Document:

immy_ex105.htm

Exhibit 10.5

 

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

 

 

ASSET PURCHASE AGREEMENT

 

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of June 11, 2013 (the “Effective Date”), is entered into between BUDERER DRUG COMPANY, INC., an Ohio corporation (“Buderer”), with a place of business at 633 Hancock Street, Sandusky, Ohio 44870, and IMPRIMIS PHARMACEUTICALS, INC., a Delaware corporation (“Imprimis”), with a place of business at 12626 High Bluff Drive, Suite 150, San Diego, California 92130.  The parties hereby agree as follows:

 

1. Definitions.  For the purposes of this Agreement, the following terms shall have the respective meanings set forth below and grammatical variations of such terms shall have corresponding meanings:

 

1.1 “Affiliate” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or is under common control with, such Person.  A Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, more than fifty percent (50%) of the voting stock or other ownership interest of the other Person, or if it directly or indirectly possesses the power to direct or cause the direction of the management and policies of the other Person by any means whatsoever.

 

1.2 “Assets” shall mean, collectively, (a) the Technology; (b) all discoveries, inventions, technology, compositions, formulations, samples, components, processes, standards, methods, procedures and techniques relating thereto; (c) all formulae, data, information, results of experimentation and testing, and other know-how, whether or not patentable or copyrightable, relating thereto; (d) all product registrations and applications therefor relating thereto; and (e) all intellectual property rights and other assets relating thereto.

 

1.3 “Assigned Patent Rights” shall mean, collectively, (a) all patent applications (including provisional patent applications) in any jurisdiction that claim the Technology, together with all divisionals, continuations and continuations-in-part that claim priority to, or common priority with, the foregoing; (b) all patents issuing therefrom (including utility models and design patents and certificates of invention), together with all reissues, renewals, extensions or additions thereof and thereto; and (c) all foreign counterparts with or to any of the foregoing.

 

1.4 “Contract” or “Contracts” shall mean any mortgage, indenture, lease, contract, covenant, arrangement, agreement, instrument, commitment, purchase order or license.

 

1.5 “Development Recovery Amount” shall mean, with respect to any Product, the fully-burdened costs (determined in accordance with GAAP, consistently applied) to Imprimis or its Affiliates incurred or accrued in connection with the research, development, production and regulatory approval of such Product.

 

1.6 “Encumbrance” or “Encumbrances” shall mean any encumbrance, lien, charge, hypothecation, pledge, mortgage, adverse claim, option, preemptive right, or other security interest of any nature, or any Contract to create any of the foregoing entered into by Buderer on or before the Effective Date.

 

1.7 “First Commercial Sale” shall mean, with respect to any Product, the first sale of such Product after all applicable marketing and pricing approvals (if any) have been granted by the applicable governing health authority of such country.

 

1.8 “GAAP” shall mean United States generally accepted accounting principles.

 

1.9 “Knowledge of Buderer” or “Buderer’s Knowledge” shall mean the actual knowledge of any director, officer, or employee of Buderer and the Knowledge such individuals would reasonably be expected to obtain in the course of diligently performing his or her duties for Buderer and/or making a reasonable inquiry into the matters contemplated by this Agreement.

 

1.10 “Licensee” shall mean a Third Party to whom Imprimis or its Affiliate has granted a license, immunity or other right under the Assigned Patent Rights to offer to sell, sell or otherwise commercialize one or more Products, provided such license has not expired or been terminated.

 

  

1

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

1.11 “Net Licensing Revenues” shall mean, with respect to any Product, the aggregate cash consideration received by Imprimis or its Affiliates in consideration for the grant by Imprimis or its Affiliates to a Licensee of a license, immunity or other right under the Assigned Patent Rights to offer to sell, sell or otherwise commercialize such Product (excluding amounts received to reimburse Imprimis or its Affiliates for research, development or similar services conducted for such Product, in reimbursement of patent or other out-of-pocket expenses relating to such Product, or in consideration for the purchase of any debt or securities of Imprimis or its Affiliates).

 

1.12 “Net Receipts” shall mean, with respect to any Product, the aggregate of the Net Sales thereof and Net Licensing Revenues therefrom in excess of the Development Recovery Amount therefor.

 

1.13 “Net Sales” shall mean, with respect to any Product, the gross sales price of such Product invoiced by Imprimis and its Affiliates to customers who are not Affiliates (or are Affiliates but are the end users of such Product), less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such customers; (b) freight and insurance costs in transporting such Product; (c) cash, quantity and trade discounts, rebates and other price reductions for such Product; (d) sales, use, value-added and other direct taxes; (e) customs duties, tariffs, surcharges and other governmental charges incurred in exporting or importing such Product; (f) an allowance for uncollectible or bad debts determined in accordance with generally accepted accounting principles; and (g) the fully-burdened cost of goods sold determined in accordance with generally accepted accounting principles.

 

1.14 “Payment Period” shall mean, on a Product-by-Product and country-by-country basis, the period of time beginning on the date of the First Commercial Sale of such Product in such country and continuing during the term for which a valid claim of an issued patent within the Assigned Patent Rights in such country remains in effect and would be infringed but for rights under the Assigned Patent Rights by the use, offer for sale, sale or import of such Product in such country.

 

1.15 “Person” shall mean any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group of any of the foregoing.

 

1.16 “Product” will mean any product, in any form or formulation, comprising any one or more of (a) injectable pentoxifylline, (b) lyophilized polyphenols, or (c) tranexamic acid and any antibiotic, in each case for use in the prevention or treatment of any disease, state or condition in humans, which if made, used, offered for sale, sold or imported absent rights under the Assigned Patent Rights would infringe a valid claim of an issued patent within the Assigned Patent Rights.

 

1.17 “Tax” or “Taxes” shall mean any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes as well as public imposts, fees and social security charges (including but not limited to health, unemployment and pension insurance), together with all interest, penalties and additions imposed with respect to such amounts and any obligation under any agreement or arrangement with any other Person with respect to such amounts and including any liability for taxes of a predecessor entity.

 

1.18 “Technology” shall mean, collectively, (a) any product in any form or formulation comprising any one or more of (i) injectable pentoxifylline, (ii) lyophilized polyphenols, or (iii) tranexamic acid and any antibiotic; and (b) all methods of manufacture and use of the foregoing.

 

1.19 “Third Party” shall mean any Person other than Imprimis, Buderer or their respective Affiliates.

 

2. Purchase and Sale of the Assets.

 

2.1 Assets.  Subject to the terms and conditions of this Agreement, Imprimis hereby agrees to purchase from Buderer, and Buderer hereby agrees to sell, convey, transfer and assign to Imprimis, on the Effective Date, all of Buderer’s right, title and interest in and to the Assets.  Concurrently with the execution of this Agreement, Buderer shall deliver all required consents to Material Contracts (as defined below) as set forth on Schedule 3.7 hereof.  To the extent necessary to comply with applicable privacy laws, Buderer shall have the right to redact patient identifying information from any data or information transferred to Imprimis.

 

  

2

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

2.2 No Assumption of Liabilities.  Imprimis shall not be obligated to assume or perform and is not assuming or performing any liabilities or obligations of Buderer which relate to Buderer’s ownership of the Assets prior to the Effective Date or otherwise, whether known or unknown, fixed or contingent, certain or uncertain, and regardless of when they are or were asserted, and Buderer shall remain responsible for and shall promptly pay such liabilities.

 

2.3 Transfer Documents.  On the Effective Date, the sale, conveyance, transfer and assignment of the Assets from Buderer to Imprimis in accordance with this Agreement will be further evidenced by execution by the parties of such bills of sale, assignments or other title transfer documents and instruments as reasonably requested by Imprimis.

 

2.4 Consideration.  The consideration for the sale to Imprimis of the Assets under this Agreement shall consist of the following (collectively, the “Purchase Price”):

 

2.4.1 [***], payable within thirty (30) days after Imprimis, its Affiliate or Licensee files the first Investigational New Drug application with the United States Food and Drug Administration for the first Product;

 

2.4.2 [***], payable within thirty (30) days after the date of the issuance of the first patent in the United States within the Assigned Patent Rights; and

 

2.4.3 the Net Sales Payment Consideration (as defined below).

 

2.5 Allocation of Purchase Price.  The Purchase Price shall be allocated, if an allocation is required, by Imprimis within sixty (60) days following a determination that such allocation is required.  After the Effective Date, Imprimis and Buderer shall make consistent use of any allocation required under Section 1060 of the Internal Revenue Code for all Tax purposes and in all filings, declarations and reports with the Internal Revenue Service or any other applicable taxing authority in respect thereof.  In any and all actions, suits, proceedings, arbitration, or governmental or regulatory investigations or audits related to the determination of any Tax, neither Imprimis nor Buderer shall contend or represent that such allocation is not a correct allocation.

 

3. Representations and Warranties of Buderer.  Buderer hereby represents and warrants to Imprimis, except as indicated on the disclosure schedules attached to this Agreement, as follows:

 

3.1 Authority and Binding Effect.  Buderer has the full power and authority to execute and deliver this Agreement and the other documents and instruments contemplated hereby.  This Agreement and the other documents and instruments contemplated hereby, and the consummation by Buderer of its obligations contained herein and therein, have been duly authorized by all necessary actions of Buderer, and this Agreement and the other documents and instruments contemplated hereby have been duly executed and delivered by Buderer.  This Agreement and the other documents and instruments contemplated hereby are valid and binding agreements of Buderer, enforceable against Buderer in accordance with their respective terms.

 

3.2 Organization and Standing.  Buderer is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio.  Buderer is qualified to do business in each jurisdiction where such qualification is necessary.  Buderer has the requisite corporate power and authority to conduct its business as now conducted, to own the Assets and to use such Assets in the conduct of its business.

 

3.3 Intellectual Property.

 

3.3.1 There exist no Assigned Patent Rights as of the Effective Date.

 

3.3.2 Buderer has good and marketable title to each of the Assets, and each of the Assets is held or controlled by Buderer free and clear of any Encumbrances (including without limitation any distribution rights and royalty rights).  All Assets and Assigned Patent Rights and will be fully transferable, alienable or licensable by Imprimis without restriction and without payment of any kind to any Third Party.

 

3.3.3 All Assets are currently in compliance with applicable legal requirements (including payment of filing, examination and maintenance fees and proofs of use), and are not subject to any unpaid maintenance fees or taxes or actions falling due within ten (10) days after the Effective Date.

 

  

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CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

3.3.4 To the extent that any Assets or Assigned Patent Rights were originally owned or created by or for any Person other than Buderer, (a) Buderer has obtained or will procure the complete, unencumbered and unrestricted right to effect the transfer of the Assets or Assigned Patent Rights from Buderer to Imprimis and confirms that such transfer does not violate any such right to transfer; (b) no Third Parties have retained or otherwise have any rights or licenses with respect to the Assets and Assigned Patent Rights; and (iv) to the Knowledge of Buderer, no valid basis exists for any such Person to challenge or object to this Agreement or the transactions contemplated herein.

 

3.3.5 To Buderer’s Knowledge, Buderer has not transferred ownership of, or granted any license of or right to use, or authorized the retention of any rights to use, to any Person any Assets or Assigned Patent Rights.

 

3.3.6 To Buderer’s Knowledge, Buderer is not required to make or accrue any royalty, milestone or other similar payment to any Third Party in connection with any of the Assets.

 

3.3.7 To Buderer’s Knowledge, none of the Assets transferred hereunder infringe upon or misappropriate the intellectual property of any Third Party.

 

3.4 Conflicts; Consents.  The execution and delivery by Buderer of this Agreement, and the consummation of the transactions contemplated hereby, will not conflict with (i) any provision of the certificate of incorporation or bylaws of Buderer, each as amended to date; (ii) Contracts to which Buderer or any of its properties or assets (including intangible assets) is subject; or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buderer or any of its properties or assets (tangible and intangible).  It is not necessary for Buderer to take any action or to obtain any approval, consent or release by or from any Third Party, governmental or other, to enable Buderer to enter into or perform its obligations under this Agreement.

 

3.5 Litigation and Proceedings.  There is no claim, action, suit, proceeding or investigation (or any counter or cross-claim in an action brought by or on behalf of Buderer), whether at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, that is pending or, to Imprimis’ Knowledge, threatened, against Imprimis, which (i) could reasonably be expected to adversely affect Buderer’s ability to perform its obligations under this Agreement or complete any of the transactions contemplated hereby; or (ii) involves the possibility of any judgment or liability, or which may become a claim, against the Assets, Imprimis or its business.  Buderer is not subject to any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental department, commission, board, bureau, agency or instrumentality having jurisdiction over Imprimis or any of the Assets that affects, involves or relates to the Assets.

 

3.6 Compliance with Law/Permits. Buderer is in compliance with all, and is not in violation of any, law, ordinance, order, decree, rule or regulation of any governmental agency or authority, the violation of or noncompliance with which could have a material adverse effect on Buderer.  No unresolved (i) charges of violations of laws or regulations relating to Buderer’s business have been made or threatened; (ii) proceedings or investigations relating to Buderer’s business are pending or have been threatened; and (iii) citations or notices of deficiency have been issued or have been threatened, against Buderer relating to or arising out of its business by any governmental authorities.

 

3.7 Contracts.  Schedule 3.7 lists the Contracts to which Buderer is a party as of the date hereof which arise out of or relate to the Assets by which any of the Assets are currently bound (the “Material Contracts”).  Buderer is not in violation of or in default under (nor is there existing conditions which with the passage of time either giving of notice or both would cause such a violation or default under) any such Material Contract.  Each such Material Contract is in full force and effect, and has a legal, valid and binding obligation Buderer, and to Knowledge of Buderer, each of the other parties thereto, enforcefull in accordance with its terms.  Buderer has not received notice that it is in violation or breach of or in default under any such Material Contract.  Except as set forth on Schedule 3.7, no such Material Contract has a provision that would require consent, notice or the payment of money or transfer of property as a result of the transactions contemplated herein.

 

3.8 Full Disclosure.  The representations and warranties made by Buderer in this Agreement and the schedules to be delivered pursuant to this Agreement do not contain any untrue statement of material fact or admit to state a material fact necessary to make any of them in the light of the circumstances in which they were made, not misleading.

 

3.9 No Broker.  Buderer has not retained or used the services of an agent, finder, or broker in connection with the transactions contemplated by this Agreement

 

4. Representations and Warranties of Imprimis.  Imprimis represents and warrants to Buderer as follows:

 

4.1 Authority and Binding Effect.  Imprimis has the full corporate power and authority to execute and deliver this Agreement and the other documents and instruments contemplated hereby.  This Agreement and the other documents and instruments contemplated hereby, and the consummation by Imprimis of its obligations contained herein and therein, have been duly authorized by all necessary corporate actions of Imprimis, and this Agreement and the other documents and instruments contemplated hereby have been duly executed and delivered by Imprimis.  This Agreement and the other documents and instruments contemplated hereby t are valid and binding agreements of Imprimis, enforceable against Imprimis in accordance with their respective terms.

 

  

4

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

4.2 Organization and Standing.  Imprimis is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and Imprimis is qualified to do business in each jurisdiction where such qualification is necessary and where the failure to be so qualified would have a material adverse effect on Imprimis.  Imprimis has the requisite corporate power and authority to conduct its business as now conducted.

 

4.3 Conflicts; Consents.  The execution and delivery by Imprimis of this Agreement, and the consummation of the transactions contemplated hereby, will not give rise to a Conflict with respect to (i) any provision of the certificate of incorporation or bylaws of Imprimis, each as amended to date; (ii) Contracts to which Imprimis or any of its properties or assets (including intangible assets) is subject; or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Imprimis or any of its properties or assets (tangible and intangible), except in any such case where it would not have a material adverse effect on Buderer’s rights under the Assets.  It is not necessary for Imprimis to take any action or to obtain any approval, consent, or release by or from any Third Party, governmental or other, to enable Imprimis to enter into or perform its obligations under this Agreement.

 

4.4 Compliance with Law/Permits.  Imprimis is in compliance with all, and is not in violation of any, law, ordinance, order, decree, rule or regulation of any governmental agency or authority, the violation of or noncompliance with which could have a material adverse effect on Imprimis.  No unresolved (i) charges of violations of laws or regulations relating to Imprimis’ business have been made or threatened; (ii) proceedings or investigations relating to Imprimis’ business are pending or have been threatened; and (iii) citations or notices of deficiency have been issued or have been threatened, against Imprimis relating to or arising out of its business by any governmental authorities, which have had or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on Imprimis.

 

4.5 No Broker.  Imprimis has not retained or used the services of an agent, finder, or broker in connection with the transactions contemplated by this Agreement.

 

5. Net Sales Payments.

 

5.1 Net Sales Payment Amounts.

 

5.1.1 Net Sales Payment Consideration.  Subject to the provisions in this Section 5.1 and Section 5.2, on a Product-by-Product and country-by-country basis, Imprimis shall pay to Buderer, on a quarterly basis, [***] of Net Receipts of any Product during the applicable Payment Period (the “Net Sales Payment Consideration”).

 

5.1.2 Third Party Royalties.  If Imprimis, its Licensees or their respective Affiliates is required to pay royalties to any Third Party in order to make, have made, use, sell, offer to sale or import any Product, then Imprimis shall have the right to credit [***] of such Third Party royalty payments against the Net Sales Payment Consideration owing to Buderer under Section 5.1.1 with respect to sales of such Product; provided, however, that Imprimis shall not reduce the amount of the royalties paid to Buderer under Section 5.1.1 by reason of this Section 5.1.2, with respect to sales of such Product for any period, to less than [***] of Net Receipts of such Product for such period.

 

5.1.3 Combination/Bundled Products.  In the event that a Product is sold by Imprimis, its Licensees or their respective Affiliates in combination with one or more products which is itself not a Product, then Net Sales shall be calculated by multiplying the sales price of such combination sale by the fraction A/(A+B) where A is the fair market value of the Product(s) and B is the fair market value of the other product(s) in the combination sale, each as reasonably determined by Imprimis.

 

5.2 Reports and Net Sales Payments.  Within sixty (60) days after the end of each calendar quarter during the applicable Payment Period, Imprimis will deliver to Buderer a report setting forth for such calendar quarter (a) the calculation of the applicable Net Sales Payment Consideration; (b) the payments due under this Agreement for the sale of each Product; and (c) the applicable exchange rate as determined below.  Imprimis will remit the total payments due for the sale of Products during such calendar quarter at the time such report is made.  No such reports or payments will be due for any Product before the First Commercial Sale of such Product.  With respect to Net Receipts received in United States dollars, all amounts shall be expressed in United States dollars.  With respect to Net Receipts received in a currency other than United States dollars, all amounts shall be expressed both in the currency in which the amount is invoiced (or received as applicable) and in the United States dollar equivalent.  The United States dollar equivalent shall be calculated using the average of the exchange rate (local currency per US$1) published in The Wall Street Journal, Western Edition, under the heading “Currency Trading” on the last business day of each month during the applicable calendar quarter.

 

5.3 Payment Provisions.

 

5.3.1 Payment Terms.  The Net Sales Payment Consideration shown to have accrued by each report provided for under Section 5.2 shall be due on the date such report is due.  Payment of Net Sales Payment Consideration in whole or in part may be made in advance of such due date.

 

  

5

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

5.3.2 Exchange Control.  If at any time legal restrictions prevent the prompt remittance of part or all Net Sales Payment Consideration with respect to any country in where a Product is sold, Imprimis shall have the right, in its sole discretion, to make such payments by depositing the amount thereof in local currency to Buderer’s account in a bank or other depository institution in such country.  If the payment rate specified in this Agreement should exceed the permissible rate established in any country, the payment rate for sales in such country shall be adjusted to the highest legally permissible or government-approved rate.

 

5.3.3 Withholding Taxes.  Imprimis shall be entitled to deduct the amount of any withholding taxes, value-added taxes or other taxes, levies or charges with respect to such amounts, other than United States taxes, payable by Imprimis, its Licensees or their respective Affiliates, or any taxes required to be withheld by Imprimis, its Licensees or their respective Affiliates, to the extent Imprimis, its Licensees or their respective Affiliates pay to the appropriate governmental authority on behalf of Buderer such taxes, levies or charges.  Imprimis shall use reasonable efforts to minimize any such taxes, levies or charges required to be withheld on behalf of Buderer by Imprimis, its Licensees or their respective Affiliates.  Imprimis promptly shall deliver to Buderer proof of payment of all such taxes, levies and other charges, together with copies of all communications from or with such governmental authority with respect thereto.

 

5.4 Audits.  Upon the written request of Buderer and not more than once in each calendar year, Imprimis shall permit an independent certified public accounting firm of nationally recognized standing selected by Buderer and reasonably acceptable to Imprimis, at Buderer’s expense, to have access during normal business hours to such of the financial records of Imprimis as may be reasonably necessary to verify the accuracy of the Net Sales Payment Consideration reports hereunder for the eight (8) calendar quarters immediately prior to the date of such request (other than records for which Buderer has already conducted an audit under this Section.  If such accounting firm concludes that additional amounts were owed during the audited period, Imprimis shall pay such additional amounts within thirty (30) days after the date Buderer delivers to Imprimis such accounting firm’s written report so concluding.  The fees charged by such accounting firm shall be paid by Buderer; provided, however, if the audit discloses that the Net Sales Payment Consideration payable by Imprimis for such period are more than one hundred ten percent (110%) of the Net Sales Payment Consideration actually paid for such period, then Imprimis shall pay the reasonable fees and expenses charged by such accounting firm.  Buderer shall cause its accounting firm to retain all financial information subject to review under this Section 5.4 in strict confidence; provided, however, that Imprimis shall have the right to require that such accounting firm, prior to conducting such audit, enter into an appropriate non-disclosure agreement with Imprimis regarding such financial information.  The accounting firm shall disclose to Buderer only whether the reports are correct or not and the amount of any discrepancy.  No other information shall be shared.  Buderer shall treat all such financial information as Imprimis’ confidential information, and shall not disclose such financial information to any Third Party or use it for any purpose other than as specified in this Section 5.4.

 

6. Post-Effective Date Covenants.

 

6.1 Imprimis Diligence.

 

6.1.1 Imprimis shall use commercially reasonable efforts (whether alone or with or through its Licensees and its or their respective Affiliates) to research, develop and commercialize a Product in major markets.

 

6.1.2 Imprimis shall control, at its sole expense, the preparation, filing, prosecution, maintenance and enforcement of the Assigned Patent Rights consistent with prudent business practices, and shall consider in good faith the interests of Buderer.

 

6.2 Buderer Covenants.

 

6.2.1 Buderer shall transfer to Imprimis all documents and information comprising the Assets within thirty (30) days after the Effective Date.

 

6.2.2 During the term of the Agreement, Imprimis shall have the first right (at its sole option in its sole discretion) to acquire each new product and technology opportunity of Buderer or its Affiliates pursuant to a transaction with substantially the same structure as this Agreement.

 

6.3 Further Assurances.  Buderer shall provide all cooperation reasonably requested by Imprimis in connection with any effort by Imprimis to establish, perfect, defend, or enforce its rights in or to the Assets (including the Assigned Patent Rights).  Such cooperation shall include, without limitation, (i) executing further consistent assignments, transfers, licenses, and releases, and (ii) providing data and information, consulting with Imprimis and executing and delivering any documents and instruments regarding the preparation and prosecution of the Assigned Patent Rights.  In addition, to the extent Buderer cannot transfer and assign any of the Assigned Patent Rights, or any portion thereof, as of the Effective Date, then Buderer will assign and transfer the same at the first opportunity to do so.  To the extent further transfer or assignment of any patents rights is required and Buderer has not, within fifteen (15) days after the delivery of such assignment to Buderer, (a) executed and returned to Imprimis the form of assignment reasonably requested by Imprimis, or (b) delivered to Imprimis a written objection to Imprimis’ request, then Buderer hereby irrevocably appoints Imprimis as its attorney-in-fact with the right, authority, and ability to execute and enter into such assignment on behalf of Buderer.  Buderer stipulates and agrees that such appointment is a right coupled with an interest and will survive the incapacity or unavailability of Buderer at any future time.  To the extent that any of the Assigned Patent Rights cannot be assigned and transferred by Buderer, then Buderer hereby grants Imprimis an irrevocable, worldwide, fully-paid up, royalty-free, exclusive license, with the right to sublicense through multiple tiers, under the Assigned Patent Rights for all purposes.

 

  

6

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

7. Indemnification.

 

7.1 Indemnification of Imprimis.  Subject to the provisions of this Section 7, Buderer shall indemnify, defend and hold harmless Imprimis, its officers, directors, affiliates, agents, stockholders and representatives (collectively, the “Imprimis Indemnitees”), from and against any and all damage, loss, liability and expense (including without limitation reasonable expenses of investigation and reasonable attorneys’ and consultants’ fees and expenses in connection with any action, suit or proceeding or settlement of any of the foregoing) (collectively, “Losses”) incurred or suffered by a Imprimis Indemnitee arising out of:

 

7.1.1 any breach of the representations and warranties of Buderer set forth in this Agreement;

 

7.1.2 any breach of any covenant or agreement of Buderer set forth in this Agreement or in any certificate, instrument, or other document delivered pursuant to this Agreement; and

 

7.1.3 the ownership or operation of the Assets prior to the Effective Date or any liability or obligation whatsoever of Buderer.

 

7.2 Indemnification of Buderer.  Subject to the provisions of this Section 7, Imprimis shall indemnify and hold harmless Buderer, its officers, directors, affiliates, agents, stockholders and representatives (collectively, the “Buderer Indemnitees”), from and against any and all Losses incurred or suffered by a Buderer Indemnitee arising out of:

 

7.2.1 any breach of the representations and warranties of Imprimis set forth in this Agreement;

 

7.2.2 any breach of any covenant or agreement of Imprimis set forth in this Agreement or in any certificate, instrument, or other document delivered pursuant to this Agreement;

 

7.2.3 the ownership or operation of the Assets after the Effective Date or the manufacture, use, or sale of Product solely by Imprimis, its Licensees or their respective Affiliates or use of Product by their customers.

 

7.3 Offset.  Imprimis may offset against the Net Sales Payment Consideration or any other amounts due Buderer from Imprimis, any amounts owed to Imprimis for indemnification under Section 7.1.  The exercise of such offset by Imprimis in good faith, whether or not ultimately determined to be justified, will not constitute an event of default hereunder.  Neither the exercise nor the failure to exercise, any such right of offset will constitute an election of remedies or limit Imprimis in any manner in the enforcement of any other remedies that may be available to it.

 

7.4 Procedure.  A party seeking indemnification (the “Indemnitee”) will promptly notify the other party (the “Indemnifying Party”) in writing of a claim or suit; provided that an Indemnitee’s failure to give such notice or delay in giving such notice will not affect such Indemnitee’s right to indemnification under this Section 7 except to the extent that the Indemnifying Party has been prejudiced by such failure or delay.  Imprimis shall have the right to control the defense of all indemnification claims hereunder.  Buderer shall have the right to participate at its own expense in the claim or suit with counsel of its own choosing.  Imprimis will consult with the Indemnitee in good faith with respect to all non-privileged aspects of the defense strategy.  Buderer will cooperate with the Imprimis as reasonably requested, at the Buderer’s sole cost and expense.  Imprimis will not settle any claim or suit with respect to which Buderer is the Indemnifying Party without Buderer’s prior written consent, which consent shall not be unreasonably withheld.

 

8. Term and Termination.

 

8.1 Term.  The term of this Agreement shall continue until expiration of all payment obligations hereunder.

 

8.2 Termination.

 

8.2.1 Imprimis shall have the right to terminate this Agreement at its option in its sole discretion upon written notice to Buderer.

 

8.2.2 If Imprimis, its Licensee or their respective Affiliates fails to file an Investigational New Drug Application in the United States for a Product before the fifth anniversary of the Effective Date, then (unless the parties otherwise mutually agree in writing) Buderer shall have the right, at its option and as its sole remedy, to terminate the Agreement.

 

8.2.3 In the event of the termination of this Agreement in accordance with this Section 8.2, Imprimis shall re-assign to Buderer the Technology and the other Assets.

 

  

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CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

9. Miscellaneous.

 

9.1 Public Announcements.  Neither party shall make any public announcements concerning matters concerning this Agreement or the negotiation thereof without the prior written consent of the other party unless such disclosure is required by law, in which case the announcing party shall provide the other party with reasonable notice of such disclosure.

 

9.2 Assignment.  Neither party shall assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that a party may, without such consent, assign this Agreement and its rights and obligations hereunder (a) to any Affiliate, or (b) in connection with the transfer or sale of all or substantially all of its business to which this Agreement relates, or in the event of its merger, consolidation, change in control or similar transaction.  Any permitted assignee shall assume all obligations of its assignor under this Agreement.  Any purported assignment in violation of this Section 9.2 shall be void.

 

9.3 Confidentiality.  Each party hereby agrees, and agrees to cause its stockholders, members, and representatives, to keep the terms of this Agreement confidential and, without limiting its other obligations hereunder, will treat and safeguard such terms with the same degree of care with which it treats its own confidential information (but in no less a reasonable degree of care) and to limit access to such terms to such employees, consultants, representatives and professional advisors of such party who reasonably require such access in connection with the activities contemplated by this Agreement or otherwise to administer the terms of this Agreement.  To the extent practicable, in the event that a party is required to disclose such terms pursuant to any law, regulation, or judicial or administrative directive, such party will promptly notify the other party in order to allow the other party a reasonable period of time to obtain protective or confidential treatment of such terms before they are disclosed.  Either party may disclose the terms of this Agreement (i) to the extent required, in the reasonable opinion of such party’s legal counsel, to comply with applicable laws, including, without limitation, the rules and regulations promulgated by the United States Securities and Exchange Commission; and (ii) in connection with a prospective acquisition, merger, financing, or license for such party, to prospective acquirers or merger candidates or to existing or potential investors or licensees; provided that prior to such disclosure each such candidate or investor will agree to be bound by obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Section 9.3.  Each party acknowledges that it will be impossible to measure in money the damage to the other party if such party fails to comply with the obligations imposed by this Section 9.3, and that, in the event of any such failure, the non-disclosing party may not have an adequate remedy at law or in damages.  Accordingly, each party agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is an appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that the disclosing party has an adequate remedy at law.  Each party agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with the non-disclosing party seeking or obtaining such equitable relief.

 

9.4 Severability.  Any provision of this Agreement which is illegal, invalid or unenforceable shall be ineffective to the extent of such illegality, invalidity or unenforceability, without affecting in any way the remaining provisions hereof.

 

9.5 Governing Law; Exclusive Jurisdiction.  This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law principles thereof. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of any federal court located in the Southern District of the State of California or state court in San Diego, California having jurisdiction, in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by laws of the State of California for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

 

9.6 Entire Agreement; Amendment.  This Agreement, and each additional agreement and document to be executed and delivered pursuant hereto, constitute all of the agreements of the parties with respect to, and supersede all prior agreements and understandings relating to the subject matter of, this Agreement or the transactions contemplated by this Agreement.  This Agreement may not be modified or amended except by a written instrument specifically referring to this Agreement signed by the parties hereto.

 

9.7 Waiver.  No waiver by one party of the other party’s obligations, or of any breach or default hereunder by any other party, shall be valid or effective, unless such waiver is set forth in writing and is signed by the party giving such waiver; and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature or any other breach or default by such other party.

 

9.8 Notices.  Any consent, notice or report required or permitted to be given or made under this Agreement by a party to the other party shall be in writing, delivered by any lawful means to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and (except as otherwise provided in this Agreement) shall be effective upon receipt by the addressee.

 

If to Buderer:                        Buderer Drug Company, Inc.

633 Hancock Street

Sandusky, Ohio 44870

Attention:  Matthew Buderer

If to Imprimis:                        Imprimis Pharmaceuticals, Inc.

12626 High Bluff Drive, Suite 150

San Diego, California 92130

Attention:  Chief Executive Officer

9.9 Counterparts.  This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

  

8

CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS ARE MARKED WITH [***] 

AND HAVE BEEN FILED SEPARATELY WITH THE SEC.

  

 

IN WITNESS WHEREOF, each of Imprimis and Buderer has caused a duly authorized representative to execute this Asset Purchase Agreement on the date first written above.

 

	
BUDERER DRUG COMPANY, INC.

	  
	 	 
	
By:        /s/ Matthew J. Buderer

	  
	Name:   Matthew J. Buderer	 
	Title:     Vice President	 
	  	  
	
IMPRIMIS PHARMACEUTICALS, INC.

	  
	 	 
	
By:        /s/ Mark L. Baum

	  
	Name:    Mark L. Baum	 
	
Title:     Chief Executive Officer

	 

 

[Signature Page to Asset Purchase Agreement]ambt_ex41.htm

EXHIBIT 4.1

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED,  OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

 

AMBIENT CORPORATION

 

Senior Secured Promissory Note

due June 30, 2014

 

	No. CN-__-__	 	$500,000

 

Dated: __________

 

For value received, Ambient Corporation, a Delaware corporation (the “Maker” or the “Company”), hereby promises to pay to the order of Vicis Capital Master Fund (together with its successors, representatives, and permitted assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of Five Hundred Thousand Dollars ($500,000.00), together with interest thereon.

 

All payments under or pursuant to this Note shall be made, without setoff or counterclaim and without any withholding or deduction whatsoever, in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, instructions for which are attached hereto as Exhibit A. The outstanding principal balance of this Note shall be due and payable on June 30, 2014 (the “Maturity Date”) or at such earlier time as provided herein. This Note may be prepaid in whole or part without premium or penalty. All payments due under this Notes shall be senior to all other Indebtedness of the Company and any Subsidiary and pari passu to all other Notes issued pursuant to the Purchase Agreement (as defined herein).

 

  

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ARTICLE I

 

Section 1.1 Purchase Agreement. This Note has been executed and delivered pursuant to the Note Purchase Agreement dated as of August 12, 2013 (the “Purchase Agreement”) by and between the Maker and Vicis Capital Master Fund. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement.

 

Section 1.2 Interest. Beginning on the issuance date of this Note (the “Issuance Date”), the outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to twelve percent (12%), payable quarterly commencing on [the first business day following the first fiscal quarter-end following issuance] and on the first business day of each following three-month period in cash. Interest shall be computed on the basis of a 360-day year of twelve (12) 30-day months and shall accrue commencing on the Issuance Date. Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), then to the extent permitted by law, the Maker will pay interest to the Holder, payable on demand, on the outstanding principal balance of the Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum.

 

Section 1.3 Security Agreement. The obligations of the Maker hereunder are secured by a continuing security interest in all of the assets of the Maker pursuant to the terms of a security agreement dated as of August 12, 2013 by and between the Maker and the Holder.

 

Section 1.4 Payment on Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

 

Section 1.5 Transfer. This Note may be transferred or sold, subject to the provisions of Section 4.8 of this Note, or pledged, hypothecated or otherwise granted as security by the Holder. Notwithstanding the foregoing, if at any time the Holder intends to transfer this Note to a third party that is not a pooled investment vehicle (as such term is defined in Rule 206(4)-8 under the Investment Advisers Act of 1940, as amended), the Holder will use commercially reasonable efforts to notify in writing the Maker at least twenty (20) days prior thereto (which notice or failure to provide notice shall, for the avoidance of doubt, in no way limit or affect the transferability of this Note) and afford the Maker an opportunity to prepay the then outstanding principal amount and accrued interest thereon prior to such transfer.

 

Section 1.6 Replacement. Upon receipt of a duly executed, notarized and unsecured written statement from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof) and a standard indemnity, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

 

  

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ARTICLE II

EVENTS OF DEFAULT; REMEDIES

 

Section 2.1 Events of Default.

 

(a) The occurrence of any of the following events shall be an “Event of Default” under this Note:

 

(i) the Maker shall fail to make any principal or interest payments on the date such payments are due, whether at maturity or at a date fixed for prepayment or by acceleration or otherwise, and such default is not fully cured within two (2) business days after the Holder delivers written notice to the Maker of the occurrence thereof; or

 

(ii)  [Intentionally Omitted];

 

(iii) [Intentionally Omitted];

 

(iv) default shall be made in the performance or observance of (i) any material covenant, condition or agreement contained in this Note and such default is not fully cured within five (5) business days after the Holder delivers written notice to the Maker of the occurrence thereof or (ii) any material covenant, condition or agreement contained in the Purchase Agreement, and such default is not fully cured within five (5) business days after the Holder delivers written notice to the Maker of the occurrence thereof; or

 

(v) any material representation or warranty made by the Maker herein or in the Purchase Agreement or any other Transaction Document shall prove to have been false or incorrect or breached in a material respect on the date as of which made and the Holder delivers written notice to the Maker of the occurrence thereof; or

 

(vi) the Maker shall (A) default in any payment of any amount or amounts of principal of or interest on any Indebtedness (other than the Indebtedness hereunder) the aggregate principal amount of which Indebtedness is in excess of $500,000 or (B) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

 

  

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(vii) the Maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), or admit in writing its inability to pay its debts (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

 

(viii) a proceeding or case shall be commenced in respect of the Maker, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of sixty (60) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days; or

 

(ix) if any of the Company or its Subsidiaries shall default in the observance or performance of any term or provision of a material agreement to which it is a party or by which it is bound, which default will have a Material Adverse Effect and such default is not waived or cured within the applicable grace period provided for in such agreement; or

 

(x) if a final judgment which, either alone or together with other outstanding final judgments against the Company and its Subsidiaries, exceeds an aggregate of $250,000 shall be rendered against the Company or any Subsidiary and such judgment shall have continued undischarged or unstayed for forty-five (45) days after entry thereof.

 

Section 2.2 Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 2.1 (a)(vii) or (viii), the outstanding principal balance and accrued interest hereunder shall be automatically due and payable and (ii) Sections 2.1 (a)(i)-(vi), (ix), and (x), Holder may demand the prepayment of this Note pursuant to Section 3.1 hereof, or (b) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement, or applicable law. In case of a default in the payment of any principal of or interest on a Note, the Maker will pay to the Holder such further amount as shall be sufficient to cover the cost and the expenses of collection, including, without limitation, reasonable attorney’s fees, expenses and disbursements. No course of delay on the part of the Holder shall operate as a waiver thereof or otherwise prejudice the right of the Holder. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

 

  

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ARTICLE III

PREPAYMENT

 

Section 3.1 Prepayment.

 

(a) Prepayment Upon an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default described in Sections 2.1(a)(iv) and (v), (a)(ix), and (a)(x) hereof, the Holder shall have the right, at such Holder’s option, to require the Maker to prepay in cash all or a portion of this Note at a price equal to one hundred percent (100%) of the aggregate principal amount of this Note being prepaid plus all accrued and unpaid interest applicable at the time of such request. Nothing in this Section 3.1(a) shall limit the Holder’s rights under Section 2.2 hereof.

 

(b) Prepayment Upon Major Transaction. In addition to all other rights of the Holder contained herein, simultaneous with the occurrence of a Major Transaction (as defined below), the Maker shall prepay in cash all of the Holder’s Notes at a price equal to one hundred percent (100%) of the aggregate principal amount of this Note being prepaid plus all accrued and unpaid interest (the “Major Transaction Prepayment Price”).

 

(c) Prepayment Option Upon Triggering Event. In addition to all other rights of the Holder contained herein, after a Triggering Event (as defined below), the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to one hundred percent (100%) of the aggregate principal amount of this Note being prepaid plus all accrued and unpaid interest (the “Triggering Event Prepayment Price,” and, collectively with the Major Transaction Prepayment Price, the “Prepayment Price”).

 

(d) Intentionally Omitted.

 

(e) Major Transaction. A “Major Transaction” shall be deemed to have occurred at such time as any of the following events:

 

(i) the merger or consolidation of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity (except in connection with a merger involving the Company solely for the purpose, and with the sole effect, of reorganizing the Company under the laws of another jurisdiction; provided that the certificate of incorporation and bylaws (or similar charter or organizational documents) of the surviving entity are substantively identical to those of the Company and do not otherwise adversely impair the rights of the Purchaser);

 

(ii) the sale, transfer, lease, or other disposition of 50% or more of the consolidated assets of the Maker (as shown on the most recent financial statements of the Maker or a Subsidiary, as the case may be) in any single transaction or series of related transactions (other than the sale of inventory in the ordinary course of business), or the liquidation, dissolution, recapitalization or reorganization in any form of transaction, or acquisition of all or substantially all of the capital stock or assets of another business or entity to the extent not otherwise permitted by the Purchase Agreement; or

 

  

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(iii) the investment by any third party in the Maker pursuant to a transaction in which the Maker receives gross proceeds of at least $5 million; provided that in the event of such investment the Holder shall be entitled to prepayment under Section 3.1(b) only to the extent to which the gross proceeds of such investment exceed $5 million; provided further that any such prepayment shall be allocated pro rata among all Notes then outstanding.

 

(iv) the execution by the Maker of an agreement to which the Maker is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii).

 

(f) Triggering Event. A “Triggering Event” shall be deemed to have occurred at such time as any of the following events:

 

(i) [Intentionally Omitted];

 

(ii) the Maker deregisters its Common Stock and as a result such shares of Common Stock are no longer publicly traded; or

 

(iii) the Maker consummates a “going private” transaction and as a result the Common Stock is no longer registered under Section 12(b) or 12(g) of the Exchange Act; or

 

(iv) the Maker breaches any representation, warranty, covenant or other term or condition of the Purchase Agreement, this Note or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby or hereby, except to the extent that such breach would not have a Material Adverse Effect (as defined in the Purchase Agreement) and except, in the case of a breach of a covenant which is curable, only if such breach continues for a period of a least twenty (20) business days.

 

(g) Intentionally Omitted.

 

(h) Mechanics of Prepayment at Option of Holder Upon Major Transaction. No sooner than fifteen (15) days nor later than ten (10) days prior to the consummation of a Major Transaction, but not prior to the public announcement of such Major Transaction, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Major Transaction”) to the Holder of this Note. At any time after receipt of a Notice of Major Transaction (or, in the event a Notice of Major Transaction is not delivered at least ten (10) days prior to a Major Transaction, at any time within ten (10) days prior to a Major Transaction), the Holder of this Note may require the Maker to prepay, effective concurrently with the consummation of such Major Transaction, all or any portion of this Note then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Major Transaction”) to the Maker, which Notice of Prepayment at Option of Holder Upon Major Transaction shall indicate (i) the principal amount of this Note that the Holder is electing to have prepaid and (ii) the applicable Major Transaction Prepayment Price, as calculated pursuant to Section 3.1(b) above.

 

  

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(i) Mechanics of Prepayment at Option of Holder Upon Triggering Event. Within five (5) business days after the occurrence of a Triggering Event, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Triggering Event”) to the Holder. At any time after the earlier of the Holder’s receipt of a Notice of Triggering Event and the Holder becoming aware of a Triggering Event, the Holder of this Note may require the Maker to prepay all or any portion of this Note then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Triggering Event”) to the Maker, which Notice of Prepayment at Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note that the Holder is electing to have prepaid and (ii) the applicable Triggering Event Prepayment Price, as calculated pursuant to Section 3.1(c) above. The Holder shall only be permitted to require the Maker to prepay this Note pursuant to Section 3.1 hereof for the greater of a period of ten (10) days after receipt by the Holder of a Notice of Triggering Event or for so long as such Triggering Event is continuing.

 

(j) Payment of Prepayment Price. Upon the Maker’s receipt of a Notice(s) of Prepayment at Option of Holder Upon Triggering Event or a Notice(s) of Prepayment at Option of Holder Upon Major Transaction from the Holder, the Maker shall immediately notify the Holder by facsimile of the Maker’s receipt of such Notice(s) of Prepayment at Option of Holder Upon Triggering Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction and the Holder which has sent such a notice shall promptly submit to the Maker the Holder’s certificates representing this Note which the Holder has elected to have prepaid. The Maker shall deliver the applicable Triggering Event Prepayment Price to the Holder within five (5) business days after the Maker’s receipt of a Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case of a prepayment pursuant to Section 3.1(h), the Maker shall deliver the applicable Major Transaction Prepayment Price immediately prior to the consummation of the Major Transaction; provided that the Holder’s original Note shall have been so delivered to the Maker. If the Maker shall fail to prepay all of the Notes submitted for prepayment (other than pursuant to a dispute as to the arithmetic calculation of the Prepayment Price), in addition to any remedy such holder of the Notes may have under this Note and the Purchase Agreement, the applicable Prepayment Price payable in respect of such Notes not prepaid shall bear interest at the rate of two percent (2%) per month (prorated for partial months) or the maximum rate permitted by law, if less, until paid in full. Until the Maker pays such unpaid applicable Prepayment Price in full to a holder of the Notes submitted for prepayment, such holder shall have the option (the “Void Optional Prepayment Option”) to, in lieu of prepayment, require the Maker to promptly return to such holder(s) all of the Notes that were submitted for prepayment by such holder(s) under this Section 3.1 and for which the applicable Prepayment Price has not been paid, by sending written notice thereof to the Maker via facsimile (the “Void Optional Prepayment Notice”). Upon the Maker’s receipt of such Void Optional Prepayment Notice(s) and prior to payment of the full applicable Prepayment Price to such holder, (i) the Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the Notice(s) of Prepayment at Option of Holder Upon Major Transaction, as the case may be, shall be null and void with respect to those Notes submitted for prepayment and for which the applicable Prepayment Price has not been paid, (ii) the Maker shall immediately return any Notes submitted to the Maker by each holder for prepayment under this Section 3.1(j) and for which the applicable Prepayment Price has not been paid. A holder’s delivery of a Void Optional Prepayment Notice and exercise of its rights following such notice shall not affect the Maker’s obligations to make any payments which have accrued prior to the date of such notice. Payments provided for in this Section 3.1 shall have priority to payments to stockholders in connection with a Major Transaction.

 

Section 3.2 No Rights as Shareholder. Nothing contained in this Note shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Maker or of any other matter, or any other rights as a shareholder of the Maker.

 

  

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ARTICLE IV

MISCELLANEOUS

 

Section 4.1 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy or facsimile at the address or number designated in the Purchase Agreement (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

 

Section 4.2 Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

 

Section 4.3 Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

 

Section 4.4 Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, the Transaction Documents, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Maker to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Maker (or the performance thereof). The Maker acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Holder and that the remedy at law for any such breach may be inadequate. Therefore the Maker agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

 

Section 4.5 Enforcement Expenses. The Maker agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.

 

  

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Section 4.6 Binding Effect. The obligations of the Maker and the Holder set forth herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof.

 

Section 4.7 Amendments. This Note may not be modified or amended in any manner except in writing executed by the Maker and the Holder.

 

Section 4.8 Compliance with Securities Laws. The Holder of this Note acknowledges that this Note is being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder shall not offer, sell or otherwise dispose of this Note. This Note and any Note issued in substitution or replacement therefor shall be stamped or imprinted with a legend in substantially the following form:

 

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER THAT THIS NOTE MAY BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

 

Section 4.9 Specific Performance; Consent to Jurisdiction; Venue.

 

(a) The Maker and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Note or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement or the other Transaction Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

 

(b) The parties agree that venue for any dispute arising under this Note will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Maker and Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 4.9 shall affect or limit any right to serve process in any other manner permitted by law. The parties hereby waive all rights to a trial by jury.

 

  

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Section 4.10 Parties in Interest. This Note shall be binding upon, inure to the benefit of and be enforceable by the Maker, the Holder and their respective successors and permitted assigns.

 

Section 4.11 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No delay or omission on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion

 

Section 4.12 Maker Waivers. Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment of this Note, AND THE PARTIES HERETO DO HEREBY WAIVE TRIAL BY JURY.

 

(a) THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

 

Section 4.13 Definitions. For the purposes hereof, the following terms shall have the following meanings.

 

“Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

 

  

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“Trading Day” means (a) a day on which the Common Stock is traded on the Nasdaq Stock Market, or (b) if the Common Stock is not traded on the Nasdaq Stock Market, in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

Section 4.14 Counterclaims. The Maker waives the right to interpose counterclaims or set-offs of any kind and description in any litigation arising hereunder.

 

Section 4.15 Transfer and Assignment. The Holder may transfer or assign this Note without the consent of the Maker. The Maker may not transfer or assign this Note or its obligations hereunder without the consent of the Holder

 

 

[REMAINDER OF NOTE INTENTIONALLY LEFT BLANK]

 

  

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IN WITNESS WHEREOF, the Maker has caused this Note to be signed on the day and year first above written.

 

	 	
AMBIENT CORPORATION

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

 

 

 

 

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