued by any Seller to the extent related to the Business, any Purchased Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise, including Avoidance Action Claims and commercial tort claims (collectively, the “Potential Actions”) solely to the extent that such Actions and/or claims are against the following parties (each a “Designated Party” and collectively, the “Designated Parties”): (i) any of the Sellers’ vendors, suppliers, customers or trade creditors in regards or related to the Purchased Assets or Business, (ii) any of the Sellers’ employees and (iii) any counterparties to any Assigned Contracts, other than the rights to Actions specifically set forth on Section 2.02(f) of the Disclosure Schedules; provided, however, that it is understood and agreed by the parties that Buyers will not assert or pursue any Potential Actions against any Designated Party other than as a defense or offset against any claim or cause of actions raised or asserted by such Designated Party;
(j) all prepaid expenses, credits, advance payments, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees related to the Business or any Purchased Asset including, without limitation, any such item relating to the payment of Taxes and including, without limitation, the assets described in Section 2.01(j) of the Disclosure Schedules;
(k) all of Sellers’ rights under warranties, indemnities and all similar rights against Third Parties to the extent related to any Purchased Asset;
(l) all rights to insurance policy proceeds available under the Insurance Policies to the extent relating to any Purchased Asset or Assumed Liability;
(m) originals, or where not available, copies, of all books and records, including, but not limited to, (i) books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, personnel files, lists of prospective customers, vendors and suppliers, purchase orders and invoices, production data, quality control records and procedures, patient complaints and inquiry files, research and development files, product development and stability records; (ii) Clinical Data records and data (including all correspondence and filings related to any Investigational New Drugs and clinical trials with any Governmental Authority), and rights of reference to any Drug Master Files; (iii) strategic plans, internal financial statements, marketing and promotional surveys, material and research and files relating to the Business or any Purchased Asset, (iv) all files relating to the filing, prosecution, issuance, maintenance, enforcement or defense of any Intellectual Property Rights (including attorney-client privileged materials); (v) records, files (including data files) and documents evidencing any Intellectual Property Assets; and (vi) documentation covering, containing, describing, memorializing or otherwise pertaining to or used for any exploitation activity in connection with any Product, in all forms, including in paper or electronically stored formats, in which they are stored or maintained, and all data and information included or referenced therein (“Books and Records”), in each case except those (x) relating exclusively to any Excluded Asset or Excluded Liability, (y) relating exclusively to any Employee who is not a Transferred Employee, or (z) that any Seller is not permitted to transfer under applicable Law; and
(n) all goodwill associated with the Business or any Purchased Asset, including the Intellectual Property Assets.
Section 2.02 Excluded Assets. Notwithstanding any provision of this Agreement to the contrary, nothing herein contained will be deemed to constitute an agreement to sell, transfer, assign or convey the Excluded Assets to Buyers, and Sellers will retain all right, title and interest to, in and under the Excluded Assets. The term “Excluded Assets” means all assets, properties and rights of Sellers other than the Purchased Assets. Without limiting the generality of the foregoing, the Excluded Assets shall include the following assets:
(a) Contracts, including Intellectual Property Agreements, Leases and the Contracts set forth on Section 2.02(a) of the Disclosure Schedules, that are not Assigned Contracts (the “Excluded Contracts”);
(b) all cash and cash equivalents of Sellers;
(c) all deposits and prepaid charges and expenses of, and advance payments made by, a Seller, in each case, related to any Excluded Contract;
(d) all Leased Real Property;
(e) the corporate seals, organizational documents, minute books, stock books, Tax Returns, records or copies of records relevant to the taxation of Sellers, books of account or other records having to do with the corporate organization of Sellers and their Subsidiaries;
(f) the assets, properties and rights specifically set forth on Section 2.02(f) of the Disclosure Schedules;
(g) all equity and other ownership interests in the Company, Timber LLC and BioPharmX and any of their Subsidiaries;
(h) all Potential Actions against parties other than the Designated Parties;
(i) all post-petition adequate assurance deposits provided to utilities and any deposits provided to suppliers or service providers by a Seller on a prepetition or post-petition basis;
(j) all (i) rights to insurance policy proceeds available under the Insurance Policies to the extent not related to any Purchased Asset or Assumed Liability, and (ii) directors and officers, fiduciary, or employment practices liability insurance policies;
(k) all Books and Records (i) relating primarily to any Excluded Asset or Excluded Liability, (ii) relating primarily to any Employee who is not a Transferred Employee, and (iii) that any Seller is not permitted to transfer under applicable Law; and
(l) the rights which accrue or will accrue to Sellers under this Agreement and the Ancillary Documents.
Section 2.03 Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyers shall assume and agree to pay, perform and discharge only the following Liabilities of Sellers (collectively, the “Assumed Liabilities”), and no other Liabilities:
(a) all Liabilities from the ownership or operation of the Purchased Assets by Buyers solely to the extent such Liabilities arise after the Closing;
(b) all Liabilities in respect of the Assigned Contracts but solely to the extent that such Liabilities thereunder arise after the Closing, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Sellers on or prior to the Closing;
(c) the Cure Costs;
(d) Transfer Taxes (as defined below); and
(e) all Liabilities in connection with the Assumed Purchase Orders (“Assumed Purchase Order Liabilities”).
Section 2.04 Excluded Liabilities. Notwithstanding anything to the contrary set forth herein, Sellers expressly acknowledge and agree that Buyers will not assume, be obligated to pay, perform or otherwise discharge or in any other manner be liable or responsible for any Liabilities of Sellers, whether existing on the Closing Date or arising thereafter, including on the basis of any Law imposing successor liability, other than the Assumed Liabilities and the obligations of Buyers under this Agreement (all such Liabilities that Buyers are not assuming being referred to collectively as the “Excluded Liabilities”). Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:
(a) any Liabilities relating to or arising out of the Excluded Assets;
(b) any Liabilities under the Excluded Contracts or any other Contracts, including Intellectual Property Agreements, (i) which are not validly and effectively assigned to Buyers pursuant to this Agreement; or (ii) to the extent such Liabilities arise out of or relate to a breach by Sellers of such Contracts prior to Closing;
(c) all Liabilities with respect to the Purchased Assets and Assigned Contracts that arose or accrued on or prior to the Closing Date, other than Cure Costs and Assumed Purchase Order Liabilities set forth in Section 2.03(e);
(d) except as provided by Section 7.04(b), any Liabilities of Sellers with respect to any present or former employees, officers, directors, retirees, independent contractors or consultants of Sellers, including, without limitation, any Liabilities associated with any claims for wages or other compensation, benefits, bonuses, accrued vacation, workers' compensation, severance, retention, termination or other payments;
(e) except as provided by Section 7.04(b), any Liabilities with respect to any Employee Plan, including any PEO Plan;
(f) any Liabilities to indemnify, reimburse or advance amounts to any present or former officer, director, employee, independent contractor, consultant, or agent of Sellers (including with respect to any breach of fiduciary obligations by same);
(g) any Liabilities associated with debt, loans or credit facilities of Sellers and/or the Business owing to financial institutions;
(h) any accounts payable of Sellers (i) which constitute intercompany payables owing to Affiliates of Sellers or any third parties other than those arising under the Assumed Contracts; (ii) which constitute debt, loans or credit facilities to financial institutions; or (iii) which did not arise in the ordinary course of business;
(i) any Liability for (i) Taxes of Sellers (or any stockholder or Affiliate of Sellers), including any Taxes that arise out of the consummation of the transactions contemplated hereby imposed by applicable Tax Law on Sellers, (ii) Taxes relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period; and (iii) other Taxes of Sellers (or any stockholder or Affiliate of Sellers) of any kind or description (including any Liability for Taxes of Sellers (or any stockholder or Affiliate of Sellers) that become Liabilities of Buyers under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law); provided, however, that no Taxes which are to be borne by Buyers under Section 2.09(b) shall be treated as Excluded Liabilities;
(j) any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date; and
(k) any Liabilities arising out of, in respect of or in connection with the failure by Sellers or any of their Affiliates to comply with any Law or Governmental Order.
Section 2.05 Assignment of Contracts
(a) Section 2.01(c) of the Disclosure Schedules sets forth a list of all Contracts to which, to Sellers’ Knowledge, a Seller is a party and which are to be included in the Assigned Contracts. Sellers shall make such additions or deletions to Section 2.01(c) of the Disclosure Schedules as Buyers shall, in their sole discretion, request in writing no later than one (1) Business Day prior to the Closing Date. Any such deleted Contract shall be deemed to no longer be an Assigned Contract. Any Contract of Sellers that is not listed on Section 2.01(c) of the Disclosure Schedules shall not be considered an Assigned Contract and shall be deemed an Excluded Contract. Buyers and Sellers acknowledge and agree that there shall be no reduction or increase in the Purchase Price if Buyers elect to add or delete any Contracts from Section 2.01(c) of the Disclosure Schedules.
(b) Sellers shall take all actions reasonably required to assume and assign the Assigned Contracts to Buyers, including using commercially reasonable efforts to facilitate any negotiations with the counterparties to such Assigned Contracts and to obtain a finding under the Sale Order that the proposed assumption and assignment of the Assigned Contracts to Buyers satisfy all applicable requirements of Section 365 of the Bankruptcy Code.
(c) At the Closing, (i) Sellers shall, pursuant to the Sale Order and the Assignment and Assumption Agreement(s), as applicable, assign to Buyers (the consideration for which is included in the Purchase Price) each of the Assigned Contracts that is capable of being assigned under applicable Law and (ii) Buyers shall assume and discharge the Assumed Liabilities (if any) under the Assigned Contracts, pursuant to the Assignment and Assumption Agreement(s).
(d) If prior to or within thirty (30) days after Closing, it is discovered that a Contract should have been listed in Section 2.01(c) of the Disclosure Schedules but was not so listed (any such Contract, a “Previously Omitted Contract”), Sellers shall, promptly (but in no event later than two Business Days following the discovery thereof) notify Buyers in writing of such Previously Omitted Contract. Buyers shall deliver written notice to Sellers promptly thereafter, designating such Previously Omitted Contract as “Assumed” or “Excluded” (a “Previously Omitted Contract Designation”). A Previously Omitted Contract designated as “Excluded,” or with respect to which Buyers fail to deliver a Previously Omitted Contract Designation, shall be an Excluded Contract. If Buyers designate a Previously Omitted Contract as “Assumed”, Section 2.01(c) of the Disclosure Schedules shall be amended to include such Previously Omitted Contract and Sellers shall serve a notice (the “Previously Omitted Contract Notice”) on the counterparties to such Previously Omitted Contract notifying such counterparties of Sellers’ intention to assign and Buyers’ intention to assume such Previously Omitted Contract in accordance with this Agreement. The Previously Omitted Contract Notice shall provide the counterparties to such Previously Omitted Contract with ten Business Days to object, in writing to Sellers and Buyers, to the assumption of their Contract. If the counterparties, Sellers and Buyers are unable to reach a consensual resolution with respect to the objection, Sellers will use commercially reasonable efforts to seek an expedited hearing before the Bankruptcy Court to approve the assumption. If no objection is timely served on Sellers and Buyers, the Sale Order shall deem such Previously Omitted Contract assumed. Sellers and Buyers shall execute, acknowledge and deliver such other instruments and take commercially reasonable efforts as are reasonably practicable for Buyers to assume the rights and obligations under such Previously Omitted Contract. For the avoidance of doubt, Buyers will be responsible for the Cure Costs, if any, of any Previously Omitted Contract that Buyers assume.
Section 2.06 Assignment of Assets
(a) Buyers may, in their discretion by written notice to Sellers, designate any of the Purchased Assets as additional Excluded Assets, and any of the Excluded Assets as additional Purchased Assets, which notice shall set forth in reasonable detail the Purchased Assets or Excluded Assets so designated. Buyers and Sellers acknowledge and agree that there shall be no reduction in the Purchase Price if Buyers elect to designate any Purchased Assets (other than Assumed Contracts) as Excluded Assets and there shall be no increase in the Purchase Price if Buyers elect to designate any Excluded Assets (other than Excluded Contracts) as Purchased Assets. Notwithstanding any other provision hereof, the Liabilities of Sellers under or related to any Purchased Asset excluded under this paragraph will constitute Excluded Liabilities.
(b) Notwithstanding any other provision of this Agreement to the contrary, this Agreement will not constitute an agreement to assign or transfer and will not effect the assignment or transfer of any Purchased Asset (including any Assigned Contract) if (i) (A) prohibited by applicable Law, (B) an attempted assignment or transfer thereof would reasonably likely to subject Buyers, their Affiliates or any of their respective Representatives to civil or criminal Liability or (C) an attempted assignment or transfer thereof, without the approval, authorization or consent of, or granting or issuance of any license or permit by, any Third Party thereto (each such action, a “Necessary Consent”), would constitute a breach, default or violation thereof or of any Law or in any way adversely affect the rights of Buyers thereunder or (ii) the Bankruptcy Court has not entered an order approving such assignment or transfer. In the event such assignment or transfer is subject to a Necessary Consent being obtained, Sellers and Buyers will use their commercially reasonable efforts to obtain the Necessary Consents with respect to any such Purchased Asset (including any Assigned Contract) for the assignment or transfer thereof to Buyers, as Buyers may reasonably request. If such Necessary Consent is not obtained, or if an attempted assignment or transfer thereof would give rise to any of the circumstances described in clauses (i) or (ii) of the first sentence of this section, be ineffective or would adversely affect the rights of Buyers to such Purchased Asset following the Closing, (x) Sellers and Buyers will, and will cause their respective Affiliates to, (1) use commercially reasonable efforts (including cooperating with one another to obtain such Necessary Consents, to the extent feasible) as may be necessary so that Buyers would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, (2) complete any such assignments or transfers as soon as reasonably practicable, and (3) upon receipt of any applicable Necessary Consents, to transfer or assign the applicable Purchased Asset to Buyers, and (y) Sellers will, and will cause their respective Affiliates to, cooperate with Buyers in good faith without further consideration in any arrangement reasonably acceptable to Buyers and Sellers intended to provide Buyers with the benefit of any such Purchased Assets.
Section 2.07 Further Conveyances and Assumptions. From time to time following the Closing, Sellers and Buyers will, and will cause their respective Affiliates to, in each case at Buyers’ sole cost and expense, execute, acknowledge and deliver all such further conveyances, notices, assumptions, assignments, releases and other instruments, and will take such further actions, as may be reasonably necessary or appropriate to assure fully to Buyers and their successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Buyers under this Agreement and to assure fully to each Seller and its Affiliates and their respective successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Buyers under this Agreement, and to otherwise make effective the transactions contemplated herein; provided that nothing in this section will require Buyers or any of their Affiliates to assume any Liabilities other than the Assumed Liabilities.
Section 2.08 Purchase Price. The purchase price for the Purchased Assets shall be the aggregate of (i) $14,350,000 and (ii) Cure Costs (the “Purchase Price”), plus the assumption of the Assumed Liabilities. The Purchase Price shall be paid as provided in Section 3.02(b)(i).
Section 2.09 Certain Tax Matters.
(a) Buyer shall be entitled to deduct and withhold from any payments hereunder that they are required to deduct and withhold under any provision of Tax Law. All such withheld amounts that are paid over to the relevant governmental authority shall be treated as delivered to the Person in respect of which such withholding was imposed.
(b) Any sales, use, gross-receipts, excise, value-added, property, transfer, real estate or land transfer, documentary, stamp, registration, recording, filing, goods and services or other similar Taxes which may be payable by reason of the sale of the Purchased Assets or the assumption of the Assumed Liabilities under this Agreement or the transactions contemplated hereby (collectively “Transfer Taxes”), and that are not exempt under the Bankruptcy Code, shall be borne and timely paid (either directly to the relevant Tax authority or, where a Seller is required under applicable law to pay such Taxes, by payment to Sellers for remittance by Sellers to the relevant Tax authority) by Buyers. Buyers shall, at their own expense, timely file any Tax Return or other document required to be filed with respect to such Transfer Taxes, and Sellers shall join in the execution of any such Tax Return if required by Law.
(c) All real property, personal property and similar ad valorem Taxes, if any, levied with respect to the Purchased Assets for a taxable period which includes (but does not end on) the Closing Date (collectively, the “Apportioned Taxes”) shall be apportioned between Sellers and Buyers based on the number of days of such taxable period ending on and including the Closing Date (such portion of such taxable period, the “Pre-Closing Tax Period”) and the number of days of such taxable period after the Closing Date (such portion of such taxable period, the “Post-Closing Tax Period”). Sellers shall be responsible for the proportionate amount of such Apportioned Taxes that is attributable to the Pre-Closing Tax Period and such amount shall be an Excluded Liability, and Buyers shall be responsible for the proportionate amount of such Apportioned Taxes that is attributable to the Post-Closing Tax Period and such amount shall be an Assumed Liability. Any Apportioned Taxes shall be timely paid, and all applicable Tax Returns shall be timely filed, as provided by applicable Law. The paying party (or parties, as applicable) shall be entitled to reimbursement from the non-paying party (or parties, as applicable) for the non-paying party's (or parties’, as applicable) portion of the Apportioned Taxes in accordance with this section. Upon payment of any such Apportioned Taxes, the paying party (or parties, as applicable) shall present a statement to the non-paying party (or parties, as applicable) setting forth the amount of reimbursement to which the paying party (or parties, as applicable) is entitled under this section, together with such supporting evidence as is reasonably necessary to calculate the amount to be reimbursed. The non-paying party (or parties, as applicable) shall make such reimbursement by wire transfer in immediately available funds within ten days of receipt of such statement to an account designated by the paying party (or parties, as applicable).
(d) Buyers and Sellers agree to provide each other with such information and assistance as is reasonably requested by the other party (or parties, as applicable), including access to records, Tax Returns and personnel, for the preparation and filing of any Tax Returns or for the defense of any Tax claim or assessment, whether in connection with a Tax proceeding or otherwise.
(e) Buyers and Sellers hereby waive compliance with any bulk sales, bulk transfer or similar Laws in connection with the transactions provided for herein.
ARTICLE III
CLOSING
Section 3.01 Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place (i) in New York at the offices of Covington & Burling LLP, The New York Times Building, 620 Eighth Avenue, New York, New York 10018 or remotely by electronic exchange of documents and signatures (or their electronic counterparts), on the first Business Day after all of the conditions to Closing set forth in ARTICLE VIII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date, but subject to the satisfaction or waiver of such conditions), or (ii) at such other place or time or on such other date as Sellers and Buyers may mutually agree in writing; provided, that, unless agreed in writing by Buyers, the Closing shall not occur before January 16, 2024. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.
Section 3.02 Closing Deliverables.
(a) At the Closing, Sellers shall deliver to Buyers the following:
(i) one or more duly executed bills of sale in form and substance satisfactory to Buyers (each being a “Bill of Sale”), transferring the tangible personal property included in the Purchased Assets to each Buyer, as applicable;
(ii) one or more duly executed assignment and assumption agreements in form and substance satisfactory to Buyers (each being a “Assignment and Assumption Agreement”), effecting the assignment to and assumption by Buyers of the Purchased Assets and the Assumed Liabilities;
(iii) one or more duly executed assignments in form and substance satisfactory to Buyers (each being a “Intellectual Property Assignment”), transferring all of Sellers’ right, title and interest in and to the Intellectual Property Assets to Buyers;
(iv) one or more duly executed powers of attorney to the extent reasonably necessary to effectuate the transfer of any Purchased Assets hereunder in form and substance satisfactory to Buyers;
(v) the Seller Closing Certificates;
(vi) the Applicable Withholding Certificates;
(vii) the certificates of the Secretary or Assistant Secretary of each Seller required by Section 8.02(l) and Section 8.02(m);
(viii) a copy of the Sale Order as entered by the Bankruptcy Court; and
(ix) such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyers, as may be required to give effect to this Agreement.
(b) At the Closing, Buyers shall deliver to Sellers the following:
(i) the Purchase Price, which shall be payable in the form of (a) a credit bid under Section 362(k) of the Bankruptcy Code in the amount of all outstanding obligations under the DIP Loan Agreement (the “DIP Obligations”) and (b) cash in the amount of the Purchase Price minus the DIP Obligations (the “Cash Component”), which Cash Component shall be delivered by wire transfer of immediately available funds to the account identified in Schedule 3.02(b)(i);
(ii) all Assignment and Assumption Agreements duly executed by Buyers;
(iii) the Buyers’ Closing Certificate;
(iv) the certificates of the Secretary or Assistant Secretary of Buyers required by Section 8.03(e) and Section 8.03(f); and
(v) such other documents or instruments as Sellers reasonably request and are reasonably necessary to consummate the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as expressly disclosed in (a) the Company SEC Documents (other than (i) any information that is contained in the “Risk Factors” or “Note Regarding Forward-Looking Statements” or similar sections of such Company SEC Documents and (ii) any forward-looking statements, or other statements that are similarly predictive or forward-looking in nature, contained in such Company SEC Documents), or (b) the Disclosure Schedules, Sellers represent and warrant to Buyers that the statements contained in this ARTICLE IV are true and correct as of the date hereof.
Section 4.01 Organization and Qualification of Sellers. Each Seller is a corporation duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and, subject to any limitations that may be imposed on such Seller as a result of filing a petition for relief under the Bankruptcy Code, has full corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets forth each jurisdiction in which each Seller is organized and licensed or qualified to do business, and each Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary.
Section 4.02 Authority of Sellers. Subject to entry of the Bidding Procedures Order and Sale Order, as applicable, each Seller has the requisite corporate power and authority to enter into this Agreement and the Ancillary Documents to which such Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each Seller of this Agreement and any Ancillary Document to which such Seller is a party, the performance by such Seller of its obligations hereunder and thereunder and the consummation by such Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate or similar action on the part of such Seller. This Agreement has been duly executed and delivered by each Seller, and (assuming due authorization, execution and delivery by Buyers and the entry of the Sale Order) this Agreement constitutes a legal, valid and binding obligation of each Seller enforceable against such Seller in accordance with its terms. When each Ancillary Document to which a Seller is or will be a party has been duly executed and delivered by such Seller (assuming due authorization, execution and delivery by each other party thereto and the entry of the Sale Order), such Ancillary Document will constitute a legal and binding obligation of such Seller enforceable against it in accordance with its terms.
Section 4.03 No Conflicts; Consents. Subject to the Sale Order having been entered, the execution and delivery by the Sellers of this Agreement, the performance by the Sellers of their obligations under this Agreement and the Ancillary Documents and the consummation by the Sellers of the transactions contemplated by this Agreement and the Ancillary Documents do not and will not (a) contravene, conflict with or result in any violation or breach of any provision of the certificate of incorporation or bylaws or other organizational documents of such Seller; (b) contravene, conflict with or result in a violation or breach of any provision of any applicable Law or Governmental Order applicable to Sellers, the Business or the Purchased Assets; (c) except as set out in Section 4.03 of the Disclosure Schedules, require any consent or other action by any Person under, constitute a breach or default, or an event that, with or without notice or lapse of time or both, would constitute a breach or default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under any Contract or Permit to which a Seller is a party or by which a Seller or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the creation or imposition of any Lien other than Permitted Liens on the Purchased Assets,. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to any Seller in connection with the execution and delivery of this Agreement or any of the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except to the extent required if the Sale Order is not entered.
Section 4.04 Title to Purchased Assets. Sellers have good and valid title to, or in the case of leased assets, have good and valid leasehold interests in, the Purchased Assets free and clear of all Liens except for Permitted Liens. At the Closing, Buyers will be vested with good and valid title to, or in the case of leased assets, good and valid leasehold interest in, such Purchased Assets, free and clear of all Liens and Excluded Liabilities, to the fullest extent permissible under Law, including Section 363(f) of the Bankruptcy Code.
Section 4.05 Assets Necessary to Business. Subject to the exclusion of the Excluded Assets, the Purchased Assets and Assumed Liabilities constitute all of the assets, properties, licenses and Contracts necessary to conduct the Business in substantially the same manner as the Business has been conducted prior to the date hereof, subject to ordinary wear and tear.
Section 4.06 Intellectual Property; IT Assets.
(a) Section 4.06(a) of the Disclosure Schedules contains a true, correct, current and complete list of (i) all Intellectual Property Registrations, specifying as to each, as applicable: (A) the owner (or the co-owners) thereof, (B) the jurisdiction (foreign and domestic) in which such item is issued or registered or in which any application for issuance or registration has been filed, (C) the respective issuance, registration, or application number of such item, and (D) the date of application and issuance or registration of such item; (ii) all unregistered Trademarks included in the Intellectual Property Assets; (iii) all proprietary Software included in the Intellectual Property Assets; and (iv) all other Intellectual Property Rights that are used or held for use in the conduct of the Business as currently conducted or proposed to be conducted other than Intellectual Property Rights licensed by Sellers pursuant to Excluded Contracts.
(b) Section 4.06(b) of the Disclosure Schedules contains a correct, current and complete list of all Intellectual Property Agreements necessary or useful for operating the Business as currently conducted, specifying for each the date, title and parties thereto. Sellers have provided Buyers with true and complete copies (or in the case of any oral agreements, a complete and correct written description) of all such Intellectual Property Agreements, including all modifications, amendments and supplements thereto and waivers thereunder.
(c) Except as set forth in Section 4.06(c) of the Disclosure Schedules, Sellers are the sole, exclusive and record owners of all Intellectual Property Assets that they purport to own and hold all right, title and interest in and to all such Intellectual Property Assets, free and clear of any Lien. The Intellectual Property Assets constitute all of the Intellectual Property Rights necessary to, or used or held for use in, the conduct of the Business of the Sellers as currently conducted and as proposed by the Sellers or any of their Subsidiaries to be conducted. There exist no material restrictions on the disclosure, use, license or transfer of the Intellectual Property Assets. The consummation of the transactions contemplated by this Agreement will not (i) alter, encumber, impair or extinguish any rights of the Sellers under any Intellectual Property Assets, including any Intellectual Property Agreement, (ii) impair the right of Buyers to develop, use, sell, license or dispose of, or to bring any Action for the infringement of, any Intellectual Property Assets owned by Sellers or, to the extent such rights thereunder are currently held by the Sellers, any Intellectual Property Rights held pursuant to an Assigned Contract or (iii) through the operation of any Contracts to which the Sellers are a party or otherwise bound, encumber any of the Intellectual Property Assets.
(d) The Sellers have not granted any license with respect to, or authorized the retention of any exclusive rights in, any Intellectual Property Assets.
(e) No funding, facilities or personnel of any Governmental Authority or any university, college, research institute or other educational institution has been or is being used in any material respect to create, in whole or in part, any material Intellectual Property Assets, except for use of facilities or personnel that (i) does not result in such Governmental Authority or educational institution obtaining ownership of, or use rights to, such Intellectual Property Assets, and (ii) does not require or otherwise obligate the Sellers to grant or offer to any such Governmental Authority or educational institution any license or other right to such Intellectual Property Assets. No current or former Service Provider who contributed to the creation or development of the Intellectual Property Assets has performed services for a Governmental Authority or any university, college, research institute or other educational institution related to the Business as presently conducted during a period of time during which such Service Provider was also performing services for the Sellers or their Affiliates.
(f) All of the Intellectual Property Assets that are the subject of an issued Intellectual Property Registration are, to Seller’s Knowledge, valid and enforceable. The Sellers have taken all necessary steps to maintain and enforce the Intellectual Property Assets and to preserve the confidentiality of all Trade Secrets included in the Intellectual Property Assets, including by requiring all Persons having access thereto to execute binding, written non-disclosure agreements. All necessary registration, maintenance, and renewal fees due in connection with the prosecution and maintenance of the Intellectual Property Registrations have been timely paid, and all Intellectual Property Registrations are otherwise in good standing. Sellers have provided Buyers with true and complete copies of file histories, documents, certificates, office actions, correspondence and other materials related to all Intellectual Property Registrations. All necessary documents, recordations, and certificates in connection with the Intellectual Property Rights have been filed with the relevant Patent, Copyright, Trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining the Intellectual Property Registrations registered in such jurisdictions. There are no actions that must be taken by the Sellers or any of their Affiliates within 90 days of the Closing Date that, if not taken, will result in the loss of any of the Intellectual Property Registrations, including the payment of any registration, maintenance, or renewal fees or the filing of any responses to U.S. Patent and Trademark Office (or equivalent authority) actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any of the Intellectual Property Registrations.
(g) The conduct of the Business as currently and formerly conducted and as proposed to be conducted, including the use of the Intellectual Property Assets and the Intellectual Property Rights licensed under the Intellectual Property Agreements in connection with the Business, and the Company Products, processes, and services of the Business have not infringed, contributed to the infringement of, misappropriated or otherwise violated and will not infringe, misappropriate, or otherwise violate any Intellectual Property Rights or other rights of any Person in any material respect. There is no, and since the Reference Date there has been no, Action pending or, to Sellers’ Knowledge, threatened against or affecting the Sellers, or affecting the conduct of the Business as presently conducted (including the research, development and manufacture, as applicable, of any Company Product) (i) alleging that the use of any of the Intellectual Property Assets or any services provided, processes used or Products manufactured, used, imported, offered for sale or sold by the Sellers do or may conflict with, misappropriate, infringe, contribute to the infringement of or otherwise violate any Intellectual Property Right of any Person or (ii) alleging that the Sellers or any of their Subsidiaries have infringed, misappropriated or otherwise violated any Intellectual Property Right of any Person. Neither the Sellers nor any of their Subsidiaries have received from any Person any offer to license any Intellectual Property Rights in connection with any actual or threatened claim of infringement, misappropriation or other violation of any Intellectual Property Rights. To Seller’s Knowledge, no Person has infringed, misappropriated, or otherwise violated any Intellectual Property Assets or the Intellectual Property Rights licensed under the Intellectual Property Agreements.
(h) There is no, and since the Reference Date there has been no Action pending or, to Sellers’ Knowledge, threatened against or affecting the Sellers or any of their Affiliates, or affecting the conduct of the respective businesses of the Sellers or any of their Affiliates as presently conducted (i) based upon, or challenging or seeking to deny or restrict, any right of the Sellers or any of their Affiliates in any of the Intellectual Property Assets, or (ii) alleging that any of the Intellectual Property Assets is invalid, unenforceable or not infringed. To Sellers’ Knowledge, there is no information, materials, facts, or circumstances that would render any of the Intellectual Property Assets unenforceable, or would adversely affect any pending application for any of the Intellectual Property Assets. Sellers are not aware of any facts or circumstances that could reasonably be expected to give rise to any such Action. Sellers are not subject to any outstanding or prospective Governmental Order (including any motion or petition therefor) that does or could reasonably be expected to restrict or impair the use of any Intellectual Property Assets. To Sellers’ Knowledge, neither the Sellers or any of their Affiliates have misrepresented, or failed to disclose, and there are no misrepresentations of or failure to disclose, any fact or circumstance in any application for any Intellectual Property Assets that would constitute fraud, inequitable conduct or a misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any such Intellectual Property Assets.
(i) None of the Intellectual Property Assets owned by Sellers has been adjudged invalid or unenforceable in whole or part, or in the case of pending Patent applications included in the Intellectual Property Assets, have been the subject of a final and non-appealable finding of unpatentability. All issued Patents, registered Trademarks and registered Copyrights included in the Intellectual Property Assets are, to Sellers; Knowledge, valid, enforceable, in full force and effect and subsisting in all material respects.
(j) To Sellers’ Knowledge, none of the Intellectual Property Agreements has been adjudged invalid or unenforceable in whole or part. All issued Patents, registered Trademarks and registered Copyrights included in the Intellectual Property Agreements are, to Sellers’ Knowledge, valid, enforceable, in full force and effect and subsisting in all material respects.
(k) To Sellers’ Knowledge, no Person has infringed, misappropriated or otherwise violated any Intellectual Property Asset or any Intellectual Property Right exclusively licensed to the Sellers pursuant to an Intellectual Property Agreement.
(l) The Sellers and their Affiliates have taken commercially reasonable actions in accordance with current industry practice to maintain the confidentiality of all Intellectual Property Assets, the value of which to the Sellers is contingent upon maintaining the confidentiality thereof (including any Trade Secrets owned, used or held for use by the Sellers and their Affiliates), and no such Intellectual Property Assets have been disclosed, and access to such Intellectual Property Assets has not been provided to any Person, other than to Representatives of the Sellers and their Affiliates, all of whom are bound by written confidentiality agreements that protect such Intellectual Property Assets. To Sellers’ Knowledge, no Service Provider or agent of any Seller is in default or breach of any confidentiality or non-disclosure agreement, or any confidentiality provisions of any Employment Agreement or other such agreement, with the Sellers relating to the protection, ownership, development, use or transfer of any Intellectual Property Assets of the Sellers.
(m) To the extent that any Intellectual Property Right has been developed or created by a Third Party (including any current or former Service Provider) for the Sellers, each such Seller, as the case may be, has a written agreement with such Third Party with respect thereto pursuant to which such Person has agreed to hold all Intellectual Property Rights in confidence and to not use any such Intellectual Property Right for any purpose other than for the benefit of such Seller, and such Seller thereby either (i) has obtained ownership of and is the exclusive owner of, or (ii) has obtained a valid and unrestricted right to exploit, sufficient for the conduct of its business as currently conducted or as proposed to be conducted, such Intellectual Property Right. In each case where the Sellers have acquired any Intellectual Property Rights from any Person (including any Service Provider), such Seller has obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Intellectual Property Rights to such Seller, or ownership in such Intellectual Property Rights are vested in such Seller pursuant to applicable Law.
(n) The IT Assets are reasonably sufficient for the immediate and anticipated needs of the Business.
Section 4.07 Assigned Contracts. Each Assigned Contract (including any Intellectual Property Agreements included in the Purchased Assets) is in full force and effect and is a valid and binding obligation of the Seller party thereto and, to the Knowledge of Sellers, the other parties thereto in accordance with its terms and conditions, except as such validity and enforceability may be limited by (a) bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors’ rights generally, (b) equitable principles of general applicability (whether considered in a proceeding at law or in equity), and (c) the obligations to pay Cure Costs hereunder. No Seller has received any written or oral notice of the intention of any Person to terminate any Assigned Contract (including any Intellectual Property Agreements included in the Purchased Assets). To the Knowledge of Sellers, no event has occurred which, with the passage of time or the giving of notice, or both, would constitute a default under or a violation of any Assigned Contract (including any Intellectual Property Agreements included in the Purchased Assets) or would cause the acceleration of any obligation of any Seller or the creation of a Lien, other than Permitted Liens, upon any Purchased Asset. Sellers have delivered or made available to Buyers copies of all of the Assigned Contracts (including any Intellectual Property Agreements included in the Purchased Assets), together with all amendments, modifications or supplements thereto.
Section 4.08 Real Property.
(a) Sellers do not currently own, and have not previously owned, any interest in real property.
Section 4.09 Tangible Personal Property Leases. Section 4.09 of the Disclosure Schedules sets forth all leases of personal property (“Personal Property Leases”) used in or related to the Business. Sellers have a valid and enforceable leasehold interest under each Personal Property Lease under which either of the Sellers is a lessee.
Section 4.10 Inventory. The Inventory consists of a quality and quantity usable in the ordinary course of business consistent with past practice in all material respects. All Inventory is owned by Sellers free and clear of all Liens other than Permitted Liens. Section 4.10 of the Disclosure Schedules sets forth a listing of the Inventory owned, in the possession or control of, any of the Sellers, including the address at which such Inventory is located.
Section 4.11 Compliance With Laws; Permits.
(a) The Sellers are, and since the Reference Date have been, in compliance in all material respects with all applicable Laws. Since the Reference Date, none of the Sellers have received any written notice of or, to Sellers’ Knowledge, is under investigation with respect to, any violation of any applicable Law. There is no judgment, decree, injunction, rule or order of any arbitrator or Governmental Authority outstanding against any of the Sellers that has had or would reasonably be expected to have, individually or in the aggregate with all other Effects, a Seller Material Adverse Effect.
(b) None of the Sellers, or any of their respective directors, officers, consultants, agents or other Persons acting for or on its behalf, has taken any action that would result in a violation by such Person of (i) the Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78m(b), 78dd-1, 78dd-2, 78ff) (the “FCPA”) or any other applicable anti-corruption or anti-bribery Law, (ii) any economic sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, Her Majesty’s Treasury or any applicable prohibited party list maintained by any U.S. Governmental Authority, the European Union or Her Majesty’s Treasury (collectively, “Sanctions”) or (iii) any applicable Law relating to export controls. The Company has conducted its business in compliance with the FCPA (and any state or foreign equivalents) any other anti-corruption applicable Law (including the U.S. federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the U.S. False Claims Act (31 U.S.C. § 3729 et seq.), and any state or foreign equivalents), Sanctions and applicable Laws relating to export controls, and, except as set forth on Section 4.11(b) of the Disclosure Schedules, the Sellers have instituted and maintained policies and procedures designed to cause each such Person to comply with all such laws described in this sentence.
(c) None of the Sellers or any of their respective directors, officers, consultants, agents or other Persons acting for or on its behalf, is a Person that is, or is owned or controlled by Persons that are (i) the subject of any Sanctions or (ii) located, organized or resident in a country or region that is the subject of Sanctions.
(d) The Sellers hold all material Permits necessary or advisable to conduct the Business (including, without limitation, any Investigational New Drug applications) in the places and in such manner in which the Business is currently being conducted, and: (i) such Permits are valid and in full force and effect and are not subject to any pending or, to Sellers’ Knowledge, threatened Action by any Governmental Authority to suspend, cancel, modify, terminate or revoke any such Permit; (ii) the Sellers are in compliance in all material respects with the terms and requirements of such Permits; and (iii) the Sellers are not in material default under, and no condition exists that with notice or lapse of time or both would constitute a material default under or would reasonably be expected to result in any suspension, cancellation, material modification, termination or revocation of, any such Permit.
Section 4.12 Litigation.
(a) Except as set forth on Section 4.12 of the Disclosure Schedules, there is no Action before or by any Governmental Authority or arbitrator pending or, to the Knowledge of the Company, threatened in writing against or affecting (i) the Business, the Purchased Assets or the Assumed Liabilities; or (ii) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
(b) There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against, relating to or affecting the Business.
Section 4.13 Privacy Matters.
(a) The Sellers are and have been in material compliance with (i) all applicable Laws relating to privacy, data protection, information or cyber security, or the Processing of Personal Information Processed by the Sellers in the course of the operations of the Business (“Privacy Laws”); (ii) all privacy policies, informed consent forms and authorizations, and other related policies and procedures established by the Sellers with respect to privacy, data protection, information or cyber security, or the Processing of Personal Information Processed by the Sellers in the course of the operations of the Business; and (iii) all contractual requirements to which the Sellers are subject as it relates to the Processing of Personal Information by the Sellers in the course of the operations of the Business. The Sellers, as applicable, have provided all requisite notices, obtained all required consents, and satisfied all other requirements of Privacy Laws for their Processing of Personal Information that are necessary and in connection with the consummation of the transactions contemplated hereunder. Without limitation, the transactions to be consummated hereunder as of the Closing Date will comply with in all material respects with all Privacy Laws.
(b) Since the Reference Date, no claims, investigations, or alleged violations have been asserted or to Sellers’ Knowledge, threatened against the Sellers (and, to Sellers’ Knowledge, no such claims, investigations, or allegations are likely to be asserted or threatened against the Sellers and there are no facts or circumstances that are likely to form the basis for any such claims, investigations or allegations) by any Person regarding the Processing of Personal Information by or on behalf of the Sellers or alleging a violation of Privacy Laws.
(c) The Sellers have implemented and maintained reasonable and appropriate organizational, physical, administrative and technical measures required by Privacy Laws, and which are consistent with the state of the art for the industry in which the Sellers operate, to protect the confidentiality, integrity, and security of all Personal Information and other data and information in the possession of the Sellers, in any format, or Processed by the Sellers in the conduct of the Business (collectively, “Business Data”) and IT Assets against unauthorized access, acquisition, interruption, alteration, modification, or use. Without limiting the generality of the foregoing, the Sellers have implemented a comprehensive written information security program that complies with applicable Laws and (i) identifies internal and external risks to the security of Business Data and IT Assets; and (ii) implements, monitors and improves adequate and effective safeguards to control those risks. To Sellers’ Knowledge, the Sellers have not experienced (nor to Sellers’ Knowledge, have any Third Party acting on behalf of the Sellers) any actual or alleged Security Incidents. The Sellers have not (nor have any Third Parties acting on the Sellers’ behalf) notified, or been required to notify, any Person of any Security Incident. In addition the Sellers do not have any material data security, information security or other technological vulnerabilities that could adversely impact the operation of relevant IT Assets or cause a Security Incident.
Section 4.14 Employee Benefit Plans; Labor Matters.
(a) Section 4.14(a) of the Disclosure Schedules sets forth a true, correct and complete list of each Employee Plan and indicates which Employee Plans are PEO Plans. Sellers have made available to Buyers with respect to each Employee Plan that is not a PEO Plan and to the extent the following documents with respect to an Employee Plan that is a PEO Plan have been provided to the Sellers (which the Sellers shall use their reasonable best efforts to obtain from the sponsor of the PEO Plan) a copy of (i) each Employee Plan (or a description, if such plan is not written) and all amendments thereto and material written interpretations thereof, including a copy of (if applicable) (ii) all material Contracts including each trust, insurance or other funding arrangement, and each administrative services agreement, each as applicable, (iii) each current summary plan description, summary of material modifications, and summaries of benefits and coverage (if applicable), (iv) the three most recently filed IRS Forms 5500 and accompanying schedules and attachments thereto for each Employee Plan required to file IRS Forms 5500, (v) the most recently prepared actuarial reports and financial statements, (vi) all policies pertaining to fiduciary liability insurance, (vii) all discrimination and qualification tests for the three most recent plan years, (viii) all documents and correspondence relating thereto received from or provided to the Department of Labor, the Pension Benefit Guaranty Corporation, the IRS or any other Governmental Authority during the past three years and (ix) all current employee handbooks, manuals, policies and procedures (including any handbook, manual, policy or procedure provided or prepared by a professional employer organization) that apply to any Service Provider.
(b) Section 4.14(b) of the of the Disclosure Schedules sets forth a true, correct and complete list of each (i) Employment Agreement with an employee or former employee with respect to which the Sellers have continuing obligations as of the date hereof (other than at-will offer letters with no severance or change in control benefits or guaranteed term or payments), (ii) Consulting Agreement pursuant to which an Independent Contractor is entitled to receive (or is reasonably expected to be entitled to receive) more than $50,000 during any 12-month period and (iii) restrictive covenant Contract and indemnification Contract entered into with the Sellers’ executive officers, in each case as in effect as of the date of this Agreement. A copy of each such Employment Agreement, Consulting Agreement or other Contract, as the case may be, together with any amendments thereto, has been made available to Buyers. Except as set forth on Section 4.14(b) of the Disclosure Schedules, each current and former Employee and Independent Contractor has executed a nondisclosure and assignment-of-rights agreement for the benefit of the Sellers, vesting all rights in work product created by such Employee or Independent Contractor during such Person’s affiliation with the Sellers, and a copy of each such agreement has been made available to Buyers. To Sellers’ Knowledge, no current Employee or Independent Contractor is a party to, or is otherwise bound by, any Contract that adversely affects the performance of such Employee or Independent Contractor’s duties to the Sellers. The Sellers have properly classified, pursuant to the Code and any other applicable Law, all Independent Contractors used by the Sellers, and no such Independent Contractor has a reasonable basis for a claim for benefits available to Employees only under any Employee Plan. The Sellers have no “leased employees” within the meaning of Section 414(n) of the Code.
(c) The Sellers have made available to Buyers a true, correct and complete list of all former Employees whose employment has been terminated within 90 days preceding the date hereof, or whose work hours have been reduced by fifty percent (50%) or more within six months preceding the date hereof, including for each such Person: name, site of employment, job title, date of hire, date of employment loss, termination or layoff, if applicable, and amount of reduction in hours for each calendar month during the six-month period preceding the anticipated Closing Date, if applicable. To Sellers’ Knowledge, no Employee or Independent Contractor intends to terminate his or her employment or services with the applicable Seller.
(d) The Sellers have made available to Buyers a true, correct and complete list that sets forth, as of the date hereof: (i) each current Employee, including each such Person’s name, employer, job title, hire date, work location, current base salary or wage or commission rate, most recent annual bonus received and current annual bonus or incentive opportunity (including performance goals and target and maximum amounts), all other wage or compensation arrangements, fringe benefits (other than those available to all Employees), whether part-time or full-time, status as exempt or non-exempt under the Fair Labor Standards Act, immigration status, whether such person has entered in an Employment Agreement, and whether such individual is in active employment or on leave, and if on leave, the nature of such leave and the date of expected return; and (ii) each current Independent Contractor, including each such Person’s name, location, description of services, consulting or contracting term, consulting or contracting fee and an indication of whether such Person has entered into a Contract with any of the Sellers. Except as set forth on Section 4.14(d) of the Disclosure Schedules, the employment of each Employee and the services of each Independent Contractor is terminable at will without compensation or other penalty. The engagement of each Employee and Independent Contractor is subject to the Laws of the United States only. The Sellers have a completed Form I-9 (Employment Eligibility Verification) for each Employee, and to the extent required by applicable Law, each such Form I-9 has since been updated.
(e) No Employee Plan is, and neither the Sellers nor any of their ERISA Affiliates have ever sponsored, maintained, administered, or contributed to (or has had any obligation to contribute to) or has or is reasonably expected to have any direct or indirect liability with respect to: (i) a “defined benefit plan” ( as defined in Section 3(35) of ERISA); (ii) a “multiemployer plan” (as defined in Sections 4001(a)(3) and 3(37)(A) of ERISA): or (iii) a pension plan subject to Section 302 or Title IV of ERISA or Section 412 or 4971 of the Code.
(f) Each Employee Plan other than a PEO Plan, and to Sellers’ Knowledge, each Employee Plan that is a PEO Plan, has been established, maintained, funded and administered in all material respects in compliance with its terms and with all applicable Law, including ERISA and the Code. No Action (other than routine claims for benefits) is pending against or involves or, to Sellers’ Knowledge, is threatened against or threatens to involve, any Employee Plan (excluding any Action involving a PEO Plan in which the Action does not relate to the participation of the Sellers). The Sellers have complied in all material respects with applicable Law with respect to each plan, arrangement or policy mandated by applicable Law (including with respect to the payment of social insurance Taxes or similar contributions to a fund of a Governmental Authority with respect to wages of an employee).
(g) The Sellers and their Subsidiaries have paid all salaries, bonuses, commissions, wages, severance and accrued vacation pay due to Employees, and any such amounts for any period ending on or before the Closing Date to the extent required to be paid on or before the Closing Date.
(h) Except as set forth in Section 4.14(h) of the Disclosure Schedules, neither the execution of this Agreement nor the consummation of the transactions contemplated hereby (either alone or together with any other event) will (i) entitle any current or former Service Provider to any payment or benefit, including any bonus, retention, severance, retirement or job security payment or benefit, (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation under, any Employee Plan, (iii) limit or restrict the right of any of the Sellers to merge, amend or terminate any Employee Plan or (iv) result in the payment of any amount that could, individually or in combination with any other such payment, constitute an “excess parachute payment,” as defined in 280G(b)(1) of the Code (without regard to subsection (b)(4) thereof).
(i) To the Sellers’ Knowledge, no allegations of sexual harassment or other sexual misconduct have been made since the Reference Date against any former or current officer of the Sellers or any of their Subsidiaries or any Employee in a managerial or executive position. The Sellers have not entered into any settlement agreements related to allegations of sexual harassment or misconduct by a Service Provider.
Section 4.15 Taxes.
(a) All material Tax Returns filed by, on behalf or in respect of the Business have been timely filed in accordance with applicable Tax Laws and are true, correct and complete in all material respects. Within the last three years, no Governmental Authority has made a claim in writing that the Business or the Purchased Assets may be subject to Taxes, or that a Tax Return related to the Business or the Purchased Assets may be required to be filed, in a jurisdiction where no such Tax Returns have been filed.
(b) Subject to any obligation of Sellers under the Bankruptcy Code, and except as set forth on Section 4.15(b) of the Disclosure Schedules, all material Taxes related to the Business or the Purchased Assets (whether or not shown on any Tax Return) have been timely paid in full and, where payment is not yet due, the Sellers have established an materially adequate accrual for all Taxes through the end of the last period for which the Sellers ordinarily record items on their books in accordance with GAAP.
(c) The Sellers have properly withheld, and timely paid over to the appropriate Taxing Authority, all material Taxes required to be withheld from any payment (including any dividend or interest payment) to any Service Provider, Employee, creditor, stockholder, vendor or other Person and has materially complied with all record keeping and information reporting obligation under applicable Tax Law in connection therewith.
(d) No extension or waiver of the statute of limitations with respect to the time to assess Taxes related to the Business or the Purchased Assets (i) has been granted, which grant remains in effect or (ii) has been requested, which request is currently pending.
(e) No Seller is a party to any Action by any Taxing Authority. There are no Actions pending or threatened to any Seller in writing by any taxing authority related to the Purchased Assets or the Business.
(f) Except as set forth on Section 4.15(f) of the Disclosure Schedules, there are no Liens in respect of Taxes with respect to any of the Purchased Assets, except for Liens for Taxes not yet due and payable that arise by operation of Law.
Section 4.16 Key Suppliers.
(a) Section 4.16 of the Disclosure Schedules sets forth a true, correct and complete list of the top 10 suppliers, measured by annual revenue to the Sellers, on a consolidated basis, during the 12-month period ended as of September 30, 2023 (“Key Suppliers”).
(b) Except as would not be material to the Sellers, taken as a whole, no Key Supplier has terminated, suspended, cancelled or materially and adversely modified (i) its business relationship with any of the Sellers or (ii) the terms of a Material Contract. None of the Sellers have received written notice that any such Key Supplier intends to terminate, suspend, cancel or materially and adversely modify its business relationship with the any of the Sellers or the terms of a Material Contract. As of the date of this Agreement, there are no unresolved material claims or disputes pending between any Seller, on the one hand, and any Key Supplier, on the other hand.
Section 4.17 Insurance. The Sellers have made available to Buyers a true, correct and complete copy of all material insurance policies and all material self-insurance programs and arrangements relating to the Business and the Purchased Assets. As of the date of this Agreement: (a) all such insurance policies are in full force and effect, all premiums thereon have been timely paid or, if not yet due, accrued; (b) there is no material claim pending under the Sellers’ insurance policies or fidelity bonds as to which coverage has been questioned, denied or disputed by the underwriters thereof; and (c) the Sellers are in compliance in all material respects with the terms of such policies and bonds. The Sellers have no Knowledge as of the date of this Agreement of any threatened termination of, or material premium increase with respect to, any of such policies or bonds.
Section 4.18 Finders’ Fees. Except as set forth on Section 4.18 of the Disclosure Schedules, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Sellers who might be entitled to any fee or commission from any of the Sellers in connection with any of the transactions contemplated by this Agreement.
Section 4.19 No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV OF THIS AGREEMENT (AS MODIFIED BY THE SELLERS’ DISCLOSURE SCHEDULES), THE SELLERS MAKE NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AND THE SELLERS HEREBY DISCLAIM ANY SUCH REPRESENTATION OR WARRANTY. IN CONNECTION WITH BUYERS’ INVESTIGATION OF THE SELLERS, BUYERS MAY HAVE RECEIVED FROM OR ON BEHALF OF THE SELLERS CERTAIN ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND PLANS. THE SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND PLANS (INCLUDING THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING ESTIMATES, PROJECTIONS AND FORECASTS).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyers represent and warrant to Sellers that the statements contained in this ARTICLE V are true and correct as of the date hereof.
Section 5.01 Organization of Buyers. Each Buyer is a corporation duly organized, validly existing and in good standing under the Laws of their respective jurisdiction of organization.
Section 5.02 Authority of Buyers. Buyers have full corporate power and authority to execute and deliver this Agreement and the Ancillary Documents to which Buyers are a party, to carry out their obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyers of this Agreement and any Ancillary Document to which Buyers are a party, the performance by Buyers of their obligations hereunder and thereunder and the consummation by Buyers of the transactions contemplated hereby and thereby have been duly authorized by Buyers and no other corporate proceedings on the part of Buyers are necessary to authorize the execution or delivery by Buyers of this Agreement and any Ancillary Document to which Buyers are a party, the performance by Buyers of their obligations under this Agreement and any Ancillary Document to which Buyers are a party or the consummation by Buyers of the transactions contemplated by this Agreement and any Ancillary Document to which Buyers are a party. This Agreement has been duly executed and delivered by Buyers and, assuming due authorization, execution and delivery by the Sellers, constitutes a valid and binding obligation of Buyers, enforceable against Buyers in accordance with its terms. When each Ancillary Document to which Buyers are or will be a party has been duly executed and delivered by Buyers (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Buyers enforceable against them in accordance with its terms.
Section 5.03 No Conflicts; Consents. The execution and delivery by Buyers of this Agreement and the Ancillary Documents to which it is a party, the performance by Buyers of their obligations under this Agreement and the Ancillary Documents to which it is a party and the consummation by Buyers of the transactions contemplated hereby and thereby, do not and will not (a) contravene, conflict with or result in any violation or breach of any provision of the organizational documents of Buyers, (b) contravene, conflict with or result in a violation or breach of any provision of any applicable Law, (c) require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Buyers are entitled under any provision of any Contract binding on Buyers or any Permit affecting, or relating in any way to, the assets or business of Buyers or (d) result in the creation or imposition of any Lien on any asset of Buyers, with only such exceptions, in the case of each of clauses (c) and (d), as would not reasonably be expected to have, individually or in the aggregate with all other Effects, a Buyer Material Adverse Effect.
Section 5.04 Finders’ Fees. There is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Buyers who might be entitled to any fee or commission from Buyers upon consummation of the transactions contemplated by this Agreement.
Section 5.05 Available Funds. Buyers have, and at the Closing will have, funds available that are sufficient to consummate the transactions contemplated by this Agreement and to perform their obligations under this Agreement.
Section 5.06 Litigation. As of the date of this Agreement, there are no proceedings pending or, to the Knowledge of Buyers, threatened against Buyers that seeks to enjoin the transactions contemplated by this Agreement, other than any such proceedings that have not had and would not have a Buyer Material Adverse Effect.
Section 5.07 Independent Investigation. Buyers acknowledge that they have conducted to their satisfaction their own independent investigation and analysis of the Business, the Purchased Assets and the Assumed Liabilities, and that Buyers and their Representatives have received access to such books and records, facilities, equipment, contracts and other assets of the Sellers that Buyers and their Representatives have desired or requested to review for such purpose, and that Buyers and their Representatives have had a full opportunity to meet with the management of the Company and the Company’s Subsidiaries and to discuss the business, operations, assets, liabilities, results of operations, condition (financial or otherwise) and prospects of the Company and the Company’s Subsidiaries.
Section 5.08 Non-Reliance. Except for the specific representations and warranties expressly made by the Sellers in ARTICLE IV of this Agreement, Buyers specifically disclaim that they are relying upon or have relied upon any other representations or warranties that may have been made by the Sellers or any other Person, and acknowledges and agrees that the Sellers have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by the Sellers or any other Person.
ARTICLE VI
BANKRUPTCY COURT MATTERS
Section 6.01 Competing Transactions. Sellers will market the Purchased Assets as permitted by and in accordance with the Bidding Procedures, and all obligations hereunder remain subject to alternative bids to be submitted and considered in accordance with such Bidding Procedures.
Section 6.02 Bankruptcy Court Filings.
(a) Within one Business Day of the date hereof, Sellers shall file or cause to be filed a petition for relief under Chapter 11 of the Bankruptcy Code on behalf of Sellers with the Bankruptcy Court (the date of such petition being the “Petition Date”). No later than one day following the Petition Date, Sellers shall file (and, within one Business Day thereafter, serve) a motion or motions (the “Sale Motion”), in form and substance reasonably satisfactory to Buyers, in the Bankruptcy Case requesting that the Bankruptcy Court (i) approve the Bidding Procedures and enter the Bidding Procedures Order and (ii) schedule a hearing on the Sale Motion for entry of the Sale Order. Thereafter, Buyers and Sellers shall take all actions as may be reasonably necessary to cause the Bidding Procedures Order and the Sale Order to be issued, entered and become Final Orders, including furnishing affidavits, declarations and/or other documents or information for filing with the Bankruptcy Court. Buyers agree that they will promptly take such actions as are reasonably requested by Sellers to assist in obtaining entry of the Sale Order and a finding of adequate assurance of future performance by Buyers, including furnishing affidavits or other documents or information for filing with the Bankruptcy Court for the purposes, among others, of providing necessary assurances of performance by Buyers under this Agreement and demonstrating that Buyers are “good faith” purchasers under Section 363(m) of the Bankruptcy Code.
(b) Sellers shall provide reasonably appropriate notice of the hearings on the Sale Motion, as is required by the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, to all Persons entitled to notice, including all Persons that have expressed interest in buying the Purchased Assets, all Persons that have asserted liens, claims or other interests in the Purchased Assets, all parties to the Assigned Contracts, all applicable state and local tax authorities, including the Internal Revenue Service, each Governmental Authority that is an interested party with respect to the Purchased Assets and the Bidding Procedures Order and all Tax and environmental authorities in jurisdictions applicable to Sellers. Sellers shall be responsible for making all appropriate filings relating thereto with the Bankruptcy Court, which filings shall be submitted to Buyers within a reasonable time prior to their filing with the Bankruptcy Court to allow for Buyers’ prior review and comments.
(c) On or before the date that is no later than two business days after entry of the Bidding Procedures Order Sellers shall file with the Bankruptcy Court and serve an assignment and assumption notice (the “Assignment and Assumption Notice”) by first class mail on all non-debtor counterparties to all Contracts and provide a copy of the same to Buyers. The Assignment and Assumption Notice shall inform each recipient that its respective Contract may be designated by Buyers as assumed, and the timing and procedures relating to such designation, and, to the extent applicable (i) the title of the Contract, (ii) the name of the counterparty to the Contract, (iii) Sellers’ good faith estimates of the Cure Costs required in connection with such Contract, (iv) the identity of Buyers and (v) the deadline by which any such Contract counterparty may file an objection to the proposed assumption and assignment and/or cure, and the procedures relating thereto.
(d) Sellers shall use their best efforts to (i) file and have entered the Bidding Procedures Order on or before December 14, 2023, (ii) hold the Auction, unless an Auction is not required to be held pursuant to the terms of the Bidding Procedures, on or before January 8, 2024 and (iii) file and have entered the Sale Order on or before January 12, 2024.
(e) The Sellers shall consult with the Buyers regarding pleadings that they intend to file with the Bankruptcy Court in connection with, or which might reasonably affect the Bankruptcy Court’s approval of the Bidding Procedures Order and the Sale Order, including, sharing in advance any drafts thereof for Buyers’ review and comment. Each Seller shall promptly provide Buyers and their counsel with copies of all notices, filings and orders of the Bankruptcy Court that such Seller has in its possession (or receives) pertaining to the Sale Motion, or any other order related to any of the transactions contemplated in this Agreement. No Seller shall seek any modification to the Bidding Procedures Order and the Sale Order by the Bankruptcy Court or any other Governmental Authority of competent jurisdiction to which a decision relating to the Bankruptcy Case has been appealed, in each case, without the prior written consent of Buyers.
(f) If the Sale Order, or any other orders of the Bankruptcy Court relating to this Agreement or the transactions contemplated in this Agreement are appealed by any Person (or if any petition for certiorari or motion for reconsideration, amendment, clarification, modification, vacation, stay, rehearing or reargument shall be filed with respect to the Bidding Procedures Order and the Sale Order, or other such order), subject to rights otherwise arising from this Agreement, Sellers shall use their commercially reasonable best efforts to prosecute such appeal, petition or motion, at Buyers’ sole cost and expense, and obtain an expedited resolution of any such appeal, petition or motion, to the extent not otherwise inconsistent with Sellers’ fiduciary duty to Sellers’ estate.
(g) Notwithstanding anything expressed or implied herein to the contrary, other than in the ordinary course of business, Sellers shall not consent or agree to the allowance of any claim to the extent it would constitute an Assumed Liability without the prior written consent of Buyers. Each Seller shall use its best efforts to cause the Sale Order to provide that Buyers will have standing in the Bankruptcy Case to object to the amount of any claim to the extent it would constitute an Assumed Liability and that the Bankruptcy Court will retain the right to hear and determine such objections.
ARTICLE VII
COVENANTS
Section 7.01 Conduct of Business Prior to the Closing.
(a) From the date hereof until the Closing, except as otherwise required, authorized or restricted pursuant to this Agreement, the Bankruptcy Code, an order of the Bankruptcy Court or the DIP Loan Agreement or consented to in writing by Buyers (which shall not be unreasonably withheld, conditioned or delayed), Sellers shall conduct the Business in the ordinary course of business consistent with past practice.
(b) Without limiting the generality of Section 7.01(a), from the date hereof until the Closing Date, other than in the ordinary course of business, Sellers shall not (i) renew, enter into, terminate amend or modify in any material respect (other than terminations in connection with (A) an expiration or (B) a renewal that becomes automatically effective unless a party thereto provides prior notice of an intention not to renew) any Contract or arrangement relating to the Business or the Purchased Assets in a manner adverse to Sellers, or (ii) waive, release or assign any material rights, claims or benefits of the Sellers, in each case, except as otherwise required, authorized or restricted pursuant to this Agreement, the Bankruptcy Code, an order of the Bankruptcy Court or the DIP Loan Agreement or consented to in writing by Buyers (which shall not be unreasonably withheld, conditioned or delayed).
(c) except as otherwise required, authorized or restricted pursuant to this Agreement, the Bankruptcy Code, an order of the Bankruptcy Court or the DIP Loan Agreement or consented to in writing by Buyers (which shall not be unreasonably withheld, conditioned or delayed), and without limiting the generality of Section 7.01(a), from the date hereof until the Closing Date, Sellers shall:
(i) preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets and all applications for Permits relating to the Business or any Purchased Asset;
(ii) pay all post-petition obligations in compliance with and as contemplated by the DIP Loan Agreement;
(iii) maintain the properties and assets included in the Purchased Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;
(iv) continue in full force and effect all their insurance policies, other than such policies that expire by their terms (in which event Sellers shall use reasonable best efforts to renew, replace or extend such policies) or changes to such policies made in the ordinary course of business of Sellers in a manner that is consistent with past practice;
(v) defend and protect the properties and assets included in the Purchased Assets from infringement or usurpation;
(vi) perform their obligations under the Assigned Contracts in all material respects;
(vii) maintain the Books and Records in accordance with industry best practice; and
(viii) comply in all material respects with all Laws applicable to the conduct of the Business or the ownership and use of the Purchased Assets.
(d) Subject to Section 7.01(a), during the period from the date hereof until the Closing, the Sellers shall use their reasonable best efforts to continue the ASCEND Study (TMB01-301) as currently contemplated, including the recruitment of patients for the Company’s ongoing clinical trial relating to the Company Product TMB-001, until the number of randomized patients included therein amounts to one hundred twenty (120) patients; provided that Sellers perform or continue to perform the actions set forth in Schedule 7.01(d)(ii).
Section 7.02 Access to Information.
(a) From the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, Sellers shall (i) afford Buyers and their Representatives reasonable access during normal business hours to the offices, properties, facilities, assets, books, records, Service Providers and agents of the Sellers; (ii) furnish Buyers, their Representatives with such financial and operating data and other information (including the work papers of the Sellers’ independent accountants upon receipt of any required consents from such accountants and subject to the execution of customary access letters) as such Persons may reasonably request related to the Business as Buyers or any of their Representatives may reasonably request; and (iii) instruct the Service Providers and Representatives of Sellers to cooperate with Buyers in their non-invasive investigation of the Business; provided, that any such access shall be afforded and any such information shall be furnished at Buyers’ expense; provided, further that the parties hereto shall act in good faith in all respects in the performance of the obligations under this Section 7.02(a). All access pursuant to this Section 7.02(a) shall be conducted in a manner that does not interfere with the normal operations of Sellers in any material respect. No investigation by Buyers or other information received by Buyers shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Sellers in this Agreement. Any investigation pursuant to this Section 7.02(a) shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Sellers. No information or knowledge obtained in any investigation pursuant to this Section 7.02(a) shall affect or be deemed to modify any representation or warranty made by the Sellers hereunder.
(b) The provisions of Section 7.02(a) shall not require and shall not be construed to require Sellers to permit any access to or any inspection or review of, or to disclose or otherwise make available, any information that (i) affording such access or furnishing such information would result in loss of legal protection, including the attorney-client privilege and work product doctrine; (ii) relates to the applicable portions of minutes of the meetings of the board of directors of such Seller (including any presentations or other materials prepared by or for the board of directors) where the board of directors discussed the transactions contemplated by this Agreement or any similar transaction involving the sale of any Seller, or a material portion of its assets, to, or combination of any Sellers with, any Person; and (iii) in the reasonable judgment of any Seller based on the opinion of outside legal counsel would (A) violate such Seller’s respective obligations with regard to confidentiality or waive the protection of any attorney-client privilege, or (B) violate any applicable Law. In the event that Sellers objects to any request submitted pursuant to and in accordance with Section 7.02(a) and withholds information on the basis of any of the foregoing clauses (i), or (ii), Sellers shall use reasonable best efforts to make appropriate substitute arrangements to permit reasonable disclosure that does not suffer from any of the foregoing impediments, including through the use of reasonable best efforts to implement appropriate and mutually agreeable measures to permit the disclosure of such information in a manner to remove the basis for the objection.
Section 7.03 Notice of Certain Events.
(a) From the date hereof until the Closing, Sellers and Buyers shall promptly notify the other of:
(i) any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect or Buyer Material Adverse Effect, respectively, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by such party hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 8.02 or Section 8.03, respectively, to be satisfied;
(ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or the entry of the approval of any order by the Bankruptcy Court;
(iii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or, to such party’s knowledge, including Sellers’ Knowledge, threatened against, relating to or involving or otherwise affecting the Business, the Purchased Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.12 or that relate to the consummation of the transactions contemplated by this Agreement.
(b) Receipt of information by either party pursuant to this Section 7.03 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by either party in this Agreement and shall not be deemed to amend or supplement the Disclosure Schedules.
Section 7.04 Employees and Employee Benefits.
(a) Commencing on the Closing Date, Sellers shall terminate all Employees, and Buyers shall offer employment effective as of immediately following the Closing to all Employees (each Employee who accepts such offer and commences employment immediately upon the Closing being referred to herein as a “Transferred Employee,” and collectively as, the “Transferred Employees”). Each offer of employment to the Employees shall provide each Transferred Employee with (i) a base salary or base wages and cash target bonus opportunity no less than the base salary or base wages and cash target bonus opportunity of such Transferred Employee immediately prior to the Closing and (ii) benefits that are substantially comparable in the aggregate to either (A) those offered to similarly situated newly hired employees of Buyers or (B) those offered by Sellers to the Transferred Employees as of immediately prior to the Closing (other than any equity or equity-based and change in control or transaction-based compensation or benefits or severance pay or post-employment health or welfare benefits), with the determination of the employee benefits under clause (ii) to be made by Buyers from time to time in its sole and absolute discretion.
(b) Sellers shall be solely responsible, and Buyers shall have no obligations whatsoever for, any compensation or other amounts payable to any current or former employee, officer, director, independent contractor or consultant of the Business, including, without limitation, hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay under any Employee Plan for any period relating to the service with Sellers at any time on or prior to the Closing Date and Sellers shall pay all such amounts to all entitled persons on, prior to or promptly following the Closing Date; provided, however, that Buyers shall, no later than two business days following the Closing Date, either fund Seller’s liability to pay accrued unused vacation days of Employees who terminate employment with Sellers on the Closing Date or promptly pay such amounts to such Employees directly (subject to applicable tax withholdings).
(c) Sellers shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees, officers, directors, independent contractors or consultants of the Business or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. Sellers also shall remain solely responsible for all worker’s compensation claims of any current or former employees, officers, directors, independent contractors or consultants of the Business which relate to events occurring on or prior to the Closing Date. Sellers shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.
(d) With respect to any “employee benefit plan” (as defined in Section 3(3) of ERISA) maintained by Buyers or any of their Affiliates, but excluding (i) any retiree healthcare or life insurance plans or programs maintained by Buyers or any of their Affiliates, (ii) any equity compensation arrangement and (iii) any defined benefit plan maintained by Buyers or any of their Affiliates, in each case, in which any Transferred Employee will participate on or after the Closing Date (collectively, the “Buyer Benefit Plans”), Buyers shall, or shall cause their Affiliates to, recognize all service with Sellers or their Subsidiaries rendered prior to the Closing Date by Transferred Employees, for purposes of vesting and eligibility and for purposes of determining paid time off, sick leave and severance benefits (but not otherwise for benefit accrual purposes) under such Buyer Benefit Plans. In no event shall anything contained in this Section 7.04(d) result in any duplication of benefits for the same period of service.
Section 7.05 Confidentiality.
(a) Sellers shall, and shall cause their Affiliates to, hold, and shall use their best efforts to cause their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Business, except to the extent that Sellers can show that such information (a) is generally available to and known by the public through no fault of Sellers, any of their Affiliates or their respective Representatives or (b) is lawfully acquired by Sellers, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. Notwithstanding the foregoing, Sellers shall be entitled to disclose (i) any information required to be disclosed by Sellers to the Bankruptcy Court, the United States Trustee, parties in interest in the Bankruptcy Case, and other Persons bidding on assets of Sellers, and (ii) any information required to be disclosed by Sellers pursuant to any applicable Law (including the Bankruptcy Code), legal proceeding or Governmental Authority, provided that in each case, such disclosure shall be limited to the information that is so required to be disclosed and the Person(s) to whom such disclosure is required. Notwithstanding anything in to the contrary, unless disclosure is required by applicable Law, the confidentiality of any Trade Secrets of the Business shall be maintained for so long as such Trade Secrets continue to be entitled to protection as Trade Secrets of the Business.
Section 7.06 Consents. Sellers and Buyers shall use commercially reasonable efforts to give all notices to, and obtain all consents and approvals contemplated by this Agreement.
Section 7.07 Books and Records. Each of the Sellers (or any subsequently appointed bankruptcy estate representative, including a trustee, a creditor trustee or a plan administrator) and Buyers agree that each of them shall preserve and keep the books and records held by it related to the pre-Closing Business for a period commencing on the date hereof and ending at such date on which an orderly wind-down of Sellers’ operations has occurred in the reasonable judgment of Buyers and Sellers (or any subsequently appointed bankruptcy estate representative, including a trustee, a creditor trustee or a plan administrator) and shall make such books and records available to the other parties hereto (and permit any such other party to make extracts and copies of such books and records at its own expense) as may be reasonably required by such other party in connection with, among other things, any insurance claims by, legal proceedings or tax proceedings against or governmental investigations of Sellers or Buyers or in order to enable Sellers or Buyers to comply with their respective obligations under this Agreement and each Ancillary Document. In the event Sellers, on the one hand, or Buyers, on the other hand, wish to destroy such records, the relevant party shall first give twenty days' prior written notice to the other party and such other party shall have the right at its option and expense, upon prior written notice given within that twenty day period, to take possession of the records within thirty days after the date of such notice.
Section 7.08 Public Announcements. Neither Sellers nor Buyers shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other parties hereto, unless, in the sole judgment of Buyers or Sellers, disclosure is otherwise required by applicable Law or by the Bankruptcy Court with respect to filings to be made with the Bankruptcy Court in connection with this Agreement, provided that the party intending to make such release shall use its best efforts consistent with such applicable Law or Bankruptcy Court requirement to consult with the other parties with respect to the text thereof.
Section 7.09 Further Assurances. Subject to the other provisions of this Agreement, each Buyer and each Seller shall (a) take all actions reasonably necessary or appropriate to consummate the transactions contemplated by this Agreement, (b) provide the other parties hereto with reasonable cooperation and take such actions as such other parties may be reasonably request in connection with the consummation of the transactions contemplated herein, and (c) use commercially reasonable efforts to cause the fulfilment at the earliest practicable date of all of the conditions to its obligations to consummate the transactions contemplated herein. If requested by Buyers, Sellers will transfer to Buyers the personnel records of any Employees who accept an offer of post-Closing employment with Buyers.
Section 7.10 Wrong Pockets. If following the Closing any Buyer or Seller becomes aware that any of the Purchased Assets have not been transferred to Buyers or that any of the Excluded Assets have been transferred to Buyers, it shall promptly notify the other and the parties hereto shall, as soon as reasonably practicable thereafter, ensure that such property is transferred, at the expense of the party that is seeking the assets to be transferred to it, to (i) Buyers, in the case of any Purchased Assets which were not transferred to Buyers at or in connection with the Closing, as such Purchased Assets are allocated between Buyers in their sole discretion, or (ii) any Seller, in the case of any Excluded Assets which were transferred to Buyers at the Closing.
Section 7.11 DIP Financing.
(a) Simultaneously with commencement of the Bankruptcy Case and pursuant to the DIP Loan Agreement, LEO US Holding, will, subject to Section 7.11(b) below, provide debtor-in-possession financing to Sellers up to a maximum new money amount of $7,400,000 plus the repayment and roll-up of the Bridge Loan Amount (the “DIP Loan”), in order to permit Sellers to continue operating the Business and pay the reasonable and documented out-of-pocket Third Party fees and expenses actually incurred in connection with the transactions contemplated herein and the Bankruptcy Case.
(b) The DIP Loan Agreement will become effective upon (i) approval by the Bankruptcy Court and (ii) satisfaction of the conditions as set forth herein and in the DIP Loan Agreement. If the Closing occurs, all amounts then outstanding under the DIP Loan Agreement shall be credited towards the Purchase Price payable by Buyers as set forth above. The Bidding Procedures Order shall expressly authorize and approve such credit bidding by the Buyers, as the designee of the DIP Lender and Bridge Lender, respectively, of any amounts outstanding under the DIP Loan Agreement (which amounts shall include the outstanding amounts under the Bridge Loan Agreement pursuant to the Roll-Up Loan (as defined in the DIP Loan Agreement)) pursuant to Section 363(k) of the Bankruptcy Code. Each Seller expressly acknowledges and agrees that Buyers may exercise such right to credit bid amounts owed by any Seller under the DIP Loan Agreement (which amounts shall include the outstanding amounts under the Bridge Loan Agreement pursuant to the Roll-Up Loan (as defined in the DIP Loan Agreement)) in order to effect the payment of the Purchase Price under this Agreement.
(c) The obligations of Sellers under the DIP Loan Agreement will be secured by a lien on substantially all of the assets of Sellers, including, without limitation, the Purchased Assets, under Section 364 of the Bankruptcy Code in accordance with the priorities set forth in the DIP Loan Agreement. In addition, the obligations of Sellers under the DIP Loan Agreement will be entitled to super-priority administrative claim status pursuant to Section 364(c)(1) of the Bankruptcy Code.
(d) The Bidding Procedures Order shall provide that if the Bankruptcy Court enters an order approving a Competing Transaction, then on the first Business Day following the closing of such Competing Transaction, Sellers shall pay to Buyers, in accordance with wire transfer instructions provided by Buyers, from the purchase price received from such other Successful Bidder, an amount equal to all obligations of Sellers then outstanding under the DIP Loan Agreement (which shall include the outstanding obligations under the Bridge Loan Agreement pursuant to the Roll-Up Loan (as defined in the DIP Loan Agreement)), which payment shall be irrevocable and free and clear of all Liens. No qualified bid may contain any provision that purports to alter or restrict the foregoing. The Sellers shall not reduce or otherwise alter the overbidder’s deposit required of any qualified bidder under the Bidding Procedures or the Bidding Procedures Order without the prior written consent of Buyers. For the avoidance of doubt, in the event the overbidder’s deposit of the Successful Bidder is insufficient, as of the closing of the Competing Transaction, to satisfy in full all obligations owing under the DIP Loan Agreement, Sellers will pay the remainder of all obligations owing under the DIP Loan Agreement (which shall include the outstanding obligations under the Bridge Loan Agreement pursuant to the Roll-Up Loan (as defined in the DIP Loan Agreement)) in full as promptly as possible, including by directing the Successful Bidder, in accordance with the Sale Order, to pay the proceeds of the sale to the Successful Bidder directly the DIP Lender and/or Bridge Lender, as applicable, in satisfaction of such obligations.
Section 7.12 No Successor Liability. The parties hereto intend that, except where expressly prohibited under applicable Law (including under Section 363 of the Bankruptcy Code), upon the Closing, the Buyers shall not be deemed to: (i) be the successor of any Seller, (ii) have, de facto, or otherwise, merged with or into any Seller, (iii) be a mere continuation or substantial continuation of any Seller or the enterprise(s) of any Seller, or (iv) be liable for any acts or omissions of any Seller in the conduct of the Business or arising under or related to the Purchased Assets other than as set forth in this Agreement. Without limiting the generality of the foregoing, and except as otherwise provided in this Agreement, the parties hereto intend that Buyers shall not be liable for any Lien (other than Assumed Liabilities and Permitted Liens) against any Seller or any of such Seller's predecessors or Affiliates, and Buyers shall have no successor or vicarious liability of any kind or character whether known or unknown as of the Closing Date, whether now existing or hereafter arising, or whether fixed or contingent, with respect to the Business, the Purchased Assets or any Liabilities of any Seller arising prior to the Closing Date. The Parties agree that the provisions substantially in the form of this section shall be reflected in the Sale Order.
Section 7.13 Name Change. Promptly following the Closing, the Sellers shall and shall cause each of their Affiliates that has a name that includes the words “Timber”, “Timber Pharmaceuticals” or any derivatives thereof, to file the necessary documentation in their respective jurisdiction of formation and any jurisdiction where they are registered to do business to amend their Organizational Documents to change the name of each Seller or such Affiliate to a name that does not include the words “Timber”, “Timber Pharmaceuticals” or any derivatives thereof or any other similar name
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01 Conditions to Obligations of All Parties. The obligations of each party hereto to consummate the transactions contemplated by this Agreement shall be subject to the fulfilment, at or prior to the Closing, of each of the following conditions:
(a) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
(b) The Bankruptcy Court shall have entered the Bidding Procedures Order and the Sale Order and each of such orders shall be a Final Order providing for a sale of the Purchased Assets free and clear of any Liens and in form and substance reasonably satisfactory to Sellers and Buyers, which orders shall not have been reversed, modified, amended or stayed.
Section 8.02 Conditions to Obligations of Buyers. The obligations of Buyers to consummate the transactions contemplated by this Agreement shall be subject to the fulfilment or Buyers’ waiver, at or prior to the Closing, of each of the following conditions:
(a) Sellers shall have complied with the sale process deadlines set forth in the Bidding Procedures Order (as may be modified pursuant to the terms of the Bidding Procedures and Bidding Procedures Order).
(b) Sellers shall have delivered to Buyers a copy of the Sale Order and copies of all affidavits of service of the Sale Motion or notice of such motion filed by or on behalf of Sellers.
(c) The representations and warranties made by Sellers in this Agreement or in any Ancillary Document, other than those set forth in Section 4.05, shall be true and correct in all respects, in each case as of the date hereof and as of the Closing Date, with the same force and effect as though all such representations and warranties had been made as of the Closing Date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be so true and correct only as of such other specified date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, have a Seller Material Adverse Effect, and the representations and warranties made by Sellers set forth in Section 4.05, shall be true and correct in all material respects, in each case as of the date hereof and as of the Closing Date, with the same force and effect as though all such representations and warranties had been made as of the Closing Date.
(d) Sellers shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by them prior to or on the Closing Date.
(e) No Action shall have been commenced against Buyers or Sellers which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.
(f) All approvals, consents and waivers that are listed on Section 8.02(f) of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Buyers at or prior to the Closing.
(g) From the date of this Agreement, there shall not have occurred any Seller Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Seller Material Adverse Effect.
(h) Each of John Koconis, Jessica Bruno-Raiz, Stephen Lombardi and David McAuley shall have entered into an employment or consultancy agreement with Buyers or an Affiliate of Buyers on terms mutually acceptable to Buyers and such individuals.
(i) The Company Product Registrations shall have been assigned or transferred, as applicable, to Buyers.
(j) All Liens relating to the Purchased Assets shall have been released in full, other than Permitted Liens, pursuant to the Sale Order.
(k) Buyers shall have received a certificate from each Seller, dated the Closing Date and signed by a duly authorized officer of each Seller, that each of the conditions set forth in Section 8.02(c) and Section 8.02(d) have been satisfied (the “Seller Closing Certificates”).
(l) Buyers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Seller certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of such Seller authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.
(m) Buyers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Seller certifying the names and signatures of the officers of such Seller authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.
(n) Buyers shall have received an Applicable Withholding Certificate with respect to each Seller.
(o) Sellers shall have delivered to Buyers such other documents and deliveries as set forth in Section 3.02(a).
Section 8.03 Conditions to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Sellers’ waiver, at or prior to the Closing, of each of the following conditions:
(a) The representations and warranties made by Buyers in this Agreement or any Ancillary Document shall be true and correct in all respects, in each case as of the date hereof and as of the Closing Date, with the same force and effect as though all such representations and warranties had been made as of the Closing Date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be so true and correct only as of such other specified date), except where the failure of such representations and warranties to be true and correct would not have a Buyer Material Adverse Effect.
(b) Buyers shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by them prior to or on the Closing Date.
(c) No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.
(d) Sellers shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyers, that each of the conditions set forth in Section 8.03(a) and Section 8.03(b) have been satisfied (the “Buyers’ Closing Certificate”).
(e) Sellers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyers certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Buyers authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.
(f) Sellers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyers certifying the names and signatures of the officers of Buyers authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder.
(g) Buyers shall have delivered such other documents and deliveries set forth in Section 3.02(b).
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of Sellers and Buyers;
(b) by Buyers by written notice to Sellers if:
(i) Buyers are not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by any Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VIII and such breach, inaccuracy or failure is incapable of being cured by the End Date (as defined below) or if curable by the End Date, has not been cured by a Seller within the earlier of (A) fifteen days of such Seller's receipt of written notice of such breach from Buyers or (B) five Business Days prior to the End Date; or
(ii) the Closing has not occurred on or before February 15, 2024 (the “End Date”), unless the failure to close by such date shall be due to the failure of Buyers to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by Buyers prior to the Closing;
(c) by any Seller by written notice to Buyers if:
(i) such Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyers pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VIII and such breach, inaccuracy or failure is incapable of being cured by the End Date or if curable by the End Date, has not been cured by Buyer within the earlier of (A) fifteen days of Buyers’ receipt of written notice of such breach from such Seller or (B) five Business Days prior to the End Date; or
(ii) the Closing has not occurred on or before the End Date, unless such failure shall be due to the failure of such Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
(d) by Buyers or any Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable;
(e) by Buyers, if (i) any Seller or any Affiliate of Seller takes material steps in furtherance of, or does not use commercially reasonable efforts to oppose any other Person in seeking, an order of the Bankruptcy Court dismissing the Bankruptcy Case or converting it to a petition for relief under Chapter 7 of the Bankruptcy Code, (ii) any Seller or any Affiliate of Sellers takes material steps in furtherance of, or does not use commercially reasonable efforts to oppose any other Person in seeking, the entry of an order by the Bankruptcy Court appointing a trustee in the Bankruptcy Case or an examiner with enlarged powers relating to the operation of the Business, (iii) the Bankruptcy Court enters a Final Order identified in clauses (i) or (ii) above, or (iv) the Bankruptcy Court enters an order pursuant to Section 362 of the Bankruptcy Code lifting the automatic stay with respect to any material Purchased Assets and allowing such assets to be foreclosed on or otherwise seized by a Third Party;
(f) by Buyers, if (i) following entry by the Bankruptcy Court of the Bidding Procedures Order, such order is (A) materially amended, modified or supplemented without Buyers’ prior written consent or (B) voided, reversed or vacated or is subject to a stay such that the Bidding Procedures Order is not in full force and effect as of the date set forth in Section 9.01(g) below or (ii) following entry by the Bankruptcy Court of the Sale Order, the Sale Order is (A) materially amended, modified or supplemented in any way without Buyers’ prior written consent or (B) voided, reversed or vacated or is subject to a stay such that the Sale Order is not in full force and effect as of the date set forth in Section 9.01(g) below;
(g) by Buyers, if the Bankruptcy Court shall not have entered the Bidding Procedures Order on or before December 14, 2023; provided that Buyers shall not be able to terminate this Agreement pursuant to this Section 9.01(g) if, prior to such termination, the Bankruptcy Court shall have entered the Bidding Procedures Order;
(h) by Buyers, if the Bankruptcy Court shall not have entered the Sale Order on or before January 12, 2024 or following entry thereof such order shall have been voided, reversed, vacated or made subject to a stay; provided that Buyers shall not be able to terminate this Agreement pursuant to this section if, prior to such termination, the Bankruptcy Court shall have entered the Sale Order or the Sale Order is a Final Order, as applicable;
(i) by Buyers, if the Bidding Procedures Order is entered by the Bankruptcy Court and (i) the Auction is not held on or before January 8, 2024, unless an Auction is not required to be held pursuant to the terms of the Bidding Procedures or (ii) the Sale Hearing is not held on or before January 12, 2024; provided that Buyers shall not be able to terminate this Agreement pursuant to this section if, prior to such termination, the Auction or Sale Hearing shall have been held, as applicable;
(j) by Buyers, if Sellers withdraw or seek authority to withdraw the Sale Motion;
(k) by Buyers, if Buyers are not selected as Successful Bidder or Backup Bidder at the conclusion of the Auction;
(l) by Buyers, if, under Section 363(k) of the Bankruptcy Code, Buyers are disallowed from providing a credit bid (or otherwise bidding on such other terms as may be agreed by Buyers in their sole discretion) as contemplated by this Agreement in connection with the Purchase Price;
(m) by Buyers, if Buyers are selected as Backup Bidder pursuant to the Bidding Procedures and Sellers fail to provide notice to Buyers, on or before the Backup Bid Outside Date, that Sellers have terminated any Competing Transaction and that the Sellers have elected to complete the transactions contemplated by this Agreement;
(n) automatically, upon the consummation of a Competing Transaction; or
(o) by Buyers, upon the occurrence of any “Event of Default” under the DIP Loan Agreement that has not been cured (if susceptible to cure under the terms of the DIP Loan Agreement) or waived by the DIP Lender in accordance with the terms of the DIP Loan Agreement.
Section 9.02 Backup Bidder. If an Auction is conducted, and Buyers are not the Successful Bidder, Buyers shall, if their bid is determined to be the next highest bid, be selected as Backup Bidder. If Buyers are selected as Backup Bidder, Buyers agree to serve as Backup Bidder until February 15, 2024 (as such date may be extended in accordance with this Section 9.02, the “Backup Bid Outside Date”); provided, however that the Backup Bidder may, in their sole and absolute discretion, extend the Backup Bid Outside Date by giving written notice to Sellers at least two (2) Business Days before the Backup Bid Outside Date (or before the end of any applicable extension thereof) of the new Backup Bid Outside Date. Subject to the terms of the Sale Order, following the Sale Hearing and prior to the Backup Bid Outside Date, if the Successful Bidder fails to consummate the applicable Competing Transaction as a result of a breach or failure to perform on the part of such Successful Bidder, the Buyers as Backup Bidder will be deemed to have the new prevailing bid, and Sellers will be authorized, without further order of the Bankruptcy Court, but subject to the Sale Order, to consummate the transactions contemplated by this Agreement on the terms and conditions set forth in this Agreement.
Section 9.03 Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a) as set forth in this ARTICLE IX and ARTICLE X hereof;
(b) that nothing herein shall relieve any party hereto from liability for any breach of any provision hereof.
Section 9.04 Breakup Fee; Expense Reimbursement.
(a) If this Agreement is terminated pursuant to the consummation of a Competing Transaction and Buyers are not otherwise in breach of their obligations under this Agreement, the Bidding Procedures Order, the DIP Loan Agreement or the Sale Order, then, in such case, Sellers shall, jointly and severally, without the requirement of any notice or demand from Buyers or any application to or order of the Bankruptcy Court, promptly, but in no event later than three Business Days after the date of the consummation of such Competing Transaction, pay or cause to be paid to Buyers (i) all reasonable out-of-pocket and documented fees and expenses (including reasonable attorneys’ fees and expenses) incurred by Buyers in connection with or related to Buyers’ evaluation, consideration, analysis, negotiation, and documentation of this Agreement or the transactions contemplated herein (the “Expense Reimbursement”) and (ii) a fee in an amount equal to 2.5% of the cash portion of the Purchase Price (the “Breakup Fee”) in addition to the Expense Reimbursement, in each case by wire transfer of immediately available funds to such account or accounts as may be specified in a written notice by Buyers given to Sellers; provided, however that the Breakup Fee and Expense Reimbursement, in the aggregate, shall not exceed an amount equal to 3.5% of the cash portion of the Purchase Price. The Expense Reimbursement and the Breakup Fee shall, pursuant to the Bidding Procedures Order, constitute allowed administrative expenses of Sellers’ estates under Section 503(b) of the Bankruptcy Code; provided, however, that notwithstanding any provision of this Agreement to the contrary, the Expense Reimbursement and Breakup Fee shall be payable only from the proceeds of a Competing Transaction. The Bidding Procedures Order shall provide for the payment by Sellers of the Breakup Fee and Expense Reimbursement (prior to the repayment of the obligations owed on account of any prepetition secured financing) as and when such amounts are due and payable hereunder.
(b) Each of the parties to this Agreement acknowledges and agrees that the agreements contained in this Section 9.04 are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the other parties would not enter into this Agreement. Each of the parties further acknowledges that the payment by Sellers of the Breakup Fee and the Expense Reimbursement is not a penalty, but rather liquidated damages in a reasonable amount that will compensate Buyers, together with any additional damages to which Buyers may be entitled hereunder, in the circumstances in which such Breakup Fee and Expense Reimbursement is payable for the efforts and resources expended and the opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated herein, which amount would otherwise be impossible to calculate with precision. Without limiting in any way Buyers’ rights set forth in the DIP Loan Agreement, Buyers’ receipt in full of the Breakup Fee and the Expense Reimbursement, together with interest or collection expenses, if any, due and payable as provided herein, shall be the sole and exclusive monetary remedy of Buyers against Sellers, and Sellers shall have no further liability or obligation, under this Agreement or relating to or arising out of any such breach of this Agreement or failure to consummate the transactions contemplated herein. The obligations to pay the Breakup Fee and Expense Reimbursement in accordance with the provisions of this Section 9.04 will (i) be binding upon and enforceable against each Seller immediately upon the Bankruptcy Court’s entering the Bidding Procedures Order, (ii) not be terminable or dischargeable thereafter for any reason (except as otherwise set forth in this Agreement), (iii) survive any subsequent conversion or dismissal or consolidation of the Bankruptcy Case, any plan of reorganization or liquidation in such case, and (iv) survive the subsequent termination of this Agreement by any means. The obligation to pay Buyers the Breakup Fee and Expense Reimbursement, as and when required under this Agreement, are intended to be, and upon entry of the Bidding Procedures Order are, binding (only to the extent such obligations are not paid to Buyers from the proceeds of any Competing Transaction as and when such Competing Transaction is consummated) upon (A) each Seller, (B) any successors or assigns of any Seller, (C) any trustee of a Seller’s estate, (D) the reorganized Sellers and (E) any other entity vested or revested with any right, title or interest in or to a Seller, or any other Person claiming any rights in or control (direct or indirect) over any Seller (each of (A) through (E), a “Successor”) as if such Successor were a Seller hereunder. The obligations of Sellers to pay Buyers the Breakup Fee and Expense Reimbursement, as and when required under this Agreement (and only to the extent such obligations are not paid to Buyers from the proceeds of any Competing Transaction as and when such Competing Transaction closes), may not be discharged under Sections 1141 or 727 of the Bankruptcy Code or otherwise and may not be abandoned under Section 554 of the Bankruptcy Code or otherwise.
(c) For the avoidance of doubt, while Buyers may pursue (i) a grant of specific performance prior to the termination of this Agreement to cause the Closing and performance of this Agreement and (ii) concurrently pursue the payment of the Breakup Fee and the Expense Reimbursement, under no circumstances shall Buyers be permitted or entitled to receive both (A) the remedy of specific performance to cause the Closing and (B) the payment of the Breakup Fee and/or the Expense Reimbursement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing (including electronic mail (“e-mail”) transmission and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.01):
if to Buyers, to:
LEO Spiny Merger Sub, Inc.
Industriparken 55
DK-2750 Ballerup
Denmark
Attention: Legal Department
E-mail: legal@leo-pharma.com
with a copy (which shall not constitute notice) to:
Covington & Burling LLP
The New York Times Building, 620 8th Ave
New York
NY 10018
Attention: Uri Doron
E-mail: UDoron@cov.com
if to the Sellers prior to the Closing Date, to:
Timber Pharmaceuticals, Inc.
3 Mountainview Road, Suite 100,
Warren, NJ 07059
Attention: John Koconis
E-mail: jkoconis@timberpharma.com
with a copy (which shall not constitute notice) to:
Lowenstein Sandler LLP
One Lowenstein Drive
Roseland, NJ 07068
Attention: Steven Skolnick and Annie Nazarian Davydov
E-mail: sskolnick@lowenstein.com and anazarian@lowenstein.com
Section 10.02 No Survival of Representations and Warranties. The representations, warranties, covenants and agreements contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Closing Date and be extinguished by the Closing other than those covenants and agreements, that by their terms are to be performed at or after the Closing and the Sellers and Buyers agree that such covenants and agreements will survive the Closing hereunder until the expiration of the applicable statute of limitations or for such shorter period explicitly specified therein, and each party to this Agreement will be liable to the other parties after the Closing for any breach thereof.
Section 10.03 Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
Section 10.04 Entire Agreement. This Agreement, the Ancillary Documents and the DIP Loan Agreement constitute the entire agreement between the parties with respect to the subject matter contained herein and therein and supersede all prior agreements and understandings, both oral and written, between the parties with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Section 10.05 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 10.06 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
Section 10.07 Binding Effect; Benefit; Assignment.
(a) The provisions of this Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of each other party hereto, except that Buyers may transfer or assign its respective rights and obligations under this Agreement, in whole or from time to time in part, (i) to one or more of its Affiliates at any time, (ii) as collateral to any financing sources at any time and (iii) after the Closing Date, to any Person; provided that such transfer or assignment shall not relieve Buyers of their respective obligations hereunder or enlarge, alter or change any obligation of any other party hereto or due to Buyers.
Section 10.08 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 10.09 Amendment and Waivers.
(a) Any provision of this Agreement may be amended or waived prior to the Closing Date if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective.
(b) No failure or delay by any party 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. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable Law.
Section 10.10 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED 1N ACCORDANCE WITH FEDERAL BANKRUPTCY LAW, TO THE EXTENT APPLICABLE, AND WHERE STATE LAW IS IMPLICATED, THE INTERNAL LAWS OF THE STATE OF DELAWARE SHALL GOVERN, WITHOUT REGARD TO THE LAWS OF ANY OTHER JURISDICTION THAT MIGHT BE APPLIED BECAUSE OF CONFLICTS OF LAWS PRINCIPLES OF THE STATE OF DELAWARE.
(b) THE BANKRUPTCY COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR AMONG THE PARTIES HERETO, WHETHER AT LAW OR IN EQUITY, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT IF THE BANKRUPTCY COURT IS UNWILLING OR UNABLE TO HEAR ANY SUCH DISPUTE, THE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN DELAWARE WILL HAVE SOLE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR AMONG THE PARTIES HERETO, WHETHER AT LAW OR IN EQUITY, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.11 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, that money damages or other legal remedies would not be an adequate remedy for any such damage, and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (without proof of damages) in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. Each party agrees that no other party or Person shall be required to obtain, furnish, post or provide any bond or other security or instrument in connection with any remedy referred to in this Section 10.11, and each party irrevocably waives any right that it may have to require the obtaining, furnishing, posting or provision of any such bond or other security or instrument. If, prior to the End Date, any party brings any action, suit or proceeding in accordance with this Section 10.11 to enforce specifically the performance of the terms and provisions hereof by any other party, the End Date shall automatically be extended by (i) the amount of time during which such action, suit or proceeding is pending, plus 20 Business Days or (ii) such other time period established by the court presiding over such action, suit or proceeding, as the case may be.
Section 10.12 Counterparts; Effectiveness. This Agreement may be signed manually or by facsimile or other electronic transmission by the parties (including in .pdf, .tiff, .jpg or similar format), 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 all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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LEO PHARMA A/S |
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By /s/ Christophe Bourdon Name: Christophe Bourdon Title: CEO |
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By /s/ Philip Eickhoff Name: Philip Eickhoff Title: CFO |
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LEO SPINY MERGER SUB, INC. |
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By /s/ Philip Eickhoff Name: Philip Eickhoff Title: Non-executive Director |
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TIMBER PHARMACEUTICALS, INC. |
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By /s/ John Koconis Name: John Koconis Title: Chief Executive Officer TIMBER PHARMACEUTICALS, LLC. |
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By /s/ John Koconis Name: John Koconis Title: Chief Executive Officer BIOPHARMX, INC. |
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By /s/ John Koconis Name: John Koconis Title: Chief Executive Officer |
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Exhibit 10.2
SENIOR SECURED SUPERPRIORITY PRIMING
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
THIS SENIOR SECURED SUPERPRIORITY PRIMING DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “Agreement”), dated as of November 17, 2023, is made by and between TIMBER PHARMACEUTICALS, INC., a Delaware corporation (“Holdings”), TIMBER PHARMACEUTICALS LLC, a Delaware limited liability company (“Timber”), BIOPHARMX, INC., a Nevada Corporation (“BioPharmX”, and together with Holdings and Timber, each a debtor and debtor in possession in a case pending under Chapter 11 of the Bankruptcy Code and each individually a “Borrower” and together “Borrowers”), and LEO US HOLDING, INC., a Delaware corporation, as lender (together with its successors and assigns, “Lender”).
PRELIMINARY STATEMENTS
1. The Borrowers filed voluntary petitions with the Bankruptcy Court on November 17, 2023 (the date of such filing being referred to herein as the “Petition Date”) initiating the Case and are continuing in the possession of their assets and in the management of their business pursuant to Sections 1107 and 1108 of the Bankruptcy Code. The Bankruptcy Court entered the Interim Order on [], 2023, authorizing the Borrowers to enter into this Agreement.
2. Prior to the Petition Date, LEO US Holding, Inc. (the “Prepetition Lender”) provided financing to the Borrowers pursuant to the LEO Loan Agreement (as defined herein).
3. The Borrowers have requested that the Lender provide a term loan facility to the Borrowers in an aggregate principal amount not to exceed the Commitment (as defined herein), comprising (a) the Interim Loan (as defined herein) in the aggregate principal amount of $3,000,000, (b) the Final Loan (as defined herein) in the aggregate principal amount of $3,000,000, (c) the Post-Order Loan (as defined herein) in the aggregate principal amount of $1,400,000 and (d) the Roll-Up Loan (as defined herein) in the aggregate principal amount equal to $6,500,000 plus accrued and unpaid interest under the LEO Loan Agreement.
4. The proceeds of the Loans (as defined herein) will be used solely in the manner set forth in Section 5.2 hereof.
5. To provide security for the repayment of all obligations of the Borrowers hereunder and under the other Loan Documents (as defined herein), the Borrowers will provide to the Lender the following (all as more fully described herein), subject in each case to the Carve-Out (as defined herein):
(a) pursuant to Section 364(c)(1) of the Bankruptcy Code and the Order, as applicable, a Superpriority Claim in the Case having priority over any administrative claims of any entity, including, without limitation, any claims specified in or ordered pursuant to Sections 105, 326, 327, 328, 330, 331, 361, 362, 363, 365, 503, 506, 507, 546, 552, 726, 1113, 1114 or any other provisions of the Bankruptcy Code,
(b) pursuant to Section 364(c)(2) of the Bankruptcy Code and the Order, a perfected first priority Lien on all unencumbered property and assets of the Borrowers of any kind, including, upon entry of the Final Order, claims and causes of action under Sections 502(d), 544, 545, 547, 548 and 550 of the Bankruptcy Code (collectively, “Avoidance Actions”),
(c) pursuant to Section 364(c)(3) of the Bankruptcy Code and the Order, a perfected junior Lien on the property of the Borrowers subject to a Permitted Lien (other than the Primed Liens) (“Permitted Liens”), and
(d) pursuant to Section 364(d)(1) of the Bankruptcy Code and the Order, a perfected first priority senior priming Lien on all of the “Collateral” (as defined in the LEO Loan Agreement) (collectively, the “Primed Liens”).
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement (including the recitals hereof), the terms listed in this Section 1.1 shall have the respective meanings set forth in this Section 1.1.
“363 Sale” means the sale of all or substantially all of the assets of the Borrowers under Section 363 of the Bankruptcy Code in accordance with the Stalking Horse APA.
“Acquisition Closing”: the “Closing” (as defined in the Stalking Horse APA) of the Contemplated Transactions.
“Affiliate”: with respect to any Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For the purposes of this definition, “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”) as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities or by contract or otherwise.
“Agreement”: as defined in the preamble hereto.
“Alternative Transaction”: any plan, agreement or arrangement, other than the Stalking Horse APA, the effect and/or results of which involve the recapitalization or acquisition of either Borrower or substantially all of the assets of the Borrowers by any Person other than the Lender.
“Alternative Transaction Order”: as defined in this Section 1.1 in the definition of “Maturity Date.”
“Anti-Corruption Laws”: as defined in Section 3.9(c).
“Applicable Rate”: twelve percent (12.00 %) per annum.
“Assignee”: as defined in Section 8.7.
“Backup Bidder” has the meaning ascribed to such term in the Stalking Horse APA.
“Bankruptcy Code”: Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.
“Bankruptcy Court”: the United States Bankruptcy Court (or, as applicable, the District Court) for the District of Delaware.
“Bidding Procedures”: the bidding and sale procedures governing the 363 Sale as set forth in the Bidding Procedures Order and otherwise in form and substance reasonably satisfactory to the Lender and Borrower.
“Bidding Procedures Motion”: that certain motion or series of motions filed by the Borrowers in the Case, and in form and substance reasonably acceptable to the Borrowers and Lender, requesting approval for a bidding and sale process under Section 363 of the Bankruptcy Code to sell substantially all of the Borrowers’ business and assets, which shall include a motion seeking authority to establish bidding procedures.
“Bidding Procedures Order”: an order in the Case in form and substance reasonably satisfactory to the Lender and the Borrowers approving, among other things, (a) the Bidding Procedures, (b) subject to higher and better offers, the Stalking Horse APA, (c) the payment of the break-up fee and expense reimbursement to the Stalking Horse Bidders on the terms set forth in the Stalking Horse APA and (d) the ability of the Stalking Horse Bidders to credit bid the full amount of the Loans and other Obligations.
“Borrowers”: as defined in the preamble hereto.
“Budget”: the initial budget of the Borrowers in the form attached as Exhibit D to this Agreement and any subsequent budget approved by the Lender in its sole discretion.
“Budget Period”: each weekly period set forth in the Budget.
“Business”: the business of the development of non-systemic treatments for rare dermatologic diseases including congenital ichthyosis, including X-linked recessive CI and autosomal recessive CI and other sclerotic skin diseases.
“Business Day”: a day, other than Saturday, Sunday or other day on which commercial banks in Copenhagen, Denmark, New York, New York, or Wilmington, Delaware are authorized or required by applicable Requirement of Law to close.
“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including member interests, partnership interests and joint venture interests, and any and all warrants, rights or options to purchase (or convertible into, or exchangeable for) any of the foregoing.
“Carve-Out”: collectively: the sum of (i) all fees required to be paid to the Clerk of the Court and to the UST under section 1930(a) of title 28 of the United States Code in such amount, with respect to the UST, as agreed to by the UST or as determined by the Bankruptcy Court, (ii) Carve-Out Expenses,.
“Carve-Out Expenses”: unpaid claims for postpetition fees and expenses of persons or firms retained by the Borrowers whose retention is approved by the Bankruptcy Court pursuant to sections 327, 328, or 363 of the Bankruptcy Code but only to the extent such fees and expenses are (i) (a) incurred prior to the giving of a Remedies Notice by the DIP Lender to the Borrowers, (b) within the amounts set forth in the Budget (subject to any Variance Amounts) approved by the DIP Lender, (c) subsequently allowed by the Court under sections 330, 331, or 363 of the Bankruptcy Code, and (d) not otherwise paid from any retainers or any professional expense escrow account established by the Borrowers; or (ii) incurred after transmission of the Remedies Notice in an aggregate amount not to exceed $250,000, to the extent such fees and expenses are (a) subsequently allowed by the Court under sections 330, 331, or 363 of the Bankruptcy Code, and (b) not otherwise paid from any retainers or any other professional expense escrow account established by the Debtors.
“Case”: the case or cases of a Borrower or the Borrowers to be filed (or, currently pending, as the case may be) under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
“Cash Collateral”: “cash collateral” as such term is defined in Section 363(a) of the Bankruptcy Code, or any successor provision.
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
“Collateral”: all of the “Collateral” referred to in the Order or the other Security Documents and all of the other property and assets that are or are intended under the terms of the Order or the other Security Documents to be subject to Liens in favor of the Lender.
“Commitment”: the (i) New Money Commitment plus (ii) the Roll-Up Commitment in an aggregate principal amount at any time outstanding of up to an amount equal to $13,900,000 plus accrued and unpaid interest under the LEO Loan Agreement plus (iii) the amount of the Upfront Fee to be incurred and capitalized pursuant to Section 2.6, as such amount may be reduced from time to time in accordance with the terms of this Agreement.
“Commonly Controlled Entity”: an entity, whether or not incorporated, that is under common control with a Borrower within the meaning of Section 4001 of ERISA or is part of a group that includes a Borrower and that is treated as a single employer under Section 414 of the Code or the regulations thereunder.
“Company Product”: the programs TMB-001, TMB-003, BPX-01 and BPX-04.
“Contemplated Transactions”: all of the transactions among the Borrowers and the Lender contemplated by the Stalking Horse APA.
“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Creditors’ Committee”: any official committee of unsecured creditors appointed in the Case.
“Debtor Relief Laws”: 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 and affecting the rights of creditors generally.
“Default”: any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“DIP Orders”: the Interim Order and Final Order.
“Disposition” or “Dispose”: (a) the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property of a Borrower or any of its Subsidiaries (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any Capital Stock owned by a Borrower or any of its Subsidiaries, or any notes or accounts receivable or any rights and claims associated therewith, and (b) the issuance of Capital Stock by a Borrower or any of its Subsidiaries to any Person (in the case of any such Subsidiary, other than a Borrower or any of its Subsidiaries).
“Dollars” and “$”: dollars in lawful currency of the United States.
“Effect” means any event, state of facts, circumstance, change, occurrence, development, condition or effect.
“Effective Date”: as defined in Section 4.1(a).
“End Date”: February 15, 2024.
“Environmental Laws”: the Legal Requirements relating to pollution or protection of public or employee health or safety or the environment, including laws relating to (i) emissions, discharges, releases or threatened releases of Hazardous Materials, into the environment (including ambient air, indoor air, surface water, ground water, land surface or subsurface strata), (ii) the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transport or handling of Hazardous Materials, and (iii) underground and above ground storage tanks containing Hazardous Materials, and related piping, and emissions, discharges, releases or threatened releases therefrom.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Event of Default”: any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Facility”: the Commitment and the Loans made hereunder.
“Final Loan”: a loan made pursuant to the Final Order.
“Final Order”: the final order of the Bankruptcy Court with respect to this Agreement, substantially in the form of the Interim Order attached hereto, with any necessary changes required by the Bankruptcy Court, the Federal Rules of Bankruptcy Procedure or the Local Rules of the Bankruptcy Court, as necessary and as approved by the Lender.
“First Day Orders”: as defined in Section 4.1(d).
“Foreign Lender”: as defined in Section 2.7(d).
“GAAP”: generally accepted accounting principles in the United States as in effect from time to time.
“Governmental Approval”: any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
“Governmental Authority”: any transnational, domestic or foreign federal, state, provincial, local or other governmental, regulatory or administrative authority, department, court, agency, board, commission or official, including any political subdivision thereof, or any other governmental or quasi-governmental (including self-regulatory) authority or instrumentality.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrowers in good faith.
“Hazardous Material”: any pollutant, contaminant or toxic or hazardous substance, constituent, material or waste regulated under Environmental Laws, including petroleum, crude oil or any fraction thereof or any petroleum product, but does not include nominal quantities of any chemical used in the ordinary course of business as office or cleaning supplies.
“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, and (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.
“Interim Loan”: a Loan made pursuant to the Interim Order.
“Interim Order”: the interim order of the Bankruptcy Court with respect to this Agreement, substantially in the form of Exhibit B hereto, as the same may be amended, modified or supplemented from time to time with the express written consent of the Lender.
“Investment”: as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Capital Stock or debt of another Person, (b) a loan, advance or capital contribution to, Guarantee Obligation or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor incurs debt of the type referred to in clause (h) of the definition of “Indebtedness” set forth in this Section 1.1 in respect of such Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit of, or all of a substantial part of the business being conducted by, such Person.
“Legal Requirement”: any federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, statute or treaty.
“Lender”: as defined in the preamble hereto.
“LEO Loan Agreement”: the Secured Bridge Loan Agreement dated as of August 30, 2023 (as amended by that certain First Amendment to Secured Bridge Loan Agreement, dated as of October 27, 2023, and as it may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among the Borrowers and the Prepetition Lender, as holder, as it may have been amended, supplemented or modified prior to the Petition Date.
“Liabilities”: liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Lien”: with respect to any property or asset, any mortgage, lien, license, pledge, hypothecation, encroachment, occupancy right, preemptive right, charge, security interest, community property interest, encumbrance or other adverse claim of any kind in respect of such property or asset, including the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.
“Loan(s)”: an extension of credit by the Lender to the Borrowers pursuant to Section 2.1.
“Loan Documents”: this Agreement, the Security Documents, the Note, and any other agreement, instrument, certificate, report and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing any Loan or any other Obligation and any amendment, waiver, supplement or other modification to any of the foregoing.
“Material Adverse Effect”: any event, change, occurrence or state of facts that has had, or is reasonably likely to have, individually or in the aggregate, a material adverse effect on: (i) the assets, Liabilities, business, operations, properties, condition (financial or otherwise) or results of operations of the Business, taken as a whole; provided that, for purposes of the foregoing clause (i), no such Effect to the extent resulting from, attributable to or arising out of any of the following occurring after the date hereof shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur: (A) changes in general economic conditions in the United States, (B) changes in securities or financial market conditions in the United States, (C) changes in general conditions in the industry in which any Borrower and its Subsidiaries operate, (D) acts of war, sabotage or terrorism (whether the commencement or escalation thereof) or pandemics or natural disasters involving the United States, (E) changes in general political or social conditions in the United States, (F) changes in Requirements of Law affecting the Borrowers or the Business (it being understood and agreed that this clause (F) shall not apply with respect to any representation or warranty the purpose of which is to address compliance with applicable Requirements of Law), (G) changes in GAAP affecting any of the Borrowers (it being understood and agreed that this clause (G) shall not apply with respect to any representation or warranty the purpose of which is to address compliance with GAAP), (H) the failure to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period, in and of itself (it being understood and agreed that this clause (H) shall not apply with respect to any Effects giving rise or contributing to such change that are not otherwise excluded from this definition of “Material Adverse Effect”), (I) the announcement of this Agreement or the transactions contemplated hereby in accordance with the terms hereof (it being understood and agreed that this clause (I) shall not apply with respect to any representation or warranty the purpose of which is to address the consequences of the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby or the performance of obligations hereunder), (J) the sale process of the Business to the extent in accordance with the terms of the Bidding Procedures Order; or (ii) the Borrowers’ ability to consummate the transactions contemplated by this Agreement on or before the End Date. For the avoidance of doubt, the following events shall be deemed to constitute a Material Adverse Effect: (x) failure of any ongoing clinical study of a Company Product to meet its primary endpoint, including failure of the ASCEND Study (TMB01-301) to meet its primary endpoint at the conclusion of such study (proportion of subjects with ≥2-point improvement from Baseline in IGA scores in the treatment area at week 12 relative to placebo) at the pre-specified significance level of 0.01, (y) the clinical data resulting from the ASCEND Study (TMB01-301) (including by taking into account data integrity, data completeness, GCP compliance, and readiness of clinical sites for inspection by applicable Governmental Authorities) is not reasonably likely to be accepted by the U.S. Food and Drug Administration as support for a Marketing Application; or (z) the U.S. Investigational New Drug application for TMB-001 is on clinical hold for safety reasons.
“Marketing Application” means a “new drug application” as defined in the FDCA and 21 C.F.R. Part 314.
“Maturity Date”: the date which is the earliest of (a) the date that is three (3) months from the date of the first Loan under this Agreement, (b) the Acquisition Closing, (c) the first Business Day following the consummation of an Alternative Transaction previously approved by an order of the Bankruptcy Court (an “Alternative Transaction Order”), (d) the effective date as of which a Competing Transaction (as defined in the Stalking Horse APA) is consummated under the Stalking Horse APA, (e) the earlier of the effective date or the substantial consummation (as defined in Section 1101(2) of the Bankruptcy Code) of a Plan of Reorganization that has been confirmed by an order of the Bankruptcy Court, and (f) such earlier date on which all Loans and other Obligations for the payment of money shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents, including Section 7 hereof.
“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Cash Proceeds”: with respect to any Disposition by a Borrower or any of its Subsidiaries, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of the Borrowers or such Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such Disposition (other than Indebtedness under this Agreement), (ii) reasonable expenses related thereto incurred by the Borrowers or such Subsidiary in connection therewith (including, without limitation, attorneys’ fees and accountants’ fees), (iii) transfer taxes paid to any taxing authorities by the Borrowers or such Subsidiary in connection therewith, and (iv) income and franchise taxes to be paid in connection with such Disposition (after taking into account any tax credits or deductions to the extent available to offset income in the current taxable year, and any tax sharing arrangements); in each case, to the extent, but only to the extent, that the amounts so deducted are (x) actually paid or required to be paid (and reserved for such purpose) to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of the Borrowers or any of its Subsidiaries and (y) properly attributable to such transaction or to the asset that is the subject thereof.
“New Money Commitment”: the obligation of the Lender to make an Interim Loan, a Final Loan and a Post-Order Loan.
“Non-Excluded Taxes”: as defined in Section 2.7.
“Note”: each promissory note requested by Lender and executed by the Borrowers in favor of the Lender evidencing the Obligations of the Borrowers hereunder related to the Interim Loan, the Final Loan, the Post-Order Loan or the Roll-Up Loan, and all extensions, renewals, amendment, substitutions and replacements thereto.
“Notice of Borrowing”: a notice of a borrowing substantially in the form of Exhibit A.
“Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans) the Loans, and all other obligations and liabilities of the Borrowers to the Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses, or otherwise.
“OFAC”: as defined in Section 3.9(a).
“Order”: collectively, the Interim Order and the Final Order.
“Ordinary Course of Business” or “in the Ordinary Course”: the conduct of the Business in substantially the same manner as the Business was operated on the date of this Agreement.
“Other Taxes”: any and all present or future stamp or documentary taxes or any other excise taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.
“Patriot Act”: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Title III of Pub. L. 107‐56, signed into law October 26, 2001.
“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).
“Permitted Liens”: (i) Liens for Non-Excluded Taxes not yet due or delinquent or the validity or amount of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (ii) materialmen’s, mechanics’, carriers’, workers’, warehousemen’s, repairers’ and similar Liens arising in the ordinary course of business, securing obligations as to which there is no default and which are not yet due and payable, or the validity or amount of which is being contested in good faith by appropriate proceedings which have the effect of preventing the forfeiture or sale of the property subject thereto and for which adequate reserves have been established in accordance with GAAP, (iii) Liens to secure payment of workers’ compensation, unemployment insurance, social security or other social security legislation (other than Liens imposed by ERISA), (iv) with respect to real property, any nonmonetary Lien or other requirement or restriction arising under any zoning, entitlement, building, conservation restriction and other land use and environmental applicable Requirement of Law, but only if the same are not being violated by the current use of such real property or the operation of the Business, (v) Liens created in favor of Lender and its respective affiliates and (vi) Liens expressly disclosed in the Stalking Horse APA, in this Agreement, or in the other Loan Documents.
“Permitted Uses”: as defined in Section 5.2.
“Person”: an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or a Governmental Authority.
“Petition Date”: as defined in the preliminary statements hereto.
“Plan”: at a particular time, any employee benefit plan that is covered by ERISA and in respect of which the Borrowers or a Commonly Controlled Entity (i) is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA, (ii) is a sponsor, (iii) is obligated to contribute thereto, or (iv) otherwise has any liability with respect thereto.
“Plan of Reorganization”: a plan or plans of reorganization with respect to the Case.
“Post-Order Loan”: a loan in a principal amount not to exceed $1,400,000 made by the Lender to the Borrowers.
“Prepetition Financing Documents”: all “Loan Documents” as such term is defined in the LEO Loan Agreement.
“Prepetition Lender”: as defined in the Preamble.
“Prepetition Liabilities”: the “Obligations” as defined in the LEO Loan Agreement.
“Primed Liens”: as defined in the preliminary statements hereto.
“Properties”: the facilities and properties owned, leased or operated by the Borrower.
“Remedies Notice”: as defined in the Interim Order.
“Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under of PBGC Reg. § 4043.
“Requirement of Law”: as to any Person, the Bylaws and Certificate of Incorporation or other organizational or governing documents of such Person, and any Legal Requirement, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer”: the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Borrower or any of the other individuals designated in writing to the Lender by an existing Responsible Officer of a Borrower as an authorized signatory of any certificate or other document to be delivered hereunder.
“Roll-Up Commitment”: the obligation of the Lender to make a Roll-Up Loan to the Borrowers.
“Roll-Up Loan”: a loan made pursuant to the Final Order to be used to repay all Prepetition Liabilities to the Prepetition Lender.
“Sale Milestones”: the following milestones with respect to the Contemplated Transactions, in each case as any such time and date may be extended or such
milestone may be modified with the consent of the Lender:
(a) the Petition Date shall have occurred no later than one Business Day after the date of the Stalking Horse APA;
(b) the Borrowers shall file the Bidding Procedures Motion within two days of the Petition Date;
(c) a hearing of the Bankruptcy Court to approve the Bidding Procedures Motion shall be held and entry of the Bidding Procedures Order shall occur not later than 27 days after the Petition Date;
(d) the deadline for submission of qualified bids for the 363 Sale shall occur not later than 48 days after the Petition Date (the “Bid Deadline”);
(e) the auction, if any, for the 363 Sale (the “Auction”) shall be held not later than 4 days after the Bid Deadline; and
(f) a hearing of the Bankruptcy Court to approve the successful bid in the Auction shall be held not later than 4 days after the Auction, or if there are no Qualified Bidders (as defined in the Bidding Procedures Order), no later than 8 days following the Bid Deadline, and entry of the Sale Order shall occur not later than 10 days following the Bid Deadline.
“Sale Order”: the order entered by the Bankruptcy Court in the Case in form and substance reasonably satisfactory to the Borrowers and the Lender that, among other things, approves the 363 Sale.
“Sanctioned County”: as defined in Section 3.9(a).
“Sanctions”: as defined in Section 3.9(a).
“SDN List”: as defined in Section 3.9(a).
“SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.
“Secured Obligations”: as defined in the Security Agreement.
“Securities Act”: the Securities Act of 1933, as amended from time to time and any successor statute.
“Security Agreement”: that certain Security Agreement dated of even date herewith by the Borrowers to and for the benefit of Lender, as it may be amended, supplemented or otherwise modified from time to time.
“Security Documents”: the collective reference to the Security Agreement, the Order, any guaranty, and all other security documents hereafter delivered to the Lender granting a Lien on any property of any Person to secure the Obligations.
“Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is not a Multiemployer Plan.
“Stalking Horse APA”: the asset purchase agreement by and among each of the Borrowers, collectively as sellers and each individually a seller, and the Stalking Horse Bidders, as Buyers, providing for the acquisition of substantially all of the assets of the Borrowers under Section 363 of the Bankruptcy Code and attached as Exhibit C hereto.
“Stalking Horse Bidders”: collectively, LEO Spiny Merger Sub, Inc., a Delaware corporation, and LEO Pharma A/S, a Danish Aktieselskab.
“Subsidiary”: with respect to any Person, any other Person of which such Person or any of its Subsidiaries (i) is a general partner or holds a majority of the voting interests of a partnership or (ii) holds securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other corporate bodies performing similar functions (or, if there are no such ownership interests having ordinary voting power, 50% or more of the equity interests) which are at any time, directly or indirectly, owned or controlled by such Person.
“Superpriority Claim”: a claim under Section 364(c)(1) of the Bankruptcy Code against the Borrowers in the Case which is an administrative expense claim having priority over any or all administrative expenses, including, without limitation, administrative expenses of the kind specified in Sections 503(b), 506(c) or 507(b) of the Bankruptcy Code.
“Uniform Commercial Code” or “UCC”: the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in the State of Delaware or any other applicable jurisdiction.
“United States”: the United States of America.
“Upfront Fee”: as defined in Section 2.6.
“UST”: the Office of the United States Trustee.
“Variance Report”: a budget variance report/reconciliation, certified by a Responsible Officer, in a form acceptable to the Lender, setting forth (a) the actual cash receipts and disbursements of the Borrowers (i) for the Budget Period ending immediately prior to the Variance Report Date and (ii) on a cumulative basis, for the period commencing on the Petition Date and ending on the Friday immediately preceding such Variance Report Date (the “Cumulative Period”), in each case on (A) a line-item basis as of the end of the Budget Period and the Cumulative Period, respectively, and (B) in aggregate as of the end of the Budget Period and the Cumulative Period, respectively, (b) the variance in dollar amounts of the actual disbursements for each Budget Period and the Cumulative Period, respectively, from those budgeted amounts for the corresponding Budget Period and the Cumulative Period, respectively, reflected in the Budget, and (c) the variance of the actual cash receipts for the Budget Period from those budgeted amounts for the corresponding Budget Period and the Cumulative Period, respectively, reflected in the Budget; provided that, all amounts set forth on the Budget, including for the categories of (x) ordinary course expenses, and (y) estate professionals, will be cumulative per category (and not subject to line item restrictions) with all amounts to be carried forward and subject to a variance in an amount no greater than 115% of the amount allocated for each such category (the “Variance Amount”) set forth in the Budget, and provided further that the Budget and any variance therefrom shall not exceed the Commitment.
“Variance Report Date”: each Tuesday of each calendar week, commencing with the first Tuesday following the Petition Date.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this Agreement shall have the meanings set forth herein when such terms are used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (ii) the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings), (iii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights and (iv) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.
(c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 Commitment.
(a) Subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the Order, the Lender agrees to make Loans to the Borrowers at in an aggregate principal amount of Loans at any time outstanding not to exceed the amount of the Commitment. The Borrowers may draw only four Loans under the Commitment that shall be (i) an Interim Loan pursuant to the Interim Order, (ii) a Final Loan pursuant to the Final Order, (iii) a Roll-Up Loan pursuant to the Final Order and (iv) a Post-Order Loan in accordance with the Budget which shall be drawn on or prior to January 7, 2024. The Commitment in respect of the Interim Loan shall terminate automatically immediately upon the making of the Interim Loan, the Commitment in respect of the Final Loan shall terminate automatically immediately upon the making of the Final Loan, the Commitment in respect of the Roll-Up Loan shall terminate automatically immediately upon the making of the Roll-Up Loan, and the Commitment in respect of the Post-Order Loan shall terminate automatically immediately upon the making of the Post-Order Loan.
(b) Notwithstanding the foregoing:
(i) The aggregate principal amount of Loans outstanding at any time to the Borrowers shall not exceed the Commitment in effect at such time.
(ii) The Commitment shall automatically and permanently be reduced to zero on the Maturity Date. Within the limits set forth herein, the Borrowers may borrow, prepay and repay Loans, on or after the Effective Date and prior to the Maturity Date, subject to the terms, provisions and limitations set forth herein; provided, however, that amounts repaid or prepaid may not be reborrowed.
2.2 Making the Loans.
(a) The Borrowers shall give the Lender prior telephonic notice (promptly confirmed in writing by e-mail, in substantially the form of Exhibit A hereto (a “Notice of Borrowing”)), not later than 12:00 noon (New York time) on the date which is three (3) Business Days prior to the date of the proposed Loan (or such shorter period as the Lender is willing to accommodate from time to time, but in no event later than 12:00 noon (New York time) at least one (1) Business Day prior to the borrowing date of the proposed Loan). Such Notice of Borrowing shall be irrevocable and shall specify (i) the aggregate principal amount of the proposed Loan and line-item amounts for each of the proposed uses of the proposed Loan, (ii) the use(s) of the proposed Loan, in reasonable detail (which use(s) must be Permitted Uses) and (iii) the proposed borrowing date, which must be a Business Day. The Lender may act without liability upon the basis of written, electronic, telecopied, or telephonic notice believed by the Lender in good faith to be from the Borrowers (or from any Responsible Officer thereof designated in writing purportedly from the Borrowers to the Lender). The Borrowers hereby waive the right to dispute the Lender’s record of the terms of any such telephonic Notice of Borrowing. The Lender shall be entitled to rely conclusively on any Responsible Officer’s authority to request a Loan on behalf of the Borrowers until the Lender receives written notice to the contrary. The Lender shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing.
2.3 Repayment of the Loans. The Loans shall mature on the Maturity Date and shall be indefeasibly repaid in full in immediately available funds on the Maturity Date. Unless otherwise provided under this Agreement, all payments (including prepayments) to be made by the Borrowers hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 noon (New York time) on the due date thereof to the Lender at the office of the Lender specified in Section 8.2 (or such other office as may be specified from time to time by the Lender by written notice to the Borrowers), in Dollars and in immediately available funds. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. In the case of any extension of any payment of principal pursuant to the preceding sentence, interest thereon shall be payable at the then applicable rate during such extension.
2.4 Reduction of Commitment; Prepayments.
(a) Termination; Reduction of Commitment.
(i) The Commitment shall terminate on the Maturity Date.
(ii) The Borrowers may, without premium or penalty, reduce the Commitment to an amount (which may be zero) not less than the sum of (A) the aggregate unpaid principal amount of all Loans then outstanding and (B) the aggregate principal amount of all Loans not yet made as to which a Notice of Borrowing has been given by the Borrowers under Section 2.2. Each such reduction (1) shall be in an amount which is an integral multiple of $100,000 (unless the Commitment in effect immediately prior to such reduction is less than $100,000), (2) shall be made by providing not less than five (5) Business Days’ prior written notice to the Lender and (3) shall be irrevocable.
(iii) Once reduced, the Commitment may not be increased.
(b) Optional Prepayment. The Borrowers may at any time and from time to time prepay the principal of any Loan, in whole or in part without penalty or premium.
(c) Mandatory Prepayment.
(i) If at any time the aggregate principal amount of all Loans exceeds the Commitment, the Borrowers shall immediately prepay the Loans to the full extent of any such excess.
(ii) Immediately upon any Disposition by a Borrower or any of its Subsidiaries, the Borrowers shall prepay the outstanding principal amount of the Loans in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such Disposition. Nothing contained in this subsection (ii) shall permit a Borrower or any of its Subsidiaries to make a Disposition of any property other than in accordance with Section 6.5.
2.5 Interest Rates and Payment Dates. Each Loan shall bear interest at a rate per annum equal to the Applicable Rate. All computations of interest shall be made on the basis of a 360- day year and actual days elapsed.
(a) On or prior to the Maturity Date, if any Event of Default shall occur, the Loans (whether or not overdue) shall bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2.00%, (ii) after the Maturity Date, the Loans shall bear interest at a rate per annum equal to the rate then applicable to the Loans under the Facility plus 2.00% and (iii) if all or a portion of any interest payable on any Loan or any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then applicable to the Loans under the Facility plus 2.00%, in each case, with respect to clauses (i), (ii) and (iii) above, from the date of such nonpayment until such amount is indefeasibly paid in full in immediately available funds (as well after as before judgment).
(b) Interest shall accrue and be payable on the Maturity Date, provided that interest accruing pursuant to paragraph (a) of this Section shall be payable from time to time on demand.
2.6 Upfront Fee. The Borrowers agree to pay to the Lender an upfront fee equal to 2.00% of the aggregate principal amount of the New Money Commitment as of the Effective Date (the “Upfront Fee”). The Upfront Fee shall be fully earned as of the Effective Date and shall be paid in kind on the Effective Date by being capitalized and added to the principal amount of the Loans.
2.7 Taxes.
(a) All payments made by the Borrowers under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any and all present or future income, stamp or other taxes, levies, imposts, duties, charges, assessments, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto), excluding: (i) taxes imposed on or measured by net income and franchise taxes (imposed in lieu of net income taxes) imposed on the Lender as a result of (x) such Lender being organized under the laws of, or having its principal office located in, the jurisdiction imposing such tax or (y) such Lender having a present or former connection between the Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (ii) U.S. federal withholding taxes imposed on any amount payable to a Lender pursuant to a law in effect on the date such Lender becomes a party to this Agreement, and (iii) taxes that are attributable to the Lender’s failure to comply with the requirements of Section 2.7(d) of this Agreement. If any taxes that are not described in clauses (i) through (iii) of the prior sentence (such taxes, the “Non-Excluded Taxes”) or Other Taxes are required to be deducted or withheld from any amounts payable to the Lender hereunder, the amounts so payable to the Lender shall by way of additional interest be increased to the extent necessary to pay to the Lender (after payment of all Non-Excluded Taxes and Other Taxes) a sum equal to the amount such Lender would have received had no such deduction of withholding been required.
(b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrowers, as promptly as possible thereafter the Borrowers shall send to the Lender for its own account a certified copy of an original official receipt received by the Borrowers showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fail to remit to the Lender the required receipts or other required documentary evidence, the Borrowers shall indemnify the Lender for any incremental taxes, interest or penalties that may become payable by the Lender as a result of any such failure.
(d) Each Lender that is organized under the laws of: (i) the United States shall execute and deliver to the Borrowers two completed copies of IRS form W-9 on or prior to the Effective Date and (ii) the laws of a jurisdiction other than the United States (a “Foreign Lender”) shall execute and deliver to the Borrowers two completed copies of IRS form W-8ECI, W-8BEN, or W-8IMY (and any supporting documentation requested by the Borrowers), as applicable, or other applicable form, certificate or document prescribed by the United States IRS certifying as to such Lender’s entitlement to exemption from U.S. withholding taxes on or prior to becoming a Lender under this Agreement. Specifically, a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrowers within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrowers as described in Section 881(c)(3)(C) of the Code and (y) executed copies of IRS Form W-8BEN or IRS Form W‑8BEN-E.
(e) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
2.8 Evidence of Indebtedness. The Lender shall maintain an account or accounts evidencing the Obligations of the Borrowers to the Lender resulting from each Loan made by the Lender, including the amounts of principal and interest payable and paid to the Lender from time to time hereunder. The entries made in such accounts, to the extent permitted by applicable law, shall be prima facie evidence of the existence and amounts of the obligations recorded therein, absent manifest error; provided, that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement and the other Loan Documents. Upon request of the Lender, the Borrowers shall execute and deliver one or more Notes payable to the order of the Lender and evidencing the Interim Loan, Final Loan, Post-Order Loan or Roll-Up Loan, as applicable.
2.9 Priority and Liens.
(a) Superpriority Claims and Liens. The Borrowers hereby covenant, represent and warrant that, upon entry of the Order, the Obligations of the Borrowers to the Lender under the Loan Documents, subject in each case (with respect to priority only) to the Carve-Out:
(i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim of the Lender;
(ii) pursuant to Section 364(c)(2) of the Bankruptcy Code, shall at all times be secured by a perfected first priority Lien on all tangible and intangible property of the Borrowers that is not subject to Permitted Liens, including, upon entry of the Final Order, Avoidance Actions;
(iii) pursuant to Section 364(c)(3) of the Bankruptcy Code, shall be secured by a perfected Lien upon all tangible and intangible property of the Borrowers that is subject to Permitted Liens; and
(i) pursuant to Section 364(d)(1) of the Bankruptcy Code, shall be secured by a perfected first priority senior priming Lien upon all tangible and intangible property of the Borrowers that is subject to Primed Liens, all of which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior Liens of the Lender.
(b) Set-Off. Subject to Section 7 hereof, upon the occurrence and during the continuance of any Event of Default, the Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Legal Requirements and without further order of or application to the Bankruptcy Court, to set off and apply any and all deposits (general or special, time or demand, provisional or final, other than payroll, trust, withholding and tax accounts) at any time held by, or on behalf of, Lender, and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrowers against any and all of the obligations of the Borrowers under the Loan Documents, whether or not such obligations are then due. The Lender shall notify the Borrowers of such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Lender under this Section 2.9(b) are in addition to other rights and remedies which it may have on the Maturity Date or upon the occurrence and during the continuance of any Event of Default under the Loan Documents or the Order.
(c) Discharge. Each Borrower agrees that (i) its obligations hereunder shall not be discharged by the entry of an order confirming a Plan of Reorganization (and each Borrower, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge) and (ii) the Superpriority Claim granted to the Lender pursuant to the Order, and described in Section 2.9(a) and the Liens granted to the Lender pursuant to the Order, and the Security Documents shall not be affected in any manner by the entry of an order confirming a Plan of Reorganization.
2.10 Security. Upon entry of the Order, as security for the prompt payment and performance of all Secured Obligations of the Borrowers, each Borrower has granted, in accordance with the provisions hereof, the Security Documents applicable to such Borrower and the Order, to the Lender a security interest in all of its right, title and interest in and to all of the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loans, each Borrower hereby represents and warrants to the Lender that:
3.1 Continued Compliance with the Stalking Horse APA. Each of the representations and warranties made by any Borrower in or pursuant to the Stalking Horse APA, each of which is expressly incorporated and made applicable to the transactions under the Loan Documents herein by reference, is true and correct in all respects with respect to each Borrower (in the case of any representation or warranty that is subject to a materiality or Material Adverse Effect qualifier) or in all material respects (in the case of any representation or warranty that is not subject to a materiality or Material Adverse Effect qualifier) as if made on the date hereof. Each Borrower has performed and complied with all of its obligations and agreements under the Stalking Horse APA in all respects (in the case of any representation or warranty that is subject to a materiality or Material Adverse Effect qualifier) or in all material respects (in the case of any representation or warranty that is not subject to a materiality or Material Adverse Effect qualifier).
3.2 No Legal Bar. Subject to the entry of the Order (which shall have occurred prior to the making of any Loan), the execution, delivery and performance of this Agreement and the other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate in any material respect any Requirement of Law or any Contractual Obligation of any Borrower and will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents); provided that, this Agreement and the transactions contemplated by, and only to the extent such transactions are effected under and in accordance with the terms of, this Agreement shall be deemed to have been consented to by the Prepetition Lender and shall not constitute an “Event of Default” under the LEO Loan Agreement.
3.3 No Default. No Borrower is in default under or with respect to any of its Contractual Obligations in any respect that could reasonably be expected to result in a Material Adverse Effect.
3.4 Federal Regulations. No portion of any Loan is to be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations U and X of the FRB 12 C.F.R. Parts 221 and 224.
3.5 Investment Company Act; Other Regulations. No Borrower is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Borrower is subject to regulation under any Requirement of Law that limits its ability to incur Indebtedness.
3.6 Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document or any other document, certificate or statement furnished by or on behalf of any Borrower to the Lender for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained herein or therein not misleading.
3.7 Financial Statements; No Material Adverse Effect. Except as set forth on Schedule 3.7, there is no fact known to any Borrower that could reasonably be expected to result in a Material Adverse Effect that has not been expressly disclosed in the Stalking Horse APA, in this Agreement, in the other Loan Documents or in any other documents, certificates and statements furnished to the Lender for use in connection with the transactions contemplated hereby and by the other Loan Documents.
3.8 Secured Superpriority Obligations. On and after the Effective Date and the entry of each of the DIP Orders, such DIP Order and the Loan Documents are sufficient to provide the Superpriority Claims and Liens described in, and with the priority provided in, Section 2.9 of this Agreement and such DIP Order. From and after entry of each DIP Order, such DIP Order shall be in full force and effect and shall not have been vacated, reversed, modified, amended, rescinded or stayed without the prior written consent of the Lender.
3.9 Foreign Assets Control Regulations; Anti-Money Laundering; Anti-Corruption Practices.
(a) Each Borrower is in compliance with all U.S. economic sanctions laws, Executive Orders and implementing regulations (“Sanctions”) as administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department. No Borrower is (i) a Person on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”), (ii) a person who is otherwise the target of U.S. economic sanctions laws such that a U.S. person cannot deal or otherwise engage in business transactions with such person, (iii) a Person organized or resident in a country or territory subject to comprehensive Sanctions (a “Sanctioned Country”), or (iv) owned or controlled by (including by virtue of such Person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any Person on the SDN List or a government of a Sanctioned Country such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited by U.S. law.
(b) Each Borrower is in compliance with all laws related to terrorism or money laundering including: (i) all applicable requirements of the Currency and Foreign Transactions Reporting Act of 1970 (31 U.S.C. 5311 et. seq., (the Bank Secrecy Act)), as amended by Title III of the USA Patriot Act, (ii) the Trading with the Enemy Act, (iii) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (66 Fed. Reg. 49079), any other enabling legislation, executive order or regulations issued pursuant or relating thereto and (iv) other applicable federal or state laws relating to “know your customer” or anti-money laundering rules and regulations.
(c) Each Borrower is in compliance with all applicable anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977 and the U.K. Bribery Act 2010 (“Anti-Corruption Laws”).
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effective Date. This Agreement shall become effective as of the Business Day (the “Effective Date”) when each of the following conditions precedent shall have been satisfied or waived in a manner satisfactory to the Lender in its sole and absolute discretion:
(a) The Lender shall have received each of the following, each of which shall be originals or telecopies, each dated on or prior to the Effective Date (or, in the case of certificates of governmental officials, a recent date before the Effective Date) each in form and substance satisfactory to the Lender and in such number of copies as may be requested by the Lender:
(i) duly executed counterparts of this Agreement;
(ii) the Security Agreement, duly executed by the Borrowers;
(iii) the Note(s), duly executed by the Borrowers;
(iv) such duly executed certificates of resolutions or consents, incumbency certificates and/or other duly executed certificates of Responsible Officers of each Borrower as the Lender 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 Loan Documents;
(v) such documents and duly executed certifications as the Lender may reasonably require to evidence that each Borrower is duly organized or formed, and that each Borrower is validly existing and in good standing in the jurisdiction where it is formed;
(vi) a certificate signed by a Responsible Officer of each Borrower certifying, as of the Effective Date, that since the Petition Date there has been no change, event, circumstance or development that, individually or in the aggregate, has resulted in, or would reasonably be expected to result in, a Material Adverse Effect.
(b) All Governmental Approvals and all third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Lender) and shall remain in effect; all applicable governmental filings shall have been made and all applicable waiting periods in connection with the transactions contemplated hereby shall have expired without, in either case, any action being taken by any Governmental Authority, and no law or regulation shall be applicable in the reasonable judgment of the Lender that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby.
(c) The Interim Order shall have been entered by the Bankruptcy Court, shall be in full force and effect and shall not have been amended, modified, stayed or reversed without the prior written consent of the Lender.
(d) All of the “first day motions” and related orders submitted on or about the date of the commencement of the Case shall be in form and substance reasonably satisfactory to the Lender and, as entered, shall not deviate from the form thereof approved by the Lender in any material respect which is adverse to the interests of the Lender (such orders hereinafter being referred to as “First Day Orders”.
(e) The Bidding Procedures Motion and the related exhibits (including the forms of Bidding Procedures, Bidding Procedures Order and Sale Order) shall be in form and substance acceptable to the Lender in its sole discretion.
(f) The Lender shall have received, at least one Business Day prior to the Effective Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act.
(g) Each of the representations and warranties made by the Borrowers in or pursuant to the Loan Documents shall be true and correct in all respects (subject to any qualification provided therein) or in all material respects (in the case of any representation or warranty not otherwise qualified) on and as of such date as if made on and as of such date.
(h) No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.
(i) All proceedings in connection with the making of such Loan and the other transactions contemplated by this Agreement and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Lender, and the Lender shall have received all such agreements, instruments, approvals, opinions, and other documents, each in form and substance satisfactory to the Lender, as the Lender may reasonably request.
4.2 Conditions Precedent to All Loans. The obligation of the Lender to make any Loan on or after the Effective Date is subject to the fulfillment of each of the following conditions precedent:
(a) (i) With respect to the making of the Interim Loan, the Interim Order shall have been entered by the Bankruptcy Court, shall be in full force and effect and shall not have been amended, modified, stayed or reversed without the prior written consent of the Lender, and (ii) with respect to the making of the Final Loan, the Post-Order Loan and the Roll-Up Loan, both the Interim Order and the Final Order shall have been entered by the Bankruptcy Court, shall be in full force and effect and shall not have been amended, modified, stayed or reversed without the prior written consent of the Lender.
(b) All material motions and other documents to be filed with and submitted to the Bankruptcy Court in connection with any Order shall have been, prior to such filing and submittal, (x) received by the Lender reasonably in advance of filing and (y) approved by and in form and substance satisfactory to, the Lender in its reasonable discretion.
(c) The Lender shall have received, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrowers hereunder (provided that for the avoidance of doubt, the Borrowers shall not be required to pay any of the reasonable and documented fees and expenses of Covington & Burling LLP, as counsel to the Lender).
(d) Each of the representations and warranties made by the Borrowers in or pursuant to the Loan Documents shall be true and correct in all respects (subject to any qualification provided therein) or in all material respects (in the case of any representation or warranty not otherwise qualified) on and as of such date as if made on and as of such date.
(e) No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.
(f) The Lender shall have received a Notice of Borrowing pursuant to Section 2.2 hereof.
SECTION 5. AFFIRMATIVE COVENANTS
Each Borrower hereby agrees that, so long as the Commitment remains in effect or any Loan or Obligations or other amounts are owing to the Lender hereunder or under the other Loan Documents, such Borrower shall:
5.1 Further Assurances. At any time or from time to time upon the request of the Lender, at the expense of the Borrowers, promptly execute, acknowledge and deliver such additional instruments, certificates or documents, and do all such other acts and things as the Lender may reasonably request for purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, of providing for payment of the Obligations in accordance with the terms of this Agreement, the Notes and the other Loan Documents, or of more fully perfecting or renewing the rights of the Lender with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds or products thereof or with respect to any other property or assets hereafter acquired by the Borrowers which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, the Borrowers shall execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Lender may be required to obtain from the Borrowers for such governmental consent, approval, recording, qualification or authorization (to the extent the Borrowers are permitted by applicable law to do so). The Borrowers shall fully preserve or cause to be fully preserved the Liens granted by the Security Documents.
5.2 Use Of Proceeds. Use the proceeds of the Loans (i) to repay the Prepetition Liabilities in full (subject to the Final Order) and (ii) to pay the Borrower’s reasonable and documented expenses in accordance with the terms of the Budget (subject to any Variance Amounts) and any applicable Variance Report(s), as reviewed and approved by the Lender in its sole discretion (collectively, the “Permitted Uses”).
5.3 Preservation Of Existence; Business, Etc. Except as set forth on Schedule 5.3 (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the laws of the jurisdiction of its organization; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal conduct of its business; (c) preserve or renew all of its material registered patents, trademarks, trade names and service marks; and (d) maintain and operate its business in substantially the manner in which it is presently conducted and operated, and in compliance with all covenants of the Borrowers set forth in the Stalking Horse APA.
5.4 Financial Information; Default Notices. Deliver to the Lender, in form satisfactory to the Lender:
(a) as soon as reasonably practicable after request by the Lender, such cash flows, cash balance reports or other financial reports as reasonably requested by the Lender; and
(b) promptly (and in any event within two Business Days) provide written notice to the Lender of the occurrence of any Default or Event of Default, describing the nature of such Default or Event of Default and any remedial actions being taken with respect thereto.
5.5 Sale Milestones; Other Bankruptcy Matters. The Borrowers and their Subsidiaries shall (a) comply with and achieve the Sale Milestones, (b) comply in a timely manner with their obligations and responsibilities as debtors-in-possession under the Bankruptcy Code, the Bankruptcy Rules, the DIP Orders, the First Day Orders and any other order of the Bankruptcy Court, (c) to the extent reasonably practicable, at least three (3) calendar days prior to the date when the Borrowers intend to file the same, all substantive motions and other filings made in the Cases, including any “first day” or “second day” motions, any Chapter 11 plan or disclosure statement, or relating to the 363 Sale, and, in each case, any related proposed orders, (d) provide the Lender with timely updates of any material developments in connection with the Cases and the 363 Sale, and (e) deliver or cause to be delivered to the Lender, in accordance with the Bid Procedures, copies of any documents related to the sale of the assets of one or more of the Borrowers.
5.6 Budget and Variance Reports. The Borrowers and their Subsidiaries shall deliver to the Lender on each Variance Report Date, a Variance Report for the applicable Budget Period and Cumulative Period. The Borrowers shall, and shall cause their Subsidiaries to, cause spending to comply with the Budget and any applicable Variance Report(s), as reviewed and approved by the Lender in its sole discretion.
5.7 Clinical Trials. The Borrower shall (i) take such actions as are reasonably necessary to pursue NDA submission for TMB-001 no later than March 31, 2025; (ii) perform or continue to perform the actions set forth in Schedule 5.7; and (iii) use their reasonable best efforts to continue the ASCEND Study (TMB01-301) study as currently contemplated, including the recruitment of patients for any Borrower’s ongoing clinical trials relating to any Company Product, until the number of randomized patients included therein amounts to one hundred twenty (120) patients.
SECTION 6. NEGATIVE COVENANTS
Each Borrower hereby agrees that, so long as the Commitment remains in effect or any Loan or other Obligations or other amounts are owing to the Lender hereunder or under any other Loan Document, such Borrower shall not, directly or indirectly:
6.1 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a financing statement that names any Borrower as debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, other than the following:
(a) Liens pursuant to any Loan Document and the Order;
(b) Permitted Liens; and
(c) pledges or deposits in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA.
6.2 Indebtedness. Create, incur, assume or suffer to exist any secured Indebtedness, except:
(a) Indebtedness under the Loan Documents; and
(b) secured Indebtedness outstanding on the date hereof and listed on Schedule 6.2.
6.3 Investments. Make or hold any Investments, except:
(a) Investments held by the Borrowers in the form of cash or cash equivalents;
(b) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the Ordinary Course of Business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and
(c) Investments existing on the date hereof and listed on Schedule 6.3.
6.4 Fundamental Changes. Except as set forth on Schedule 6.4, merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, other than the Contemplated Transactions or an Alternative Transaction.
6.5 Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of obsolete or worn out property or property no longer used or useful in the Business of the Borrower, whether now or hereafter owned or leased, in the Ordinary Course of Business of such Person;
(b) Dispositions of inventory in the Ordinary Course of Business;
(c) Dispositions of equipment, software or real 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 Disposition are reasonably promptly applied to the purchase price of such replacement property; and
(d) the marketing for sale and the sale of the assets of the Business in accordance with the Stalking Horse APA, the Bidding Procedures Order, and the transactions contemplated thereby.
6.6 Change In Nature Of Business. Engage in any line of business different from the Business.
6.7 Transactions With Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrowers, whether or not in the Ordinary Course of Business, other than on fair and reasonable terms substantially as favorable to the Borrowers as would be obtainable by the Borrowers at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to transactions, arrangements, fees reimbursements and indemnities specifically and expressly permitted between or among such parties under this Agreement.
6.8 Accounting Changes. Other than as required pursuant to UST guidelines and other Bankruptcy Court requirements, make any change in (i) accounting policies or reporting practices in a manner that could materially affect the results of computation of any financial ratio or data for a given reporting period, except (x) as required by generally accepted accounting principles, (y) as required for compliance with the Sarbanes-Oxley Act or (z) as pre-approved by the Lender, or (ii) its fiscal year.
6.9 Partnerships, Etc. Become a general partner in any general or limited partnership or joint venture.
6.10 Speculative Transactions. Engage in any transaction involving any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement (including caps and collars with respect to interest rates, currency exchange rates or commodity prices) or futures contracts for speculative purposes or any similar speculative transactions, which are, in any case, inconsistent with prior practice and not otherwise made in the Ordinary Course of Business.
6.11 Formation Of Subsidiaries. Organize or invest in any new Subsidiary.
6.12 Administrative Priority; Lien Priority; Payment.
(a) At any time, suffer to exist a priority for any administrative expense, secured claim or unsecured claim against the Borrowers (now existing or hereafter arising of any kind or nature whatsoever), including without limitation any administrative expense of the kind specified in, or arising or ordered under, Sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c) 726 or 1114 of the Bankruptcy Code equal or superior to the priority of the Lender in respect of the Obligations, except for the Carve-Out.
(b) At any time, suffer to exist any Lien on the Collateral having a priority equal or superior to the Lien in favor of the Lender in respect of the Collateral, except for Permitted Liens and the Carve-Out.
(c) Prior to the date on which the Obligations have been paid in full in cash, pay any administrative expense claims except (i) Obligations due and payable hereunder, (ii) other administrative expense and professional claims incurred in the ordinary course of the business of the Borrowers or the Case, including pursuant to the Budget and (iii) the Carve-Out.
6.13 OFAC; USA Patriot Act; Anti-Corruption Laws. Permit any of its Subsidiaries to fail to comply with the laws, regulations and executive orders referred to in Section 3.9. The Borrowers will not use the proceeds of any Loan, directly or, knowingly, indirectly, for any payments to any Person, including any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, or otherwise take any action, directly or, knowingly, indirectly, that would result in a violation of any Anti-Corruption Laws. Furthermore, the Borrowers will not, directly or indirectly, use the proceeds of any Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, Affiliate, joint venture partner or other Person, to fund any activities of or business with any Person, or in any country or territory, 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 participating in the transaction of any Sanctions.
6.14 Clinical Trials. Permit any material change or modification to or termination of any of the Borrower’s ongoing clinical trials relating to any Company Product not previously made known to Lender.
6.15 Orders; Bankruptcy Actions. (a) Notwithstanding anything to the contrary in this Agreement, use any portion or proceeds of the Loans or the Collateral, or disbursements set forth in the Budget (subject to any Variance Amounts), for payments or purposes that would violate the terms of the applicable Order, or (b) seek, consent to, or not contest, without the prior written consent of the Lender, any order granting authority to take any action that is prohibited by the terms of this Agreement, the applicable Order or other Loan Documents or refrain from taking any action that is required to be taken by the terms of this Agreement, the applicable Order or any of the other Loan Documents.
SECTION 7. EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events shall occur and be continuing:
(a) the Borrowers shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrowers shall fail to pay any interest on any Loan or any other amount payable hereunder or under any other Loan Document, within one Business Day after any such interest or other amount becomes due in accordance with the terms hereof, or any Borrower shall use the proceeds of any Loan for purposes other than as described in the corresponding Notice of Borrowing; or
(b) any representation or warranty made or deemed made by any Borrower herein or in any other Loan Document or that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been inaccurate in any respect (subject to any qualification provided therein) or in any material respect (in the case of any representation or warranty not otherwise qualified) on or as of the date made or deemed made; or
(c) any Borrower fails to perform or observe any term, covenant or agreement contained in any of Sections 2.9 or 2.10, Section 5 or Section 6; or
(d) any Borrower shall Default in the observance or performance of any other provision contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such Default shall continue unremedied for a period of five (5) calendar days after notice to the Borrowers from the Lender; or
(e) any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of any Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Lender, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Lender is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could, in the sole judgment of the Lender, reasonably be expected to result in a Material Adverse Effect; or
(f) one or more judgments or decrees shall be entered against any Borrower involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage) of $25,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within five (5) Business Days from the entry thereof; or
(g) any of the Security Documents shall cease, for any reason, to be in full force and effect, or any Borrower or any Affiliate of any Borrower shall file a proceeding or take any other action to revoke or invalidate the Security Documents without the express written consent of the Lender, or any Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or
(h) a Material Adverse Effect has occurred; or
(i) an order (which has not been stayed) with respect to the Case shall be entered by the Bankruptcy Court appointing, or any Borrower shall file an application for an order with respect to the Case seeking the appointment of, (i) a trustee under Section 1104 of the Bankruptcy Code, or (ii) an examiner with enlarged powers relating to the operation of the business (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; or
(j) an order with respect to the Case shall be entered by the Bankruptcy Court converting the Case to a Chapter 7 case or any Borrower shall file a motion or not oppose a motion seeking such relief, unless such motion is consented to by the Lender; or
(k) the Bankruptcy Court shall enter an order or orders granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code to the holder or holders of any security interest to permit foreclosure (or the granting of a deed in lieu of foreclosure or the like) on any Collateral of any Borrower which has a value in excess of $25,000 in the aggregate or permits any third party to commence or continue any litigation against any Borrower involving a potential liability not covered by insurance in excess of $25,000 in the aggregate; or
(l) an order shall be entered by any court, tribunal, or governmental authority or agency, or any Borrower shall apply for authority, to revoke, reverse, stay, modify, supplement or amend any DIP Order without the express prior written consent of the Lender; or
(m) an order with respect to the Case shall be entered by the Bankruptcy Court without the express prior written consent of the Lender (i) to permit any administrative expense or any claim (now existing or hereafter arising, of any kind or nature whatsoever) to have administrative priority as to any Borrower equal or superior to the priority of the Lender in respect of the Obligations, except for allowed administrative expenses to the extent set forth in the Order including, but not limited to, administrative expenses authorized pursuant to the Budget, or (ii) to grant or permit the grant of a Lien on the Collateral, other than a Permitted Lien or any Lien in favor of the Lender; or
(n) any Borrower shall make any payment of principal or interest or otherwise on account of any prepetition Indebtedness or trade payable (excluding payments effected by a setoff of obligations as permitted by Section 553 of the Bankruptcy Code) in excess of $1,000 (except to the extent such payment is authorized pursuant to the Budget), without the express prior written consent of the Lender and the approval of the Bankruptcy Court other than as provided for in any First Day Orders; or
(o) any Borrower shall file a motion in the Case (i) to use Cash Collateral of the Lender under Section 363(c) of the Bankruptcy Code without the express prior written consent of the Lender, (ii) to recover from any portions of the Collateral any costs or expenses of preserving or disposing of such Collateral under Section 506(c) of the Bankruptcy Code, to cut off rights in the Collateral under Section 552(b) of the Bankruptcy Code, or (iii) to take any other action or actions materially adverse to the Lender or its rights and remedies hereunder or under any of the other Loan Documents or the Lender’s interest (as lender under the Loan Documents) in any of the Collateral; or
(p) except as set forth in Schedule 3.7, any Borrower shall file a motion seeking to assume or reject any executory contract or lease under Section 365 of the Bankruptcy Code, other than in accordance with the Bidding Procedures Order or by motion with the express prior written consent of the Lender; or
(q) (a) any Borrower or any Affiliate thereof files a pleading challenging the validity, priority, perfection, or enforceability (“Challenge”) of the Prepetition Financing Documents, the Prepetition Liabilities, or any Lien granted to the Lender pursuant to the Prepetition Financing Documents, or (b) any Lien granted to the Lender pursuant to the Prepetition Financing Documents is determined, pursuant to a final order no longer subject to appeal or challenge, to be null and void, invalid or unenforceable by the Bankruptcy Court or another court of competent jurisdiction in any action commenced or asserted by any other party in interest in the Case, including, without limitation, any Creditors’ Committee, granted standing to pursue such Challenge ; or
(r) an order shall be entered by the Bankruptcy Court dismissing the Case which does not contain a provision for termination of the Commitment, and payment in full in cash of all Obligations of any Borrower hereunder and under the other Loan Documents upon entry thereof; or
(s) any Borrower shall fail to comply with any DIP Order in any respect; or
(t) the Final Order shall not have been entered by the Bankruptcy Court on or prior to December 14, 2023. or
(u) any Borrower shall take (or support any other Person in taking) any action in order to restrict or prohibit the Lender (or its designee, including the Stalking Horse Bidders) from submitting a “credit bid” for any assets of any Borrower, including any such action seeking a determination that “cause” to restrict or prohibit such credit bid exists under Section 363(k) of the Bankruptcy Code; or
(v) the Stalking Horse APA shall have terminated in accordance with its terms, provided however, that to the extent the Stalking Horse APA has been terminated due to the selection of an alternative bidder (aside from the Stalking Horse Bidders) with respect to an Alternative Transaction (and the Stalking Horse Bidders have not also been designated as the Backup Bidder), no Event of Default shall be deemed to have occurred under this Agreement; or
(w) on the date of the consummation of an Alternative Transaction previously approved by an Alternative Transaction Order, the Borrowers shall fail to indefeasibly pay in full to Lender all Obligations, including, without limitation, the outstanding principal, interest, and other obligations of the Borrowers under this Agreement;
(x) any Borrower shall file a motion seeking approval of a disclosure statement and a Plan of Reorganization, or the entry of an order confirming a Plan of Reorganization, that does not require the payment in full in cash of all Obligations on the effective date of such Plan of Reorganization (to the extent such Obligations have not otherwise been satisfied or are anticipated to be satisfied from the proceeds of the 363 Sale and or any Alternative Transaction).
then, upon the occurrence of an Event of Default, the Lender may, without limitation, (i) send a Remedies Notice, (ii) declare the Commitment of the Lender to make the Loans terminated, whereupon the Commitment shall be terminated, (iii) declare the unpaid principal amount of all outstanding Loans, all interest accrued thereon, and all other amounts owed or payable under any Loan Document to be immediately due and payable, and (iv) exercise all rights and remedies available to it under the Loan Documents. Without limiting the foregoing, upon the consummation of an Alternative Transaction subject to an Alternative Transaction Order, the Commitment shall terminate. After the occurrence of an Event of Default and three (3) Business Days following the delivery of a Remedies Notice to the Borrowers (with a copy to counsel for the Borrowers, counsel for the Creditors’ Committee, the UST and the Bankruptcy Court), the automatic stay provided in Section 362 of the Bankruptcy Code shall be deemed automatically vacated without further action or order by the Bankruptcy Court and the Lender shall be entitled to exercise all such rights and remedies, including against the Collateral.
Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrowers. Notwithstanding the foregoing, any Event of Default under clause (m) above may be cured through the return to the Borrower, within five (5) days following notice from the Lender of such Event of Default, of all sums paid which constitute or caused an Event of Default under clause (m) above. Upon the return of all such sums, the Borrowers shall provide notice thereof to the Lender, along with such other evidence the Lender may reasonably require to confirm that such payment has been made to the Borrower, and upon delivery of such items such Event of Default shall then be cured and cease to be in effect or continuing.
7.2 Application of Proceeds. If an Event of Default shall have occurred and be continuing, the Lender may at any time apply (a) all payments received by the Lender under the Loan Documents, whether from any Borrower or otherwise and (b) all or any part of proceeds constituting Collateral received by the Lender, in payment of the Obligations in the following order:
(a) first, to the payment of all costs and expenses of such sale, collection or other realization, all other expenses, liabilities and advances made or incurred by the Lender in connection therewith, and all amounts for which the Lender is entitled to compensation, reimbursement and indemnification under any Loan Document and all advances made by the Lender thereunder for the account of any Borrower, and to the payment of all costs and expenses paid or incurred by the Lender in connection with the Loan Documents, all in accordance with Section 8.5 and the other terms of this Agreement and the Loan Documents;
(b) second, thereafter, to the payment of all other Obligations; and
(c) third, thereafter, to the payment to or upon the order of the Borrowers or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
7.3 Credit Bidding. Each Borrower acknowledges that the Lender may, either directly or indirectly through one or more entities, including the Stalking Horse Purchaser, (a) credit bid or purchase all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (b) credit bid or purchase all or any portion of the Collateral at any other sale or foreclosure conducted in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy. In connection with any such credit bid, the Obligations shall be entitled to be, and shall be, credit bid by the Stalking Horse Purchaser or such other entity or entities designated by the Lender for the purpose of the consummation of such sale or foreclosure transaction without further action by the Lender, subject, with respect to the 363 Sale, the provisions of the Bidding Procedures Order, Stalking Horse APA and Sale Order, and any such credit bid amount may be applied by the Lender to payment of the Obligations under Section 7.2 of this Agreement.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. No amendment, supplement, modification or waiver of any of the provisions of this Agreement or any other Loan Document shall be deemed to be made unless the same shall be in writing signed on behalf of the Borrowers and the Lender and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Any such waiver and any such amendment, supplement or modification shall be binding upon the Borrowers, the Lender and all future holders of the Loans. In the case of any waiver, each of the Borrowers and the Lender shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.
8.2 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing (including electronic mail (“e-mail”) transmission) and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2):
Borrowers: Timber Pharmaceuticals, Inc., Timber Pharmaceuticals LLC and BioPharmX, Inc.
3 Mountainview Road, Suite 100,
Warren, NJ 07059
Attention: John Koconis
E-mail: jkoconis@timberpharma.com
with a copy (which shall not constitute notice) to:
Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
Attention: Andrew Remming and Eric Schwartz
E-mail: aremming@morrisnichols.com and eschwartz@morrisnichols.com
and
Lowenstein Sandler LLP
One Lowenstein Drive
Roseland, NJ 07068
Attention: Annie Nazarian Davydov and Philip Gross
E-mail: anazarian@lowenstein.com and pgross@lowenstein.com
Lender: LEO US Holding, Inc.
c/o LEO Pharma A/S
Industriparken 55
DK-2750 Ballerup
Denmark
Attention: Legal Department
E-mail: legal@leo-pharma.com
With a copy to:
Covington & Burling LLP
The New York Times Building
620 Eighth Ave
New York, NY 10018, USA
E-mail: dcoffino@cov.com, mbeeler@cov.com; udoron@cov.com
Attention: Dianne Coffino, Martin Beeler and Uri Doron
provided that any notice, request or demand to or upon the Lender shall not be effective until received. Notices and other communications to the Lender hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Lender.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
8.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.
8.5 Payment of Fees and Expenses; and Indemnification.
(a) Any action taken by any Borrower under or with respect to any Loan Document, even if required under any Loan Document or at the request of the Lender, shall be at the expense of such Borrower, and the Lender shall not be required under any Loan Document to reimburse any Borrower therefor except as expressly provided therein. In addition, each Borrower agrees to pay or reimburse the Lender upon demand for (a) all reasonable and documented out-of-pocket costs and expenses incurred by the Lender (including the reasonable fees and expenses of counsel to the Lender) in connection with the investigation, development, preparation, negotiation, execution, interpretation or administration of, any modification of any term of or termination of, any Loan Document, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein, in each case including the attorneys’ fees of the Lender and (b) all costs and expenses (including the fees and expenses of counsel to the Lender) incurred in connection with (i) the creation, perfection and maintenance of the perfection of the Lender’s Liens upon the Collateral, including Lien search, filing and recording fees, (ii) the enforcement or preservation of any right or remedy under any Loan Document, any Secured Obligation, with respect to the Collateral or any other related right or remedy or any attempt to inspect, verify, protect, insure, collect, sell, liquidate or otherwise dispose of any Collateral or (iii) the commencement, defense, conduct of, intervention in, or the taking of any other action (including preparation for and/or response to any subpoena or request for document production relating thereto) with respect to, any proceeding related to any Borrower, Loan Document, Secured Obligation or the transactions contemplated by the Stalking Horse APA. The Borrowers are authorized and directed to make payment of the costs and expenses of Lender under this Section 8.5(a) in cash within 3 Business Days of receipt of an invoice therefor. No recipient of any such payment shall be required to file any interim or final fee application with the Bankruptcy Court or otherwise seek bankruptcy court approval of any such payments.
(b) Borrowers shall pay, indemnify, and hold the Lender, and the officers, directors, trustees, employees, agents, advisors and Affiliates of the Lender and its officers, directors, employees, affiliates, agents and controlling persons (each, an “Indemnitee”) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the enforcement of this Agreement, the other Loan Documents and any such other documents (regardless of whether any Indemnitee is a party hereto and regardless of whether any such matter is initiated by a third party, a Borrower or any other Person), including any of the foregoing relating to the use of proceeds of the Loan or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Borrower or any of the Properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Borrower under any Loan Document (all the foregoing in this clause (b), collectively, the “Indemnified Liabilities”), provided that the Borrowers shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, each Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee. All amounts due under this Section 8.5 shall be payable not later than ten (10) days after written demand therefor. Statements payable by any Borrower pursuant to this Section 8.5 shall be submitted to the address of such Borrower set forth in Section 8.2, or to such other Person or address as may be hereafter designated by such Borrower in a written notice to the Lender. The agreements in this Section 8.5 shall survive repayment of the Loan and all other amounts payable hereunder.
8.6 Payments Set Aside. To the extent that any payment by or on behalf of the Borrowers is made to the Lender, or the Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, or otherwise avoided and recovered by any Borrower, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and any Lien corresponding thereto, shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
8.7 Successors and Assigns; Assignments. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrowers may not assign or otherwise transfer any of their rights or obligations hereunder (x) without the prior written consent of the Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void) or (y) to any Person that is not a “United States person” as defined in Section 7701(a)(30) of the Code and (ii) the Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement with notice to the Borrowers. The Borrowers shall maintain a register containing the name and address of each Lender and Assignee under this Agreement and its interest in the Loans and the amounts of the Obligations of the Borrowers owing to such Person.
8.8 Set-off. In addition to any rights and remedies of the Lender provided by applicable Legal Requirements and/or the Stalking Horse APA, the Lender and its Affiliates shall have the right, without prior notice to the Borrowers, any such notice being expressly waived by the Borrowers to the extent permitted by applicable Legal Requirements, upon any amount becoming due and payable by the Borrowers hereunder (whether at the Maturity Date or otherwise), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in each case, whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by, or on behalf of, the Lender or any Affiliate of the Lender to or for the credit or the account of the Borrowers, as the case may be. The Lender agrees promptly to notify the Borrowers after any such setoff and application made by the Lender or any Affiliate, provided that the failure to give such notice shall not affect the validity of such setoff and application.
8.9 Conflicts Between this Agreement and the Order. To the extent any term or provision of this Agreement conflicts or is inconsistent with any term of the Order, the terms of the Order shall control and govern.
8.10 Counterparts. This Agreement may be signed manually or by facsimile or other electronic transmission by the parties (including in .pdf, .tiff, .jpg or similar format), 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 all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). A set of the copies of this Agreement signed by all the parties shall be lodged with each Borrower and the Lender.
8.11 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future Legal Requirements, then (a) this Agreement is to be construed and enforced as if such illegal, invalid or unenforceable provision were not a part hereof; (b) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by such illegal, invalid or unenforceable provision or by its severance from this Agreement; and (c) there will be added automatically as a part of this Agreement a provision mutually agreed to which is similar in terms to such illegal, invalid or unenforceable provision as may be possible and still be legal, valid and enforceable.
8.12 Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrowers and the Lender with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
8.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE, AND TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.
8.14 Submission To Jurisdiction; Waivers.
(a) SUBMISSION TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE BANKRUPTCY COURT, OR IN THE EVENT THAT THE BANKRUPTCY COURT DOES NOT HAVE JURISDICTION OVER ANY MATTER OR IF IT HAS JURISDICTION BUT DOES NOT EXERCISE SUCH JURISDICTION FOR ANY REASON, THEN TO THE NONEXCLUSIVE JURISDICTION OF ANY DELAWARE STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA LOCATED IN DELAWARE, 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 LOAN 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 THE BANKRUPTCY COURT, ANY SUCH DELAWARE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT LOCATED IN DELAWARE. 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 LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY JURISDICTION.
(b) WAIVER OF VENUE. EACH BORROWER 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 OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) SERVICE OF PROCESS. EACH BORROWER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
8.15 Acknowledgements. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;
(b) the Lender does not have a fiduciary relationship with or duty to the Borrowers arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Lender, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Borrowers and the Lender.
8.16 Releases of Liens. At such time as the Loans and the other Obligations under the Loan Documents shall have been indefeasibly paid in full in immediately available funds and the Commitment has been terminated, the Collateral shall be released from the Liens created by the Security Documents and the Order, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Lender and the Borrowers under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person.
8.17 WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.18 Regulatory. Each Borrower will, and will cause each of its Subsidiaries to, provide, to the extent commercially reasonable or required by any Requirement of Law, such information and take such actions as are reasonably requested by the Lender to assist the Lender in maintaining compliance with applicable Legal Requirements.
[Signature Page Follows]
IN WITNESS WHEREOF, the Borrowers and the Lender have caused this Agreement to be signed by their duly authorized officers as of the date first above written.
| BORROWERS: | |
|
TIMBER PHARMACEUTICALS, INC.,
By: /s/ John Koconis Name: John Koconis Title: Chief Executive Officer
TIMBER PHARMACEUTICALS LLC,
By: /s/ John Koconis Name: John Koconis Title: Chief Executive Officer
BIOPHARMX, INC.,
By: /s/ John Koconis Name: John Koconis Title: Chief Executive Officer |
LENDER and solely with respect to Section 3.2 hereof PREPETITION LENDER :
|
LEO US HOLDING, INC., a Delaware corporation
By: /s/ Philip Eickhoff Name: Philip Eickhoff Title: Non-executive Director |
Exhibit 10.3
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS A TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
VRS / TIMBER PHARMACEUTICALS
ENGAGEMENT LETTER
October 31, 2023
Timber Pharmaceuticals, Inc.
3 Mountain View Road
Suite 100
Warren, New Jersey 07059.
Attention: John Koconis, Chairman and CEO
Dear John:
This letter agreement (the “Agreement”) will confirm that Timber Pharmaceuticals, Inc. together with its affiliates and subsidiaries (the “Company”), has engaged VRS Restructuring Services, LLC (“VRS”) to act as the Company’s advisor in connection with providing restructuring services to the Company as more fully described herein (the “Engagement”).
Notwithstanding anything to the contrary herein, as of the date of execution of this Agreement, VRS shall not be providing the Company with a Chief Restructuring Officer or other officer to the Company, but shall provide same solely upon written confirmation by the Company (from and after execution of this Agreement), to amend this Agreement in order for VRS to provide the Company with a Chief Restructuring Officer and related employees (the “CRO Amendment Election”).
|
1) |
Scope of Services. VRS shall provide restructuring services to the Company including, but not limited to, the following areas: |
|
a) |
analyzing the business, operations and financial condition of the Company; |
|
b) |
advising and assisting, when requested by the Company, with managing short term liquidity, including the preparation of a 13-week cash flow forecast/debtor-in-possession (“DIP”) financing budget and monitoring short term liquidity; |
|
c) |
assisting the Company with preparing financial analyses and determining restructuring strategy; |
|
d) |
advising and assisting, when requested by the Company, with restructuring initiatives, including negotiations with creditors and key stakeholders, structuring plans of reorganization, and selling all or parts of the Company, including any marketing thereof and liquidating assets; |
|
e) |
assisting the Company in connection with negotiations for DIP financing, including canvassing with potential candidates with interest in providing DIP financing; |
|
f) |
assisting the Company with the preparation of data in order to prepare pleadings and fiduciary filings required in the event the Company determines to commence a bankruptcy proceeding; |
|
g) |
in the event a bankruptcy proceeding is commenced, where appropriate, providing declarations and/or testimony on such matters that are within VRS’s expertise, including but not limited to testimony in support of the typical “first day” bankruptcy pleadings, a motion seeking approval pursuant to section 363 of the Bankruptcy Code for auction and bidding procedures and/or stalking horse bidding protections, and a motion seeking approval of DIP financing and use of cash collateral; |
|
h) |
assisting the Company and the board of directors of the Company in evaluating employee retention/incentive bonus programs/agreements prior to and/or in connection with the restructuring process; |
|
i) |
advising and assisting the Company and its counsel, when requested by the Company, in negotiations with various parties-in-interest; and |
|
j) |
supporting the Company in such matters as management and/or board of directors of the Company shall request from time to time. |
|
2) |
Fees. Fees for the Engagement will be charged on an hourly basis pursuant to the following rate schedule: |
|
Team Member Level |
Hourly Rate |
|
Managing Director |
$[***] |
|
Director |
$[***] |
|
Vice President |
$[***] |
|
Senior Associate |
$[***] |
|
Associate/Analyst |
$[***] |
The Engagement team will be Jeffrey T. Varsalone, Managing Director, [***], Director and [***], Senior Associate. Success also depends on significant participation by the Company, its officers and other key personnel.
|
3) |
Retainer & Invoices. The Company will pay VRS a retainer of $[***] USD prior to the commencement of the Engagement. VRS shall bill the Company on a weekly basis and weekly invoices shall be applied against the retainer. If and when VRS determines that the retainer is insufficient to support continuing services, VRS will request that the retainer be replenished in an amount sufficient to support continued services. VRS reserves the right to suspend providing services if VRS and the Company cannot agree upon an additional retainer sufficient to support continued services. |
|
4) |
Expense Reimbursement. In addition to paying the Fees, the Company will reimburse VRS for all reasonable out-of-pocket expenses incurred by in connection with this Agreement including, without limitation, travel, lodging, document preparation, printing, and Engagement-related legal fees and costs. Expenses shall be itemized and included on the weekly invoices applied against the retainer. |
|
5) |
Term. This Agreement shall have an initial term of four (4) weeks (the “Initial Term”) and thereafter shall continue (such Initial Term and the entire period of continuation is called the “Term”) until terminated, (a “Termination”), for any reason, by written notice to the other party specifying the date of termination (the “Termination Date”), which date shall be at least five (5) business days after the giving of such notice. Sections 6 and 7 of this Agreement shall survive termination of this Agreement. |
|
6) |
Indemnification. In consideration of, and as a condition precedent to VRS’s undertaking the Engagement, the Company agrees that in the event that any of VRS, the respective members, directors, managers, partners, officers, contractors, agents or employees of VRS, or any affiliate of any of the foregoing (each, an “Indemnified Person”) becomes involved in any action, claim, suit, investigation or proceeding (each, a “Proceeding”), actual or threatened, brought by or against any person, including stockholders, members or partners of the Company, in connection with the Engagement, the Company will reimburse such Indemnified Person for any losses, claims, fees (including fees of legal counsel and other professional advisors), expenses, damages or liabilities related to such Proceeding (collectively, “Losses”) including, without limitation, Losses incurred in investigating, responding to third party subpoenas, serving as a witness, making an Indemnified Person available to serve as a witness, or enforcing the Engagement, as such expenses are incurred; provided, however, that the Company shall not be responsible to indemnify any Loss if it is finally determined by a court or arbitral tribunal (each, a “Court”) that any such Loss of any Indemnified Person has resulted primarily and/or directly from or due to the gross negligence or willful misconduct of VRS or other Indemnified Persons in connection with VRS or its Indemnified Person’s (or Indemnified Persons’) performance under this Engagement, and to the extent the Company has already paid or reimbursed VRS or other Indemnified Person, VRS or such Indemnified Person shall repay the portion of such Loss attributable thereto. |
The Company also agrees that neither VRS nor any other Indemnified Person shall have any liability to the Company or any person asserting claims on behalf or in right of the Company in connection with or as a result of the Engagement or any matter referred to in the Engagement, except to the extent that any Losses incurred by the Company are finally determined by a Court to have resulted primarily and directly from the willful misconduct or gross negligence of VRS or other Indemnified Person(s) in performing the services that are the subject of the Engagement. In no event shall VRS or any other Indemnified Person be responsible for any indirect, special or consequential damages, even if advised of the possibility thereof.
The Company’s obligations hereunder shall be in addition to any rights that any Indemnified Person may have at common law or otherwise.
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7) |
D&O Insurance. At the request of VRS, and subject in all respects to the CRO Amendment Election having been approved by the Company’s board of directors, the Company shall provide VRS with a copy of its current D&O Insurance policy, a certificate of insurance evidencing it is in full force and effect, and any other documents VRS may reasonably request evidencing such coverage. The Company shall, as of the occurrence (if any) of the CRO Amendment Election, utilize reasonable efforts (and assuming no additional cost to the Company) to add any VRS personnel serving as Chief Restructuring Officer to the Company (or in any other similar interim management role or as a director to the Company as the case may be) to such D&O Insurance policy and shall maintain similar D&O coverage as currently maintained for other officers and directors of the Company for such VRS personnel for so long as claims may be made against them on account of their role as an officer and / or director of the Company. The Company disclaims any right to distribution on behalf of any VRS personnel to the extent, from and after any CRO Amendment Election, any VRS personnel is added as an additional insured under the Company’s D&O Insurance policy and such VRS personnel successfully obtains reimbursement for a claim filed against or under such D&O Insurance policy on account of their role as Chief Restructuring Officer (or other similar role as interim management or director to the Company). In the event that following the CRO Amendment Election, the Company is not able to add any VRS personnel, and does not maintain reasonably satisfactory insurance covering any VRS personnel serving as Chief Restructuring Officer (or any other similar interim management role or as a director, as the case may be) at any point during this Engagement, VRS reserves the right to purchase a separate D&O policy that will cover VRS personnel only, the reasonable cost of which in an amount not to exceed $5,000 (or such other amount as may be further agreed to between the Company and VRS) shall be reimbursed to VRS by the Company, invoiced as an out of pocket expense. |
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8) |
Bankruptcy Filing. In the event a chapter 11 bankruptcy case is commenced pursuant to Title 11 of the U.S. Code (the “Bankruptcy Code”), to the extent that the CRO Amendment Election occurs, the Company shall apply promptly to the bankruptcy court for approval of the retention of VRS pursuant to §363 of the Bankruptcy Code in accordance and compliance with the “J. Alix Protocol” as promulgated by the Office of the United States Trustee nunc pro tunc to the date such case is commenced, and will use all reasonable efforts to obtain approval under such standard. To the extent the CRO Amendment Election does not occur and the Company wishes to retain VRS as continued post-bankruptcy advisor, the Company shall apply with the Bankruptcy Court for approval of VRS as an estate professional of the Company. The Company agrees that any post-petition compensation accrued according to the terms set forth herein and payments made pursuant to the expense reimbursement and indemnification provisions of the Agreement shall be entitled to priority as expenses of administration under §§503(b)(1)(A) and 507(a)(2) of the Bankruptcy Code and shall further be entitled to the benefits of any “carve out” for professional fees and expenses (which carve-outs shall be adequate to enable the Company to pay promptly VRS the compensation and expense reimbursement contemplated hereby taking into account the Company’s obligations to other professionals entitled to the benefit of the carve-outs). The Company shall use its best efforts to ensure that any cash collateral order, debtor-in-possession financing order and/or similar order entered in such case or cases (a) permits the use of cash collateral and financing proceeds for the full and prompt payment of all of VRS’s fees and expenses contemplated hereby, and (b) contains the agreement by the lender(s) that VRS’s fees and expenses shall be paid at the times and from the sources specified herein. |
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9) |
Miscellaneous. |
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a) |
This Agreement shall be binding upon, and inure to the benefit of, both parties and their respective successors and assigns. |
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b) |
This Agreement embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. |
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c) |
This Agreement may be executed in counterparts each of which shall be deemed an original and all of which, taken together, shall comprise one and the same Agreement. This Agreement may be executed by the delivery of signatures by facsimile or other electronic means. |
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d) |
If any term, provision or covenant of the Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions and covenants contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. |
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e) |
This Agreement shall be governed by and interpreted in accordance with the laws of the State of New Jersey (without regard to its conflicts of law principles). The parties hereby irrevocably consent to the exclusive jurisdiction of any New Jersey state court or United States federal court sitting in New Jersey over any action or proceeding arising out of or relating to this Agreement; provided that from and after the commencement of any bankruptcy case, the parties also irrevocably consent to the exclusive jurisdiction of any court (including the United States Bankruptcy Court) where such bankruptcy case is pending regarding the interpretation and enforcement of this Agreement. Solely for purposes of enforcing the Company’s obligations hereunder, the Company consents to personal jurisdiction, service and venue in any court proceeding in which any claim subject to this Agreement is brought by or against any Indemnified Person. VRS and the Company (on its own behalf and, to the extent permitted by applicable law, on behalf of its security holders and creditors) irrevocably agree to waive all rights to trial by jury. |
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f) |
After the Engagement has been completed and publicly disclosed by the parties, VRS may refer to it in traditional “tombstone” announcements and/or its professional promotional materials (in a manner that does not disclose non-public terms or information). In connection therewith, VRS may use the Company’s corporate logo (including electronic versions thereof) in VRS’s advertising or promotional materials. |
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g) |
VRS shall maintain the confidentiality of all proprietary and/or non-public information it receives from or with respect to the Company during its engagement hereunder in a commercially reasonable manner and may only use such information for the purposes contemplated hereby. Furthermore, VRS may be provided highly confidential and/or attorney-client privileged and/or attorney work product documents and communications from the Company and/or its other advisors (including attorneys), and VRS (and its personnel) agrees to maintain the privileged and/or protected nature of such documents and communications and that receipt of such documents and/or information from the Company and/or its other advisors (including attorneys) shall not be deemed a waiver any such privilege, attorney work-product or other confidential designations and/or protections. |
Please countersign a copy of this letter to confirm your agreement to its terms. We look forward to working with you.
Very truly yours,
VRS RESTRUCTURING SERVICES, LLC
By: /s/ Jeffrey T. Varsalone
Jeffrey T. Varsalone
Managing Member
AGREED TO AND ACCEPTED:
TIMBER PHARMACEUTICALS, INC.
By: /s/ John Koconis
John Koconis
Chairman and CEO
Exhibit 10.4
[Date]
[Name]
[Address]
Dear ________________:
This Retention Bonus Agreement the (“Agreement”) is entered into as of the date written below between [_______] (“you”) and Timber Pharmaceutical, Inc. (the “Company”) for the purpose of setting forth the requirements for you to receive additional compensation as consideration for your continued employment with and efforts on behalf of the Company as the Company continues to pursue all efforts to complete and consummate a Transaction (as defined below).
We consider your continued service and dedication to the Company essential and critical to meeting this goal.
To incentivize you to remain employed with the Company through and until the completion of a Transaction, we are pleased to offer you a retention bonus in the amount of $_________ (the “Retention Bonus”), which is equal to approximately 25% of your current annual salary, subject to the following terms and conditions:
1. Payment. The Retention Bonus will be payable to you, subject to all applicable tax withholdings and deductions and the repayment obligation set forth in Paragraph 2 below, in a single lump sum in the next practical payroll cycle following your execution and return of this Agreement, assuming you execute it prior to the Deadline (as defined below).
2. Repayment. The Retention Bonus is conditioned on your continued employment by the Company until the earlier to occur of (i) April 30, 2024, or (ii) closing of a Transaction (provided you further agree to cooperate, as required, to assist with any affairs of the Company (including any wind-up or liquidation matters reasonably requested by the Company) for a period of 60 days post-closing of the Transaction (the “Post-Closing Cooperation Period)) (each a “Trigger”), provided that if you obtain new employment during the Post-Closing Cooperation Period, such cooperation (x) does not reasonably impede your duties with your new employer and (y) is subject to your new employer’s consent (with such consent not to be unreasonably withheld). Except as provided in Paragraph 3 below, if your employment with the Company terminates prior to the closing of a Transaction for any reason other than as provided in paragraph 3, below, the Retention Bonus will be forfeited and you must, not later than thirty (30) days after your termination of employment, repay the entire Retention Bonus to the Company. In the event that you fail or refuse to repay the Repayment Bonus within such time, interest shall accrue at a rate equal to the prevailing 10-year Treasury Bill rate on the date of your termination of employment, plus three percent (3%), compounded daily from the date of your termination of employment with the Company until the date that the Retention Bonus is repaid. Should you not timely repay the Retention Bonus, the Company shall have the right to recover costs (including reasonable attorneys’ fees and costs) incurred to pursue collection from you.
3. Exceptions to Repayment. Notwithstanding Paragraph 2, you shall not be required to repay the Retention Bonus if prior to a Trigger:
(a) your employment is involuntarily terminated by the Company other than for “Cause” (as defined below); or
(b) your employment with the Company terminates due to your death or “Total and Permanent Disability” (as defined below).
For purposes of this Agreement:
“Cause” means: (i) your conviction for an act constituting a felony, or your guilty plea or plea of nolo contendere to such a felony; (ii) your commission of fraud, embezzlement, theft or other misappropriation of funds or property of the Company or any of its subsidiaries; (iii) your material neglect, or refusal to discharge, perform or observe the duties and responsibilities of your position, provided you have been given written notice of such neglect or refusal, and you have not cured such neglect or refusal within fifteen (15) days thereafter (if the matter is, in the discretion of the Company, curable); or (iv) your violation of a Company policy or your breach of any obligation or duty to the Company or any written agreement between you and the Company, including (without limitation) any agreement providing non-competition, non-solicitation, non-disparagement, or protection of confidential information covenants, as determined in the discretion of the Company.
“Transaction” means (i) any sale or transfer by the Company, directly or indirectly, of all or substantially all of the assets of the Company (ii) any sale or transfer of a majority of the equity securities of the Company, (iii) any consolidation, merger, recapitalization, or reorganization of the Company, in each case, in a single transaction or series of related transactions, other than a Transaction involving only the Company and one or more of its subsidiaries, or a Transaction immediately following which the shareholders of the Company immediately prior to the Transaction continue to hold a majority of the voting power in the resulting entity or a parent entity.
“Total and Permanent Disability” means that you are unable, in the determination of the Company, to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
4. No Effect on Salary or Benefits. The Retention Bonus shall not be taken into account for purposes of any benefit plan, policy, or arrangement of the Company in which you participate or are covered, except to the extent expressly provided in any such benefit plan, policy, or arrangement. Without limiting the preceding sentence, the Retention Bonus shall not be considered in the computation of your base salary and shall not be considered in the determination of any severance or separation payments or benefits for which you may be eligible.
5. Offsets. The Company shall be entitled to offset any amounts payable to you from the Company or any of its affiliates by any Retention Bonus that is subject to repayment pursuant to Paragraph 2.
6. No Contract of Employment. This Agreement and the Retention Bonus are not a contract or guarantee of employment with the Company and they are not intended to change in any way the “at-will” status of your employment with the Company.
7. Entirety; Successors; Modifications. This Agreement is the entire agreement between you and the Company concerning the terms of the Retention Bonus, and it supersedes any other oral or written agreement or statement with respect to the subject matter hereof. This Agreement is binding on the Company and any direct corporate successor to the Company or its business, and on you, your estate, personal representative, guardian or any other person acting in your interest. This Agreement cannot be modified except in writing signed by you and the Company.
8. Governing Law. This Agreement will be governed by and interpreted under the laws of the State of Delaware, without regard to choice of law or conflict of law principles. THE COMPANY AND YOU HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT.
Please confirm your agreement and understanding of the terms above by countersigning this Agreement below and returning it to ________________ by ______________, 2023 (the “Deadline”). If you do not countersign and return this Agreement by the Deadline, the offer contained in this Agreement will be null and void in all respects. The Company expects that you will keep this Agreement and its contents confidential.
We are grateful for the work you have done for the Company. Your expertise, capabilities and efforts on behalf of the Company are very much appreciated.
Regards,
I confirm that I have read, understand and agree to the terms set forth above:
[Name]
Dated:
Document And Entity Information |
Nov. 14, 2023 |
|---|---|
| Document Information [Line Items] | |
| Entity, Registrant Name | TIMBER PHARMACEUTICALS, INC. |
| Document, Type | 8-K |
| Document, Period End Date | Nov. 14, 2023 |
| Entity, Incorporation, State or Country Code | DE |
| Entity, File Number | 001-37411 |
| Entity, Tax Identification Number | 59-3843182 |
| Entity, Address, Address Line One | 3 Mountainview Road, Suite 100 |
| Entity, Address, City or Town | Warren |
| Entity, Address, State or Province | NJ |
| Entity, Address, Postal Zip Code | 07059 |
| City Area Code | 908 |
| Local Phone Number | 636-7160 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | TMBR |
| Security Exchange Name | NYSE |
| Entity, Emerging Growth Company | false |
| Amendment Flag | false |
| Entity, Central Index Key | 0001504167 |