Exhibit 10.1

 

SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION

LOAN AND SECURITY AGREEMENT

THIS SENIOR SECURED SUPERPRIORITY DEBTOR-IN-POSSESSION LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of April 16, 2019, between SILICON VALLEY
BANK, a California corporation with a loan production office located at 505
Howard Street, 3rd Floor, San Francisco, California 94105 (“Bank”), and
ACHAOGEN, INC., a Delaware corporation and a debtor and a debtor in possession
(“Borrower”), provides the terms on which Bank shall lend to Borrower and
Borrower shall repay Bank.  The parties agree as follows:

1.ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following
GAAP.  Calculations and determinations must be made following
GAAP.  Notwithstanding the foregoing, except as otherwise specifically set forth
herein, all financial covenant calculations (if any) shall be computed with
respect to Borrower only, and not on a consolidated basis. Capitalized terms not
otherwise defined in this Agreement shall have the meanings set forth in
Section 13.  All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Uniform Commercial Code to
the extent such terms are defined therein.

2.LOAN AND TERMS OF PAYMENT

2.1Promise to Pay.  Borrower hereby unconditionally promises to pay Bank the
outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.

2.1.1Term Loan Advances.

(a)Availability.  Subject to the terms and conditions of this Agreement, subject
to the entry of the Interim DIP Order, Bank shall make term loan advances (each
a “Initial Term Loan Advance” and collectively, the “Initial Term Loan
Advances”) to Borrower in an original principal amount not to exceed the Initial
Term Loan Commitment on an aggregate basis.  Subject to the terms and conditions
of this Agreement, from and after the entry of the Final DIP Order, Bank shall
make term loan advances (each a “Final Term Loan Advance” and collectively, the
“Final Term Loan Advances”, and together with the Initial Term Loan Advances,
each a “Term Loan Advance” and collectively, the “Term Loan Advances”) to
Borrower; provided that Fifteen Million Dollars ($15,000,000.00) of the Term
Loan Advances shall be used to repay in full Borrower’s outstanding obligations
and liabilities to Bank under the Prior Loan Agreement (including without
limitation, all Bank Expenses, fees, and accrued interest) (collectively, the
“Prior Obligations”) upon entry of the Final DIP Order; provided, further, that
the Term Loan Advances (including the amounts used to repay the Prior
Obligations in full) shall not exceed the Commitment.  Borrower may request up
to one (1) Term Loan Advance in each week, which Term Loan Advance shall be in
an amount not to exceed the Borrower’s expenses shown in the Budget for such
week.  After repayment, the Term Loan Advances (or any portion thereof) may not
be reborrowed.  The aggregate amount of the Term Loan Advances made prior to the
entry of the Final DIP Order shall not exceed the Initial Term Loan
Commitment.  Borrower hereby authorizes Bank to apply Fifteen Million Dollars
($15,000,000.00) of the Term Loan Advances to the Prior Obligations as part of
the funding process upon entry of the Final DIP Order without actually
depositing such funds into an account of Borrower.  Notwithstanding anything to
the contrary contained in this Agreement or any Financing Order, under no
circumstances shall Bank make Term Loan Advances exceeding Ten Million Dollars
($10,000,000) in the aggregate except in connection with the repayment of the
Prior Obligations following the entry of the Final DIP Order.

(b)Interest Payments.  Commencing on May 1, 2019, and continuing on each Payment
Date thereafter, Borrower shall make monthly payments of interest on the
principal amount of the Term Loan Advances at the rate set forth in Section
2.2(a).

(c)Repayment.  All outstanding principal and accrued and unpaid interest under
the Term Loan Advances, and all other outstanding Obligations with respect to
the Term Loan Advances, are due and payable in full on the Term Loan Maturity
Date.  Upon the occurrence of the Term Loan Maturity Date, subject to the
funding and/or payment of the Carve Out, KEIP/KERP Plan Amount and Wind Down
Amount, all Obligations and Prior Obligations shall paid in full, in cash, on a
final and indefeasible basis, subject to the provisions of the Financing Order.

 

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Exhibit 10.1

(d)Permitted Prepayment of Term Loan Advances.  Borrower shall have the option
to prepay all, but not less than all, of the Term Loan Advances advanced by Bank
under this Agreement, provided Borrower (i) provides written notice to Bank of
its election to prepay the Term Loan Advances at least thirty (30) days prior to
such prepayment, and (ii) pays, on the date of such prepayment (A) all
outstanding principal plus accrued and unpaid interest, plus (B) all other sums,
if any, that shall have become due and payable, including interest at the
Default Rate with respect to any past due amounts, plus (C) the Term Loan
Commitment Fees.

(e)Mandatory Prepayment Upon an Acceleration.  If the Term Loan Advances are
accelerated following the occurrence and during the continuance of an Event of
Default, subject to the funding and/or payment of the Carve Out and KEIP/KERP
Plan Amount, Borrower shall immediately pay to Bank an amount equal to the sum
of: (i) all outstanding principal plus accrued and unpaid interest, plus
(ii) all other sums, if any, that shall have become due and payable, including
interest at the Default Rate with respect to any past due amounts, plus (iii)
the Term Loan Commitment Fees.

2.2Payment of Interest on the Credit Extensions.  

(a)Interest Rate.  Subject to Section 2.2(b), the principal amount outstanding
under each Term Loan Advance shall accrue interest at a floating per annum rate
equal to the Prime Rate plus five and one half percent (5.5%), which interest
shall be payable monthly in accordance with Section 2.2(d) below.

(b)Default Rate.  Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall bear interest at a rate per annum which
is four percent (4.0%) above the rate that is otherwise applicable thereto (the
“Default Rate”) unless Bank otherwise elects from time to time in its sole
discretion to impose a smaller increase.  Fees and expenses which are required
to be paid by Borrower pursuant to the Loan Documents (including, without
limitation, Bank Expenses) but are not paid when due shall bear interest until
paid at a rate equal to the highest rate applicable to the Obligations.  Payment
or acceptance of the increased interest rate provided in this Section 2.2(b) is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of Bank.

(c)Adjustment to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on the effective
date of any change to the Prime Rate and to the extent of any such change.

(d)Payment; Interest Computation.  Interest is payable monthly on the Payment
Date and shall be computed on the basis of a 360-day year for the actual number
of days elapsed.  In computing interest, (i) all payments received after 12:00
p.m. Pacific time on any day shall be deemed received at the opening of business
on the next Business Day, and (ii) the date of the making of any Credit
Extension shall be included and the date of payment shall be excluded; provided,
however, that if any Credit Extension is repaid on the same day on which it is
made, such day shall be included in computing interest on such Credit Extension.

2.3Term Loan Commitment Fees; Bank Expenses.  Borrower shall pay to Bank:

(a)Term Loan Commitment Fees.  The Bank shall be entitled to receive the
following commitment fees: (i) a non-refundable commitment fee of One Million
Five Hundred Thousand Dollars ($1,500,000.00) (the “Initial Term Loan Commitment
Fee”), which shall be deemed earned as of entry of the Interim DIP Order and
shall be due at the Term Loan Maturity Date; and (ii) a non-refundable
commitment fee of One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
“Final Term Loan Commitment Fee” and, together with the Initial Term Loan
Commitment Fee, the “Term Loan Commitment Fees”), which shall be deemed earned
as of entry of the Final DIP Order and shall be due at the Term Loan Maturity
Date; provided, that the Term B Final Payment (as defined in the Prior Loan
Agreement) shall be waived as of the entry of the Final DIP Order (which, for
the avoidance of doubt, shall authorize the Borrower’s repayment in full of the
Prior Obligations and approve the Final Term Loan Commitment Fee).

(b)Bank Expenses.  All Bank Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through
and after the Petition Date, when due (or, if no stated due date, upon demand by
Bank).

Unless otherwise provided in this Agreement or in a separate writing by Bank,
Borrower shall not be entitled to any credit, rebate, or repayment of any fees
earned by Bank pursuant to this Agreement notwithstanding any termination of
this Agreement pursuant to its terms or the suspension or termination of Bank’s
obligation to make loans and advances hereunder pursuant to the terms
hereof.  Bank may deduct amounts owing by Borrower under the

 

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Exhibit 10.1

clauses of this Section 2.3 pursuant to the terms of Section 2.4(c).  Bank shall
provide Borrower written notice of deductions made from the Designated Deposit
Account pursuant to the terms of the clauses of this Section 2.3.

2.4Payments; Application of Payments; Debit of Accounts.

(a)All payments to be made by Borrower under any Loan Document shall be made in
immediately available funds in Dollars, without setoff or counterclaim, before
12:00 p.m. Pacific time on the date when due.  Payments of principal and/or
interest received after 12:00 p.m. Pacific time are considered received at the
opening of business on the next Business Day.  When a payment is due on a day
that is not a Business Day, the payment shall be due the next Business Day, and
additional fees or interest, as applicable, shall continue to accrue until
paid.  

(b)Bank has the exclusive right to determine the order and manner in which all
payments with respect to the Obligations may be applied.  Borrower shall have no
right to specify the order or the accounts to which Bank shall allocate or apply
any payments required to be made by Borrower to Bank or otherwise received by
Bank under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement.

(c)Bank may debit any of Borrower’s deposit accounts, including the Designated
Deposit Account, for principal and interest payments or any other amounts
Borrower owes Bank when due; provided, that Bank shall first debit the
Designated Deposit Account.  These debits shall not constitute a set-off.

2.5Withholding.

(a)Defined Terms.  For purposes of this Section 2.5, the term “applicable law”
includes FATCA.

(b)Payments Free of Taxes.  Any and all payments by or on account of any
obligation of Borrower under any Loan Document shall be made without deduction
or withholding for any Taxes, except as required by applicable law.  If any
applicable law requires the deduction or withholding of any Tax from any such
payment, then Borrower (or applicable withholding agent) shall be entitled to
make such deduction or withholding and shall timely pay the full amount deducted
or withheld to the relevant Governmental Authority in accordance with applicable
law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower
shall be increased as necessary so that after such deduction or withholding has
been made (including such deductions and withholdings applicable to additional
sums payable under this Section 2.5(b)), Bank receives an amount equal to the
sum it would have received had no such deduction or withholding been made.

(c)Payment of Other Taxes by Borrower.  Borrower shall timely pay to the
relevant Governmental Authority in accordance with applicable law, or at the
option of Bank timely reimburse it for the payment of, any Other Taxes.

(d)Indemnification by Borrower.  Borrower shall indemnify Bank within ten (10)
days after receipt by Borrower of written demand therefor, for the full amount
of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section 2.5(d)) payable or paid by
Bank or required to be withheld or deducted from a payment to Bank and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  A certificate as to the amount of such payment
or liability delivered to Borrower by Bank, shall be conclusive absent manifest
error.

(e)Evidence of Payments.  As soon as practicable after any payment of Taxes by
Borrower to a Governmental Authority pursuant to this Section 2.5, Borrower
shall deliver to Bank the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to Bank.

(f)Status of Lenders.  

(i) Bank, and any other Person holding a beneficial interest in the right to
make the Term Loan Advance, if entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document, shall
deliver to Borrower, at the time or times reasonably requested by Borrower, such
properly completed and executed documentation reasonably requested by Borrower
as will permit such payments to be made without withholding or at a reduced rate
of withholding.  In addition, Bank and any other Person holding a beneficial
interest in the right to make the Term Loan Advances, if reasonably requested by
Borrower, shall deliver

 

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Exhibit 10.1

such other documentation prescribed by applicable law or reasonably requested by
Borrower as will enable Borrower to determine whether or not Bank or such other
Person is subject to backup withholding or information reporting
requirements.  Notwithstanding anything to the contrary in the preceding two
sentences, the completion, execution and submission of such documentation (other
than such documentation set forth below in subparagraphs (ii)(A), (ii)(B) and
(ii)(D) of this Section 2.5(f)) shall not be required if in the reasonable
judgment of Bank or any other Person holding a beneficial interest in the right
to make the Term Loan Advances such completion, execution or submission would
subject Bank or such other Person to any material unreimbursed cost or expense
or would materially prejudice the legal or commercial position of Bank or of
such other Person.

(ii)Without limiting the generality of the foregoing,

(A)if requested by Borrower, Bank or any such other Person holding a beneficial
interest in the right to make the Term Loan Advances that is a US Person shall
deliver to Borrower on or prior to the date on which such other Person acquires
a beneficial interest in the right to make the Term Loan Advances (and from time
to time thereafter upon the reasonable request of Borrower), executed copies of
IRS Form W-9 certifying that Bank or such other Person is exempt from U.S.
federal backup withholding tax;

(B)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower (in such number of copies as shall be requested by Borrower)
on or prior to the date on which such Foreign Lender acquires a beneficial
interest in the right to make the Term Loan Advances (and from time to time
thereafter upon the reasonable request of Borrower), executed copies of the
applicable IRS Form W-8, duly completed, together with such supplementary
documentation as may be prescribed by applicable law (or reasonably requested by
Borrower, including a customary “non-bank” certificate) to permit Borrower to
determine the withholding or deduction required to be made;

(C)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to Borrower (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender acquires a
beneficial interest in the right to make the Term Loan Advances (and from time
to time thereafter upon the reasonable request of Borrower), executed copies of
any other form prescribed by applicable law as a basis for claiming exemption
from or a reduction in U.S. federal withholding Tax, duly completed, together
with such supplementary documentation as may be prescribed by applicable law to
permit Borrower to determine the withholding or deduction required to be made;
and

(D)if a payment made to Bank or any other Person holding a beneficial interest
in the right to make the Term Loan Advances would be subject to U.S. federal
withholding Tax imposed by FATCA if Bank or such other Person were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), Bank or such other Person shall deliver to Borrower at the time or
times prescribed by law and at such time or times reasonably requested by
Borrower such documentation prescribed by applicable law (including as
prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such
additional documentation reasonably requested by Borrower as may be necessary
for Borrower to comply with its obligations under FATCA and to determine that
Bank or such other Person has complied with the obligations imposed by FATCA on
Bank or such other Person or to determine the amount to deduct and withhold from
such payment.  Solely for purposes of this clause (D), “FATCA” shall include any
amendments made to FATCA after the Petition Date.  

Bank and any such other Person holding a beneficial interest in the right to
make the Term Loan Advances agree that if any form or certification it
previously delivered expires or

 

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Exhibit 10.1

becomes obsolete or inaccurate in any respect, it shall update such form or
certification or promptly notify Borrower in writing of its legal inability to
do so.

(g)Refunds.  If any party determines, in its sole discretion exercised in good
faith, that it has received a refund of any Taxes as to which it has been
indemnified pursuant to this Section 2.5 (including by the payment of additional
amounts pursuant to this Section 2.5), it shall pay to the indemnifying party an
amount equal to such refund (but only to the extent of indemnity payments made
under this Section 2.5 with respect to the Taxes giving rise to such refund),
net of all out-of-pocket expenses (including Taxes) of such indemnified party
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund).  Such indemnifying party, upon the
request of such indemnified party, shall repay to such indemnified party the
amount paid over pursuant to this paragraph (g) (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) in the event that
such indemnified party is required to repay such refund to such Governmental
Authority.  Notwithstanding anything to the contrary in this paragraph (g), in
no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this paragraph (g) the payment of which would
place the indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid.  This paragraph shall not be construed to require any
indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the indemnifying party or
any other Person.

(h)Survival.  Each party’s obligations under this Section 2.5 shall survive the
termination of this Agreement and the Loan Documents.

3.CONDITIONS OF LOANS

3.1Conditions Precedent to Initial Term Loan Advances.  Unless otherwise waived
by the Bank, the Bank’s obligation to make an Initial Term Loan Advance is
subject to the condition precedent that Bank shall have received, in form and
substance reasonably satisfactory to Bank, such documents, and completion of
such other matters, as Bank may reasonably deem necessary or appropriate,
including, without limitation:

(a)the entry of the Interim DIP Order shall have occurred not later than three
(3) business days following the Petition Date;

(b)duly executed signatures to the Loan Documents;

(c)a secretary’s corporate borrowing certificate of Borrower with respect to
Borrower’s Operating Documents, incumbency, specimen signatures and resolutions
authorizing the execution and delivery of this Agreement and the other Loan
Documents to which it is a party;

(d)duly executed signatures to the completed Borrowing Resolutions for Borrower;

(e)Bank shall have received the Initial Budget prepared in good faith based upon
assumptions believed to be reasonable when made and when delivered, reasonably
satisfactory in all respects to Bank.

(f)Borrower shall have filed the Sale Motion with the Bankruptcy Court
requesting, among other things, approval of the sale process for the Sale;

(g)this Agreement and the other Loan Documents shall, upon entry of the Interim
DIP Order, be effective to create in favor of Bank legal, valid and enforceable
first priority Lien upon all Collateral;

(h)[Reserved];

(i)certified copies, dated as of a recent date, of financing statement searches,
as Bank may request, accompanied by written evidence (including any UCC
termination statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in connection with
the initial Credit Extension, will be terminated or released;

(j)evidence satisfactory to Bank that the insurance policies and endorsements
required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing lender loss payable and/or additional insured
clauses or endorsements in favor of Bank;

 

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Exhibit 10.1

(k)payment of the Bank Expenses then due as specified in Section 2.3 hereof and
as set forth in an invoice delivered to Borrower prior to the date of funding of
the Initial Term Loan Advance;

(l)[Reserved]; and

(m)all (i) “first day orders” and all related pleadings intended to be entered
on or prior to the date of entry of the Interim DIP Order (including, for the
purposes of the “cash management order,” a bridge order authorizing continued
use of the Borrower’s current cash management systems until a hearing with
respect to a final cash management order) shall have been entered by the
Bankruptcy Court and shall be reasonably satisfactory in form and substance to
the Bank and (ii) to the extent available for Bank review at that time, forms of
“second day orders” shall be reasonably satisfactory in form and substance to
the Bank.

3.2Conditions Precedent to Final Term Loan Advances.  Unless otherwise waived by
the Bank, the Bank’s obligation to make a Final Term Loan Advance is subject to
the condition precedent that Bank shall have received, in form and substance
reasonably satisfactory to Bank, such documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate, including,
without limitation:

(a)the entry of the Final DIP Order shall have occurred not later than thirty
(30) days following the Petition Date;

(b)all material “second day orders” and all related pleadings intended to be
entered on or prior to the date of entry of the Final DIP Order, including a
final cash management order, shall have been entered by the Bankruptcy Court,
and all pleadings related to procedures for approval of significant
transactions, including, without limitation, asset sale procedures, regardless
of when filed or entered, shall be reasonably satisfactory in form and substance
to the Bank; and

(c)Bank shall have received when due a current Budget prepared in good faith
based upon assumptions believed to be reasonable when made and when delivered,
reasonably satisfactory in all respects to Bank.

3.3Conditions Precedent to all Credit Extensions.  Bank’s obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the
following conditions precedent:

(a)the applicable Financing Order shall be in full force and effect and shall
not have been modified or amended (unless otherwise approved by Bank), reversed,
stayed or subject to a motion for reargument or reconsideration;

(b)except as otherwise provided in Section 3.5, timely receipt of an executed
Payment/Advance Form;  

(c)the representations and warranties in this Agreement shall be true, accurate,
and complete in all material respects on the date of the Payment/Advance Form
and on the Funding Date of each Credit Extension; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Event of Default shall have
occurred and be continuing or result from the Credit Extension.  Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties in this Agreement remain true, accurate, and
complete in all material respects; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date; and

(d)Bank determines in the exercise of its reasonable discretion that a Material
Adverse Change has not occurred.  

3.4Covenant to Deliver. Borrower agrees to deliver to Bank each item required to
be delivered to Bank under this Agreement as a condition precedent to any Credit
Extension.  Borrower expressly agrees that a Credit Extension made prior to the
receipt by Bank of any such item shall not constitute a waiver by Bank of
Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s reasonable
discretion.

3.5Procedures for Borrowing.  Subject to the prior satisfaction of all other
applicable conditions to the making of a Credit Extension set forth in this
Agreement, to obtain a Credit Extension, other than in connection

 

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Exhibit 10.1

with the first Initial Term Loan Advance, Borrower shall notify Bank (which
notice shall be irrevocable) by electronic mail, facsimile, or telephone by
12:00 p.m. Pacific time at least two (2) Business Days prior to the proposed
Funding Date of the Credit Extension.  Together with any such electronic or
facsimile notification (which shall not be required in connection with the first
Initial Term Loan Advance), Borrower shall deliver to Bank by electronic mail or
facsimile a completed Payment/Advance Form executed by an Authorized
Signer.  Bank may rely on any telephone notice given by a person whom Bank
reasonably believes is an Authorized Signer.  Bank shall credit the Credit
Extensions to the Designated Deposit Account.  Bank may make Credit Extensions
under this Agreement based on instructions from an Authorized Signer or without
instructions if the Credit Extensions are necessary to meet Obligations which
have become due.

4.Grant of SUPERPRIORITY CLAIM AND SECURITY INTEREST

4.1Grant of Superpriority Claim and Security Interest.  Borrower warrants and
covenants that, subject only to the Carve Out and the KEIP/KERP Plan Amount,
upon the entry of the applicable Financing Order, the Obligations of Borrower
under the Loan Documents shall at all times constitute a Superpriority Claim
against the Borrower and its estate in the Chapter 11 Case having priority,
pursuant to Section 364(c)(1) and 507(b) of the Bankruptcy Code, over the other
administrative claims of any person or entity, including, without limitation any
claims under Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c) (upon
entry of the Final DIP Order), 507(a), 507(b), 546(c), 546(d), 726 (to the
extent permitted by law), 1113 and 1114 of the Bankruptcy Code, and any other
provision of the Bankruptcy Code, and which shall at all times be, subject to
the Carve Out and the KEIP/KERP Plan Amount, senior to the rights of Borrower,
Borrower’s estate, any trustee or successor trustee to the extent permitted by
law, or any other creditor in the Chapter 11 Case.  

Pursuant to Section 364 of the Bankruptcy Code and the Loan Documents, the Liens
of Bank hereunder shall at all times be secured by, and Borrower hereby grants
to Bank, to secure the payment and performance in full of all of the
Obligations, and pledges to Bank, a continuing, valid, binding, enforceable,
non-avoidable and automatically properly perfected priming first priority
post-petition Lien, which Lien shall be subject only to the payment of the Carve
Out and the KEIP/KERP Plan Amount, on all existing and after acquired real and
personal property and other assets of Borrower, tangible and intangible, whether
now owned by or owing to, or hereafter acquired by or arising in favor of
Borrower, whether owned or consigned by or to, or leased from or to Borrower and
regardless of where located, including, without limitation, the items listed on
the attached Exhibit A (collectively, the “Collateral”).

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank.  Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
perfected Lien on the Collateral granted herein.  The Collateral may also be
subject to Permitted Liens.

If this Agreement is terminated, Bank’s Lien on the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations (other than
inchoate indemnity obligations) and at such time as Bank’s obligation to make
Credit Extensions has terminated, Bank shall, at the sole cost and expense of
Borrower, release its Liens in the Collateral and all rights therein shall
revert to Borrower.  In the event (x) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and (y)
this Agreement is terminated, Bank shall terminate the Lien granted herein upon
Borrower providing cash collateral acceptable to Bank in its good faith business
judgment for Bank Services, if any.  In the event such Bank Services consist of
outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in
an amount equal to (x) if such Letters of Credit are denominated in Dollars,
then at least one hundred five percent (105.0%); and (y) if such Letters of
Credit are denominated in a Foreign Currency, then at least one hundred ten
percent (110.0%), of the Dollar Equivalent of the face amount of all such
Letters of Credit plus, in each case, all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating  to such  Letters
of Credit.

4.2[Reserved]

4.3No Avoidance, Subordination or Modification

4.4.  Borrower’s Obligations and the Liens granted to the Bank hereunder shall
not be subject to avoidance, subordination or modification under any provision
of the Bankruptcy Code or applicable law, and all claims and Liens arising under
this Agreement and the other Loan Documents shall constitute allowed claims and
Liens against Borrower and its estate that are valid, binding and enforceable
against Borrower and Borrower’s estate, and all claims, defenses, offsets to
such obligations shall be

 

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Exhibit 10.1

waived, and, subject to the applicable challenge periods set forth in the
Financing Order, all persons and entities shall be barred from asserting any
such claims, defenses or offsets to such allowed claim. The Obligations under
this Agreement and the Liens in the Collateral securing the Obligations shall
not be subject to, and Borrower hereby waives the right to, surcharge the same
pursuant to Section 506(c) of the Bankruptcy Code upon entry of the Final DIP
Order, and such Obligations and Liens shall not be subject to, and Borrower
shall waive the right to assert any rights under Sections 552 of the Bankruptcy
Code with respect to the Bank or the Collateral.

4.5Authorization to File Financing Statements.  Borrower hereby authorizes Bank
to file financing statements, without notice to Borrower, with all appropriate
jurisdictions to the extent the Bank deems such filings to be necessary or
desirable.   Such financing statements may indicate the Collateral as “all
assets of the Debtor” or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank’s discretion.

4.6No Discharge; Survival of Claims.  Pursuant to Section 1141(d)(4) of the
Bankruptcy Code, Borrower hereby waives any discharge of the Obligations with
respect to any plan of reorganization that shall not provide for the payment in
full in cash of the Obligations (other than contingent indemnification and
reimbursement Obligations not yet due) under this Agreement.  Borrower hereby
agrees that the Superpriority Claims and Liens granted to the Bank pursuant to
the Interim DIP Order or the Final DIP Order shall not be affected in any manner
by the entry of an order confirming a plan of reorganization.

5.REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1Due Organization, Authorization; Power and Authority.  Borrower is duly
existing and in good standing as a Registered Organization in its jurisdiction
of formation and is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its business or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on
Borrower’s business.  Borrower previously delivered to Bank a completed
certificate signed by Borrower, entitled “Perfection Certificate” dated as of
February 26, 2018 (as amended, the “Perfection Certificate”).  Borrower
represents and warrants to Bank that (a) Borrower’s exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof;
(b) Borrower is an organization of the type and is organized in the jurisdiction
set forth in the Perfection Certificate; (c) the Perfection Certificate
accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate
accurately sets forth Borrower’s place of business, or, if more than one, its
chief executive office as well as Borrower’s mailing address (if different than
its chief executive office); (e) Borrower (and each of its predecessors) has
not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its
jurisdiction; and (f) as of February 26, 2018, all other information set forth
on the Perfection Certificate pertaining to Borrower and each of its
Subsidiaries is accurate and complete in all material respects (it being
understood and agreed that Borrower may from time to time update certain
information in the Perfection Certificate after the date hereof to the extent
such updates result from actions, transactions, circumstances or events not
prohibited by this Agreement).  If Borrower is not now a Registered Organization
but later becomes one, Borrower shall promptly notify Bank of such occurrence
and provide Bank with Borrower’s organizational identification number.

The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s Operating Documents, (ii) contravene, conflict with, constitute a
default under or violate any material Requirement of Law, (iii) contravene,
conflict or violate any applicable order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority by which Borrower or any of
its Subsidiaries or any of their property or assets may be bound or affected,
(iv) require any action by, filing, registration, or qualification with, or
Governmental Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force and effect (or
are being obtained pursuant to Section 6.1(b))) or (v) conflict with,
contravene, constitute a default or breach under, or result in or permit the
termination or acceleration of, any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which it is a party or
by which it is bound in which the default could reasonably be expected to have a
material adverse effect on Borrower’s business.

5.2Collateral.  Borrower has good title to, rights in, and the power to transfer
each item of the Collateral upon which it purports to grant a Lien hereunder,
free and clear of any and all Liens except Permitted Liens.  Borrower has no
Collateral Accounts at or with any bank or financial institution other than Bank
or Bank’s Affiliates.  The Accounts are bona fide, existing obligations of the
Account Debtors.  

 

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Exhibit 10.1

The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate or as
permitted pursuant to Section 7.2.  None of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection
Certificate or as permitted pursuant to Section 7.2.  

All Inventory is in all material respects of good and marketable quality, free
from material defects.

Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) licenses not prohibited hereunder, (b)
over-the-counter software that is commercially available to the public, and (c)
material Intellectual Property licensed to Borrower and noted on the Perfection
Certificate.  Each Patent (other than patent applications) which it owns or
purports to own and which is material to Borrower’s business is valid and
enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part.  To the best of Borrower’s
knowledge, no claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such claim would not
reasonably be expected to have a material adverse effect on Borrower’s business.

Except as noted on the Perfection Certificate or with respect to which notice is
provided under Section 6.7(b), Borrower is not a party to, nor is it bound by,
any Restricted License.

5.3Litigation.  Other than as set forth in the Perfection Certificate or as
disclosed pursuant to Section 6.2(d), there are no actions or proceedings
pending or, to the knowledge of any Responsible Officer, threatened in writing
by or against Borrower or any of its Subsidiaries, which could reasonably be
expected to result in damages payable by Borrower, individually or in the
aggregate, in excess of Five Hundred Thousand Dollars ($500,000.00).

5.4Financial Statements.  All consolidated financial statements for Borrower and
any of its Subsidiaries delivered to Bank fairly present in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations.  

5.5[Reserved].

5.6Regulatory Compliance.  Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended.  Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors).  Borrower (a) has complied in all material respects
with all Requirements of Law, and (b) has not violated any Requirements of Law
the violation of which could reasonably be expected to have a material adverse
effect on its business.  None of Borrower’s or any of its Subsidiaries’
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally.  Borrower
and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Governmental Authorities that are necessary to continue their respective
businesses as currently conducted, except where the failure to obtain such
consents, approvals or authorizations, make such declarations or filings, or
give all notices could not reasonably be expected to have a material adverse
effect on Borrower’s business.

5.7Subsidiaries; Investments.  Borrower does not own any stock, partnership, or
other ownership interest or other equity securities except for Permitted
Investments.

5.8Tax Returns and Payments; Pension Contributions.  Borrower has timely filed
all required Tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local Taxes, assessments, deposits and contributions owed by
Borrower except (a) to the extent such Taxes are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted, so long
as such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor, or (b) if such Taxes,
assessments, deposits and contributions do not, individually or in the
aggregate, exceed Fifty Thousand Dollars ($50,000.00).  

To the extent Borrower defers payment of any contested Taxes, Borrower shall (i)
notify Bank in writing of the commencement of, and any material development in,
the proceedings, and (ii) post bonds or take any other steps required to prevent
the Governmental Authority levying such contested Taxes from obtaining a Lien
upon any of the Collateral that is other than a “Permitted Lien.”  Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional Taxes becoming due and payable by
Borrower in excess of Fifty Thousand Dollars ($50,000.00).  Borrower has paid
all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and Borrower has not
withdrawn from

 

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Exhibit 10.1

participation in, and has not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.

5.9Use of Proceeds.  Borrower shall use Fifteen Million Dollars ($15,000,000.00)
of the proceeds of the Term Loan Advances to repay the Prior Obligations, upon
entry of the Final DIP Order and in accordance with the terms of this Agreement,
and shall use the other Term Loan Advances and proceeds of all other Credit
Extensions as working capital and to fund the Bank Expenses and its general
business requirements and not for personal, family, household or agricultural
purposes.  Except as set forth in the Budget or the Carve Out, no Collateral or
proceeds thereof shall be used for the payment of Case Professionals so long as
the Obligations remain outstanding.

5.10Full Disclosure.  No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Bank, as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to Bank, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not
misleading (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

5.11Definition of “Knowledge.”  For purposes of the Loan Documents, whenever a
representation or warranty is made to Borrower’s knowledge or awareness, to the
“best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of any
Responsible Officer.

5.12Financing Order.  The Financing Order is in full force and effect is not
subject to a pending appeal or motion for leave to appeal or other proceeding to
set aside such order and has not been reversed, modified, stayed or vacated.

6.AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1Government Compliance.  

(a)Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a material adverse effect on Borrower’s business or operations.  Borrower
shall comply, and have each Subsidiary comply, in all material respects, with
all laws, ordinances and regulations to which it is subject.

(b)Obtain all of the Governmental Approvals necessary for the performance by
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a Lien to Bank in all of the Collateral. Borrower shall promptly
provide copies of any such obtained Governmental Approvals to Bank.

6.2Financial Statements, Reports, Certificates.  Provide Bank with the
following:

(a)Monthly Operating Reports.  Contemporaneously with delivery to the United
States Trustee, copies of all monthly operating reports and supporting
documentation.

(b)Other Statements.  Within five (5) days of delivery, copies of all material
statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt, in each case other than solely in their
capacities as members of the Board;

(c)SEC Filings.  Within five (5) days of filing, copies of all periodic and
other reports, proxy statements and other materials filed by Borrower with the
SEC, any Governmental Authority succeeding to any or all of the functions of the
SEC or with any national securities exchange, or distributed to its
shareholders, as the case may be.  Documents required to be delivered pursuant
to the terms hereof (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on which Borrower
posts such documents, or provides a link thereto, on Borrower’s website on the
Internet at Borrower’s website address;

 

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Exhibit 10.1

(d)Legal Action Notice.  A prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that could
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars
($500,000.00) or more;

(e)Other Financial Information.  Other financial information reasonably
requested by Bank;

(f)Government Notices.  Deliver to Bank, within ten (10) days after the same are
sent or received, copies of all material correspondence, reports, documents and
other filings with any Governmental Authority regarding compliance with or
maintenance of Governmental Approvals or Requirements of Law that could
reasonably be expected to have a material adverse effect on any of the
Governmental Approvals or on the operations of Borrower or any of its
Subsidiaries;

(g)Beneficial Ownership Information.  Prompt written notice of any changes to
the beneficial ownership information set out in Section 15 of the Perfection
Certificate.  Borrower understands and acknowledges that Bank relies on such
true, accurate and up-to-date beneficial ownership information to meet Bank’s
regulatory obligations to obtain, verify and record information about the
beneficial owners of its legal entity customers;

(h)Budget.  Attached as Exhibit C is Borrower's Initial Budget, which has been
approved by Bank.  Beginning on the first Friday following the Petition Date,
and then no later than the Friday of each subsequent calendar week, Borrower
shall deliver to Bank an updated, proposed Budget (each, a “Proposed Budget”)
for the following 13-week period, which shall be in form and substance
reasonably satisfactory to Bank (it being agreed that using a form similar to
Exhibit C shall be acceptable). A Proposed Budget shall become the new Budget
upon approval by the Bank (which must be in writing) and, if no such approval is
received, the prior approved Budget shall continue in place and Bank and
Borrower shall negotiate in good faith regarding the terms of the Proposed
Budget.  Borrower shall not permit the amount of its actual disbursements
(excluding payment of all Bank Expenses) for any week to exceed one hundred
fifteen percent (115.0%) of the disbursements shown in the Budget for such week
and on an aggregate basis, and Borrower shall not permit the actual cash
receipts for any week to be less than eighty-five percent (85.0%) of the cash
receipts shown in the Budget for such week and on an aggregate basis (the
“Budget Variances”).  Borrower shall also deliver with each updated Budget a
variance report reflecting on a line item and an aggregate basis, Borrower’s
actual unrestricted cash receipts and cash disbursements compared to the Budget
for such immediately preceding week and for the period commencing on the
Petition Date through and including the end of the week immediately preceding
the date of the variance report.  For the avoidance of doubt, for purposes of
calculating the Budget Variances, any unused amounts set forth in the Budget for
any period of determination may be carried forward and used during subsequent
periods; and

(i)Case Professional Fees and Expenses.  Upon Bank’s request, estimated
summaries regarding all accrued and unpaid expenses of all Case Professionals,
together with a reconciliation report comparing the same to the amounts set
forth in the Budget for such Cash Professional (or category of Case
Professional).

6.3Inventory; Returns.  Keep all Inventory in good and marketable condition,
free from material defects.  Returns and allowances between Borrower and its
Account Debtors shall follow Borrower’s customary practices as they exist at the
date hereof or as is customary for companies similar in size, business and
location to Borrower.  Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than Five Hundred Thousand
Dollars ($500,000.00).

6.4Taxes; Pensions.  Timely file, and require each of its Subsidiaries to timely
file, all required Tax returns and reports and timely pay, and require each of
its Subsidiaries to timely pay, all foreign, federal, state and local Taxes,
assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any Taxes contested pursuant to the
terms of Section 5.8 hereof and taxes with respect to which the amount does not
exceed the amount set forth in Section 5.8, and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.

6.5Insurance.  

(a)Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry and location and as Bank may
reasonably request.  Insurance policies shall be in a form, with financially
sound and reputable insurance companies that are not Affiliates of Borrower, and
in amounts that are reasonably satisfactory to Bank.  All property policies
shall have a lender’s loss payable endorsement showing Bank as lender loss
payee.  All liability policies shall show, or have endorsements showing, Bank as
an additional

 

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Exhibit 10.1

insured.  Bank shall be named as lender loss payee and/or additional insured
with respect to any such insurance providing coverage in respect of any
Collateral.

(b)Ensure that proceeds payable under any property policy are, at Bank’s option,
payable to Bank on account of the Obligations.  Notwithstanding the foregoing,
(i) so long as no Event of Default has occurred and is continuing, Borrower
shall have the option of applying the proceeds of any casualty policy up to Five
Hundred Thousand Dollars ($500,000.00) with respect to any loss, but not
exceeding Five Hundred Thousand Dollars ($500,000.00) in the aggregate for all
losses under all casualty policies in any one (1) year, toward the replacement
or repair of destroyed or damaged property; provided that any such replaced or
repaired property (x) shall be of equal or like value as the replaced or
repaired Collateral and (y) shall be deemed Collateral in which Bank has been
granted a first priority Lien, and (i) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the
Obligations.  

(c)At Bank’s request, Borrower shall deliver certified copies of insurance
policies and evidence of all premium payments.  Each provider of any such
insurance required under this Section 6.5 shall agree, by endorsement upon the
policy or policies issued by it or by independent instruments furnished to Bank,
that it will give Bank thirty (30) days prior written notice (except for
non-payment, which shall be ten (10) days prior written notice) before any such
policy or policies shall be canceled.  If Borrower fails to obtain insurance as
required under this Section 6.5 or to pay any amount or furnish any required
proof of payment to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section 6.5, and take
any action under the policies Bank deems prudent.

6.6Operating Accounts.

Maintain all of its and its Subsidiaries’ operating, depository, and
securities/investment accounts with Bank and Bank’s Affiliates.

6.7Protection and Registration of Intellectual Property Rights.  

(a)(i) Protect, defend and maintain the validity and enforceability of its
Intellectual Property that is material to Borrower’s business; (ii) promptly
advise Bank in writing of material infringements or any other event that could
reasonably be expected to materially and adversely affect the value of its
Intellectual Property; and (iii) not allow any Intellectual Property material to
Borrower’s business to be abandoned, forfeited or dedicated to the public
without Bank’s written consent.  

(b)To the extent not already disclosed in writing to Bank, if Borrower (i)
obtains any Patent, registered Trademark, registered Copyright, registered mask
work, or any pending application for any of the foregoing, whether as owner,
licensee or otherwise, or (ii) applies for any Patent or the registration of any
Trademark, then Borrower shall immediately provide written notice thereof to
Bank and shall execute such intellectual property security agreements and other
documents and take such other actions as Bank may request in its good faith
business judgment to perfect and maintain a first priority perfected Lien in
favor of Bank in such property.  If Borrower decides to register any Copyrights
or mask works in the United States Copyright Office, Borrower shall: (x) provide
Bank with at least fifteen (15) days prior written notice of Borrower’s intent
to register such Copyrights or mask works together with a copy of the
application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as Bank may
request in its good faith business judgment to perfect and maintain a first
priority perfected Lien in favor of Bank in the Copyrights or mask works
intended to be registered with the United States Copyright Office; and (z)
record such intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the Copyright or mask work
application(s) with the United States Copyright Office.  Borrower shall promptly
provide to Bank copies of all applications that it files for Patents or for the
registration of Trademarks, Copyrights or mask works, together with evidence of
the recording of the intellectual property security agreement required for Bank
to perfect and maintain a first priority perfected Lien on such property.

(c)Provide written notice to Bank within the later of ten (10) days of entering
or becoming bound by any Restricted License (other than over-the-counter
software that is commercially available to the public).  Borrower shall take
such commercially reasonable steps as Bank reasonably requests to obtain the
consent of, or waiver by, any person whose consent or waiver is necessary for
(i) any Restricted License to be deemed “Collateral” and for Bank to have a Lien
in it that might otherwise be restricted or prohibited by law or by the terms of
any such Restricted License, whether now existing or entered into in the future,
and (ii) Bank to have the ability in the event of

 

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Exhibit 10.1

a liquidation of any Collateral to dispose of such Collateral in accordance with
Bank’s rights and remedies under this Agreement and the other Loan Documents.

6.8Litigation Cooperation.  From the date hereof and continuing through the
termination of this Agreement pursuant to its terms, make available to Bank,
without expense to Bank, Borrower and its officers, employees and agents and
Borrower's books and records, to the extent that Bank may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Bank with respect to any Collateral or relating to Borrower.

6.9Access to Collateral; Books and Records.  Allow Bank, or its agents, at
reasonable times during regular business hours, on three (3) Business Days’
notice (provided no notice is required if an Event of Default has occurred and
is continuing), to inspect the Collateral and audit and copy Borrower’s
Books.  Such inspections or audits shall be conducted no more often than once
every twelve (12) months unless an Event of Default has occurred and is
continuing in which case such inspections and audits shall occur as often as
Bank shall determine is necessary.  The foregoing inspections and audits shall
be at Borrower’s expense.  In the event Borrower and Bank schedule an audit more
than eight (8) days in advance, and Borrower cancels or seeks to reschedule the
audit with less than eight (8) days written notice to Bank, then (without
limiting any of Bank’s rights or remedies), Borrower shall pay Bank a fee of Two
Thousand Dollars ($2,000.00) plus any out-of-pocket expenses incurred by Bank to
compensate Bank for the anticipated costs and expenses of the cancellation or
rescheduling.

6.10Further Assurances.  Execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank’s Lien on the Collateral
or to effect the purposes of this Agreement.

6.11Formation or Acquisition of Subsidiaries.  Notwithstanding and without
limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the
time that Borrower forms any direct or indirect Subsidiary or acquires any
direct or indirect Subsidiary after the date hereof, Borrower shall (a) cause
such new Subsidiary to provide to Bank either a joinder to this Agreement to
cause such Subsidiary to become a co-borrower hereunder or a secured Guaranty to
cause such Subsidiary to be a secured Guarantor under this Agreement, together
with such appropriate financing statements and/or Control Agreements, all in
form and substance satisfactory to Bank (including being sufficient to grant
Bank a first priority Lien (subject to Permitted Liens) in and to the assets of
such newly formed or acquired Subsidiary), provided that any Foreign Subsidiary
shall not be required to become a co-borrower or secured Guarantor, (b) provide
to Bank appropriate certificates and powers and financing statements, pledging
all of the direct or beneficial ownership interest in such new Subsidiary, in
form and substance satisfactory to Bank, provided that, with respect to stock,
units, or other evidence of ownership held by Borrower in any Foreign
Subsidiary, Borrower shall not be required to grant or pledge a security
interest to Bank in more than sixty-five percent (65.0%) of such stock, units,
or other evidence of ownership held by Borrower in such Foreign Subsidiary, and
(c) provide to Bank all other documentation in form and substance satisfactory
to Bank, including, as Bank may deem necessary, one or more opinions of counsel
satisfactory to Bank, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above.  Any
document, agreement, or instrument executed or issued pursuant to this Section
6.11 shall be a Loan Document.

6.12Investment Banker; Financial Advisor.

(a)On the Petition Date, the Borrower will file a motion, in form and substance
reasonably satisfactory to Bank, seeking authorization under applicable sections
of the Bankruptcy Code to employ:

(i)Cassel Salpeter & Co., LLC or another investment banker satisfactory to Bank
(the “Investment Banker”), under similar terms and conditions as those under
which Cassel Salpeter & Co., LLC has been retained under that certain Investment
Banking Agreement dated April 2, 2019 (the “Investment Banker Agreement”) , and

(ii)Meru, LLC or another financial advisor satisfactory to Bank (the “Financial
Advisor”), under similar terms and conditions as those under which Meru, LLC has
been retained under that certain engagement letter dated April 2, 2019 (the
“Consulting Services Engagement Letter”), to be Debtor’s financial adviser,
which retention shall include making Nick Campbell, or another professional
satisfactory to Bank, under similar terms and conditions as those set forth in
the Consulting Services Engagement Letter with respect to Mr. Campbell,
available to be interim chief restructuring officer of Borrower.

 

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Exhibit 10.1

(b)Borrower will continue to employ an Investment Banker and Financial Advisor
or chief restructuring officer pursuant to the terms of Section 6.12(a) at all
times during the Case, provided that upon the resignation or termination of an
Investment Banker, Financial Advisor or chief restructuring officer, Borrower
will have five (5) Business Days to seek court authorization to retain another
Financial Advisor or chief restructuring officer, as applicable.

(c)Borrower and each of its Subsidiaries hereby authorizes the Investment Banker
and Financial Advisor retained by Borrower to communicate directly with Bank and
its professionals and advisors regarding Borrower and its Subsidiaries and any
matters within the scope of its work related thereto.

(d)Borrower and its Subsidiaries shall cooperate with the Bank and its
respective professionals and advisors and provide assistance with any and all
diligence reasonably requested thereby, including, but not limited to, providing
Bank and its counsel and advisors with prompt reasonable access from time to
time, upon prior request, to (w) the Investment Banker and the Financial Advisor
retained by Borrower pursuant hereto, (x) all related diligence materials and
work product, including written reports provided by such Investment Banker and
Financial Advisor to Borrower as may be reasonably requested by Bank (other than
any such materials and reports determined by Borrower or its counsel to be
subject to the work-product doctrine or attorney-client privilege), (y) Borrower
and its Subsidiaries' respective property, business locations and books and
records during regular business hours (as long as such access does not
unreasonably interfere with or disrupt normal business activities), and (z) such
other available information as Bank or its respective professionals or advisers
shall reasonably request.

6.13Bankruptcy Matters.  Borrower will:

(a)contemporaneously with the filing thereof, deliver to Bank copies of all
pleadings, motions, applications, financial information and other papers and
documents filed by Borrower in the Case, which copies of such papers and
documents may be provided to or served on Bank’s counsel; and

(b)as long as Bank is not a bidder for such Collateral, contemporaneously with
the receipt thereof, deliver to Bank copies of all letters of intent,
expressions of interest, offers to purchase or draft purchase agreements
(together with subsequent drafts) with respect to any of the Collateral.

6.14Milestones. Borrower will perform and deliver each of the items set forth in
Schedule 6.14 on or before the dates specified therein with respect to such
items.

6.15Payment of Post-Petition Obligations.  Pay all actual and necessary material
business expenses in accordance with the Budget, to the extent of funds
available in the Budget for such purpose, as and when due.

6.16Borrower’s Leases.  Within 90 days of the Petition Date, Borrower shall
submit, and shall use commercially reasonable efforts to ensure that the
Bankruptcy Court shall grant, a motion to extend the period in which Borrower
can assume or reject its (and its Affiliate’s) leases of non-residential real
property until at least 210 days from the Petition Date, unless Borrower
determines, in its reasonable business judgment to reject its lease.

7.NEGATIVE COVENANTS

Prior to the date on which the Obligations have been paid in full, Borrower
shall not do any of the following without Bank’s prior written consent:

7.1Dispositions.  Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; and (b) of worn-out, surplus or obsolete
Equipment that is, in the reasonable judgment of Borrower, no longer
economically practicable to maintain or useful in the ordinary course of
business of Borrower.

7.2Changes in Business, Management Control, or Business Locations. (a) Engage in
or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower and such Subsidiary, as applicable,
or reasonably related thereto; (b) liquidate or dissolve; (c) fail to provide
notice to Bank of any Key Person departing from or ceasing to be employed by
Borrower within ten (10) days after such Key Person’s departure from Borrower;
or (d) permit or suffer any Change in Control.

Borrower shall not, without at least twenty (20) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Five Hundred
Thousand Dollars ($500,000.00) in Borrower’s assets or property) or deliver any
portion of the Collateral

 

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Exhibit 10.1

valued, individually or in the aggregate, in excess of Five Hundred Thousand
Dollars ($500,000.00) to a bailee at a location other than to a bailee and at a
location already disclosed in the Perfection Certificate (other than with
respect to Collateral in transit or Collateral with customers or clients of
Borrower in the ordinary course of business), (2) change its jurisdiction of
organization, (3) change its organizational structure or type, (4) change its
legal name, or (5) change any organizational number (if any) assigned by its
jurisdiction of organization.  If Borrower intends to deliver any portion of the
Collateral valued, individually or in the aggregate, in excess of Five Hundred
Thousand Dollars ($500,000.00) to a bailee (and such Collateral is not
Collateral in transit or Collateral with customers or clients of Borrower in the
ordinary course of business), and Bank and such bailee are not already parties
to a bailee agreement governing both the Collateral and the location to which
Borrower intends to deliver the Collateral, then Borrower shall use commercially
reasonable efforts to cause such bailee to execute and deliver a bailee
agreement in form and substance satisfactory to Bank.

7.3Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person (including, without limitation, by
the formation of any Subsidiary). A Subsidiary may merge or consolidate into
another Subsidiary or into Borrower.

7.4Indebtedness.  Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5Encumbrance.  Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the priming first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s Intellectual Property, except as is otherwise permitted in Section
7.1 hereof and the definition of “Permitted Liens” herein.

7.6Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6 hereof.

7.7Distributions; Investments.  Pay any dividends or make any distribution or
payment or redeem, retire or purchase any of Borrower or any Guarantor’s capital
stock, provided that Borrower may convert any of its convertible securities into
other securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof.

7.8Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.

7.9Subordinated Debt. Make or permit any payment on any Subordinated Debt.

7.10Compliance.  Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to (a) meet the minimum funding requirements of ERISA, (b) prevent
a Reportable Event or Prohibited Transaction, as defined in ERISA, from
occurring, or (c) comply with the Federal Fair Labor Standards Act, the failure
of any of the conditions described in clauses (a) through (c) which could
reasonably be expected to have a material adverse effect on Borrower’s business;
or violate any other law or regulation, if the violation could reasonably be
expected to have a material adverse effect on Borrower’s business, or permit any
of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

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Exhibit 10.1

7.11Cash Collateral.  Subject to the Budget Variances, Borrower shall not use
any cash Collateral (including proceeds of the Term Loan Advances), or pay or
incur any expenses, liabilities or obligations in an amount greater than shown
in the Budget, or prior to the week shown in the Budget.

7.12Financing Order. Prior to the date on which the Obligations have been paid
in full, Borrower will not:

(a)seek, consent to or suffer to exist at any time any modification, stay,
vacation or amendment of the Financing Order, except for modifications and
amendments joined in or agreed to in writing by Bank;

(b)seek the use of “Cash Collateral” (as defined in the Financing Order) in a
manner inconsistent with the terms of the Financing Order without the prior
written consent of Bank;

(c)suffer to exist at any time a priority for any administrative expense or
unsecured claim against Borrower (now existing or hereafter arising of any kind
or nature whatsoever), including, without limitation, any administrative
expenses of the kind specified in Sections 105, 326, 328, 503((b), 506(c),
507(a), 507(b), 546(c), 552(b), 726 and 1114 of the Bankruptcy Code) or any
claim which is equal or superior to the Superpriority Claim of Bank;

(d)directly or indirectly seek, consent or suffer to exist at any time after the
date hereof any Lien on any properties, assets or rights except for Permitted
Liens; or

(e)pay any administrative expenses, except administrative expenses incurred in
the ordinary course of business of Borrower and set forth in the Budget;
provided, however, that notwithstanding the foregoing, Borrower shall be
permitted to pay as the same may become due and payable (i) administrative
expenses of the kind specified in Section 503(b) of the Bankruptcy Code incurred
in the ordinary course of business and to the extent otherwise authorized under
the Budget and not in conflict with the Financing Order, and (ii) compensation
and reimbursement of expenses to professionals allowed and payable under
Sections 330 and 331 of the Bankruptcy Code to the extent permitted by the
Budget and not in conflict with the Financing Order.

7.13Budget Variances.  Borrower shall not exceed the Budget Variances without
the consent of Bank.

8.EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1Payment Default.  Borrower fails to (a) make any payment of principal or
interest on any Credit Extension when due, or (b) pay any other Obligations
within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day cure period shall not apply to payments due on the Term
Loan Maturity Date).  During the cure period, the failure to make or pay any
payment specified under clause (b) hereunder is not an Event of Default (but no
Credit Extension will be made during the cure period);

8.2Covenant Default.  

(a)Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4,
6.5, 6.6, 6.7(b), 6.11, 6.12, 6.13, 6.14, 6.15, or 6.16, or violates any
covenant in Section 7; or

(b)Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period).  Cure periods provided under this section shall not
apply, among other things, to financial covenants (if any) or any other
covenants set forth in clause (a) above;

8.3Material Adverse Change.  A Material Adverse Change occurs;

8.4Attachment; Levy; Restraint on Business.  

(a) (i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower or of any entity under the control of Borrower (including
a Subsidiary) in excess of One Hundred Thousand

 

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Exhibit 10.1

Dollars ($100,000.00), or (ii) a notice of lien or levy is filed against any of
Borrower’s assets by any Governmental Authority, and the same under subclauses
(i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; or

(b) (i) any material portion of Borrower’s assets is attached, seized, levied
on, or comes into possession of a trustee or receiver, or (ii) any court order
enjoins, restrains, or prevents Borrower from conducting all or any material
part of its business;

8.5[Reserved].

8.6Other Agreements.  There is, under any agreement to which Borrower is a party
with a third party or parties, (a) any default occurring after the Petition Date
resulting in a right by such third party or parties, whether or not exercised,
to accelerate the maturity of any Indebtedness in an amount individually or in
the aggregate in excess of One Hundred Thousand Dollars ($100,000.00), if such
default is not being disputed in good faith by Borrower or is otherwise not
subject to the automatic stay; or (b) any breach or default by
Borrower  occurring after the Petition Date and which is not being disputed in
good faith by Borrower or is otherwise not subject to the automatic stay, the
result of which could have a material adverse effect on Borrower’s business,;
provided, however, that the Event of Default under this Section 8.6 caused by
the occurrence of a breach or default under such other agreement shall be cured
or waived for purposes of this Agreement upon Bank receiving written notice from
the party asserting such breach or default of such cure or waiver of the breach
or default under such other agreement, if at the time of such cure or waiver
under such other agreement (x) Bank has not declared an Event of Default under
this Agreement and/or exercised any rights with respect thereto; (y) any such
cure or waiver does not result in an Event of Default under any other provision
of this Agreement or any Loan Document; and (z) in connection with any such cure
or waiver under such other agreement, the terms of any agreement with such third
party are not modified or amended in any manner which could in the good faith
business judgment of Bank be materially less advantageous to Borrower or any
Guarantor.

8.7Judgments; Penalties.  One or more fines, penalties or final judgments,
orders or decrees for the payment of money in an amount, individually or in the
aggregate, of at least One Hundred Thousand Dollars ($100,000.00) (not covered
by independent third-party insurance as to which liability has been accepted by
such insurance carrier) shall be rendered against Borrower by any Governmental
Authority, and the same are not, within ten (10) days after the entry,
assessment or issuance thereof, discharged, satisfied, or paid, or after
execution thereof, stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit
Extensions will be made prior to the satisfaction, payment, discharge, stay, or
bonding of such fine, penalty, judgment, order or decree);

8.8Misrepresentations.  Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any
Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;

8.9Subordinated Debt.  Any document, instrument, or agreement evidencing any
Subordinated Debt shall for any reason be revoked or invalidated or otherwise
cease to be in full force and effect, in each case other than pursuant to its
terms, any Person shall be in breach thereof or contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Obligations shall for any reason be subordinated
or shall not have the priority contemplated by this Agreement or any applicable
subordination or intercreditor agreement; or

8.10Governmental Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) cause, or could reasonably be expected to cause,
a Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval

 

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Exhibit 10.1

in any other jurisdiction; provided, however, that notwithstanding anything to
the contrary, the suspension or delisting of Borrower’s stock by Nasdaq or any
other exchange shall not be an Event of Default.    

8.11Bankruptcy Defaults:

(a)the Final DIP Order is not entered within thirty (30) days (or such other
period as Bank may agree to in writing with Borrower) following the Petition
Date; or any Financing Order is stayed, revised, revoked, remanded, rescinded,
amended, reversed, vacated, or modified in any manner not acceptable to Bank;

(b)Borrower or any of its Affiliates shall file or consent to the filing of a
pleading seeking to modify or otherwise alter the Interim DIP Order or the Final
DIP Order without the prior consent of Bank;

(c)(i) an order shall be entered by the Bankruptcy Court appointing a trustee
under Section 1104 of the Bankruptcy Code, or an examiner with enlarged powers
relating to the operation of the business of Borrower under Section 1106(b) of
the Bankruptcy Code or (ii) the Borrower’s exclusive rights to file and solicit
acceptances for a plan shall terminate without the prior consent of Bank;

(d)(A) Borrower shall attempt to invalidate, reduce or otherwise impair the
Liens of Bank, of Bank’s claims or rights against Borrower or any of its
Subsidiaries or to subject any Collateral to assessment pursuant to Section
506(c) or 552(b) of the Bankruptcy Code, (B) any Lien or Superpriority Claim
created by this Agreement, the Prior Loan Agreement, or the Financing Order
shall, for any reason, cease to be valid or (C) any action is commenced by or on
behalf of the Borrower or any of its Subsidiaries which contests the validity,
perfection or enforceability of any of the Liens of Bank created by this
Agreement, the Prior Loan Agreement or the Financing Order;

(e)Borrower or any of its Affiliates shall file or consent to the filing of a
motion seeking to dismiss the Case or convert the Case to a case under chapter 7
of the Bankruptcy Code or an order with respect to the Case shall be entered by
the Bankruptcy Court dismissing the Case or converting the Case to a case under
chapter 7 of the Bankruptcy Code;

(f)any chapter 11 plan is filed in the Case, or an order shall be entered by the
Bankruptcy Court confirming a chapter 11 plan in the Case, that does not provide
for the termination of this Agreement and, if in effect at such time, the Prior
Loan Agreement and the payment in full in cash of the Obligations, and, if any
remain, the Prior Obligations and any Reinstated Prior Obligations on or before
the effective date of such plan;

(g)without the express prior written consent of Bank, any sale of, or motion by
Borrower to sell, a material portion of its assets pursuant to Section 363 of
the Bankruptcy Code that does not provide sufficient proceeds to cause the
payment in full of the Obligations, the Prior Obligations and Reinstated Prior
Obligations;

(h)an order shall be entered in the Case without the express prior written
consent of Bank, except as contemplated herein, (i) to revoke, vacate, reverse,
stay, modify, supplement or amend this Agreement and the transactions
contemplated hereby, any Loan Document or the Financing Order, or (ii) to permit
any administrative expense or any claim (now existing or hereafter arising, of
any kind or nature whatsoever) to have administrative priority equal or superior
to the priority of Bank in respect of the Obligations;

(i)an order shall be entered in the Case granting of relief from the automatic
stay to permit a third party to foreclose or enforce on assets of Borrower that
have a value that exceeds Fifty Thousand Dollars ($50,000.00) in the aggregate;

(j)a motion shall be filed by Borrower seeking authority, or an order shall be
entered in the Case (other than, for the avoidance of doubt, any motion or order
permitting insurance premium financing agreements, which must be in form and
substance acceptable to Bank), that (A) permits Borrower to incur Indebtedness
secured by any claim under Section 364(c)(1) of the Bankruptcy Code or by a Lien
pari passu with or superior to the Lien granted under the Loan Documents and
Sections 364(c)(2) or (d) of the Bankruptcy Code, unless (1) all of the
Obligations, Prior Obligations and Reinstated Prior Obligations, without
duplication,  have been paid in full at the time of the entry of any such order
and all Commitments terminated, (2) the Obligations, Prior Obligations and
Reinstated Prior Obligations, without duplication, are paid in full with such
debt and all commitments terminated, or (3) such Indebtedness is subject to an
intercreditor agreement in form and substance satisfactory to Bank in its sole
discretion or (B) permits Borrower or any Subsidiary of Borrower the right to
use Collateral other than in accordance with the terms of the Financing Order,
unless all of the Obligations, Prior Obligations, Reinstated Prior Obligations,
without duplication, shall have been paid in full and all commitments
terminated;

 

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--------------------------------------------------------------------------------

Exhibit 10.1

(k)proceeds of any sale of all or substantially all assets of Borrower, other
than the Wind Down Amount, the Carve Out, and the KEIP/KERP Plan Amount are not
directly remitted to Bank at the closing thereof, and the Obligations, Prior
Obligations, and Reinstated Prior Obligations (excluding the amount of the Wind
Down Amount, the Carve Out and the KEIP/KERP Plan Amount), without duplication,
are not paid in full in accordance with the terms of this Agreement from such
proceeds;

(l)any motions by Borrower to sell Collateral or approve procedures regarding
the same, any plan or disclosure statement filed by Borrower or supplements or
amendments thereto, or any orders approving or amending any of the foregoing,
are not in form and substance acceptable to Bank in its reasonable discretion;

(m)the automatic stay terminates or expires (other than an order granting of
relief from the automatic stay to permit a third party to foreclose or enforce
on assets of Borrower that have a value that is Fifty Thousand Dollars
($50,000.00) or less in the aggregate), unless all of the Obligations, Prior
Obligations, and Reinstated Prior Obligations shall have been paid in full;

(n)[reserved];

(o)(A) Borrower, any Subsidiary of Borrower, or any of their respective
Affiliates challenges the extent, validity or priority of the Obligations, the
Prior Obligations or the Reinstated Prior Obligations or the application of any
payments or collections received by Bank to the Obligations, the Prior
Obligations or the Reinstated Prior Obligations or (B) any other Person
challenges the extent, validity or priority of the Obligations, the Prior
Obligations or the Reinstated Prior Obligations or the application of any
payments or collections received by Bank to the Obligations, the Prior
Obligations or the Reinstated Prior Obligations and, in the case of this
subclause (B), such challenge is not resolved in a manner reasonably
satisfactory to Bank by the later of the expiration of any applicable challenge
period set forth in the Financing Order and forty-five (45) days following  the
assertion of such challenge;

(p)(A) Borrower, any Subsidiary of Borrower, or any of their respective
Affiliates challenges the validity, extent, perfection or priority of any Liens
granted in the Collateral to secure the Obligations, the Prior Obligations or
the Reinstated Prior Obligations or (B) any other Person challenges the
validity, extent, perfection or priority of any Liens granted in the Collateral
to secure the Obligations, the Prior Obligations or the Reinstated Prior
Obligations and, in the case of this subclause (B), such challenge is not
resolved in a manner reasonably satisfactory to Bank by the later of the
expiration of any applicable challenge period set forth in the Financing Order
and forty-five (45) days following  the assertion of such challenge;

(q)(i) Bank or the Collateral are surcharged or (ii) Borrower seeks to surcharge
Bank or the Collateral, pursuant to Sections 105, 506(c), 552 or any other
section of the Bankruptcy Code or (iii) the extent of the Liens on Collateral
are otherwise limited by any such section of the Bankruptcy Code;

(r)payment of or granting adequate protection with respect to pre-petition debt
(other than to Bank);  

(s)Borrower shall fail to maintain sufficient projected borrowing capacity under
this Agreement to pay all accrued administrative obligations and other
administrative claims when due, subject to funds being included in the Budget
for such purpose;

(t)[reserved];

(u)any willful and uncured violation by Borrower of the terms of the Financing
Order;

(v)within the 13-week period covered by a Budget, the Bank, using commercially
reasonable discretion, does not approve of a Proposed Budget becoming the new
Budget in accordance with Section 6.2(h) hereof;

(w)(i) Borrower deposits any funds (or allow any funds to be deposited) into the
“Adequate Assurance Account” (as defined in any order approving adequate
assurance procedures under § 366 of the Bankruptcy Code, which must be in form
and substance acceptable to Bank and may only be amended or modified with Bank’s
prior consent (the “Utilities Order”) unless such funds are deposited for
purposes of adequate assurance deposits in favor of utilities providers or are
otherwise required by the Utilities Order and contemplated by the Budget or (ii)
Borrower uses any funds deposited in the Adequate Assurance Account in a manner
inconsistent with the Utilities Order or the Budget without Bank’s prior
consent; or

(x)any order is entered by the Bankruptcy Court sustaining any objection or
challenge of any kind or nature to the validity, priority, or amount of the
Liens or the Obligations, Prior Obligations or Reinstated Prior

 

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Exhibit 10.1

Obligations held by Bank, including with respect to an action to recharacterize
or subordinate any Liens or claims of Bank against Borrower.

9.BANK’S RIGHTS AND REMEDIES

9.1Rights and Remedies.  Upon five (5) Business Days’ written notice (a
“Remedies Notice”) of the occurrence of an Event of Default (the “Remedies
Notice Period”), in each case delivered in accordance with the Financing Order,
unless the Bankruptcy Court orders otherwise, the automatic stay under Section
362 of the Bankruptcy Code will be automatically lifted to allow Bank to take
any and all actions permitted by the Loan Documents and applicable law, as if no
case were pending under the Bankruptcy Code. Prior to the expiration of the
Remedies Notice Period, Borrower, United States Trustee, and/or the Creditors’
Committee may contest the existence or continuation of an Event of Default, or
Bank’s right to assert remedies in connection with an Event of Default set forth
in a Remedies Notice, by filing of an expedited motion in the Bankruptcy Court.
Nothing in this paragraph shall limit the ability of Borrower and other
parties-in-interest to timely request any such expedited hearing on a motion
seeking such a finding, and Bank hereby consents to the conduct of such
expedited hearing (but not to the relief being sought therein).  Upon the
transmittal of a Remedies Notice:

(a)Borrower shall have no right to use any proceeds of the Collateral other than
to satisfy the Obligations, the Carve Out and KEIP/KERP Plan Amount; provided,
that, Borrower shall be permitted to use cash collateral (as defined in the
Bankruptcy Code) to pay its employees ordinary wages accrued up to and including
the date of service of the Remedies Notice;

(b)any obligation otherwise imposed on Bank to provide any loan or advance to
Borrower pursuant to this Agreement or the Financing Order shall be suspended
(pending the outcome of a hearing conducted under this Agreement and the
Financing Order), and any loan or advance made thereafter shall be made by Bank
in its sole and exclusive discretion;

(c)the Bank shall have the right to demand that Borrower (i) deposit cash with
Bank in an amount equal to at least (x) one hundred five percent (105.0%) of the
Dollar Equivalent of the aggregate face amount of all Letters of Credit
denominated in Dollars remaining undrawn, and (y) one hundred ten percent
(110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of
Credit denominated in a Foreign Currency remaining undrawn (plus, in each case,
all interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment)), to secure all of the
Obligations relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and Borrower
shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter
of credit fees scheduled to be paid or payable over the remaining term of any
Letters of Credit;

(d)the Bank shall have the right to terminate any FX Contracts;

(e)the Bank shall have the right to verify the amount of, demand payment of and
performance under, and collect any Accounts and General Intangibles, settle or
adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank considers advisable, and notify any Person owing
Borrower money of Bank’s Lien on such funds;

(f)the Bank shall have the right to make any payments and do any acts it
considers necessary or reasonable to protect the Collateral and/or its Lien on
the Collateral. Borrower shall assemble the Collateral if Bank requests and make
it available as Bank designates.  Bank may enter premises where the Collateral
is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its Lien and pay all expenses incurred. Borrower grants Bank a license to
enter and occupy any of its premises, without charge, to exercise any of Bank’s
rights or remedies;

(g)the Bank shall have the right to ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the
Collateral.  Upon the occurrence and during the continuance of an Event of
Default, Bank is hereby granted a non-exclusive, royalty-free license or other
right to use, without charge, Borrower’s labels, Patents, Copyrights, mask
works, rights of use of any name, trade secrets, trade names, Trademarks, and
advertising matter, or any similar property as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s
benefit;  

 

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Exhibit 10.1

(h)the Bank shall have the right to place a “hold” on any account maintained
with Bank and/or deliver a notice of exclusive control, any entitlement order,
or other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral; and

(i)the Bank shall have the right to demand and receive possession of Borrower’s
Books.

9.2Power of Attorney.  Borrower hereby irrevocably appoints Bank as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of
an Event of Default, to:  (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms Bank determines reasonable; (d) make, settle, and adjust
all claims under Borrower’s insurance policies; (e) pay, contest or settle any
Lien, charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Bank or a third party as the Uniform Commercial Code permits.  Borrower
hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on
any documents necessary to perfect or continue the perfection of Bank’s Lien on
the Collateral regardless of whether an Event of Default has occurred until all
Obligations (other than inchoate indemnity obligations) have been satisfied in
full and Bank is under no further obligation to make Credit Extensions
hereunder.  Bank’s foregoing appointment as Borrower’s attorney in fact, and all
of Bank’s rights and powers, coupled with an interest, are irrevocable until all
Obligations (other than inchoate indemnity obligations) have been fully repaid
and performed and Bank’s obligation to provide Credit Extensions terminates.

9.3Protective Payments.  If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or any other Loan
Document or which may be required to preserve the Collateral, Bank may obtain
such insurance or make such payment, and all amounts so paid by Bank are Bank
Expenses and immediately due and payable, bearing interest at the then highest
rate applicable to the Obligations, and secured by the Collateral.  Bank will
make reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time thereafter.  No
payments by Bank are deemed an agreement to make similar payments in the future
or Bank’s waiver of any Event of Default.

9.4Application of Payments and Proceeds Upon Default.  If an Event of Default
has occurred and is continuing, Bank shall have the right to apply in any order
any funds in its possession, whether from Borrower account balances, payments,
proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations.  Bank shall pay
any surplus to Borrower by credit to the Designated Deposit Account or to other
Persons legally entitled thereto; Borrower shall remain liable to Bank for any
deficiency.  If Bank, directly or indirectly, enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Bank
shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor.

9.5Bank’s Liability for Collateral.  So long as Bank complies with reasonable
banking practices regarding the safekeeping of the Collateral in the possession
or under the control of Bank, Bank shall not be liable or responsible for: (a)
the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c)
any diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person.  Borrower bears all risk of
loss, damage or destruction of the Collateral.

9.6No Waiver; Remedies Cumulative.  Bank’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any
other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or
therewith.  No waiver hereunder shall be effective unless signed by the party
granting the waiver and then is only effective for the specific instance and
purpose for which it is given.  Bank’s rights and remedies under this Agreement
and the other Loan Documents are cumulative.  Bank has all rights and remedies
provided under the Uniform Commercial Code, by law, or in equity.  Bank’s
exercise of one right or remedy is not an election and shall not preclude Bank
from exercising any other remedy under this Agreement or other remedy available
at law or in equity, and Bank’s waiver of any Event of Default is not a
continuing waiver.  Bank’s delay in exercising any remedy is not a waiver,
election, or acquiescence.  

9.7Demand Waiver.  Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

 

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Exhibit 10.1

10.NOTICES

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

If to Borrower:Achaogen, Inc.
One Tower Place, Suite 400
South San Francisco, California 94080
Attn: Chief Executive Officer
Email:bwise@achaogen.com

with a copy to:Hogan Lovells US LLP

1999 Avenue of the Stars, Suite 1400

Los Angeles, California 90067

Attn:  Richard Wynne, Esquire

Erin Brady, Esquire

Chris Bryant, Esquire

Email: rick.wynne@hoganlovells.com

erin.brady@hoganlovells.com

chris.bryant@hoganlovells.com

 

 

If to Bank:

Silicon Valley Bank
505 Howard Street, 3rd Floor
San Francisco, California 94105
Attn: Sheila Colson
Email: scolson@svb.com

with a copy to:Morrison & Foerster LLP

200 Clarendon Street, 20th Floor

Boston, Massachusetts 02116

Attn:  David A. Ephraim, Esquire

Email: DEphraim@mofo.com

 

11.CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE

Except as otherwise expressly provided in any of the Loan Documents, California
law governs the Loan Documents without regard to principles of conflicts of
law.  Borrower and Bank each submit to the exclusive jurisdiction of the
Bankruptcy Court; provided, however, that nothing in this Agreement shall be
deemed to operate to preclude Bank from bringing suit or taking other legal
action in any other jurisdiction to realize on the Collateral or any other
security for the Obligations, or to enforce a judgment or other court order in
favor of Bank.  Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and Borrower
hereby waives any objection that it may have based upon lack of personal
jurisdiction, improper venue, or forum non conveniens and hereby consents to the
granting of such legal or equitable relief as is deemed appropriate by such
court.  Borrower hereby waives personal service of the summons, complaints, and
other process issued in such action or suit and agrees that service of such
summons, complaints, and other process may be made by registered or certified
mail addressed to Borrower at the address set forth in, or subsequently provided
by Borrower in accordance with, Section 10 of this Agreement and that service so
made shall be deemed completed upon the earlier to occur of Borrower’s actual
receipt thereof or three (3) days after deposit in the U.S. mails, proper
postage prepaid.

 

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Exhibit 10.1

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

This Section 11 shall survive the termination of this Agreement.

12.GENERAL PROVISIONS

12.1Termination Prior to Term Loan Maturity Date; Survival. All covenants,
representations and warranties made in this Agreement shall continue in full
force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations) have been satisfied.  So
long as Borrower has satisfied the Obligations (other than inchoate indemnity
obligations, any other obligations which, by their terms, are to survive the
termination of this Agreement and, any Obligations under Bank Services
Agreements that are cash collateralized in accordance with Section 4.1 of this
Agreement), this Agreement may be terminated prior to the Term Loan Maturity
Date by Borrower, effective three (3) Business Days after written notice of
termination is given to Bank.  Those obligations that are expressly specified in
this Agreement as surviving this Agreement’s termination shall continue to
survive notwithstanding this Agreement’s termination.

12.2Successors and Assigns.  This Agreement binds and is for the benefit of the
successors and permitted assigns of each party.  Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion).  Bank has the
right, without the consent of or notice to Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents. Notwithstanding the foregoing, prior to the occurrence of an Event of
Default, Bank shall not assign any interest in the Loan Documents to an
operating company that is a direct competitor of Borrower or a vulture fund or a
distressed debt fund.

12.3Indemnification.  Borrower agrees to indemnify, defend and hold Bank and its
directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless
against:  (i) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (ii) all losses or expenses
(including Bank Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Bank and Borrower contemplated by the Loan Documents
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by such Indemnified Person’s gross negligence or willful
misconduct.  This Section 12.3 shall not apply with respect to Taxes other than
any Taxes that represent losses, claims, damages, etc. arising from any non-Tax
claim.

This Section 12.3 shall survive until all statutes of limitation with respect to
the Claims, losses, and expenses for which indemnity is given shall have run.

12.4Time of Essence.  Time is of the essence for the performance of all
Obligations in this Agreement.

12.5Severability of Provisions.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.6Correction of Loan Documents.  Bank may correct patent errors and fill in
any blanks in the Loan Documents consistent with the agreement of the parties so
long as Bank provides Borrower with written notice of such correction and allows
Borrower at least ten (10) days to object to such correction.  In the event of
such objection, such correction shall not be made except by an amendment signed
by both Bank and Borrower.

12.7Amendments in Writing; Waiver; Integration.  No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any
obligation under any Loan Document, shall be enforceable or admissible unless,
and only to the extent, expressly set forth in a writing signed by the party
against which enforcement or admission is sought.  Without limiting the
generality of the foregoing, no oral promise or statement, nor any action,
inaction, delay, failure to require performance or course of conduct shall
operate as, or evidence, an amendment, supplement or waiver or have any other
effect on any Loan Document.  Any waiver granted shall be limited to the
specific circumstance expressly described in it, and shall not apply to any
subsequent or other

 

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Exhibit 10.1

circumstance, whether similar or dissimilar, or give rise to, or evidence, any
obligation or commitment to grant any further waiver.  The Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements.  All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of the Loan Documents merge into the Loan Documents.

12.8Counterparts.  This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

12.9Confidentiality.  In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s
Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with
Bank, collectively, “Bank Entities”); (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use its best efforts to obtain any prospective transferee’s or purchaser’s
agreement to the terms of this provision); (c) as required by law, regulation,
subpoena, or other order; (d) to Bank’s regulators or as otherwise required in
connection with Bank’s examination or audit; (e) as Bank considers appropriate
in exercising remedies under the Loan Documents; and (f) to third-party service
providers of Bank so long as such service providers have executed a
confidentiality agreement with Bank with terms no less restrictive than those
contained herein.  Confidential information does not include information that is
either: (i) in the public domain or in Bank’s possession when disclosed to Bank,
or becomes part of the public domain (other than as a result of its disclosure
by Bank in violation of this Agreement) after disclosure to Bank; or
(ii) disclosed to Bank by a third party, if Bank does not know that the third
party is prohibited from disclosing the information.

Bank Entities may use anonymous forms of confidential information for aggregate
datasets, for analyses or reporting, and for any other uses not expressly
prohibited in writing by Borrower.  The provisions of the immediately preceding
sentence shall survive termination of this Agreement.

12.10Right of Set Off.  Borrower hereby grants to Bank, a Lien and right of set
off as security for all Obligations to Bank, whether now existing or hereafter
arising upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of Bank (including a Bank subsidiary) or in transit to
any of them.  At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Bank may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the Obligations.  ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

12.11Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between
Borrower and Bank arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

12.12Electronic Execution of Documents.  The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

12.13Captions.  The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

12.14Construction of Agreement.  The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement.  In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.

12.15Relationship.  The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement.  The parties do not
intend to create any agency, partnership, joint venture, trust, fiduciary or
other relationship with duties or incidents different from those of parties to
an arm’s-length contract.

 

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Exhibit 10.1

12.16Third Parties.  Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

12.17Release of Claims.  Subject to applicable terms of the Interim DIP Order
and Final DIP Order, Borrower hereby acknowledges effective upon entry of the
Interim DIP Order and again upon the entry of the Final DIP Order, that Borrower
has no defense, counterclaim, offset, recoupment, cross complaint, claim or
demand of any kind or nature whatsoever that can be asserted to reduce or
eliminate all or any part of Borrower’s liability with respect to the
Obligations or the Prior Obligations or to seek affirmative relief or damages of
any kind or nature from Bank.  Borrower, in its own right, on behalf of its
bankruptcy estate, and on behalf of all its successors, assigns, and any Person
acting for and on behalf of, or claiming through them, (collectively, the
“Releasing Parties”), hereby fully, finally and forever releases and discharges
Bank and all of its respective past and present officers, directors, servants,
agents, attorneys, assigns, heirs, parents, subsidiaries, and each Person acting
for or on behalf of any of them (collectively, the “Released Parties”) of any
from any and all past, present and future actions, causes of action, demands,
suits, claims, liabilities, Liens, lawsuits, adverse consequences, amounts paid
in settlement, costs, damages, debts, deficiencies, diminution in value,
disbursements, expenses, losses and other obligations of any kind or nature
whatsoever, whether in law, equity or otherwise (including, without limitation,
those arising under Sections 541 through 550 of the Bankruptcy Code and interest
or other carrying costs, penalties, legal, accounting and other professional
fees and expenses, and incidental, consequential and punitive damages payable to
third parties), whether known or unknown, fixed or contingent, direct, indirect,
or derivative, asserted or unasserted, foreseen or unforeseen, suspected or
unsuspected, now existing, heretofore existing or which may heretofore accrue
against any of the Released Parties, whether held in a personal or
representative capacity, and which in each case are based on any act, fact,
event or omission or other matter, cause or thing occurring at or from any time
prior to and including the date hereof in any way, directly or indirectly
arising out of, connected with or relating to this Agreement, the Financing
Order and the transactions contemplated hereby (other than breaches by Bank or
any Released Party of any of their obligations under any Loan Document or the
Financing Order), the Prior Loan Agreement, and all other agreements,
certificates, instruments and other documents and statements (whether written or
oral) related to any of the foregoing, except for any Claims and/or losses
caused by such Released Party’s gross negligence or willful
misconduct.  Borrower, for and on behalf of itself and the applicable Releasing
Parties, acknowledges and agrees that each has been informed by Borrower’s
attorney and advisors that, the release contained herein may extend to claims to
which the parties do not know or suspect to exist in their favor, including
claims which if known by them would have materially affected their decision to
enter into the released contained herein, and notwithstanding the foregoing,
hereby fully, finally, and irrevocably releases, acquits, waives and forever
discharges any such unknown claims and any applicable law, statute or common law
principle that, notwithstanding a general release, excludes from a general
release and/or preserves claims that are not known or suspected at the time of
executing the release. Borrower agrees that no fact, event, circumstance,
evidence or transaction which could now be asserted or which may hereafter be
discovered shall affect in any manner the final, absolute and unconditional
nature of the release set forth above.  Borrower waives the provisions of
California Civil Code section 1542, which states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING
THE RELEASE AND THAT IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS
OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

12.18Wind Down Amount.  The Borrower and the Bank agree to negotiate in good
faith to fund a wind-down of the Borrower after consummation of the Sale (it
being understood that this clause does not obligate any of the parties to reach
an agreement regarding the terms of a wind-down) (the amount of any such
funding, the “Wind Down Amount”).

13.DEFINITIONS

13.1Definitions.  As used in the Loan Documents, the word “shall” is mandatory,
the word “may” is permissive, the word “or” is not exclusive, the words
“includes” and “including” are not limiting, the singular includes

 

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Exhibit 10.1

the plural, and numbers denoting amounts that are set off in brackets are
negative.  As used in this Agreement, the following capitalized terms have the
following meanings:

“Account” is any “account” as defined in the Uniform Commercial Code with such
additions to such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Uniform Commercial
Code with such additions to such term as may hereafter be made.

“Acquisition” is (a) the purchase or other acquisition by Borrower or any
Subsidiary of all or substantially all of the assets of any other Person, or (b)
the purchase or other acquisition (whether by means of merger, consolidation, or
otherwise) by Borrower or any Subsidiary of all or substantially all of the
stock or other equity interest of any other Person.

“Affiliate” is, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution
who is authorized to execute the Loan Documents, including any Credit Extension
request, on behalf of Borrower.

“Bank” is defined in the preamble hereof.

“Bank Entities” is defined in Section 12.9.

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower or any Guarantor.

“Bank Services”  are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

“Bank Services Agreement” is defined in the definition of Bank Services.

“Bankruptcy Code” means Title 11 of the United States Code, as now and hereafter
in effect, or any applicable successor statute.

“Bankruptcy Court” means the United States Bankruptcy Court for the District of
Delaware, or any other court having jurisdiction over the Case from time to
time.

“Bankruptcy Recoveries” means any recoveries of Borrower, by settlement or
otherwise, in respect of claims and causes of action to which Borrower may be
entitled to assert by reason of any avoidance or other power vested in or on
behalf of a debtor or the estate of a debtor under chapter 5 of the Bankruptcy
Code.

“Board” means Borrower’s board of directors.

“Borrower” is defined in the preamble hereof.

“Borrower Case Professionals” means those persons or firms retained by the
Borrower pursuant to sections 327, 328 or 363 of the Bankruptcy Code, other than
ordinary course professionals.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state Tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s board of directors (and, if required under the terms of
such Person’s Operating Documents, stockholders) and delivered by

 

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Exhibit 10.1

such Person to Bank approving the Loan Documents to which such Person is a party
and the transactions contemplated thereby, together with a certificate executed
by its secretary or another authorized officer on behalf of such Person
certifying (a) such Person has the authority to execute, deliver, and perform
its obligations under each of the Loan Documents to which it is a party,
(b) that set forth as a part of or attached as an exhibit to such certificate is
a true, correct, and complete copy of the resolutions then in full force and
effect authorizing and ratifying the execution, delivery, and performance by
such Person of the Loan Documents to which it is a party, (c) the name(s) of the
Person(s) authorized to execute the Loan Documents, including any Credit
Extension request, on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively rely on such
certificate unless and until such Person shall have delivered to Bank a further
certificate canceling or amending such prior certificate.

“Budget” means the Initial Budget, and each subsequent 13-week cash flow
projection prepared by Borrower in accordance with Section 6.2(h), as the same
may be modified, amended, supplemented, and replaced from time to time with
Bank’s prior written consent, and subject to the Budget Variances.  

“Budget Variances” is defined in Section 6.2(h).

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed.

“Carve Out” means all Obligations, Prior Obligations and Reinstated Prior
Obligations and the repayment of any of the foregoing, and the Liens and
Superpriority Claims of Bank shall be subject to and subordinate to a carve out
for payment of: (a) all fees required to be paid pursuant to the Clerk of the
Court and to the Office of the United States Trustee under section 1930(a) of
title 28 of the United States Code prior to or after delivery by the Bank of a
Carve Out Trigger Notice plus interest at the statutory rate, plus (b) all
reasonable fees and expenses up to $20,000 incurred by a trustee under section
726(b) of the Bankruptcy Code, plus (c) subject to the Budget, all unpaid Case
Professional Fees and Expenses (excluding any success or completion fees payable
to the Committee Case Professionals) incurred at any time prior to delivery by
the Bank of a Carve Out Trigger Notice, plus (d) Case Professional Fees and
Expenses (excluding any success or completion fees payable to the Committee Case
Professionals) in an aggregate amount not to exceed the applicable Carve Out Cap
incurred after delivery by the Bank of the Carve Out Trigger Notice, plus (e)
all earned and unpaid advisory, success, transaction, completion or other fees
and expenses payable to the Investment Banker pursuant to the Investment Banker
Agreement incurred at any time that are allowed by the Bankruptcy Court.

“Carve Out Cap” means an aggregate amount of Case Professional Fees and Expenses
in accordance with the Budget not to exceed $250,000.00; provided, that the
Carve Out Cap shall be reduced on a dollar-for-dollar basis by any payments of
any Case Professional Fees and Expenses made after delivery of the Carve Out
Trigger Notice in respect of fees and expenses incurred after delivery of the
Carve Out Trigger Notice.

“Case” means the Borrower’s case under chapter 11 of the Bankruptcy Code that
was filed in the United States Bankruptcy Court for the District of Delaware on
April 15, 2019.

“Carve Out Trigger Notice” means a written notice delivered by Bank to Borrower,
its counsel, the United States Trustee, and lead counsel to any Creditors’
Committee, which notice may be delivered at any time following the occurrence of
any Event of Default under this Agreement.

“Case Professionals” means, collectively, Borrower Case Professionals and the
Committee Case Professionals.

“Case Professional Fees and Expenses” means, all accrued and unpaid fees,
disbursements, costs and expenses incurred by Case Professionals in accordance
with the Budget and allowed by the Bankruptcy Court at any time; provided, that
the term “Case Professional Fees and Expenses” shall not include any advisory,
success, transaction, completion or other fees and expenses payable or paid to
the Investment Banker.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue; (d) money market funds at
least ninety-five percent (95.0%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition; and (e) any other investments held with Bank or any of Bank’s
Affiliates.

 

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Exhibit 10.1

“Change in Control” means (a) at any time, any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), shall become,
or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of  forty-nine percent (49.0%) or more of
the ordinary voting power for the election of directors of Borrower (determined
on a fully diluted basis) other than by the sale of Borrower’s equity securities
in a public offering or to venture capital or private equity investors so long
as Borrower identifies to Bank the venture capital or private equity investors
at least seven (7) Business Days prior to the closing of the transaction and
provides to Bank a description of the material terms of the transaction; (b)
except for a change in the members of the Board resulting from the sale of
Borrower’s equity securities in a public offering or to venture capital or
private equity investors so long as Borrower identifies to Bank the venture
capital or private equity investors at least seven (7) Business Days prior to
the closing of the transaction and provides to Bank a description of the
material terms of the transaction, during any period of twelve (12) consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body; or
(c) at any time, Borrower shall cease to own and control, of record and
beneficially, directly or indirectly, one hundred percent (100.0%) of each class
of outstanding capital stock of each Subsidiary of Borrower (unless such
Subsidiary is dissolved or merged into Borrower or a secured Guarantor) free and
clear of all Liens (except Liens created by this Agreement).

“Chapter 11 Case” means the Case.

“Claims” is defined in Section 12.3.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Commitment” means Bank’s obligation to make Term Loan Advances under Section
2.1.1 in an aggregate amount not to exceed Twenty Five Million Dollars
($25,000,000.00) (which amount is inclusive of the Initial Term Loan
Commitment), subject to the terms and conditions set forth in this Agreement and
the Financing Order, as such amount shall be reduced by the making of Term Loan
Advances under Section 2.1.1; provided that, after the delivery of the Carve Out
Trigger Notice, the amount of the Commitment shall not exceed the amount of the
Carve Out.

“Committee Case Professionals” means those persons or firms retained by the
Creditors’ Committee pursuant to section 328 or 1103 of the Bankruptcy Code.  

“Commodity Account” is any “commodity account” as defined in the Uniform
Commercial Code with such additions to such term as may hereafter be made.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation, in each
case, directly or indirectly guaranteed, endorsed, co‑made, discounted or sold
with recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or,
if not determinable, the maximum reasonably anticipated liability for it
determined by the Person in good faith; but the amount may not exceed the
maximum of the obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Uniform Commercial Code) over such
Deposit Account, Securities Account, or Commodity Account.

 

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Exhibit 10.1

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Credit Extension” is the Term Loan Advances, or any other extension of credit
by Bank for Borrower’s benefit under the Loan Documents.

“Default Rate” is defined in Section 2.2(b).

“Deposit Account” is any “deposit account” as defined in the Uniform Commercial
Code with such additions to such term as may hereafter be made.

“Designated Deposit Account” is the multicurrency account denominated in
Dollars, account number 224 (last three digits), maintained by Borrower with
Bank.

“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.

“Domestic Subsidiary” means a Subsidiary organized under the laws of the United
States or any state or territory thereof or the District of Columbia.

“Equipment” is all “equipment” as defined in the Uniform Commercial Code with
such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

“Event of Default” is defined in Section 8.

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
Recipient or required to be withheld or deducted from a payment to Recipient,
(a) Taxes imposed on or measured by net income (however denominated), franchise
Taxes, and branch profits Taxes, in each case, (i) imposed as a result of
Recipient being organized under the laws of, or having its principal office or
its applicable lending office located in, the jurisdiction imposing such Tax (or
any political subdivision thereof) or (ii) that are Other Connection Taxes, (b)
U.S. federal withholding Taxes imposed on amounts payable to or for the account
of Recipient with respect to an applicable interest in a Term Loan Advance
pursuant to a law in effect on the date on which (i) Recipient acquires such
interest in a Term Loan Advance or (ii) Recipient changes its lending office,
except in each case to the extent that, pursuant to Section 2.5, amounts with
respect to such Taxes were payable either to such Recipient’s assignor
immediately before such Recipient became a party hereto or to such Recipient
immediately before it changed its lending office, (c) Taxes attributable to such
Recipient’s failure to comply with Section 2.5(f), and (d) any U.S. federal
withholding Taxes imposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the
date hereof (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or
future regulations or official interpretations thereof, any agreement entered
into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any
intergovernmental agreement entered into in connection with the implementation
of such sections of the Internal Revenue Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to, or official interpretations
implementing such, intergovernmental agreements.

“Final DIP Order” means a Final Order of the Bankruptcy Court in substantially
the form of the Interim DIP Order (with only such modifications thereto as are
satisfactory in form and substance to the Bank in its sole discretion) approving
the Loan Documents on a final basis.

“Final Order” means an order by the Bankruptcy Court as to which: (i)(a) no
request for a stay or any similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled or

 

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Exhibit 10.1

suspended, and any deadline for filing such a request that may be designated by
law, statute, regulation, or rule has passed; (b) no petition for rehearing or
reconsideration or application for review is pending and the time for filing any
such petition or application has passed; (c) no Governmental Authority has
undertaken to reconsider the action on its own motion and the time within which
it may effect such reconsideration has passed; and (d) no appeal is pending
(including other administrative or judicial review) or in effect and any
deadline for filing any such appeal that may be specified by law, statute,
regulation, or rule has passed or (ii) any applicable stay (including, without
limitation, under Bankruptcy Rule 6004(h) has been waived).

“Financial Advisor” is defined in Section 6.12(a)(ii).

“Financing Order” means the Interim DIP Order and the Final DIP Order, as
applicable.

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Lender” means (a) if Borrower is a US Person, a Recipient that is not a
US Person, and (b) if Borrower is not a US Person, a Recipient that is resident
or organized under the laws of a jurisdiction other than that in which Borrower
is resident for tax purposes.

“Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

“Funding Date” is any date on which a Credit Extension is made to or for the
account of Borrower which shall be a Business Day.

“FX Contract” is any foreign exchange contract by and between Borrower and Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Uniform
Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation, all Intellectual
Property, claims, income and other Tax refunds, security and other deposits,
payment intangibles, contract rights, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

“Governmental Approval” is 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” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Guarantor” is any Person providing a Guaranty in favor of Bank.

“Guaranty” is any guarantee of all or any part of the Obligations, as the same
may from time to time be amended, restated, modified or otherwise supplemented.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.

“Indemnified Person” is defined in Section 12.3.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
under any Loan Document and (b) to the extent not otherwise described in (a),
Other Taxes.

 

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Exhibit 10.1

“Initial Budget” means the cash flow projection for the thirteen-week period
beginning immediately after the Petition Date prepared by Borrower in accordance
with Section 6.2(h), which shall in form and substance be satisfactory to Bank
in its sole discretion and shall be annexed to and approved by the Interim DIP
Order.

“Insolvency Proceeding” is any proceeding by or against any Person under the
Bankruptcy Code, or any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, compositions, extensions generally
with its creditors, or proceedings seeking reorganization, arrangement, or other
relief.

“Intellectual Property” means, with respect to any Person, all of such Person’s
right, title, and interest in and to the following:

(a)its Copyrights, Trademarks and Patents;

(b)any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, and operating
manuals;

(c)any and all source code;

(d)any and all design rights which may be available to such Person;

(e)any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

(f)all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“Interim DIP Order” shall mean an order of the Bankruptcy Court (as the same may
be amended, supplemented, or modified from time to time after entry thereof with
the consent of the Bank and in accordance with the terms hereof) approving the
Loan Documents on an interim basis.  The Interim DIP Order shall be in the form
set forth as Exhibit D, with changes to such form as are satisfactory to the
Bank, in its sole discretion.

“Initial Term Loan Commitment” means the Bank’s obligation to make Initial Term
Loan Advances under Section 2.1.1 in an aggregate amount not to exceed Four
Million Three Hundred Thousand ($4,300,000.000), subject to the terms and
conditions set forth in this Agreement and the Interim DIP Order, as such amount
shall be reduced by the making of Initial Term Loan Advances under Section
2.1.1; provided that, after the delivery of the Carve Out Trigger Notice, the
amount of the Initial Term Loan Commitment shall not exceed the amount of the
Carve Out.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Inventory” is all “inventory” as defined in the Uniform Commercial Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products,
including without limitation such inventory as is temporarily out of Borrower’s
custody or possession or in transit and including any returned goods and any
documents of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

“Investment Banker” is defined in Section 6.12(a)(i).

“IP Agreement” is that certain Intellectual Property Security Agreement by and
between Borrower and Bank dated as of the date hereof, as may be amended,
modified, supplemented and/or restated from time to time.

“KEIP/KERP Plan Amount” is the aggregate amount due and owing on any date of
determination to one or more individuals named in, and pursuant to, the
KEIP/KERP plan of the Borrower that is approved by the Bank in writing and
authorized by the Bankruptcy Court, as such plan may be amended from time to
time with the written consent of the Bank; provided, that the Borrower’s
proposed key employee incentive plan shall be funded only from proceeds of a
sale of the Collateral that are in excess of $25,000,000.00.  

“Key Person” is the Chief Executive Officer, who is Blake Wise as of the date
hereof.

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity, or
similar agreement.

 

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Exhibit 10.1

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits,
certificates, notices, and any other documents related to this Agreement, the
Interim DIP Order, the Final DIP Order, the Perfection Certificate, the IP
Agreement, any Control Agreement, any Bank Services Agreement, any subordination
agreement, any note, or notes or guaranties executed by Borrower or any
Guarantor, and any other present or future agreement by Borrower and/or any
Guarantor with or for the benefit of Bank in connection with this Agreement or
Bank Services, all as amended, restated, or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; or (c) a material impairment of the
prospect of repayment of any portion of the Obligations, in each case measured
from and after the date hereof; provided, however, that notwithstanding anything
to the contrary, none of the following shall constitute or be deemed to have
caused an Event of Default, material adverse effect, or Material Adverse Change:
(i) the filing and continuance of the Chapter 11 Case; (ii) a variance in
disbursements or cash receipts that does not exceed the applicable Budget
Variance; or (iv) the suspension or delisting of Borrower’s stock by Nasdaq or
any other exchange; provided, further that Bank shall not be entitled to declare
the occurrence of a Material Adverse Change prior to the conclusion of the
auction described in the Sale Motion.    

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, fees, Bank Expenses, the Term Loan Commitment Fees, and other amounts
Borrower owes Bank now or later, whether under this Agreement, the other Loan
Documents, or otherwise, and including, without limitation, any interest
accruing after the Case begins and debts, liabilities, or obligations of
Borrower assigned to Bank, and to perform Borrower’s duties under the Loan
Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the date hereof, and, (a) if such Person is a corporation, its bylaws
in current form, (b) if such Person is a limited liability company, its limited
liability company agreement (or similar agreement), and (c) if such Person is a
partnership, its partnership agreement (or similar agreement), each of the
foregoing with all current amendments or modifications thereto.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Term Loan Advance or Loan
Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Payment/Advance Form” is that certain form attached hereto as Exhibit B.

“Payment Date” is the first (1st) calendar day of each month.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

(a)Borrower’s Indebtedness to Bank under this Agreement and the other Loan
Documents;

(b)Subordinated Debt;

(c)unsecured Indebtedness to trade creditors or unsecured Indebtedness incurred
in connection with credit cards, in each case incurred in the ordinary course of
business;

 

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Exhibit 10.1

(d)Indebtedness secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder;

(e)Indebtedness consisting of Permitted Investments;

(f)Indebtedness (i) consisting of the obligation to pay rent when due under real
property leases entered into in the ordinary course of Borrower’s business and
(ii) incurred solely in connection with deposits for real property in the
ordinary course of business;

(g)extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be; and

(h)Indebtedness existing on the Petition Date which is shown on the Perfection
Certificate.

“Permitted Investments” are:

(a)Investments (including, without limitation, Subsidiaries) existing on the
date hereof which are shown on the Perfection Certificate;

(b)(i) Investments consisting of Cash Equivalents, and (ii) any Investments
permitted by Borrower’s investment policy, as amended from time to time,
provided that such investment policy (and any such amendment thereto) has been
approved in writing by Bank;

(c)Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
Borrower;

(d)Investments consisting of deposit accounts (but only to the extent that
Borrower is permitted to maintain such accounts pursuant to Section 6.6 of this
Agreement) in which Bank has a first priority perfected Lien; and

(e)Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business.

“Permitted Liens” are:

(a)Liens for Taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code, and
the Treasury Regulations adopted thereunder;

(b)Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

(c)leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business), and leases, subleases, non-exclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Bank a Lien thereon;

(d)Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase; or

(e)Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7;
or

(f)Liens existing on the Petition Date which are shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents.

 

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Exhibit 10.1

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“Petition Date” shall mean April 15, 2019.

“Prior Loan Agreement” is that certain Loan and Security Agreement between Bank
and Borrower dated as of February 26, 2018.

“Prior Obligations” is defined in Section 2.1.1(a).

“Prime Rate” is the rate of interest per annum from time to time published in
the money rates section of The Wall Street Journal or any successor publication
thereto as the “prime rate” then in effect; provided that, in the event such
rate of interest is less than zero, such rate shall be deemed to be zero for
purposes of this Agreement; and provided further that if such rate of interest,
as set forth from time to time in the money rates section of The Wall Street
Journal, becomes unavailable for any reason as determined by Bank, the “Prime
Rate” shall mean the rate of interest per annum announced by Bank as its prime
rate in effect at its principal office in the State of California (such Bank
announced Prime Rate not being intended to be the lowest rate of interest
charged by Bank in connection with extensions of credit to debtors); provided
that, in the event such rate of interest is less than zero, such rate shall be
deemed to be zero for purposes of this Agreement.

“Recipient” means Bank or any other Person holding a beneficial interest in the
right to make the Term Loan Advance.

“Registered Organization” is any “registered organization” as defined in the
Uniform Commercial Code with such additions to such term as may hereafter be
made.

“Reinstated Prior Obligations” means any Prior Obligations constituting an
Avoided Payment, to the extent such obligations have been reinstated, in each
case, pursuant to, and subject to the requirements and terms of a Final Order of
the Bankruptcy Court.

“Released Parties” has the meaning specified in Section 12.17.

“Releasing Parties” has the meaning specified in Section 12.17.

“Remedies Notice” has the meaning specified in Section 9.1.

“Remedies Notice Period” has the meaning specified in Section 9.1.

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, 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” is any of the Chief Executive Officer, President and Chief
Financial Officer of Borrower.  

“Restricted License” is any material license or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Bank’s right to sell any Collateral.

“Sale” means a sale of all or substantially all of Borrower’s assets, in each
case pursuant to Section 363 of the Bankruptcy Code.

“Sale Motion” means an omnibus motion filed by Borrower requesting, among other
things, the Bankruptcy Court’s approval of (a) bidding procedures with respect
to the Sale, and (b) approval of the Sale; provided, that the Sale Motion shall
be satisfactory to the Bank in its sole discretion.

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

“Securities Account” is any “securities account” as defined in the Uniform
Commercial Code with such additions to such term as may hereafter be made.

 

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Exhibit 10.1

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person.  Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Superpriority Claim” means a super-priority administrative expense claim
against Borrower and its estate in the Chapter 11 Case having priority, pursuant
to Section 364(c)(1) and 507(b) of the Bankruptcy Code (subject only to the
payment of the Carve Out and the KEIP/KERP Plan Amount), over the other
administrative claims of any person or entity, including, without limitation any
claims under Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c) (upon
entry of the Final DIP Order), 507(a), 507(b), 546(c), 546(d), 726 (to the
extent permitted by law), 1113 and 1114 of the Bankruptcy Code, and any other
provision of the Bankruptcy Code, and which shall at all times be, subject to
the Carve Out and the KEIP/KERP Plan Amount, senior to the rights of Borrower,
Borrower’s estate, any trustee or successor trustee to the extent permitted by
law, or any other creditor in the Chapter 11 Case.

“Tax” and “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Term Loan Advance” and “Term Loan Advances” are each defined in Section
2.1.1(a) hereof.

“Term Loan Commitment Fees” is defined in Section 2.3(a).

“Term Loan Maturity Date” is the earlier of (a) September 30, 2019, (b) the date
of a prepayment of the Obligations under Section 2.1.1 of this Agreement, (c)
the date of acceleration of the Obligations pursuant to the terms of this
Agreement and Financing Order, and (d) the date on which the Sale is
consummated.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Uniform Commercial Code” is the Uniform Commercial Code, as the same may, from
time to time, be enacted and in effect in the State of California provided,
that, to the extent that the Uniform Commercial Code is used to define any term
herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the Uniform Commercial Code, the definition of such
term contained in Article or Division 9 shall govern; provided further, that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien
on any Collateral is governed by the Uniform Commercial Code in effect in a
jurisdiction other than the State of California, the term “Uniform Commercial
Code” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.

“US Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Internal Revenue Code.

“Wind Down Amount” is defined in Section 12.18.

[Signature page follows.]

 

 

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Exhibit 10.1

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.

BORROWER:

ACHAOGEN, INC.

By_/s/BlakeWise______________________________

Name: Blake Wise_____________________________

Title: CEO___________________________________

BANK:

SILICON VALLEY BANK

By_/s/ Sheila Colson____________________________

Name:_Sheila Colson____________________________

Title: Managing Director_________________________

 

Signature Page to Loan and Security Agreement

 

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Exhibit 10.1

EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, domain names, Intellectual Property,
commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts,
certificates of deposit, fixtures, letters of credit rights (whether or not the
letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now
owned or hereafter acquired, wherever located; and

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing; and

The Bankruptcy Recoveries.

 

 

 

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Exhibit 10.1

EXHIBIT B – LOAN PAYMENT/ADVANCE REQUEST FORM

Deadline for same day processing is Noon Pacific Time

 

Fax To:  Date: _____________________

 

Loan Payment:ACHAOGEN, INC.

From Account #________________________________To Account
#__________________________________________________

(Deposit Account #)(Loan Account #)

Principal $____________________________________and/or Interest
$________________________________________________

Authorized Signature:Phone Number:

Print Name/Title:

 

 

Loan Advance:

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

From Account #________________________________To Account
#__________________________________________________

(Loan Account #)(Deposit Account #)

Amount of Advance $___________________________

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

Authorized Signature:Phone Number:

Print Name/Title:

 

 

Outgoing Wire Request:

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, Pacific Time

 

Beneficiary Name: _____________________________Amount of Wire: $

Beneficiary Bank: ______________________________Account Number:

City and State:

Beneficiary Bank Transit (ABA) #: Beneficiary Bank Code (Swift, Sort, Chip,
etc.):

(For International Wire Only)

Intermediary Bank: Transit (ABA) #:

For Further Credit to:

Special Instruction:

 

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

Authorized Signature: ___________________________2nd Signature (if required):
_______________________________________

Print Name/Title: ______________________________Print Name/Title:
______________________________________________

Telephone #: Telephone #:

 

 

 

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Exhibit 10.1

EXHIBIT C

BUDGET

 

 

 

 

 

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Exhibit 10.1

EXHIBIT D

INTERIM DIP ORDER

 

 

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Exhibit 10.1

Schedule 6.14 – Milestones

 

 

 

1.

No later than three (3) Business Days after the Petition Date, or such later
date as may be consented to by Bank, Borrower will have obtained entry of the
Interim DIP Order.

 

2.

No later than one (1) Business Day after the Petition Date, or such later date
as may be consented to by Bank, Borrower will have filed the Sale Motion.

 

3.

No later than thirty (30) days after the Petition Date, or such later date as
may be consented to by Bank, Borrower will have obtained entry of the Final DIP
Order.

 

4.

No later than twenty five (25) days after the Petition Date, or such later date
as may be consented to by Bank, Borrower will have obtained entry of a Final
Order approving bidding procedures for the Sale.

 

5.

No later than forty five (45) days after the Petition Date, or such later date
as may be consented to by Bank, Borrower will have completed the marketing
process described in the Sale Motion and selected a stalking horse bidder, if
any, for an auction.

 

6.

No later than sixty (60) days after the Petition Date, or such later date as may
be consented to by Bank, Borrower will have conducted the auction described in
the Sale Motion.

 

7.

No later than sixty five (65) days after the Petition Date, or such later date
as may be consented to by Bank, Borrower will have obtained entry of a Final
Order approving the Sale.

 

8.

No later than seven (7) days after the entry of the Final Order approving the
sale, or such later date as may be consented to by Bank, Borrower will have
consummated the Sale and use cash proceeds at the closing thereof to cause,
without duplication, all Obligations and Prior Obligations to be paid in full,
in cash, on a final and indefeasible basis, subject to the provisions of the
Financing Order.