Document:

Exhibit 10.6

 

Lease Agreement

 

Made and signed in Ramat Gan on May 9, 2012

 

Between:                                             Bechar & Sons (1983) Food Supply and Marketing Ltd., Private Company 51-1008633

At Adv. Avi Bechar, of 9 Hagilad St., Ramat Gan

(hereinafter: “the Lessor”)

 

Of the one part

 

And:                                                                     SteadyMed Ltd., Private Company 513698928

Of 5 Oppenheimer St., Tamar Park Rehovot

(hereinafter: “the Lessee”)

 

Of the other part

 

Whereas                                                 The Lessor warrants that it is the owner and holds the exclusive right of possession over offices located on Floor A at 5 Oppenheimer St., Rehovot, known as part of parcel 200, block 3695, including 12 parking spots (9-13, 39-45), and including the relative part in the common areas at the building (hereinafter: “the Property”) and that there is no prevention according to law and/or agreement upon its engagement in this Contract, lease of the Property and receipt of the Rent;

 

And whereas                          The Lessee wishes to rent the Property from the Lessor (including the relative part in the common areas at the building) according to the terms of this Agreement, and the Lessor is interested in leasing the Property to the Lessor, explicitly provided that it will not be protected according to the Tenant Protection Law (Consolidated Version), 5732-1972 and/or any other law that amends and/or replaces the same and/or the regulations according thereto;

 

And whereas                          The Lessee undertakes that it did not pay key money or other premium to the Lessor for the Property and that it wishes to rent the Property subject to the explicit condition that it will not be protected according to the Tenant Protection Law (Consolidated Version), 5732-1972 and/or any other law that amends and/or replaces the same and/or the regulations according thereto;

 

Therefore, it is warranted, agreed upon and conditioned by the Parties as follows:

 

1.              The preamble of this Agreement and its Appendices constitute an integral part thereof and are binding as its other terms. Headings in this Agreement are intended for convenience and orientation only, and will not serve for interpretation of any term of this Agreement.

 

 

2.              The Lease Period

 

The Lessor hereby leases the Property to the Lessee, and the Lessee hereby rents the Property from the Lessor, commencing on July 1, 2012 and until June 30, 2015, according to the conditions set forth in this Agreement (hereinafter: “the Lease Period”).

 

3.              Purpose and Designation of the Lease

 

a)             The Lessee undertakes to use the Property for the purpose of management of high-tech industry.

 

a)             The Lessee hereby warrants that it has seen the Property and its vicinity, inspected them and found them to be suitable and appropriate for the lease purpose from any aspect, including its location, quality of construction and permits required for management of the lease purpose, and it declares it has not found any incompatibility; if such is discovered, it hereby waives any remedy to which it is entitled due to the same.

 

b)             The Lessee hereby undertakes that the Property will serve only for the purpose specified in sub-Section A above, and the Lessee also undertakes to ensure that it and/or its employees and/or its agents and/or its visitors and/or its guests do not perform any use and/or matter and/or action that is illegal at the Property and/or adjacent thereof and/or that are noisy, annoying, disturb the Property and/or the building at which the Property is located, including its facilities and/or content, in an unreasonable manner.

 

c)              Each of the Parties undertakes to fulfill the provisions of any law that applies to the Property and/or in connection therewith. Without derogating from the generality of the aforesaid, the Lessee undertakes to obtain any license and/or permit required according to any law for management of its business at the Property and/or for fulfillment of the lease purpose as specified in sub-Section A above and/or for presentation of signs and installation thereof according to Section 9 below. For this purpose, the Lessee will be entitled to submit applications for approvals, permits and other consents that may be required by national or local authorities, in order to obtain a permit for the lease purpose. The Lessor will sign any form or document required for this purpose, provided the same does not impose thereupon monetary obligation or liability for the correctness of the form or document. The Lessor undertakes not to submit an objection, whether in writing or orally, and not to otherwise object to the licensing processes for the Property, provided the same is in accordance with the provisions of this Agreement.

 

d)             It is hereby clarified that to the best knowledge of the Lessor, the Management Company is installing sprinklers in the public areas and the private areas. It is hereby clarified that the Lessor will bear the cost of installation of such sprinklers according to the requirements of the Management Company. It is

 

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also clarified that if the Lessee cannot meet its obligations according to this Agreement due to non-receipt of approval from the fire department and/or any other competent authority in connection with the sprinklers (“Authorities Approval”), the Lessee must advise the Lessor in writing of the same within reasonable time, and the Lessee will have the right, according to its exclusive discretion, to vacate the Property without any penalty, by written notice submitted to the Lessor two months in advance.

 

e)              Breach of the provisions of sub-Section A constitutes material breach of this Agreement.

 

4.              The rent

 

a.              For the Lease period, according to this Agreement, the Lessee will pay the Lessor for the Property as defined above, the monthly rent of 34,000 NIS (thirty four thousand New Israeli Shekels).

 

1)             To the monthly rent will be added the linkage as defined in this Agreement. To avoid doubt, if the new index decreases from the original one, the rent will not decrease.

 

2)             “Index” – The Cost of Living index as published by the Central Bureau of Statistics or any other official body or institute that may replace it, whether it is based on the same data or not. If another index replaces it, and the Central Bureau of Statistics and Economic research does not state the connection between the index and that replacing it, the accountants of the parties will decide on the connection between the index and the new one, by agreement, between them.

 

“The basic index”- The cost of living index published on June 15, 2012.

 

“The new index” -The last periodical index, published before the date for any payments’ transfer.

 

“Linkage” -The difference between the new index and the basic index divided by the basic index, and multiplied by the rent principal.

 

3)             The rent will be paid every three months in advance by means of Bank transfer to the Lessor’s account in the First International Bank, Yitzhak Sade branch (048) account No. 409-202207, Bechar and sons (1983) Food Supply and Marketing Ltd.. Every 6 month the linkage difference will be calculated for every month’s linkage and the Lessee will pay the Lessor these differentials within 7 days from the calculation date.

 

4)             In addition to the rent, the Lessee will pay the Lessor the VAT due at the rate persisting at the time of payment. The payment will be made together with the rent and that for a lawful tax invoice.

 

b.              In addition to the aforesaid and without derogation, every amount due from the Lessee to the Lessor that is not paid on time, will bear an arrears’ interest at the customary highest rate of the date in Bank Leumi Ltd. for unauthorized credit’ deviations (hereinafter: “arrear interest”) starting with the debt’s creation and until the actual payment day.

 

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c.               Any non-payment of rent in full and on time, including additions as aforesaid, for a period exceeding 7 days, will be deemed a basic breach of the Agreement by the Lessee to the Lessor, without diminishing the Lessor’s rights deriving from this Agreement.

 

d.              Nothing mentioned in the above sub section b and/ or c will be interpreted as providing the Lessee with any right to delay any payment in this Agreement.

 

e.               Payment by check will be deemed as completed only after its full redemption.

 

f.                It is hereby agreed, that if the Lessee does not use the Property or any of its parts, for any time of the lease period, the Lessee will pay the full rent, and all other payments owing or will owe by this Agreement as if the Lessee has actually been using the Property throughout the lease Period.

 

g.               The payment will be made up to 11.00 A.M. on the payment date.

 

h.              Subject to the above sub section c, a breach of any of section 4’s prescriptions will be deemed a basic breach of the Agreement.

 

5.              Assignment of Rights

 

a.              The Lessee cannot allow any person unauthorized by the Lessor, apart from his employees and/ or his agents and/ or his independent contractors and/ or any of the persons sponsored by the Lessor, to use the Property, among others the Lessee will not Lease the Property and/ or give to other or others the right to use and/ or assign or transfer any of his rights and/ or obligations deriving from this Agreement to a third party, unless the Lessee receives explicit written authorization, in advance, from the Lessor.

 

b.              Breach of section 5 will be deemed a basic breach of the Agreement.

 

6.              Tax

 

a.              During the Lease period, and in addition to the rent, the Tenant will pay all the government and/or municipal taxes, fees, levies of all sort and type (except Property tax and taxes, fees, levies of all sort and type that are imposed on the Property’s owner) as well as any tax and/or levy and/or fee that is imposed or will be imposed on the Property and/or the business it manages, including municipal taxes, business tax, sign tax etc.

 

The Lessee undertakes to present the Lessor from time to time, at his request (or his accountant and/or the Lessor’s bookkeeper) with all the receipts indicating that he has paid all the payments charged by the authorities and/or other bodies in this above section.

 

b.              In avoidance of doubt, it is agreed and declared, that any tax that will be imposed on the use of the Property and/or its maintenance for the Lessee’s

 

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business or/and his use of the Property will fall on, and be paid by, the Lessee.

 

c.               The Lessee will pay management fees to the Property’s Management Company as fixed by the Management Company and on fixed terms. The Lessee declares that he is aware that the agreement between the Management Company and the Condominium delegation has been signed and cannot be changed as long as it is valid. The Management’s agreement copy is attached as Appendix to the Agreement.

 

d.              Breach of section 6 will be deemed a basic breach of the Agreement.

 

7.              Tenant Protection

 

a.              It is explicitly stated and agreed that in relation to the Property and the Lease subject to this Agreement, the Lessee is not a protected Lessee, and that the provisions of the Tenant Protection Law, including the Tenant Protection Law (consolidated version) of 1972 with it amendments and any other law which may be enacted dealing with Tenant Protection does not, and will not, apply to the lease of the Property.

 

b.              Without derogating from the generality, the parties declare that the Lessee did not pay and was not asked to pay, directly or indirectly, key money and/or any other payment for the Property or any part of it.

 

8.              The Property’s maintenance and operation

 

a.              The Lessee undertakes to use the Property with reasonable care, to maintain it in proper condition and to repair at his expense, any defect, impairment, breakdown or damage incurred to the Tenancy unless it occurred through wear from reasonable use.

 

b.              The Lessor may do any repairs and/or renovations required to keep the Property in proper condition after advance coordination with the Lessee, including repairs to be done at the Lessee’s expense by this Agreement and/or by law. The Lessee will reimburse the Lessor for any reasonable amount he has paid by receipts showing the payments for the repairs that are the Lessee’s responsibility, and were performed as stated by the Lessor instead of the Lessee, immediately after receiving the note, and subject to the Lessor sending an advance 7 (seven) days written note, before doing the said repair, and the Lessee himself or/and anyone on his behalf did not do the repair in that time.

 

c.               The Lessor undertakes to repair within 14 days, at his expense, any defect, or damage resulting from natural and/or reasonable wear, including damages to infrastructures i.e. sewage, electricity and air-conditioning.

 

d.              The Lessor may in person, or his representatives, visit the Property during regular business hours with advance coordination with the Lessee in order to control and see its condition including the application of the terms of this

 

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Agreement and/or in order to present the Property to potential buyers and/or lessees.

 

e.               The Lessee undertakes to indemnify the Lessor immediately, if he is charged of any indemnity to a third party for any damage caused, to the body and/or properties of the said third party, that may have been caused by an act and/or omission of the Lessee and/or any of his representatives as referred to above and below, and subject to the Lessor having transmitted a note to the Lessee concerning the event immediately after receipt of a warning and will allow the Lessee to appoint a legal representative for the Lessor to defend himself against such a claim, if made against him.

 

9.              a. The Lessee undertakes to take all steps to be in possession of valid licenses and approvals required under any law for the operation of the Property, and to comply with all legal instructions referring to the operation of his business on the Property.

 

b. The Lessee will be liable for any fine imposed on him and will bear all payments deriving from breach of the connected legal instructions.

 

In avoidance of doubt, it is hereby clarified that the Lessor does not bear any responsibility for the aforesaid, and that the Lessee will not be released from his undertakings by this Agreement, including paying the rent, due to avoidance of acquiring the licenses or their renewal.

 

10.       a. The Lessee undertakes not to make any change in the leased Property or add any addition unless he has received the Lessor’s prior and written authorization and subject to this Agreement’s instructions and subject to the Lessor acquiring all the licenses and approvals to perform the alterations if required. To avoid doubt, it is hereby clarified that the Lessee will not abolish the wall dividing the two parts of the Property.

 

Any alteration or addition made by the Lessee, after the Lessor’s said approval, (except for movables or assets that are not connected in a fixed way to the property) will immediately become the Lessor’s exclusive property without any payment and without the fact being deemed as payment of key- money of any sort or kind.

 

b.     It is hereby agreed and declared that, without derogating from the said generality of the above sub section a, the Lessee may affix additional signs on the external property’s walls in accordance with the law, including without derogating from the said generality, with the Rehovot municipality laws and provisions and/or the Management Company’s decisions only signs of self-publicity (hereinafter “the signs”).

 

The Lessor will not abstain from agreement except for detailed, written, reasonable and relevant argument. To avoid doubt, the Lessee will bear all expenses related to the signs’ fixing and/or their maintenance and/or their removal as stated in the following sub section c.

 

c.     In every case in which, according to this Agreement , the Lessor is allowed to return the Property to his hands, the Lessee undertakes that the Property be returned in proper condition subject to the alterations and additions done by the Lessee, after receipt of the Lessor’s approval, and the repair of all the defects

 

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and/or the damage and/or the damaged caused by the signs and/or deviation from the agreed additions and/or the fixing and/or maintenance and/or removal and/or damage caused by them, and except repairs and other defects that are not the Lessee’s responsibility by this Agreement and/or by law, and to carry out, at his expense, every repair and/or renovation required to stand by his undertaking. All this, not later than the date on which the Lessor is entitled to require the Lessee to return the Property to its initial condition and the Lessee undertakes to return the Property to its initial condition, except for natural and/or reasonable wear within a reasonable period following the Lessors’ request.

 

11.       The Lessee undertakes to keep the Property and its surroundings cleaning and insure that no goods, stocks, packaging tools or other objects be put outside the Property and that the Property’s surroundings will be clean and free from any waste, garbage or objects originating from the Property.

 

12.       (Deleted – Phone line)

 

13.       a.     During the Lease period and its extensions, the Lessee will pay for electricity consumption on the Property according to the Property’s separate electricity counter and the payments according to this counter will be paid by the Lessee immediately upon the adequate payment request or until the date stated in the payment demand. The electricity accounts will be paid by the Lessee himself whether they are addressed to him or to the Lessor.

 

b.              The Lessee will bear and pay on time all house committee and Management Company’s payments.

 

c.               Copies of the receipts referred to in sections 6 and 13 will be delivered by the Lessee to the Lessor as detailed in the above section 6a.

 

d.              Notwithstanding the aforesaid, it is agreed that the Lessee may make all payments referred to in the above sections 6 and 13 by bank direct debits. In such a case the Lessee will ensure all direct debits be valid and active and cannot cancel them except by written note to the Lessor.

 

During the lease period and/or at the Lessors request, the Lessee will provide the Lessor with copies of the said valid direct bank debits.

 

14.       Insurance

 

a.                                      The Lessee will insure, at his expense, the Property and his activities on the Property against all risks for which he is responsible as stated by this Agreement. The Lessee undertakes to ensure the existence and validity during all the lease period and/or all relevant additional periods by this Agreement, of the said policies with Insurance firms, in terms and real value.

 

The property will be insured by the Lessor for its full value, i.e. for a total of 1,000,000 $ (One Million Dollars) with accepted comprehensive coverage effective for loss or damage due to accepted comprehensive fire insurance risks including fire, smoke, lightning, explosion, earthquake, storm and hail, flood, liquid damage and pipe explosions, glass breakage, vehicle injury, aircraft injury, pogrom, strikes, malicious damage and burglary damages as well as loss of lease fees and management fees due to damage caused to the building as a result of the aforementioned risks.

 

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b.                                      Notwithstanding the aforesaid, during the lease period, the Lessee undertakes that the following policies and instructions will exist and be valid :-

 

·                  Explicit provision in every policy that the policy can only be cancelled after a 30 (thirty) days written note to the Lessor.

 

·                  Third parties liabilities insurance insures the Lessee’s lawful liability in respect to personal injury or property damage that may result to the body and/or the property of any person or body in the Property and its surroundings, with a liability limit of 250,000$ (A hundred thousand) US Dollars for every case. The insurance is not subject to any limitation for liability deriving from fire, explosion, panic, lifting instruments, loading and unloading, defective sanitary facilities, poisoning, any harmful substance in food or drink, strike or lockout, liability due to and against contractors and subcontractors (of any degree) and their employees, animals, or subrogation claims from the National Insurance Institute. The insurance is extended to indemnify the lessor for its liability as owner and manager and/or any of its representatives, and that subject to the cross liability section, by which, the insurance is deemed to be set separately for every one of the insured individuals.

 

·                  Insurance of the Property’s content including all alterations, improvements and additions to the Property and/or that are done and/or will be done by or for the Lessee, at full value, and its panes, windows, glass partitions, glass doors, as well as any other property brought to the Property, and/or the project by or for the Lessee (including equipment, furniture, facilities and stocks), as valued by the Insurance appraiser, and against loss or damage by regular risks for comprehensive fire insurance, including fire, smoke, lightning, explosion, earthquake, storm and hail, flood, liquid damage and pipe explosions, glass breakage, vehicle injury, aircraft injury, riots, strikes, malicious damage and burglary damages.

 

c.                                       The Lessee undertakes to add the Lessor as co-beneficiary on the insurance policy so that the Lessee and the Lessor will be “the insured” or “the beneficiary” together.

 

d.                                      Without derogating from the aforesaid generality, the Lessee will include in the said policies, a section by which the insurer waives his subrogation rights towards the Lessor and/or toward any right to apply to the Lessor in any way and/or form.

 

e.                                       The Lessee undertakes to pay the insurance policies in full and on time and to carry out all the undertakings imposed on the insured by the insurance contracts and by the Insurance Contract Law, and to renew them every time so as to assure that the insurance to be applied by this contract be valid at all times during the lease period.

 

f.                                        The Lessee will provide the Lessor with the insurance policy or the attached Appendix A, Insurance Firm’s Certificate form, not later than the end of the month in which the Agreement was signed.

 

g.                                       If the Lessee does not provide the Lessor with the insurance policy or the said Insurance Firm’s Certificate form and/or if any insurance policy is cancelled and the Lessee does not provide a copy of an alternative insurance policy in reasonable time since the cancellation, the Lessor may, but is not obliged to take out the said insurance policies at the

 

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Lessee’s expense but the aforesaid does not derogate from any of the Lessor’s other rights and assistance to which he is entitled by this Agreement and/or by law in this matter.

 

h.                                      Breach of any of section 14 provisions will be deemed a basic breach of the Agreement.

 

1.              Indemnification

 

Both parties undertake to indemnify the other party, of all reasonable sums that the first party will pay to any person for deeds and/or default in which the responsibility as described in this Agreement lies with the other party, and also to pay the first party any reasonable expense paid by the second party, including expenses of the defense proceedings in connection with the aforesaid request and/or claim, provided that the second party presents the first party with note of any said request and/or claim, in advance, within a reasonable amount of time and will enable him, at his written request, to defend himself, at his expense, against any said request and/or claim. Each party will cooperate with the other in connection to any said request and/or claim.

 

16.       Return of the Property

 

a.                                      In every case in which, according to this Agreement, the Lessor is entitled to return the Property to himself, the Lessee undertakes that the Property be returned the Lessor in the condition it was on the Property’s delivery date taking in account the changes and additions done by the Lessee after reception of the Lessor’s approval, except for wear from natural and/or reasonable use, which is not according to this Agreement, the Lessee’s responsibility, and to repair at his expense, any defect, impairment, breakdown or damage incurred to the Property for the fulfillment of his said undertaking, all that not later than the time in which the Lessor is entitled to receive the Property as aforesaid.

 

b.                                      The Lessee undertakes to evacuate the Property immediately on the leasing period’s expiry date and/or the end of the Option period or prior to that as said in the following section 18 and to return to the Lessor the exclusive possession of the Property free of any person, and object that does not belong to the Lessor, and in the state that it was in at the delivery of the holding in the Property, apart from reasonable wear as specified in the above section 16a.

 

c.                                       The parties see the Property’s evacuation and the transfer of the possession on the Property free of any person and object immediately at the lease period’s end or at a prior date, as said in the following section 18 a fundamental condition of this Agreement and fix, after a careful evaluation, the sum equal to 1,600 NIS per day as agreed upon indemnity for the damage caused to the Lessor for every day of delay in the Property’s evacuation and the transfer of the possession of the Property, free of any person, and object.

 

A delay of up to 3 days will not be deemed as a breach of the Agreement.

 

The aforesaid does not derogate from or contradict any additional right

 

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and/or remedy that are available to the Lessor by this Agreement and/or by law and especially a claim to evacuate and/or expulsion in a summary legal procedure.

 

17.       Liability for damages

 

a.                                      In the liabilities distribution between the Lessor and the Lessee, the Lessee will be liable for any loss, injury, damage or failure that might have been caused to the body and/or properties of any person or body, (including the Lessee, third parties, the Lessee’s employees and managers) caused on the Property or its immediate surroundings, related to an act and/or omission of the Lessee and/or any of his representatives including the maintenance and/or use of the Property and/or the building. This section does not exclude any of the Lessee’s liability to any third party.

 

b.                                      The Lessee hereby undertakes to indemnify the Lessor– within 30 (thirty) days from his first written demand - for injury, damage or failure as said in the above sub section (a) and to reimburse the Lessor - within 15 (fifteen) days from his first written demand - all the sum that the Lessor paid for injury, damage or failure, connected to his defense for a aforesaid claim (including the Lessor’s reasonable attorney’s fees), subject to the Lessor sending the Lessee the third party’s note for this claim.

 

c.                                       The Lessee undertakes to exemplify the Lessor and keep him free from any liability deriving from any damage caused to any party, animal or inanimate, for the aforesaid in this section and/or by Property’s defects.

 

d.                                      If a claim and/or a demand is presented to the Lessor to indemnify any person or body for a case in which the Lessee is liable as aforesaid, at the Lessors discretion, the defense management will be transferred to the Lessee and the Lessee will conduct it and bear all payments, expenses and attorneys’ fees connected with the cancellation of the claim and/or the defense and court procedures, subject to the Lessee sending a detailed note to the Lessor immediately after learning of the claim and/or the demand to the Lessor’s care.

 

18.       Breach and Remedies

 

a.                                      In addition to any special section of this Agreement, the parties see in every one of the following, a basic breach and defect undermining the root of the Agreement. .

 

1)             Without derogating and/or changing the aforesaid in section 4c., non-payment on time of any of the sums that the Lessee must pay by this Agreement.

 

2)             If the Lessee will transfer his rights and/or liabilities and/or allow use of his rights and/or liabilities in contradiction to that defined in this Agreement.

 

3)             If the Lessee will operate a business on the Property that contradicts that defined in this Agreement.

 

4)             In the case of a process of receivership and/or liquidation against the Lessee.

 

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b.                        In every one of the detailed above sub section a., the Lessor will be entitled, at his discretion, to take one of the following steps:

 

1)             To cancel this Agreement and accordingly end the lease period and return to himself the Property’s possession.

 

2)             In addition to the aforesaid, the Lessor may charge the Lessee arrears interest as referred to in the above section 4b.at the Lessor’s discretion for any delay in payment that the Lessee owes to the Lessor by this Agreement and that from the day the Lessee had to pay, up to the actual payment or collection.

 

c.                         If at the end of the lease period the Lessee does not evacuate the Property according to this Agreement’s instructions, then, in addition to any remedy given to the Lessor by this Agreement and/or by law, the Lessor may if circumstances are justified, change the Property’s locks, cut the electricity current and take any other justified step.

 

The Lessor will not bear any liability for damage or loss caused to the Lessee resulting from the aforesaid and all the expenses, including storage and transport, will fall exclusively on the Lessee.

 

d.                        If one of the parties will carry out a basic breach of this Agreement’s instructions, then, in addition to any remedy allowed to him by this Agreement’s instructions and/or by law and notwithstanding the aforesaid, the damaged party will be entitled to receive from the breaching party, upon his first written demand, an agreed compensation evaluated without proof of damage, an amount in NIS equal to 10,000 (ten thousand) US$ at the exchange rate known in the transaction.

 

19.       Collateral

 

To secure the fulfillment of all the Lessee’s obligations deriving from this Agreement, the Lessee will provide the Lessor with the following collaterals:

 

a.              The Lessee will hereby submit to the Lessor, a payment equal to 4 months’ rent totaling 154,000 NIS (including management fees) (hereinafter “the Bank guarantee”). If the Agreement is extended and/or the rent increased as noted in the following section 20 the guarantee will be increased accordingly. The Bank guarantee will be deposited in the trustee’s hands of the Lessor’s representative, Avi Bechar, Attorney, and will be used in the case that the Lessee breaks this Agreement in a basic breach or violation of this Agreement, which is not repaired within 7 business days, from the time the Lessee was given written note by the Lessor. In the note the matter of the basic breach will be described. The Bank guarantee will be returned to the Lessee after 30 days from the end of the lease period or optional extended periods, if will be and subject to all the Property’s rent by this Agreement being paid by the Lessee.

 

Breach of section 9 is a basic breach of the Agreement.

 

20.       The Extension Period Option

 

a.                        An option is hereby proposed to the Lessee to extend the lease period for an additional 24 months’ period (hereinafter: “the option period”). Realization of the option by the Lessee will be by provision of a written advance note to the Lessor, at

 

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least 120 days before the lease period expiry date, to realize the option.

 

It is hereby clarified that the condition to implement the said option is the actual delivery by the Lessee to the Lessor’s or his attorney’s hand not later than two months before the lease period expiry date, the insurer’s note in the form of Appendix a’ that the insurance policies will be valid up to the option period’s end that was exercised along with a new Bank guarantee. Non-delivery of any of the said notes and/or documents will result in the cancellation of the said option as if the note of the option implementation was not delivered and that at the Lessor’s discretion.

 

c.                         All this Agreement’s provisions will apply to the option period, except for the current section.

 

d.                        Notwithstanding the aforesaid, if the Lessee repeatedly breaches the Agreement, the Lessor will be entitled to cancel any aforementioned Lessee’s option given and this will not be deemed as a breach of this Agreement, provided that he had delivered an advance written warning that if the breach will continue, section 4 instructions will apply.

 

e.                         The Option period’s rent will be based on the rent paid for the last lease period’s monthly rent plus the index and plus 4 NIS for every m2 of the Property. The rent will be paid in the same pattern as aforesaid.

 

f.                          It is hereby clarified that if the Lessee will notify the option’s realization and for any reason deriving from the Lessee, he will not finally exercise it, the Lessor will be entitled to a payment of a sum equal to NIS 34,000 plus management fees, and that, as agreed compensation beyond any other remedy the Lessor is eligible by law and/or by this Agreement. The Lessor has given his consent.

 

21.       Transfer of the Property

 

The Lessor will be entitled to transfer his rights, all or part of them, on the Property to a third party during the lease period, provided that he has delivered the Lessee with an advance note at least two weeks before the transfer of the said rights and provided and the Lessee’s rights are not damaged.

 

This done, the new right’s owner will replace the Lessor in all the acquired rights, and the Lessee undertakes to fulfill all his responsibilities deriving from the rights the owner has bought.

 

22.       Nonuse of rights by the Lessor

 

In any case in which the Lessor does not apply one or more of his rights by this Agreement, it will not be deemed as the Lessor’s waive or agreement and the Lessee waives any right to put forward claims concerning the said waive or agreement.

 

23.       Notes

 

a.              Every note sent by any of the parties to the other address as described in the preamble to this Agreement will be deemed as having reached its destination after 72 hours if sent by recorded post, and on its delivery, if delivered by hand.

 

b.              The Lessee undertakes to deliver to the Lessor’s representative a copy of all the notes received from the Management Company and/or the delegation within 5 business days from the notes’ reception.

 

General

 

24.       Every payment that applies and/or will apply to one of the parties and will be paid for by the other party, will be returned by the payment liable according to this Agreement and/or

 

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by law to the payer, within 7 (seven) days from the reception of the payer’s party’s written demand.

 

25.       It is hereby explicitly agreed and declared by the parties, that this agreement comprehends and formulates all that agreed by them and that after the signing of this Agreement there is not, and will not, be any validity to any agreement and other agreements apart from this Agreement.

 

In avoidance of doubt it is hereby agreed and declared, that no change, extension, waiver, delay, relief or discount done in this Agreement and/or in the derived charges, will be valid, unless done in writing and signed by all parties.

 

26.       Each party will bear his Attorney’s legal fees in relation to the preparation and signing of this Agreement.

 

Exclusive jurisdiction clause:

 

27.       It is hereby agreed that the Tel Aviv Court of Justice will have exclusive jurisdiction authority to judge every matter relating to this Agreement.

 

In witness whereof, the parties have signed this Agreement

 

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
The Lessee
    	
 
    	
The Lessor
    	
 
    

 

I undersigned,                        , attorney for the Lessee, hereby confirm that the Lessee is authorized to sign this Agreement with the Lessor, and there is no prevention from the Lessee party to be attached to this Agreement, and that this attachment is in line with the Lessee’s Articles and memorandum.

 

	
 
    	
Date:
    	
14/5/12
    	
 
    	
/s/ Dimenstein Attorney
    	
 
    

 

I, the undersigned, Avi Bechar, Attorney, Attorney for the Lessor, hereby confirm that the Lessor is authorized to sign this Agreement with the Lessor, and there is nothing preventing the Lessor party from being attached to this Agreement, and that this attachment is in line with the Lessor’s Articles and memorandum.

Additionally, I confirm that Mr. Yaakov Bechar is the Lessor’s Authorized signatory, and has signed this Agreement in my presence.

 

	
 
    	
Date:
    	
4/5/12
    	
 
    	
/s/ Avi Bechar Attorney
    	
 
    

 

13

 

Appendix “a”  (section 14 b of the Agreement)

 

To

 

Bechar & Sons (1983) - Food Supply and Marketing Ltd.
 At Adv. Avi Bechar, of 9 Hagilad St., Ramat Gan

 

Dear Sirs.,

 

Re: Insurance Edition Certificate for the period from            to           

 

We hereby certify that we have edited the policies detailed in section 14 of the Agreement on the Property leased by you and that is in the possession of the Lessee whose name is detailed below, located on Floor A at 5 Oppenheimer St., Rehovot (hereinafter: “The Property”), and relates to the Property’s Lessee’s business and activities.

 

1.                  The insured name                                ((hereinafter: “The Lessee”).

 

The insured properties: The Property’s content (without derogating from the generality, including all alterations, improvements and additions to the Property that are done and/or will be done by or for the Lessee, including equipment, furniture, facilities and stock of all kinds.

 

The insurance sum:

 

Special condition: The policy includes a section concerning the waiver of subrogation towards you as well as toward guests and visitors to the site.

 

2.                  Third party liability insurance: (about the Lessee’s business and activities)

 

The insured name                                  ((hereinafter: “The Lessee”).

 

Liability limit:                                      For one case                        (                 ) minimum.

 

	
Special conditions:
    	
1.
    	
It is agreed that the policy is comprehensive to indemnify the Lessor   for his actual or future vicarious liability to the Lessee’s act and/or   default
    
	
 
    	
 
    	
 
    
	
 
    	
2.
    	
The policy includes a cross-liability section for the insured   individuals.
    

 

The policies cannot be cancelled without a 30 (thirty) days advance registered mail written note to Avi Bechar Attorney.

 

 

	
 
    	
Sincerely
    
	
 
    	
 
    
	
 
    	
The insurer’s name and signature
    

 

14

 

Appendix “b”  (section 19b of the Agreement)

 

To

 

Bechar & Sons (1983) Food Supply and Marketing Ltd.,

At Adv. Avi Bechar, of 9 Hagilad St.,
  Ramat Gan

 

Dear Sirs.

 

	
 
    	
Re:
    	
Bank Guarantee Letter Number:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
1.
    	
In reply   to                                (hereinafter   “the Lessee”), We hereby guarantee to pay any amount that you require from us   on the actual payment date, up to the total value of 154,000 New Israeli   Shekels (in words, a hundred and fifty four thousand NIS) (hereinafter “the   guarantee”), that is due or will be due from the lessee to ensure the   fulfilling of all his liabilities by the lease Agreement of the Office spaces   at 5 Oppenheimer St., Rehovot, with all its Appendices, that was edited and   signed on the                          (hereinafter “the Agreement”).
    
	
 
    	
 
    	
 
    
	
 
    	
2.
    	
At your first written request (hereinafter “the Request”) and not   later than seven days from the receipt of your written request here to our   address cited below we shall send you in exchange of this guarantee, any sum   set in this request provided that it will not exceed the guarantee sum, and   that without requiring you to prove your request.
    
	
 
    	
 
    	
 
    
	
 
    	
3.
    	
This guarantee cannot be converted or assigned.
    
	
 
    	
 
    	
 
    
	
 
    	
4.
    	
This guarantee will be valid until and including the day             , and after this   date will be null and void. Every written demand by this guarantee letter   must reach the undersigned before the said date .
    

 

 

	
 
    	
Respectfully,
    

 

 

	
Bank
    	
 
    	
 
    
	
 
    	
 
    
	
Branch
    	
 
    	
 
    
	
 
    	
 
    
	
Address
    	
 
    	
 
    
				

 

15

 

Management Agreement

 

Made and signed on January 1, 2012

 

Between:

 

Ofek, MB - Facilities Management Service (2000) Ltd
  (Hereinafter: “The Management Company”)

 

And:

 

Lev Hapark residents’ representatives
  Openheimer 5
  Rehovot
  (Hereinafter: “The Delegation”)

 

	
Whereas:
    	
The Delegation represents all the building’s residents;
    
	
 
    	
 
    
	
And Whereas:
    	
The Delegation wishes to receive from the Company management   maintenance services in the building;
    
	
 
    	
 
    
	
And Whereas:
    	
The Company has the knowhow and the capability to perform the   services offered in this Agreement;
    
	
 
    	
 
    
	
And Whereas:
    	
This Agreement is intended to regulate the mutual undertakings in all   that concerns the management and the execution of the services in the   building;
    
	
 
    	
 
    
	
And Whereas:
    	
This Agreement is intended to regulate the mutual undertakings in all   that concerns the management and the execution of the services in the   building;
    

 

Thus stated, it was stipulated and agreed between the parties as follows:

 

Preamble

 

1.              The preamble and the parties’ declarations of this Agreement are an integral part of the agreement.

 

2.              The headings of the sections in this Agreement are only for convenience; they are not part of this Agreement and will not be used as interpretation.

 

3.              The parties to this Agreement will not be connected to any declaration, representation, agreements and undertakings, (orally or in writing) that are not included in this Agreement and before its signing.

 

4.              Every alteration in this Agreement and every addition to this Agreement will be in writing and signed by the two parties, otherwise they will be invalid.

 

5.              The Delegation and the residents declare that there is no prevention by law and/or agreement to engage with the Company in this Agreement.

 

 

The engagement

 

7.              The Company will exclusively manage and perform the services in the building for the Delegation, in good faith, conscientiously, and to the usual high standard and according to the terms fixed in this Agreement.

 

8.              By signing this Agreement, the Delegation empowers the Company and allows it, as far as it depends on its decision, to receive the holding and care of the management of the common property. To avoid doubt, it is clarified that the Company does not undertake any liability to the common property on its different facilities toward any authority, except for its undertaking to keep and abide by any law and/or relevant regulation concerning the services’ operation. Without derogating from the generality, it is clarified that the Company will not bear payments and/or charges deriving from the common property except from its undertakings by this Agreement.

 

The Agreement Period

 

9.              The beginning of the Agreement Period will be from January 1, 2012 and it will be for 12 months subject to this Agreement’s provisions. If the Agreement Period ends and no notice are given for its termination, as stated below, the Agreement will continue to apply until its cessation, as stated in the following section 10.

 

10.       The Agreement Period will end, if any of the following conditions takes place, whichever is earlier :

 

a.              At the time the Company declares its wish to terminate the Agreement provided it has notified the Delegation 60 days ahead and in writing.

 

b.              At the time the Delegation notified the Company that it wishes to terminate the Agreement provided it had notified the Delegation 60 days ahead and in writing.

 

c.               If the Delegation and/or any of the building’s residents will contravene any of the undertakings of the Agreement, the Company will be entitled to end this Agreement in 45 days by written note.

 

d.              Notwithstanding the aforesaid in this section, it is agreed that the parties will not give notice of the Agreement’s cessation in the 12 month period following the determined date.

 

The services

 

11.       The Company will supply the necessary services at its discretion and decision in the building’s common property, for its management, maintenance and operation of the building’s common property (Hereinafter: “The services”) and that as stated in the Company’s offer detailed in Appendix a’. It is clarified that the services scope and/or their frequency and/or the comments on the services, detailed in Appendix a’ of this Agreement, can be changed and/or adjusted by the Company according to the necessary requirements, at the Company’s discretion, for the management, maintenance and operation of the building’s common property.

 

The services management and operation

 

12.       The Company may decide from time to time, subject to this Agreement, the services scope, quality, kind, method and time of their provision.

 

13.       The Company may decide from time to time, to fix procedures, to update them and/or change them in connection to services operating in the building or the common property, all and/or in part. The procedures will be coordinated with the Delegation and will be binding for the building’s residents.

 

17

 

14.       The Management Company may contact from time to time contractors and/or sub-contractors of other companies for the operation of part and/or all of the services that the Management Company has accepted under this Agreement. Such a connection will be for certain part of the project and/or every part of the facilities and the systems and/or for all the services and/or part of them.

 

15.       The Management Company may employ and/or contact in any way it deems fit, for full or part employment, any person or body, including technical, professional or administrative employees, clerks, specialists, attorneys, advisors, laborers and professional work suppliers.

 

16.       If any of the building’s residents, representatives, guests, visitors and/or any third party contravene the said procedures and this breach causes a defect and/or failure and/or damage in any part of the building and/or all or part of the common property that is not considered reasonable and regular wear, the Company will not be liable and repair costs will fall exclusively on the Delegation. If the Delegation wishes the Company to do any work connected to the said damage, the proceeds due to the Company will be in addition to the management’s fees and will be calculated separately.

 

17.       In avoidance of doubt, the Company will not be considered as the building’s guard and/or in any part of it, neither of its contents in the meaning of the term in the Guards Law 1967. The building’s residents and/or the Delegation will be responsible for their property and the said Law will not apply to the relations between the Company and the Delegation and/or any of the building’s residents.

 

18.       It is clarified that the Company is not responsible for the collection of the residents’ debts to the authorities.

 

The Proceeds

 

19.       The proceeds for reception of all the services detailed in this Agreement and in its Appendix a’ will be NIS 7.28 per m2 plus VAT. It is hereby clarified that the cost was calculated on the basis of the building’s surface of 7,280 m2.

 

Insurance

 

20.       The Company will ensure the building for a third party policy for up to NIS 12,000,000 for each case and for the period with a policy covering the area of public spaces only.

 

21.       The Company will also ensure its employees in an employers’ liability policy.

 

Delayed payments

 

22.       Every time the property’s owner will be in arrears in any payment due from him to the Management Company by this Agreement for a period exceeding 14 days and/or if the property’s owner contravenes any of this Agreement’s provisions, the Management Company will be entitled, in addition, and without derogating its rights, to demand any sum due to it by the property’s owner and to get it by any means of support it chooses.

 

23.       To add to every delayed payment interest, an arrears’ interest at the customary highest rate on the said date in Bank Leumi Ltd. for unauthorized credit’ deviations and/or interest and linkage by the Interest and Linkage Law 1961, whichever is the higher, starting with the debt’s creation and until the actual payment day.

 

24.       In every case of claim from the Management Company against a resident/ property owner for breach of this Agreement, the resident will indemnify the Management Company for all the expenses that the Management Company will incur due to these procedures.

 

25.       Refusal or unwillingness on the part of the resident to receive any service and/or his wish to cease and/or cancel this Agreement or part of its provisions, will not release him from paying all the fees by this Agreement.

 

18

 

Delayed payments

 

26.       The Tel Aviv Court of Justice will have exclusive jurisdiction authority to judge every matter relating to this agreement and/or deriving from it, including its operation, violation or cancellation.

 

27.       Notwithstanding the aforesaid, controversy concerning matters defined in this Agreement will be settled in the way fixed by this Agreement.

 

Notes

 

28.       The parties’ address for this Agreement, will be as described in the heading of this Agreement or every other address in Israel which will be detailed in the note sent to the other party as stated in this section.

 

29.       Every note sent by any of the parties to the other to this address will be deemed as having reached its destination after 3 business days if sent by recorded post.

 

In witness whereof the parties signed

 

 

	
 
    	
 
    	
 
    	
 
    
	
 
    	
The Management Company
    	
 
    	
The Delegation
    

 

19

 

 

20Exhibit 10.7

 

STEADYMED THERAPEUTICS, INC.

 

LOAN AND SECURITY AGREEMENT

 

[SQUARE 1 BANK LOGO]

 

 

This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of February 20, 2013, by and between Square 1 Bank (“Bank”) and SteadyMed Therapeutics, Inc. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.                              DEFINITIONS AND CONSTRUCTION.

 

1.1                             Definitions. As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.

 

1.2                             Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP (except for non-compliance with FAS 123R in monthly reporting). The term “financial statements” shall include the accompanying notes and schedules.

 

2.                              LOAN AND TERMS OF PAYMENT.

 

2.1                             Credit Extensions.

 

(a)                                 Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.

 

(b)                                 Term Advances.

 

(i)                      Subject to and upon the terms and conditions of this Agreement, Bank agrees to make Term Advances to Borrower in two tranches, Tranche A and Tranche B. Borrower may request, and hereby requests, that Bank make one (1) Term Advance in an amount of $1,500,000 under Tranche A (the “Tranche A Term Advance”) on or about the Closing Date. Borrower may request that Bank make one (1) or more Term Advances in an aggregate amount of up to $1,500,000 under Tranche B (the “Tranche B Term Advance(s)”) at any time from the Closing Date through the Availability End Date. The proceeds of the Term Advances shall be used for general working capital purposes.

 

(ii)                  Interest shall accrue from the date of each Term Advance at the rate specified in Section 2.3(a), and prior to the Interest Only End Date shall be payable monthly beginning on the 20th day of the month next following such Term Advance, and

 

SteadyMed Therapeutics, Inc. LSA

 

1

 

continuing on the same day of each month thereafter. Any Term Advances that are outstanding on the Interest Only End Date shall be payable in equal monthly installments of principal, plus all accrued interest, beginning on the 20th day of the month immediately following the Interest Only End Date, and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Advances and any other amounts due under this Agreement shall be immediately due and payable. Term Advances, once repaid, may not be reborrowed.

 

(iii)              When Borrower desires to obtain a Term Advance, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:30 p.m. Eastern time on the day on which the Term Advance is to be made. Such notice shall be substantially in the form of Exhibit C. The notice shall be signed by an Authorized Officer.

 

2.2                             Intentionally Left Blank.

 

2.3                             Interest Rates, Payments, and Calculations.

 

(a)                                 Interest Rates.

 

(i)                                    Term Advances. Except as set forth in Section 2.3(b), the Term Advances shall bear interest, on the outstanding daily balance thereof, at a fixed annual rate equal to the greater of: (A) 5.00% above the Treasury Rate then in effect; or (B) 5.25%.

 

(b)                                 Late Fee; Default Rate. If any payment is not made within 15 days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default.

 

(c)                                  Payments. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings, duties, impositions or other charges, to the end that Bank will receive the entire amount of any Obligations payable hereunder, regardless of source of payment.

 

(d)                                 Computation. In the event the Treasury Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Treasury Rate is changed, by an amount equal to such change in the Treasury Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.

 

2.4                             Crediting Payments. Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies, except that to the extent Borrower uses the Term Advances to

 

2

 

purchase Collateral, Borrower’s repayment of the Term Advances shall apply on a “first-in-first-out” basis so that the portion of the Term Advances used to purchase a particular item of Collateral shall be paid in the chronological order the Borrower purchased the Collateral. After the occurrence and during the continuance of an Event of Default, Bank shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.

 

2.5                             Fees. Borrower shall pay to Bank the following:

 

(a)                                 Intentionally Omitted.

 

(b)                                 Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all Bank Expenses, as and when they become due.

 

(c)                                  Prepayment Fee. In the event Borrower intends to prepay any Term Advance prior to the Term Loan Maturity Date, Borrower shall (i) prepay all of the then outstanding Term Advances, pay any accrued and unpaid interest on the Term Advances, pay the final payment fee described in Section 2.5(d) below, and pay any other amounts due under this Agreement, and (ii) simultaneous with any such prepayment, pay Bank a fee of 2.5% of the aggregate principal amount of the Term Advances so prepaid.

 

(d)                                 Final Payment Fee. Upon the earlier of (i) the Term Loan Maturity Date, or (ii) termination of the Term Loan facility (as described in Section 2.1(b)), whether by prepayment, acceleration or otherwise, a fee equal to (x) 3.5%, multiplied by (y) the aggregate amount of the Term Advances drawn during the term of this Agreement. Bank and Borrower both agree that, notwithstanding any provision in Section 2.6 hereof, Borrower’s obligations to pay the final payment fee described herein shall survive any termination of this Agreement.

 

2.6                             Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.

 

3

 

3.                              CONDITIONS OF LOANS.

 

3.1                             Conditions Precedent to Closing. The agreement of Bank to enter into this Agreement on the Closing Date is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, each the following items and completed each of the following requirements:

 

(a)                                 this Agreement;

 

(b)                                 an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;

 

(c)                                  a financing statement (Form UCC-1);

 

(d)                                 Borrower shall have opened and funded not less than $50,000 in deposit accounts held with Bank;

 

(e)                                  payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of Borrower’s accounts with Bank;

 

(f)                                   current SOS Reports indicating that except for Permitted Liens, there are no other security interests or Liens of record in the Collateral;

 

(g)                                 current financial statements, including statements for Borrower’s 2011 fiscal year prepared in accordance with Israeli GAAP, company prepared consolidated and consolidating balance sheets, income statements, and statements of cash flows for the most recently ended month in accordance with Section 6.2, and such other updated financial information as Bank may reasonably request;

 

(h)                                 current Compliance Certificate in accordance with Section 6.2;

 

(i)                                    a Warrant in form and substance satisfactory to Bank;

 

(j)                                    a Borrower Information Certificate (which Bank acknowledges has been provided to Bank on or before the Closing Date);

 

(k)                                 the SteadyMed Israel Secured Guaranty Documents, including the filing for registration of the Debenture of Fixed Charge and Floating Charge by SteadyMed Israel with the Israeli Registrar of Companies; and

 

(l)                                    such other documents or certificates, and completion of such other matters, as Bank may reasonably request.

 

3.2                             Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is contingent upon the Borrower’s compliance with Section 3.1 above, and is further subject to the following conditions:

 

(a)                                 timely receipt by Bank of the Loan Advance/Paydown Request Form as provided in Section 2.1;

 

4

 

(b)                                 Borrower shall have transferred substantially all of its Cash assets into operating accounts held with Bank and otherwise be in compliance with Section 6.6 hereof;

 

(c)                                  the Debenture of Fixed Charge and Floating Charge of SteadyMed Israel shall remain registered in full force and effect with the Israeli Registrar of Companies; and

 

(d)                                 the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

 

4.                              CREATION OF SECURITY INTEREST.

 

4.1                             Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property. Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding.

 

SteadyMed Israel shall grant and pledge to Bank a fixed charge over all issued and outstanding shares of the Borrower which are owned and held by SteadyMed Israel as set forth in the Debenture of Fixed Charge between SteadyMed Israel and the Bank (the “Fixed Charged Assets”) and a floating charge over all of the present and future assets of SteadyMed Israel as they may be from time to time, excluding any intellectual property assets of SteadyMed Israel (the “Floating Charged Assets” and together with the Fixed Charge Assets, the “Charged Assets”) to secure prompt repayment of any and all Obligations by the Borrower and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents, and to secure prompt repayment of any and all amounts which may be due by SteadyMed Israel under that certain Unconditional Guaranty between SteadyMed Israel and the Bank. SteadyMed Israel also agreed not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its assets other than as set forth in the Debenture of Fixed Charge. Notwithstanding any termination of this Agreement, Bank’s fixed charge and floating charge under the Debenture of Fixed Charge and Floating Charge shall remain in effect for so long as any Obligations are outstanding.

 

4.2                             Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements, and amendments thereto that (i) either

 

5

 

specifically describe the Collateral or describe the Collateral as all assets of Borrower of the kind pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable. Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing statement. Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank reasonably requests for Bank to (i) subject to Section 7.10 below, obtain an acknowledgment, in form and substance satisfactory to Bank, of the bailee that the bailee holds such Collateral for the benefit of Bank, and (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance satisfactory to Bank. Borrower will not create any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding. Borrower shall take such other actions as Bank requests to perfect its security interests granted under this Agreement.

 

5.                              REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

5.1                             Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.2                             Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect.

 

5.3                             Collateral. Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value in excess of $100,000, is located solely in the Collateral States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been

 

6

 

made. Except as set forth in the Schedule, none of the Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates.

 

5.4                             Intellectual Property. Borrower is the sole owner of the intellectual property created or purchased by Borrower, except for licenses granted by Borrower to its customers or corporate partners in the ordinary course of business. To the best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents created or purchased by Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the intellectual property created or purchased by Borrower violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect.

 

5.5                             Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower has not done business under any name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. The chief executive office of Borrower is located at the address indicated in Section 10 hereof.

 

5.6                             Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect.

 

5.7                             No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank.

 

5.8                             Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.

 

5.9                             Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would

 

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reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect.

 

5.10                      Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.

 

5.11                      Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect.

 

5.12                      Inbound Licenses. Except as disclosed on the Schedule, Borrower is not a party to, nor is bound by, any material license or other agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.

 

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

 

6.                              AFFIRMATIVE COVENANTS.

 

Borrower covenants that, until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following:

 

6.1                             Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in the respective states of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all

 

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licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect.

 

6.2                             Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required by the Investment Agreement) consolidated and consolidating financial statements of Borrower prepared by a United States certified public accounting firm in accordance with United States GAAP, consistently applied, together with an opinion which is either unqualified, qualified only for going concern so long as Borrower’s investors provide additional equity as needed or otherwise consented to in writing by Bank on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (iii) annual budget approved by Borrower’s Board of Directors as soon as available but not later than 31 days after the beginning of each fiscal year of Borrower during the term of this Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $250,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems, (vii) such budgets, sales projections, operating plans or other financial information generally prepared by Borrower in the ordinary course of business as Bank may reasonably request from time to time.

 

(a)                                 Within 30 days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto.

 

(b)                                 As soon as possible and in any event within 3 calendar days after becoming aware of the occurrence or existence of an Event of Default hereunder, a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto.

 

(c)                                  Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower’s Books and to make copies thereof and to check, test, inspect, audit and appraise the Collateral at Borrower’s expense in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral.

 

Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Bank shall be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the

 

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files were delivered by a Responsible Officer. Borrower shall include a submission date on any certificates and reports to be delivered electronically.

 

6.3                             Inventory and Equipment; Returns. Borrower shall keep all Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States and such other locations as to which Borrower gives prior written notice. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving inventory having a book value of more than $100,000.

 

6.4                             Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Bank, on demand, proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower or such Subsidiary.

 

6.5                             Insurance. Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and (ii) maintain liability and other insurance, in each case in as ordinarily insured against by other owners in businesses similar to Borrower’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall show Bank as an additional insured and specify that the insurer must give at least 20 days notice to Bank before canceling its policy for any reason. Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank a copy of its policies or certificate of insurance including any endorsements covering Bank or showing Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments. Proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.

 

6.6                             “Primary Depository”. Subject to the provisions of Section 3.1(d) and 3.2(b), Borrower within 30 days of the Closing Date shall maintain all its depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates.

 

6.7                             Financial Covenants. Borrower shall at all times maintain the following financial ratios and covenants:

 

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(a)                                 Minimum Cash. A balance of Cash at Bank of not less than (i) 1.25 multiplied by (ii) the outstanding Obligations, monitored on a daily basis.

 

6.8                             Consent of Inbound Licensors. Prior to entering into or becoming bound by any material inbound license or agreement, Borrower shall: (i) provide written notice to Bank of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition; and (ii) in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Bank to have a security interest in it that might otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.

 

6.9                             Creation/Acquisition of Subsidiaries. In the event any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “New Subsidiary” (defined as a Subsidiary formed after the date hereof during the term of this Agreement): (i) to cause New Subsidiary to become either a co-Borrower hereunder, if such New Subsidiary is organized under the laws of the United States, or a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is organized under the laws of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under the laws of the United States.

 

6.10                      Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to affect the purposes of this Agreement.

 

7.                              NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall be available and until the outstanding Obligations are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank’s prior written consent, which shall not be unreasonably withheld:

 

7.1                             Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution, other than Permitted Transfers.

 

7.2                             Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief financial officer without delivering written notification to Bank within 10 days; fail to

 

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appoint an interim replacement or fill a vacancy in the position of chief executive officer or chief financial officer for more than 30 consecutive days; suffer a change on its board of directors which results in the failure of Keith Bank to serve as a voting member, or suffer the resignation of one or more directors from its board of directors in anticipation of Borrower’s insolvency, in each case without the prior written consent of Bank which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; have a Change in Control.

 

7.3                             Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (a) each of the following conditions is applicable: (i) the consideration paid in connection with such transactions (including assumption of liabilities) does not in the aggregate exceed $250,000 during any fiscal year, (ii) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions do not result in a Change in Control, and (iv) Borrower is the surviving entity; or (b) the Obligations are repaid in full concurrently with the closing of any merger or consolidation of Borrower in which Borrower is not the surviving entity; provided, however, that Borrower shall not, without Bank’s prior written consent, enter into any binding contractual arrangement with any Person to attempt to facilitate a merger or acquisition of Borrower; provided however, Borrower may enter into any such agreement without Bank’s prior written consent so long as (i) no Event of Default exists when such agreement is entered into by Borrower, (ii) such agreement does not give such Person the right to claim any fee, payment or damages from any parties, other than from Borrower or Borrower’s investors, in connection with a sale of Borrower’s stock or assets pursuant to or resulting from an assignment for the benefit of creditors, an asset turnover to Borrower’s creditors (including, without limitation, Bank), foreclosure, bankruptcy or similar liquidation, and (iii) Borrower notifies Bank in advance of entering into such an agreement (provided, the failure to give such notification shall not be deemed a material breach of this Agreement).

 

7.4                             Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness to Bank.

 

7.5                             Encumbrances. Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (i) the licensors of in-licensed property with respect to such property or (ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property.

 

7.6                             Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that

 

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Borrower may (i) repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, and (ii) repurchase the stock of former employees pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees to Borrower regardless of whether an Event of Default exists.

 

7.7                             Investments. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its Investment Property with a Person other than Bank or Bank’s Affiliates or permit any Subsidiary to do so unless such Person has entered into a control agreement with Bank, in form and substance satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.

 

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

 

7.9                             Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any documentation relating to the Subordinated Debt without Bank’s prior written consent.

 

7.10                      Inventory and Equipment. Store the Inventory or the Equipment of a book value in excess of $100,000 with a bailee, warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of business and for movable items of personal property having an aggregate book value not in excess of $100,000, and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 and such other locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Bank’s rights in the Collateral.

 

7.11                      No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.

 

7.12                      Transfers to SteadyMed Israel. Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not transfer, in any form or fashion, any property or assets whatsoever to SteadyMed Israel, except that Borrower shall be permitted to transfer Cash to SteadyMed Israel from time to time, subject to the limitations that (a) at all times at

 

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least 90% of the aggregate amount of Cash owned by the Borrower and SteadyMed Israel shall be held in Borrower’s accounts at Bank, and (b) immediately before and after giving effect to any such transfer, Borrower shall be in compliance with the terms and conditions of this Agreement.

 

8.                              EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:

 

8.1                             Payment Default. If Borrower fails to pay any of the Obligations when due;

 

8.2                             Covenant Default.

 

(a)                                 If Borrower fails to perform any obligation under Sections 6.2 (financial reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts) or 6.7 (financial covenants), or violates any of the covenants contained in Article 7 of this Agreement; or

 

(b)                                 If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 10 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 10 day period or cannot after diligent attempts by Borrower be cured within such 10 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.

 

8.3                             Material Adverse Change. If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect;

 

8.4                             Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, Israeli Government or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);

 

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8.5                             Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);

 

8.6                             Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party with a third party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $250,000 (b) in connection with any lease of real property or (c) that would reasonably be expected to have a Material Adverse Effect;

 

8.7                             Judgments. If a final, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $250,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8                             Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.

 

8.9                             Guaranty. If any guaranty of all or a portion of the Obligations (a “Guaranty”) ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any Guaranty or a security agreement securing any Guaranty, including, without limitation, the SteadyMed Israel Secured Guaranty Documents (collectively, the “Guaranty Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.9 occur with respect to any guarantor.

 

9.                              BANK’S RIGHTS AND REMEDIES.

 

9.1                             Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a)                                 Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

 

(b)                                 Demand that Borrower (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;

 

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(c)                                  Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;

 

(d)                                 Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;

 

(e)                                  Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(f)                                   Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;

 

(g)                                 Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;

 

(h)                                 Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

 

(i)                                    Bank may credit bid and purchase at any public sale;

 

(j)                                    Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for

 

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the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and

 

(k)                                 Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

 

9.2                             Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Bank’s obligation to provide advances hereunder is terminated.

 

9.3                             Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.

 

9.4                             Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; and/or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.

 

17

 

9.5                             Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

9.6                             No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.

 

9.7                             Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.

 

9.8                             Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.

 

10.                       NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below:

 

	
If to Borrower:
    	
SteadyMed Therapeutics, Inc.
    
	
 
    	
2410 Camino Ramon, Suite 285
    
	
 
    	
San Ramon, CA 94583
    
	
 
    	
 
    
	
 
    	
Attn: Chief Executive Officer
    
	
 
    	
 
    
	
If to Bank:
    	
Square 1 Bank
    
	
 
    	
406 Blackwell Street, Suite 240
    
	
 
    	
Durham, North Carolina 27701
    
	
 
    	
Attn: Loan Operations Manager
    
	
 
    	
FAX: (919) 314-3080
    

 

18

 

	
with a copy to:
    	
Square 1 Bank
    
	
 
    	
2420 Sand Hill Road, Suite 100
    
	
 
    	
 
    
	
 
    	
Menlo Park, CA 94025
    
	
 
    	
 
    
	
 
    	
Attn: Benjermin Colombo
    
	
 
    	
 
    
	
 
    	
FAX: 650-543-2780
    

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                       CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of California. All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the Superior Court of San Mateo County, California or the United States District Court for the Northern District of California, except as provided below with respect to arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury waiver set forth in this Section 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in San Mateo County, California in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules. The arbitrator shall apply California law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section. The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses,

 

19

 

both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

12.                       GENERAL PROVISIONS.

 

12.1             Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

 

12.2             Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

 

12.3             Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.4             Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

12.5             Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.6             Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

12.7             Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in

 

20

 

Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

 

12.8             Confidentiality. In handling any confidential information, Bank and Borrower and all employees and agents of such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower in connection with their present or prospective business relations with Borrower, (ii) in the case of Bank, to prospective transferees or purchasers of any interest in the Credit Extensions, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.

 

********

 

21

 

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

 

 

	
 
    	
STEADYMED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jonathan M.N. Rigby
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jonathan M.N. Rigby
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    	
 
    
	
 
    	
SQUARE 1 BANK
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Evan Travis
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Evan Travis
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
AVP
    

 

22

 

EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefore, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.

 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.

 

“Availability End Date” means September 30, 2013.

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.

 

“Borrower’s Books” means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” shall mean a transaction other than a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Bank in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the California Uniform Commercial Code, as amended or supplemented from time to time.

 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the extent any such property (i) is non-assignable by its terms without the

 

1

 

consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §9406 and §9408 of the Code), (ii) the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, or (iv) property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clause (c) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien.

 

“Collateral State” means the state or states where the Collateral is located, which is California.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

 

“Credit Extension” means each Term Advance or any other extension of credit, by Bank to or for the benefit of Borrower hereunder.

 

“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

 

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

 

“Event of Default” has the meaning assigned in Article 8.

 

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

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, including but not limited to any sublimit contained herein.

 

2

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Interest Only End Date” means September 30, 2013, provided that the Interest Only End Date shall be extended by Bank to March 30, 2014 if Borrower shall have achieved the Trigger Conditions.

 

“Inventory” means all present and future inventory in which Borrower has any interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 

“Investment Agreement” means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank at Borrower’s request.

 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

 

“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, including any document, instrument or agreement entered between SteadyMed Israel and Bank in connection with this Agreement all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on: (i) the operations, business or financial condition of Borrower and its Subsidiaries and Affiliates (including SteadyMed Israel) taken as a whole; (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents; or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.

 

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise.

 

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

 

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter Square blank become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 

“Permitted Indebtedness” means:

 

3

 

(a)                            Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;

 

(b)                            Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c)                             Indebtedness not to exceed $250,000 in the aggregate in any fiscal year of Borrower secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;

 

(d)                            Subordinated Debt;

 

(e)                             Indebtedness to trade creditors incurred in the ordinary course of business; and

 

(f)                              Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Investment” means:

 

(a)                            Investments existing on the Closing Date disclosed in the Schedule;

 

(b)                                   (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking accounts held with Bank or subject to a control agreement in favor of Bank; and (vi) Investments consistent with any investment policy adopted by the Borrower’s board of directors;

 

(c)                             Repurchases of stock from former employees or directors of Borrower under the terms of applicable repurchase agreements (i) in an aggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases, or (ii) in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees to Borrower regardless of whether an Event of Default exists;

 

(d)                            Investments accepted in connection with Permitted Transfers;

 

(e)                             Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed $250,000 in the aggregate in any fiscal year;

 

(f)                              Investments not to exceed $250,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;

 

(g)                            Investments in unfinanced capital expenditures in any fiscal year, not to exceed $250,000;

 

(h)                            Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

 

4

 

(i)                               Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary;

 

(j)                               Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive or exclusive (provided that no exclusive license shall be a worldwide exclusive license or exclusive as to more than three fields of use without the Bank’s prior written consent (which shall not be unreasonably withheld)) licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $250,000 in the aggregate in any fiscal year; and

 

(k)                            Investments permitted under Section 7.3.

 

“Permitted Liens” means the following:

 

(a)                            Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;

 

(b)                            Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;

 

(c)                             Liens not to exceed $250,000 in the aggregate in any fiscal year of Borrower (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;

 

(d)                            Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;

 

(e)                             Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments); and Subject to Section 6.6, Liens in favor of other financial institutions arising in connection with Borrower’s deposit accounts held at such institutions to secure standard fees for deposit services charged by, but not financing made available by such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit accounts; and

 

(f)                              Liens securing Subordinated Debt.

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:

 

(a)                            Inventory in the ordinary course of business;

 

(b)                            licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business, provided that under no circumstances shall Borrower enter into an exclusive worldwide license or a license which is exclusive as to more than three fields of use without the Bank’s prior written consent (which shall not be unreasonably withheld);

 

(c)                             worn-out, surplus or obsolete Equipment not financed with the proceeds of Credit Extensions;

 

5

 

(d)                            grants of security interests and other Liens that constitute Permitted Liens;

 

(e)                             transfers of Cash to SteadyMed Israel, subject at all times to the limitations set forth in Section 7.12; and

 

(f)                              other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $250,000 during any fiscal year.

 

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

 

“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Vice President of Finance and the Controller of Borrower, as well as any other officer or employee identified in as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.

 

“SteadyMed Israel” means SteadyMed Ltd., Israeli Private Company No. 51-369892-8, Borrower’s parent company organized under the laws of Israel.

 

“SteadyMed Israel Secured Guaranty Documents” means those certain (i) Debenture of Fixed Charge and Floating Charge entered by and between SteadyMed Israel and the Bank of even date hereof, including the request for registration of a fixed charge and floating charge filed by SteadyMed Israel with the Israeli Registrar of Companies; and (ii) an Unconditional Guaranty entered by and between SteadyMed Israel and the Bank of even date hereof.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank).

 

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

“Term Advance” means the Tranche A Term Advance and the Tranche B Term Advance(s).

 

“Term Loan Maturity Date” means June 1, 2015.

 

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

 

“Tranche” means any of the Tranche A Term Advance or Tranche B Term Advance(s).

 

6

 

“Tranche A Term Advance” has the meaning assigned in Section 2.1(b).

 

“Tranche B Term Advance(s)” has the meaning assigned in Section 2.1(b).

 

“Treasury Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “3 year constant maturity treasury rate”.

 

“Trigger Conditions” means each of the following conditions: (i) Borrower shall have entered into a written collaboration or joint venture agreement with Sanofi-Aventis, in form and substance satisfactory to Bank, no later than January 31, 2013, and (ii) Borrower shall have entered into at least one additional collaboration or joint venture agreement, in form and substance satisfactory to Bank, by June 30, 2013 that provides for an up-front payment to be received by Borrower of at least $2,500,000.

 

7

 

	
DEBTOR:
    	
STEADYMED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
SECURED PARTY:
    	
SQUARE 1 BANK
    

 

EXHIBIT B

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)            all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names, and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)            any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include any of the intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest (collectively, the “Intellectual Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of February 20, 2013, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

1

 

EXHIBIT C

 

LOAN ADVANCE/PAYDOWN REQUEST FORM

 

[Please refer to New Borrower Kit]

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

 

[Please refer to New Borrower Kit]

 

1

 

SCHEDULE OF EXCEPTIONS

 

Permitted Indebtedness (Exhibit A) — None.

 

Permitted Investments (Exhibit A) — None.

 

Permitted Liens (Exhibit A) — None.

 

Prior Names (Section 5.5) — None.

 

Litigation (Section 5.6) — None.

 

Inbound Licenses (Section 5.12) — None.

 

1

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