Document:

Exhibit 10.21

 

*** CONFIDENTIAL TREATMENT REQUESTED.

Confidential portions of this document have been redacted and have been separately filed with the Commission.

 

FIRST AMENDMENT TO PATHOLOGY SERVICES AGREEMENT

 

THIS FIRST AMENDMENT TO PATHOLOGY SERVICES AGREEMENT (the “Amendment”) is made and entered into as of December 19, 2012, by and between VERACYTE, INC., a California corporation (“Veracyte”) and THYROID CYTOLOGY PARTNERS, P.A., a Texas professional association (“Pathologists”) with respect to the following:

 

RECITALS

 

A.                                        Veracyte is engaged in the business of developing and marketing diagnostic testing utilizing Veracyte’s proprietary molecular assays and procuring the related anatomic and cytologic pathology through contracted pathologists.

 

B.                                        Brazos Valley Pathology, P.A., doing business as Reitpath, a Texas professional association, and Veracyte have entered into that certain Pathology Services Agreement dated November 10, 2010, as assigned to Pathologists on May 18, 2011 (the “Agreement”) pursuant to which Pathologists provide certain professional pathology services to Veracyte.

 

C.                                        Veracyte and Pathologists desire to amend the Agreement.

 

AGREEMENT

 

IN CONSIDERATION of the foregoing recitals and the mutual promises and covenants contained herein, Veracyte and Pathologists agree as follows:

 

1.                                          Defined Terms.  Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement.

 

2.                                          Section 1(b).  Section 1(b) to the Agreement is hereby amended and restated to read in its entirety as follows:

 

“(b)                               Approved Physicians.  Pathologists will provide the services through individual physicians listed on Exhibit B (“Approved Physicians”). From time to time additional physicians may be engaged by Pathologists to furnish services under this Agreement; provided, however, that each additional physician must satisfy the professional standards and qualifications set forth in this Agreement. Veracyte shall have the sole discretion to approve any such physician in writing prior to furnishing services. Pathologists shall also undertake commercially reasonable efforts to hire a nationally recognized thyroid expert, on at least a part-time basis, to assist Pathologists in providing the Services (as defined below) pursuant to this Agreement.”

 

3.                                          Section 1(d).  Section 1(d) to the Agreement is hereby amended and restated to read in its entirety as follows:

 

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“(d)                               International Arrangements.  The Parties shall meet and confer in good faith to negotiate the terms and conditions pursuant to which the Services may be provided by Pathologists for samples obtained outside of the United States by Veracyte. Veracyte may engage multiple service providers to provide the Services for patients located outside of the United States.”

 

4.                                          Section 3(b).  Section 3(b) to the Agreement is hereby amended and restated to read in its entirety as follows:

 

“(b)                               Covered States.  Veracyte may provide specimens from the fifty United States (the “Covered States”).”

 

5.                                          Section 6.  Section 6 to the Agreement is hereby amended and restated to read in its entirety as follows:

 

“6.                                    Term.  This Agreement shall become effective on the Effective Date, and shall continue until December 31, 2015 (the “Expiration Date”), unless terminated earlier as provided herein. The Agreement shall automatically renew for successive one (1) year terms unless either Party gives written notice of its intention not to renew this Agreement at least twelve (12) months prior to the end of the then current term.”

 

6.                                          Section 8(d)(iii).  Section 8(d)(iii) to the Agreement is hereby amended and restated to read in its entirety as follows:

 

“(iii)                             Veracyte shall reimburse Pathologists for the annual cost incurred prior to January 1, 2013 for renewing state licenses (other than Texas) for Approved Physicians. Veracyte shall also reimburse Pathologists for the costs incurred prior to January 1, 2013 for acquiring licenses for Approved Physicians in states other than Texas in order to provide the Services hereunder; this will include, without, limitation, reimbursement of the costs incurred prior to the Effective Date of this Agreement for licenses acquired specifically in anticipation of the execution of the Agreement. Pathologists shall assume all financial responsibility for the costs incurred on or after January 1, 2013 for licensing all Approved Physicians, including, without limitation, any patient compensation fund contribution requirements required by any applicable state law.”

 

7.                                          New Section 8(d)(iv).  Section 8(d)(iv) is hereby added to the  Agreement to read in its entirety as follows:

 

“(iv)                            Pathologists shall be entitled to use one or more offices as mutually agreed from time to time in  office space leased by Veracyte at 12357 A Riata Trace Parkway, Building 5, Austin, Texas 78727. Commencing on January 1, 2013, Pathologists shall reimburse Veracyte the proportionate share, including common areas,(based on the ratio of office space used by Pathologists relative to the total space leased by Veracyte) of Veracyte’s actual out-of-pocket rental costs for such space including base rent and operating expenses.”

 

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8.                                          Exhibit E.  Exhibit E is hereby amended and restated to read in its entirety as attached hereto as Exhibit E, effective January 1, 2013.

 

9.                                          Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

10.                                   Continuing Effect of Agreement.  Except as herein provided, all of the terms and conditions of the Agreement remain in full force and effect from the Effective Date of the Agreement.

 

11.                                   Reference.  After the date of this Amendment, any reference to the Agreement shall mean the Agreement as amended by this Amendment.

 

IN WITNESS WHEREOF, Veracyte and Pathologists have executed this Amendment as of the day and year first written above.

 

 

	
 
    	
VERACYTE
    
	
 
    	
 
    
	
 
    	
VERACYTE, INC., a California corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Mark E. Spring
    
	
 
    	
By:
    	
Mark E. Spring
    
	
 
    	
Its
    	
CFO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THYROID CYTOLOGY PARTNERS, P.A., a Texas professional association
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ [ILLEGIBLE]
    
	
 
    	
By:
    	
 
    
	
 
    	
Its
    	
President
    

 

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EXHIBIT B

 

APPROVED PHYSICIANS

 

Dr. Katherine O’Reilly

Dr. Torn Traweek

Dr. Cherry Starling

Dr. Rose Matte

Dr. Kevin Stancoven

Dr. Alex Van Amerongen

Dr. Mike Cohen

Dr. Kelly Gilliland

Dr. Laura Been

Dr. Eric Harp

Dr. Nancy Ciau

 

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*** Confidential material redacted and filed separately with the Commission.

 

EXHIBIT E

 

FEE SCHEDULE

 

	
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5Exhibit 10.10.10

 

TENTH AMENDMENT
 TO
  AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Tenth Amendment to Amended and Restated Loan and Security Agreement is entered into as of September 10, 2013 (the “Amendment”), by and between APPLIED OPTOELECTRONICS, INC. (“Borrower”) and EAST WEST BANK (“Bank”).

 

RECITALS

 

Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of May 20, 2009 and as amended from time to time including that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of May 3, 2010, that certain Second Amendment to Amended and Restated Loan and Security Agreement dated as of October 28, 2010, that certain Third Amendment to Amended and Restated Loan and Security Agreement dated as of December 6, 2010, that certain Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of May 5, 2011, that certain letter dated September 30, 2011, that certain Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of November 30, 2011, that certain Sixth Amendment to Amended and Restated Loan and Security Agreement dated as of March 29, 2012, that certain Seventh Amendment to Amended and Restated Loan and Security Agreement dated as of June 29, 2012, that certain Eighth Amendment to Amended and Restated Loan and Security Agreement dated as of November 2, 2012, that certain Assignment, Assumption and Amendment Agreement dated as of March 25, 2013, and that certain Ninth Amendment to Amended and Restated Loan and Security Agreement dated as of April 11, 2013 (collectively, the “Agreement”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      The following defined terms set forth in Section 1.1 of the Agreement are amended and restated in their entirety to read as follows:

 

“Domestic Borrowing Base” means an amount equal to (i) 80% of Eligible Accounts, plus (ii) the lesser of 30% of Eligible Inventory or $1,000,000, plus (iii) Excess Cash; as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrower.  Notwithstanding the foregoing, Eligible Inventory shall not exceed 50% of the total Domestic Borrowing Base; and the Excess Cash component of the Domestic Borrowing Base shall not exceed $2,000,000.

 

“Shares” means the capital stock of all of Borrower’s direct and indirect Subsidiaries, including without limitation, Prime World International Holdings, Ltd., and Global Technology, Inc.; provided however that the Shares shall not include more than 65% of the outstanding capital stock of Global Technology, Inc.

 

2.                                      The following defined terms are added to Section 1.1 of the Agreement as follows:

 

“Equipment II Advance” means a cash advance or cash advances made under Section 2.1(h).

 

“Equipment II Maturity Date” means September 10, 2017.

 

“Excess Cash” means the amount of Borrower’s unrestricted cash maintained at Bank in excess of Four Million Dollars ($4,000,000).

 

3.                                      Section 2.1(g) is amended in its entirety to read as follows:

 

 

(g)                                  Priority.  Notwithstanding the foregoing provisions, any payments by Borrower to Bank following an Event of Default shall not be applied to any Line II Advance or Equipment II Advance or any interest accrued thereon until all other Credit Extensions are fully repaid.

 

4.                                      The following is added as a new subsection (h) following the end of Section 2.1(g):

 

(h)                                 Equipment II Advances.

 

(i)                                     Subject to and upon the terms and conditions of this Agreement, on or before March 10, 2014 (the “Amortization Date”), Bank agrees to make one or more Equipment II Advances to Borrower in an aggregate amount not to exceed Five Million Dollars ($5,000,000). On or before the initial Equipment II Advance made to Borrower, Borrower shall execute and deliver to Bank a promissory note for the Equipment II Advances in substantially the form attached hereto as Exhibit B-6.  Bank may enforce its rights in respect of the Equipment II Advance under this Agreement without such note. Equipment II Advances may only be used to finance Equipment purchased by Borrower no earlier than March 31, 2013, which was new when purchased by Borrower.  No Equipment II Advance may exceed ninety percent (90%) of the total invoice for such Equipment (excluding taxes, shipping, warranty charges, freight discounts and installation expenses relating to such Equipment).

 

(ii)                                  Borrower shall pay interest on the aggregate outstanding principal amount of the Equipment II Advances on the fifth day of each month for so long as any Equipment II Advances are outstanding.  On the fifth day of each month following the Amortization Date and until the Equipment II Advance Maturity Date, Borrower shall repay the outstanding Equipment II Advances in forty two (42) equal monthly installments of principal, plus accrued interest.  The entire principal balance and all accrued but unpaid interest on the Equipment II Advances shall be due and payable on the Equipment II Advance Maturity Date.  Equipment II Advances, once repaid, may not be reborrowed.  Borrower may prepay any Equipment II Advances without penalty or premium.

 

(iii)                               When Borrower desires to obtain an Equipment II Advance, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:00 p.m. Pacific time three (3) Business Days before the day on which the Equipment II Advance is to be made.  Such notice shall be substantially in the form of Exhibit C.  The notice shall be signed by a Responsible Officer or its designee and include a copy of the invoice or other documentation with respect to the purchase and payment terms of the Equipment being acquired by Borrower that is to be financed by Bank, with such details as may be requested by Bank.

 

5.                                      The following is added as a new subsection (v) to the end of Section 2.3(a) as follows:

 

(v)                                 Except as set forth in Section 2.3(b), the outstanding principal balance of each Equipment II Advance shall bear interest at a variable rate per annum equal to the Prime Rate plus 1.25%.

 

6.                                      The following is added to the end of Section 6.2(a) of the Agreement:

 

Notwithstanding the foregoing, following Borrower’s initial public offering and for so long as Borrower is required to file its Form 10Q with the Securities Exchange Commission), in lieu of delivering monthly financial statements, Borrower shall deliver quarterly consolidated and consolidating financial statements (balance sheet, income

 

 

statement and cash flow statement) to Bank on or before the date Borrower’s report on Form 10-Q is required to be filed with the Securities Exchange Commission.

 

7.                                      Section 6.6 of the Agreement is amended in its entirety to read as follows:

 

6.6                               [Intentionally Omitted].

 

8.                                      Section 6.15 of the Agreement is amended in its entirety to read as follows:

 

6.15                        Minimum Debt Service Coverage.  Borrower shall maintain a minimum ratio of EBITDASO on a consolidated basis for the trailing four quarter period to the sum of (x) all accrued interest payable in the same four quarter period plus (y) all principal payable in the same four quarter period on any Indebtedness (not including principal outstanding on any revolving lines of credit) owing by Borrower and its Subsidiaries to Bank or other financial institutions, of at least 1.25 to 1.00 (the “DSC Ratio”), measured on a quarterly basis. Notwithstanding the foregoing, Borrower’s failure to maintain the DSC Ratio shall not constitute an Event of Default if, within 60 days after the reporting period of such failure, Borrower receives cash proceeds from the sale and issuance of its equity and/or Subordinated Debt securities in an amount no less than the shortfall amount that caused Borrower’s failure to maintain the DSC Ratio.

 

9.                                      Section 7.2 of the Agreement is amended in its entirety to read as follows:

 

7.2 Change in Name or Executive Management; Change in Business; Change in Fiscal Year; Change in Control.  (i) Change its name without 30 days prior written notification to Bank; or (ii) terminate or replace its chief executive officer or chief financial officer or other executive level officer without prior written approval of Bank (provided however Borrower need not comply with this clause (ii) following Borrower’s initial public offering and for so long as Borrower’s capital stock is publicly traded on a nationally recognized exchange market); or (iii) engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; or (iv) change its fiscal year end; or (v) have a Change in Control.

 

10.                               Exhibit B-6 attached hereto is incorporated in its entirety as Exhibit B-6 to the Agreement.

 

11.                               Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remains in full force and effect in accordance with its terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all instruments, documents and agreements entered into in connection with the Agreement.

 

12.                               Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.

 

13.                               This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

14.                               As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

(a)                                 this Amendment, duly executed by Borrower;

 

 

(b)                                 Corporate Resolutions and Incumbency Certification;

 

(c)                                  payment of an amendment fee of $12,500, plus all Bank Expenses incurred through the date of this Amendment; and

 

(d)                                 such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

	
 
    	
APPLIED   OPTOELECTRONICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Chih-Hsiang (Thompson) Lin
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    	
 
    
	
 
    	
EAST   WEST BANK
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Lisa Chang
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Vice   President
    

 

 

EXHIBIT B-6

EQUIPMENT II ADVANCE NOTE

 

	
$5,000,000
    	
September       ,   2013
    
	
 
    	
Santa   Clara, California
    

 

FOR VALUE RECEIVED, the undersigned, Applied Optoelectronics, Inc. (the “Borrower”), HEREBY PROMISES TO PAY to the order of East West Bank (the “Bank”) at its Principal Office located at 2350 Mission College Blvd., Suite 988, Santa Clara, California  95054, or at such other place as Bank may from time to time designate in writing, in lawful money of the United States and in immediately available funds, the principal amount of FIVE MILLION DOLLARS ($5,000,000) or so much of the Equipment II Advances (as defined in the Loan Agreement (defined below)) as may be advanced from time to time, together with interest from the date of disbursement computed on the principal balances hereof from time to time outstanding as set forth in the Amended and Restated Loan and Security Agreement by and between Bank and Borrower dated as of June 30, 2009 and as amended from time to time (the “Loan Agreement”).  The Loan Agreement is incorporated herein by this reference in its entirety.  Capitalized terms used but not otherwise defined herein are used in this Equipment II Advance Note as defined in the Loan Agreement.

 

This Equipment II Advance Note (the “Equipment II Advance Note”) is entitled to the benefits of, the Loan Agreement.  The Loan Agreement, among other things, contains provisions for acceleration of the maturity of this Equipment Advance Note upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity of this Equipment II Advance Note upon the terms and conditions specified in the Loan Agreement.  This Equipment II Advance Note is also secured by the Collateral described in the Loan Agreement, and reference to the Loan Agreement is hereby made for a description of the rights of Borrower and Bank in respect to such Collateral.

 

Borrower further promises to pay interest on the unpaid principal amount hereof outstanding from time to time from the date hereof until payment in full hereof at the rate (or rates) from time to time applicable to the Equipment II Advances as determined in accordance with the Loan Agreement.  Interest shall be calculated on the basis of a three hundred sixty (360)-day year for the actual days elapsed.

 

Borrower waives demand, presentment and protest, and notice of demand, presentment, protest and nonpayment.  Except as otherwise provided in the Loan Agreement or other Loan Documents, Borrower waives all rights to notice and hearing of any kind upon the occurrence of an Event of Default prior to the exercise by Bank of its rights to repossess the Collateral without judicial process or to replevy, attach or levy upon the Collateral without notice or hearing.

 

If this Equipment II Advance Note is not paid when due, whether at its specified or accelerated maturity date, Borrower promises to pay all costs of collection and enforcement of this Equipment II Advance Note, including, but not limited to, reasonable attorneys’ fees and costs, incurred by Bank hereof on account of such collection or enforcement, whether or not suit is filed hereon.

 

This Equipment II Advance Note shall be governed and construed in accordance with the laws of the State of California.

 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Equipment II Advance Note as of the date and year first above written.

 

	
 
    	
APPLIED   OPTOELECTRONICS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:

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