Document:

Exhibit 10.8

 

Execution Version

 

FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT

 

August 28, 2015

 

among

 

PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP,
 as Class A Representative

 

MACQUARIE US TRADING LLC, 
 as Class B Agent

 

CORTLAND CAPITAL MARKET SERVICES LLC, 
 as Second Lien Collateral Agent

 

PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, 
 as Control Agent

 

KADMON PHARMACEUTICALS, LLC,
 as Borrower

 

KADMON HOLDINGS, LLC,
 as Holdings

 

KADMON CORPORATION, LLC,
 KADMON RESEARCH INSTITUTE, LLC,
 THREE RIVERS RESEARCH INSTITUTE I, LLC,
 THREE RIVERS BIOLOGICS, LLC,
 THREE RIVERS GLOBAL PHARMA, LLC, 
 as Guarantors

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
1.1          Defined Terms
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
1.2          Usages
    	
14
    
	
 
    	
 
    	
 
    
	
2.
    	
Lien Priorities
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
2.1          Seniority Of Liens Securing First   Lien Obligations
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
2.2          Payment Subordination
    	
17
    
	
 
    	
 
    	
 
    
	
 
    	
2.3          First And Second Lien Collateral To   Be Identical
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
2.4          Pledged Collateral
    	
19
    
	
 
    	
 
    	
 
    
	
 
    	
2.5          Limitations On Duties And   Obligations
    	
21
    
	
 
    	
 
    	
 
    
	
 
    	
2.6          Prohibition On Contesting Liens; No   Marshaling
    	
22
    
	
 
    	
 
    	
 
    
	
 
    	
2.7          Confirmation Of Subordination In   Second Lien Collateral Documents
    	
22
    
	
 
    	
 
    	
 
    
	
 
    	
2.8          Release Of Liens Or Guaranties
    	
23
    
	
 
    	
 
    	
 
    
	
 
    	
2.9          Subordination Of Liens Securing   Excess Class A Obligations or Excess Class B Obligations
    	
24
    
	
 
    	
 
    	
 
    
	
3.
    	
Modification Of   Obligations
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
3.1          Permitted Modifications
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
3.2          Modifications Requiring Consent
    	
25
    
	
 
    	
 
    	
 
    
	
 
    	
3.3          Parallel Modifications To Second Lien   Obligations
    	
26
    
	
 
    	
 
    	
 
    
	
 
    	
3.4          Notice Of Modifications
    	
26
    
	
 
    	
 
    	
 
    
	
4.
    	
Enforcement
    	
27
    
	
 
    	
 
    	
 
    
	
 
    	
4.1          Who May Exercise Remedies
    	
27
    
	
 
    	
 
    	
 
    
	
 
    	
4.2          Manner Of Exercise
    	
29
    
	
 
    	
 
    	
 
    
	
 
    	
4.3          Specific Performance
    	
30
    
	
 
    	
 
    	
 
    
	
 
    	
4.4          Notice Of Exercise
    	
30
    
	
 
    	
 
    	
 
    
	
5.
    	
Payments
    	
30
    
	
 
    	
 
    	
 
    
	
 
    	
5.1          Application Of Proceeds
    	
30
    
	
 
    	
 
    	
 
    
	
 
    	
5.2          Insurance
    	
31
    
	
 
    	
 
    	
 
    
	
 
    	
5.3          Payment Turnover
    	
32
    
	
 
    	
 
    	
 
    
	
 
    	
5.4          Refinancing After Discharge Of First   Lien Obligations
    	
32
    
	
 
    	
 
    	
 
    
	
6.
    	
Purchase Of First Lien   Obligations By Second Lien Claimholders
    	
33
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
6.1          Purchase Right
    	
33
    
	
 
    	
 
    	
 
    
	
 
    	
6.2          Purchase Notice
    	
35
    
	
 
    	
 
    	
 
    
	
 
    	
6.3          Purchase Price
    	
36
    
	
 
    	
 
    	
 
    
	
 
    	
6.4          Purchase Closing
    	
36
    
	
 
    	
 
    	
 
    
	
 
    	
6.5          Excess First Lien Obligations Not   Purchased
    	
37
    
	
 
    	
 
    	
 
    
	
 
    	
6.6          Actions After Purchase Closing
    	
37
    
	
 
    	
 
    	
 
    
	
 
    	
6.7          No Recourse Or Warranties;   Defaulting Creditors
    	
37
    
	
 
    	
 
    	
 
    
	
7.
    	
Insolvency Proceedings
    	
38
    
	
 
    	
 
    	
 
    
	
 
    	
7.1          Use Of Cash Collateral And Dip   Financing
    	
38
    
	
 
    	
 
    	
 
    
	
 
    	
7.2          Sale Of Collateral
    	
39
    
	
 
    	
 
    	
 
    
	
 
    	
7.3          Relief From The Automatic Stay
    	
40
    
	
 
    	
 
    	
 
    
	
 
    	
7.4          Adequate Protection
    	
40
    
	
 
    	
 
    	
 
    
	
 
    	
7.5          First Lien Objections To Second Lien   Actions
    	
41
    
	
 
    	
 
    	
 
    
	
 
    	
7.6          Avoidance; Reinstatement Of   Obligations
    	
41
    
	
 
    	
 
    	
 
    
	
 
    	
7.7          Reorganization Securities
    	
41
    
	
 
    	
 
    	
 
    
	
 
    	
7.8          Post-Petition Claims
    	
42
    
	
 
    	
 
    	
 
    
	
 
    	
7.9          Waivers
    	
42
    
	
 
    	
 
    	
 
    
	
 
    	
7.10        Separate Grants Of Security And   Separate Classification
    	
42
    
	
 
    	
 
    	
 
    
	
 
    	
7.11        Effectiveness In Insolvency   Proceedings
    	
43
    
	
 
    	
 
    	
 
    
	
8.
    	
Miscellaneous
    	
43
    
	
 
    	
 
    	
 
    
	
 
    	
8.1          Conflicts
    	
43
    
	
 
    	
 
    	
 
    
	
 
    	
8.2          No Waivers; Remedies Cumulative;   Integration
    	
43
    
	
 
    	
 
    	
 
    
	
 
    	
8.3          Effectiveness; Severability;   Termination
    	
43
    
	
 
    	
 
    	
 
    
	
 
    	
8.4          Modifications Of This Agreement
    	
44
    
	
 
    	
 
    	
 
    
	
 
    	
8.5          Information Concerning Financial   Condition Of Borrower And Its Subsidiaries
    	
44
    
	
 
    	
 
    	
 
    
	
 
    	
8.6          No Reliance
    	
45
    
	
 
    	
 
    	
 
    
	
 
    	
8.7          No Warranties; Independent Action
    	
45
    
	
 
    	
 
    	
 
    
	
 
    	
8.8          Subrogation
    	
46
    
	
 
    	
 
    	
 
    
	
 
    	
8.9          Applicable Law; Jurisdiction;   Service
    	
46
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
8.10        Waiver Of Jury Trial
    	
46
    
	
 
    	
 
    	
 
    
	
 
    	
8.11        Notices
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
8.12        Further Assurances
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
8.13        Successors And Assigns
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
8.14        Authorization
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
8.15        No Third-Party Beneficiaries
    	
48
    
	
 
    	
 
    	
 
    
	
 
    	
8.16        No Indirect Actions
    	
48
    
	
 
    	
 
    	
 
    
	
 
    	
8.17        Counterparts
    	
48
    
	
 
    	
 
    	
 
    
	
 
    	
8.18        Original Grantors; Additional Grantors
    	
48
    

 

iii

 

FIRST/SECOND LIEN INTERCREDITOR AGREEMENT

 

This Intercreditor Agreement is entered into as of August 28, 2015 (this “Agreement”) among PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, a Delaware limited partnership (“Perceptive”), as control agent as defined in the Class A Credit Agreement referred to below (in such capacity, “Class A Representative”), MACQUARIE US TRADING LLC, as administrative agent, collateral agent and custodian for the Class B Lenders defined below (in such capacity, “Class B Agent”), CORTLAND CAPITAL MARKET SERVICES LLC, a Delaware limited liability company, as collateral agent for the Second Lien Purchasers defined below (in such capacity, “Second Lien Collateral Agent”), PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, as control agent for Class A Representative, Class B Agent and Second Lien Collateral Agent (in such capacity, the “Control Agent”), KADMON PHARMACEUTICALS, LLC, a Pennsylvania limited liability company (“Borrower”), KADMON HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), and the other Guarantors (as defined below).

 

BACKGROUND

 

(A)                               Borrower has entered into that certain Credit Agreement, dated as of the date hereof (as from time to time amended, restated, supplemented or otherwise modified, renewed, refinanced or replaced, the “Class A Credit Agreement”), with Holdings and the other Guarantors from time to time party thereto, Class A Lenders and Class A Representative, providing for a term loan to Borrower.

 

(B)                               Borrower has entered into that certain Third Amended and Restated Senior Secured Convertible Credit Agreement, dated as of the date hereof (as from time to time further amended, restated, supplemented or otherwise modified, renewed, refinanced or replaced, the “Class B Credit Agreement”), with Holdings and the other Guarantors from time to time party thereto, certain lenders and agents, and Class B Agent, providing for a convertible term loan to Borrower.

 

(C)                               Borrower has issued Second-Lien Convertible PIK Notes due 2019, dated as of the date hereof (as from time to time amended, restated, supplemented or otherwise modified, renewed, refinanced or replaced, the “Second Lien Notes”), in favor of the purchasers (the “Second Lien Purchasers”).

 

(D)                               Holdings has guaranteed, and Holdings and Borrower have agreed to cause certain current and future Subsidiaries of Borrower and Holdings (together with Holdings, the “Guarantors”) to guarantee, Borrower’s Obligations under the Class A Credit Agreement, the Class B Credit Agreement and the Second Lien Notes.

 

(E)                                The First Lien Obligations and the Second Lien Obligations are secured by Liens on substantially all the assets of Borrower and the Guarantors.

 

(F)                                 The Parties desire to set forth in this Agreement their rights and remedies with respect to the Collateral securing the First Lien Obligations and the Second Lien Obligations, and priority of payment with respect to the Class A Obligations, Class B Obligations and Second Lien Obligations.

 

1

 

AGREEMENT

 

1.                                      DEFINITIONS

 

1.1                               DEFINED TERMS

 

Unless otherwise stated or the context otherwise clearly requires, the following terms have the following meanings:

 

“Affiliate” means, for a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the specified Person. For these purposes, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “controlled” has a correlative meaning.

 

“Agreement” is defined in the Preamble.

 

“Assignment and Acceptance” is defined in Section 6.1(a)(B).

 

“Bankruptcy Code” means the federal Bankruptcy Code.

 

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state, or foreign bankruptcy, insolvency, receivership, or similar law affecting creditors’ rights generally.

 

“Borrower” is defined in the Preamble.

 

“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in New York City are authorized or required by law to close (or are in fact closed).

 

“Capped Class A Obligations” means Class A Obligations relating to the payment of principal, together with interest, premium (including the amount of the Prepayment Premium under, and as defined in, the Class A Credit Agreement, regardless of whether such Prepayment Premium is then due and payable) and fees accruing or payable in respect thereof or in respect of commitments therefor.

 

“Capped Class B Obligations” means Class B Obligations relating to the payment of principal, together with interest, premium (including the amount of the Prepayment Premium under, and as defined in, the Class B Credit Agreement, regardless of whether such Prepayment Premium is then due and payable) and fees accruing or payable in respect thereof or in respect of commitments therefor.

 

“Capped First Lien Obligations” means any First Lien Obligations consisting of Capped Class A Obligations or Capped Class B Obligations.

 

2

 

“Capped Second Lien Obligations” means Second Lien Obligations relating to the payment of principal, together with interest, premium (if any) and fees accruing or payable in respect thereof or in respect of commitments therefor.

 

“Class A Cap” means the sum of:

 

(a)                                 the excess of:

 

(1)                                 the sum of (x) the aggregate principal amount of Class A Obligations up to, but not in excess of, $40,250,000, plus (y) the amount of interest thereon compounded and added to the principal thereof, over

 

(2)                                 principal payments applied to term loans that are Class A Obligations (other than payments in connection with a Refinancing); plus

 

(b)                                 amounts in respect of accrued, unpaid interest, fees, and premium (including, for the avoidance of doubt, the amount of the Prepayment Premium under, and as defined in the Class A Credit Agreement), in each case above accruing in respect of or attributable to, but only in respect of or attributable to, the aggregate principal amount of Class A Obligations (including the aggregate original principal amount of any term loan that is a Class A Obligation) at any one time not to exceed the amount referred to in clause (a);

 

provided that the Class A Cap shall not apply to any Class A Obligations other than Capped Class A Obligations.  Notwithstanding the foregoing, the Class A Cap shall not be deemed to have been breached as a result of the incurrence of any DIP Financing consented to by a First Lien Representative and deemed consented to by the Second Lien Collateral Agent pursuant to Section 7.1(a).

 

Any net increase in the aggregate principal amount of a loan (on a U.S. Dollar equivalent basis) after the loan is incurred that is caused by a fluctuation in the exchange rate of the currency in which the loan is denominated will be ignored in determining whether the Class A Cap has been exceeded, except with respect to the principal amount of Class A Obligations made, issued, or advanced after the calculation of such fluctuation in exchange rate.

 

“Class A Claimholders” means, together, Class A Lenders, Class A Representative and the other holders of Class A Obligations.

 

“Class A Collateral” means all of the property of any Grantor, whether real, personal, or mixed, as to which a Lien is granted as security for a Class A Obligation.

 

“Class A Collateral Documents” means the security documents defined in the Class A Credit Agreement, and any other documents or instruments granting a Lien on real or personal property to secure a Class A Obligation or granting rights or remedies with respect to such Liens.

 

“Class A Credit Agreement” is defined in the Preamble.

 

“Class A Lenders” means any “Lender” under the Class A Credit Agreement.

 

3

 

“Class A Loan Documents” means:

 

(a)                                 the Class A Credit Agreement and the “Loan Documents” defined in the Class A Credit Agreement;

 

(b)                                 each other agreement, document, or instrument providing for, evidencing, guaranteeing, or securing an Obligation under the Class A Credit Agreement;

 

(c)                                  any other document or instrument executed or delivered at any time in connection with Borrower’s Obligations under the Class A Credit Agreement, including any guaranty of or grant of Collateral to secure such Obligations, and any intercreditor or joinder agreement to which holders of Class A Obligations are parties, to the extent effective at the relevant time; and

 

(d)                                 each other agreement, document, or instrument providing for, evidencing, guaranteeing, or securing any DIP Financing provided by or consented to in writing by Class A Lenders and deemed consented to by the Second Lien Purchasers pursuant to Section 7.1 to the extent effective at the relevant time; provided that any such documents or instruments to which any Class A Claimholder is a party in connection with a DIP Financing (other than a DIP Financing deemed consented to by Second Lien Purchasers pursuant to Section 7.1) will not be deemed Class A Loan Documents unless so designated in writing by Class A Lenders.

 

“Class A Obligations” means all Obligations of the Grantors under:

 

(a)                                 the Class A Credit Agreement and the other Class A Loan Documents;

 

(b)                                 the guaranties by the Guarantors of the Borrower’s Obligations under the Class A Loan Documents; or

 

(c)                                  any other agreement or instrument granting or providing for the perfection of a Lien securing any of the foregoing.

 

Notwithstanding any other provision hereof, the term “Class A Obligations” will include accrued interest, fees, costs, and other charges incurred under the Class A Credit Agreement and the other Class A Loan Documents, whether incurred before or after commencement of an Insolvency Proceeding, and whether or not allowable in an Insolvency Proceeding. To the extent that any payment with respect to the Class A Obligations (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of set-off, or otherwise) is declared to be fraudulent or preferential in any respect, set aside, or required to be paid to a debtor in possession, trustee, receiver, or similar Person, then the obligation or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding as if such payment had not occurred.

 

“Class A Representative” is defined in the Preamble.

 

“Class B Agent” is defined in the Preamble.

 

“Class B Cap” means the sum of:

 

4

 

(a)         the excess of:

 

(1)                                 the sum of (x) the aggregate principal amount of Class B Obligations up to, but not in excess of, $79,460,064.33, plus (y) the amount of interest thereon compounded and added to the principal thereof, over

 

(2)                                 principal payments applied to term loans that are Class B Obligations (other than payments in connection with a Refinancing); plus

 

(b)                                 amounts in respect of accrued, unpaid interest, fees, and premium (including, for the avoidance of doubt, the amount of the Prepayment Premium under, and as defined in the Class B Credit Agreement), in each case above accruing in respect of or attributable to, but only in respect of or attributable to, the aggregate principal amount of Class B Obligations (including the aggregate original principal amount of any term loan that is a Class B Obligation) at any one time not to exceed the amount referred to in clause (a);

 

provided that the Class B Cap shall not apply to any Class B Obligations other than Capped Class B Obligations.  Notwithstanding the foregoing, the Class B Cap shall not be deemed to have been breached as a result of the incurrence of any DIP Financing consented to by a First Lien Representative and deemed consented to by the Second Lien Collateral Agent pursuant to Section 7.1(a).

 

Any net increase in the aggregate principal amount of a loan (on a U.S. Dollar equivalent basis) after the loan is incurred that is caused by a fluctuation in the exchange rate of the currency in which the loan is denominated will be ignored in determining whether the Class B Cap has been exceeded, except with respect to the principal amount of Class B Obligations made, issued, or advanced after the calculation of such fluctuation in exchange rate.

 

“Class B Claimholders” means, together, Class B Agent and the holders of Class B Obligations.

 

“Class B Collateral” means all of the property of any Grantor, whether real, personal, or mixed, as to which a Lien is granted as security for a Class B Obligation.

 

“Class B Collateral Documents” means the security documents defined in the Class B Credit Agreement, and any other documents or instruments granting a Lien on real or personal property to secure a Class B Obligation or granting rights or remedies with respect to such Liens.

 

“Class B Credit Agreement” is defined in the Preamble.

 

“Class B Lenders” means any “Lender” under the Class B Credit Agreement.

 

“Class B Loan Documents” means:

 

(a)                                 the Class B Credit Agreement and the “Loan Documents” defined in the Class B Credit Agreement;

 

5

 

(b)                                 each other agreement, document, or instrument providing for, evidencing, guaranteeing, or securing an Obligation under the Class B Credit Agreement;

 

(c)                                  any other document or instrument executed or delivered at any time in connection with Borrower’s Obligations under the Class B Credit Agreement, including any guaranty of or grant of Collateral to secure such Obligations, and any intercreditor or joinder agreement to which holders of Class B Obligations are parties, to the extent effective at the relevant time; and

 

(d)                                 each other agreement, document, or instrument providing for, evidencing, guaranteeing, or securing any DIP Financing provided by or consented to in writing by Class B Lenders and deemed consented to by the Second Lien Purchasers pursuant to Section 7.1 to the extent effective at the relevant time; provided that any such documents or instruments to which any Class B Claimholder is a party in connection with a DIP Financing (other than a DIP Financing deemed consented to by Second Lien Purchasers pursuant to Section 7.1) will not be deemed Class B Loan Documents unless so designated in writing by Class B Lenders.

 

“Class B Obligations” means all Obligations of the Grantors under:

 

(a)                                 the Class B Credit Agreement and the other Class B Loan Documents;

 

(b)                                 the guaranties by the Guarantors of Borrower’s Obligations under the Class B Loan Documents; or

 

(c)                                  any other agreement or instrument granting or providing for the perfection of a Lien securing any of the foregoing.

 

Notwithstanding any other provision hereof, the term “Class B Obligations” will include accrued interest, fees, costs, and other charges incurred under the Class B Credit Agreement and the other Class B Loan Documents, whether incurred before or after commencement of an Insolvency Proceeding, and whether or not allowable in an Insolvency Proceeding.

 

“Class B Purchase Event” is defined in Section 6.1(b).

 

“Class B Standstill Period” is defined in Section 4.1(b)(2)(A).

 

“Collateral” means, subject to Section 2.3(c), all of the property of any Grantor, whether real, personal, or mixed, that is (or is required to be) Class A Collateral, Class B Collateral or Second Lien Collateral, including any property subject to Liens granted pursuant to Section 7 to secure Class A Obligations, Class B Obligations or Second Lien Obligations.

 

“Control Agent” is defined in the Preamble.

 

“Defaulting Creditor” is defined in Section 6.7(c).

 

“DIP Financing” means the obtaining of credit or incurring debt secured by Liens on the Collateral pursuant to Section 364 of the Bankruptcy Code (or similar Bankruptcy Law).

 

“Discharge of Class A Obligations” means:

 

6

 

(a)                                 payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of an Insolvency Proceeding, whether or not such interest would be allowed in the proceeding) on all outstanding Indebtedness included in the Class A Obligations;

 

(b)                                 payment in full in cash of all other Class A Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification Obligations for which no claim or demand for payment, whether oral or written, has been made at such time), and

 

(c)                                  termination or expiration of any commitments to extend credit that would be Class A Obligations.

 

“Discharge of Class B Obligations” means:

 

(a)                                 (i) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of an Insolvency Proceeding, whether or not such interest would be allowed in the proceeding) on all outstanding Indebtedness included in the Class B Obligations or (ii) conversion of all of the foregoing amounts into Conversion Property as defined in the Class B Credit Agreement; and

 

(b)                                 (i) payment in full in cash of all other Class B Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification Obligations for which no claim or demand for payment, whether oral or written, has been made at such time) or (ii) conversion of all of the foregoing amounts into Conversion Property as defined in the Class B Credit Agreement.

 

“Discharge of First Lien Obligations” means that each of the Discharge of Class A Obligations, and the Discharge of Class B Obligations, has occurred.

 

“Discharge of Ordinary First Lien Obligations” means that each of the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, and the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations, has occurred.

 

“Discharge of Second Lien Obligations” means:

 

(a)                                 (i) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of an Insolvency Proceeding, whether or not such interest would be allowed in the proceeding) on all outstanding Indebtedness included in the Second Lien Obligations or (ii) conversion of all of the foregoing amounts into Conversion Units as defined in the Second Lien Notes; and

 

(b)                                 (i) payment in full in cash of all other Second Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than indemnification Obligations for which no claim or demand for payment, whether oral or written, has been made at such time) or (ii) conversion of all of the foregoing amounts into Conversion Units as defined in the Second Lien Notes.

 

7

 

“Disposition” means an “Asset Sale” (as defined in the Class A Credit Agreement), or other sale, lease, exchange, transfer, or other disposition.

 

“Enforcement Action” means an action under applicable law:

 

(a)                                 to foreclose, execute, levy, or collect on, take possession or control of, sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under any First Lien Loan Document or the Second Lien Note Documents (including by way of set-off, recoupment notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable);

 

(b)                                 to solicit bids from third Persons to conduct the liquidation or disposition of Collateral or to engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of valuing, marketing, promoting, and selling Collateral;

 

(c)                                  to receive a transfer of Collateral in satisfaction of Indebtedness or any other Obligation secured thereby;

 

(d)                                 otherwise to enforce a security interest or exercise another right or remedy, as a secured creditor or otherwise, pertaining to the Collateral at law, in equity, or pursuant to any First Lien Loan Document or the Second Lien Note Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses, and exercising voting rights in respect of equity interests comprising Collateral);

 

(e)                                  to effect the Disposition of Collateral by any Grantor after the occurrence and during the continuation of an event of default under any First Lien Loan Document or the Second Lien Note Documents with the consent of the applicable First Lien Representative or Second Lien Collateral Agent, as applicable;

 

(f)                                   to commence, or join in filing of a petition for commencement of, an Insolvency Proceeding against the owner of Collateral.

 

“Equity Interest” means, for any Person, any and all shares, interests, participations, or other equivalents, including membership interests (however designated, whether voting or non-voting) of equity of the Person, including, if the Person is a partnership, partnership interests (whether general or limited) or any other interest or participation that confers on a holder the right to receive a share of the profits and losses of, or distributions of property of, such partnership, but not including debt securities convertible or exchangeable into equity.

 

“Excess Class A Obligations” means any Class A Obligations that are Capped Class A Obligations and that are in excess of the Class A Cap.

 

8

 

“Excess Class B Obligations” means any Class B Obligations that are Capped Class B Obligations and that are in excess of the Class B Cap.

 

“Excess First Lien Obligations” means, together, any Excess Class A Obligations and any Excess Class B Obligations.

 

“Excess Second Lien Obligations” means any Second Lien Obligations that are Capped Second Lien Obligations and that are in excess of the Second Lien Cap.

 

“First Lien Claimholders” means, together, Class A Claimholders and Class B Claimholders.

 

“First Lien Collateral” means, together, Class A Collateral and Class B Collateral.

 

“First Lien Collateral Documents” means, together, Class A Collateral Documents and Class B Collateral Documents.  The “applicable” First Lien Collateral Documents of any First Lien Claimholder shall be the Class A Collateral Documents, in the case of Class A Claimholders, and the Class B Collateral Documents, in the case of Class B Claimholders.

 

“First Lien Credit Agreement” means either Class A Credit Agreement or Class B Credit Agreement.

 

“First Lien Loan Documents” means, together, Class A Loan Documents and Class B Loan Documents.  The “applicable” First Lien Loan Documents of any First Lien Claimholder shall be the Class A Loan Documents, in the case of Class A Claimholders, and the Class B Loan Documents, in the case of Class B Claimholders.

 

“First Lien Obligations” means, together, Class A Obligations and Class B Obligations.  The “applicable” First Lien Obligations of any First Lien Claimholder shall be the Class A Obligations, in the case of Class A Claimholders, and the Class B Obligations, in the case of Class B Claimholders.

 

“First Lien Representative” means, subject to Section 4.1(b), either Class A Representative or Class B Agent.

 

“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state, province or municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to government, including without limitation Regulatory Authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law-, rule- or regulation-making organizations or entities of any State, territory, county, city or other political subdivision of the United States.

 

“Grantor” means each of Borrower, each Guarantor, and each other Person that executes and delivers a Class A Collateral Document, Class B Collateral Document or a Second Lien Collateral Document as a “grantor” or “pledgor” (or the equivalent).

 

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“Guarantors” is defined in the Preamble.

 

“Holdings” is defined in the Preamble.

 

“Indebtedness” means and includes all Obligations that constitute “Indebtedness” under the Class A Credit Agreement or the Class B Credit Agreement, or “Obligations” under the Second Lien Notes, as applicable.

 

“Insolvency Proceeding” means (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.

 

“Lien” means any mortgage, lien, pledge, charge or other security interest, or any lease, title retention agreement, mortgage, restriction, easement, right-of-way, option or adverse claim (of ownership or possession) or other encumbrance of any kind or character whatsoever or any preferential arrangement that has the practical effect of creating a security interest.

 

“Modify”, as applied to any document or obligation, includes:

 

(a)                                 any modification by amendment, supplement, termination, or replacement of the document or obligation;

 

(b)                                 any waiver of a provision (including waivers by course of conduct); and

 

(c)                                  the settlement or release of any claim;

 

whether oral or written, and regardless of whether the modification is in conformity with the provisions of the document or obligation governing modifications.

 

“New Agent” is defined in Section 5.4.

 

“Obligations” means all obligations of every nature of a Person owed to any obligee under an agreement, whether for principal, interest, acceleration or prepayment premium or penalties or payments for early termination, fees, expenses, indemnification, or otherwise, and all guaranties of any of the foregoing, whether absolute or contingent, due or to become due, now existing or hereafter arising, and including interest and fees that accrue after the commencement by or against any Person of any proceeding under any Bankruptcy Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

“Ordinary Class A Obligations” means, together, the Capped Class A Obligations (up to the Class A Cap) and all Uncapped Class A Obligations.

 

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“Ordinary Class B Obligations” means, together, the Capped Class B Obligations (up to the Class B Cap) and all Uncapped Class B Obligations.

 

“Ordinary First Lien Obligations” means, together, the Ordinary Class A Obligations and the Ordinary Class B Obligations.

 

“Ordinary Second Lien Obligations” means, together, the Capped Second Lien Obligations (up to the Second Lien Cap) and all Uncapped Second Lien Obligations.

 

“Party” means a party to this Agreement.

 

“Perceptive” is defined in the Preamble.

 

“Person” means any natural person, corporation, limited liability company, trust, business trust, joint venture, association, company, partnership, Governmental Authority, or other entity.

 

“Pledged Collateral” is defined in Section 2.4(a).

 

“Post-Petition Claims” means interest, fees, costs, expenses, and other charges that pursuant to the Class A Credit Agreement, the Class B Credit Agreement or the Second Lien Notes continue to accrue after the commencement of an Insolvency Proceeding, to the extent such interest, fees, expenses, and other charges are allowed or allowable under Bankruptcy Law or in the Insolvency Proceeding.

 

“Proceeds” means:

 

(a)                                 all “proceeds,” as defined in Article 9 of the UCC, of the Collateral; and

 

(b)                                 whatever is recovered when Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily, including any additional or replacement Collateral provided during any Insolvency Proceeding and any payment or property received in an Insolvency Proceeding on account of any “secured claim” (within the meaning of Section 506(b) of the Bankruptcy Code or similar Bankruptcy Law).

 

“Purchase Date” is defined in Section 6.2(a)(5).

 

“Purchase Event” is defined in Section 6.1(b).

 

“Purchase Notice” is defined in Section 6.2(a).

 

“Purchase Price” is defined in Section 6.3.

 

“Purchased Credit Agreement” means, (i) in the case of the purchase of Ordinary Class A Obligations by Second Lien Claimholders pursuant to Section 6.1(a) or by Class B Claimholders pursuant to Section 6.1(b), the Class A Credit Agreement, and (ii) in the case of the purchase of Ordinary Class B Obligations by Second Lien Claimholders pursuant to Section 6.1(a), the Class B Credit Agreement.

 

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“Purchased Loan Documents” means, (i) in the case of the purchase of Ordinary Class A Obligations by Second Lien Claimholders pursuant to Section 6.1(a) or by Class B Claimholders pursuant to Section 6.1(b), the Class A Loan Documents, and (ii) in the case of the purchase of Ordinary Class B Obligations by Second Lien Claimholders pursuant to Section 6.1(a), the Class B Loan Documents.

 

“Purchased Obligations” means (i) in the case of the purchase of Ordinary Class A Obligations by Second Lien Claimholders pursuant to Section 6.1(a) or by Class B Claimholders pursuant to Section 6.1(b), the Ordinary Class A Obligations, and (ii) in the case of the purchase of the Ordinary Class B Obligations by Second Lien Claimholders pursuant to Section 6.1(a), the Ordinary Class B Obligations.

 

“Purchasing Creditors” means, (i) in the case of the purchase of Ordinary Class A Obligations or Ordinary Class B Obligations by Second Lien Claimholders pursuant to Section 6.1(a), the Second Lien Claimholders, and (ii) in the case of the purchase of Ordinary Class A Obligations by Class B Claimholders pursuant to Section 6.1(b), the Class B Claimholders.

 

“Recovery” is defined in Section 7.6.

 

“Refinance” means, for any Indebtedness, to refinance, replace, refund, or repay, or to issue other Indebtedness in exchange or replacement for such Indebtedness in whole or in part, whether with the same or different lenders, agents, or arrangers. “Refinanced” and “Refinancing” have correlative meanings.

 

“Second Lien Adequate Protection Payments” is defined in Section 7.4(b)(4).

 

“Second Lien Cap” means the excess of:

 

(a)                                 the sum of (x) the aggregate principal amount of Second Lien Obligations up to, but not in excess of, $149,500,000, plus (y) the amount of interest thereon compounded and added to the principal thereof, over

 

(b)                                 the aggregate amount of principal payments under the Second Lien Notes (other than payments in connection with a Refinancing);

 

provided that the Second Lien Cap shall not apply to any Second Lien Obligations other than Capped Second Lien Obligations.  Notwithstanding the foregoing, the Second Lien Cap shall not be deemed to have been breached as a result of the incurrence of any DIP Financing provided by a Second Lien Claimholder as permitted under Section 7.1(c).

 

Any net increase in the aggregate principal amount of a loan (on a U.S. Dollar equivalent basis) after the loan is incurred that is caused by a fluctuation in the exchange rate of the currency in which the loan is denominated will be ignored in determining whether the Second Lien Cap has been exceeded, except with respect to the principal amount of Second Lien Obligations made, issued, or advanced after the calculation of such fluctuation in exchange rate.

 

“Second Lien Claimholders” means, together, Second Lien Collateral Agent and the other holders of Second Lien Obligations.

 

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“Second Lien Collateral” means all of the property of any Grantor, whether real, personal, or mixed, as to which a Lien is granted as security for a Second Lien Obligation.

 

“Second Lien Collateral Agent” is defined in the Preamble.

 

“Second Lien Collateral Documents” means the security documents defined in the Second Lien Notes, and any other documents or instruments granting a Lien on real or personal property to secure a Second Lien Obligation or granting rights or remedies with respect to such Liens.

 

“Second Lien Note Documents” means:

 

(a)                                 the Note Purchase Agreement, dated as of the date hereof, among Borrower, the Guarantors and investors named on the signature pages thereto and the “Securities Documents” defined in the form of Note attached thereto as Exhibit A;

 

(b)                                 the Agency Agreement, dated as of the date hereof, among Second Lien Collateral Agent, Borrower, the Guarantors, the parties designated as the holders on the signature pages thereto or who become holders after the date thereof by executing a joinder thereto;

 

(c)                                  each other agreement, document, or instrument providing for, evidencing, guaranteeing, or securing an Obligation under the Second Lien Notes; and

 

(d)                                 any other document or instrument executed or delivered at any time in connection with Borrower’s Obligations under the Second Lien Notes, including any guaranty of or grant of Collateral to secure such Obligations, and any intercreditor or joinder agreement to which holders of Second Lien Obligations are parties, to the extent effective at the relevant time.

 

“Second Lien Notes” is defined in the Preamble.

 

“Second Lien Obligations” means all Obligations of the Grantors under:

 

(a)                                 the Second Lien Notes and the other Second Lien Note Documents;

 

(b)                                 the guaranties by the Guarantors of Borrower’s Obligations under the Second Lien Note Documents; or

 

(c)                                  any other agreement or instrument granting or providing for the perfection of a Lien securing any of the foregoing.

 

Notwithstanding any other provision hereof, the term “Second Lien Obligations” will include accrued interest, fees, costs, and other charges incurred under the Second Lien Notes and the other Second Lien Note Documents, whether incurred before or after commencement of an Insolvency Proceeding, and whether or not allowable in an Insolvency Proceeding.

 

“Second Lien Purchase Event” is defined in Section 6.1(a).

 

“Second Lien Purchasers” is defined in the Preamble.

 

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“Second Lien Standstill Period” is defined in Section 4.1(a)(2)(A).

 

“Selling Claimholders” means, (i) in the case of the purchase of Ordinary Class A Obligations by Second Lien Claimholders pursuant to Section 6.1(a) or by Class B Claimholders pursuant to Section 6.1(b), the Class A Claimholders, and (ii) in the case of the purchase of Ordinary Class B Obligations by Second Lien Claimholders pursuant to Section 6.1(a), the Class B Claimholders.

 

“Subordinated Debt Payment” means any payment or distribution by or on behalf of any Grantor, directly or indirectly, of assets or Equity Interests of such Grantor of any kind or character, whether in cash, property or securities, including on account of the purchase, redemption or other acquisition of Second Lien Obligations, or by setoff, exchange or in any other manner, for or on account of the Second Lien Obligations.

 

“Subsidiary” of a Person means a corporation or other entity a majority of whose voting stock is directly or indirectly owned or controlled by the Person. For these purposes, “voting stock” of a Person means securities or other ownership interests of the Person having general power under ordinary circumstances to vote in the election of the directors, or other persons performing similar functions, of the Person. References to a percentage or proportion of voting stock refer to the relevant percentage or proportion of the votes entitled to be cast by the voting stock.

 

“UCC” means the Uniform Commercial Code (or any similar legislation) as in effect in any applicable jurisdiction.

 

“Uncapped Class A Obligations” means Class A Obligations that are not Capped Class A Obligations.

 

“Uncapped Class B Obligations” means Class B Obligations that are not Capped Class B Obligations.

 

“Uncapped First Lien Obligations” means, together, Uncapped Class A Obligations and Uncapped Class B Obligations.

 

“Uncapped Second Lien Obligations” means Second Lien Obligations that are not Capped Second Lien Obligations.

 

1.2                               USAGES

 

Unless otherwise stated or the context clearly requires otherwise:

 

(a)                                 Agents. (1) References to Class A Representative will refer to Class A Representative acting on behalf of itself and on behalf of all of the other applicable Class A Claimholders. Actions taken by Class A Representative pursuant to this Agreement are meant to be taken on behalf of itself and the other applicable Class A Claimholders.

 

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(2)                                 References to Class B Agent will refer to Class B Agent acting on behalf of itself and on behalf of all of the other applicable Class B Claimholders. Actions taken by Class B Agent pursuant to this Agreement are meant to be taken on behalf of itself and the other applicable Class B Claimholders.

 

(3)                                 References to Second Lien Collateral Agent will refer to Second Lien Collateral Agent acting on behalf of itself and on behalf of all of the other applicable Second Lien Claimholders. Actions taken by Second Lien Collateral Agent pursuant to this Agreement are meant to be taken on behalf of itself and the other applicable Second Lien Claimholders.

 

(b)                                 Singular and plural. Definitions of terms apply equally to the singular and plural forms.

 

(c)                                  Masculine and feminine. Pronouns will include the corresponding masculine, feminine, and neuter forms.

 

(d)                                 Will and shall. “Will” shall be deemed to have the same meaning as “shall”.

 

(e)                                  Time periods. In computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until,” and “ending on” (and the like) mean “to but excluding.”

 

(f)                                   When action may be taken. Any action permitted under this Agreement may be taken at any time and from time to time.

 

(g)                                  Time of day. All indications of time of day mean New York City time.

 

(h)                                 Including. “Including” means “including, but not limited to.”

 

(i)                                     Or. “A or B” means “A or B or both.”

 

(j)                                    Statutes and regulations. References to a statute refer to the statute and all regulations promulgated under or implementing the statute as in effect at the relevant time. References to a specific provision of a statute or regulation include successor provisions. References to a Section of the Bankruptcy Code also refer to any similar provision of Bankruptcy Law.

 

(k)                                 Agreements. References to an agreement (including this Agreement) refer to the agreement as amended at the relevant time.

 

(l)                                     Governmental agencies and self-regulatory organizations. References to a governmental or quasi-governmental agency or authority or a self-regulatory organization include any successor agency, authority, or self-regulatory organization.

 

(m)                             Section references. Section references refer to Sections of this Agreement. References to numbered Sections refer to all included Sections. For example, a

 

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reference to Section 7 also refers to Sections 7.1, 7.1(a), etc. References to a Section or article in an agreement, statute, or regulation include successor and renumbered Sections and articles of that or any successor agreement, statute, or regulation.

 

(n)                                 Successors and assigns. References to a Person include the Person’s permitted successors and assigns.

 

(o)                                 Herein, etc. “Herein,” “hereof,” “hereunder,” and words of similar import refer to this Agreement in its entirety and not to any particular provision.

 

(p)                                 Assets and property. “Asset” and “property” have the same meaning and refer to both real and personal, tangible and intangible assets and property, including cash, securities, accounts, and general intangibles.

 

2.                                      LIEN PRIORITIES

 

2.1                               SENIORITY OF LIENS SECURING FIRST LIEN OBLIGATIONS

 

(a)                                 A Lien on Collateral securing any Class A Obligation will at all times be pari passu and of equal rank with a Lien on such Collateral securing any Class B Obligation.

 

(b)                                 A Lien on Collateral securing any Uncapped First Lien Obligation will at all times be senior and prior in all respects to a Lien on such Collateral securing any Second Lien Obligation.  A Lien on Collateral securing any Second Lien Obligation will at all times be junior and subordinate in all respects to a Lien on such Collateral securing any Uncapped First Lien Obligation.

 

(c)                                  A Lien on Collateral securing (x) any Capped Class A Obligation, up to but not in excess of the Class A Cap, or (y) any Capped Class B Obligation, up to but not in excess of the Class B Cap, will, in each case, at all times be senior and prior in all respects to a Lien on such Collateral securing any Second Lien Obligation.  A Lien on Collateral securing any Second Lien Obligation will at all times be junior and subordinate in all respects to a Lien on such Collateral securing (x) any Capped Class A Obligation, up to but not in excess of the Class A Cap, or (y) any Capped Class B Obligation, up to but not in excess of the Class B Cap.

 

(d)                                 The Lien on Collateral securing any Excess Class A Obligation or Excess Class B Obligation will have the priority set forth in Section 2.9.

 

(e)                                  Except as otherwise expressly provided herein, the priority of the Liens securing First Lien Obligations and the rights and obligations of the Parties will remain in full force and effect irrespective of:

 

(1)                                 how a Lien was acquired (whether by grant, possession, statute, operation of law, subrogation, or otherwise);

 

(2)                                 the time, manner, or order of the grant, attachment, or perfection of a Lien;

 

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(3)                                 any conflicting provision of the UCC or other applicable law;

 

(4)                                 any defect in, or non-perfection, setting aside, or avoidance of, a Lien or a First Lien Loan Document or a Second Lien Note Document;

 

(5)                                 the modification of a First Lien Obligation or a Second Lien Obligation;

 

(6)                                 the modification of a First Lien Loan Document or a Second Lien Note Document;

 

(7)                                 the subordination of a Lien on Collateral securing a First Lien Obligation to a Lien securing another obligation of a Grantor or other Person that is permitted under the First Lien Loan Documents as in effect on the date hereof or secures a DIP Financing deemed consented to by the Second Lien Claimholders pursuant to Section 7.1;

 

(8)                                 the exchange of a security interest in any Collateral for a security interest in other Collateral;

 

(9)                                 the commencement of an Insolvency Proceeding; or

 

(10)                          any other circumstance whatsoever, including a circumstance that might be a defense available to, or a discharge of, a Grantor in respect of a First Lien Obligation or a Second Lien Obligation or holder of such Obligation.

 

2.2                               PAYMENT SUBORDINATION

 

(a)                                 Notwithstanding anything to the contrary in the Second Lien Note Documents, and subject to Sections 2.2(b) and (c), until the Discharge of First Lien Obligations, no Grantor shall make, directly or indirectly, and no Second Lien Claimholder shall accept, any Subordinated Debt Payment, other than (1) payments of interest on the Second Lien Obligations paid in kind and not in cash, (2) reimbursement of out-of-pocket costs and expenses required to be paid by any Grantor under the Second Lien Note Documents, in each case in accordance with the terms of the Second Lien Note Documents and (3) payments of closing fees and expenses in connection with the issuance of the Second Lien Notes (the foregoing permitted payments on the Second Lien Obligations the “Permitted Subordinated Debt Payments”).

 

(b)                                 Upon the occurrence of any “event of default” or similar event under any Class A Loan Document or Class B Loan Document (any such event under any such documents, a “First Lien Default”), and until such event is cured or waived in accordance with the terms of the Class A Loan Documents or Class B Loan Documents (as applicable), no Grantor shall make, and the Second Lien Claimholders shall not accept, any Subordinated Debt Payment.  Upon such cure or waiver, the Grantors may make any Permitted Subordinated Debt Payments missed due to the application of this Section 2.2(b), the Second Lien Claimholders may receive any such Permitted Subordinated Debt Payments, and the Grantors may resume Permitted Subordinated Debt Payments under Section 2.2(a).

 

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(c)                                  No First Lien Default shall be deemed to have been waived or cured for purposes of this Section 2.2 unless and until the Borrower shall have received a written waiver or confirmation of cure from Class A Representative or Class B Agent, as applicable.

 

(d)                                 Until the Discharge of the First Lien Obligations has occurred, whether or not an Insolvency Proceeding has commenced, any payments received by the Second Lien Collateral Agent or other Second Lien Claimholders in contravention of this Section 2.2 will be:

 

(1)                                 segregated and held in trust; and

 

(2)                                 promptly paid over to a First Lien Representative, with any necessary endorsements, to be applied in accordance with this Agreement until the Discharge of First Lien Obligations has occurred.

 

2.3                               FIRST AND SECOND LIEN COLLATERAL TO BE IDENTICAL

 

(a)                                 The Parties intend that the First Lien Collateral and the Second Lien Collateral be identical.  Accordingly, subject to the other provisions of this Agreement, the Parties will cooperate:

 

(1)                                 to determine the specific items included in the First Lien Collateral and the Second Lien Collateral, the steps taken to perfect the Liens thereon, and the identity of the Persons having First Lien Obligations or Second Lien Obligations; and

 

(2)                                 to make the forms, documents, and agreements creating or evidencing the First Lien Collateral and Second Lien Collateral and the guaranties of the First Lien Obligations and the Second Lien Obligations materially the same, other than with respect to the first and second lien nature of the Liens.

 

(b)                                 Until the Discharge of First Lien Obligations, and whether or not an Insolvency Proceeding has commenced, each Grantor agrees that it will not grant, and will use its best efforts to prevent any other Person from granting, a Lien on any property:

 

(1)                                 in favor of a First Lien Claimholder to secure any First Lien Obligations unless each Grantor or such other Person grants (or offers to grant with a reasonable opportunity for the Lien to be accepted) (x) to the First Lien Representative of the other class, a pari passu Lien to secure all other First Lien Obligations, if any, and (y) to Second Lien Collateral Agent a junior Lien on such property to secure the Second Lien Obligations (however, the refusal of a First Lien Representative or Second Lien Collateral Agent to accept such Lien will not prevent a First Lien Claimholder from taking the Lien); and

 

(2)                                 in favor of a Second Lien Claimholder to secure a Second Lien Obligation unless each Grantor or such other Person grants (or offers to grant with a reasonable opportunity for the Lien to be accepted) each First Lien Representative a senior Lien on such property to secure the applicable First Lien Obligations (however, the refusal of a First Lien Representative to accept such Lien will not prevent the Second Lien Claimholder from taking the Lien).

 

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(c)                                  Subject to Section 2.1, if a Second Lien Claimholder hereafter acquires a Lien on property to secure a Second Lien Obligation where the property is not also subject to Liens securing the First Lien Obligations, then such Second Lien Claimholder will give each First Lien Representative written notice of such Lien no later than five Business Days after acquiring such Lien. If First Lien Representatives also obtain Liens on such property, or if such Second Lien Claimholder fails to provide such timely notice to any First Lien Representative, then such property will be deemed to be Collateral for all purposes hereunder.

 

2.4                               PLEDGED COLLATERAL

 

(a)                                 If a First Lien Representative has any Collateral in its possession or control (such Collateral being the “Pledged Collateral”), then, subject to Section 2.1 and the other provisions of this Section 2.4, such First Lien Representative will possess or control the Pledged Collateral as gratuitous bailee and/or gratuitous agent for perfection for the benefit of the other First Lien Representative and Second Lien Collateral Agent as secured party, so as to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2), and 9-313(c) of the UCC.  In this Section 2.4, “control” has the meaning given that term in Sections 8-106 and 9-314 of the UCC.

 

(b)                                 A First Lien Representative will have no obligation to any other First Lien Claimholder or Second Lien Claimholder to ensure that any Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.4.  The duties or responsibilities of First Lien Representatives under this Section 2.4 will be limited solely to possessing or controlling the Pledged Collateral as bailee and/or agent for perfection in accordance with this Section 2.4 and delivering the Pledged Collateral upon a Discharge of Class A Obligations to the extent of Ordinary Class A Obligations or Discharge of Class B Obligations to the extent of Ordinary Class B Obligations (as applicable), as provided in Section 2.4(d) or (h) (as applicable).

 

(c)                                  Second Lien Collateral Agent hereby waives and releases each First Lien Representative from all claims and liabilities arising out of such First Lien Representative’s role under this Section 2.4 as bailee and/or agent with respect to the Pledged Collateral, except for claims arising by reason of such First Lien Representative’s gross negligence or willful misconduct.

 

(d)                                 Upon the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, Class A Representative agrees that it will deliver or transfer control of any Pledged Collateral in its possession or control, together with any necessary endorsements (which endorsements will be without recourse and without any representation or warranty):

 

(1)                                 first, to Class B Agent if the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations has not occurred;

 

(2)                                 second, to Second Lien Collateral Agent if the Discharge of Second Lien Obligations to the extent of Ordinary Second Lien Obligations has not occurred; and

 

(3)                                 third, to Borrower;

 

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and will take any other action reasonably requested by the Class B Agent or, if no Ordinary Class B Obligations remain outstanding, Second Lien Collateral Agent (at the expense of Borrower or, upon default by Borrower in payment or reimbursement thereof, Class B Agent or Second Lien Collateral Agent, as applicable), in connection with such Person obtaining a first-priority, or second-priority, as applicable, interest in the Pledged Collateral.

 

(e)                                  If Second Lien Collateral Agent has any Pledged Collateral in its possession or control, then, subject to Section 2.1 and the other provisions of this Section 2.4, Second Lien Collateral Agent agrees that it will possess or control the Pledged Collateral as gratuitous bailee and/or gratuitous agent for perfection for the benefit of First Lien Representatives as secured party, so as to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2), and 9-313(c) of the UCC.

 

(f)                                   Second Lien Collateral Agent will have no obligation to any First Lien Representative to ensure that any Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.4.  The duties or responsibilities of Second Lien Collateral Agent under this Section 2.4 will be limited solely to possessing or controlling the Pledged Collateral as bailee and/or agent for perfection in accordance with this Section 2.4 and delivering the Pledged Collateral upon a Discharge of Second Lien Obligations to the extent of Ordinary Second Lien Obligations, as provided in Section 2.4(i).

 

(g)                                  Each First Lien Representative hereby waives and releases Second Lien Collateral Agent from all claims and liabilities arising out of Second Lien Collateral Agent’s role under this Section 2.4 as bailee and/or agent for perfection with respect to the Pledged Collateral, except for claims arising by reason of Second Lien Collateral Agent’s gross negligence or willful misconduct.

 

(h)                                 Upon the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations, Class B Agent agrees that it will deliver or transfer control of any Pledged Collateral in its possession or control, together with any necessary endorsements (which endorsements will be without recourse and without any representation or warranty);

 

(1)                                 first, to Class A Representative if the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations has not occurred;

 

(2)                                 second, to Second Lien Collateral Agent if the Discharge of Second Lien Obligations to the extent of Ordinary Second Lien Obligations has not occurred; and

 

(3)                                 third, to Borrower;

 

and will take any other action reasonably requested by Class A Representative or, if no Ordinary Class A Obligations remain outstanding, Second Lien Collateral Agent (in each case, at the expense of the Borrower or, upon default by the Borrower in payment or reimbursement thereof, Class A Representative or Second Lien Collateral Agent, as applicable), in connection with such Person obtaining a first-priority, or second-priority, as applicable, interest in the Pledged Collateral.

 

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(i)                                     Upon the Discharge of Second Lien Obligations to the extent of Ordinary Second Lien Obligations, Second Lien Collateral Agent agrees that it will deliver or transfer control of any Pledged Collateral in its possession or control, together with any necessary endorsements (which endorsements will be without recourse and without any representation or warranty);

 

(1)                                 first, to Class A Representative if the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations has not occurred;

 

(2)                                 second, to Class B Agent if the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations has not occurred; and

 

(3)                                 third, to Borrower;

 

and will take any other action reasonably requested by Class A Representative or, if no Ordinary Class A Obligations remain outstanding, Class B Agent (in each case, at the expense of the Borrower or, upon default by the Borrower in payment or reimbursement thereof, Class A Representative or Class B Agent, as applicable), in connection with such Person obtaining a first-priority interest in the Pledged Collateral.

 

2.5                               LIMITATIONS ON DUTIES AND OBLIGATIONS

 

(a)                                 (1) First Lien Representatives will be solely responsible for perfecting and maintaining the perfection of their Liens on their First Lien Collateral, and (2) except for First Lien Representatives’ obligations under Section 2.4, Second Lien Collateral Agent will be solely responsible for perfecting and maintaining the perfection of its Liens on the Second Lien Collateral.

 

(b)                                 This Agreement does not impose on any First Lien Representative or Second Lien Collateral Agent any obligations in respect of the disposition of Proceeds of foreclosure on any Collateral that would conflict with a prior perfected claim in favor of another Person, an order or decree of a court or other Governmental Authority, or applicable law.

 

(c)                                  Except for obligations expressly provided for herein, the Control Agent and First Lien Claimholders will have no liability to any other First Lien Claimholder or Second Lien Claimholder for any action by a First Lien Claimholder with respect to any First Lien Obligations or Collateral, including:

 

(1)                                 the maintenance, preservation, or collection of any First Lien Obligations or any Collateral; and

 

(2)                                 the foreclosure upon, or the sale, liquidation, maintenance, preservation, or other disposition of, any Collateral.

 

(d)                                 No First Lien Representative will have, by reason of this Agreement or any other document, a fiduciary duty to any other First Lien Representative, any First Lien Claimholder, the Second Lien Collateral Agent or any Second Lien Claimholder.

 

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(e)                                  No First Lien Representative will have by reason of this Agreement or any other document a fiduciary relationship with any other First Lien Representative or Second Lien Collateral Agent. The parties recognize that the interests of each First Lien Representative and Second Lien Collateral Agent may differ, and each First Lien Representative may act in its own interest without taking into account the interests of any Second Lien Claimholder.

 

2.6                               PROHIBITION ON CONTESTING LIENS; NO MARSHALING

 

(a)                                 Each First Lien Representative agrees that it will not contest in any proceeding (including an Insolvency Proceeding) the validity, enforceability, perfection, or priority of any Lien securing another First Lien Obligation or a Second Lien Obligation, but nothing in this Section 2.6 will impair the rights of any First Lien Claimholder to enforce this Agreement, including the priority of the Liens securing the First Lien Obligations or the provisions for exercise of remedies.

 

(b)                                 Second Lien Collateral Agent agrees that it will not contest in any proceeding (including an Insolvency Proceeding) the validity, enforceability, perfection, or priority of (i) any Lien securing (x) any Capped Class A Obligation, up to but not in excess of the Class A Cap, or (y) any Capped Class B Obligation, up to but not in excess of the Class B Cap, or (ii) any Lien securing any Uncapped First Lien Obligations, but nothing in this Section 2.6 will impair the rights of any Second Lien Claimholder to enforce this Agreement, including the priority of the Liens securing the Second Lien Obligations or the provisions for exercise of remedies.

 

(c)                                  Until the Discharge of First Lien Obligations, Second Lien Collateral Agent agrees that it will not assert any marshaling, appraisal, valuation, or other similar right that may otherwise be available to a junior secured creditor.

 

2.7                               CONFIRMATION OF SUBORDINATION IN SECOND LIEN COLLATERAL DOCUMENTS

 

Borrower will cause each Second Lien Collateral Document to include the following language (or language to similar effect approved by First Lien Representatives) and any other language a First Lien Representative reasonably requests to reflect the subordination of the Lien:

 

“Notwithstanding anything herein to the contrary, the Lien and security interest granted to Second Lien Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by Second Lien Collateral Agent hereunder are subject to the provisions of the Intercreditor Agreement, dated August 28, 2015 (as amended, restated, supplemented, or otherwise modified from time to time, the “Intercreditor Agreement”), among PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, as Class A Representative, MACQUARIE US TRADING LLC, as Class B Agent, Cortland Capital Market Services LLC, as Second Lien Collateral Agent, PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, as Control Agent, and the Grantors (as defined therein) from time to time party thereto and other

 

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persons party or that may become party thereto from time to time. If there is a conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement will control.”

 

2.8                               RELEASE OF LIENS OR GUARANTIES

 

(a)                                 If any First Lien Representative releases a Lien on Collateral, or releases a Grantor from its Obligations under its guaranty of any First Lien Obligations which guaranty is secured by a Lien on Collateral, in connection with:

 

(1)                                 an Enforcement Action; or

 

(2)                                 a Disposition of any Collateral under any First Lien Loan Document other than pursuant to an Enforcement Action (whether or not there is an event of default under any First Lien Loan Document);

 

then any Lien of Second Lien Collateral Agent on such Collateral, and the Obligations of the Grantor under such guaranty of the Second Lien Obligations, will be, except as otherwise provided below, automatically and simultaneously released to the same extent, and Second Lien Collateral Agent agrees that it will promptly execute and deliver to First Lien Representatives or the Grantor such termination statements, releases, and other documents as a First Lien Representative or the Grantor requests to effectively confirm the release.

 

(b)                                 Second Lien Collateral Agent hereby appoints each First Lien Representative and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the place and stead of Second Lien Collateral Agent or in such First Lien Representative’s own name, in such First Lien Representative’s discretion to take any action and to execute any and all documents and instruments that may be reasonable and appropriate for the limited purpose of carrying out the terms of this Section 2.8, including any endorsements or other instruments of transfer or release. This appointment is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations or such time as this Agreement is terminated in accordance with its terms.  Until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, the foregoing power of attorney shall be exercisable only by Class A Representative and Class B Agent agrees that, notwithstanding the foregoing, Class B Agent will not exercise any such rights until Discharge of Class A Obligations to the extent of Ordinary Class A Obligations.

 

(c)                                  Until the Discharge of First Lien Obligations, to the extent that a First Lien Representative:

 

(1)                                 releases a Lien on Collateral or a Grantor from its Obligations under its guaranty, which Lien or guaranty is reinstated; or

 

(2)                                 obtains a new Lien or additional guaranty from a Grantor;

 

then the First Lien Representative of the other class and Second Lien Collateral Agent will be granted a Lien on such Collateral and an additional guaranty, as the case may be, subject to Section 2.1.

 

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2.9                               SUBORDINATION OF LIENS SECURING EXCESS CLASS A OBLIGATIONS OR EXCESS CLASS B OBLIGATIONS

 

(a)                                 All Liens securing Second Lien Obligations up to but not exceeding the Second Lien Cap,  will be senior in all respects and prior to any Lien on the Collateral securing any Excess Class A Obligations or Excess Class B Obligations (in each case, only with respect to such excess amounts).  All Liens securing any Excess Class A Obligations or Excess Class B Obligations will be junior and subordinate in all respects to any Lien securing a Second Lien Obligation up to but not exceeding the Second Lien Cap.

 

(b)                                 All Liens securing Excess Class A Obligations or Excess Class B Obligations will be senior in all respects and prior to any Lien on the Collateral securing any Excess Second Lien Obligations.  All Liens securing any Excess Second Lien Obligations will be junior and subordinate in all respects and prior to any Lien securing Excess Class A Obligations or Excess Class B Obligations.

 

(c)                                  Nothing in this Section 2.9 will waive any default or event of default under the Second Lien Note Documents resulting from:

 

(1)                                 the incurrence of Excess First Lien Obligations; or

 

(2)                                 the grant of Liens under any First Lien Collateral Documents securing any such excess amounts;

 

or the right of Second Lien Claimholders to exercise any rights and remedies under the Second Lien Note Documents as a result thereof.

 

3.                                      MODIFICATION OF OBLIGATIONS

 

3.1                               PERMITTED MODIFICATIONS

 

Except as otherwise expressly provided in this Section 3:

 

(a)                                 the First Lien Obligations may be modified in accordance with their terms, and their aggregate amount increased or Refinanced, without notice to or consent by any Second Lien Claimholder; provided that the holders of any Refinancing Indebtedness (or their agent) bind themselves in a writing addressed to Second Lien Claimholders to the terms of this Agreement; and

 

(b)                                 the Second Lien Obligations may be modified in accordance with their terms, and their aggregate amount increased or Refinanced, without notice to or consent by any First Lien Claimholder; provided that the holders of any Refinancing Indebtedness (or their agent) bind themselves in a writing addressed to First Lien Claimholders to the terms of this Agreement.

 

However, no such modification may contravene the provisions of this Agreement, including without limitation Section 2.1, 2.2 or 2.6.

 

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3.2                               MODIFICATIONS REQUIRING CONSENT

 

Notwithstanding the preceding Section 3.1 and except as otherwise permitted as DIP Financing provided by a Class A Lender or Class B Lender and deemed consented to by the Second Lien Purchasers pursuant to Section 7.1, in the case of (x) any Modification to or Refinancing of any First Lien Obligations, both First Lien Representative of the other class and Second Lien Collateral Agent must consent thereto, and (y) any Modification to or Refinancing of any Second Lien Obligations, First Lien Representatives must consent thereto, in each case, if such Modification or refinancing:

 

(a)                                 increases the aggregate principal amount of loans, letters of credit, bankers acceptances, bonds, debentures, notes, or similar instruments or other similar extensions of credit, beyond:

 

(1)                                 for the Class A Obligations, the Class A Cap;

 

(2)                                 for the Class B Obligations, the Class B Cap; or

 

(3)                                 for the Second Lien Obligations, the Second Lien Cap;

 

(b)                                 increases:

 

(1)                                 the interest rate or yield, including by increasing the “applicable margin” or similar component of the interest rate (including to provide for additional compounded or PIK interest), through original issue discount or by modifying the method of computing interest; or

 

(2)                                 a letter of credit, commitment, facility, utilization, upfront, waiver, consent or similar fee so that the combined interest rate and fees are increased by more than 2% per annum in the aggregate at any level of pricing, but excluding increases resulting from:

 

(A)                               increases in an underlying reference rate not caused by a Modification or Refinancing of such Obligations;

 

(B)                               accrual of interest at the “default rate” set forth in the loan documents as of the date hereof or, for a Refinancing, a rate that corresponds to the default rate (but not in excess of any such default rate in effect as of the date hereof); or

 

(C)                               application of a pricing grid set forth in the loan documents at the date hereof;

 

(c)                                  for the Second Lien Obligations:

 

(1)                                 modifies covenants, defaults, or events of default to make them materially more restrictive as to any Grantor, except for modifications to match changes made to any First Lien Obligations so as to preserve, on substantially similar economic terms, any differential that exists on the date hereof between the covenants, defaults, or events of default in

 

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any First Lien Loan Document and the covenants, defaults, or events of default in the Second Lien Note Document;

 

(2)                                 accelerates any date upon which a scheduled payment of principal or interest is due, or otherwise decreases the weighted average life to maturity;

 

(3)                                 changes a prepayment, redemption, or defeasance provision so as to require a new payment or accelerate an existing payment Obligation;

 

(4)                                 changes a term that would result in a default under any First Lien Loan Document;

 

(5)                                 increases the Obligations of a Grantor; or

 

(6)                                 confers additional rights on a Second Lien Claimholder in a manner materially adverse to a First Lien Claimholder.

 

3.3                               PARALLEL MODIFICATIONS TO SECOND LIEN OBLIGATIONS

 

Subject to Section 3.2, if a First Lien Claimholder and a Grantor Modify a First Lien Collateral Document, the modification will apply automatically to any comparable provision of a Second Lien Collateral Document in which the Grantor grants a Lien on the same Collateral, without the consent of any Second Lien Claimholder and without any action by Second Lien Collateral Agent or any Grantor; provided that no such Modification will:

 

(a)                                 remove or release Second Lien Collateral, except to the extent that (1) the release is permitted or required by Section 2.8 and (2) there is a corresponding release of First Lien Collateral of such First Lien Claimholder;

 

(b)                                 impose duties on Second Lien Collateral Agent without its consent; or

 

(c)                                  permit other Liens on the Collateral not permitted under the terms of the Second Lien Note Documents or Section 7.

 

3.4                               NOTICE OF MODIFICATIONS

 

A First Lien Representative or Second Lien Collateral Agent will notify First Lien Representative of the other class or Second Lien Collateral Agent, as applicable, of each Modification to the Class A Obligations, Class B Obligations or Second Lien Obligations, as applicable, within ten Business Days after the Modification’s effective date and, if requested by the notified party, promptly provide copies of any documents executed and delivered in connection with the Modification.

 

Notice and copies will not be required to the extent Borrower or a Grantor has provided the same to the party to be notified.

 

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4.                                      ENFORCEMENT

 

4.1                               WHO MAY EXERCISE REMEDIES

 

(a)                                 (1)                                 As between First Lien Claimholders and Second Lien Claimholders, subject to Sections 4.1(a)(2), 4.1(b)(1) and 4.1(c), until the Discharge of Ordinary First Lien Obligations, First Lien Claimholders will have the exclusive right to:

 

(A)                               commence and maintain an Enforcement Action (including the rights to set off or credit bid their debt);

 

(B)                               subject to Section 2.8, make determinations regarding the release or disposition of, or restrictions with respect to, the Collateral; and

 

(C)                               otherwise enforce the rights and remedies of a secured creditor under the UCC and the Bankruptcy Laws of any applicable jurisdiction, so long as (x) any Proceeds received by Class A Claimholders in the aggregate in excess of those necessary to achieve Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, and (y) any Proceeds received by Class B Claimholders in the aggregate in excess of those necessary to achieve Discharge of Class B Obligations to the extent of Ordinary Class B Obligations, in each case, are distributed in accordance with Section 5.1, except as otherwise required pursuant to the UCC and applicable law, subject to the relative priorities described in Section 2.1.

 

(2)                                 Notwithstanding Section 4.1(a)(1),  Second Lien Claimholders may commence an Enforcement Action or exercise rights with respect to a Lien securing a Second Lien Obligation, if:

 

(A)                               180 days have elapsed since Second Lien Collateral Agent notified First Lien Representatives that the Second Lien Obligations were due in full as a result of acceleration or otherwise (such 180 day period, the “Second Lien Standstill Period”);

 

(B)                               First Lien Claimholders are not then diligently pursuing an Enforcement Action with respect to all or a material portion of the Collateral or diligently attempting to vacate any stay or prohibition against such exercise;

 

(C)                               any acceleration of the Second Lien Obligations has not been rescinded; and

 

(D)                               no Grantor is then a debtor in an Insolvency Proceeding.

 

(b)                                 (1)                                 As between Class A Claimholders and Class B Claimholders, subject to Sections 4.1(b)(2) and 4.1(c), until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, Class A Claimholders, acting through the Class A Representative, will have the exclusive right to:

 

(A)                               commence and maintain an Enforcement Action (including the rights to set off or credit bid their debt);

 

(B)                               make determinations regarding the release or disposition of, or restrictions with respect to, the Collateral, or any matters covered pursuant to Section 7 with

 

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respect to any Insolvency Proceedings to the extent such determination is to be made by a First Lien Representative;

 

(C)                               in accordance with Section 5.1, make determinations regarding the application of proceeds of Collateral; and

 

(D)                               otherwise enforce the rights and remedies of a secured creditor under the UCC and the Bankruptcy Laws of any applicable jurisdiction, so long as any Proceeds received by Class A Claimholders in the aggregate in excess of those necessary to achieve Discharge of Class A Obligations to the extent of Ordinary Class A Obligations are distributed in accordance with Section 5.1, except as otherwise required pursuant to the UCC and applicable law, subject to the relative priorities described in Section 2.1.

 

(2)                                 Notwithstanding Section 4.1(b)(1), Class B Claimholders may commence an Enforcement Action or exercise rights with respect to a Lien securing a Class B Obligation, if:

 

(A)                               90 days have elapsed since Class B Agent notified the Class A Representative that the Class B Obligations were due in full as a result of acceleration or otherwise (such 90 day period, the “Class B Standstill Period”);

 

(B)                               Class A Claimholders are not then diligently pursuing an Enforcement Action with respect to all or a material portion of the Collateral or diligently attempting to vacate any stay or prohibition against such exercise;

 

(C)                               any acceleration of the Class B Obligations has not been rescinded; and

 

(D)                               no Grantor is then a debtor in an Insolvency Proceeding.

 

(c)                                  Notwithstanding Sections 4.1(a) and (b), but subject to Section 2.3, a Class B Claimholder or Second Lien Claimholder may:

 

(1)                                 file a proof of claim or statement of interest, vote on a plan of reorganization (including a vote to accept or reject a plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), and make other filings, arguments, and motions, with respect to its Class B Obligations or Second Lien Obligations and the Collateral in any Insolvency Proceeding commenced by or against any Grantor, in each case in accordance with this Agreement;

 

(2)                                 take action to create, perfect, preserve, or protect its Lien on the Collateral, so long as such actions, in the case of Second Lien Claimholders, provide for, and are not adverse to, the priority status in accordance with this Agreement of Liens on the Collateral securing the Class A Obligations or Class B Obligations, or Class A Claimholders’ rights to exercise remedies, or, in the case of Class B Claimholders, not adverse to the Class A Claimholders’ right to exercise remedies;

 

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(3)                                 file necessary pleadings in opposition to a claim objecting to or otherwise seeking the disallowance of its Class B Obligations or Second Lien Obligations or a Lien securing its Class B Obligations or Second Lien Obligations, as the case may be;

 

(4)                                 join (but not exercise any control over) a judicial foreclosure or Lien enforcement proceeding with respect to the Collateral initiated by Class A Representative or Class B Representative, to the extent that such action could not reasonably be expected to interfere materially with the Enforcement Action, but no Class B Claimholder or Second Lien Claimholder may receive any Proceeds thereof unless expressly permitted herein; and

 

(5)                                 bid for or purchase Collateral at any public, private, or judicial foreclosure upon such Collateral initiated by any Class A Claimholder, or any sale of Collateral during an Insolvency Proceeding; provided that such bid may not include a “credit bid” in respect of any Class B Obligations or Second Lien Obligations unless the proceeds of such bid are otherwise sufficient to cause the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations and such bid may not include a “credit bid” in respect of any Second Lien Obligations unless the proceeds of such bid otherwise are sufficient to cause the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations.

 

(d)                                 Except as otherwise expressly set forth in this Section 4.1, Class B Claimholders and Second Lien Claimholders may exercise any rights and remedies that could be exercised by an unsecured creditor, other than initiating or joining in an involuntary case or proceeding under the Bankruptcy Code with respect to a Grantor, against a Grantor that has guaranteed or granted Liens to secure the Class B Obligations or Second Lien Obligations in accordance with the terms of the applicable Class B Loan Documents or Second Lien Note Documents and applicable law; provided that any judgment Lien obtained by a Second Lien Claimholder as a result of such exercise of rights will be included in the Class B Collateral or Second Lien Collateral, as applicable, and be subject to this Agreement for all purposes (including in relation to the Class A Obligations).

 

4.2                               MANNER OF EXERCISE

 

(a)                                 A First Lien Claimholder may take any Enforcement Action not prohibited by Section 4.1:

 

(1)                                 in any manner in its sole discretion in compliance with applicable law;

 

(2)                                 without consultation with or the consent of any Second Lien Claimholder;

 

(3)                                 regardless of whether an Insolvency Proceeding has been commenced;

 

(4)                                 regardless of any provision of any Second Lien Note Document (other than this Agreement); and

 

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(5)                                 regardless of whether such exercise is adverse to the interest of any Second Lien Claimholder.

 

(b)                                 The rights of a First Lien Claimholder or the Control Agent to enforce any provision of this Agreement or any First Lien Loan Document will not be prejudiced or impaired by:

 

(1)                                 any act or failure to act of any Grantor, any other First Lien Claimholder, or the Control Agent; or

 

(2)                                 noncompliance by any Person other than such First Lien Claimholder with any provision of this Agreement, any First Lien Loan Document, or any Second Lien Note Document, regardless of any knowledge thereof that any First Lien Claimholder or the Control Agent may have or otherwise be charged with.

 

(c)                                  No Second Lien Claimholder will contest, protest, object to, or take any action to hinder, and each waives any and all claims with respect to, any Enforcement Action by a First Lien Claimholder in compliance with this Agreement and applicable law.

 

4.3                               SPECIFIC PERFORMANCE

 

First Lien Representatives and Second Lien Collateral Agent may each demand specific performance of this Agreement, and each waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action brought by any other party hereto.

 

4.4                               NOTICE OF EXERCISE

 

Each party hereto will provide reasonable prior notice to the others of its initial material Enforcement Action.

 

5.                                      PAYMENTS

 

5.1                               APPLICATION OF PROCEEDS

 

Until the Discharge of First Lien Obligations and the Discharge of Second Lien Obligations, and regardless of whether an Insolvency Proceeding has been commenced, Collateral or Proceeds received in connection with an Enforcement Action or subject to Section 7.7, received in connection with any Insolvency Proceeding involving a Grantor, will be applied:

 

(a)                                 first, to the payment in full or cash collateralization of all Ordinary Class A Obligations;

 

(b)                                 next, to the payment in full of all Ordinary Class B Obligations;

 

(c)                                  next, to the payment in full of the Second Lien Obligations that are not Excess Second Lien Obligations;

 

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(d)                                 next, to the payment in full of any Excess Class A Obligations;

 

(e)                                  next, to the payment in full of any Excess Class B Obligations;

 

(f)                                   next, to the payment in full of any Excess Second Lien Obligations; and

 

(g)                                  next, to the applicable Grantor or as otherwise required by applicable law;

 

in each case as specified in the applicable First Lien Documents or the Second Lien Documents, or as otherwise determined by the First Lien Claimholders or the Second Lien Claimholders, as applicable.

 

Notwithstanding the foregoing, until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, any non-cash Collateral or non-cash Proceeds will be held by Class A Representative as Collateral for such  Ordinary Class A Obligations unless the failure to apply such amounts as set forth above would be commercially unreasonable, and after the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, any non-cash Collateral or non-cash Proceeds will be held by Class B Agent as Collateral for such  Ordinary Class B Obligations unless the failure to apply such amounts as set forth above would be commercially unreasonable.

 

5.2                               INSURANCE

 

(a)                                 First Lien Representatives and Second Lien Collateral Agent will be named as additional insureds and/or loss payees, as applicable, under any insurance policies maintained by any Grantor.

 

(b)                                 Until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, and subject to the rights of the Grantors under the Class A Loan Documents:

 

(1)                                 Class A Representative will have the exclusive right to adjust settlement for any losses covered by an insurance policy covering the Collateral, and to approve an award granted in a condemnation or similar proceeding (or a deed in lieu of condemnation) affecting the Collateral; and

 

(2)                                 all Proceeds of such policy, award, or deed will be applied in the order provided in Section 5.1 and thereafter, if no Second Lien Obligations are outstanding, to the payment to the owner of the subject property, such other Person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct.

 

(c)                                  During the period after the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations but before the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations, and subject to the rights of the Grantors under the Class B Loan Documents:

 

(1)                                 Class B Agent will have the exclusive right to adjust settlement for any losses covered by an insurance policy covering the Collateral, and to approve an award

 

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granted in a condemnation or similar proceeding (or a deed in lieu of condemnation) affecting the Collateral; and

 

(2)                                 all Proceeds of such policy, award, or deed will be applied in the order provided in Section 5.1 and thereafter, if no Second Lien Obligations are outstanding, to the payment to the owner of the subject property, such other Person as may be entitled thereto, or as a court of competent jurisdiction may otherwise direct.

 

5.3                               PAYMENT TURNOVER

 

(a)                                 Until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations, whether or not an Insolvency Proceeding has commenced, Collateral or Proceeds (including insurance proceeds or property or Proceeds subject to Liens referred to in Section 2.3(d)) received by a Class B Claimholder or Second Lien Claimholder in connection with an Enforcement Action or, subject to Section 7.7, received in connection with any Insolvency Proceeding, will be:

 

(1)                                 segregated and held in trust; and

 

(2)                                 promptly paid over to Class A Representative in the form received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. Class A Representative is authorized to make such endorsements as agent for the Class B Claimholders and Second Lien Claimholders. This authorization is coupled with an interest and is irrevocable until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations.

 

(b)                                 During the period after the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations but before the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations, whether or not an Insolvency Proceeding has commenced, Collateral or Proceeds (including insurance proceeds or property or Proceeds subject to Liens referred to in Section 2.3(d)) received by a Class A Claimholder with respect to Excess Class A Obligations or a Second Lien Claimholder in connection with an Enforcement Action or, subject to Section 7.7, received in connection with any Insolvency Proceeding, will be:

 

(1)                                 segregated and held in trust; and

 

(2)                                 promptly paid over to Class B Agent in the form received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. Class B Agent is authorized to make such endorsements as agent for the Class B Claimholders and Second Lien Claimholders. This authorization is coupled with an interest and is irrevocable until the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations.

 

5.4                               REFINANCING AFTER DISCHARGE OF FIRST LIEN OBLIGATIONS

 

Subject to the restrictions in Section 3.2, if, after the Discharge of Class A Obligations or Discharge of Class B Obligations, Borrower issues or incurs Refinancing of such First Lien Obligations that is permitted to be incurred under the Second Lien Note Documents, then the applicable First Lien Obligations will automatically be deemed not to have been

 

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discharged for all purposes of this Agreement (except for actions taken as a result of the initial applicable Discharge of First Lien Obligations). Upon Second Lien Collateral Agent’s receipt of a notice stating that Borrower has entered into a new First Lien Loan Document and identifying the new Class A Representative or new Class B Agent (the “New Agent”):

 

(a)                                 the Obligations under such Refinancing indebtedness automatically will be treated as First Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein;

 

(b)                                 the New Agent under such new First Lien Loan Documents will be treated as Class A Representative or Class B Agent (as applicable), for all purposes of this Agreement;

 

(c)                                  Second Lien Collateral Agent agrees that it will promptly:

 

(1)                                 enter into such documents and agreements (including amendments or supplements to this Agreement) as Borrower or the New Agent reasonably requests to provide to the New Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement;

 

(2)                                 deliver to the New Agent any Pledged Collateral held by it together with any necessary endorsements (or otherwise allow the New Agent to obtain control of such Pledged Collateral); and

 

(d)                                 the New Agent will promptly agree in a writing addressed to Second Lien Collateral Agent to be bound by the terms of this Agreement.

 

If any Obligations under any new applicable First Lien Loan Documents are secured by Collateral that does not also secure First Lien Obligations of the other class or any Second Lien Obligations, then the Grantors will cause the First Lien Obligations of the other class to be secured at such time by a pari passu Lien on such Collateral, and cause such Second Lien Obligations to be secured at such time by a second priority Lien on such Collateral, in each case, to the same extent provided in the applicable First Lien Collateral Documents and this Agreement.

 

6.                                      PURCHASE OF FIRST LIEN OBLIGATIONS BY SECOND LIEN CLAIMHOLDERS

 

6.1                               PURCHASE RIGHT

 

(a)                                 If there is:

 

(1)                                 (x) an acceleration of the Class A Obligations in accordance with the Class A Credit Agreement or (y) an acceleration of the Class B Obligations in accordance with the Class B Credit Agreement;

 

(2)                                 (x) a payment default under the Class A Credit Agreement that is not cured, or waived by Class A Claimholders, within sixty days of its occurrence, or (y) a payment default under the Class B Credit Agreement that is not cured, or waived by Class B Claimholders, within sixty days of its occurrence; or

 

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(3)                                 the commencement of an Insolvency Proceeding,

 

(each a “Second Lien Purchase Event”), then Second Lien Claimholders may purchase all, but not less than all, of (x) the Ordinary Class A Obligations or (y) the Ordinary Class A Obligations and the Ordinary Class B Obligations.  Such purchase will:

 

(A)                               include all Capped Class A Obligations (and Capped Class B Obligations, if applicable) outstanding at the time of purchase up to but not in excess of the Class A Cap (and Class B Cap, respectively, if applicable), plus all principal of, and all accrued and unpaid interest, fees, and expenses in respect of, all Uncapped Class A Obligations (and Uncapped Class B Obligations, if applicable);

 

(B)                               be made pursuant to an Assignment and Acceptance (as such term is defined in the Purchased Credit Agreement), whereby such Second Lien Claimholders will assume all funding commitments and Obligations of the Selling Claimholders under the Purchased Loan Documents; and

 

(C)                               otherwise be subject to the terms and conditions of this Section 6.

 

(b)                                 If there is:

 

(1)                                 an acceleration of the Class A Obligations in accordance with the Class A Credit Agreement;

 

(2)                                 a payment default under the Class A Credit Agreement that is not cured, or waived by Class A Claimholders, within sixty days of its occurrence; or

 

(3)                                 the commencement of an Insolvency Proceeding,

 

(each a “Class B Purchase Event” and, together with any Second Lien Purchase Event, “Purchase Events”), then Class B Claimholders may purchase all, but not less than all, of the Ordinary Class A Obligations.  Such purchase will:

 

(A)                               include all Capped Class A Obligations outstanding at the time of purchase up to but not in excess of the Class A Cap, plus all principal of, and all accrued and unpaid interest, fees, and expenses in respect of, all Uncapped Class A Obligations;

 

(B)                               be made pursuant to an Assignment and Acceptance (as such term is defined in the Class A Credit Agreement, whereby such Class B Claimholders will assume all funding commitments and Obligations of Class A Claimholders under the Class A Loan Documents; and

 

(C)                               otherwise be subject to the terms and conditions of this Section 6.

 

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(c)                                  Each Selling Claimholder will retain all rights to indemnification provided in the relevant Purchased Loan Documents for all claims and other amounts relating to periods prior to the purchase of the Purchased Obligations pursuant to this Section 6.

 

6.2                               PURCHASE NOTICE

 

(a)                                 Purchasing Creditors will deliver a Purchase Notice to Class A Representative and, in the case of any purchase of First Lien Obligations pursuant to this Section 6 by Second Lien Claimholders, the Class B Agent, that:

 

(1)                                 is signed by the Purchasing Creditors;

 

(2)                                 states that it is a Purchase Notice under this Section 6;

 

(3)                                 states that each Purchasing Creditor is irrevocably electing to purchase, in accordance with this Section 6, the percentage of all of the Purchased Obligations stated in the Purchase Notice for that Purchasing Creditor, which percentages must aggregate exactly 100% for all Purchasing Creditors;

 

(4)                                 represents and warrants that the Purchase Notice is in conformity with, (x) if the Purchasing Creditors are Second Lien Claimholders, the Second Lien Note Documents and any other binding agreement among Second Lien Claimholders, and (y) if the Purchasing Creditors are Class B Claimholders, the Class B Loan Documents and any other binding agreement among Class B Claimholders; and

 

(5)                                 designates a date on which the purchase will occur that is (x) in the case of a purchase of only the Ordinary Class A Obligations by the Second Lien Claimholders pursuant to Section 6.1(a), fifteen Business Days after Class A Representative’s and Class B Representative’s receipt of the Purchase Notice, (y) in all other cases, subject to modification of such date by Section 6.2(b)(3) below, at least five but not more than fifteen Business Days after Class A Representative’s and/or Class B Agent’s receipt of the Purchase Notice, and (z) subject to modification of such date by Section 6.2(b)(3) below, not more than sixty days after the Purchase Event (such complying date, the “Purchase Date”).

 

A Purchase Notice will be ineffective if it is received by Class A Representative and/or Class B Agent (as applicable) after the occurrence giving rise to the Purchase Event is waived, cured, or otherwise ceases to exist.

 

(b)                                 Upon Class A Representative’s and/or Class B Agent’s receipt of an effective Purchase Notice conforming to this Section 6.2, the Purchasing Creditors will be irrevocably obligated to purchase, and the Selling Claimholders will be irrevocably obligated to sell, the Purchased Obligations in accordance with and subject to this Section 6.  Notwithstanding the foregoing, (1) to the extent that the Class B Claimholders have delivered a valid Purchase Notice pursuant to Section 6.1(b), the Second Lien Claimholders may not deliver a Purchase Notice pursuant to Section 6.1(a) requesting the purchase of only the Ordinary Class A Obligations, (2) to the extent that Second Lien Claimholders have delivered a valid Purchase Notice pursuant to Section 6.1(a) desiring to purchase only the Ordinary Class A Obligations and Class B Claimholders have also concurrently delivered a valid Purchase Notice pursuant to

 

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Section 6.1(b), Second Lien Claimholders shall be relieved of their obligation to purchase the Ordinary Class A Obligations, and Class B Claimholders shall be obligated to purchase the Ordinary Class A Obligations pursuant to this Section 6 and (3) to the extent that the Second Lien Claimholders have delivered a valid Purchase Notice pursuant to Section 6.1(a) desiring to purchase only the Ordinary Class A Obligations, notwithstanding anything herein to the contrary, the Class B Claimholders may deliver a Purchase Notice requesting the purchase of the Ordinary Class A Obligations on or prior to the Purchase Date specified in the Purchase Notice delivered by the Second Lien Claimholders, Second Lien Claimholders shall be relieved of their obligation to purchase the Ordinary Class A Obligations, and Class B Claimholders shall be obligated to purchase the Ordinary Class A Obligations pursuant to this Section 6 on or prior to the date that is 14 days after the date of delivery of the Purchase Notice by the Class B Claimholders; provided that, if such Class B Claimholders fail to complete the purchase of Ordinary Class A Obligations by the applicable Purchase Date, the Second Lien Claimholders will have the right, but not the obligation, to purchase the Ordinary Class A Obligations pursuant to the terms of this Section 6 on or prior to the date that is fifteen Business Days after the Purchase Date specified in the Purchase Notice previously delivered by the Class B Claimholders.

 

6.3                               PURCHASE PRICE

 

The “Purchase Price” for the Purchased Obligations will equal the sum of:

 

(a)                                 the principal amount of all loans, advances, or similar extensions of credit included in the Purchased Obligations, and all accrued and unpaid interest thereon through the Purchase Date (including any acceleration prepayment penalties or premiums); and

 

(b)                                 all accrued and unpaid fees, expenses, indemnities, and other amounts owed to the Selling Claimholders under the Purchased Loan Documents on the Purchase Date to the extent not allocable to Excess Class A Obligations or Excess Class B Obligations, as applicable.

 

6.4                               PURCHASE  CLOSING

 

On the Purchase Date:

 

(a)                                 the Purchasing Creditors and Selling Claimholders will execute and deliver the Assignment and Acceptance;

 

(b)                                 the Purchasing Creditors will pay the Purchase Price to Selling Claimholders by wire transfer of immediately available funds; and

 

(c)                                  Purchasing Creditors agree that they will execute and deliver to Selling Claimholders a waiver of all claims arising out of this Agreement and the transactions contemplated hereby as a result of exercising the purchase option contemplated by this Section 6.

 

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6.5                               EXCESS FIRST LIEN OBLIGATIONS NOT PURCHASED

 

Any Excess First Lien Obligations will, after the closing of the purchase of the Purchased Obligations in accordance with this Section 5, remain Excess First Lien Obligations (owned by the applicable Selling Claimholders) for all purposes of this Agreement.

 

6.6                               ACTIONS AFTER PURCHASE CLOSING

 

After the closing of the purchase of the Purchased Obligations, the Purchasing Creditors may elect or appoint a new administrative agent and, if applicable, a new collateral agent to act as “Class A Representative”, or “Class B Agent” (as the case may be) hereunder.

 

6.7                               NO RECOURSE OR WARRANTIES; DEFAULTING CREDITORS

 

(a)                                 Selling Claimholders will be entitled to rely on the statements, representations, and warranties in the Purchase Notice without investigation, even if Selling Claimholders are notified that any such statement, representation, or warranty is not or may not be true.

 

(b)                                 The purchase and sale of the Purchased Obligations under this Section 6 will be without recourse and without representation or warranty of any kind by Selling Claimholders, except that Selling Claimholders represent and warrant that on the Purchase Date, immediately before giving effect to the purchase:

 

(1)                                 the principal of and accrued and unpaid interest on the Purchased Obligations, and the fees and expenses thereof, are as stated in the Assignment and Acceptance;

 

(2)                                 Selling Claimholders own the Purchased Obligations free and clear of any Liens (other than participation interests not prohibited by the Purchased Credit Agreement, in which case the Purchase Price will be appropriately adjusted so that the Purchasing Creditors do not pay amounts represented by participation interests); and

 

(3)                                 each Selling Claimholder has the full right and power to assign its Purchased Obligations and such assignment has been duly authorized by all necessary corporate action by such Selling Claimholder.

 

(c)                                  The obligations of Selling Claimholders to sell their respective Purchased Obligations under this Section 6 are several, and not joint and several. If a Selling Claimholder (a “Defaulting Creditor”) breaches its obligation to sell its Purchased Obligations under this Section 6, no other Selling Claimholder will be obligated to purchase the Defaulting Creditor’s Purchased Obligations for resale to the holders of Second Lien Obligations. A Selling Claimholder that complies with this Section 6 will not be in default of this Agreement or otherwise be deemed liable for any action or inaction of any Defaulting Creditor; provided that nothing in this Section 6.7(c) will require the Purchasing Creditors to purchase less than all of the Purchased Obligations.

 

(d)                                 Each Grantor irrevocably consents, and will use its best efforts to obtain any necessary consent of each other Grantor, to any assignment effected to one or more Purchasing Creditors pursuant to this Section 6.

 

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7.                                      INSOLVENCY PROCEEDINGS

 

7.1                               USE OF CASH COLLATERAL AND DIP FINANCING

 

(a)                                 Until the Discharge of Ordinary First Lien Obligations, if an Insolvency Proceeding has commenced, Second Lien Collateral Agent, as holder of a Lien on the Collateral, will not contest, protest, or object to, and each Second Lien Claimholder will be deemed to have consented to:

 

(1)                                 any use, sale, or lease of “cash collateral” (as defined in Section 363(a) of the Bankruptcy Code); and

 

(2)                                 Borrower or any other Grantor obtaining DIP Financing,

 

if (subject to Section 4.1(b)(1)(B)) a First Lien Representative consents in writing to such use, sale, or lease, or DIP Financing; provided that:

 

(A)                               Second Lien Collateral Agent otherwise retains its Lien on the Collateral;

 

(B)                               any Second Lien Claimholder may seek adequate protection as permitted by Section 7.4 and, if such adequate protection is not granted, the applicable Second Lien Collateral Agent may object under this Section 7.1 solely on such basis; and

 

(C)                               after taking into account the use of cash collateral and the principal amount of any DIP Financing (after giving effect to any Refinancing of any First Lien Obligations) on any date, the sum of the then outstanding principal amount of any First Lien Obligations and any DIP Financing does not exceed 125% of the sum of (i) the amount of the Class A Cap, plus (ii) the amount of the Class B Cap.

 

Upon written request from a First Lien Representative, Second Lien Collateral Agent, as holder of a Lien on the Collateral, will join any objection by a First Lien Representative, to the use, sale, or lease of cash collateral for any purpose other than adequate protection payments to the applicable Second Lien Claimholders.

 

(b)                                 Any customary “carve-out” or other similar administrative priority expense or claim consented to in writing by a First Lien Representative to be paid prior to the Discharge of Ordinary First Lien Obligations will be deemed for purposes of Section 7.1(a):

 

(1)                                 to be a use of cash collateral; and

 

(2)                                 not to be a principal amount of DIP Financing at the time of such consent.

 

(c)                                  No Second Lien Claimholder may provide DIP Financing to a Borrower or other Grantor secured by Liens equal or senior in priority to the Liens securing any First Lien Obligations; provided that if no First Lien Claimholder offers to provide DIP Financing or no

 

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First Lien Representative has consented in writing to a DIP Financing, in each case, to the extent permitted under Section 7.1(a) on or before the date of the hearing to approve DIP Financing, then a Second Lien Claimholder may seek to provide such DIP Financing secured by Liens equal or senior in priority to the Liens securing any First Lien Obligations, and First Lien Claimholders may object thereto.

 

7.2                               SALE OF COLLATERAL

 

Second Lien Collateral Agent, as holder of a Lien on the Collateral and on behalf of the Second Lien Claimholders, will not contest, protest, or object, and will be deemed to have consented pursuant to Section 363(f) of the Bankruptcy Code, to a Disposition of Collateral free and clear of its Liens or other interests under Section 363 of the Bankruptcy Code if a First Lien Representative consents in writing to the Disposition; provided that:

 

(a)                                 either (i) pursuant to court order, the Liens of the Second Lien Claimholders attach to the net Proceeds of the Disposition with the same priority and validity as the Liens held by such Second Lien Claimholders on such Collateral, and the Liens remain subject to the terms of this Agreement, or (ii) (x) if the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations has not occurred prior to such Disposition, the Proceeds of a Disposition of Collateral received by Class A Lenders in excess of those necessary to achieve the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations are distributed in accordance with the UCC and applicable law, and (y) if the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations has, but the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations has not, occurred prior to such Disposition, the Proceeds of a Disposition of Collateral received by Class B Lenders in excess of those necessary to achieve the Discharge of Class B Obligations to the extent of Ordinary Class B Obligations are distributed in accordance with the UCC and applicable law;

 

(b)                                 the net cash Proceeds of the Disposition that are applied to First Lien Obligations permanently reduce the First Lien Obligations pursuant to Section 5.1 or if not so applied, are subject to the rights of Second Lien Collateral Agent to object to any further use notwithstanding Section 7.1(a); and

 

(c)                                  Second Lien Claimholders may credit bid on the Collateral in any such Disposition in accordance with Section 363(k) of the Bankruptcy Code; provided that any such credit bid of Second Lien Obligations must provide for the payment in full in cash of all Ordinary First Lien Obligations on the closing of any resulting Disposition.

 

Notwithstanding the preceding sentence, any Second Lien Claimholders may object to any Disposition of Collateral that could be raised in an Insolvency Proceeding by unsecured creditors generally, so long as not otherwise inconsistent with the terms of this Agreement and any applicable Second Lien Claimholder has conceded, or there has been a determination, that all or a portion of the applicable Second Lien Obligations are unsecured.

 

(d)                                 Upon a First Lien Representative’s request, Second Lien Collateral Agent, solely in its capacity as holder of a Lien on Collateral, will join any objection asserted by a First Lien Representative to any Disposition of Collateral during an Insolvency Proceeding.

 

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7.3                               RELIEF FROM THE AUTOMATIC STAY

 

Until the Discharge of Ordinary First Lien Obligations, no Second Lien Claimholder may seek relief from the automatic stay or any other stay in an Insolvency Proceeding in respect of the Collateral without First Lien Representatives’ prior written consent or oppose any request by a First Lien Representative for relief from such stay.

 

7.4                               ADEQUATE PROTECTION

 

(a)                                 No Second Lien Claimholder will contest, protest, or object to:

 

(1)                                 a request by a First Lien Claimholder for “adequate protection” under any Bankruptcy Law; or

 

(2)                                 an objection by a First Lien Claimholder to a motion, relief, action, or proceeding based on a First Lien Claimholder claiming a lack of adequate protection.

 

(b)                                 Notwithstanding Section 7.4(a), in an Insolvency Proceeding:

 

(1)                                 Except as permitted in this Section 7.4, no Second Lien Claimholders may seek or request adequate protection or relief from the automatic stay imposed by Section 362 of the Bankruptcy Code or other relief.

 

(2)                                 If a First Lien Claimholder is granted adequate protection in the form of additional or replacement Collateral in connection with a motion described in Section 7.1, then the applicable Second Lien Collateral Agent may seek or request adequate protection in the form of a Lien on such additional or replacement Collateral, which Lien will be subordinated to the Liens securing the First Lien Obligations and any DIP Financing (and all related Obligations) on the same basis as the other Liens securing the applicable Second Lien Obligations are subordinated under this Agreement to the Liens securing First Lien Obligations.

 

(3)                                 Any claim by a Second Lien Claimholder under Section 507(b) of the Bankruptcy Code will be subordinate in right of payment to any claim of First Lien Claimholders under Section 507(b) of the Bankruptcy Code and any payment thereof will be deemed to be Proceeds of Collateral; provided that, subject to Section 7.7, Second Lien Claimholders will be deemed to have agreed pursuant to Section 1129(a)(9) of the Bankruptcy Code that such Section 507(b) claims may be paid under a plan of reorganization in any form having a value on the effective date of such plan equal to the allowed amount of such claims.

 

(4)                                 So long as First Lien Claimholders are receiving payment in cash of all Post-Petition Claims consisting of all interest at the applicable rate under the First Lien Loan Documents, Second Lien Collateral Agent may seek and, subject to the terms hereof, retain payments of Post-Petition Claims consisting of interest at the non-default rate under the Second Lien Note Documents (“Second Lien Adequate Protection Payments”). If a Second Lien Claimholder receives Second Lien Adequate Protection Payments before the Discharge of Ordinary First Lien Obligations, then upon the effective date of any plan or the conclusion or dismissal of any Insolvency Proceeding, the Second Lien Claimholder will pay over to First Lien Claimholders pursuant to Section 5.1, an amount equal to the lesser of (i) the Second Lien

 

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Adequate Protection Payments received by the Second Lien Claimholder and (ii) the amount necessary to Discharge the First Lien Obligations. Notwithstanding anything herein to the contrary, First Lien Claimholders will not be deemed to have consented to, and expressly retain their rights to object to, the payment of Second Lien Adequate Protection Payments.

 

7.5                               FIRST LIEN OBJECTIONS TO SECOND LIEN ACTIONS

 

Subject to Section 4.1, nothing in this Section 7 limits a First Lien Claimholder from objecting in an Insolvency Proceeding or otherwise to any action taken by a Second Lien Claimholder, including the Second Lien Claimholder’s seeking adequate protection (other than adequate protection permitted under Section 7.4(b)) or asserting any of its rights and remedies under the Second Lien Note Documents or otherwise.

 

7.6                               AVOIDANCE; REINSTATEMENT OF OBLIGATIONS

 

If a First Lien Claimholder or a Second Lien Claimholder receives payment or property on account of a First Lien Obligation or Second Lien Obligation, and the payment is subsequently invalidated, avoided, declared to be fraudulent or preferential, set aside, or otherwise required to be transferred to a trustee, receiver, or the estate of Borrower or other Grantor (a “Recovery”), then, to the extent of the Recovery, the First Lien Obligations or Second Lien Obligations intended to have been satisfied by the payment will be reinstated as First Lien Obligations or Second Lien Obligations, as applicable, on the date of the Recovery, and no Discharge of Class A Obligations, Discharge of Class B Obligations or Discharge of Second Lien Obligations, as applicable, will be deemed to have occurred for all purposes hereunder. If this Agreement is terminated prior to a Recovery, this Agreement will be reinstated in full force and effect, and such prior termination  will not diminish, release, discharge, impair, or otherwise affect the obligations of the Parties from the date of reinstatement.  Upon any such reinstatement of any First Lien Obligations, each Second Lien Claimholder will deliver to the applicable First Lien Representative any Collateral and any Proceeds thereof, in each case, received between the Discharge of Class A Obligations or Discharge of Class B Obligations, as the case may be, and their reinstatement in accordance with Section 5.3.  No Second Lien Claimholder may benefit from a Recovery, and any distribution made to a Second Lien Claimholder as a result of a Recovery will be paid over to the applicable First Lien Representative for application to the applicable First Lien Obligations in accordance with Section 5.1.

 

7.7                               REORGANIZATION SECURITIES

 

To the extent not inconsistent with Section 2.2, nothing in this Agreement prohibits or limits the right of a Second Lien Claimholder to receive and retain any debt or equity securities that are issued by a reorganized debtor pursuant to a plan of reorganization or similar dispositive restructuring plan in connection with an Insolvency Proceeding; provided that any debt securities received by a Second Lien Claimholder on account of a Second Lien Obligation that constitutes a “secured claim” within the meaning of Section 506(b) of the Bankruptcy Code will be paid over or otherwise transferred to Class A Lenders (or, if the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations has occurred, the Class B Agent) for application in accordance with Section 5.1, unless such distribution is made under a plan that is

 

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consented to by the affirmative vote of all classes composed of the secured claims of First Lien Claimholders.

 

If, in an Insolvency Proceeding, debt Obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the extent the debt Obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt Obligations pursuant to such plan and will apply with like effect to the Liens securing such debt Obligations.

 

7.8                               POST-PETITION  CLAIMS

 

(a)                                 No Second Lien Claimholder may oppose or seek to challenge any claim by a First Lien Claimholder for allowance or payment in any Insolvency Proceeding of First Lien Obligations consisting of Post-Petition Claims.

 

(b)                                 No First Lien Claimholder may oppose or seek to challenge in an Insolvency Proceeding a claim by a Second Lien Claimholder for allowance and any payment permitted under Section 7.4, of Second Lien Obligations consisting of Post-Petition Claims.

 

7.9                               WAIVERS

 

Second Lien Collateral Agent waives:

 

(a)                                 any claim it may hereafter have against any First Lien Claimholder arising out of any cash collateral or financing arrangement or out of any grant of a security interest in connection with the Collateral in an Insolvency Proceeding, so long as such actions are not in express contravention of the terms of this Agreement;

 

(b)                                 any right to assert or enforce any claim under Section 506(c) or 552 of the Bankruptcy Code as against First Lien Claimholders or any of the Collateral to the extent securing any First Lien Obligations; and

 

(c)                                  solely in its capacity as a holder of a Lien on Collateral, any claim or cause of action that any Grantor may have against any First Lien Claimholder, except to the extent arising from a breach by such First Lien Claimholder of the provisions of this Agreement.

 

7.10                        SEPARATE GRANTS OF SECURITY AND SEPARATE CLASSIFICATION

 

The grants of Liens pursuant to the Class A Collateral Documents, the Class B Collateral Documents and the Second Lien Collateral Documents constitute three separate and distinct grants. Because of, among other things, their differing rights in the Collateral, the Second Lien Obligations, to the extent deemed to be “secured claims” within the meaning of Section 506(b) of the Bankruptcy Code, are fundamentally different from the Class A Obligations and Class B Obligations and must be separately classified in any plan of reorganization in an Insolvency Proceeding. Second Lien Claimholders will not seek in an Insolvency Proceeding to

 

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be treated as part of the same class of creditors as Class A Claimholders or Class B Claimholders and will not oppose or contest any pleading by Class A Claimholders or Class B Claimholders seeking separate classification of their respective secured claims.

 

7.11                        EFFECTIVENESS IN INSOLVENCY PROCEEDINGS

 

The Parties acknowledge that this Agreement is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, which will be effective before, during, and after the commencement of an Insolvency Proceeding. All references in this Agreement to any Grantor will include such Person as a debtor-in-possession and any receiver or trustee for such Person in an Insolvency Proceeding.

 

8.                                      MISCELLANEOUS

 

8.1                               CONFLICTS

 

If this Agreement conflicts with any First Lien Loan Documents or Second Lien Note Documents, this Agreement will control.

 

8.2                               NO WAIVERS; REMEDIES CUMULATIVE; INTEGRATION

 

(a)                                 A Party’s failure or delay in exercising a right under this Agreement will not waive the right, nor will a Party’s single or partial exercise of a right preclude it from any other or further exercise of that or any other right.

 

(b)                                 The rights and remedies provided in this Agreement will be cumulative and not exclusive of other rights or remedies provided by law.

 

(c)                                  This Agreement constitutes the entire agreement among the Parties and supersedes all prior agreements, oral or written, relating to its subject matter.

 

8.3                               EFFECTIVENESS; SEVERABILITY; TERMINATION

 

(a)                                 This Agreement will become effective when executed and delivered by the Parties. Each First Lien Claimholder and each Second Lien Claimholder waives any right it may have under applicable law to revoke this Agreement or any provision thereunder or consent by it thereto.

 

(b)                                 This Agreement will survive, and continue in full force and effect, in any Insolvency Proceeding.

 

(c)                                  If a provision of this Agreement is prohibited or unenforceable in a jurisdiction, the prohibition or unenforceability will not invalidate the remaining provisions hereof, or invalidate or render unenforceable that provision in any other jurisdiction.

 

(d)                                 Subject to Sections 2.4(d), (h) and (i), 5.1, 5.4, 7.5 and 7.6, this Agreement will terminate and be of no further force and effect:

 

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(1)                                 as to Class A Claimholders, upon the Discharge of Class A Obligations;

 

(2)                                 for Class B Claimholders, upon the Discharge of Class B Obligations and

 

(3)                                 for Second Lien Claimholders, upon the Discharge of Second Lien Obligations.

 

8.4                               MODIFICATIONS OF THIS AGREEMENT

 

A modification or waiver of any provision of this Agreement will only be effective if in writing signed on behalf of each Party or its authorized agent, and a waiver will be a waiver only for the specific instance involved and will not impair the rights of the Parties making the waiver or the obligations of the other Parties to such Party in any other respect or at any other time.  Notwithstanding the foregoing, no Grantor will have a right to consent to or approve a modification of this Agreement except to the extent its rights are directly affected.

 

8.5                               INFORMATION CONCERNING FINANCIAL CONDITION OF BORROWER AND ITS SUBSIDIARIES

 

(a)                                 The Control Agent, Class A Claimholders, the Class B Claimholders and Second Lien Claimholders will each be responsible for keeping themselves informed of:

 

(1)                                 the financial condition of the Grantors; and

 

(2)                                 all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations or the Second Lien Obligations.

 

(b)                                 Neither the Control Agent nor any First Lien Claimholder will have any duty to advise any other First Lien Claimholder or any Second Lien Claimholder, and no Second Lien Claimholder will have any duty to advise the Control Agent or any First Lien Claimholder, of information known to it regarding any such condition or circumstances or otherwise.

 

(c)                                  If the Control Agent or a First Lien Claimholder provides any such information to a Second Lien Claimholder, or a Second Lien Claimholder provides any such information to the Control Agent or any First Lien Claimholder, the Control Agent or the First Lien Claimholder, or Second Lien Claimholder, respectively, will have no obligation to:

 

(1)                                 make, and it does not make, any express or implied representation or warranty, including as to accuracy, completeness, truthfulness, or validity;

 

(2)                                 provide additional information on that or any subsequent occasion;

 

(3)                                 undertake any investigation; or

 

(4)                                 disclose information that, pursuant to applicable law or accepted or reasonable commercial finance practices, it desires or is required to maintain as confidential.

 

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8.6                               NO RELIANCE

 

(a)                                 Each First Lien Representative acknowledges that it and each other First Lien Claimholder has, independently and without reliance on any Second Lien Claimholder, and based on documents and information the First Lien Claimholder deemed appropriate, made its own credit analysis and decision to enter into the First Lien Loan Documents and this Agreement, and will continue to make its own credit decisions in taking or not taking any action under the First Lien Loan Documents or this Agreement.

 

(b)                                 Second Lien Collateral Agent acknowledges that it and each other Second Lien Claimholder has, independently and without reliance on any First Lien Claimholder, and based on documents and information the Second Lien Claimholder deemed appropriate, made its own credit analysis and decision to enter into the Second Lien Note Documents and this Agreement, and will continue to make its own credit decisions in taking or not taking any action under the Second Lien Note Documents or this Agreement.

 

8.7                               NO WARRANTIES; INDEPENDENT ACTION

 

(a)                                 Except as otherwise expressly provided herein:

 

(1)                                 no Second Lien Claimholder has made any express or implied representation or warranty to any First Lien Claimholder, including with respect to the execution, validity, legality, completeness, collectability, or enforceability of any Second Lien Note Document, the ownership of any Collateral, or the perfection or priority of any Liens thereon; and

 

(2)                                 each Second Lien Claimholder may manage and supervise its loans and extensions of credit under the Second Lien Note Documents in accordance with applicable law and as it may otherwise, in its sole discretion, deem appropriate;

 

(3)                                 no First Lien Claimholder has made any express or implied representation or warranty to any Second Lien Claimholder or First Lien Claimholder of another class, including with respect to the execution, validity, legality, completeness, collectability, or enforceability of any First Lien Loan Document, the ownership of any Collateral, or the perfection or priority of any Liens thereon; and

 

(4)                                 each First Lien Claimholder may manage and supervise its loans and extensions of credit under the First Lien Loan Documents in accordance with law and as it may otherwise, in its sole discretion, deem appropriate.

 

(b)                                 No Second Lien Claimholder will have any duty to any First Lien Claimholder, and no First Lien Claimholder will have any duty to any Second Lien Claimholder or First Lien Claimholder of another class, to act or refrain from acting in a manner that allows, or results in, the occurrence or continuance of an event of default or default under any agreements with Borrower or any other Grantor (including the First Lien Loan Documents and the Second Lien Note Documents), regardless of any knowledge thereof that it may have or be charged with.

 

45

 

8.8                               SUBROGATION

 

If a Second Lien Claimholder pays or distributes cash, property, or other assets to a First Lien Claimholder under this Agreement, such Second Lien Claimholder will be subrogated to the rights of the First Lien Claimholder with respect to the value of the payment or distribution; provided that each Second Lien Claimholder waives such right of subrogation until the Discharge of Ordinary First Lien Obligations.  Such payment or distribution will not reduce any Second Lien Obligations.  If a Class B Claimholder pays or distributes cash, property, or other assets to a Class A Claimholder under this Agreement, such Class B Claimholder will be subrogated to the rights of the Class A Claimholder with respect to the value of the payment or distribution; provided that each Class B Claimholder waives such right of subrogation until the Discharge of Class A Obligations to the extent of Ordinary Class A Obligations.  Such payment or distribution will not reduce any Class B Obligations

 

8.9                               APPLICABLE LAW; JURISDICTION; SERVICE

 

(a)                                 This Agreement, and any claim or controversy relating to the subject matter hereof, will be governed by the law of the State of New York, without regard to principles of law that would result in the application of the laws of another jurisdiction.

 

(b)                                 All judicial proceedings brought against a Party arising out of or relating hereto may be brought in any state or federal court of competent jurisdiction in the state, county, and city of New York. Each Party irrevocably:

 

(1)                                 accepts generally and unconditionally the nonexclusive personal jurisdiction and venue of such courts;

 

(2)                                 waives any defense of forum non conveniens; and

 

(3)                                 agrees that service of process in such proceeding may be made by registered or certified mail, return receipt requested, to the Party at its address provided in accordance with Section 8.11 and that such service will confer personal jurisdiction over the Party in such proceeding and otherwise constitutes effective and binding service in every respect.

 

8.10                        WAIVER OF JURY TRIAL

 

Each Party waives its right to jury trial of any claim or cause of action based upon or arising hereunder. The scope of this waiver is intended to encompass any and all disputes that may be filed in any court and that relate to the subject matter hereof, including contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each Party acknowledges that this waiver is a material inducement to enter into a business relationship, that it has already relied on this waiver in entering into this Agreement, and that it will continue to rely on this waiver in its related future dealings. Each Party further represents and warrants that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing (other than by a mutual written waiver specifically referring to this Section 8.10 and executed by each of the Parties), and will apply to any subsequent modification hereof. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

 

46

 

8.11                        NOTICES

 

(a)                                 Any notice to a First Lien Claimholder or a Second Lien Claimholder under this Agreement must also be given to First Lien Representatives and Second Lien Collateral Agent, respectively. Unless otherwise expressly provided herein, notices and consents must be in writing and will be deemed to have been given (i) when delivered in person or by courier service and signed for against receipt thereof, (ii) upon receipt of facsimile, and (iii) three Business Days after deposit in the United States mail with first-class postage prepaid and properly addressed. For the purposes hereof, the address of each Party will be as set forth below the Party’s name on the signature pages hereto, or at such other address as the Party may designate by notice to the other Parties.

 

(b)                                 Failure to give a notice or copies as required by Section 3.4 or 4.4 will not affect the effectiveness or validity of any modification or of this Agreement, or the effectiveness or validity of the exercise of remedies otherwise permitted hereunder and under applicable law, impose any liability on any First Lien Claimholder or Second Lien Claimholder, or waive any rights of any Party.

 

8.12                        FURTHER ASSURANCES

 

First Lien Representatives, Second Lien Collateral Agent, and Borrower will each take such further action and will execute and deliver such additional documents and instruments (in recordable form, if requested) as First Lien Representatives or Second Lien Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.

 

8.13                        SUCCESSORS AND ASSIGNS

 

(a)                                 This Agreement is binding upon and inures to the benefit of each First Lien Claimholder, each Second Lien Claimholder, the Control Agent, and their respective successors and assigns. However, no provision of this Agreement will inure to the benefit of a trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of Borrower, or other Grantor, including where such estate or creditor representative is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency Proceeding.

 

(b)                                 If a First Lien Representative assigns its First Lien Obligations pursuant to its First Lien Credit Agreement, such Person’s successor will be a party to this Agreement with all the rights, and subject to all the obligations, of this Agreement. Notwithstanding any other provision of this Agreement, this Agreement may not be assigned to any Person except as expressly contemplated herein.

 

8.14                        AUTHORIZATION

 

By its signature hereto, each Person signing this Agreement on behalf of a Party represents and warrants to the other Parties that it is duly authorized to execute this Agreement.

 

47

 

8.15                        NO THIRD-PARTY BENEFICIARIES

 

No Person is a third-party beneficiary of this Agreement and no trustee in bankruptcy for, or bankruptcy estate of, or unsecured creditor of, any Grantor will have or acquire or be entitled to exercise any right of a First Lien Claimholder or Second Lien Claimholder under this Agreement, whether upon an avoidance or equitable subordination of a Lien of First Lien Claimholder or Second Lien Claimholder, or otherwise. None of Borrower, any other Grantor, or any other creditor thereof has any rights hereunder, and neither Borrower nor any Grantor may rely on the terms hereof.  Other than as expressly set forth herein, nothing in this Agreement impairs the Obligations of Borrower and the other Grantors to pay principal, interest, fees, and other amounts as provided in the First Lien Loan Documents and the Second Lien Note Documents. Except to the extent expressly provided in this Agreement, no Person will have a right to notice of a modification to, or action taken under, this Agreement or any First Lien Collateral Document (including the release or impairment of any Collateral) other than as a lender under a First Lien Credit Agreement, and then only to the extent expressly provided in the applicable First Lien Loan Documents.

 

8.16                        NO INDIRECT ACTIONS

 

Unless otherwise expressly stated, if a Party may not take an action under this Agreement, then it may not take that action indirectly, or assist or support any other Person in taking that action directly or indirectly. “Taking an action indirectly” means taking an action that is not expressly prohibited for the Party but is intended to have substantially the same effects as the prohibited action.

 

8.17                        COUNTERPARTS

 

This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which will constitute an original, but all of which when taken together will constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by telecopy or electronic facsimile or other electronic means will be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable, and each Party utilizing telecopy, electronic facsimile, or other electronic means for delivery will deliver a manually executed original counterpart to each other Party on request.

 

8.18                        ORIGINAL GRANTORS; ADDITIONAL GRANTORS

 

Borrower and each other Grantor on the date of this Agreement will constitute the original Grantors party hereto. The original Grantors will cause each Subsidiary of Borrower and of Holdings that becomes a Grantor after the date hereof contemporaneously to become a party hereto (as a Guarantor) by executing and delivering a joinder agreement (in form and substance satisfactory to First Lien Representatives) to First Lien Representatives. The Parties further agree that, notwithstanding any failure to take the actions required by the immediately preceding sentence, each Person that becomes a Grantor at any time (and any security granted by any such Person) will be subject to the provisions hereof as fully as if it constituted a Guarantor party hereto and had complied with the requirements of the immediately preceding sentence.

 

[signatures to follow]

 

48

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by its duly authorized officers as of the date first above written.

 

	
 
    	
PERCEPTIVE   CREDIT OPPORTUNITIES
    
	
 
    	
FUND,   LP, as Class A Representative and Control Agent
    
	
 
    	
By   its general partner, Perceptive Credit Opportunities GP, LLC
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Sandeep   Dixit
    
	
 
    	
 
    	
Name:
    	
Sandeep   Dixit
    
	
 
    	
 
    	
Title:
    	
Chief   Credit Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James Mannix
    
	
 
    	
 
    	
Name:
    	
James   Mannix
    
	
 
    	
 
    	
Title:
    	
COO
    
	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
Perceptive Credit   Opportunities Fund, LP
    
	
 
    	
c/o Perceptive Advisors   LLC
    
	
 
    	
499 Park Avenue, 25th   Floor
    
	
 
    	
New York, NY 10022
    
	
 
    	
Attention:
    	
Sandeep Dixit
    
	
 
    	
E-mail:
    	
Sandeep@perceptivelife.com
    
	
 
    	
 
    

 

[Signature Page to Intercreditor Agreement]

 

 

	
 
    	
MACQUARIE US TRADING   LLC, as Class B
    
	
 
    	
Agent
    
	
 
    	
By
    	
/s/ Joshua Karlin
    	
/s/ Anita Chiu
    
	
 
    	
 
    	
Name: Joshua Karlin
    	
Anita Chiu
    
	
 
    	
 
    	
Title: Authorized Signatory
    	
Associate Director
    
	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
 
    
	
 
    	
Macquarie US Trading   LLC
    
	
 
    	
225 West Washington   Street, 21st Floor
    
	
 
    	
Chicago, Illinois   60606
    
	
 
    	
Attention: Agency   Services — Mike Fredian
    
	
 
    	
Fax No.: (312) 262-6308
    
	
 
    	
Email:   MacquarieUST@cortlandglobal.com
    
	
 
    	
 
    
	
 
    	
With a copy (which   shall not constitute effective notice) to:
    
	
 
    	
 
    
	
 
    	
Macquarie US Trading   LLC
    
	
 
    	
125 West 55th Street
    
	
 
    	
New York, New York   10019
    
	
 
    	
Attention: Arvind Admal
    
	
 
    	
Fax No.: (212) 231-0629
    
	
 
    	
Email:   loan.admin@macquarie.com
    

 

[Signature Page to Intercreditor Agreement]

 

 

	
 
    	
CORTLAND CAPITAL MARKET   SERVICES
    
	
 
    	
LLC, as Second Lien   Collateral Agent
    
	
 
    	
By
    	
/s/ Emily Ergang Pappas
    
	
 
    	
 
    	
Name:
    	
Emily Ergang Pappas
    
	
 
    	
 
    	
Title:
    	
Associate Counsel
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Address for Notices:
    
	
 
    	
225 West Washington   Street
    
	
 
    	
Suite 2100
    
	
 
    	
Chicago, Illinois 60606
    
	
 
    	
Attn:
    	
Legal Department
    
	
 
    	
Attn.:
    	
Mike Fredian
    
	
 
    	
Fax:
    	
312-376-0751
    
	
 
    	
Email:
    	
legal@cortlandglobal.com
    
					

 

[Signature Page to Intercreditor Agreement]

 

 

Acknowledged and Agreed to by: 

 

	
KADMON PHARMACEUTICALS,   LLC
    
	
 
    
	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

KADMON HOLDINGS, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

 

KADMON CORPORATION, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

[Signature Page to Intercreditor Agreement]

 

 

KADMON RESEARCH INSTITUTE, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

THREE RIVERS RESEARCH INSTITUTE I, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

THREE RIVERS BIOLOGICS, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

[Signature Page to Intercreditor Agreement]

 

 

THREE RIVERS GLOBAL PHARMA, LLC

 

	
By
    	
/s/ Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Name: Harlan W. Waksal,   M.D.
    	
 
    
	
 
    	
Title: President and   Chief Executive Officer
    	
 
    

 

Address for Notices:

450 E. 29th Street

New York, NY 10016

Attn: Harlan W. Waksal, M.D.

Tel.: (212) 308-6000

Fax: (646) 666-7978

Email: harlan.waksal@kadmon.com

 

[Signature Page to Intercreditor Agreement]Exhibit 10.9

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

confidential

 

Execution Copy

 

FIRST AMENDED AND RESTATED LICENSE AGREEMENT

 

This FIRST AMENDED AND RESTATED LICENSE AGREEMENT (the “Agreement”), dated as of September   , 2011 (the “Execution Date”) and effective as of August 13, 2010 (the “Effective Date”) by and between Symphony Evolution, Inc., a Delaware corporation (“Symphony”) and Kadmon Corporation, LLC (f/k/a Kadmon Pharmaceuticals, LLC), a Delaware limited liability company (“Licensee”) (each of Symphony and Licensee being a “Party,” and collectively, the “Parties”).

 

BACKGROUND

 

A.            WHEREAS, Symphony and Licensee have entered into that certain License Agreement, dated August 13, 2010, as amended by that certain First Amendment to License Agreement dated May 18, 2011 (collectively, the “Original Agreement”); and

 

B.            WHEREAS, Symphony and Licensee now desire to amend the Original Agreement to broaden the Field and in certain other respects, and to restate, supersede and replace the Original Agreement in its entirety;

 

NOW, THEREFORE, in consideration of the foregoing and the covenants and premises contained herein, the Parties therefore agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

As used in this Agreement, the following terms have the meaning set forth in this ARTICLE 1:

 

1.1          “Affiliate” means any corporation or other entity that is directly or indirectly controlling, controlled by or under the common control with a Party hereto.  For the purpose of this Agreement, “control” includes the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity to elect directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority.

 

1.2          “Annual Net Worldwide Sales” means the cumulative total of all Net Sales of all Licensed Products in all jurisdictions during any calendar year during the term of this Agreement.

 

1.3          “Applicable Laws” means, with respect to each Party, all laws, codes, ordinances, statutes, rules, regulations, orders, decrees, judgments, injunctions, notices or binding agreements promulgated or entered into by any Governmental Authority having jurisdiction over such Party or such Party’s obligations under this Agreement, as the same may be amended, modified or repealed from time to time.

 

1.4          “Asia” means Australia, Bangladesh, Bhutan, Brunei, Burma (Myanmar), Cambodia, China, Hong Kong, India, Indonesia, Japan, Laos, Macao, Malaysia, Maldives, Mongolia, Nepal, New Zealand, North Korea, Pakistan, Philippines, Qatar, Singapore, South

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Korea, Sri Lanka, Taiwan, Thailand, and Vietnam, as their boundaries are defined as of the Effective Date, and including any successors of the foregoing countries to the extent within the boundaries of the countries set forth above as of the Effective Date.

 

1.5          “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

1.6          “Code” has the meaning set forth in Section 13.8.

 

1.7          “Combination Product” means either (i) a Licensed Product containing as its active ingredients both XL647 and one or more other active ingredients, or (ii) a combination therapy priced and sold in a single package comprised of a Licensed Product and one or more other therapeutically, prophylactically or diagnostically active products, in each case (i) and (ii), in all dosage forms, formulations, presentations, line extensions, and package configurations.  All references to Licensed Products in this Agreement shall be deemed to include Combination Products.

 

1.8          “Commercially Reasonable Efforts” means, with respect to any Licensed Product, exerting such efforts and employing such resources as would normally be exerted or employed by a company in a similar position as Licensee at the applicable time, using such company’s strategic core technology and consistent with practices commonly used in the research-based pharmaceutical industry, for a product at a similar state in its development or product life and of similar market potential, taking into account efficacy, safety, the competitiveness of alternative products in the marketplace, the patent and other proprietary position of the product, the likelihood of regulatory approval, and maintaining the first priority of rapid and effective development of the applicable product.

 

1.9          “Confidential Information” means the terms of this Agreement (but not its existence) and all trade secrets, know-how and other proprietary confidential information of a Party or its Affiliates, licensees or sublicensees (including, without limitation, technical, business, financial and market information, patent disclosures, patent applications, structures, models, techniques, formulae, processes, compositions, compounds, antigens, antibodies, hybridomas, apparatus, designs, sketches, photographs, plans, drawings, specifications, samples, reports, customer lists, price lists, studies, findings, inventions and ideas) disclosed by either Party or their Affiliates, licensees or sublicensees or obtained through observation or examination of the other’s information or developments, but only to the extent that such information is maintained as confidential by the Party, Affiliate, licensee or sublicensee providing same and provided that, Confidential Information shall only include information that is either marked as “CONFIDENTIAL” or that, due to the nature of the information, the receiving Party, Affiliate, licensee or sublicensee should reasonably know that it is confidential.

 

1.10        “Control” or “Controlled” means, with respect to any material, information or intellectual property right, that a Party owns or has a license to such item or right, and has the ability to grant the other Party access, a license or a sublicense (as applicable) in or to such item or right as provided in this Agreement without violating the terms of any agreement or other arrangement with any Third Party.

 

2

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.11        “Cumulative Net Asian Sales” means the cumulative total of all Net Sales of all Licensed Products in Asia during the term of this Agreement.

 

1.12        “Cumulative Net European Sales” means the cumulative total of all Net Sales of all Licensed Products in Europe during the term of this Agreement.

 

1.13        “Cumulative Net North American Sales” means the cumulative total of all Net Sales of all Licensed Products in North America during the term of this Agreement.

 

1.14        “Drug Master File” means the drug master file related to a Licensed Product filed with the United States Food and Drug Administration, or its equivalent in jurisdictions outside the United States.

 

1.15        “EMA” means the European Medicines Agency, or any successor agency thereto.

 

1.16        “Encumbrance” means any claim, charge, equitable interest, hypothecation, lien, mortgage, pledge, option, license, assignment, power of sale, retention of title, right of pre-emption, right of first refusal or security interest of any kind.

 

1.17        “Europe” means the European Union and Switzerland.

 

1.18        “European Union” means all countries that are officially recognized as member states of the European Union at any particular time during the effectiveness of this Agreement.

 

1.19        “Field” means, collectively, the Oncology Field and the Non-Oncology Field.

 

1.20        “First Commercial Sale” means, with respect to any Licensed Product, the first sale by Licensee or its sublicensees for use or consumption by the general public of such Licensed Product in a country after all required Regulatory Approvals have been granted, or otherwise permitted, by the governing health authority of such country.  “First Commercial Sale” shall not include the sale of any Licensed Product for use in clinical trials or for compassionate use prior to receipt of all Regulatory Approvals.

 

1.21        “Governmental Authority” means any United States or non-United States federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

 

1.22        “IND” means an Investigational New Drug Application to be filed with the United States Food and Drug Administration, or any equivalent application in jurisdictions outside the United States, including an “Investigational Medicinal Product Dossier” filed or to be filed with the EMA.

 

1.23        “Indemnified Parties” has the meaning set forth in Section 12.1.

 

1.24        “Indemnified Proceeding” has the meaning set forth in Section 12.2.

 

1.25        “Indemnifying Party” has the meaning set forth in Section 12.2.

 

3

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.26        “Indication in the Non-Oncology Field” means a clinical indication for use in the Non-Oncology Field, regardless of the severity, frequency or route of any treatment, and regardless of the patient class.

 

1.27        “Indication in the Oncology Field” means a clinical indication for use in the Oncology Field, regardless of the severity, frequency or route of any treatment, and regardless of the patient class.

 

1.28        “Knowledge of Symphony” means the actual knowledge of any executive officer or member of the board of directors of Symphony, without the duty of inquiry or investigation.

 

1.29        “Licensed IP” means the Licensed Patents and the Licensed Know-How.

 

1.30        “Licensed Know-How” means any and all know-how, trade secrets and proprietary technology that is Controlled by Symphony on the Effective Date and that relates to the Licensed Patents, Regulatory Files, XL647, the Oncology Program, the Non-Oncology Program or Licensed Products, their use, formulation, preparation or manufacture, or which is necessary or reasonably useful for the development, manufacture, import, use or sale of Licensed Products, including without limitation, enhancements, manufacturing processes or protocols, writings, documentation, data, technical information, techniques, results of experimentation and testing, diagnostic and prognostic assays, specifications, databases, any and all laboratory, research, pharmacological, toxicological, analytical, quality control, pre-clinical and clinical data, safety data, chemistry, manufacturing and control data and other information and materials, whether or not patentable.

 

1.31        “Licensed Patents” means any and all Patent Rights Controlled by Symphony on the Effective Date, a Valid Claim of which would be infringed by the development, manufacture, use, offer for sale, sale or importation of a Licensed Product, including the patents listed on Schedule 1.30 hereto.

 

1.32        “Licensed Product” means any pharmaceutical product in finished dosage form that contains XL647 as an active ingredient.

 

1.33        “Licensee Indemnified Party” has the meaning set forth in Section 12.1.

 

1.34        “Licensee XL647 IP” means, other than Licensed IP, all patents, patent applications, invention disclosures, know-how, trade secrets, proprietary technology, findings, improvements, discoveries, inventions, additions, modifications, enhancements, derivative works, clinical and safety data, chemistry, manufacturing and control data or changes to, arising from or related to the Licensed IP, Regulatory Files, XL647, the Oncology Program or the Non-Oncology Program (including without limitation methods of manufacture and formulations), in each case Controlled by Licensee or its Affiliates on or after the Effective Date.

 

1.35        “Loss” has the meaning set forth in Section 12.1.

 

1.36        “Master Clinical and Safety Database” has the meaning set forth in Section 3.7.

 

4

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.37        “NDA” means a New Drug Application to be filed with the United States Food and Drug Administration, or any equivalent application in jurisdictions outside the United States.

 

1.38        “Net Sales” means the amount invoiced or otherwise billed by Licensee or its Affiliates or sublicensees for sales or other commercial disposition of Licensed Products to all Third Party purchasers (the “gross invoice price”), commencing on the First Commercial Sale, less the following (to the extent included in such billing or otherwise actually allowed or incurred with respect to such sales):  (1) *** and *** actually allowed; (2) *** and *** (including, but not limited to, *** and ***); (3) *** and *** for and separately *** on the *** or other *** in the *** of ***, and (4) ***, other *** and *** to *** actually ***and *** on the ***or other *** in the *** of ***.  Net Sales shall also include the *** of all other ***received by Licensee as ***for the ***of *** ***, whether such ***is in *** in *** or another ***.

 

With respect to sales of Combination Products that are a Licensed Product containing as its active ingredients both XL647 and one or more other active ingredients, Net Sales shall be calculated on the basis of the gross invoice price of the Combination Product multiplied by a fraction, the numerator of which shall be the fair market value (determined in accordance with generally accepted accounting principles) of the product most closely comparable to the Combination Product that contains XL647 as the sole active ingredient and the denominator of which shall be the sum of (i) the fair market value (determined in accordance with generally accepted accounting principles) of the product most closely comparable to the Combination Product that contains XL647 as the sole active ingredient and (ii) the sum of the fair market values (determined in accordance with generally accepted accounting principles) of products, in each case most closely comparable to the Combination Product, that contain each of the other active ingredients as the sole active ingredient.

 

With respect to sales of Combination Products that are a combination therapy priced and sold in a single package, Net Sales shall be calculated on the basis of the gross invoice price of the Licensed Product sold without the other therapeutically, prophylactically or diagnostically active products; provided, however, that where the sum of the gross invoice price of the Licensed Product, and the gross invoice price(s) that of the other therapeutically, prophylactically or diagnostically active products is less than the gross invoice price of the Combination Product, then one-half of the difference between:  (i) the gross invoice price of the Combination Product and (ii) the sum of the gross invoice prices of the Licensed Product and the other therapeutically, prophylactically or diagnostically active products shall be added to the Net Sales of such Combination Product.

 

In the event that Product is sold only as a Combination Product and either Party reasonably believes that the calculation set forth in this Paragraph does not fairly reflect the value of the Product relative to the other active ingredients in the Combination Product, the Parties shall negotiate, in good faith, other means of calculating Net Sales with respect to Combination Products.  Lacking such agreement, Net Sales of such Combination Product shall be calculated on the basis of a gross invoice price equal to fifty percent (50%) of the gross invoice price of the Combination Product.

 

Licensee’s transfer of a Licensed Product to an Affiliate or sublicensee shall not result in any Net Sales, unless such Licensed Product is consumed by such Affiliate or sublicensee in the

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

course of its commercial activities.  Further, the disposition of Licensed Product for, or the use in, pre-clinical or clinical (Phase I — III) trials, other market-focused (Phase IV or V) trials, or other Regulatory Approvals or free samples shall not result in any Net Sales.

 

1.39        “Non-Oncology Field” means, collectively, the PKD Field and all therapeutic, prophylactic and diagnostic uses that are outside of both (i) the PKD Field, and (ii) the Oncology Field.

 

1.40        “Non-Oncology Program” means Symphony’s program pursuing indications for XL647 in the Non-Oncology Field and, as applicable, as further developed (including clinical development) by Licensee during the term of this Agreement.

 

1.41        “Non-Oncology Program Transfer” has the meaning set forth in Section 3.7.

 

1.42        “Non-Oncology Program Transfer Period” has the meaning set forth in Section 3.7.

 

1.43        “North America” means Canada, Mexico, the United States of America and their coming territories and possessions, including Puerto Rico.

 

1.44        “NSCLC” has the meaning set forth in Section 7.1.

 

1.45        “Off-label Use” means the use of a Licensed Product for clinical indications other than those stated in the labeling approved by the United States Food and Drug Administration or other applicable Regulatory Authority.

 

1.46        “Oncology Field” means all therapeutic, prophylactic and diagnostic uses for the treatment of cancer, including therapeutic, prophylactic and diagnostic uses for the treatment of primary or metastatic malignant lesions of the kidney.

 

1.47        “Oncology Program” means Symphony’s clinical program pursuing indications for XL647 in the Oncology Field and, as applicable, as further developed by Licensee during the term of this Agreement.

 

1.48        “Oncology Program Transfer” has the meaning set forth in Section 3.6.

 

1.49        “Oncology Program Transfer Period” has the meaning set forth in Section 3.6.

 

1.50        “Ongoing Non-Oncology Program Activities” has the meaning set forth in Section 3.7.

 

1.51        “Ongoing Oncology Program Activities” has the meaning set forth in Section 3.6.

 

1.52        “Patent Rights” means all intellectual property rights represented by or issuing from (a) the United States and foreign issued patents and patent applications listed in Schedule  1.30; (b) all patent applications filed in any jurisdiction corresponding to or claiming priority from the patents and/or patent applications referred to in the foregoing clause (a); (c) all divisionals, continuations and continuations-in-part of the patent applications referred to in the

 

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foregoing clauses (a) and (b); (d) all patents issuing from the patent applications referred to in the foregoing clauses (a), (b) and (c); (e) all reissues, re-examination certificates, registrations, confirmations, extensions, substitutions, renewals, amendments and supplementary protection certificates of the patent and/or patent applications referred to in the foregoing clauses (a) through (d); and (f) all foreign counterparts of the patents and patent applications referred to in the foregoing clauses (a) through (e).

 

1.53        “Person” means any individual, partnership (whether general or limited), limited liability company, corporation, trust, estate, association, nominee or other entity.

 

1.54        “Phase I Clinical Trial” means, as to a specific Licensed Product, a lawful study in humans, the principal purpose of which is a preliminary determination of safety of the Licensed Product for its intended use in healthy individuals or patients to support its continued testing in similar clinical trials as required for Regulatory Approval.

 

1.55        “Phase II Clinical Trial” means, as to a specific Licensed Product, (i) a controlled and lawful study in humans of the safety, dose ranging and efficacy of such Licensed Product, which is prospectively designed to generate sufficient data (if successful) to commence a Phase III Clinical Trial of such product, or (ii) the Phase II portion (as defined in the applicable protocol) of a clinical study designated as a “Phase I/II” study or other similar designation as approved by the FDA (or the equivalent designation in any other country); provided, however, in each case, that with respect to oncology, the study must be conducted on a series of patients with the same type and stage of cancer.

 

1.56        “Phase III Clinical Trial” means, as to a specific Licensed Product, (i) a controlled and lawful pivotal study in humans of the efficacy and safety of such Licensed Product, which is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a manner sufficient to obtain Regulatory Approval to market and sell that Licensed Product for the indication being investigated by the study, or (ii) the Phase III portion (as defined in the applicable protocol) of a clinical study designated as a “Phase II/III” study or other similar designation as approved by the FDA (or the equivalent designation in any other country) ); provided, however, in each case, that with respect to oncology, the study must be conducted on a series of patients with the same type and stage of cancer.

 

1.57        “PKD Field” means all therapeutic, prophylactic and diagnostic uses for the treatment of all forms of polycystic kidney disease, including without limitation both autosomal recessive and autosomal dominant forms.  For clarity, the PKD Field excludes therapeutic, prophylactic and diagnostic uses for the treatment of primary or metastatic malignant lesions of the kidney.

 

1.58        “Regulatory Approval” means (a) in the United States, approval by the United States Food and Drug Administration of an NDA or similar application for marketing approval, and satisfaction of all related applicable FDA registration and notification requirements, if any, or (b) in any other country, approval by Regulatory Authorities (including pricing and reimbursement approvals) having jurisdiction over such country of a single application or set of applications comparable to an NDA and satisfaction of all related applicable regulatory and notification requirements required for the marketing and sale of pharmaceuticals in such country.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

1.59        “Regulatory Authority” means the United States Food and Drug Administration, or any successor agency in the United States, or any Governmental Authority in any other country that is a counterpart to the FDA and has responsibility for granting registrations or other regulatory approval for the marketing, manufacture, storage, sale or use of drugs in such other country.

 

1.60        “Regulatory Files” means any Drug Master File, IND, NDA or any other filings filed with any Regulatory Authority with respect to the Oncology Program, the Non-Oncology Program or XL647 in the Field.

 

1.61        “sNDA” means a Supplemental New Drug Application to be filed with the United States Food and Drug Administration, or any equivalent application in jurisdictions outside the United States.

 

1.62        “Study Initiation” means the enrollment of the first patient in a Phase I Clinical Trial, Phase II Clinical Trial or Phase III Clinical Trial.

 

1.63        “Symphony Indemnified Party” has the meaning set forth in Section 12.1.

 

1.64        “Tangible Materials” means any tangible documentation, know-how, data, reports, records or other materials or information, whether written or electronic, that is Controlled by Symphony, embodying or related to the Licensed IP, Regulatory Files, XL647, the Oncology Program or the Non-Oncology Program, including, but not limited to, documentation, patent applications and invention disclosures.

 

1.65        “Third Party” means any Person other than a Party.

 

1.66        “Third Party Non-Oncology Contracts” has the meaning set forth in Section 3.5.

 

1.67        “Third Party Oncology Contracts” has the meaning set forth in Section 3.4.

 

1.68        “Trademarks” has the meaning set forth in Section 7.7.

 

1.69        “Valid Claim” means (i) a claim of an issued and unexpired patent which has not been held invalid in a final decision of a court of competent jurisdiction from which no appeal may be taken, and which has not been disclaimed, irrevocably abandoned or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise, or (ii) a claim of a pending patent application that has not been cancelled, withdrawn or abandoned or been pending for more than seven (7) years.

 

1.70        “XL647” means:

 

 

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ARTICLE 2
 LICENSE

 

2.1          Grant.  Subject to the terms and conditions of this Agreement, Symphony hereby grants Licensee a worldwide, exclusive (even as to Symphony), non-transferable (except as expressly provided herein), license under the Licensed IP (with the right to grant sublicenses as provided in Section 2.2) to make, have made, use, have used, sell, offer for sale, have sold, import, export, develop, and have developed Licensed Products in the Field.  For clarity, Symphony acknowledges and agrees that the right to “make, have made, use, have used, sell, offer for sale, have sold, import, export, develop, and have developed Licensed Products in the Field” includes the right to research, formulate, register, transport, distribute, promote, market and otherwise dispose of Licensed Products in the Field.

 

2.2          Sublicenses.  Licensee has the right to grant written sublicenses (in whole or in part and through one or more tiers of sublicensees) consistent in all respects with this Agreement, which sublicenses shall include, without limitation, a provision binding sublicensees to all terms hereof intended for the protection or benefit of Symphony (including without limitation that Symphony shall have the right to terminate such sublicense in the event that this Agreement is terminated pursuant to Section 7.2).  Licensee agrees to deliver to Symphony for informational purposes (and under an obligation of confidentiality) a true and correct copy of each sublicense granted by Licensee or any sublicensee and any modification or termination thereof within thirty (30) days after execution, modification or termination; provided, however, that Licensee may redact from such copy economic terms that are confidential and are not related to compliance with this Agreement as long as Licensee provides Symphony with all terms Symphony would reasonably deem necessary to insure that Licensee is meeting its obligations (including without limitation payment obligations) to Symphony under this Agreement.

 

2.3          No Implied Rights.  Only the license granted pursuant to the express terms of this Agreement is of any legal force or effect.  No other license rights are granted or created by implication, estoppel or otherwise.  All rights not explicitly granted hereunder are reserved.

 

2.4          Ownership; Right to Use.  Notwithstanding Section 2.1 above, the Parties acknowledge and agree that, as between the Parties, Symphony retains ownership of all Licensed IP.

 

ARTICLE 3
 DELIVERY/TRANSFER

 

3.1          Oncology Program Regulatory Files.  Within a reasonable time after the Effective Date, and no later than *** days thereafter, Symphony and Licensee shall, at Licensee’s sole cost and expense, take all actions necessary to effectuate the assignment to Licensee or its designee of the sponsorship to the Regulatory Files with respect to the Oncology Program.  Symphony shall, at the reasonable request of Licensee and at Licensee’s expense, perform any acts that Licensee may reasonably deem necessary or desirable to evidence or confirm Licensee’s ownership interest in such Regulatory Files, including, but not limited to, making further written assignments in a form reasonably determined by Licensee.  Without limiting the license rights

 

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granted under ARTICLE 2, the Parties understand and agree that the assignment of such Regulatory Files does not include an assignment of any Licensed IP.

 

3.2          Non-Oncology Program Regulatory Files.  Within a reasonable time after the Execution Date, and no later than ninety (90) days thereafter, Symphony and Licensee shall, at Licensee’s sole cost and expense, take all actions necessary to effectuate the assignment to Licensee or its designee of the sponsorship to the Regulatory Files with respect to the Non-Oncology Program.  Symphony shall, at the reasonable request of Licensee and at Licensee’s expense, perform any acts that Licensee may reasonably deem necessary or desirable to evidence or confirm Licensee’s ownership interest in such Regulatory Files, including, but not limited to, making further written assignments in a form reasonably determined by Licensee.  Without limiting the license rights granted under ARTICLE 2, the Parties understand and agree that the assignment of such Regulatory Files does not include an assignment of any Licensed IP.

 

3.3          Tangible Materials.  Within a reasonable time after the Effective Date, and no later than ninety (90) days thereafter, Symphony shall, at Licensee’s sole cost and expense, deliver to Licensee copies of all then-existing Tangible Materials related to the Oncology Field.  Within a reasonable time after the Execution Date, and no later than ninety (90) days thereafter, Symphony shall, at Licensee’s sole cost and expense, deliver to Licensee copies of all then-existing Tangible Materials related to the Non-Oncology Field that are not already in the possession of Licensee.

 

3.4          Third Party Oncology Contracts.  Symphony shall, during the ninety (90) day period following the Effective Date, at Licensee’s sole cost and expense, use commercially reasonable efforts to (i) transfer to Licensee any Third Party contracts listed in Schedule 3.4 (the “Third Party Oncology Contracts”), or (ii) assist Licensee in establishing an independent contractual relationship with such Third Parties.  Licensee shall not assume or be responsible for any liabilities or obligations of Symphony under any Third Party Oncology Contracts that arose thereunder, or relate to periods, prior to the Effective Date (which liabilities and obligations shall be retained by and shall remain the sole responsibility and obligation of Symphony), but Licensee shall be responsible for all liabilities and obligations related to all Third Party Oncology Contracts arising thereunder, or relating to periods, on or after the Effective Date, regardless of whether such Third Party Oncology Contracts are transferred to Licensee.

 

3.5          Third Party Non-Oncology Contracts.  Symphony shall, during the ninety (90) day period following the Execution Date, at Licensee’s sole cost and expense, use commercially reasonable efforts to (i) transfer to Licensee any Third Party contracts listed in Schedule 3.5 (the “Third Party Non-Oncology Contracts”), or (ii) assist Licensee in establishing an independent contractual relationship with such Third Parties.  Licensee shall not assume or be responsible for any liabilities or obligations of Symphony under any Third Party Non-Oncology Contracts that arose thereunder, or relate to periods, prior to the Execution Date (which liabilities and obligations shall, as between the Parties, be retained by and shall remain the sole responsibility and obligation of, Symphony), but Licensee shall be responsible for all liabilities and obligations related to all Third Party Non-Oncology Contracts arising thereunder, or relating to periods, on or after the Effective Date, regardless of whether such Third Party Non-Oncology Contracts are transferred to Licensee.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

3.6          Oncology Program Transfer, Responsibilities and Interim Program Management.  To the extent not otherwise provided in this Agreement, the Parties shall cooperate to fully transition the Oncology Program and all related activities to Licensee or its designee (the “Oncology Program Transfer”) within one hundred twenty (120) days after the Effective Date (the “Oncology Program Transfer Period”).  Notwithstanding the foregoing, Licensee acknowledges and agrees that, subsequent to the Effective Date, it is and shall be solely responsible for the Oncology Program and all related activities, liabilities and obligations, including without limitation the active, ongoing development, clinical and regulatory activities and obligations related to Licensed Products in the Oncology Field that, as of the Effective Date, are being conducted and/or managed by or on behalf of Symphony (including by RRD International, LLC) (the “Ongoing Oncology Program Activities”).  Symphony shall be responsible for the Oncology Program and all related activities, liabilities and obligations arising, or relating to periods, prior to the Effective Date, including without limitation development, clinical and regulatory activities and obligations related to Licensed Products in the Oncology Field arising, or relating to periods, prior to the Effective Date.  During the Oncology Program Transfer Period, Symphony shall, on behalf of Licensee and at Licensee’s sole cost and expense, continue to conduct and/or manage (and/or have conducted and/or managed) the Oncology Program and all Ongoing Oncology Program Activities, consistent with past practice, to the extent that the Oncology Program and such Ongoing Oncology Program Activities have not been transferred to Licensee or its designee.

 

3.7          Non-Oncology Program Transfer, Responsibilities and Interim Program Management.  To the extent not otherwise provided in this Agreement, the Parties shall cooperate to fully transition the Non-Oncology Program and all related activities to Licensee or its designee (the “Non-Oncology Program Transfer”) within one hundred twenty (120) days after the Execution Date (the “Non-Oncology Program Transfer Period”).  Notwithstanding the foregoing, Licensee acknowledges and agrees that, subsequent to the Execution Date, it is and shall be solely responsible for the Non-Oncology Program and all related activities, liabilities and obligations, including without limitation the active, ongoing development, clinical and regulatory activities and obligations related to Licensed Products in the Non-Oncology Field that, prior to the Execution Date, had been conducted and/or managed by or on behalf of Symphony or its former licensees (including by RRD International, LLC) (the “Ongoing Non-Oncology Program Activities”).  Symphony shall be responsible for the Non-Oncology Program and all related activities, liabilities and obligations arising, or relating to periods, prior to the Execution Date, including without limitation development, clinical and regulatory activities and obligations related to Licensed Products in the Non-Oncology Field arising, or relating to periods, prior to the Execution Date.  During the Non-Oncology Program Transfer Period, Symphony shall, on behalf of Licensee and at Licensee’s sole cost and expense, continue to conduct and/or manage (and/or have conducted and/or managed) the Non-Oncology Program and all Ongoing Non-Oncology Program Activities, consistent with past practice, to the extent that the Non-Oncology Program and such Ongoing Non-Oncology Program Activities have not been transferred to Licensee or its designee.

 

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ARTICLE 4
 CONSIDERATION

 

4.1          Initial Fee.  On the Effective Date, Licensee shall pay Symphony an initial non-refundable fee of ***.

 

4.2          Oncology Milestone Payments.

 

4.2.1       Initial Fee.  On or before June 30, 2011, Licensee shall pay Symphony a non-refundable fee of ***.

 

4.2.2       September 2011 Fee.  On or before ***, Licensee shall pay Symphony a non-refundable fee of ***.

 

4.2.3       Development Milestones.  Within *** days following the first achievement by Licensee of each of the following milestones with respect to any Licensed Product, Licensee shall provide Symphony with written notice of such achievement and shall pay Symphony the applicable payments below:

 

	
Event
    	
 
    	
Payment
    
	
1.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
2.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
3.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
4.    *** of *** for a *** in the *** of a ***   in ***
    	
 
    	
***
    
	
5.    *** of *** for a *** in the *** of a ***   in the ***
    	
 
    	
***
    
	
6.    *** of *** for a *** in the *** of a ***   in ***
    	
 
    	
***
    
	
7.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
8.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
9.    The *** of an *** for a *** in the *** of   a *** in ***
    	
 
    	
***
    
	
10.  *** of *** for a *** in the *** of a *** in   ***
    	
 
    	
***
    
	
11.  *** of *** for a *** in the *** of a *** in   the ***
    	
 
    	
***
    
	
12.  *** of *** for a *** in the *** of a *** in   ***
    	
 
    	
***
    
	
13.  The *** of an *** for *** in the *** of a   *** in ***
    	
 
    	
***
    
	
14.  The *** of an *** for *** in the *** of a   *** in ***
    	
 
    	
***
    
	
15.  The *** of an *** for *** in the *** of a   *** in ***
    	
 
    	
***
    
	
16.  *** of *** for *** in the *** of a *** in   ***
    	
 
    	
***
    
	
17.  *** of *** for *** in the *** of a *** in   the ***
    	
 
    	
***
    
	
18.  *** of *** for *** in the *** of a *** in   ***
    	
 
    	
***
    

 

4.2.4       Sales Milestones.  Within *** days following the first achievement by Licensee of each of the following milestones with respect to any Licensed Product, Licensee shall provide Symphony with written notice of such achievement and shall pay Symphony the applicable payments below:

 

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Event
    	
 
    	
Payment
    
	
1.    *** of all *** in the *** or *** ***
    	
 
    	
***
    
	
2.             *** of all *** in the *** or *** ***
    	
 
    	
***
    
	
3.             *** of all *** in the *** or *** ***
    	
 
    	
***
    
	
4.             *** of all *** in the *** or *** ***
    	
 
    	
***
    

 

For the avoidance of doubt, more than one of the foregoing milestones may occur in any given calendar year.  For illustrative purposes only, in the event that Annual Net Worldwide Sales of all Licensed Products in the Oncology Field reaches $*** by March 15th of a given calendar year, then Symphony shall be entitled to a milestone payment of $*** within *** (***) days thereafter; and, in the event that Annual Net Worldwide Sales of all Licensed Products in the Oncology Field reaches $*** on October 15th of the same calendar year, Symphony shall be entitled to the milestone payment of $*** within *** days thereafter.

 

For the further avoidance of doubt, (i) each of the milestone payments set forth in this Section 4.2.4 shall be payable only once upon the initial achievement of the applicable milestone event, (ii) no amounts shall be due under this Section 4.2.4 for subsequent or repeated achievement of such milestone event and (iii) for the purposes of this Section 4.2.4, any modified, improved or “next generation” Licensed Product shall be considered the same Licensed Product as the original Licensed Product, regardless of product name or trademark.

 

4.3          Non-Oncology Milestone Payments.

 

4.3.1       Initial Fee.  On the Execution Date, Licensee shall pay Symphony a non-refundable fee of *** ($***).

 

4.3.2       December 2011 Fee.  On or before December 31, 2011, Licensee shall pay Symphony a non-refundable fee of *** ($***).

 

4.3.3       Development Fee.  No later than the earlier of (i) *** months following Study Initiation of any Phase III Clinical Trial of a Licensed Product in the Non-Oncology Field or (ii) *** days following Licensee entering into a written agreement with any non-Affiliate Third Party (including any sublicense granted pursuant to U) that grants any such Third Party any right or contingent right to commercialize any Licensed Products in the Non-Oncology Field (or any portion thereof), Licensee shall pay Symphony a non-refundable fee of *** ($***) (the “Development Fee”).  In addition, Licensee shall promptly, but in no event later than *** days thereafter, provide Symphony with written notice of (i) Study Initiation of any Phase III Clinical Trial, or (ii) Licensee entering into a written agreement with any non-Affiliate Third Party, in each case that obligates Licensee to pay the Development Fee pursuant to the immediately preceding sentence.  Notwithstanding the initial sentence of this Section 4.3.4, if any Phase III Clinical Trial that obligates Licensee to pay the Development Fee pursuant to the initial

 

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sentence of this Section 4.3.4 is discontinued prior to the actual payment thereof by Licensee (within the prescribed time period), then no Development Fee payment will be due with respect to such discontinued Phase III Clinical Trial; provided, however, that the reinstitution or recommencement of such discontinued Phase III Clinical Trial or Study Initiation of any other Phase III Clinical Trial of a Licensed Product in the Non-Oncology Field shall once again obligate Licensee to pay the Development Fee (within the prescribed time period).  Once paid to Symphony, the Development Fee is non-refundable.

 

4.3.4       Development Milestones.  Within *** days following each achievement by Licensee of each of the following milestones with respect to any Licensed Product, Licensee shall provide Symphony with written notice of such achievement and shall pay Symphony the applicable payments below:

 

	
Event
    	
 
    	
Payment
    
	
1.             *** of *** for each *** in the *** of a ***   in ***
    	
 
    	
***
    
	
2.             *** of *** for each *** in the *** of a ***   in ***
    	
 
    	
***
    
	
3.             *** of *** for each *** in the *** of a ***   in ***
    	
 
    	
***
    
	
4.             *** of *** for each *** in the *** of a ***   in ***
    	
 
    	
***
    

 

4.3.5       Sales Milestones.  Within *** days following the achievement by Licensee of each of the following milestones with respect to Licensed Products in the Non-Oncology Field, Licensee shall provide Symphony with written notice of such achievement and shall pay Symphony the applicable payments below:

 

	
Event
    	
 
    	
Payment
    
	
1.             *** of all *** in the *** or ***
    	
 
    	
***
    
	
2.             *** of all *** in the *** or ***
    	
 
    	
***
    
	
3.             *** of all *** in the *** or ***
    	
 
    	
***
    

 

For the avoidance of doubt, (i) each of the milestone payments set forth in this Section 4.3.5  shall be payable only once upon the initial achievement of the applicable milestone event, (ii) no amounts shall be due under this Section 4.3.5 for subsequent or repeated achievement of such milestone event and (iii) for the purposes of this Section 4.3.5, any modified, improved or “next generation” Licensed Product shall be considered the same Licensed Product as the original Licensed Product, regardless of product name or trademark.

 

4.4          Royalties.

 

4.4.1       Percentage.  Commencing on the First Commercial Sale of any Licensed Product and ending upon the expiration of the royalty term set forth in Section 4.4.2, within *** days following the end of each calendar quarter,

 

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Licensee shall pay royalties on the Annual Net Worldwide Sales of Licensed Products in an amount equal to the applicable percentages set forth below:

 

	
 
    	
 
    	
Royalty Payable
    	
 
    
	
Annual Net Worldwide Sales
    	
 
    	
Oncology Field
    	
 
    	
Non-Oncology Field
    	
 
    
	
$***
    	
 
    	
***
    	
 
    	
***
    	
 
    
	
> $***
    	
 
    	
***
    	
 
    	
***
    	
 
    
	
> $***
    	
 
    	
***
    	
 
    	
***
    	
 
    

 

For example, if the Annual Net Worldwide Sales of all Licensed Products in the Oncology Field for a given calendar year are $*** and the Annual Net Worldwide Sales of all Licensed Products in the Non-Oncology Field are $*** (i.e. the Annual Net Worldwide Sales of all Licensed Products are $***) then the royalty payable to Symphony on such Annual Net Worldwide Sales under this Section 4.4.1 for that calendar year would be $***, calculated as follows:  ((***% x $***) + (***% x $***) + (***% x $***)) + (***% x $***).

 

4.4.2       Royalty Term.  Royalties due under this Section 4.4 shall be payable on a country-by-country and Licensed Product-by-Licensed Product basis until the expiration of the last-to-expire Valid Claim of any Licensed Patent covering such Licensed Product in such country.

 

4.4.3       No Multiple Royalties.  No multiple royalties shall be payable because any Licensed Product, its manufacture, use, lease, sale or import is or shall be covered by more than one Licensed Patent.

 

4.4.4       Adjustments for Third Party Licenses.  To the extent that, subsequent to the Effective Date, Licensee is reasonably required to obtain licenses to issued non-Affiliate Third-Party patents or other intellectual property that dominates the Licensed Patents, in order to make, have made, sell, offer for sale, have sold, import and export XL647 in the Field in a particular country in order to avoid infringing such Third-Party intellectual property, Licensee may deduct from the running royalty due to Symphony for that country the amounts actually paid to license such Third-Party patents or intellectual property; provided, however, that the application of such deductions shall not (either singly or in the aggregate) reduce the royalty otherwise payable to Symphony for such country under Section 4.4.1 by more than (***%) in any given calendar quarter.  For clarity, Licensee shall have no right to make any deductions pursuant to this Section 4.4.4 in respect of any license related to formulation or drug-delivery technologies or methods.

 

4.4.5       Adjustments for Competing Products.  In the event that, in any country, a Licensed Product is covered only by a pending patent application(s) within the Licensed Patents (and not by any issued patent included in the Licensed Patents), and if Licensee can demonstrate that a Third Party (other than an Affiliate of Licensee) is selling a competing product having at least a (***%) market share in

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

such country, which competing product would infringe one or more claims of such pending patent application if issued as a patent included in the Licensed Patents, then the royalties payable hereunder with respect to such Licensed Product in such country shall be reduced by (***%) during the period before the patent is issued.

 

4.5          Call Option.  Commencing on the Effective Date and ending on December 31, 2013, Licensee, in its sole discretion, shall have the right to purchase, according to the following schedules, all of the future economic obligations owed to Symphony pursuant to Sections 4.2, and 4.3 of this Agreement with respect to Licensed Products in the Oncology Field and/or the Non-Oncology Field:

 

Licensed Products in the Oncology Field:

 

	
Calendar Year of Purchase
    	
 
    	
Payment
    	
 
    
	
2011
    	
 
    	
$
    	
***
    	
 
    
	
2012
    	
 
    	
$
    	
***
    	
 
    
	
2013
    	
 
    	
$
    	
***
    	
 
    

 

Licensed Products in the Non-Oncology Field:

 

	
Calendar Year of Purchase
    	
 
    	
Payment
    	
 
    
	
2011
    	
 
    	
$
    	
***
    	
 
    
	
2012
    	
 
    	
$
    	
***
    	
 
    
	
2013
    	
 
    	
$
    	
***
    	
 
    

 

4.6          Existing Third Party Licenses.  Except with respect to the Third Party Oncology Contracts and Third Party Non-Oncology Contracts, Symphony shall remain responsible for the payment of royalties and other payment obligations, if any, due to Third Parties under any Licensed IP which has been licensed to Symphony and is sublicensed to Licensee hereunder, including without limitation any payments due under existing Third Party license agreements.

 

4.7          Projections.  Without limiting Licensee’s diligence obligations with respect to Licensed Products (including Sections 7.1, 7.2 and 7.3), Symphony and Licensee acknowledge and agree that nothing in this Agreement shall be construed as representing an estimate or projection of anticipated sales of any Licensed Product, and that the milestones and Net Sales levels set forth in Sections 4.2, 4.3 and 4.4 or elsewhere in this Agreement or that have otherwise been discussed by the Parties are merely intended to define the milestone payments and royalty obligations to Symphony in the event such milestones and/or Net Sales levels are achieved.  NEITHER SYMPHONY NOR LICENSEE MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT LICENSEE WILL BE ABLE TO SUCCESSFULLY COMMERCIALIZE ANY LICENSED PRODUCT OR, IF

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

COMMERCIALIZED, THAT ANY PARTICULAR NET SALES LEVEL OF SUCH LICENSED PRODUCT WILL BE ACHIEVED.

 

ARTICLE 5
 PAYMENTS

 

5.1          Timing.  Except as otherwise provided in this Agreement, Licensee shall make all milestone, royalty and other payments that are due within *** days after the occurrence of the applicable event, the end of the applicable period, or the receipt of an invoice from Symphony.

 

5.2          Mode of Payment; Currency Conversion.  As used in this Agreement, all references to “U.S. dollars,” “US$,” “dollars” and “$” are to the legal currency of the United States, and Licensee shall make all payments required under this Agreement by wire transfer in immediately available funds to an account designated by Symphony, in U.S. dollars.  All calculations of Net Sales, Annual Net Asian Sales, Annual Net European Sales, Annual Net North American Sales and Annual Net Worldwide Sales to determine the payment of sales milestones and royalties due hereunder shall first be determined in the currency of the country in which the Licensed Products in question were sold and then converted into equivalent U.S. dollars.  Such conversion shall be made at the exchange rate published in The Wall Street Journal, U.S. Eastern Edition, on the date of the occurrence of the applicable event or, as applicable, on the last Business Day of the period to which such payment pertains.

 

5.3          Taxes.  Symphony shall bear any and all taxes levied on account of any payment received by Symphony under this Agreement.  In the event that Licensee is required, under Applicable Laws, to withhold any deduction or tax from any payment due to Symphony under this Agreement, such amount shall be deducted from the payment to be made by Licensee and paid to the proper taxing authority; provided, however, that Licensee shall take reasonable and lawful actions to avoid and minimize such withholding and promptly notify Symphony so that Symphony may take lawful actions to avoid and minimize such withholding.  Licensee shall promptly furnish Symphony with copies of any tax certificate or other documentation evidencing such withholding as necessary to satisfy the requirements of the relevant Governmental Authority related to any application by Symphony for foreign tax credit for such payment.  Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect.

 

5.4          Interest.  Any amount owed by Licensee hereunder that is not paid by the date that such amount is due to be paid under this Agreement shall accrue interest from the date that it first became due and payable until the date that it is paid at the rate of (***%) over *** day LIBOR as reported in The Wall Street Journal, U.S. Eastern Edition.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

ARTICLE 6
 ROYALTY REPORTS AND RECORDS

 

6.1          Royalty Reports.

 

6.1.1       Frequency of Reports.

 

(a)           Upon First Commercial Sale.  Licensee shall report to Symphony the date of the First Commercial Sale of each Licensed Product within *** Business Days of occurrence in each country.

 

(b)           After First Commercial Sale.  After the First Commercial Sale of a Licensed Product in any country, Licensee shall deliver reports to Symphony within *** days after the end of each calendar quarter, containing information concerning the immediately preceding calendar quarter, as further described in Section 6.1.2.

 

6.1.2       Content of Reports.  Each report delivered by Licensee to Symphony shall contain in reasonable detail the calculation of the royalties payable to Symphony for the immediately preceding calendar quarter, including at least the following information:

 

(a)           the number of Licensed Products sold or distributed by Licensee, its Affiliates and sublicensees to Third Parties in each country;

 

(b)           the gross price charged by Licensee, its Affiliates and sublicensees for each Licensed Product;

 

(c)           calculation of Net Sales for each Licensed Product for the applicable calendar quarter in each country, including a listing of applicable deductions;

 

(d)           total royalty payable on Net Sales of each Licensed Product in U.S. dollars, together with the exchange rates used for conversion;

 

(e)           the number of sublicenses entered into for the Licensed IP and/or Licensed Products; and

 

(f)            reference to the case numbers and patent numbers which cover the actual Licensed Products sold, so that Symphony can appropriately attribute royalties to particular Licensed Patents.

 

If no amounts are due to Symphony for any calendar quarter, the report shall so state.

 

6.2          Records Retention; Audit.  Licensee, its Affiliates and its sublicensees shall keep and maintain complete and accurate records relating to the rights and obligations under this Agreement and the Net Sales, Annual Net Asian Sales, Annual Net European Sales, Annual Net North American Sales and Annual Net Worldwide Sales of Licensed Products for a period of *** calendar years after the year to which they pertain, and in sufficient detail to permit Symphony to confirm the accuracy of sales milestone and royalty payments due, any reports delivered to Symphony and compliance in other respects with this Agreement.  At the request and expense (except as provided below) of Symphony, Licensee, its Affiliates and its sublicensees shall permit an independent accounting firm of national recognition to examine such records and all other materials relating to or relevant to Net Sales, Annual Net Asian Sales,

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Annual Net European Sales, Annual Net North American Sales, Annual Net Worldwide Sales or compliance in other respects with this Agreement.  If, as a result of any inspection of the books and records of Licensee, its Affiliates or its sublicensees, it is shown that Licensee’s royalty payments under this Agreement were less than the amount which should have been paid, or that a sales milestone payment should have been paid or should have been paid earlier, then Licensee shall make all payments required to eliminate any discrepancy revealed by said inspection in accordance with Section 5.1, plus interest thereon pursuant to Section 5.4.  Such interest shall be calculated from the date such underpaid amount was due until the date such underpaid amount is actually paid.  In addition, if such underpaid amount is in excess of (***%) of the amount that actually should have been paid by Licensee, then Licensee shall reimburse Symphony for the reasonable cost of such audit.  In the event of an overpayment, such amounts shall be deducted from Symphony’s royalties until fully credited.

 

ARTICLE 7
 DUE DILIGENCE

 

7.1          Diligence Efforts.  Licensee shall (and shall require its sublicensees to) use Commercially Reasonable Efforts to, as promptly as is reasonably commercially feasible, (i) develop and commercialize one or more Licensed Products in each of the Oncology Field and the Non-Oncology Field, (ii) commence and continue preclinical studies and clinical trials of Licensed Products in each of the Oncology Field and the Non-Oncology Field in the United States and such other worldwide markets as Licensee elects to commercialize the Licensed Products, (iii) obtain such approvals as may be necessary for the sale of Licensed Products in each of the Oncology Field and the Non-Oncology Field in the United States and such other worldwide markets as Licensee elects to commercialize the Licensed Products, and (iv) fulfill market demand and achieve maximum sales of Licensed Products in each of the Oncology Field and the Non-Oncology Field in the United States and such other worldwide markets as Licensee elects to commercialize the Licensed Products.  Without limiting the generality of the foregoing, Licensee shall commence and complete the following as promptly as is reasonably commercially feasible:

 

Diligence Requirements

1.              The following Phase III Clinical Trial of a Licensed Product in the Oncology Field:  A multi-center Phase III Double-blind, Randomized and Controlled Clinical Trial of XL647 versus Erlotinib in subjects with non-small cell lung cancer that have progressed after first line or second line chemotherapy.  The primary endpoint of this trial will be median overall survival assessed by the number of endpoints (deaths) that occur in order to give 80% power to detect an approximate 2.8 month increase in survival with 95% sensitivity.  This trial will enroll all second and third line NSCLC patients, which is the group for which Erlotinib (Tarceva) was licensed in 2005 and will be a global trial carried out in both Europe and the United States.

2.              A Phase II Clinical Trial of a Licensed Product in the PKD Field.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

7.2          Diligence Milestones; Reversion.

 

7.2.1       Oncology Field.  If Study Initiation of the Phase III Clinical Trial in the Oncology Field referenced in Section 7.1 does not occur by December 31, 2011, then (i) Licensee shall pay Symphony a non-refundable fee equal to *** less any amounts actually paid by Licensee to Symphony pursuant to Section 4.2.1 and Section 4.2.2 and (ii) Symphony shall have the right to terminate this Agreement with respect to the Oncology Field, effective immediately.

 

7.2.2       Non-Oncology Field.  If Study Initiation of the Phase II Clinical Trial in the PKD Field referenced in Section 7.1 does not occur by December 31, 2012, then (i) Licensee shall pay Symphony a non-refundable fee equal to *** and (ii) Symphony shall have the right to terminate this Agreement with respect to the Non-Oncology Field, effective immediately.

 

7.3          Lack of Diligence as Material Breach.  If Licensee materially fails to fulfill its obligations under Section 7.1 in either the Oncology Field or the Non-Oncology Field, then Symphony may treat such failure as a material breach with respect to such Field in accordance with Section 13.4.1.  Without limiting the foregoing, the Parties agree that Licensee shall automatically be deemed to have materially failed to fulfill its obligations under Section 7.1 with respect to the Oncology Field or the Non-Oncology Field, as applicable, if, beginning on the first anniversary of the Effective Date (with respect to the Oncology Field) or the Execution Date (with respect to the Non-Oncology Field), during any subsequent *** month period prior to Regulatory Approval of a Licensed Product for use in each of the Oncology Field and the Non-Oncology Field, as applicable, Licensee or its sublicensees fail to (i) commence or actively continue Phase I Clinical Trials, Phase II Clinical Trials or Phase III Clinical Trials of Licensed Products in the Oncology Field and the Non-Oncology Field, as applicable, (ii) actively prepare, file or have under active review an NDA related to Licensed Products in the Oncology Field and the Non-Oncology Field, as applicable, or (iii) obtain Regulatory Approval for the sale of Licensed Products in the Oncology Field and the Non-Oncology Field, as applicable.

 

7.4          Diligence Reports.  As Symphony may request from time to time, Licensee shall keep Symphony informed as to Licensee’s progress in developing and commercializing Licensed Products under this Agreement.  Without limiting the generality of the foregoing, Licensee shall deliver quarterly reports to Symphony, within *** Business Days after the end of each calendar quarter, containing reasonably detailed information concerning (i) Licensee’s (and, as applicable, its sublicensees’) progress with respect to the development and commercialization of Licensed Products during the immediately preceding calendar quarter and (ii) what progress Licensee expects to make during the next *** months.  Such report shall include at least the following information:  (i) a list of all active and closed Phase I Clinical Trials, Phase II Clinical Trials and Phase III Clinical Trials of Licensed Products in each of the Oncology Field and the Non-Oncology Field and the anticipated timing for any results, (ii) a list of all anticipated Phase I Clinical Trials, Phase II Clinical Trials and Phase III Clinical Trials of Licensed Products in each of the Oncology Field and the Non-Oncology Field and the anticipated timing thereof, (iii) a list of planned Regulatory Filings and Regulatory Approvals and the anticipated timing of such filings and approvals, (iv) the current status and anticipated timetable for all commercial launches of Licensed Products in each of the Oncology Field and the Non-Oncology Field, (v) a

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

reasonably detailed listing and description of all other material efforts being made and anticipated to be made to develop and commercialize Licensed Products in each of the Oncology Field and the Non-Oncology Field.

 

7.5          Control and Ownership of Regulatory Filings.  Licensee shall have sole discretion, control and responsibility to draft, prepare, submit and file, at its own cost and expense, all Regulatory Files with respect to Licensed Products in the Field.  All such Regulatory Files shall be in the name of, and be owned solely by, Licensee.  In addition, Licensee shall have sole control and responsibility in the conduct of all pricing and reimbursement approval proceedings related to Licensed Products in the Field.

 

7.6          Foreign Registration.  Licensee agrees to register this Agreement with any foreign Governmental Authority which requires such registration, and Licensee shall pay all costs and legal fees in connection therewith.

 

7.7          Trademarks.  Subject to Section 7.8 and Section 7.10, Licensee shall have the right to market the Licensed Products under trademarks selected by Licensee (collectively, the “Trademarks”).  Licensee shall own all right, title and interest in and to such Trademarks and shall bear all costs and expenses of registering, and maintaining the registration of, such Trademarks.

 

7.8          Use of Symphony’s Name; Publicity.  Licensee shall have no right to use any trademark owned or used by (or confusingly similar to any trademark owned or used by) Symphony without Symphony’s prior written consent.  Neither Party shall have the right to publicize this Agreement or its relationship with the other Party without the other Party’s prior written approval, except as may be required to comply with Applicable Laws (in which event, the publicizing Party shall provide the other Party with an opportunity to review and comment on any such materials and the publicizing Party shall not unreasonably refuse to accept any comments made by the other Party).

 

7.9          Patent Marking.  Licensee agrees to mark all Licensed Products sold pursuant to this Agreement in accordance with the applicable statute or regulations relating to patent marking in the country or countries of manufacture and sale thereof.

 

7.10        Preventing Off-Label Uses.

 

7.10.1     Commercially Reasonable Efforts.  Licensee shall use Commercially Reasonable Efforts to minimize and prevent Off-label Uses.  Such efforts shall include, without limitation, establishing, coordinating and maintaining, to the extent commercially practicable, clearly differentiated dosage forms and branding and marketing strategies.

 

7.10.2     Prohibitions.  In furtherance of Section 7.10.1, neither Licensee nor any of its sublicensees shall, directly or indirectly with any Third Party, with respect to any Licensed Product (i) market or promote any Licensed Product for use in any field other than the field for which Regulatory Approval has been obtained or (ii) publish, distribute or otherwise disseminate (including verbally) any information

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

postulating, encouraging or suggesting that any Licensed Product could have uses in any field other than the field for which Regulatory Approval has been obtained.

 

ARTICLE 8
 CONFIDENTIAL INFORMATION

 

8.1          Confidentiality, Permitted Use and Disclosure.  Each Party shall and shall cause its Affiliates, licensees and sublicensees to:

 

8.1.1       keep all Confidential Information disclosed to it by the other Party or such other Party’s Affiliates, licensees or sublicensees in strictest confidence;

 

8.1.2       not directly or indirectly duplicate, use or permit the use of any Confidential Information of the other Party or such other Party’s Affiliates, licensees or sublicensees, except as reasonably required to accomplish the purpose of the disclosure of the Confidential Information or to exercise rights granted hereunder; and

 

8.1.3       not directly or indirectly disclose any Confidential Information disclosed to it by the other Party or such other Party’s Affiliates, licensees or sublicensees, other than to employees or agents of the receiving Party, Affiliate, licensee or sublicensee who reasonably require knowledge of such Confidential Information to accomplish the purpose of the disclosure of the Confidential Information.  The receiving Party, Affiliate, licensee or sublicensee shall ensure that each such employee and agent maintains in strictest confidence all Confidential Information disclosed to such employee or agent.

 

8.2          Property of Disclosing Party; Return of Information.  Confidential Information of a disclosing Party, Affiliate, licensee or sublicensee and all embodiments and expressions of such Confidential Information, including, without limitation, all reports, notes, reprints, descriptions, copies and summaries thereof, shall be and remain the property of the disclosing Party, Affiliate, licensee or sublicensee at all times, and, to the extent in the possession of a receiving Party, Affiliate, licensee or sub licensee or under its control, shall be returned to the disclosing Party, Affiliate, licensee or sublicensee upon the request of the disclosing Party, Affiliate, licensee or sublicensee except for a single copy that may be retained in the legal department of the receiving Party, Affiliate, licensee or sublicensee for record keeping purposes only.

 

8.3          Exclusion.  The receiving Party, Affiliate, licensee or sublicensee shall not be liable for the disclosure or use of any Confidential Information of a disclosing Party, Affiliate, licensee or sublicensee which was:

 

8.3.1       at the time of disclosure by the disclosing Party, Affiliate, licensee or sublicensee to the receiving Party, Affiliate, licensee or sublicensee, in the possession of the receiving Party, Affiliate, licensee or sublicensee as shown by contemporaneous written records of the receiving Party, Affiliate, licensee or sublicensee, not as a result of any unauthorized act or omission on the part of the receiving Party, Affiliate, licensee or sublicensee or any Third Party;

 

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8.3.2       at the time of use by the receiving Party, Affiliate, licensee or sublicensee, independently developed by the receiving Party, Affiliate, licensee or sublicensee without reference to or reliance on information from the disclosing Party, Affiliate, licensee or sublicensee;

 

8.3.3       required to be disclosed by law so long as the disclosing Party, Affiliate, licensee or sublicensee is promptly given prior written notice of the required disclosure; or

 

8.3.4       is (at the time of disclosure) or becomes (after the time of disclosure) known to the public or part of the public domain through no breach of this Agreement by the recipient Party or its Affiliates.

 

8.4          Authorized Disclosures.  In addition to disclosures allowed under Section 8.3, each Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is necessary in the following instances:  (i) filing or prosecuting Licensed Patents as permitted by this Agreement; (ii) regulatory filings for Licensed Products such Party has a license or right to develop hereunder; (iii) prosecuting or defending litigation as permitted by this Agreement; and (iv) disclosure to consultants, investors, bankers, lawyers, accountants, agents or other Third Parties in connection with due diligence or similar investigations by such Third Parties, provided, in each case, that any such consultant, investor, banker, lawyer, accountant, agent or Third Party is bound to maintain the confidentiality of the Confidential Information in a manner no less protective of such Confidential Information as the confidentiality provisions of this Agreement.

 

ARTICLE 9
 REPRESENTATIONS AND WARRANTIES

 

9.1          Mutual Representations and Warranties.  Each Party represents and warrants to the other Party that:

 

9.1.1       it has the power and authority to execute and deliver this Agreement and to perform the acts required of it hereunder,

 

9.1.2       the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action, and this Agreement constitutes such Party’s legal, valid and binding obligation enforceable against it in accordance with its terms, and

 

9.1.3       the execution, delivery and performance of this Agreement does not and will not, as of the Effective Date, (i) violate, conflict with or result in the breach of any provision of its certificate of incorporation, operating agreement or by laws, (ii) violate any Applicable Law, or (iii) result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or require any consent under any contract, agreement or arrangement by which it is bound.

 

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

9.2          Licensee Representations and Warranties.  Licensee represents and warrants to Symphony that it will have on hand when due under this Agreement sufficient cash or cash equivalents to satisfy the payment obligations set forth in Section 7.2.

 

 

9.3          Symphony Representations and Warranties.  Symphony represents and warrants to Licensee that, as of the Effective Date:

 

9.3.1       it is the owner of all right, title, and interest in and to (i) all of the Licensed Patents listed on Schedule 1.30 and (ii) the Regulatory Files listed on Schedule 9.3.1;

 

9.3.2       to the Knowledge of Symphony, no Third Party is engaging in any activity that infringes or misappropriates the Licensed IP;

 

9.3.3       to the Knowledge of Symphony (i) no element of the Licensed IP has been adjudged invalid or unenforceable in whole or part, and (ii) the issued patents included among the Licensed Patents listed on Schedule 1.30 constitute all of the issued patents within the Patent Rights and are valid and enforceable;

 

9.3.4       no actions or claims have been asserted in writing or are pending or, to the Knowledge of Symphony, have been threatened, against Symphony alleging that the manufacture, use or sale of XL647 misappropriates or infringes the intellectual property rights of any Third Party;

 

9.3.5       to the Knowledge of Symphony, the manufacture, use or sale of XL647 by Licensee (or its sublicensees) in strict accordance with the licenses herein and other terms of this Agreement will not misappropriate or infringe the intellectual property rights of any Third Party; provided, however, that notwithstanding anything in this Agreement to the contrary, Symphony makes no representation or warranty that any process or method used or employed in connection with the manufacture, use or sale of XL647 or any Licensed Product will not misappropriate or infringe the intellectual property rights of any Third Party or result in a breach of any Third Party license agreement to which Symphony is a party;

 

9.3.6       Symphony is not in material default under any Third Party license agreement relating in any respect to the Licensed IP nor to Symphony’s Knowledge, is any other party to any such Third Party license agreement and each such license agreement is in full force and effect as of the date hereof;

 

9.3.7       Symphony has the right to grant to Licensee the licenses that it purports to grant hereunder and to assign the Regulatory Filings to Licensee hereunder;

 

9.3.8       Symphony has the right to use and disclose and to enable Licensee to use and disclose (in each case under appropriate conditions of confidentiality) the Licensed Know-How free, to the Knowledge of Symphony, from Encumbrances (other than Encumbrances imposed by this Agreement); and

 

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9.3.9       no Affiliate of Symphony owns any intellectual property currently contemplated by Symphony or the applicable Affiliate of Symphony to be used in connection with the manufacture, use, sale, importation, exportation or development of Licensed Products in the Field.

 

9.4          Disclaimer.  Nothing in this Agreement is or shall be construed as:

 

9.4.1       an obligation to bring or prosecute actions or suits against Third Parties for infringement or misappropriation of any of the Licensed IP; or

 

9.4.2       granting by implication, estoppel, or otherwise any licenses or rights under patents or other rights of Symphony or Third Parties other than as provided in ARTICLE 2, regardless of whether such patents or other rights are dominant or subordinate to any patent within the Licensed IP.

 

9.5          No Other Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN SECTION  9.1, SYMPHONY MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUE OR OTHERWISE, AND THE LICENSED IP, LICENSED PRODUCTS (AND THE COMPOUNDS THEREIN), TANGIBLE MATERIALS AND REGULATORY FILES ARE PROVIDED “AS IS” WITH NO REPRESENTATIONS OR WARRANTIES OF ANY KIND.  SYMPHONY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR NON-INFRINGEMENT.  SYMPHONY DOES NOT WARRANT THE PERFORMANCE OF ANY PRODUCT (OR THE COMPOUND(S) THEREIN), INCLUDING THEIR SAFETY, EFFECTIVENESS OR COMMERCIAL VIABILITY.

 

ARTICLE 10
 INTELLECTUAL PROPERTY OWNERSHIP AND PROSECUTION

 

10.1        Ownership.

 

10.1.1     Licensed IP.  The Parties acknowledge and agree that, as between Symphony and Licensee, Symphony or its licensors are the owner of all right, title and interest in and to the Licensed IP.

 

10.1.2     Licensee XL647 IP.  The Parties acknowledge and agree that, as between Symphony and Licensee, Licensee or its licensors are the owner of all right, title and interest in and to all Licensee XL647 IP.

 

10.2        Prosecution and Maintenance of Patents.

 

10.2.1     Prosecution and Maintenance.  As between Symphony and Licensee, Licensee shall have the sole responsibility to prepare, file, prosecute and maintain (i) the Licensed Patents (in the name of Symphony) and (ii) patents and patent applications related to the Licensee XL647 IP (in the name of Licensee) for which, as between Licensee and its licensors, Licensee has patent prosecution and

 

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maintenance rights at such time.  Licensee shall provide Symphony with an update and the details regarding the filing, prosecution and maintenance status for each such patent and patent application upon request and/or promptly following the end of each calendar quarter.  Licensee shall provide Symphony with drafts of all proposed filings (including without limitation the initial application as well as any material correspondence with any Third Parties related to any filings) in a manner that allows Symphony a reasonable opportunity for review and comment before such filings are made or due.  Licensee shall not unreasonably refuse to accept any suggestions, recommendations or instructions from Symphony concerning the preparation, filing, prosecution, defense and maintenance of such patents and patent applications, and, to the extent otherwise possible, shall undertake the preparation, filing, prosecution and defense of such patents and patent applications in a way that will not be detrimental to the research, development or commercialization of any Licensed Product.  Licensee will not abandon, dedicate to the public, fail to maintain or allow any of the foregoing to occur with respect to any Licensed Patent without Symphony’s prior written consent.

 

10.2.2     Cooperation.  Symphony shall, at its own cost and expense, provide Licensee with reasonable cooperation in connection with the preparation, filing, prosecution and maintenance of patents and patent applications pursuant to this Section 10.2.

 

10.2.3     Broad Claims.  Licensee shall use commercially reasonable efforts to seek the allowance of broad generic claims in all Licensed Patents and in all patents and patent applications related to the Licensee XL647 IP, consistent with Licensee’s determination of enforceability, business considerations and other factors.

 

10.2.4     Funding.  Licensee shall bear all costs and expenses (including attorneys fees) incurred by Licensee in connection with the preparation, filing, prosecution and maintenance of all patents and patent applications pursuant to this Section 10.2.

 

10.2.5     Interferences and/or Reexaminations.  Unless the Parties mutually agree otherwise in writing, (i) Licensee shall not be responsible for the costs of any interference or reexamination initiated by Symphony with respect to any Licensed Patent, and (ii) Symphony shall not be responsible for the costs of any interference or reexamination initiated by Licensee with respect to any patents or patent applications related to the Licensee XL647 IP.

 

ARTICLE 11
 ENFORCEMENT

 

11.1        Notification.  Each Party agrees to immediately notify the other Party in writing upon becoming aware of any infringement, misappropriation, illegal use or misuse of the

 

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Licensed IP and provide to the other Party all reasonably-available evidence of such infringement.

 

11.2        Licensee Right to Enforce.  So long as Licensee remains the exclusive licensee of the applicable Licensed Patents or other Licensed IP in the Field, as between the Parties, Licensee shall have the first right, but not the obligation, to take action against others in the courts, administrative agencies or otherwise, at Licensee’s cost and expense, to prevent or terminate infringement, misappropriation, illegal use or misuse of the Licensed Patents or other Licensed IP in the Field.  Symphony shall, at Licensee’s expense, cooperate with and reasonably assist Licensee in any such action if so requested by Licensee, and, upon Licensee’s request, execute, file and deliver all documents and proof necessary for such purpose, including being named as a party to such litigation if requested by Licensee or if required by law.  Symphony shall otherwise have the right to participate and be represented by its own counsel at its own expense in any such action, suit or proceeding.  Licensee shall not enter into any settlement or compromise of such action, suit or proceeding that affects or concerns the validity, enforceability, or ownership of any Licensed Patents or other Licensed IP without the prior written consent of Symphony, which consent shall not be unreasonably withheld or delayed.

 

11.3        Symphony Right to Enforce.  In the event that Licensee desists or fails (within *** days after notification) to take action to prevent or terminate any infringement, misappropriation, illegal use or misuse of the Licensed Patents or other Licensed IP in the Field, then Symphony shall have the right, at its sole discretion, to take such action.  Licensee shall, at Symphony’s expense, cooperate with and reasonably assist Symphony in any such action if so requested by Symphony, and, upon Symphony’s request, execute, file and deliver all documents and proof necessary for such purpose, including being named as a party to such litigation if requested by Symphony or if required by law.  Licensee shall otherwise have the right to participate and be represented by its own counsel at its own expense in any such action, suit or proceeding.

 

11.4        Declaratory Judgment Actions:  Licensed IP.  In the event that a declaratory judgment action alleging invalidity, unenforceability, or non-infringement of the Licensed Patents or other Licensed IP is brought against either Symphony or Licensee, Licensee shall, so long as Licensee remains the exclusive licensee of the applicable Licensed Patents or Licensed IP in the Field, have the first right to defend such action at its own expense.  In the event that Symphony is a named party in such action Symphony agrees that Licensee shall control the defense of such action (including the terms and conditions of any settlement thereof) and all strategic decisions related to any such action shall be made by Licensee; provided, however, that (i) Symphony shall have the right to passively participate and be represented by its own counsel at its own expense in any such action, and (ii) Licensee shall give reasonable consideration to any strategic proposals or suggestions made by Symphony.  Symphony shall, at Licensee’s expense, cooperate with and reasonably assist Licensee in any such action if so requested by Licensee, and, upon Licensee’s request, execute, file and deliver all documents and proof necessary for such purpose, including being named as a party to such action if requested by Licensee or if required by law.  In the event that Licensee desists or fails (within ninety (90) days after notification) to defend such action, Symphony shall have the right to defend such action at its own expense.  In the event that Symphony exercises its right to defend such action, Licensee agrees that Symphony shall control the defense of such action (including the terms and

 

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conditions of any settlement thereof) and all strategic decisions related to any such action shall be made by Symphony; provided, however, that (i) Licensee shall have the right to passively participate and be represented by its own counsel at its own expense in any such action, and (ii) Symphony shall give reasonable consideration to any strategic proposals or suggestions made by Licensee.  Licensee shall, at Symphony’s expense, cooperate with and reasonably assist Symphony in any such action if so requested by Symphony, and, upon Symphony’s request, execute, file and deliver all documents and proof necessary for such purpose.

 

11.5        Recoveries.  All damages or other compensation of any kind recovered in such action, suit, or proceeding or from any settlement or compromise brought under this ARTICLE 11 shall first be used to reimburse each Party for its expenses in connection with such action, suit or proceeding, (in proportion to the expenses of each Party if recovery is insufficient to cover all such expenses) and the remainder of such recovery shall be allocated one hundred percent (100%) to the Party hereto taking the lead in the action, suit or proceeding.

 

ARTICLE 12
 INDEMNIFICATION AND LIMITATION OF LIABILITY

 

12.1        Indemnity.  To the greatest extent permitted by Applicable Law, Licensee shall indemnify and hold harmless Symphony, its Affiliates, and each of their respective officers, directors, employees, agents, members, managers, successors and assigns (each, a “Symphony Indemnified Party”) and Symphony shall indemnify and hold harmless Licensee, its Affiliates and each of their respective officers, directors, employees, agents, members, successors and assigns (each, a “Licensee Indemnified Party” and collectively, together with the Symphony Indemnified Party, the “Indemnified Parties”), from and against any and all claims, losses, diminution in value, costs, interest, awards, judgments, penalties, fees (including reasonable fees for attorneys and other professionals), court costs, liabilities, damages and expenses incurred by any Symphony Indemnified Party or Licensee Indemnified Party (irrespective of whether any such Symphony Indemnified Party or Licensee Indemnified Party, as applicable, is a party to the action for which indemnification hereunder is sought), (collectively, a “Loss”) as a result of, arising out of, or relating to any and all Third Party suits, claims, actions, proceedings, investigations, litigation or demands based upon:

 

12.1.1     in the case of Licensee being the Indemnifying Party, (A) any breach of any representation or warranty made by Licensee herein or in any certificate, instrument or document delivered hereunder, (B) any breach of any covenant, agreement or obligation of Licensee contained herein, or in any certificate, instrument or document delivered hereunder, or (C) any act of gross negligence or willful misconduct by Licensee in performing its obligations under this Agreement, (D) the development, manufacture, use, handling, storage, sale or other disposition of any Licensed Product, or (E) the exercise by Licensee, its Affiliates or sublicense of the rights granted hereunder; in each case, except (1) with respect to Losses for which Licensee is entitled to indemnification under this ARTICLE 12 or (2) to the extent such Loss arises from the gross negligence or willful misconduct of a Symphony Indemnified Party, and

 

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12.1.2     in the case of Symphony being the Indemnifying Party, (A) any breach of any representation or warranty made by Symphony herein or in any certificate, instrument or document delivered hereunder, (B) any breach of any covenant, agreement or obligation of Symphony contained herein, or in any certificate, instrument or document delivered hereunder, (C) any act of gross negligence or willful misconduct by Symphony in performing its obligations under this Agreement; in each case, except (1) with respect to Losses for which Symphony is entitled to indemnification under this ARTICLE 12 or (2) to the extent such Loss arises from the gross negligence or willful misconduct of a Licensee Indemnified Party.

 

To the extent that the foregoing undertakings by Licensee and/or Symphony may be unenforceable for any reason, such Party shall make the maximum contribution to the payment and satisfaction of any Loss that is permissible under Applicable Law.

 

12.2        Notice of Claims.  Any Indemnified Party that proposes to assert a right to be indemnified under this ARTICLE 12 shall notify Licensee or Symphony, as applicable (the “Indemnifying Party”), promptly after receipt of notice of commencement of any action, suit or proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect of which a claim is to be made under this ARTICLE 12, or the incurrence or realization of any Loss in respect of which a claim is to be made under this ARTICLE 12, of the commencement of such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of all relevant documents, including all papers served and claims made, but the omission to so notify the applicable Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or realization shall not relieve (a) such Indemnifying Party from any liability that it may have to such Indemnified Party under this ARTICLE 12 or otherwise, except, as to such Indemnifying Party’s liability under this ARTICLE 12, to the extent, but only to the extent, that such Indemnifying Party shall have been prejudiced by such omission, or (b) any other indemnitor from liability that it may have to any Indemnified Party.

 

12.3        Defense of Proceedings.  In case any Indemnified Proceeding shall be brought against any Indemnified Party, it shall notify the applicable Indemnifying Party of the commencement thereof and such Indemnifying Party shall be entitled to participate in, and provided such Indemnified Proceeding involves a claim solely for money damages and does not seek an injunction or other equitable relief against the Indemnified Party and is not a criminal or regulatory action, to assume the defense of, such Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified Party, and after notice from such Indemnifying Party to such Indemnified Party of such Indemnifying Party’s election to so assume the defense thereof and the failure by such Indemnified Party to object to such counsel within ten (10) Business Days following its receipt of such notice, such Indemnifying Party shall not be liable to such Indemnified Party for legal or other expenses related to such Indemnified Proceedings incurred after such notice of election to assume such defense except as provided below and except for the reasonable costs of investigating, monitoring or cooperating in such defense subsequently incurred by such Indemnified Party reasonably necessary in connection with the defense thereof.  Such Indemnified Party shall have the right to employ its counsel in any such Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless:

 

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12.3.1     the employment of counsel by such Indemnified Party at the expense of the applicable Indemnifying Party has been authorized in writing by such Indemnifying Party;

 

12.3.2     such Indemnified Party shall have reasonably concluded in its good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between the applicable Indemnifying Party and such Indemnified Party in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes of action available to such Indemnified Party (it being agreed that in any case referred to in this clause (b) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party);

 

12.3.3     the applicable Indemnifying Party shall not have employed counsel reasonably acceptable to the Indemnified Party, to assume the defense of such Indemnified Proceeding within a reasonable time after notice of the commencement thereof (provided, however, that this clause shall not be deemed to constitute a waiver of any conflict of interest that may arise with respect to any such counsel); or

 

12.3.4     any counsel employed by the applicable Indemnifying Party shall fail to timely commence or diligently conduct the defense of such Indemnified Proceeding;

 

in each of which cases the fees and expenses of counsel for such Indemnified Party shall be at the expense of such Indemnifying Party.  Only one counsel shall be retained by all Indemnified Parties with respect to any Indemnified Proceeding, unless counsel for any Indemnified Party reasonably concludes in good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between such Indemnified Party and one or more other Indemnified Parties in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes or action available to such Indemnified Party.

 

12.4        Settlement.  Without the prior written consent of an Indemnified Party, an Indemnifying Party shall not settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding, unless such settlement, compromise, consent or related judgment (i) includes an unconditional release of such Indemnified Party from all liability for Losses arising out of such claim, action, investigation, suit or other legal proceeding, (ii) provides for the payment of money damages as the sole relief for the claimant (whether at law or in equity), (iii) involves no finding or admission of any violation of law or the rights of any Person by the Indemnified Party, and (iv) is not in the nature of a criminal or regulatory action.  No Indemnified Party shall settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding in respect of which any payment would

 

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result hereunder or under the Operative Documents without the prior written consent of the Indemnifying Party, such consent not to be unreasonably conditioned, withheld or delayed.

 

12.5        Limitation of Liability.  EXCEPT WITH RESPECT TO EITHER PARTY’S INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 12.1, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, MANAGERS, EMPLOYEES, INDEPENDENT CONTRACTORS OR AGENTS SHALL HAVE ANY LIABILITY OF ANY TYPE (INCLUDING, BUT NOT LIMITED TO, CLAIMS IN CONTRACT, NEGLIGENCE AND TORT LIABILITY) FOR ANY SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, THE LOSS OF OPPORTUNITY, LOSS OF USE OR LOSS OF REVENUE OR PROFIT IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE SERVICES PERFORMED HEREUNDER, EVEN IF SUCH DAMAGES MAY HAVE BEEN FORESEEABLE.

 

12.6        Insurance.  Licensee shall (and shall cause all sublicense to) carry and maintain in full force and effect insurance, including product liability, directors and officers, and errors and omissions insurance, with respect to its activities under this Agreement and which shall protect Symphony and its Indemnified Parties with respect to events covered by Section 12.1.  Such insurance (i) shall list Symphony as an additional named insured thereunder, and (ii) shall be in such amounts and subject to such deductibles as are prevailing in the industry from time to time; provided, however, that Licensee shall maintain a minimum of an aggregate of *** in product liability insurance, and aggregate of *** in directors and officers insurance and an aggregate of *** in errors and omissions insurance.  Licensee shall continue to maintain such insurance after the expiration or termination of this Agreement during any period in which Licensee or any of its Affiliates or sub licensees continue to develop, manufacture, use, store, sell or otherwise distribute or dispose of any product that was a Licensed Product under this Agreement.

 

ARTICLE 13
 TERM AND TERMINATION

 

13.1        Term.  The term of this Agreement will commence on the Effective Date and end upon the expiration of the last to expire patent within the Licensed Patents, unless earlier terminated in accordance with this ARTICLE 13.

 

13.2        Effect of Expiration.  Upon the expiration of this Agreement, the license granted to Licensee pursuant to Section 2.1 shall become perpetual, irrevocable, and fully paid-up.

 

13.3        Permissive Termination.  Licensee may terminate this Agreement at any time by providing Symphony notice in writing at least *** months prior to the effective date of termination; provided, however, that Symphony shall have the right to accelerate such termination at Symphony’s option on no less than *** days’ prior written notice to Licensee.

 

13.4        Termination for Cause.

 

13.4.1     Either Party (the “Terminating Party”) may, in its sole discretion, terminate this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field if the other Party (the “Breaching Party”) has materially

 

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breached or defaulted in the performance of any of its obligations hereunder, and such breach or default has continued for sixty (60) days after written notice thereof is provided to the Breaching Party by the Terminating Party; provided, however, that if any such material breach or default relates solely to either the Oncology Field or the Non-Oncology Field, then the Terminating Party shall have no right to terminate the Agreement as a whole, but shall have the right to terminate the Agreement only with respect to the Oncology Field or the Non-Oncology Field, as applicable.  Any such termination shall become effective at the end of such sixty (60) day period unless the Breaching Party has cured or remedied any such breach or default prior to the expiration of such period.  Notwithstanding the above, in the case of a failure to pay any amount due hereunder the period for cure of any such default following notice thereof shall be thirty (30) days and, unless payment is made within such period, the termination shall become effective at the end of such period.

 

13.4.2     Symphony may terminate this Agreement, effective upon written notice to Licensee, if Licensee either brings or intentionally and materially assists a Third Party in any action denying infringement of or otherwise challenging any of the Licensed Patents.

 

13.5        Termination for Insolvency.  If voluntary or involuntary proceedings by or against a Party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for such Party, or proceedings are instituted by or against such Party for corporate reorganization or the dissolution of such Party, which proceedings, if involuntary, are not dismissed within ninety (90) days after the date of filing, or if such Party makes an assignment for the benefit of creditors, or substantially all of the assets of such Party are seized or attached and not released within ninety (90) days thereafter, the other Party may immediately terminate this Agreement effective upon notice of such termination.

 

13.6        Effect of Termination.

 

13.6.1     Accrued Rights and Obligations.  Termination of this Agreement, in whole or with respect to either the Oncology Field or the Non-Oncology Field, for any reason does not release any Party hereto from any liability which, at the time of such termination, has already accrued to the other Party or which is attributable to a period prior to such termination, nor preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.  It is understood and agreed that monetary damages may not be a sufficient remedy for any breach of this Agreement and that the nonbreaching Party may be entitled to seek injunctive relief as a remedy for any such breach.  Such remedy shall not be considered to be the exclusive remedy for any such breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.

 

13.6.2     Licenses.  Upon termination of this Agreement as a whole, all licenses granted to Licensee hereunder shall terminate.  Upon termination of this Agreement with respect to either the Oncology Field or the Non-Oncology Field,

 

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all licenses granted to Licensee hereunder shall automatically be deemed to be terminated with respect to the terminated field.

 

13.6.3     Sublicenses.  Upon the termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, (i) any and all sublicenses granted by Licensee pursuant to Section 2.2 shall, to the extent that such sublicenses relate to the terminated field, remain in effect according to its terms (including, as provided in Section 2.2, the term providing that Symphony can terminate such sublicense in the event that this Agreement is terminated pursuant to Section 7.2) with Symphony becoming the licensor thereunder; (ii) Symphony shall be entitled to payments from the sublicensees under such sublicenses in accordance with ARTICLE 4, ARTICLE 5 and ARTICLE 6; and (iii) such sublicenses shall be deemed assigned to Symphony to the extent necessary to ensure continued payments.

 

13.6.4     Payment; Return of Confidential Information.  Upon the termination of this Agreement, Licensee shall promptly:  (A) pay to Symphony all outstanding costs and expenses, if any, accrued pursuant to this Agreement prior to termination; and (B) at its own expense, return to Symphony all relevant records and materials in Licensee’s possession or control containing Symphony’s or its Affiliates’, licensees’ or sublicensees’ Confidential Information; provided, however, that in the event this Agreement is terminated solely with respect to the Oncology Field or the Non-Oncology Field, Licensee shall not be obligated to return records and materials that relate to the non-terminated field.

 

13.6.5     Cease Manufacture.  Subject to Section 13.6.6, upon the termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, Licensee shall discontinue the manufacture, use, marketing, sale and distribution of all Licensed Products that Licensee is no longer licensed to manufacture, use, market, sell or distribute.

 

13.6.6     Stock on Hand.  Upon the termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, Licensee may sell or otherwise dispose of any then-existing stock of any Licensed Product that it is no longer licensed to manufacture, use, market, sell or distribute until *** months after such termination, subject to ARTICLE 4, ARTICLE 5 and ARTICLE 6 and the other applicable terms of this Agreement.

 

13.6.7     Reversion of Rights.  Upon the termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, all, or the applicable portion, of the rights sold, assigned or transferred to Licensee hereunder shall revert to Symphony, and Licensee agrees to execute all instruments necessary and desirable to revest said rights in Symphony.

 

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13.7        Program Transfer.

 

13.7.1     Upon the termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, in addition to any other remedies available at law or in equity, and in addition to its obligations pursuant to Section 13.6, Licensee:

 

(a)           shall promptly transfer to Symphony (or its designee) or provide copies of all tangible documentation, know-how, data, reports, records or other materials or information, whether written or electronic, that is Controlled by Licensee embodying or related to the Licensed IP, Regulatory Files, XL647 or, as applicable, the Oncology Program or the Non-Oncology Program;

 

(b)           shall promptly provide Symphony (or its designee) with all information regarding, and execute all documents, reasonably necessary or desirable to transfer to Symphony (or its designee) all, Regulatory Files in Licensee’s name;

 

(c)           agrees to negotiate in good faith to grant Symphony, on commercially reasonably terms, a worldwide license under the Licensee XL647 IP (with the right to grant sublicenses through one or more tiers of sublicensees) to develop, make, have made, use, offer for sale, sell and import Licensed Products in the Field;

 

(d)           to the extent Licensee owns or holds any right, title and interest in any trademarks under which any Licensed Product has been or is being marketed or sold in the Field, assigns the same to Symphony; and

 

(e)           shall promptly transfer or use commercially reasonable efforts to assist Symphony (or its designee) to obtain all other materials, documentation, processes, Third Party licenses, and other items used by Licensee or any Third Party in connection with the performance of this Agreement to the extent necessary for Symphony (or its designee) to continue the development and commercialization of Licensed Products in the Field;

 

provided, however, that if this Agreement is terminated with respect to only either the Oncology Field or the Non-Oncology Field, the foregoing obligations shall be limited to the terminated field.

 

13.7.2     Survival.  ARTICLES 1, 5, 8, 12, 14 and Sections 9.5, 10.1, 11.2 through 11.6 (solely with respect to actions pending at such time) 13.6, and 13.7 of this Agreement shall survive the expiration or termination of this Agreement in whole or with respect to either the Oncology Field or the Non-Oncology Field, for any reason.

 

13.8        Bankruptcy.  All rights and licenses granted under this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Code”), licenses to “Intellectual Property” as defined in the Code.  The Parties agree that each Party shall retain and may fully exercise all of its rights and elections under the Code.

 

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ARTICLE 14
 MISCELLANEOUS PROVISIONS

 

14.1        Events of Force Majeure.  Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under or in breach of any provision of this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement (except with respect to payment obligations due under this Agreement) when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying.  For purposes of this Agreement, force majeure shall be defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers.  In such event, Licensee or Symphony, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue.  The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and for thirty (30) days thereafter.  To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure.

 

14.2        Notices.  Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing and shall be deemed given only if delivered to the Party personally or sent to the Party by facsimile transmission (promptly followed by a hard-copy delivered in accordance with this Section 14.2), by next Business Day delivery by a nationally recognized courier service, or by registered or certified mail (return receipt requested), with postage and registration or certification fees thereon prepaid, addressed to the Party at its address set forth below:

 

	
 
    	
Licensee:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Kadmon   Corporation, LLC

400   Madison Ave 

New   York, New York 10017 

Attention:   Steven N. Gordon 

Facsimile:   (212) 308-3900
    
	
 
    	
 
    	
 
    
	
 
    	
Symphony:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Symphony Evolution, Inc.

7361 Calhoun Place, Suite 325 

Rockville, MD 20850 

Attn:   Charles Finn 

Facsimile:   (301) 762-6154
    
	
 
    	
 
    	
 
    
	
 
    	
with   a copy to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Symphony   Capital Partners, L.P.

875   Third Avenue 
    

 

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3rd   Floor 

New   York, NY 10022 

Attn:   Mark Kessel 

Facsimile:   (212) 632-5401
    

 

or to such other address as such Party may from time to time specify by notice given in the manner provided herein to each other Party entitled to receive notice hereunder.

 

14.3        Entire Agreement.  This Agreement (including any Annexes, Schedules, Exhibits or other attachments hereto) constitutes the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement may be used to interpret or vary the meaning of the terms and conditions hereof.  This Agreement (i) supersedes any prior or contemporaneous agreements and understandings, whether written or oral, between the Parties with respect to the subject matter hereof, and (ii) amends, restates, supersedes and replaces the Original Agreement in its entirety.

 

14.4        Assignment.  Neither Party may assign or otherwise transfer this Agreement without the prior written consent of the other Party; provided, however, that (i) Licensee may assign this Agreement or any of its rights and obligations hereunder without the consent of Symphony (A) to an Affiliate or (B) in connection with a merger or the sale (by stock or assets) of all or substantially all of the assets of Licensee to which this Agreement relates; and (ii) Symphony may assign this Agreement to any Person without the prior, written consent of Licensee.  Assignment of this Agreement by either Party shall not relieve the assignor of its obligations hereunder.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

 

14.5        Headings.  The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of the Agreement.

 

14.6        Independent Contractor.  Each Party shall be acting as an independent contractor in performing under this Agreement and shall not be considered or deemed to be an agent, employee, joint venturer or partner of the other Party.

 

14.7        Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.

 

14.8        Compliance with Laws.  In performing under this Agreement, each Party shall comply with all Applicable Laws, including without limitation, those of the United States Food and Drug Administration and all foreign laws affecting this Agreement or the sale of Licensed Products in the Field.

 

36

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

14.9                        Export Controls.  Licensee and its Affiliates and sublicensees shall comply with all Applicable Laws controlling the export of certain commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce.  Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries.  Licensee hereby gives written assurance that it will comply with, and will cause its Affiliates and sublicensees to comply with, all United States export control laws and regulations, that it bears sole responsibility for any violation of such laws and regulations by itself or its Affiliates or sublicensees, and that it will indemnify and hold Symphony harmless for the consequences of any such violation.

 

14.10                 Amendment.  This Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of all Parties.

 

14.11                 Governing Law; Consent to Jurisdiction and Service of Process.

 

14.11.1       This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

14.11.2       Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in The City of New York, Borough of Manhattan, and any appellate court from any jurisdiction thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such federal court.  Each of the Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any Party may otherwise have to bring any action or proceeding relating to this Agreement.

 

14.11.3       Each of the Parties irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court.  Each of the Parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

14.12                 Waiver of Jury Trial.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

37

 

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14.13                 Counterparts.  This Agreement may be executed in one or more counterparts, and by the respective Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same Agreement.

 

14.14                 No Waiver.  The failure of either Party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such Party thereafter to enforce such provisions.

 

14.15                 Use of Name.  Neither Party shall use the name of the other Party without the prior written consent of such other Party.

 

14.16                 Press Releases.  Neither Symphony nor Licensee shall issue any public announcement or written news releases relating to this Agreement unless such public announcement or written news release shall have been mutually approved in writing in advance by both Symphony and Licensee.

 

14.17                 Extension to Affiliates.  Each Party shall have the right to extend the rights and immunities granted in this Agreement to one or more of its Affiliates.  All applicable terms and provisions of this Agreement, except this right to extend, shall apply to any such Affiliate to which this Agreement has been extended to the same extent as such terms and provisions apply to the Party extending such rights and immunities.  The Party extending the rights and immunities granted hereunder shall remain primarily liable for any acts or omissions of its Affiliates.

 

14.18                 No Third Party Beneficiary Rights.  Except for the benefits granted to and the rights of Affiliates and any Third Parties sublicensed by Licensee pursuant to Section 2.2, in each case explicitly provided for in this Agreement, this Agreement is not intended to and shall not be construed to give any Third Party any interest or rights (including, without limitation, any third party beneficiary rights) with respect to or in connection with any agreement or provision contained herein or contemplated hereby.

 

14.19                 Interpretation.  In this Agreement unless otherwise specified (i) “includes” and “including” shall mean includes and including without limitation; (ii) a Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking; (iii) a statute or statutory instrument or any of their provisions is to be construed as a reference to that statute or statutory instrument or such provision as the same may have been or may from time to time hereafter be amended or re-enacted; (iv) words denoting the singular shall include the plural and vice versa and words denoting any gender shall include all genders; (v) the Schedules and other attachments form part of the operative provision of this Agreement and references to this Agreement shall, unless the context otherwise requires, include references to the recitals and the Schedules and attachments; (vi) the headings in this Agreement are for information only and shall not be considered in the interpretation of this Agreement; and (vii) general words shall not be given a restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things.

 

SIGNATURES FOLLOW ON NEXT PAGE

 

38

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective duly authorized officers.

 

	
KADMON CORPORATION, LLC 
    	
 
    
	
 
    	
 
    
	
/s/ Samuel D. Waksal
    	
 
    
	
Name:Samuel D. Waksal
    	
 
    
	
Title:Chairman
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
SYMPHONY EVOLUTION, INC.
    	
 
    
	
 
    	
 
    
	
/s/ Jeffrey S. Edelman
    	
 
    
	
Name: Jeffrey S. Edelman
    	
 
    
	
Title:   Director
    	
 
    

 

(Signature Page to First Amended and Restated License Agreement)

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule 1.30

 

LICENSED PATENTS

 

	
 
    	
 
    	
 
    	
 
    	
Patent or Pub. No. /
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Date Granted or
    	
 
    	
Serial No. /
    	
 
    	
Docket
    	
 
    	
Owner of
    	
 
    	
 
    	
 
    
	
Patent
    	
 
    	
Country
    	
 
    	
Published
    	
 
    	
Date Filed
    	
 
    	
Number
    	
 
    	
Record
    	
 
    	
Status
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
Australia
    	
 
    	
2003249212
   20040202
    	
 
    	
20030249212
   20030714
    	
 
    	
02-420-D
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
Canada
    	
 
    	
2491191
   20040122
    	
 
    	
20032491191
   20030714
    	
 
    	
02-420-E
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
Europe
    	
 
    	
1521747
   20050413
    	
 
    	
030764599
   20030714
    	
 
    	
02-420-F
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
Japan
    	
 
    	
2006505509
   20060216
    	
 
    	
20040521770
   20030714
    	
 
    	
02-420-G
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
U.S.
    	
 
    	
7576074
   20090818
    	
 
    	
10/522,004
   20050411
    	
 
    	
02-420-H
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Issued
    	
 
    
	
Receptor-Type Kinase Modulators and Methods of Use
    	
 
    	
U.S.
    	
 
    	
2009318373
   20091224
    	
 
    	
12/455,867
   20090608
    	
 
    	
02-420-H- CON
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    
	
Receptor-Type Kinase Modulator and Methods of Treating   Polycystic Kidney Disease
    	
 
    	
U.S.
    	
 
    	
N/A
    	
 
    	
61/377,211
   20100826
    	
 
    	
10-946
    	
 
    	
Symphony Evolution, Inc.
    	
 
    	
Pending
    	
 
    

 

42

 

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Schedule 3.4

 

THIRD PARTY ONCOLOGY CONTRACTS

 

1.              Master Services Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Parexel International, LLC dated as of June 15, 2005 (solely to the extent related to Project Addendum #3 thereto, as amended).

 

2.              Project Addendum #3 dated as of February 1, 2006 to the June 15, 2005 Master Services Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Parexel International, LLC.

 

a.              Amendment 1 dated as of September 30, 2008.

b.              Amendment 2 dated as of May 7, 2009.

c.               Amendment 3 dated as November 1, 2009.

 

3.              Master Services Agreement Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Quintiles, Inc. dated as of December 15, 2006 (solely to the extent related to Project Addendum #17 thereto, as amended).

 

4.              Project Addendum #17 dated as of February 5, 2008 to the December 15, 2006 Master Services Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Quintiles, Inc.

 

a.              Change Order 1 dated as of June 5, 2009.

b.              Change Order 2 dated as of May 8, 2010.

 

5.              Clinical Study Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and the Board of Trustees of the Leland Stanford Junior University dated as of July 15, 2006.

 

a.              Amendment 1 dated as of March 14, 2007.

b.              Amendment 2 dated as of July 14, 2009.

 

6.              Clinical Study Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Sloan-Kettering Institute for Cancer Research and Memorial Hospital for Cancer and Allied Diseases dated as of August 18, 2006.

 

a.              Amendment 1 dated as of September 28, 2006.

b.              Amendment 2 dated as of June 19, 2007.

c.               Amendment 3 dated of September 28, 2007.

d.              Amendment 4 dated as of July 17, 2008.

e.               Amendment 5 dated as of June 9, 2009.

 

43

 

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7.              Compassionate Use Agreement between Symphony Evolution, Inc. and Sloan-Kettering Institute for Cancer Research and Memorial Hospital for Cancer and Allied Diseases dated as of April 1, 2010.

 

a.              Amendment 1 dated as of April 1, 2010.

 

8.              Email agreement between Symphony Evolution, Inc. and Exelixis, Inc. dated as of September 9, 2009.

 

44

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Schedule 3.5

 

THIRD PARTY NON-ONCOLOGY CONTRACTS

 

1.              Archive Services Agreement between Symphony Evolution, Inc. and Charles River Laboratories, Inc. dated as of June 9, 2009 (solely to the extent related to XL647).

 

2.              Archiving/Storage Services between Symphony Evolution, Inc. and Covance Laboratories Inc. dated as of June 9, 2009 (solely to the extent related to XL647).

 

3.              Harrogate Archive Services Agreement between Symphony Evolution, Inc. and Covance Laboratories Ltd. dated as of June 9, 2009 (solely to the extent related to XL647).

 

4.              Archiving Agreement between Symphony Evolution, Inc. and EPL Pathology Archives, Inc. dated as of June 9, 2009 (solely to the extent related to XL647).

 

5.              Master Services Agreement between Symphony Evolution, Inc. and Fisher Clinical Services Inc. dated as of April 8, 2009 (solely to the extent of Individual Project Agreement 4 related thereto and then solely to the extent related to XL647).

 

6.              Individual Project Agreement 4 between Symphony Evolution, Inc. and Fisher Clinical Services, Inc. dated as of September 9, 2009 related to the April 8, 2009 Master Services Agreement between Symphony Evolution, Inc. and Fisher Clinical Services, Inc (solely to the extent related to XL647).

 

7.              Research/Manufacturing Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Pharmaceutics International, Inc. dated as of September 29, 2004 (solely to the extent related to Appendix VIII thereto, as amended).

 

8.              Appendix VIII dated as of April 13, 2007 to the September 29, 2004 Research/Manufacturing Agreement between Symphony Evolution, Inc. (as successor in interest to Exelixis, Inc.) and Pharmaceutics International, Inc.

 

a.              First Amendment, effective as of May 1, 2011.

 

9.              Master Laboratory Services Agreement among Primrose Therapeutics, Inc., Covance Laboratories, Inc. and Covance Bioanalytical Services LLC dated as of December 7, 2010.

 

10.       Study No. 8240370 dated as of December 29, 2010 related to the December 7, 2010 Master Laboratory Services Agreement among Primrose Therapeutics, Inc., Covance Laboratories, Inc. and Covance Bioanalytical Services LLC.

 

45

 

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11.       Master Independent Contractor Agreement between Primrose Therapeutics, Inc. and XenoTech, LLC dated as of December 6, 2010.

 

12.       Work Order 1 dated as of December 6, 2010 to the December 6, 2010 Master Independent Contractor Agreement between Primrose Therapeutics, Inc. and XenoTech, LLC.

 

13.       Work Order 2 dated as of March 21, 2011 to the December 6, 2010 Master Independent Contractor Agreement between Primrose Therapeutics, Inc. and XenoTech, LLC.

 

46

 

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Schedule 9.3.1

 

REGULATORY FILES

 

IND 69,215 and related FDA files and written communications with the FDA.

 

47

 

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EXHIBIT B

 

Form of Rights Notice

 

(see attached)

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

Exhibit B

Form of Rights Notice

 

 

7361 Calhoun Place, Suite 510 · Rockville, MD 20855

Tel 301-762-6100 · Fax 301-762-6154

 

                                , 2011

 

Kadmon Corporation, LLC

400 Madison Ave

New York, New York 10017

Attention: Steven N. Gordon

 

Re: Rights Notice

 

Dear Mr. Gordon:

 

Pursuant to that certain Letter Agreement by and between Symphony Evolution, Inc.(“Symphony”) and Kadmon Corporation, LLC (“Kadmon”) dated July 5, 2011 (the “Letter Agreement”), Symphony hereby provides notice to Kadmon that Symphony has obtained the right and authority to grant Kadmon all of the rights contemplated to be granted to Kadmon pursuant to the First Amended and Restated License Agreement attached as Exhibit A to the Letter Agreement (the “Restated Agreement”). This letter constitutes the “Rights Notice” required by Paragraph 3(a) of the Letter Agreement.

 

Pursuant to Paragraph 3(b) of the Letter Agreement, the Restated Agreement takes full force and effect as of the date of this letter. In addition, pursuant to Paragraph 1(c) of the Letter Agreement, the Initial Non-Oncology Fee (as defined in the Letter Agreement) is hereby released to Symphony and the payment required in Section 4.3.1 of the Restated Agreement is hereby deemed to have been made by Kadmon.

 

Jones Day is hereby instructed, pursuant to Paragraph 2(b) of the Letter Agreement, to promptly provide each of Symphony and Kadmon with one Symphony Signature Page (as defined in the Letter Agreement) and one Kadmon Signature Page (as defined in the Letter Agreement).

 

	
 
    	
SYMPHONY EVOLUTION, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
Jeffrey S.   Edelman
    
	
 
    	
Title:
    	
Director
    

 

cc:                                Jones Day

222 East 41st Street

New York, NY 10017

Attn: Warren L. Nachlis

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK ***, HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

 

 

7361 Calhoun Place, Suite 510 · Rockville, MD 20855

Tel 301-762-6100 · Fax 301-762-6154

 

September 6, 2011

 

Kadmon Corporation, LLC

400 Madison Ave

New York, New York 10017

Attention: Steven N. Gordon

 

Re: Rights Notice

 

Dear Mr. Gordon:

 

Pursuant to that certain Letter Agreement by and between Symphony Evolution, Inc. (“Symphony”) and Kadmon Corporation, LLC (“Kadmon”) dated July 5, 2011 (the “Letter Agreement”), Symphony hereby provides notice to Kadmon that Symphony has obtained the right and authority to grant Kadmon all of the rights contemplated to be granted to Kadmon pursuant to the First Amended and Restated License Agreement attached as Exhibit A to the Letter Agreement (the “Restated Agreement”). This letter constitutes the “Rights Notice” required by Paragraph 3(a) of the Letter Agreement.

 

Pursuant to Paragraph 3(b) of the Letter Agreement, the Restated Agreement takes full force and effect as of the date of this letter. In addition, pursuant to Paragraph 1(c) of the Letter Agreement, the Initial Non-Oncology Fee (as defined in the Letter Agreement) is hereby released to Symphony and the payment required in Section 4.3.1 of the Restated Agreement is hereby deemed to have been made by Kadmon.

 

Jones Day is hereby instructed, pursuant to Paragraph 2(b) of the Letter Agreement, to promptly provide each of Symphony and Kadmon with one Symphony Signature Page (as defined in the Letter Agreement) and one Kadmon Signature Page (as defined in the Letter Agreement).

 

	
 
    	
SYMPHONY   EVOLUTION, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Jeffrey   S. Edelman
    
	
 
    	
Name:
    	
Jeffrey S.   Edelman
    
	
 
    	
Title:
    	
Director
    

 

cc:                                Jones Day

222 East 41st Street

New York, NY 10017

Attn: Warren L. Nachlis

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