Document:

Exhibit 10.13

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO ACELL, INC. IF PUBLICLY DISCLOSED.

 

SECOND LOAN MODIFICATION AGREEMENT

 

This Second Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of April 2, 2020, by and between SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”) and ACELL, INC., a Delaware corporation with its principal place of business at 6640 Eli Whitney Drive, Columbia, Maryland 21046 (“Borrower”).

 

1.                                      DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of March 28, 2017, evidenced by, among other documents, a certain Amended and Restated Loan and Security Agreement dated as of March 28, 2017, between Borrower and Bank, as amended by a certain First Loan Modification Agreement dated as of March 23, 2018 (as has been and as may be further amended, modified, restated, replaced or supplemented from time to time, the “Loan Agreement”).  Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.

 

2.                                      DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured by, among other property, the Collateral (together with any other collateral security granted to Bank, the “Security Documents”).  Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.

 

3.                                      DESCRIPTION OF CHANGE IN TERMS.

 

A.                                   Modifications to Loan Agreement.

 

1                                         Borrower hereby acknowledges and agrees that, on or before the date that is thirty (30) days from the date of this Loan Modification Agreement, Borrower will deliver the following to Bank, each in form and substance satisfactory to Bank in Bank’s sole discretion: (a) an endorsement to Borrower’s general liability insurance policy that names Bank as an additional insured; (b) an endorsement to Borrower’s property insurance policy that names Bank as lender’s loss payable; and (c) an endorsement or endorsements to Borrower’s general liability and property insurance policies stating that the insurer will give Bank at least thirty (30) days’ prior written notice before any such policy or policies shall be cancelled or materially altered.  Borrower acknowledges and agrees that the failure of Borrower to satisfy any of the requirements set forth in the immediately preceding sentence on or before the date that is thirty (30) days from the date of this Loan Modification Agreement shall result in an immediate Event of Default under the Loan Agreement for which there shall be no grace or cure period.

 

2                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 2.5(a) thereof:

 

“                                          (i)                                     Advances.  Subject to Section 2.5(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (A) [*] above the Prime Rate and (B) [*], which interest shall be payable monthly in accordance with Section 2.5(d) below.”

 

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and inserting in lieu thereof the following:

 

“                                          (i)                                     Advances.  Subject to Section 2.5(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the greater of (A) [*] above the Prime Rate and (B) [*], which interest shall be payable monthly in accordance with Section 2.5(d) below.”

 

3                                         The Loan Agreement shall be amended in Section 2.6 by: (i) deleting “and” appearing at the end of subsection (f), (ii) deleting “.” appearing at the end of subsection (g) and inserting in lieu thereof “; and”, and (iii) inserting the following new subsection (h):

 

“                                          (h)                                 2020 Anniversary Fee.  A fully earned, non-refundable anniversary fee of [*] (the “2020 Anniversary Fee”) is earned as of the Second LMA Effective Date and is due and payable on the earliest to occur of (i) the one (1) year anniversary of the Second LMA Effective Date, (ii) the occurrence of an Event of Default, or (iii) the termination of this Agreement.”

 

4                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.2 thereof:

 

“                                          (a)                                 a Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts) within thirty (30) days after the end of each month;

 

(b)                                 within thirty (30) days after the last day of each month, (i) monthly accounts receivable agings, aged by invoice date, (ii) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (iii) monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, Deferred Revenue report (to the extent that Borrower has Deferred Revenue), general ledger and detailed Account Debtor listings, each in a form acceptable to Bank;”

 

and inserting in lieu thereof the following:

 

“                                          (a)                                 a Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to Borrower’s Accounts) within seven (7) days after the end of each month;

 

(b)                                 within thirty (30) days after the last day of each month, (i) monthly accounts receivable agings, aged by invoice date, (ii) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (iii) monthly reconciliations of accounts receivable agings (aged by invoice date), transaction reports, general ledger and detailed Account Debtor listings, each in a form acceptable to Bank;”

 

5                                         The Loan Agreement shall be amended in Section 6.2 by (i) deleting “and” appearing at the end of subsection (i), (ii) relettering subsection (j) as (k), and (iii) inserting the following new subsection (j):

 

“                                          (j)                                    prompt written notice of any changes to the beneficial ownership information set out in Section 14 of the Perfection Certificate.

 

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Borrower understands and acknowledges that Bank relies on such true, accurate and up-to-date beneficial ownership information to meet Bank’s regulatory obligations to obtain, verify and record information about the beneficial owners of its legal entity customers;”

 

6                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.6 thereof:

 

“In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to or reschedules the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of [*] plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.”

 

and inserting in lieu thereof the following:

 

“In the event Borrower and Bank schedule an audit more than eight (8) days in advance, and Borrower cancels or seeks to or reschedules the audit with less than eight (8) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank a fee of [*] plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling.”

 

7                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.8 thereof:

 

“                                          (a)                                 Maintain all of its and all of its Subsidiaries operating, depository and securities/investment accounts with Bank and Bank’s Affiliates; provided, however, Borrower may maintain an account with Cambridge Trust Company ending 401 and shown on the Perfection Certificate as of the Effective Date containing an aggregate amount not to exceed [*] at any time.  Any Guarantor shall maintain all of its operating, depository and securities/investment accounts with Bank and Bank’s Affiliates.”

 

and inserting in lieu thereof the following:

 

“                                          (a)                                 Maintain all of its, all of its Subsidiaries’, and any Guarantor’s operating and other depository accounts and excess cash with Bank and Bank’s Affiliates; provided, however, Borrower may maintain an account with Cambridge Trust Company ending 401 and shown on the Perfection Certificate as of the Effective Date containing an aggregate amount not to exceed [*] at any time.  In addition to the foregoing, Borrower, its Subsidiaries, and any Guarantor shall obtain all business credit cards exclusively from Bank.”

 

8                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.9 thereof:

 

“                                          (c)                                  Maintain at all times, to be tested as of the last day of each month, an Adjusted Quick Ratio of at least [*].”

 

and inserting in lieu thereof the following:

 

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“                                          (c)                                  Adjusted Quick Ratio.  Maintain at all times, to be tested as of the last day of each month, an Adjusted Quick Ratio of at least (i) on and after the First LMA Effective Date through and including the date immediately prior to the Second LMA Effective Date, [*] and (ii) on and after the Second LMA Effective Date, [*].”

 

9                                         The Loan Agreement shall be amended by deleting the following text, appearing in Section 6.12 thereof:

 

“                                          (b)                                 Comply with the terms of the “Banking Terms and Conditions” and ensure that all persons utilizing the online banking platform are duly authorized to do so by an Administrator.  Bank shall be entitled to assume the authenticity, accuracy and completeness on any information, instruction or request for a Credit Extension submitted via the online banking platform and to further assume that any submissions or requests made via the online banking platform have been duly authorized by an Administrator.”

 

and inserting in lieu thereof the following:

 

“                                          (b)                                 Comply with the terms of Bank’s Online Banking Agreement as in effect from time and ensure that all persons utilizing the online banking platform are duly authorized to do so by an Administrator.  Bank shall be entitled to assume the authenticity, accuracy and completeness of any information, instruction or request for a Credit Extension submitted via Bank’s online banking platform and to further assume that any submissions or requests made via Bank’s online banking platform have been duly authorized by an Administrator.”

 

10                                  The Loan Agreement shall be amended by deleting the following text, appearing in Section 7.1 thereof:

 

“Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”),”

 

and inserting in lieu thereof the following:

 

“Convey, sell, lease, transfer, assign, or otherwise dispose of (including, without limitation, pursuant to a Division) (collectively, “Transfer”),”

 

11                                  The Loan Agreement shall be amended by inserting the following new text, to appear at the end of Section 7.2 thereof:

 

“If Borrower intends to add any new offices or business locations, including warehouses, containing in excess of [*] of Borrower’s assets or property, then Borrower will first receive the written consent of Bank, and the landlord of any such new offices or business locations, including warehouses, shall execute and deliver a landlord consent in form and substance satisfactory to Bank.”

 

12                                  The Loan Agreement shall be amended by deleting the following text, appearing in Section 7.3 thereof:

 

“Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all

 

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or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary).”

 

and inserting in lieu thereof the following:

 

“Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary or pursuant to a Division).”

 

13                                  The Loan Agreement shall be amended by deleting the following text, appearing in Section 10 thereof:

 

	
“with a copy to:
    	
Riemer &   Braunstein LLP
    
	
 
    	
Three Center Plaza
    
	
 
    	
Boston, Massachusetts   02108
    
	
 
    	
Attn: David A. Ephraim,   Esquire
    
	
 
    	
Fax: (617) 880-3456
    
	
 
    	
Email:   DEphraim@riemerlaw.com”
    

 

and inserting in lieu thereof the following:

 

	
“with a copy to:
    	
Morrison &   Foerster LLP
    
	
 
    	
200 Clarendon Street,   Floor 20
    
	
 
    	
Boston, Massachusetts   02116
    
	
 
    	
Attn: David A. Ephraim,   Esquire
    
	
 
    	
Fax: (617) 830-0142
    
	
 
    	
Email:   DEphraim@mofo.com”
    

 

14                                  The Loan Agreement shall be amended by deleting the following definitions, appearing in Section 13.1 thereof:

 

“                                          “Administrator” is an individual that is named:

 

(a)                                 as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in the “Banking Terms and Conditions”) on behalf of Borrower; and

 

(b)                                 as an Authorized Signer of Borrower in an approval by the Board.”

 

“                                          “Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the Unused Revolving Line Facility Fee, the Termination Fee, the Prepayment Fee, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to Bank Services and interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.”

 

“                                          “Revolving Line” is an aggregate principal amount equal to [*].”

 

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“                                          “Streamline Period” is on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has at all times during the immediately preceding calendar month maintained an Adjusted Quick Ratio, as determined by Bank in its sole discretion, of greater than [*] (the “Threshold Amount”); and (b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, or (ii) the first day thereafter in which Borrower fails to maintain the Threshold Amount, as determined by Bank in its sole discretion.  Upon the termination of a Streamline Period, Borrower must maintain the Threshold Amount each consecutive day for two (2) consecutive months as determined by Bank in its sole discretion, prior to entering into a subsequent Streamline Period.  Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date Bank determines, in its sole discretion, that the Threshold Amount has been achieved.”

 

and inserting in lieu thereof the following:

 

“                                          “Administrator” is an individual that is named:

 

(a)                                 as an “Administrator” in the “SVB Online Services” form completed by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in Bank’s Online Banking Agreement as in effect from time to time) on behalf of Borrower; and

 

(b)                                 as an Authorized Signer of Borrower in an approval by the Board.”

 

“                                          “Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the Unused Revolving Line Facility Fee, the Termination Fee, the Prepayment Fee, the 2020 Anniversary Fee, and any other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all obligations relating to Bank Services and interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.”

 

“                                          “Revolving Line” is an aggregate principal amount equal to Six Million Dollars ($6,000,000.00).”

 

“                                          “Streamline Period” is on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has at all times during the immediately preceding calendar month maintained (i) unrestricted and unencumbered cash in accounts at Bank minus (ii) the sum of (A) the aggregate outstanding principal amount of all Advances (including any amounts used for Cash Management Services), plus (B) the face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve), plus (C) the FX Reduction Amount, as determined by Bank in its sole discretion, in an amount equal to at least [*] (the “Threshold Amount”); and (b) terminating on

 

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the earlier to occur of (i) the occurrence of an Event of Default, or (ii) the first day thereafter in which Borrower fails to maintain the Threshold Amount, as determined by Bank in its sole discretion.  Upon the termination of a Streamline Period, Borrower must maintain the Threshold Amount each consecutive day for two (2) consecutive months as determined by Bank in its sole discretion, prior to entering into a subsequent Streamline Period.  Borrower shall give Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first day of the monthly period following the date Bank determines, in its sole discretion, that the Threshold Amount has been achieved.”

 

15                                  The Loan Agreement shall be amended by inserting the following new definitions, to appear alphabetically in Section 13.1 thereof:

 

“                                          “2020 Anniversary Fee” is defined in Section 2.6(h) of this Agreement.”

 

“                                          “Division” means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity.”

 

“                                          “Second LMA Effective Date” is April 2, 2020.”

 

16                                  Effective as of March 23, 2020, the Loan Agreement shall be amended by deleting the following definition, appearing in Section 13.1 thereof:

 

“                                          “Revolving Line Maturity Date” is March 23, 2020.”

 

and inserting in lieu thereof the following:

 

“                                          “Revolving Line Maturity Date” is March 23, 2022.”

 

17                                  The Compliance Certificate appearing as Exhibit B to the Loan Agreement is hereby deleted in its entirety and replaced with the Compliance Certificate attached as Schedule 1 hereto.

 

4.                                      FEES AND EXPENSES.  Borrower shall pay to Bank a modification fee equal to [*], which fee shall be fully earned, due and payable on the date hereof.  Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.

 

5.                                      RATIFICATION OF PERFECTION CERTIFICATE.  Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate of Borrower dated as of March 28, 2017, as amended as set forth on Schedule 2 hereto (as amended, the “Perfection Certificate”), and acknowledges, confirms and agrees that the disclosures and information Borrower provided to Bank in the Perfection Certificate have not changed, as of the date hereof.

 

6.                                      CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

 

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7.                                      RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.

 

8.                                      RELEASE BY BORROWER.

 

A.                                    FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and discharges Bank and its present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims existing or arising from the beginning of time through and including the date of execution of this Loan Modification Agreement (collectively “Released Claims”).  Without limiting the foregoing, the Released Claims shall include any and all liabilities or claims arising out of or in any manner whatsoever connected with or related to the Loan Documents, the recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing.

 

B.                                    In furtherance of this release, Borrower expressly acknowledges and waives any and all rights under Section 1542 of the California Civil Code, which provides as follows:

 

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” (Emphasis added.)

 

C.                                    By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Bank with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.

 

D.                                    This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release contained herein constitutes a material inducement to Bank to enter into this Loan Modification Agreement, and that Bank would not have done so but for Bank’s expectation that such release is valid and enforceable in all events.

 

E.                                     Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:

 

1                                         Except as expressly stated in this Loan Modification Agreement, neither Bank nor any agent, employee or representative of Bank has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Loan Modification Agreement.

 

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2                                         Borrower has made such investigation of the facts pertaining to this Loan Modification Agreement and all of the matters appertaining thereto, as it deems necessary.

 

3                                         The terms of this Loan Modification Agreement are contractual and not a mere recital.

 

4                                         This Loan Modification Agreement has been carefully read by Borrower, the contents hereof are known and understood by Borrower, and this Loan Modification Agreement is signed freely, and without duress, by Borrower.

 

5                                         Borrower represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released.  Borrower shall indemnify Bank, defend and hold it harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters released herein.

 

9.                                      CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents.  Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect.  Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations.  Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing.  No maker will be released by virtue of this Loan Modification Agreement.

 

10.                               COUNTERSIGNATURE.  This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

 

[The remainder of this page is intentionally left blank]

 

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This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above.

 

	
BORROWER:
    	
BANK:
    
	
 
    	
 
    
	
ACELL, INC.
    	
SILICON   VALLEY BANK
    
	
 
    	
 
    
	
By:
    	
/s/ Patrick A. McBrayer
    	
 
    	
By:
    	
/s/ Scott McCarty
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Patrick A. McBrayer
    	
 
    	
Name:
    	
Scott McCarty
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President &   CEO
    	
 
    	
Title:
    	
Director
    

 

The undersigned hereby certifies, to the best of his or her knowledge, that the information set out in the Perfection Certificate is true, complete and correct.

 

	
 
    	
Date:  April 2,   2020
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick A. McBrayer
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Patrick A. McBrayer
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President &   CEO
    
	
 
    	
 
    
	
 
    	
Email:
    
	
 
    	
 
    
	
 
    	
Phone:
    

 

 

Schedule 1

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

	
TO:
    	
SILICON VALLEY BANK
    	
Date:
    	
 
    
	
FROM:
    	
ACELL, INC.
    	
 
    

 

The undersigned authorized officer of ACELL, INC. (“Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for the period ending                 with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries, if any, relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

	
Please indicate compliance   status by circling Yes/No under “Complies” column.
    

 

	
Reporting Covenants
    	
 
    	
Required
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Monthly financial statements with Compliance   Certificate
    	
 
    	
Monthly within 30 days
    	
 
    	
Yes   No
    
	
Annual financial statements (CPA Audited)
    	
 
    	
FYE within 180 days
    	
 
    	
Yes   No
    
	
10-Q, 10-K and 8-K
    	
 
    	
Within 5 days after filing with SEC
    	
 
    	
Yes   No
    
	
A/R & A/P Agings
    	
 
    	
Monthly within 30 days
    	
 
    	
Yes   No
    
	
Detailed Account Debtor listings
    	
 
    	
Monthly within 30 days
    	
 
    	
Yes   No
    
	
Borrowing Base Reports
    	
 
    	
Monthly within 7 days
    	
 
    	
Yes   No
    
	
Board-approved Projections
    	
 
    	
Earlier of (i) February 15th or   (ii) within 10 days of Board approval, and as amended/updated
    	
 
    	
Yes   No
    

 

	
Financial Covenants
    	
 
    	
Required
    	
 
    	
Actual
    	
 
    	
Complies
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Maintain:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Adjusted Quick Ratio (at all times, tested monthly)
    	
 
    	
[*]
    	
 
    	
     : 1.0
    	
 
    	
Yes   No
    

 

 

	
Streamline Period
    	
 
    	
Required
    	
 
    	
Actual
    	
 
    	
Eligible
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Maintain:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(a) unrestricted and unencumbered cash at Bank   minus (b) the sum of (i) aggregate outstanding principal balance of   all Advances (including any amounts used for Cash Management Services), plus   (ii) the face amount of any outstanding Letters of Credit (including   drawn but unreimbursed Letters of Credit and any Letter of Credit Reserve),   plus (iii) the FX Reduction Amount
    	
 
    	
[*]
    	
 
    	
$
    	
 
    	
Yes   No
    

 

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

	
ACELL, INC.
    	
BANK USE ONLY
    
	
 
    	
 
    
	
 
    	
Received by:
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
AUTHORIZED   SIGNER
    
	
Name:
    	
 
    	
 
    	
Date:
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Verified:
    	
 
    
	
 
    	
 
    	
AUTHORIZED   SIGNER
    
	
 
    	
Date: 
    	
 
    
	
 
    	
 
    
	
 
    	
Compliance Status:   Yes   No
    

 

 

Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

	
Dated:
    	
 
    	
 
    

 

I.                                        Adjusted Quick Ratio (Section 6.9(c)) (tested monthly)

 

Required: [*]

 

Actual:        [*]

 

	
A.
    	
Aggregate value of   Borrower’s unrestricted and unencumbered cash and Cash Equivalents maintained   at Bank, determined according to GAAP
    	
 
    	
$  
    
	
B.
    	
Aggregate value of   Borrower’s net billed accounts receivable, determined according to GAAP
    	
 
    	
$
    
	
C.
    	
Quick Assets (the sum   of lines A and B)
    	
 
    	
$
    
	
D.
    	
All obligations and   liabilities of Borrower to Bank, including, without limitation, the   Obligations
    	
 
    	
$
    
	
E.
    	
Aggregate value of   liabilities that should, under GAAP, be classified as liabilities on   Borrower’s balance sheet, including all Indebtedness, not otherwise reflected   in line D above, that mature within one (1) year
    	
 
    	
$
    
	
F.
    	
Current Liabilities   (the sum of lines D and E)
    	
 
    	
$
    
	
G.
    	
Current portion of   Deferred Revenue
    	
 
    	
$
    
	
H.
    	
Line F minus line G
    	
 
    	
$
    
	
I.
    	
Adjusted Quick Ratio   (line C divided by line H)
    	
 
    	
 
    

 

Is line I equal to or greater than or equal to [*]

 

           No, not in compliance                                                  Yes, in compliance

 

 

Schedule 2

 

Amendments to Perfection Certificate

 

The Perfection Certificate is amended by inserting the following text to appear as a new Section 14, immediately following Section 13 thereof:

 

“                                          14.                               BENEFICIAL OWNERSHIP INFORMATION

 

a.                                      Is the Company any of the following:

 

(i)                                     a public company or an issuer of securities that are registered with the Securities and Exchange Commission under Section 12 of the Securities Exchange Act of 1934 or that is required to file reports under Section 15(d) of that Act;

 

(ii)                                  an investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940;

 

(iii)                               an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940; or

 

(iv)                              a pooled investment vehicle operated or advised by a regulated financial institution (including an SEC-registered investment adviser)?

 

Yes                       ̈                                    No                                 ̈

 

If yes, no further information is required for Sections 14(b), 14(c) or 14(d) below.  If no, continue to 14(b).

 

b.                                      Is the Company a pooled investment vehicle that is not operated or advised by a regulated financial institution?

 

Yes                       ̈                                    No                                 ̈

 

If yes, skip to Section 14(d) below.  If no, continue to Section 14(c).

 

c.                                       Does any individual, directly or indirectly (for example, if applicable, through such individual’s equity interests in the Company’s parent entity), through any contract, arrangement, understanding, relationship or otherwise, own 25% or more of the equity interests of the Company:

 

Yes                             ̈                                    No                                 ̈

 

If yes, complete the following information.  If no, continue to Section 14(d) below.

 

 

	
 
    	
 
    	
Name
    	
 
    	
Date of birth
    	
 
    	
Residential
   address
    	
 
    	
For US
   Persons, Social
   Security
   Number:
   (non-US
   persons should
   provide SSN if
   available)
    	
 
    	
For Non-US
   Persons: Type of
   ID, ID number,
   country of
   issuance,
   expiration date
    	
 
    	
Percentage
   of
   ownership
   (if indirect
   ownership,
   explain
   structure)
    
	
1
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
4
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

d.                                      Identify one individual with significant responsibility for managing the Company, i.e., an executive officer or senior manager (e.g., Chief Executive Officer, President, Vice President, Chief Financial Officer, Treasurer, Chief Operating Officer, Managing Member or General Partner) or any other individual who regularly performs similar functions.  If appropriate, an individual listed in Section 14(c) above may also be listed here.

 

	
 
    	
 
    	
Name
    	
 
    	
Date of birth
    	
 
    	
Residential
   address
    	
 
    	
For US Persons, Social
   Security Number:
   (non-US persons should
   provide SSN if available)
    	
 
    	
For Non-US Persons:
   Type of ID, ID
   number, country of
   issuance, expiration
   date
    	
 
    
	
1
    	
 
    	
Patrick A. McBrayerExhibit 10.14

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO ACELL, INC. IF PUBLICLY DISCLOSED.

 

Supply Agreement for Porcine Urinary Bladders

 

This agreement (the “Agreement”) is between Indiana Packers Corporation, with its principal place of business at 6755 West 100 North, Delphi, IN 46923 (“Supplier”), and ACell, Inc., with offices at 6640 Eli Whitney Drive, Columbia, MD 21046, (“ACell”), effective as of March 1, 2020 (the “Effective Date”).

 

1.                                      Definitions: For purposes of this Agreement the terms set forth in this Section 1, whether capitalized or not, shall have the following meanings:

 

0.1.          “ACell Compliant pig(s)” means pigs harvested in accordance with ACell specification [*] that meet the requirements of ACell specification [*] (Bladder Specifications) and the QTA (defined in Section 1.4 below).

 

0.2.          “Bladder” means the urinary bladder of an ACell Compliant pig

 

0.3.          “Disease” means an unusual or significant event that affects the health of the pigs and could render their Bladders (defined below) ineligible for medical use or may require special treatment or vaccination to control.

 

0.4.          “QTA” means the [*] Supplier Quality Technical Agreement signed by Supplier on September 13, 2016

 

2.                                      Agreement to Sell: Supplier hereby agrees to sell to ACell and ACell agrees to purchase from Supplier Bladders from ACell Compliant pigs at the price listed on Attachment A to this Agreement, which is incorporated by reference.

 

3.                                      Supplier Obligations:

 

3.1                               Supply shall fulfill all of the obligations set forth in the QTA. If there are any direct conflicts between the terms of this Agreement and the QTA, this Agreement shall prevail for any supply and business concerns and the QTA shall prevail for all quality-related concerns.

 

3.2                               Supplier has and will maintain at all times while this Agreement is in force, and for a period of 7 years after this Agreement expires or is terminated, a product liability insurance policy providing at least [*] Dollars [*] coverage per occurrence and [*] Dollars [*] aggregate coverage per policy year. This policy shall identify ACell as a named insured and shall provide, by endorsement or otherwise, coverage to ACell for any claim, relating to ACell specification [*] compliance and the safety of Bladders provided by Supplier under this Agreement for use in ACell products to the extent such claim is related to Supplier’s conduct. Supplier shall furnish ACell with acceptable certificates evidencing such insurance coverage within thirty (30) days of the execution of this Agreement. Supplier shall provide ACell with written notice at least thirty (30) days prior to the cancellation, non-renewal or material change in such insurance. Notwithstanding any other term of this Agreement, if Supplier does not obtain replacement insurance providing comparable coverage within such thirty (30) day period, ACell shall have the right to terminate this Agreement effective at the end of such thirty (30) day period without notice of any additional waiting periods.

 

1

 

3.3                               Supplier guarantees that no article sold to ACell pursuant to this Agreement is adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, or is an article which may not under the provisions of Sec. 404 or 505 of that Act be introduced into interstate commerce. Supplier guarantees that no article sold to ACell pursuant to this Agreement is produced in violation of any provisions of the Fair Labor Standard Act.

 

3.4                               Supplier agrees to comply with the applicable provisions of any Federal or State law and all executive orders, rules and regulations issued thereunder, whether now or hereafter in force; and any provisions, representations or agreements required thereby to be included in any purchase order under this Agreement are hereby incorporated by reference, including but not limited to, Executive Order 11246, as amended, Chapter 60 of Title 41 of the Code of Federal Regulations prohibiting discrimination against any employee or applicant for employment because of race, color, religion, sex, or national origin; Section 60-741, as amended, Chapter 60 of Title 41 of the Code of Federal Regulations prohibiting discrimination against any employee or applicant for employment because of physical or mental handicap; and Section 60-250.4 of Chapter 60 of 41 Code of Federal regulations, as amended, providing for the employment of disabled veterans and veterans of the Vietnam era.

 

3.5                               Supplier further guarantees full compliance with all applicable provisions of any other Federal and all state and municipal laws.

 

3.6                               Supplier agrees that [*]

 

4.                                      ACell’s Representations and Warranties:

 

4.1                               On a monthly basis, ACell will provide Supplier a rolling forecast covering the upcoming three (3) months.

 

4.2                               ACell will assume all liability, save those representations made by Supplier in this Agreement or its attachments, for all ACell products made with Bladders.

 

4.3                               Non Interference: Except to the extent reasonably necessary to enforce ACell’s rights under this Agreement, ACell agrees not to interfere in any way with Supplier’s ability to market and/or sell pigs or porcine products, including but not limited to porcine bladders, to other purchasers.

 

4.4                               Indemnity: ACell shall indemnify and hold harmless Supplier from any liability to a third party which may arise from this Agreement, except for claims based on or related to Supplier’s breach of its obligations under this Agreement. ACell has and will maintain at all times while this Agreement is in force, and for a period of [*] after this Agreement expires or is terminated, general liability insurance policy providing at least [*] Dollars [*] coverage per occurrence and [*] Dollars [*] aggregate coverage per policy year. This policy shall identify Supplier as a named insured and shall provide, by endorsement or otherwise, coverage to Supplier for any and all claims, demands, liabilities, damages, losses, costs and expenses, relating to Supplier. ACell shall furnish to Supplier with acceptable certificates evidencing such insurance coverage within thirty (30) days of the execution of this Agreement. ACell shall provide Supplier with written notice at least thirty (30) days prior to the cancellation, non-renewal or material change in such insurance. Notwithstanding any other term of this Agreement, if ACell does not obtain replacement insurance providing comparable coverage within such thirty (30) day period,

 

2

 

Supplier shall have the right to terminate this Agreement effective at the end of such thirty (30) day period without notice of any additional waiting periods.

 

5.                                      Purchase Commitment: A firm purchase commitment shall be made on ACell’s purchase order form, which shall be issued after ACell completes an inspection report following the Supplier’s delivery of Bladders to ACell. Such purchase orders may reflect ACell’s intent to buy, and Supplier’s intent to provide, a greater number of Bladders than the number specified in the three (3) month forecast previously provided by ACell for the subject period.

 

6.                                      Invoice Payment: Bladders shall be delivered to ACell at the slaughter plant (identified on Attachment B hereto) where the ACell Compliant pigs are processed. ACell will use best efforts to email the completed inspection report relating to that shipment of Bladders within [*] after ACell takes delivery of the Bladders, and will add the number of accepted Bladders to a purchase order. Supplier shall use that purchase order to prepare an invoice to ACell for such delivery, which invoice may be transmitted to ACell, at Supplier’s discretion, by email or U.S. mail. Payment shall be due from ACell [*] business days after receipt of invoice. Payment of all invoices shall be made by check or other form for payment agreed upon by the parties.

 

7.                                      Shipping: Supplier will pay all costs of transporting and shipping ACell Compliant pigs to the slaughter plant identified on Attachment B. ACell will take delivery of Bladders at the slaughter plant unless otherwise mutually agreed.

 

8.                                      Assignment: Except for an assignment by either party to an entity under common control with, controlled by or which controls that party or to an entity that merges with or purchases that party or substantially all of that party’s assets, ACell and/or Supplier shall not have the right to assign this Agreement without the other party’s prior written consent, which shall not be unreasonably withheld.

 

9.                                      Obligation to Purchase: ACell shall not be required to accept or purchase any pig bladders that are defective, Diseased, damaged or otherwise unsuitable for processing by ACell.

 

10.                               Force Majeure: A party shall be excused for delays in performance or failure of performance hereunder to the extent arising from causes beyond such party’s control, including without limitation, changes in regulations, strikes, wars, fire, flood, disease, earthquake, or other Acts of God (“Force Majeure Event”). Force Majeure Event also includes changes in laws or regulations that prevent ACell from purchasing or Supplier from selling Bladders that were harvested in accordance with ACell specification [*] or ACell specification [*] or satisfy the requirements of the QTA. If a party is delayed or prevented from fulfilling any of its obligation due to a Force Majeure Event, that party shall notify the other party promptly of such Force Majeure Event (in no event more than two (2) business days after the party becomes aware of the delay or inability to perform) and shall make diligent efforts to perform at its earliest opportunity. During any such period of non-performance by one party, the other party shall be permitted to suspend its performance hereunder.

 

11.                               Duration of Contract and Termination:

 

11.1                        This Agreement shall commence on the Effective Date and shall continue for a period of three (3) years, unless earlier terminated in accordance with this Section 11.

 

11.2                        Either party may terminate this Agreement following prior written notice to the other party of its intent to terminate as set forth below.

 

3

 

11.2.1.      ACell may terminate this Agreement by providing ninety (90) days written notice to Supplier. In such an event, upon the expiration of ninety (90) days after the date of the notice Supplier shall have no further obligation to provide Bladders to ACell, and ACell shall have no further obligation to purchase Bladders from Supplier.

 

11.2.2.      Supplier may terminate this Agreement by providing one (1) year written notice to ACell. In that event, Supplier shall continue to provide Bladders to ACell for a period of one (1) year after the date of such notice and upon the expiration of one (1) year after the date of the notice Supplier shall have no further obligation to provide Bladders to ACell, and ACell shall have no further obligation to purchase Bladders from Supplier.

 

11.2.3.      In addition to Sections 11.2.1. and 11.2.2. above, if ACell must change ACell specification [*] ACell specification [*] or the requirements set forth in the QTA to this Agreement, in order to ensure that the Bladders provided by Supplier remain eligible for medical use and the parties cannot resolve the issue in accordance with Section 3.4 above, upon 90 days prior written notice to Supplier, ACell may terminate this Agreement in its entirety and shall have no further obligation to purchase Bladders from Supplier.

 

11.2.4.      This Section 11.2 should not be interpreted to limit any other legal or equitable remedies to which the non-breaching party may be entitled in the event of a termination for cause.

 

12.                               Limitation of Liability: Supplier’s liability to ACell for product liability claims shall be limited to the amounts of insurance coverage specified in Section 3.5 above. TO THE EXTENT ALLOWABLE BY LAW, IN NO EVENT SHALL ANY PARTY HEREUNDER BE LIABLE TO ANY OTHER PARTY HEREUNDER FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING FROM OR IN RELATION TO THIS AGREEMENT (WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, BY STATUTE OR OTHERWISE). THIS LIMITATION SHALL APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES.

 

13.                               Notification: In case of any infectious disease or other unusual occurrence noted or recognized during the raising of the pigs destined for ACell use, Supplier must notify ACell as soon as possible (but in no event later than five (5) business days after such infectious disease or other unusual occurrence is noted or recognized by Supplier).

 

14.                               Governing Law; Forum: This Agreement is governed by the laws of the State of Delaware, exclusive of its choice of law rules.

 

15.                               Entire Agreement; Waiver, Modifications and Amendments: This Agreement (along with applicable Attachments) is the entire agreement between the parties with respect to its subject matter, and there are no other terms or conditions, expressed or implied, written or oral, with respect to that subject matter. This Agreement supersedes all prior oral or written representations, agreements, promises, or other communications concerning or relating to the subject matter of this Agreement. This Agreement may not be amended or modified except by a written agreement signed by an officer of each party. No term, condition or provision of any purchase order, invoice or other form is effective as a modification of this Agreement.

 

4

 

16.                               Non-Exclusivity: The parties acknowledge and agree that the relationship between ACell and Supplier described herein shall be non-exclusive and that either party may enter into a similar arrangement with any other party during the term of this Agreement and/or after the termination hereof.

 

17.                               Legal Proceedings: If Supplier is requested or authorized by ACell or required by government regulation, subpoena, or other legal process to produce documents or Supplier’s personnel as witnesses with respect to ACell’s processing of the Bladders, ACell will, so long as Supplier is not a party to the proceeding in which the information is sought, reimburse Supplier for Supplier’s reasonable professional time and expenses, including reasonable outside counsel fees. To the extent any professional time and expenses exceed [*] Supplier and ACell shall work together to determine a mutually agreeable amount for such time and expenses and reduce any such amount to writing. For purposes of this Agreement, professional time shall be calculated by multiplying the number of hours worked by a Supplier employee by that employee’s pro-rated hourly rate (derived from that employee’s base salary). Supplier shall submit to ACell itemized invoices for any professional time and expenses for which Supplier seeks reimbursement under this Section 17.

 

Accepted and Agreed:

 

	
INDIANA   PACKERS CORPORATION
    	
 
    	
ACEL, INC.
    
	
 
    	
 
    	
 
    
	
By:
    	
[*]
    	
 
    	
By:
    	
/s/   Christopher F. Branch
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Print Name:
    	
[*]
    	
 
    	
Print Name:
    	
Christopher F. Branch
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
VP Sales
    	
 
    	
Title:
    	
General Counsel
    
	
 
    	
1/13/20
    	
 
    	
 
    	
1/14/2020
    

 

5

 

Attachment A
 to Supply Agreement for Porcine Urinary Bladders between Indiana
 Packers Corporation and ACell, Inc.

 

Pricing Schedule and Slaughter Plant Location

 

The price for Bladders to be paid by ACell to Supplier is [*] per acceptable Bladder. The term “acceptable Bladder” shall mean a Bladder that is not defective, Diseased, damaged, a rejected Bladder (as set forth in ACell specification [*] (Pork Bladders Inedible for Medical, Technical Purposes)), or otherwise unsuitable for processing by ACell. The price is all inclusive and includes, without limitation, taxes and all applicable Supplier costs.

 

Supplier’s slaughter plant is located at:

 

Indiana Packers Corporation
 6755 West 100 North
 Delphi, IN 46923

 

6

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