Document:

Exhibit 10.16

 

 

MANUFACTURING SERVICES AGREEMENT

 

This AGREEMENT is entered into as of the 23rd day of November, 2016 by Paramit Corporation, a California corporation (referred to in this Agreement as “Paramit” or “Supplier”), and Quanterix, Inc., a Delaware corporation (referred to in this Agreement as “Customer”).  Each of Paramit and Customer may be referred to herein as a “Party” and are jointly referred to as the “Parties.”

 

RECITALS

 

WHEREAS, Customer intends to develop and commercialize certain products and wishes to contract with a contract manufacturing organization for the further refinement, manufacture and supply of such products; and

 

WHEREAS, Paramit has manufacturing and related services experience and expertise and owns a facility that is or would be suitable for production of such products; and

 

WHEREAS, Customer desires to retain Paramit as a supplier of the Product (as defined below), and Supplier desires to supply such Product and perform services for Customer on the terms and conditions set forth in this Agreement; and

 

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants of the Parties hereinafter set forth, the Parties hereto agree as follows:

 

1.                                      DEFINITIONS

 

Deterministic Acceptance Criteria:  Paramit procures material to Customer Specifications, assembles and tests finished assemblies and Product also to Customer Specifications.  An acceptance criterion that directly evaluates the functional performance of the Product to the Customer Specifications is called “deterministic”.  Non acceptance will point to a particular part or function as being defective or inoperative.  Examples:  Pressure test, repeatability of a positioning system, bearing pre-load measurement etc.  To contrast, an example of a non-deterministic criterion would be one where the customer’s application software fails but it does not point to any failing part of the machine.  The particular test might fail owing to establishment of specification limits that are tighter than what the machine design is capable of delivering, or the variance in the consumables.  Another example would be when the customer constructs a test whose result is a derivative of several parameters and therefore a failure of this test may not indicate where the problem lies or whether there is a problem at all.

 

“Acceptance Period” means [***] after shipment of Product from Paramit.

 

“Calendar Quarter” means each period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31.

 

Form:  SAL-F-0024  Rev 04

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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“Calendar Year” means each successive period of twelve months commencing on January 1 and ending on December 31; provided that the first Calendar Year shall be deemed to commence on the Effective Date and end on the December 31 thereafter, and the last Calendar year will commence on January 1 of such year and end on the date of expiration or termination of this Agreement.

 

“Customer Specifications” mean a detailed description of the functional and technical specifications for each Product, including BOMs, drawings, dimensions, manufacturing instructions, required performance characteristics, quality control tests, Deterministic Acceptance

 

Criteria, packaging and labeling instructions for each Product that is provided to and accepted by Paramit and are in effect at the time of Paramit’s commencement of manufacture of a Product.

 

The Specifications for each Product may be amended, from time to time, by written agreement of the parties; written agreement to amend Customer Specifications shall not be unreasonably withheld by either Party.

 

“ECO” means an engineering change order approved by the Parties as set forth in Article 13.

 

“Effective Date” means the date the Customer issues the first purchase order to Paramit for the Product or for NRE work.

 

“End User’’ means Customer’s customer and Customer’s third party distributor’s customer who ultimately purchase and operate the Product.

 

“FRU” means field replaceable unit manufactured by Paramit or other 3rd party suppliers that is considered a subsystem of the Product that can be purchased separately by Customer.

 

“Inventory” means, with respect to Products work in process (if any) and/or finished goods (if any) and not Materials.

 

“NREs” means non-recurring expenses associated with a Product, and include tooling, stencils, test fixtures, and test programs.

 

“Materials” refers to goods of the type listed on Customer’s bill of materials.  By way of example, materials may include resistors, capacitors, coils, integrated circuits, BGA’s, FPGA’s, power supplies, printed circuit boards, sheet metal, plastics, cases, fasteners, labels, cabling, connectors, grommets, and customer-specified packaging.

 

“Particular Purchase Order Terms” means the following terms in Customer’s purchase order:  the identification of the Product to be manufactured, Customer’s specifications and specific revision, the price per item of such Product as established under Article 2 and Exhibit B of this

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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Agreement, the quantity of Product that Paramit is to manufacture, the date or dates of shipment, and the “ship to” address (provided that the “ship to” address may be provided at a date after the purchase order is accepted).  In the case of a purchase order for NREs, the term “Particular Purchase Order Terms” means the following terms in the Customer’s purchase order:  the identification of the NREs, the charge for the NREs and the descriptions of goods, services and other deliverables covered by the NREs.  The terms and conditions of Customer’s purchase order other than the Particular Purchase Order Terms are not part of any contract between Paramit and Customer.

 

“Product” means the Quanterix Simoa product as described by the Customer’s Specifications and all subsequent revisions.

 

“Product Price” means the amount to be paid for each individual product as determined in Article 2 and Exhibit B.

 

“Spare Part” means any individual component in the bill of materials for the product that can be purchased by customer as an individual component for the purpose of field service repair.

 

“Warranty Period” means thirteen (13) months from the shipment of Product or FRU.

 

As used in this agreement, the word “include” and its variants are used to illustrate and not to limit.  Thus, the word “including” means “including (but not limited to).”The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise expressly indicated in the accompanying text.  The use of “or’’ is not intended to be exclusive unless otherwise expressly indicated in the accompanying text.  The defined terms contained in this Agreement are applicable to the singular as well as the plural forms of such terms.  A reference to documents, instruments or agreements also refers to all addenda, exhibits or schedules thereto.

 

2.                                      BASIC AGREEMENT

 

(a)           Paramit agrees to manufacture and sell, and Customer agrees to buy and pay for, the Product on the terms set forth in this Agreement and the Particular Purchase Order Terms for the Product.

 

(b)           Paramit shall accept all purchase orders issued by Customer, provided that (i) Customer is not in breach of this Agreement, (ii) the purchase order is consistent with the agreed pricing, quoted quantities, lead times and payment terms, (iii) components and parts are in Paramit’s possession or available in the market.

 

(c)           Paramit agrees to manufacture and test Product [***].  This means that the price of the Product will be determined as described in Exhibit B.  If Deterministic Acceptance Criteria for

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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the Product has not been established, Paramit cannot predict labor times.  Any additional re-work activity over and above the quoted labor amounts or shipping back and forth to Customer will be charged to Customer separately at standard Paramit rates.

 

(d)           Paramit agrees to manufacture and test FRUs [***].  This means that the price of FRUs will be determined as described in Exhibit B.

 

(e)           Paramit agrees to sell Spare Parts [***].  This means that the price of Spare Parts will be determined as described in Exhibit B.

 

(f)            Paramit agrees that the pricing in this Agreement is based on transparency and Customer’s visibility into cost.  Therefore, Paramit agrees to provide a costed BOM to Customer.

 

(g)           The Price of Product, FRUs and Spare Parts will be reviewed at least annually.  However, this will be done more frequently during the pilot phases and the first Calendar Year of production.  Either Party can initiate a cost review if a significant change in cost has occurred.

 

(h)           Cost of materials and components are based on quote(s) provided to Customer and after acceptance via issuing PO for product(s), such materials costs will be entered into Paramit system as “standard cost”.  Subsequently, if any new part is added or deleted to the Bill of Material (BOM), Paramit will have to quote it by employing provided quantity usage at the time.  Similarly, Paramit will purchase materials from Customer based on established “standard cost” and not necessarily the cost Customer might have paid for at higher volume than purchase orders placed with Paramit.

 

3.                                      PRODUCT ACCEPTANCE.

 

(a)           During the Acceptance Period, Customer may test the Product with the same Deterministic Acceptance Criteria used by both Customer and Paramit.  The Product is deemed accepted by the Customer after the expiration of the Acceptance Period.  Product acceptance and expiration of the Acceptance Period has no effect on Customer’s rights to make a Warranty claim.

 

(b)           Customer shall have the right to audit any Paramit facility at which the Product, or any component of the Product, is manufactured.  Each audit shall be conducted during Paramit’s normal business hours, upon reasonable prior written notice to Paramit (“reasonable”, for purposes of this provision, shall, unless circumstances dictate otherwise, be ten (10) business days, shall last no longer than two (2) business days, and shall consist of no more than two (2) representatives from Customer, such representatives being individuals that are reasonably acceptable to Paramit).  During an audit, Customer’s representatives will be escorted at all times by Paramit personnel and confined to limited area where the Product is manufactured.  The audit activities will be strictly confined to manufacturing and quality related activities of the Product.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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4.                                      RETURNS, REPAIR AND REPLACEMENT.

 

(a)           During the Warranty period for a Product, Customer may inspect and test the Product with the same identical test that is provided to Paramit for manufacture of Product and may return or repair in the field, in accordance with this Agreement, any Product found not to conform to Customer’s Specifications or to be defective in materials or workmanship.

 

(b)           To return a Product, Customer must give to Paramit written notice during the Warranty Period in accordance with Exhibit A, REPAIR/ UPGRADE TERMS AND CONDITIONS.  Paramit acknowledges that time is of the essence with regard to repairs and will promptly repair or replace returned Product, at Paramit’s option, and will deliver the repaired or replaced Product freight pre­ paid.  If Paramit is unable to make the repair or replacement within a commercially reasonable period of time, Paramit will refund the price paid for such Product or cancel the obligation to pay for such Product.

 

(c)           The provisions of this paragraph apply to the repaired or replaced Product, for which the Acceptance Period and Warranty Period will recommence on redelivery of such repaired or replaced Product,)and a like procedure for newly discovered defects.  Thus, if a product is rejected because of a defect and Paramit provides a replacement product, the Acceptance period and Warranty Period for the replacement Product will start with Customer’s receipt of the replacement Product.

 

(d)           lf Customer returns Product to Paramit under this section, but the Product conforms to Customer’s Specifications and the Product contains no other defect, Customer will bear all the risk and expense associated with the return, including all shipping expenses both ways, plus Paramit’s charges for testing in accordance with this Agreement.

 

(e)           Defects in Materials will be covered by their respective manufacturers’ warranties.  Customer will pay for shipping the product to Paramit and back to Customer.  If Paramit is unable to repair or replace such Product within a commercially reasonable period of time, Paramit will refund the price paid for such Material.  Paramit’s obligation to repair or replace (or refund the price) is conditioned on Customer’s making a claim in writing to Paramit no later than 30 days after the defect in materials first manifests itself.  Paramit has no obligation with respect to a defect in Materials that manifest itself after the expiration of the component manufacturer warranty period.  The foregoing warranty does not-apply to Materials supplied or consigned to Paramit by or at the direction of Customer, however, Paramit is responsible for commercially reasonable process for storage and handling of Materials supplied or consigned under its care, custody and control.  The obligations set forth in this paragraph are Paramit’s sole and exclusive obligations with respect to a defect in Materials.  Upon request, Paramit will assign to Customer rights under warranties made by suppliers of Materials that are used in the product.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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(f)            With mutual agreement, Paramit will investigate claims of failed Materials, where the failure rate is greater than [***] for commodity parts measured over one quarter, and all failures of custom parts.  Additionally, Customer may, at its option, issue a written Corrective Action Request (CAR) to Paramit.  If Customer issues a CAR, Paramit shall acknowledge receipt of the CAR no later than the close of business the next business day.  Paramit’s response to a CAR shall be organized in a mutually agreeable format.  Within 10 business days from the receipt of a CAR, Paramit shall develop and submit to Customer a plan to identify and solve the root cause for nonconformity to Customer’s Specifications or for Product defect.

 

(g)           The rights and obligations of Customer with respect to any warranty claim are set forth in this section 4; Customer shall not offset any claim for damages for any defective Product against payments otherwise due Paramit, provided that Customer may not withhold payment due for such Product until the repair or replacement of such defective Product is complete.

 

(h)           Customer will notify Paramit before returning any Products that may have been contaminated with hazardous materials.  Customer will decontaminate all internal & external sections of products destined to return to Paramit, including tubes, waste tanks and other similar hazardous material pathways and remove all fluid and solid substances, as well as disposable parts from the device prior to return to Paramit.  Customer will provide product identification information such as device serial number at the time of requesting RMA number.

 

(1)                                 Customer shall not return any instruments to Paramit that may be contaminated with viable biological agents, harmful quantities of hazardous chemicals, or radioactive materials.  Customer understands and agrees that decontamination is critical to issues of health and safety.  Customer represents and warrants to Paramit to perform and complete all decontamination requirements prior to returning any such Product to Paramit.

 

(2)                                 Customer hereby assumes all responsibility and liability for, and shall defend and indemnify Paramit against injury or damage incurred by Paramit and its employees, contractors, and/or agents that result directly or indirectly from the Customer’s breach of this representation and warranty.

 

(3)                                 Customer accepts that Paramit has no obligation to repair, service, or transport any product if it is determined that the product is contaminated.

 

(4)                                 Customer shall comply with applicable FDA and CDPH (California Department of Public Health) decontamination laws when returning any Product under this Agreement.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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5.                                      WARRANTIES.

 

(a)           Subject to the limitations set forth in this agreement, Paramit represents and warrants to Customer that:

 

(1)                                 Title to each Product will be good and on deliver of Product to Customer, Customer shall hold good title to the Product.  The foregoing warranty does not apply to materials supplied to Paramit by, or at the direction of, the Customer.

 

(2)                                 Each Product will be delivered free from any security interest or other encumbrance created by Paramit.

 

(3)                                 Paramit will not infringe any patent, copyright, trade secret, trade-mark, maskwork, or other intellectual property right of a third party in manufacturing the product.

 

(4)                                 Subject to the limitations set forth in this Agreement, Paramit warrants to Customer that:  (i) product will be manufactured in accordance with Customer’s Specifications.  (ii) Product will be manufactured in accordance with IPC-A-610, Acceptability of Electronic Assemblies, Class 3 standards in effect at the time of manufacture unless otherwise specified in Customer’s specifications.  (iii) As of the Effective Date, Paramit is ISO 13485 certified and Paramit will maintain that certification at all times relevant to the manufacture and delivery of Product.

 

(5)                                 Product will be free from defects due to manufacturing process or defects in workmanship during the Warranty Period.

 

(6)                                 Paramit will use commercially reasonable efforts to make warranty claims on Materials suppliers that Paramit purchases materials from for the manufacture of the Product for the benefit and to the account of the Customer.

 

(b)           Notwithstanding the foregoing and without compromise of the representations and warranties given in 5 (a) (1) through 5 (a) (6), any representation and warranty by Paramit against defects (whether set forth in this section, another section, or implied by law) and any obligation by Paramit to repair or replace product (or to refund the purchase price) does not apply to the following:

 

(1)                                 Any product that has been misused, damaged, or altered after shipment or that is damaged in shipping.  Misuse includes improperly handling static-sensitive electronic devices or an attempt by any unauthorized third party to repair the product.  Paramit and Customer acknowledge that the Customer plans to use its own personnel as well as its agents for repair of the product in the field and that a Service Plan will be jointly developed to authorize Customer and its agents to service the Product before Customer and its agents can service the instrument

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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without invalidating the Product warranty.  This authorization will not be unreasonably withheld by Paramit.

 

(2)                                 Materials consigned or supplied by Customer, or purchased from unauthorized brokers at the direction of Customer.

 

(3)                                 Defects resulting from compliance with Customer Specifications, except for those manufacturing process and workmanship standards developed by Paramit for Customer.

 

(c)           Paramit has no responsibility if Customer’s Specifications fail to comply with any governmental regulation or industrial specification, except as described in 5(a)(4), or if the product manufactured to Customer’s Specifications fail to meet the requirements of Customer’s customer or the end user.

 

(d)           THE WARRANTIES MADE BY PARAMIT IN THIS AGREEMENT ARE THE SOLE AND EXCLUSIVE WARRANTIES OF PARAMIT.  PARAMIT DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

6.                                      LIABILITY FOR EXCESS MATERIALS

 

(a)           Customer acknowledges that the cost of materials ordered or purchased by Paramit, but not used or consumed in the manufacture of product, is ultimately to be borne by Customer.  Customer acknowledges that such cost has not been included in Paramit’s quote to Customer and is not reflected in the price of the product.

 

(b)           Every month, Paramit will review Customer’s purchase orders for Product and the Materials on hand and on order that Paramit has allocated to manufacturing the Product.  If Paramit reasonably determines that it will not use or consume a quantity of Materials for Product that will be shipped within 90 days of Paramit’s review or within lead time of the Product, whichever is greater, then that quantity of such Materials that Paramit determines that it will not so use or consume are referred to in this Agreement as “Excess Materials”.  In order to keep the Customer continuously informed of the Excess Materials:  Paramit will submit to the customer the exact amount of Excess Materials generally before the 10th of every month.  Customer will review and seek clarifications if needed and acknowledge the Excess Material liability within 10 days of receipt.  Subsequently, Customer shall issue a PO for Excess Materials to Paramit within 20 days of the original submittal.  Customer will purchase Excess Materials from Paramit on request at the Materials Cost, subject to the requirements of this Article 6.

 

(c)           Customer acknowledges that Paramit may order or purchase more materials to manufacture the Product than will be used or consumed in the manufacture of the product, which can result in Excess Materials that Customer must purchase.  In the event that the expected

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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excess value of the component exceeds [***] at the time of purchase, then Paramit will obtain Customer’s written approval prior to ordering component.  Paramit will order more materials than are required to manufacture the product for the benefit of the Customer and only because of:

 

(1)                                 Minimum order quantity or the package size for the materials (e.g., a package contains 12 parts and an order for 100 products requires 9 packages of parts).

 

(2)                                 Parts come on reels or tapes (which are entirely non-returnable once the reel or tape has been broken).

 

(3)                                 Safety stock required by Customer.

 

(4)                                 A lower price may be available from a supplier for a larger than needed quantity.

 

(5)                                 Customer’s engineering change order, order reduction, or order cancellation may result in such materials becoming Excess Materials.

 

(d)           The term “Materials Cost” means the amount paid or payable (including freight, insurance, and safes or use tax) by Paramit to its suppliers for Materials used or to be used for the Product that are non-returnable or non-cancelable.  For Excess Materials that are returnable to the supplier and Customer has requested Paramit to return the materials, the reduced liability to the Customer will net restocking fees, freight, cancellation fees, and other charges by third parties associated with Paramit’s returning Materials or cancelling orders for Materials as well as any third party fees or charges associated with disposing of Materials that Paramit disposes on behalf of Customer.

 

(e)           When Customer is obligated to purchase Excess Materials, Customer will pay Paramit an amount equal to the Materials Cost for such excess materials plus an amount equal to [***] of such materials cost (“Excess Materials Purchase Price”).

 

(f)            Paramit will use commercially reasonable efforts to mitigate Customer’s liability for Excess Materials to the extent allowed by suppliers or vendors but any imposed limitations on such mitigations will not reduce Customer’s liability for Excess Materials.  Where feasible, Paramit will:

 

(1)                                 Reallocate materials that are part of Excess Materials to other Paramit jobs that, in Paramit’s sole discretion, could use such Materials.  In that event, Customer will have no liability to Paramit for the Materials so reallocated.  Customer acknowledges that Materials that are custom-made for Customer will not be reallocated to other Paramit jobs and will constitute Excess Materials.

 

(2)                                 Return Materials that are part of Excess Materials to Paramit’s suppliers to the extent permitted by the suppliers.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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(3)                                 Cancel orders for materials that are part of Excess Materials to the extent that orders are cancelable.  Customer acknowledges that orders for Materials that are custom for Customer may be non-cancelable and such orders will be part of Excess Materials.  Customer acknowledges that orders for Materials that are not custom for Customer may none the less be non-cancelable and in that case such orders will be part of Excess Materials.

 

(g)           Within 10 days of Paramit’s requesting Customer to purchase the Excess Materials and notifying Customer of the details of the Excess Materials and the Excess Materials Purchase Price, Customer will issue its purchase order to purchase the Excess Materials for the Excess Materials Purchase Price.  Payment terms are net 30.

 

(h)           After the Customer has paid the Excess Materials Purchase Price, then, if Customer so requests, Paramit will deliver the Excess Materials to Customer at Customer’s expense FOB Paramit shipping dock.  If Customer does not wish to take delivery of the Excess Materials, or if Customer fails to pay in a timely manner the Excess Materials Purchase Price, Paramit will store the Excess Materials for a period not to exceed 90 days from the date payment of the Excess Materials Purchase Price was due.  All risk of loss to Excess Materials, whether shipped or stored at Paramit, will be borne by Customer.  If Paramit notifies Customer to pick up Excess Materials being stored by Paramit and Customer fails to do so within 30 days of such notification, Paramit is permitted to ship material to Customer’s notice address, freight collect.

 

(i)            Paramit may purchase Customer owned Materials/ Excess Materials, solely based on demand consumption rate of issued POs to Paramit and Paramit will pay Customer accordingly.  Paramit solely, at its discretion may choose to transfer Customer’s usable, non-obsolete Materials/ Excess Materials to a consigned warehouse, designated to Customer at Paramit; the consigned warehouse is netable against Materials Requirement Planning (MRP) and will prompt Paramit to use such Materials / Excess Materials for any new demand.  Paramit system will record transaction usage; Purchase Orders will be issued to Customer monthly.

 

7.                                      LIABILITY FOR EXCESS INVENTORY.

 

(a)           Customer acknowledges that Paramit’s pricing of the product is based on shipping Product promptly after manufacture and being paid in a timely manner.

 

(b)           Once a month, Paramit will review Customer’s purchase orders and the Product Inventory that Paramit has on hand.  If Paramit determines that Paramit has Product Inventory on hand that is not covered by open purchase orders and Paramit will not ship within 90 days of Paramit’s review or within the lead time of the Product, whichever is greater, then that portion of the Product Inventory on hand that Paramit determines that it will not so ship is referred to in this agreement as “Excess Inventory.” Customer acknowledges that Customer’s modification or cancellation of its purchase order may result in part or all the Product Inventory on hand not

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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being shipped within 90 days of such modification or cancellation and thereby becoming Excess Inventory that Customer must purchase.  In order to keep the Customer continuously informed of the Excess Inventory:  Paramit will submit to the customer the exact amount of Excess Inventory, generally before the 10th of every month.  Customer will review and seek clarifications, if needed and acknowledge the Excess Inventory liability within 10 days of receipt.  Subsequently, Customer shall issue a PO for Excess Inventory to Paramit within 20 days of the original submittal.  Customer will purchase Excess Inventory from Paramit on request.

 

(c)                                  The term “Excess Inventory Purchase Price” means, with respect to Excess Inventory Product that is finished goods, the Product Price for the Product set forth in the purchase order.  The term “Excess Inventory Purchase Price” means, with respect to Excess Inventory that is work in process, the Purchase Price for the product set forth in the purchase order less the value of uncompleted work.  The value of uncompleted work is the value of the test labor and assembly labor that have not been expended on the work in process.

 

(d)                                 Within 10 days of Paramit’s requesting Customer to purchase the Excess Inventory and notifying Customer of the details of the Excess Inventory and the Excess Inventory Purchase Price, Customer will issue its purchase order to purchase the Excess Inventory from Paramit for the Excess Inventory Purchase Price.  Payment terms are net 30.

 

(e)                                  After Customer has paid the Excess Inventory Purchase Price, then, if Customer so requests, Paramit will deliver the Excess Inventory to Customer at Customer’s expense.  If Customer does not wish to take delivery of the Excess Inventory, or if Customer fails to pay timely the Excess Inventory Purchase Price, Paramit will store the excess inventory for a period not to exceed 90 days from the date the Excess Inventory Purchase Price was due.  All risk of loss to Excess Inventory paid for by Customer stored by Paramit will be borne by Customer.  If Paramit notifies Customer to pick up Excess Inventory being stored by Paramit and Customer fails to do so within 30 days of such notification, Paramit is permitted to destroy or otherwise dispose of the Excess Inventory, but any such destruction or disposition shall have no effect on Customer’s liability for the Excess Inventory purchase price or entitle Customer to any refund.  Customer will pay Paramit a storage fee equal to [***] of the Excess Inventory Purchase Price for each month (or part thereof) that Paramit stores the Excess Inventory after the date the Excess Inventory Purchase Price was due.

 

8.                                      PURCHASE ORDERS

 

(a)                                 After the building of Customer’s pilot Products and at least [***] or lead time whichever is greater, prior to the first day of each following Calendar Quarter, Customer will issue a Purchase Order for the products to be delivered in the following Calendar Quarter.

 

(b)                                 With mutual agreement of both Parties, Customer may issue a Purchase Order for Materials with lead times longer than [***] or greater, to provide liability coverage for those

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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Materials as well as provide upside flexibility as described further in this Agreement.  Materials are to be used only in the manufacture of customers Product.

 

(c)                                  It is recommended that Customer places FRU and Spare Parts orders at the same time as ordering products to prevent Price Purchase Variance (PPV) and shipment delays due to lead time issues.  In the absence of a spares forecasting process, both Parties agree to develop such process.  Paramit shall not be expected to sell Components that have been purchased and designated for the manufacture of the products; as such requests may adversely affect product delivery dates and prevent Paramit from realizing planned revenue.

 

9.                                      ORDER FLEXIBILITY

 

(a)                                 Paramit welcomes increases in orders and or requests for earlier deliveries.  Paramit will make reasonable efforts to accommodate such changes.  Upon any such request, Paramit will promptly investigate lead times, component availability, and possible expediting fees imposed by vendors (or other third parties) and will advise Customer of feasible delivery dates and increased costs, if any.  The Parties will mutually agree on the increased number of units of Product or accelerated delivery dates based on then prevailing market conditions, including lead times, component availability, and expediting fees.  In negotiating such an agreement, Paramit will not seek to increase the Product Price and separately pass through to Customer increases in Materials Costs, including any expediting fees and overtime charges for after hours or weekend work requests.  For clarity, any incremental charges associated with increased orders will be accounted for at incremental actual cost incurred and no markup whatsoever will be charged.  For example, a supplier to Paramit is required to work overtime to meet a request to expedite a Material.  The normal labor rate is $10.00 per hour and the overtime rate is time-and-a-half or $15.00 per hour.  The labor content of the Material is one hour.  Therefore, the Customer will pay the Product Price and be charged separately for $5.00 (the incremental actual cost incurred).

 

(b)                                 Customer may defer delivery of [***] of Product one time for each Product order, only if the Product original ship date is more than [***] away and such deferral can be no more than [***] and Customer will pay for the remaining Products in accordance with this Agreement.  However, within 12 months of the first Product shipment after pilot builds, Customer may defer delivery of [***] of Product one time for each Product order, only if the Product original ship date is more than [***] away and such deferral can be no more than [***] and will pay for the remaining Products in accordance with this Agreement.

 

(c)                                  With mutual agreement, Customer can reduce lead time and increase flexibility by placing additional Purchase Orders for safety stock of all Materials required for a particular quantity of Products or specific Material with longer than desirable lead times or a combination of the two.  In any case, Paramit will provide Customer with an analysis of cost to Customer and effect on lead time of the Product.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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(d)                                 Paramit acknowledges Customer’s changes in Product design or testing may require incorporating additional changes during the manufacturing process that will cause unanticipated delays and push out the original agreed ship dates.  Progress payment will provide timeline flexibility to Customer for making such design and or test enhancements and at the same time facilitates Paramit to recover its expenditure on resources and materials.  For any such delays by Customer, its subsidiaries or agents, Customer will agree to make a partial payment of [***] of Product price for the affected quantities.  Customer will pay partial payment invoices:  (i) net 30, if invoicing will be done within the PO due date or (ii) in 5 business days, if invoicing will be done past the original 30 payment due date.  Upon all the necessary Product changes are completed and Customer is ready to receive the Product, Paramit will invoice Customer for the balance of payment upon shipment of the Product.

 

10.                               CONFIDENTIAL INFORMATION.

 

If a Party (the “Disclosing Party”) provides, directly or through a third party, proprietary or confidential information to the other Party (the “Receiving Party”), the Receiving Party will hold the information of the Disclosing Party in confidence with the same care as it treats its own  proprietary or confidential information of a similar nature (but with no less than a reasonable degree of care), and the Receiving Party will take commercially reasonable precautions to prevent unauthorized disclosure, including requiring written nondisclosure agreements of its employees and limiting access to the information to those employees with a need to know the information.  The Disclosing Party shall identify its proprietary or confidential information as such, except where information should be reasonably understood by persons familiar with the industry to be of a proprietary of confidential nature.  Paramit will use proprietary or confidential information of Customer solely for the production and supply of Product to Customer.  This paragraph does not apply to information of Disclosing Party that the Disclosing Party agrees may be released or to information or Disclosing Party that is published by Disclosing Party or others having the right to do so, or to information of Disclosing Party that is or becomes generally known to the public or within an industry through no fault of the Receiving Party, or to information that the Receiving Party can show was known by the Receiving Party at the time of receipt, is independently developed by the Receiving Party by persons who had no access to customer proprietary or confidential information, or is provided to the Receiving Party by a third party who has a right to provide such information.  The Receiving Party is permitted to comply with a legal obligation that requires the Receiving Party to disclose proprietary or confidential information of the Disclosing Party, provided that the Receiving Party shall notify Disclosing promptly of the legal obligation, and will reasonably cooperate with any effort of the Disclosing Party to limit or obtain confidential treatment of such disclosure.

 

Customer shall take commercially reasonable precautions to prevent disclosure of any information pertaining to Paramit’s Intellectual Property (IP) and proprietary information, which is defined as any proprietary information, knowledge and know how that is conceived, created, written, put to practice, designed and developed by Paramit and, constructed through hardware

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

13

 

and software, including data collection, extraction, manipulation, compilation, presentation and reporting tools; know how such as automated, computerized, audio-visual instruction, assembly, verification and validation develop in connection with manufacturing, such as “vpoke’’ and “Spotlight”.

 

11.                               INSURANCE.

 

Paramit agrees to maintain in effect the following types of insurance while manufacturing the product and while in possession of product inventory:

 

(a)                                 Commercial general liability insurance with policy limits of [***] for each occurrence and [***] in the aggregate.

 

(b)                                 Automobile liability with policy limits of [***] for combined single limit.

 

(c)                                  Workers’ compensation insurance as required by law.  Paramit will provide evidence of insurance on request.

 

12.                               PAYMENT TERMS.

 

(a)                                 Payment terms are net 30.  The Product Price is FOB (Incoterms 2010) Paramit’s shipping dock (net of sales and use taxes, if any).  All prices are in U.S. Dollars.  Paramit will submit invoices to Customer upon shipment of the Product.  Each invoice will, at a minimum, refer to Customer’s purchase order number, part number, unit price, and total price.  If Customer does not object to an invoice within 30 days from the date of the invoice, it is deemed correct.  Customer will pay Paramit in full no later than 30 days from the date of Paramit’s invoice to Customer.  If any sales or use tax applies to the sale or other disposition of product or materials or inventory, Customer will pay the tax.

 

(b)                                 Customer agrees to provide financial information that includes [***], upon request.  This information will not be requested more frequently that once a month.

 

(c)                                  If Customer does not wish to take delivery of product, and if Paramit agrees, in its sole discretion, to bill and hold product in its possession, Paramit will transfer the Product to an area on Paramit’s premises that is segregated from Paramit’s manufacturing inventory.  Upon such transfer, Customer will be liable to pay for the Product as though it were delivered to Customer.  Paramit will store the product for a period not to exceed 90 days from the date the Product would otherwise have been shipped.  All risk of loss to such product will be borne by Customer.  Customer will sign an acknowledgment in a form requested by Paramit that title to the product passes to Customer, risk of loss to the product passes to Customer, and Customer is liable for the purchase price notwithstanding that delivery has not been made to Customer’s location.  Product in Paramit possession under the terms of this Section will not be pledged or encumbered in any way.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

14

 

(d)                                 If Customer fails to pay an invoice within 30 days after payment is first due, Paramit may suspend work on the Product for which payment is overdue.  If Customer fails to pay an invoice within 60 days after payment is first due, Paramit may suspend work on all contracts with Customer and Customer shall be in breach of this Agreement.  Any sum owing to Paramit by Customer will bear interest at the rate of 1% per month, compound monthly, from the date due until paid.

 

(e)                                  In the event of Customer’s material breach, Paramit is entitled to all remedies allowed by this Agreement or by law.  Among other things, Paramit may cancel all further obligations to Customer to manufacture or sell the Product or to provide services.

 

13.                               ENGINEERING CHANGE ORDER (ECO) MANAGEMENT

 

To eliminate potential ambiguity, facilitating clear and effective management of changes to the Product, for any change in the Customer Specifications, Paramit and Customer agree to the following steps:

 

(1)                                 Customer provides complete engineering ECO package for the proposed change to Paramit.

 

(2)                                 Paramit will review Materials on order, on hand, Inventory, shipment schedules and provide impact analysis to Customer, which will also include any required Inventory rework charges.

 

(3)                                 Customer may accept the outcome of ECO impact analysis in writing or ask for a revision and thereafter may accept the revised ECO impact analysis in writing or withdraw the change proposal, prior to ECO implementation.

 

(4)                                 Upon receipt of written approval of the impact analysis from Customer, Paramit will proceed with ECO implementation.

 

(5)                                 Customer will provide updated Product purchase order(s), reflecting new revision within 2 business days of providing written approval for ECO implementation to Paramit.

 

Customer will issue PO for obsoleted components and required rework of existing inventory within a week of providing written approval for ECO implementation to Paramit.

 

14.                               GRANT OF MANUFACTURING RIGHTS.

 

(a)                                 The grant of rights in this section only applies to the manufacture, use, and sale of Product for which the Customer has submitted a purchase order that has been accepted by Paramit.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

15

 

(b)                                 If the Product, or any part thereof, is claimed by one or more patent(s) owned or controlled by Customer, Customer grants Paramit the limited right under such patent(s) to make, any Product ordered by Customer, only to the extent necessary for Paramit to perform its obligations to manufacture such Product under this Agreement.  If the Product, or any part thereof, is protected by copyright held by Customer, Customer grants Paramit the limited, nonexclusive right under such copyright to reproduce the copyrighted work, to prepare derivative copies based on the copyrighted work, to distribute copies of the copyrighted work, and to perform or display the copyrighted work only to the extent necessary for Paramit to manufacture such Product ordered by Customer under this Agreement and to sell such Product to Customer.  If the Product or any part thereof, is protected by trademark, trade secret, or other intellectual property rights, Customer grants Paramit the limited, nonexclusive right under such intellectual property right to make, the Product using such intellectual property rights only to the extent necessary for Paramit to manufacture such Product under this Agreement and to sell such Product to Customer.  The grant of manufacturing rights will also extend to the right of Paramit to procure Materials of the Product that Paramit should order through sub-tier vendors, such as FAB, cable assemblies, sheet metals, plastics or other required custom Materials.

 

(c)                                  Customer represents and warrants that Customer has the right, power, and authority to grant such rights to Paramit.

 

15.                               LIMITATION OF LIABILITY.

 

In no event, whether as a result of breach of contract, breach of warranty, tort (including active or passive negligence), strict liability, Product liability, or otherwise, shall either Party be liable to the other Party for any consequential or punitive damages of any kind, including loss of profits, loss of use, or interruption of business, whether or not such Party was advised of the possibility of such damages.  Except for Customer’s obligation to indemnify Paramit under Section 16, in no event shall either Party’s liability to the other Party, its successors or assigns under this Agreement exceed [***].  The statute of limitations for an action by Customer for breach of Warranty or for other claim with respect to Product is shortened to two years from the date of shipment of the Product (i.e., an action must be filed before the second anniversary of the date of shipment).

 

16.                               INDEMNIFICATION.

 

Customer agrees to defend and indemnify Paramit and its employees against any liability (including attorney’s fees, interest, and penalties), and to hold Paramit and its employees harmless against any loss or expense (including attorney’s fees, interest, and penalties), arising out of a claim of a third party that is based on any alleged defect in, or infringement of a third party’s intellectual property resulting from the Customer’s Specifications.  The foregoing indemnification obligation applies to, among other things, any claim that the Customer’s Specifications of the Product infringes a patent, copyright, trade secret, trademark, maskwork, or

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

16

 

other intellectual property right of a third party, any claim that the manufacture, shipment, or use of the Product pursuant to the Customer’s Specifications and any claim that the Product, as a result of the Customer Specification, is unsafe or unreasonably dangerous or negligently caused personal injury or property  damage.

 

Paramit agrees to defend and indemnify Customer and its employees against any liability (including attorney’s fees, interest, and penalties), and to hold Customer and its employees harmless against any loss or expense (including attorney’s fees, interest, and penalties), arising out of a claim of a third party that (a) is based on Paramit’s manufacturing of the Product (except to the extent Paramit is indemnified by Customer under the terms of the preceding paragraph); or (b) any claim that Paramit’s manufacturing methods infringe a patent, copyright, trade secret, trademark, maskwork, or other intellectual property right of a third party.

 

Each Party agrees to give the other Party prompt written notice of any claims made for which the other Party might be liable under this Article 16.  The indemnifying Party shall have the opportunity to defend, negotiate, and settle such claims; provided, however, that the indemnified Party shall be entitled to participate in the defense of such matter and to employ at its expense counsel to assist therein.  The Party seeking indemnification shall provide the indemnifying Party with such information and assistance as the indemnifying Party may reasonably request, at the expense of the indemnifying Party.  Neither Party shall be bound in any way by any settlement of a claim or suit made without its prior written consent; provided, however, that the indemnified Party shall not unreasonably withhold or delay such consent.

 

17.                               FORCE MAJEURE.

 

A Party to this Agreement is excused from liability for non-performance or for delay in performance if such non-performance or delay is caused by a force beyond the reasonable control of the Party and if such Party is unable to overcome the effect of the force on non-performance or delay by the exercise of due diligence at reasonable cost.  Such a force includes acts of God (including floods, tornadoes, windstorms, lightning, epidemics, earthquakes, and landslides), fires or explosions (whether or not caused by negligence of an employee of a Party), strikes affecting the Party or labor disputes affecting third Parties (such as suppliers or freight companies), acts of war, terrorist acts, insurrection or civil disturbance, and governmental acts (such as seizures, quarantines, or embargoes).  The foregoing applies whether the force affects a Party to this Agreement or a third party (such as a supplier or freight carrier).  Financial inability of a Party to perform, no matter what the cause of such inability, is not excused by this paragraph.  A Party claiming excuse under this paragraph shall promptly notify the other Party of the force causing non-performance or delay and the probable duration.

 

A Party affected by an event of force majeure shall use its commercially reasonable efforts to remedy such event and the effects thereof with all reasonable dispatch; provided, however, that

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

17

 

this Article 17 shall not require that the affected Party to settle a strike or labor controversy by acceding to the demands of the opposing Party or Parties.

 

18.                               TERM AND TERMINATION

 

(a)                                 This Agreement shall take effect as of the Effective Date and, unless earlier terminated pursuant to this Article 18, shall expire on the 3rd anniversary thereof, subject to automatic one (1) year term extensions.  Either party can terminate this Agreement for convenience at any time, upon written notice to the other Party at least nine (9) months prior to the expiration of the then current term.

 

(b)                                 Customer shall have the right, to terminate this Agreement:  upon three (3) months written notice to Paramit upon the occurrence of any of the following:

 

(i)                                     the failure of Paramit to obtain or maintain any governmental licenses, registrations, or approvals required in connection with the manufacturing of the Product; or

 

(ii)                                  the attempted assignment or delegation by Paramit of any of its rights or obligations hereunder without the prior consent of Customer pursuant to this Agreement.

 

(c)                                  Paramit shall have the right, at its sole discretion, to terminate this Agreement upon 30 days written notice to Customer upon the material breach of this Agreement through a failure of Customer to pay any invoice when due as provided in Section 12.

 

(d)                                 Either Party hereto shall have the right to terminate this Agreement by written notice to the other party hereto, upon the occurrence of any of the following:

 

(i)                                     the other Party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver or trustee, or makes as assignment for the benefit of creditors, or becomes subject to involuntary proceedings under any bankruptcy or insolvency law (which proceedings remain undismissed for sixty (60) days); or

 

(ii)                                  the other Party fails to cure a material breach, within sixty (60) days after receiving written notice from the non-breaching Party.

 

(e)                                  Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior of such expiration or termination.  The rights and obligations of the Parties under Sections 4, 5, 6, 7, 10, 15, 16 and 19 shall survive expiration or termination of this Agreement.

 

(f)                                   Upon the expiration or termination of this Agreement, each Party shall promptly return to the other all proprietary or confidential information that it has received pursuant to this

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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Agreement.  Customer must purchase from Paramit any Excess Materials and Excess Inventory of the Product held by Paramit as of the date of such termination or expiration as provided in Section 6 and 7.

 

(g)                                  Upon termination by Customer under Section 18(b) or 18(d), Paramit will provide to the Customer the most current Customer Specifications at no cost.  Upon Customer’s request, Paramit will provide Paramit created manufacturing instructions for the Product for a reasonable fee.  Paramit will reasonably assist with the transfer of the Product manufacturing capabilities by providing engineering, supplier and other support as requested, which will be reasonably invoiced on an hourly basis to Customer in a manner consistent with other Paramit paid engineering and supplier efforts.  This service precludes any interaction with another contract manufacturing company.

 

(h)                                 Prior to expiration or termination of this Agreement, Customer shall have the right to place orders for, and Paramit will accept such orders and continue to supply pursuant to the terms of this Agreement, Product for delivery in the nine months following expiration or termination.

 

19.                               MISCELLANEOUS

 

(a)                                 This Agreement, including any exhibits to this Agreement along with the Particular Purchase Order Terms set forth in a purchase order accepted by Paramit, constitutes the final and complete expression of the Agreement of the Parties with respect to its subject matter.  There are no promises, restrictions, representations, warranties, arrangements, or understandings between the Parties other than those expressly set forth in this Agreement.  This Agreement supersedes all terms on any purchase order for the Product in effect as of the Effective Date except the Particular Purchase Order Terms.  This Agreement supersedes any prior negotiations, understandings, quotations, or agreements, whether written or oral, between the Parties with respect to its subject matter and may not be contradicted by evidence of any prior or contemporaneous statements or agreements.

 

(b)                                 This Agreement may be amended only by a writing signed by the Parties to this Agreement.

 

(c)                                  There are no conditions to the effectiveness of this Agreement that are not expressed on the face of this Agreement.

 

(d)                                 The Parties acknowledge that they have independently negotiated the provisions of this Agreement, that they have relied upon their own counsel as to matters of law, and that neither Party has relied on the other Party with regard to such matters.  This Agreement shall be construed as a whole, according to its fair meaning, and without consideration as to which Party drafted this Agreement or any part of it.  California Civil Code §1654 shall not be applied to

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

19

 

construe this Agreement, and in the event of a dispute, no provision of this Agreement shall be construed in favor of or against any Party by reason of such Party’s contribution to the drafting of this Agreement.

 

(e)                                  Unless this Agreement expressly provides otherwise, a reference in this Agreement to “days” is a reference to calendar days and a reference in this Agreement to a number of days is a reference to that number of consecutive calendar days.  A “business day” is any day that is not a Saturday, Sunday, or other optional bank holiday, listed in California Civil Code §7.1 except Good Friday.  If the time for any act to be performed under this Agreement falls on a day that is not a business day, the time for performing such act is extended to 5:00 P.M.  of the first day following such time that is a business day.

 

(f)                                   This Agreement shall be governed by, and construed in accordance with, California law applicable to transactions taking place entirely within and affecting solely California residents whether or not any Party to this Agreement is not a California resident.  AA

 

(g)                                  The Parties may execute this Agreement by signing one copy of this Agreement or by signing duplicate copies of this Agreement, and in the latter case, all of the signed copies will collectively constitute one and the same Agreement, and each signed copy will be deemed an original.  The Parties may execute this Agreement by one or more Parties signing one counterpart of this Agreement and one or more Parties signing one or more other counterparts of this Agreement, and the signed counterparts will collectively constitute one and the same Agreement, and each signed counterpart will be deemed an original.  Delivery by a Party of the signature page to a counterpart of this Agreement that has been signed by the Party is the same as the Party’s delivery of a signed counterpart of this Agreement.  In proving this Agreement when it has been executed in counterparts, a Party must prove only that the Party to be charged has signed a counterpart of the Agreement.  Delivery by facsimile transmission or by electronic transmission of an image of a signed counterpart of this Agreement or an image of a signed signature page to this Agreement is the same as delivery by hand of an identical document bearing an original ink signature.

 

(h)                                 The captions of the sections and other headings contained in this Agreement are for convenient reference only, and the words contained in such captions or headings do not control or affect the meaning of the provisions that follow.

 

(i)                                     A waiver of any term or condition of this Agreement in one or more instances shall not be construed as a general waiver by the Party waiving the condition, who shall be free to insist on future compliance with such term or condition.  A waiver of any provision of this Agreement must be in writing and signed by the Party to be charged with the waiver.

 

(j)                                    Nothing in this Agreement constitutes a partnership or joint venture between the Parties hereto or constitutes any Party the agent or employee of the other Party for any purpose

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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whatsoever.  Neither Party has authority to contract in the name of the other or otherwise to act to bind the other for any purpose.

 

(k)                                 Except as this Agreement may expressly provide otherwise, there are no third Party beneficiaries of this Agreement.  The Parties to this Agreement may freely modify or rescind this Agreement by an Agreement signed by both Parties without consent from any other person and without regard to the effect on any other Party.

 

(l)                                     In the event of any litigation (including arbitration, as provided below) by the Parties to this Agreement concerning this Agreement or transactions under this Agreement, the prevailing Party shall be awarded all costs of litigation, including attorney’s fees and charges for the preparation and trial of the action and for any appeals, expert witness fees, trial and appellate court costs, and deposition and trial transcript expense.

 

(m)                             After first production of Product is shipped to Customer, if Paramit efforts lead to cost reductions for the Product, Paramit and Customer will [***] for Product purchased in the first year after the implementation date of the change leading to the cost reduction.  Customer will receive [***] of the savings thereafter.  If cost savings result from Customer efforts, such as BOM or design changes, Customer will be entitled to [***] of the resulting savings, after depletion of inventory purchased at higher price or (ii) Customer has paid Paramit for such cost difference.

 

(n)                                 Neither Party or their agents shall directly or indirectly, solicit, or approach the other Party’s personnel for recruitment, unless he/she had no longer been working for the Party for 6 consecutive months; provided that either Party may solicit for employment an employee or former employee of the other Party by means of a general public solicitation (through public advertisement or other means) of similarly qualified employees.

 

(o)                                 All notices or other communications which are required or permitted hereunder shall be in writing and delivered personally, sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

If to Customer, to:

 

Quanterix, Inc.

113 Hartwell Avenue

Lexington, MA 02421

Attention:  Chief Financial Officer

 

If to Paramit, to PM and CFO:

 

Paramit Corporation

18735 Madrone Parkway

Morgan Hill, CA 95037

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

21

 

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.  Any such communication shall be deemed to have been given:  (i) when delivered, if personally delivered on a business day, (ii) on the business day after dispatch, if sent by nationally-recognized overnight courier, and (iii) on the third business day following the date of mailing, if sent by mail.  It is understood and agreed that this Section 19(0) is not intended to govern the day-to-day business communications necessary between the parties in performing their duties, in due course, under the terms of this Agreement.

 

(p)                                 Without the prior written consent of the other Party hereto, neither Party shall sell, transfer, assign, delegate, pledge, or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that either Party may, without such consent, assign this Agreement and its rights and obligations hereunder to an affiliate, to the purchaser of all or substantially all of its assets related to the Product or the business, or to its successor entity or acquirer in the event of a merger, consolidation or change in control of either Party.  Any attempted assignment or delegation in violation of the preceding sentence shall be void.  All validly assigned and delegated rights and obligations of the Parties hereunder shall be binding upon and inure to the benefit of and be enforceable by and against the successors and permitted assigns of either Party.

 

(q)                                 Paramit shall document and maintain customer complaint process and a change control process as mutually agreed with Customer.

 

(r)                                    Paramit and Customer agree to regular business reviews nor more frequently than quarterly and no less frequently than annually.  Each party shall identify an executive sponsor for the relationship to which issues, if not resolved by the Parties’ program teams, can be escalated to for resolution.  If after thirty (30) days, the executive sponsors cannot resolve an issue, then the CEOs and/or CFOs of each company shall attempt to resolve the issue for an additional thirty (30) days.  If after this second thirty (30) day period the issue may be submitted to binding arbitration as described herein.

 

(s)                                   In the event of a dispute arising under this Agreement (a “Dispute”), a party shall provide the other party with written notice of the Dispute, and the parties agree to exercise commercially reasonable efforts to resolve the Dispute in good faith by promptly engaging in discussions through a designated executive officer of each party.  A Dispute that cannot be resolved within 30 days following the discussions contemplated by the preceding sentence will, upon written demand of either party, be resolved exclusively by final and binding arbitration.  Arbitration will be  conducted exclusively in San Francisco, California by the Judicial Arbitration and Mediation Service (“JAMS”) pursuant to the United States Arbitration Act, 9 U.S.C., § 1 et seq, and the Comprehensive Arbitration Rules and Procedures of JAMS then in effect before a panel of three arbitrators.  Each party shall bear its own expenses, and the two parties will share equally the

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

22

 

fees of the arbitrators.  THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY.  Notwithstanding anything in this Agreement to the contrary, each party shall have the right, at its election, to seek injunctive or other equitable relief in any court of competent jurisdiction to enforce or obtain compliance with any provision of this Agreement without first submitting such matter to arbitration.  All rights and remedies hereunder shall be cumulative, may be exercised singularly or concurrently and, unless otherwise stated herein, shall not be deemed exclusive.

 

(t)                                    Customer shall identify any hazardous materials on their BOMs or inform Paramit of such items, so that Paramit can take necessary measures to ensure the safety of personnel that will come in contact with such materials.  Hazardous materials are materials that are radioactive, flammable, explosive, corrosive, oxidizing, asphyxiating, bio-hazardous, toxic, pathogenic, reagent, or allergenic as it pertains to state and local regulations, referencing CFR49 172.101 and CFR49 171.8.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

23

 

IN WITNESS WHEREOF, the Parties have signed and delivered the foregoing manufacturing service agreement between Paramit and Customer.

 

	
Paramit Corporation
    	
 
    	
Quanterix, Inc.
    
	
 
    	
 
    	
 
    
	
Rick Kent
    	
 
    	
/s/ Kevin Hrusovsky
    
	
(print name of signatory)
    	
 
    	
(print name of   signatory)
    
	
 
    	
 
    	
 
    
	
Chief Financial Officer
    	
 
    	
Chairman & CEO
    
	
(title of   signatory)
    	
 
    	
(title of   signatory)
    
	
 
    	
 
    	
 
    
	
/s/ Rick Kent
    	
 
    	
/s/ Kevin Hrusovsky
    
	
(signature)
    	
 
    	
(signature)
    
	
 
    	
 
    	
 
    
	
11/23/16
    	
 
    	
11/28/16
    
	
(date)
    	
 
    	
(date)
    

 

Exhibits

 

Exhibit A — REPAIR / UPGRADE TERMS AND CONDITIONS

 

Exhibits B — Pricing and Pricing Models for Product, FRU’s and Spare Components (based on pricing spreadsheets from Paramit)

 

Paramit-Quanterix Manufacturing Agreement

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

24

 

Exhibit A

 

REPAIR/ UPGRADE TERMS AND CONDITIONS

 

1.                                      Customer will request RMA number via email or phone prior to sending any Products to Paramit.

 

2.                                      Customer will provide Product part number, revision and detailed return reason of non­conformance or defect for each unit using a document and format mutually agreed to by the Parties.  Customer shall obtain a return material authorization (RMA) number from Paramit, properly pack the Product for shipping, display the RMA number on the shipping container, and ship the nonconforming or defective product to Paramit, which Customer may do freight collect.

 

3.                                      Paramit will issue RMA number same day via email if request is received prior to 2:00 PST; requests after 2:00 PST will be processed the next business day.

 

4.                                      Warranty / Out of Warranty

 

(a)                                 If Product is returned due to manufacturing process defects or workmanship within 12 months of date of shipment, Product will be repaired at no charge.

 

(b)                                 If Product is returned for repair due to defective part that has no pass-through warranty from its manufacturer, Customer will be charged for the replacement part and associated labor.  Paramit will buy parts per availability & lead time.

 

(c)                                  If Product is returned for repair after expiration of warranty date, Customer will be charges for parts and labor.

 

(d)                                 If a Product is returned to Paramit and is processed/ tested but no problem found (NPF), Customer will be charged for processing & testing.

 

(e)                                  For non-warranty repair, Customer will issue PO at $0

 

i.                                          Paramit will first try to validate failure; then, debug up to 2 hours; any additional work beyond 2 hours will require Customer’s approval.

 

ii.                                       Paramit will provide estimated quote prior to repair

 

iii.                                    After repair is performed, Paramit will provide final repair charges

 

iv.                                   Customer will update $0 PO per final repair/ upgrade charges prior to shipment.

 

5.                                      Product upgrades

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

25

 

(a)                                 Customer will provide Acceptable Ship List (ASL).  The ASL will clearly indicate allowable revision of Product to ship.

 

(b)                                 For returned Product that are at earlier revision, Paramit will contact Customer for written approval to upgrade to the most current revision if no specific direction is provided by the Customer.  For upgrade instructions, there are two options:

 

i.                                          Customer will provide written upgrade instructions.

 

ii.                                       Upon Customer’s written request, Paramit can create upgrade instruction at a rate of [***], as a onetime NRE charge but will require Customer to provide copies of all necessary ECO’s not already in Paramit’s possession.

 

Once such instruction is created, it can be used for all subsequent incoming Products that are at that particular earlier revision.

 

6.                                      For cosmetics, Paramit will inspect and assess condition of the Product based on either cosmetic specifications in Customer’s Specifications or IPC standard if Customer’s Specification does not address cosmetics.  Paramit’s manufacturing engineer will review and create required documents for cosmetic repair.

 

7.                                      For volumes greater than [***] of Product, flat fee charges can be established for Products or FRUs that require the same tests and/or upgrades.

 

8.                                      For PCBAs, if the repair cost is estimated to be greater than [***] of the Price of the FRU, Paramit will contact Customer to obtain authorization prior to performing any additional work.  For systems, Paramit will seek Customer approval, if the repair cost is to exceed the mutually established cost threshold.

 

9.                                      Repair turnaround time is 15 business days from the day the Product is received, provided the required components are available at Paramit and Product does not exhibit multiple failure modes; otherwise, the component lead time will be added to the turnaround time.  Additional time may be needed to determine root cause and to repair the multiple failure modes.  In such event, Paramit will inform Customer of committed delivery date.

 

Repair and Upgrade Rates

 

	
Activity
    	
 
    	
Cost
    
	
Test / debug rate
    	
 
    	
[***]
    
	
Labor rate
    	
 
    	
[***] for PCBAs & [***] for Systems
    
	
Evaluation Fee
    	
 
    	
[***] per unit (min. charge; applies to out of warranty and NPF   items)
    
	
Validate Failure
    	
 
    	
Test Time (actual hours) x [***]
    

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

26

 

	
Repair
    	
 
    	
Debug time (actual hours up to 2 hrs*) x [***] + cost of parts
    
	
Final Test
    	
 
    	
Test Time x [***]
    
	
Final Q/A
    	
 
    	
[***] for PCBAs & [***] for Systems (minimum Charge $25)
    
	
Standard turnaround time
    	
 
    	
15 business days, if parts are available at Paramit; otherwise,   components lead time will be added to turnaround time
    
	
 
    	
 
    	
 
    
	
Expedite Charge
    
	
3 day turn
    	
 
    	
Add [***] to the labor charge
    
	
4 day turn
    	
 
    	
Add [***] to the labor charge
    
	
5 day turn
    	
 
    	
Add [***] to the labor charge
    

 

*Requires Customer authorization if more debug time is required.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

27

 

Exhibit B:  Pricing Methodology for Instruments; FRU’s and Spare Parts (*)

 

	
Annual
   Business
   Revenue
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
[***]
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    

 

(*) NOTES:

 

(1)                                 This table provides the actual overhead percentage to be applied at various Annual Business Revenues as shown in the table above.  The balance of the table is for reference only.  Actual Product Price will be determined by the above formulae based on [***].  The same model will apply to Product, FRU and spare parts.

 

(2)                                 The formula used for calculation of the Overhead and Profit %age is the following:  [***].

 

(3)                                 Current labor rates for Mechanical Assembly is [***]; for Test and Calibration is [***] and for Manufacturing Engineering is [***].  Any hourly rate increase will be mutually agreed upon.

 

(4)                                 With mutual agreement, consignment can be used for a select few parts, where Paramit will directly manage these parts with the suppliers.  Instead of the Overhead and Profit percentage described in the table above, a [***] consignment management fee will be charged for each consigned part.

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

28Exhibit 10.17.1

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is made and dated as of April 14, 2014 and is entered into by and between QUANTERIX CORPORATION, a Delaware corporation (“Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as “Lender”) and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent for itself and the Lender (in such capacity, the “Agent”).

 

RECITALS

 

A.                                    Borrower has requested Lender to make available to Borrower two (2) term loans (each a “Term Loan Advance” and collectively the “Term Loan Advances”) in an aggregate principal amount of up to Ten Million Dollars ($10,000,000) (the “Maximum Term Loan Amount”); and

 

B.                                    Lender is willing to make the Term Loan Advances on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Borrower, Agent and Lender agree as follows:

 

SECTION 1.                         DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1                               Unless otherwise defined herein, the following capitalized terms shall have the following meanings:

 

“Account Control Agreement(s)” means any agreement entered into by and among Agent, Borrower and a third party Bank or other institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s security interest in the subject account or accounts.

 

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H.

 

“Advance(s)” means a Term Loan Advance.

 

“Advance Date” means the funding date of any Advance.

 

“Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A.

 

“Agent” has the meaning given to it in the preamble to this Agreement.

 

“Agreement” means this Loan and Security Agreement, as amended from time to time.

 

“Amortization Date” means September 1, 2015; provided, however, that if the Draw Period Milestone Event occurs, the Amortization Date shall be December 1, 2015; and provided further, that if both the Draw Period Milestone Event and the Sales Milestone Event occur, the Amortization Date shall be March 1, 2016.

 

“Assignee” has the meaning given to it in Section 11.13.

 

“Board” means Borrower’s board of directors.

 

“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by Borrower or which Borrower intends to sell, license, or distribute 

 

 

in the future including any products or service offerings under development, collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed or distributed by Borrower since its incorporation.

 

“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.

 

“Cash” means all cash and liquid funds.

 

“Change in Control” means any (i) reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Borrower or any Subsidiary, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower or any Subsidiary in which the holders of Borrower or Subsidiary’s outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Borrower or Subsidiary is the surviving entity, or (ii) the sale or issuance by Borrower of equity securities to one or more purchasers, in a single transaction or series of related transactions not registered under the Securities Act of 1933, which securities represent, as of immediately following the closing (or, if there be more than one, any closing) thereof, twenty-five percent (25%) or more of the then-outstanding total combined voting power of Borrower.

 

“Claims” has the meaning given to it in Section 11.10.

 

“Closing Date” means the date of this Agreement.

 

“Collateral” means the property described in Section 3.

 

“Confidential Information” has the meaning given to it in Section 11.12.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or of any other country.

 

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.

 

 

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

 

“Draw Period” means the period commencing upon November 1, 2014 and ending on the earlier to occur of (i) March 31, 2015, and (ii) an Event of Default; provided, however, that upon the occurrence of the Draw Period Milestone Event, the “Draw Period” shall mean the period commencing upon November 1, 2014 and ending on the earlier to occur of (i) September 30, 2015, and (ii) an Event of Default.

 

“Draw Period Milestone Event” means confirmation by Agent that Borrower has received, after the Closing Date, but on or prior to March 31, 2015, unrestricted and unencumbered net cash proceeds in an amount of at least Ten Million Dollars ($10,000,000.00) from the issuance and sale by Borrower of its equity securities with investors reasonably acceptable to Agent, milestone payments related to strategic partnerships, and grants, or a combination thereof.

 

“End of Term Charge” means a charge equal to the greater of (a) four percent (4%) of the aggregate original principal amount of all Term Loan Advances extended by Agent, or (b) Two Hundred Thousand Dollars ($200,000.00).

 

“Equity Rights Letter Agreement” means the Equity Rights Letter Agreement dated as of even date hereof by and between Agent and Borrower.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“Event of Default” has the meaning given to it in Section 9.

 

“Facility Charge” means one percent (1%) of the Maximum Term Loan Amount.

 

“Financial Statements” has the meaning given to it in Section 7.1.

 

“Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized under the laws of any state or other jurisdiction within the United States.

 

“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.

 

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within sixty (60) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations.

 

“Insolvency Proceeding” is any proceeding by or against any Person under the United States 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 all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.

 

“Investment” means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person.

 

 

“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit G.

 

“Lender” has the meaning given to it in the preamble to this Agreement.

 

“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.

 

“Loan” means the Advances made under this Agreement.

 

“Loan Documents” means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all UCC Financing Statements, the Warrant, the Equity Rights Letter Agreement, any subordination agreement, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.

 

“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrower; or (ii) the ability of Borrower to perform the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or Lender to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.

 

“Maximum Term Loan Amount” shall have the meaning assigned to such term in the preamble to this Agreement.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 2.2.

 

“Note(s)” means a promissory note or promissory notes to evidence Agent’s Loans.

 

“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.

 

“Patents” means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country.

 

“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender or Agent arising under this Agreement or any other Loan Document; (ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $250,000 outstanding at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or fair market value of the Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors incurred in the ordinary course of business, including Indebtedness incurred in the ordinary course of business with corporate credit cards; (v) Indebtedness that also constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with letters of credit that are secured by cash or cash equivalents and issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed $250,000 at any time outstanding, (viii) Indebtedness secured by a Lien described in clause (xi) of the defined term Permitted Liens; (ix) other Indebtedness in an amount not to exceed $250,000 at any time outstanding, and (x) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose materially more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

 

“Permitted Investment” means: (i) Investments existing on the Closing Date which are disclosed in Schedule 1B; (ii) (a) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from the date of investment therein, and (d) money market accounts; (iii) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (iv) repurchases of stock from former employees, directors, or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities in an aggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases; (v) Investments accepted in connection with Permitted Transfers; (vi) 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 Borrower’s business; (vii) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not affiliates, in the ordinary course of business, provided that this subparagraph (vii) shall not apply to Investments of Borrower in any Subsidiary; (viii) Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee stock purchase plans or other similar agreements approved by Borrower’s Board; (ix) Investments consisting of travel advances in the ordinary course of business; (x) Investments in newly-formed Domestic Subsidiaries, provided that each such Domestic Subsidiary enters into a Joinder Agreement promptly after its formation by Borrower and execute such other documents as shall be reasonably requested by Agent; (xi) Investments in Foreign Subsidiaries approved in advance in writing by Agent; (xii) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $250,000 in the aggregate in any fiscal year; (xiii) Investments consisting of deposit accounts or securities accounts subject to compliance with Section 7.12; and (xiv) additional Investments that do not exceed $250,000 in the aggregate.

 

“Permitted Liens” means any and all of the following: (i) Liens in favor of Agent or Lender; (ii) Liens existing on the Closing Date which are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor in accordance with GAAP; (iv) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Borrower’s business and imposed without action of such parties; provided, that the payment thereof is not yet required; (v) Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder; (vi) the following deposits, to the extent made in the ordinary course of business:  deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (vii) Liens on Equipment or software or other intellectual property constituting purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;  (viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and licenses granted by Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the business of the licensor; (x) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; (xi) Liens securing the payment of financed insurance premiums that are promptly paid on or before the date they become due provided that such Liens (A) extend only to the insurance policies so financed and all money due Borrower thereunder (including the return of premiums and dividends) and not to any other property or assets, and (B) secure liabilities in the aggregate amount not to exceed $250,000; (xii) statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property; (xiv) Liens on cash or cash equivalents securing obligations permitted under 

 

 

clause (vii) of the definition of Permitted Indebtedness; and (xv) Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through (xiv) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon) does not increase.

 

“Permitted Transfers” means (i) sales of Inventory in the ordinary course of business, (ii) licenses and similar arrangements for the use of Intellectual Property that could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States, in each case in the ordinary course of business, (iii) dispositions of worn-out, obsolete or surplus Equipment at fair market value in the ordinary course of business, (iv) Permitted Liens and Permitted Investments, and (v) other Transfers of assets having a fair market value of not more than $250,000 in the aggregate in any fiscal year.

 

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.

 

“Prepayment Charge” shall have the meaning assigned to such term in Section 2.4.

 

“Prime Rate” means the “prime rate” as reported in The Wall Street Journal, and if not reported, then the prime rate most recently reported in The Wall Street Journal.

 

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.

 

“Required Lenders” means  at any time, the holders of more than 50% of the sum of the aggregate unpaid principal amount of the Term Loan Advances then outstanding.

 

“Sales Milestone Event” means Borrower has delivered evidence acceptable to Agent in Agent’s sole discretion, after the Closing Date, but on or prior to December 31, 2014, that Borrower has completed the sale of twenty (20) of Borrower’s “Simoa HD-1 Analyzer” instruments.

 

“Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document (but excluding the Warrant and the Equity Rights Letter Agreement), including any obligation to pay any amount now owing or later arising.

 

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its sole discretion.

 

“Subsidiary” means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.

 

“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Term Loan Advance” and “Term Loan Advances” are each defined in Recital A hereof.

 

“Term Loan Interest Rate” means for any day, a floating per annum rate equal to the greater of either (i) eight percent (8%), or (ii) the sum of (A) eight percent (8%), plus (B) the Prime Rate minus five and one quarter of one percent (5.25%).  The Term Loan Interest Rate will change from time to time on the day the Prime Rate changes.

 

 

“Term Loan Maturity Date” means November 1, 2017; provided, however, that if the Draw Period Milestone Event occurs, the Term Loan Maturity Date shall be February 1, 2018; and provided further, that if both the Draw Period Milestone Event and the Sales Milestone Event occur, the Term Loan Maturity Date shall be May 1, 2018.

 

“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof.

 

“Tranche A Amount” has the meaning given to it in Section 2.1(a).

 

“Tranche B Amount” means (a) Ten Million Dollars ($10,000,000.00), minus (b) the Tranche A Amount.

 

“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, 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, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

 

“Warrant” means the Warrant Agreement dated as of even date hereof by and between Agent and Borrower.

 

Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement.  Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.

 

SECTION 2.                         THE LOAN

 

2.1                               Term Loan.

 

(a)                                 Advances.  Subject to the terms and conditions of this Agreement, Lender will severally (and not jointly) make in an amount not to exceed its respective Term Commitment, and Borrower agrees to draw, an initial Term Loan Advance on the Closing Date in an amount of at least Three Million Five Hundred Thousand Dollars ($3,500,000), but not exceeding Six Million Dollars ($6,000,000) (the amount of principal advanced is hereinafter referred to as the “Tranche A Amount”).  During the Draw Period, Borrower may request one (1) additional Term Loan Advance in an amount of up to the Tranche B Amount.  The aggregate outstanding Term Loan Advances shall not exceed the Maximum Term Loan Amount.  Proceeds of any Advance shall be deposited into an account that is subject to a perfected security interest in favor of Agent perfected by a control agreement.

 

(b)                                 Advance Request.  To obtain a Term Loan Advance, Borrower shall complete, sign and deliver to Agent an Advance Request (at least five (5) Business Days before the Advance Date).  Lender shall fund 

 

 

the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.

 

(c)                                  Interest.  The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed.  The Term Loan Interest Rate will float and change on the day the Prime Rate changes from time to time.

 

(d)                                 Payment.  Borrower will pay interest on each Term Loan Advance on the first (1st) Business Day of each month, beginning the month after the Advance Date.  Commencing on the Amortization Date, and continuing on the first (1st) Business Day of each month thereafter, Borrower shall repay the aggregate principal balance of Term Loan Advances that are outstanding on the day immediately preceding the Amortization Date in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first (1st) Business Day of each month thereafter until the Secured Obligations are repaid.  After any change in the effective rate hereunder, Agent shall recalculate future payments of principal and interest to fully amortize the outstanding principal amount over the remaining scheduled monthly payments hereunder prior to the Term Loan Maturity Date.  The entire principal balance of the Term Loan Advances and all accrued but unpaid interest hereunder, and all other Secured Obligations with respect to the Term Loan Advances, shall be due and payable on Term Loan Maturity Date.  For the avoidance of doubt, in the event of any conversion of a portion of any Term Loan Advance pursuant to Section 8.1 below, the remaining monthly payments described in this Section 2.1(d) shall be recalculated by Agent following such conversion date to reflect (i) the lower outstanding principal of the Term Loan Advance so converted, (ii) the lower interest payments resulting from such reduced principal, and (iii) the remaining months until the Term Loan Maturity Date.  Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. Lender will initiate debit entries to the Borrower’s account as authorized on the ACH Authorization on each payment date of all periodic obligations payable to Lender under each Term Loan Advance.  Once repaid, a Term Loan Advance or any portion thereof may not be reborrowed.

 

2.2                               Maximum Interest.  Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”).  If a court of competent jurisdiction shall finally determine that Borrower has actually paid to Lender an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows:  first, to the payment of the Secured Obligations consisting of the outstanding principal amount of the Term Loan Advances; second, after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.

 

2.3                               Default Interest.  In the event any payment is not paid on the scheduled payment date, an amount equal to three and one half of one percent (3.5%) of the past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.1(c), plus three and one half of one percent (3.5%) per annum.  In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.1(c).

 

2.4                               Prepayment.  At its option upon at least seven (7) Business Days prior notice to Agent, Borrower may prepay all, or any portion, of the outstanding Advances by paying the entire principal balance or a portion thereof, all accrued and unpaid interest on the portion prepaid, all unpaid Agent’s and Lender’s fees and expenses accrued to the date of the repayment (including the End of Term Charge), together with a prepayment charge on the portion prepaid equal to the following percentage of the Advance amount being prepaid: if such Advance amounts are prepaid in any of the first twelve (12) months following the Closing Date, three percent (3.00%); after twelve (12) months but prior to twenty four (24) months, two percent (2.00%); and thereafter, one percent (1.00%) (each, a “Prepayment Charge”).  Borrower agrees that the Prepayment Charge is a reasonable calculation of Lender’s lost 

 

 

profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances.  Upon the occurrence of a Change in Control, Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and all unpaid Agent’s and Lender’s fees and expenses accrued to the date of the repayment (including the End of Term Charge) together with the applicable Prepayment Charge.

 

2.5                               End of Term Charge.  On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured Obligations, or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender the End of Term Charge.  Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of the Closing Date.

 

2.6                               Notes.  If so requested by Lender by written notice to Borrower, then Borrower shall execute and deliver to Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of Lender pursuant to Section 11.13) (promptly after the Borrower’s receipt of such notice) a Note or Notes to evidence Lender’s Loans.

 

2.7                               Pro Rata Treatment.  Each payment (including prepayment) on account of any fee and any reduction of the Term Loan Advances shall be made pro rata according to the Term Commitments of the relevant Lender.

 

SECTION 3.                         SECURITY INTEREST

 

3.1                               As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in and to the following personal property whether now owned or hereafter acquired (collectively, the “Collateral”):  (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles (other than Intellectual Property); (e) Inventory; (f) Investment Property (but excluding thirty-five percent (35%) of the capital stock of any foreign Subsidiary that constitutes a Permitted Investment); (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrower’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing; provided, however, that the Collateral shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to Payment”).  Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the date of this Agreement, include the Intellectual Property to the extent necessary to permit perfection of Agent’s security interest in the Rights to Payment. Notwithstanding the foregoing, the Collateral does not include property that is non-assignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §9-406 and §9-408 of the UCC).

 

SECTION 4.                         CONDITIONS PRECEDENT TO LOAN

 

The obligation of Lender to make the Term Loan Advances hereunder are subject to the satisfaction by Borrower of the following conditions:

 

4.1                               Initial Advance.  On or prior to the Closing Date, Borrower shall have delivered to Agent the following:

 

(a)                                 executed originals of the Loan Documents, Account Control Agreements, and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;

 

 

(b)                                 certified copy of resolutions of Borrower’s Board evidencing approval of (i) the Loan and other transactions evidenced by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;

 

(c)                                  certified copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower;

 

(d)                                 a certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified would have a Material Adverse Effect;

 

(e)                                  payment of the Facility Charge and reimbursement of Agent’s and Lender’s current expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance; and

 

(f)                                   such other documents as Agent may reasonably request.

 

4.2                               All Advances.  On each Advance Date:

 

(a)                                 Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.1(b), duly executed by Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request.

 

(b)                                 The representations and warranties set forth in Section 5 of this Agreement and in the Warrant shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

 

(c)                                  Borrower shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.

 

(d)                                 Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.

 

4.3                               No Default.  As of the Closing Date and each Advance Date, (i) no fact or condition exists that would (or would, with the passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.

 

SECTION 5.                         REPRESENTATIONS AND WARRANTIES OF BORROWER

 

Borrower represents and warrants that:

 

5.1                               Corporate Status.  Borrower is a corporation duly organized, legally existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect.  Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational identification number and other information are correctly set forth in Exhibit C, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date.

 

5.2                               Collateral.  Borrower owns the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens.  Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.

 

 

5.3                               Consents.  Borrower’s execution, delivery and performance of the Notes (if any), this Agreement and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate or Articles of Incorporation (as applicable), bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any contract or agreement or require the consent or approval of any other Person which has not already been obtained.  The individual or individuals executing the Loan Documents and the Warrant are duly authorized to do so.

 

5.4                               Material Adverse Effect.  No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect.

 

5.5                               Actions Before Governmental Authorities.  Except as described on Schedule 5.5, there are no actions, suits or proceedings at law or in equity or by or before any governmental authority now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or its property.

 

5.6                               Laws.  Borrower is not in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in a Material Adverse Effect.  Borrower is not in default in any manner under any provision of any agreement or instrument evidencing Indebtedness, or any other material agreement to which it is a party or by which it is bound.

 

5.7                               Information Correct and Current.  No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available to Borrower, and (ii) the most current of such projections provided to Borrower’s Board.

 

5.8                               Tax Matters.  Except as described on Schedule 5.8, (a) Borrower has filed all federal, state and local tax returns that it is required to file, (b) Borrower has duly paid or fully reserved for all taxes or installments thereof (including any interest or penalties) as and when due, which have or may become due pursuant to such returns, and (c) Borrower has paid or fully reserved for any tax assessment received by Borrower for the three (3) years preceding the Closing Date, if any (including any taxes being contested in good faith and by appropriate proceedings).

 

5.9                               Intellectual Property Claims.  Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property.  Except as described on Schedule 5.9, (i) each of the material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no claim has been made to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit D is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material breach of, nor has Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach thereof or has failed to perform any material obligations thereunder.

 

5.10                        Intellectual Property.  Except as described on Schedule 5.10, Borrower has, or in the case of any proposed business, will have, all material rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower.  Without limiting the generality of the foregoing, and in the case of Licenses, except for restrictions that are unenforceable 

 

 

under Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property without condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and other items that are used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products.

 

5.11                        Borrower Products.  Except as described on Schedule 5.11, no Intellectual Property owned by Borrower or Borrower Product has been or is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the validity, use or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products.  Borrower has not received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any Intellectual Property (or written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim.  Neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual Property or other rights of others.

 

5.12                        Financial Accounts.  Exhibit E, as may be updated by the Borrower in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

 

5.13                        Employee Loans.  Except for Permitted Investments of the type described in clause (viii) or (ix) of the definition thereof, Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party.

 

5.14                        Capitalization and Subsidiaries.  Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto.  Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments.  Attached as Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.

 

SECTION 6.                         INSURANCE; INDEMNIFICATION

 

6.1                               Coverage.  Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks customarily insured against in Borrower’s line of business.  Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3.  Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.  Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence and $3,000,000 in the aggregate.  So long as there are any Secured Obligations (other than inchoate indemnity obligations) outstanding, Borrower shall also maintain a key man life insurance policy for the Chief Executive Officer/President in form and substance reasonably satisfactory to Agent, naming Agent as designated payee. So long as there are any Secured Obligations outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and deductibles.

 

 

6.2                               Certificates.  Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2.  Borrower’s insurance certificate shall state Agent is an additional insured for commercial general liability, a designated payee for the key man life insurance policy, a loss payee for all risk property damage insurance, subject to the insurer’s approval, and a loss payee for property insurance and additional insured for liability insurance for any future insurance that Borrower may acquire from such insurer.  Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable endorsements for all risk property damage insurance.  All certificates of insurance will provide for a minimum of thirty (30) days (ten (10) days for non-payment of premium) advance written notice to Agent of cancellation or any other change adverse to Agent’s interests.  Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved.

 

6.3                               Indemnity.  Borrower agrees to indemnify and hold Agent, Lender and their officers, directors, employees, agents, in-house attorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent resulting solely from any Indemnified Person’s gross negligence or willful misconduct. Borrower agrees to pay, and to save Agent and Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income of Agent or Lender) that may be payable or determined to be payable with respect to any of the Collateral or this Agreement.  In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).

 

SECTION 7.                         COVENANTS OF BORROWER

 

Borrower agrees as follows:

 

7.1                               Financial Reports.  Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):

 

(a)                                 as soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-date financial statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements;

 

(b)                                 as soon as practicable (and in any event within 45 days) after the end of each calendar  quarter, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect,  certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year-end adjustments; as well as the most recent capitalization table for Borrower if there were any changes from the last capitalization table provided, including the weighted average exercise price of employee stock options;

 

 

(c)                                  as soon as practicable (and in any event within one hundred eighty (180) days) after the end of each fiscal year, unqualified audited financial statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Agent, accompanied by any management report from such accountants;

 

(d)                                 together with the monthly or quarterly financial statements required pursuant to Section 7.1(a) or (b), as applicable, a Compliance Certificate in the form of Exhibit F;

 

(e)                                  promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower has made available to holders of its capital stock and copies of any regular, periodic and special reports or registration statements that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or any national securities exchange;

 

(f)                                   at the same time and in the same manner as it gives to its directors, copies of all notices, minutes, consents and other materials that Borrower provides to its directors in connection with meetings of the Board, and within 30 days after each such meeting, minutes of such meeting, provided that in all cases Borrower may exclude materials that are covered by attorney-client privilege, and matters that present a direct conflict of interest to Agent or any Lender, such as a take-out financing proposal, and executive session materials; and

 

(g)                                  financial and business projections promptly following their approval by Borrower’s Board, as well as budgets, operating plans and other financial information reasonably requested by Agent.

 

Borrower shall not make any change in its (a) accounting policies or reporting practices, or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31.

 

The executed Compliance Certificate may be sent via facsimile to Agent at (650) 473-9194 or via e-mail to BJadot@herculestech.com.  All Financial Statements required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com with a copy to BJadot@herculestech.com and BBang@herculestech.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be sent via facsimile to Agent at: (866) 468-8916, attention Chief Credit Officer.

 

7.2                               Management Rights.  Borrower shall permit any representative that Agent or Lender authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and upon reasonable notice during normal business hours; provided that, such inspection and examination shall be conducted no more often than twice every twelve (12) months unless an Event of Default has occurred.  In addition, any such representative shall have the right to meet with management and officers of Borrower to discuss such books of account and records.  In addition, Agent or Lender shall be entitled at reasonable times and intervals to consult with and advise the management and officers of Borrower concerning significant business issues affecting Borrower.  Such consultations shall not unreasonably interfere with Borrower’s business operations.  The parties intend that the rights granted Agent and Lender shall constitute “management rights” within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or Lender with respect to any business issues shall not be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender of, control over Borrower’s management or policies.

 

7.3                               Further Assurances.  Borrower shall from time to time execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to perfect or give the highest priority to Agent’s Lien on the Collateral.  Borrower shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary or desirable, or that Agent may reasonably request, to perfect and protect the Liens granted hereby and thereby.  In addition, and for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing statements, collateral assignments, notices, control agreements, security agreements and other documents without the signature of Borrower either in Agent’s name or in the name of Agent 

 

 

as agent and attorney-in-fact for Borrower.  Borrower shall protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.

 

7.4                               Indebtedness.  Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except for the Secured Obligations, the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion.

 

7.5                               Collateral.  Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used in Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral, the Intellectual Property, such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property and assets may be subject to Permitted Liens except that there shall be no Liens whatsoever on Intellectual Property, except for Permitted Liens described in clause (ix) of the definition thereof.  Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens, provided however, that there shall be no Liens whatsoever on Intellectual Property, except for Permitted Liens described in clause (ix) of the definition thereof), and shall give Agent prompt written notice of any legal process affecting such Subsidiary’s assets. Borrower shall not agree with any Person other than Agent or Lender not to encumber its property.

 

7.6                               Investments.  Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments.  Borrower shall not make any Investment in Twin Lights Biosciences, Inc. without the prior written consent of Lender.

 

7.7                               Distributions.  Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other equity interest other than (i) pursuant to employee, director or consultant stock purchase or repurchase plans or other similar agreements, provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or equity interest, and (ii) the conversion of any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange therefor, or (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other equity interest, except that a Subsidiary may pay dividends or make distributions to Borrower and Borrower may pay dividends solely in common stock, or (c) lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of $250,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of $250,000 in the aggregate.

 

7.8                               Transfers.  Except for Permitted Transfers, Borrower shall not voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of its assets.

 

7.9                               Mergers or Acquisitions.  Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of (a) a Subsidiary which is not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into another Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person.

 

7.10                        Taxes.  Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against Borrower, Agent, Lender (to the extent assessed in connection with the making of the Loan hereunder but excluding taxes on Agent’s or Lender’s net income) or the Collateral or upon Borrower’s ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.  Borrower shall file on or before the due date therefor all personal property tax returns in respect of the Collateral.  Notwithstanding the 

 

 

foregoing, Borrower may contest, in good faith and by appropriate proceedings, taxes for which Borrower maintains adequate reserves therefor in accordance with GAAP.

 

7.11                        Corporate Changes.  Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without twenty (20) days’ prior written notice to Agent.  Neither Borrower nor any Subsidiary of Borrower shall suffer a Change in Control; provided, however, that Borrower or any Subsidiary of Borrower may suffer a Change in Control so long simultaneously with such Change in Control the Secured Obligations (other than inchoate indemnity obligations) are indefeasibly paid in full.  Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States.  Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other than (w) worn-out, obsolete or surplus equipment, (x) sales of Inventory in the ordinary course of business, (y) relocations of Equipment having an aggregate value of up to $250,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit C to another location described on Exhibit C) unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the continental United States and, (iii) if such relocation is to a third party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable to Agent.

 

7.12                        Deposit Accounts.  Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment Property, except with respect to which Agent has an Account Control Agreement; provided that upon any Borrower’s opening of a new Deposit Account that is subject to an Account Control Agreement in favor of Agent, Agent hereby agrees to permit such Borrower to close any other account that has been replaced by such new Deposit Account upon written request from such Borrower and provided all funds in such former account have been transferred to a Deposit Account that is subject to an Account Control Agreement in favor of Agent.

 

7.13                        Subsidiaries.  Borrower shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shall cause any such Subsidiary to execute and deliver to Agent a Joinder Agreement.

 

7.14                        Notification of Event of Default.  Borrower shall notify Agent immediately of the occurrence of any Event of Default, such notice to be sent via facsimile to Agent.

 

SECTION 8.                         RIGHT TO INVEST; RIGHT TO CONVERT

 

8.1                               Lender or its assignee or nominee shall have the right, in its discretion, to participate in a Subsequent Financing (as defined in the Equity Rights Letter Agreement) pursuant to the terms set forth in the Equity Rights Letter Agreement.

 

8.2                               Lender shall have the right, in its discretion, to convert a portion of the Loan in a Subsequent Financing (as defined in the Equity Rights Letter Agreement) pursuant to the terms set forth in the Equity Rights Letter Agreement.

 

SECTION 9.                         EVENTS OF DEFAULT

 

The occurrence of any one or more of the following events shall be an Event of Default:

 

9.1                               Payments.  Borrower fails to pay any amount due under this Agreement, the Notes, or any of the other Loan Documents on the due date (or within three (3) days, provided that such late payment is due to an administrative error in connection with the ACH Authorization); or

 

9.2                               Covenants.  Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement or any of the other Loan Documents or any other agreement among Borrower, Agent and Lender, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, and 7.14), or any of the other Loan Documents or such other agreement, any other Loan Document or any other agreement among Borrower, Agent and Lender, such default continues for more 

 

 

than ten (10) days after the earlier of the date on which (i) Agent or Lender has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, and 7.14, the occurrence of such default; or

 

9.3                               Material Adverse Effect.  A circumstance has occurred that would reasonably be expected to have a Material Adverse Effect; or

 

9.4                               Representations.  Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been false or misleading in any material respect when made or deemed made; or

 

9.5                               Insolvency.  Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease operations of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the foregoing actions described in clauses (i) through (vi); or (B) either (i) thirty (30) days shall have expired after the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) thirty (30) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or

 

9.6                               Attachments; Judgments.  Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment or judgments is/are entered for the payment of money, individually or in the aggregate, of at least $250,000 (not covered by independent third party insurance as to which liability has been accepted by such insurance carrier as of the date of such attachment), or Borrower is enjoined or in any way prevented by court order from conducting any part of its business; or

 

9.7                               Other Obligations.  The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness in excess of $250,000, or the occurrence of any default under any agreement  or obligation of Borrower that could reasonably be expected to have a Material Adverse Effect.

 

SECTION 10.                  REMEDIES

 

10.1                        General.  Upon and during the continuance of any one or more Events of Default, (i) Agent may, at its option, accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5, all of the Secured Obligations shall automatically be accelerated and made due and payable, in each case without any further notice or act), (ii) Agent may, at its option, sign and file in Borrower’s name any and all collateral assignments, notices, control agreements, security agreements and other documents it deems necessary or appropriate to perfect or protect the repayment of the Secured Obligations, and in furtherance thereof, Borrower hereby grants Agent an irrevocable power of attorney coupled with an interest, and (iii) Agent may notify any of Borrower’s account debtors to make payment directly to Agent, compromise the amount of any such account on Borrower’s behalf and endorse Agent’s name without recourse on any such payment for deposit directly to Agent’s account.  Agent may exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of 

 

 

all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral.  All Agent’s rights and remedies shall be cumulative and not exclusive.

 

10.2                        Collection; Foreclosure.  Upon the occurrence and during the continuance of any Event of Default, Agent may, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect.  Any such sale may be made either at public or private sale at its place of business or elsewhere.  Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower.  Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and Borrower.  The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:

 

First, to Agent and Lender in an amount sufficient to pay in full Agent’s and Lender’s costs and professionals’ and advisors’ fees and expenses as described in Section 11.11;

 

Second, to Lender in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority as Agent may choose in its sole discretion; and

 

Finally, after the full, final, and indefeasible payment in Cash of all of the Secured Obligations, to any creditor holding a junior Lien on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.

 

Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.

 

10.3                        No Waiver.  Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.

 

10.4                        Cumulative Remedies.  The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative.  The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.

 

SECTION 11.                  MISCELLANEOUS

 

11.1                        Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

11.2                        Notice.  Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:

 

If to Agent:                                                                                 HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
 Legal Department
 Attention:  Chief Legal Officer and Mr. Bryan Jadot
 400 Hamilton Avenue, Suite 310
 Palo Alto, California  94301

 

 

Facsimile:  650-473-9194

Telephone:  650-289-3060

 

If to Borrower:                                                               QUANTERIX CORPORATION
 Attention:  Chief Financial Officer

113 Hartwell Avenue

Lexington, MA 02421

Facsimile: 781-862-3804

Telephone: 617-301-9409

 

or to such other address as each party may designate for itself by like notice.

 

11.3                        Entire Agreement; Amendments.

 

(a)                                 This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s revised proposal letter dated February 25, 2014).

 

(b)                                 Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b).  The Required Lenders and Borrower party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, or reduce the stated rate of any interest or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Borrower from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.17 without the written consent of the Agent.  Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon Borrower, the Lender, the Agent and all future holders of the Loans.

 

11.4                        No Strict Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

11.5                        No Waiver.  The powers conferred upon Agent and Lender by this Agreement are solely to protect its rights hereunder and under the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or Lender to exercise any such powers.  No omission or delay by Agent or Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Agent or Lender is entitled, nor shall it in any way affect the right of Agent or Lender to enforce such provisions thereafter.

 

11.6                        Survival.  All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and 

 

 

Lender and shall survive the execution and delivery of this Agreement and until the expiration or other termination of, this Agreement.  Notwithstanding the foregoing, the provisions of Section 6.3 and 11.11 shall survive and remain in full force and effect regardless of the expiration or other termination of this Agreement.

 

11.7                        Successors and Assigns.  The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower and its permitted assigns (if any).  Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect.  Agent and Lender may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower, and all of such rights shall inure to the benefit of Agent’s and Lender’s successors and assigns.

 

11.8                        Governing Law.  This Agreement and the other Loan Documents have been negotiated and delivered to Agent and Lender in the State of California, and shall have been accepted by Agent and Lender in the State of California.  Payment to Agent and Lender by Borrower of the Secured Obligations is due in the State of California.  This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

11.9                        Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court located in the State of California.  By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents.  Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2.  Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

 

11.10                 Mutual Waiver of Jury Trial / Judicial Reference.

 

(a)                                 Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws.  EACH OF BORROWER, AGENT AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER, OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Claims, including Claims that involve Persons other than Agent, Borrower and Lender; Claims that arise out of or are in any way connected to the relationship among Borrower, Agent and Lender; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.

 

(b)                                 If the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California.  Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.

 

(c)                                  In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

 

 

11.11                 Professional Fees.  Borrower promises to pay Agent’s and Lender’s fees and expenses necessary to finalize the loan documentation, including but not limited to reasonable attorneys fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable attorneys’ and other professionals’ fees and expenses (including fees and expenses of in-house counsel) incurred by Agent and Lender  after the Closing Date in connection with or related to:  (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents, including representing Agent or Lender in any adversary proceeding or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

 

11.12                 Confidentiality.  Agent and Lender acknowledge that certain items of Collateral and information provided to Agent and Lender by Borrower are confidential and proprietary information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”).  Accordingly, Agent and Lender agree that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting  Agent’s security interest in the Collateral or otherwise shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and Lender may disclose any such information:  (a) to its own directors, officers, employees, accountants, counsel and other professional advisors and to its affiliates if Agent or Lender in their sole discretion determines that any such party should have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the public through no fault of Agent or Lender; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming to have jurisdiction over Agent or Lender; (d) if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s counsel; (e) to comply with any legal requirement or law applicable to Agent or Lender; (f) to the extent reasonably necessary in connection with the exercise of any right or remedy under any Loan Document, including Agent’s sale, lease, or other disposition of Collateral after default; (g) to any participant or assignee of Agent or Lender or any prospective participant or assignee; provided, that such participant or assignee or prospective participant or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its affiliates or any guarantor under this Agreement or the other Loan Documents.

 

11.13                 Assignment of Rights.  Borrower acknowledges and understands that Agent or Lender may sell and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “Assignee”).  After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lender hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and Lender shall retain all rights, powers and remedies hereby given.  No such assignment by Agent or Lender shall relieve Borrower of any of its obligations hereunder.  Lender agrees that in the event of any transfer by it of the Note(s)(if any), it will endorse thereon a notation as to the portion of the principal of the Note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.

 

11.14                 Revival of Secured Obligations.  This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment or transfer of Collateral is recovered from Agent or Lender.  The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, 

 

 

avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lender or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Agent or Lender in Cash.

 

11.15                 Counterparts.  This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

 

11.16                 No Third Party Beneficiaries.  No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lender and Borrower unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, Lender and Borrower.

 

11.17                 Agency.

 

(a)                                 Lender hereby irrevocably appoints Hercules Technology Growth Capital, Inc. to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

 

(b)                                 Lender  agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the obligation of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding Term Loan Commitments) in effect on the date on which indemnification is sought under this Section 11.17, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

 

(c)                                  Agent in Its Individual Capacity.  The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity.

 

(d)                                 Exculpatory Provisions.  The Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Agent shall not:

 

1.              be subject to any fiduciary or other implied duties, regardless of whether any default or any Event of Default has occurred and is continuing;

 

2.              have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Lender, provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and

 

3.              except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and the Agent shall not be liable for the failure to disclose, any information relating to the Borrower or any of its affiliates that is communicated to or obtained by any Person serving as the Agent or any of its affiliates in any capacity.

 

 

(e)                                  The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lender or as the Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross negligence or willful misconduct.

 

(f)                                   The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

 

(g)                                  Reliance by Agent.  Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper party or parties.  In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to the requirements of the Loan Agreement or any of the other Loan Documents.  Agent may consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith.  Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction.  Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement, the Loan Agreement and the other Loan Documents at the request or direction of Lenders unless Agent shall have been provided by Lender with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.

 

11.18                 Publicity.

 

(a)                                 Borrower consents to the publication and use by Agent or Lender and any of its member businesses and affiliates of (i) Borrower’s name (including a brief description of the relationship among Borrower, Agent and Lender) and logo and a hyperlink to Borrower’s web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “Lender Publicity Materials”); (ii) the names of officers of Borrower in the Lender Publicity Materials; and (iii) Borrower’s name, trademarks or servicemarks in any news release concerning Agent or Lender.

 

(b)                                 Neither Borrower nor any of its member businesses and affiliates shall, without Agent’s and Lender’s consent, publicize or use (i) Agent’s or Lender’s name (including a brief description of the relationship among Borrower, Agent and Lender), logo or hyperlink to Agent’s or Lender’s web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “Borrower Publicity Materials”); (ii) the names of officers of Agent or Lender in the Borrower Publicity Materials; and (iii) Agent’s or Lender’s name, trademarks, servicemarks in any news release concerning Borrower.

 

(SIGNATURES TO FOLLOW)

 

 

IN WITNESS WHEREOF, Borrower, Agent and Lender have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

 

	
 
    	
BORROWER:
    
	
 
    	
QUANTERIX CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Paul Chapman
    
	
 
    	
Print Name:
    	
Paul Chapman
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    	
 
    
	
Accepted in Palo Alto,   California:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AGENT:
    	
 
    
	
 
    	
HERCULES TECHNOLOGY   GROWTH CAPITAL, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Ben Bang
    
	
 
    	
Print Name:
    	
Ben Bang
    
	
 
    	
Title:
    	
Senior Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
HERCULES TECHNOLOGY   GROWTH CAPITAL, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
Signature:
    	
/s/ Ben Bang
    
	
 
    	
Print Name:
    	
Ben Bang
    
	
 
    	
Title:
    	
Senior Counsel

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