Document:

gthx-ex102_370.htm

EXHIBIT 10.2

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.

LOAN AND SECURITY AGREEMENT 

THIS LOAN AND SECURITY AGREEMENT is made and dated as of May 29, 2020 and is entered into by and among G1 THERAPEUTICS, INC., a Delaware corporation, and each of its Subsidiaries (hereinafter collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as the “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).  

RECITALS

	
A.
	
Borrower has requested the Lenders make available to Borrower a loan in an aggregate principal amount of up to One Hundred Million and No/100 Dollars ($100,000,000) (the "Term Loan"); and 

	
B.
	
The Lenders are willing to make the Term Loan on the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, Borrower, Agent and the Lenders agree as follows:

SECTION 1.  DEFINITIONS AND RULES OF CONSTRUCTION

1.1Unless otherwise defined herein, the following capitalized terms shall have the following meanings:

“Account Control Agreement(s)” means any agreement entered into by and among the Agent, Borrower and a third party bank or other institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s first priority security interest in the subject account or accounts.

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business, line of business or division or other unit of operation of a Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving a merger,  consolidation or similar transaction with such other Person, or otherwise causing any Person to become a Subsidiary of Borrower, or (c) the acquisition of, or the right to use, develop or sell (in each case, including through licensing (other than “off-the-shelf” licenses)), any product, product line or Intellectual Property of or from any other Person.

“Advance(s)” means a Term Loan Advance.

 

 

“Advance Date” means the funding date of any Advance.

“Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

“Affiliate” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, (b) any Person directly or indirectly owning, controlling or holding with power to vote twenty percent (20%) or more of the outstanding voting securities of another Person, (c) any Person twenty percent (20%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by another Person with power to vote such securities, or (d) any Person related by blood or marriage to any Person described in subsection (a), (b) or (c) of this paragraph.  As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 “Agreement” means this Loan and Security Agreement, as amended from time to time.

“Amortization Date” means July 1, 2022; provided however if the Interest Only Extension Conditions are satisfied, then January 1, 2023; provided however if Borrower remains in compliance with Section 7.20, then the later of (a) January 1, 2024 and (b) the first day of the fiscal quarter immediately following the occurrence of any default under Section 7.20.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its controlled Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.

“Anti‐Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

 “Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.

“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings under development, collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed or distributed by Borrower since its incorporation.

“Borrower’s Books” means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

 

 

“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.

“Cash” means all cash, cash equivalents and liquid funds.

“Change in Control” means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Borrower, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower in which the holders of Borrower’s outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Borrower is the surviving entity.  

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the common stock, $0.0001 par value per share, of the Borrower.

“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, capital lease, letter of credit or other obligation of another, including 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.  For the avoidance of doubt, no Permitted Bond Hedge Transaction or Permitted Warrant Transaction will be considered a Contingent Obligation of Borrower.

“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.

“Cross-Default Reference Obligation” has the meaning assigned to such term in the definition of “Permitted Convertible Debt”.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.

 

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any other jurisdiction within the United States of America.

“Due Diligence Fee” means $40,000, which fee has been paid to the Lenders prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.

“Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.

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

“Excluded Accounts” means (A) Deposit Accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees holding an aggregate amount across all such accounts of not more than amounts needed for the then-next two (2) payroll cycles and (B) deposit securities, commodity or similar accounts with financial institutions inside of the United States, so long as no more than $100,000 in the aggregate is maintained in such accounts at any time.

“FDA” means the United States Food and Drug Administration or any successor thereto.

“Forecast” means the projections for Borrower as delivered and accepted by Agent on May 8, 2020; provided that Borrower may from time to time update the Forecast with a forecast approved by the board of directors of the Borrower, subject to the consent of Agent in its reasonable discretion. 

“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

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

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within ninety (90) days), including 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, (d) equity securities of any Person subject to repurchase or redemption other than at the sole option of such Person, (e) “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase and sale contracts, (f) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (g) all Contingent Obligations. For the avoidance of doubt, no (i) prepaid or deferred revenue arising in the ordinary course of business, (ii) endorsements of checks or drafts arising in the ordinary course of business and (iii) Permitted Warrant Transaction shall be considered Indebtedness of the Borrower.

“Initial Facility Charge” means Six Hundred Fifty Thousand Dollars ($650,000), which is payable to the Lenders in accordance with Section 4.1(f).

“Insolvency Proceeding” means any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the 

 

 

benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.

“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date between Borrower and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.

“Interest Only Extension Conditions” shall mean satisfaction of each of the following events:  (a) no default or Event of Default shall have occurred; and (b) Borrower shall have achieved the Performance Milestone on or prior to June 30, 2022.

 “Investment” means (a) any beneficial ownership (including stock, partnership, limited liability company interests, or other securities) of or in any Person, (b) any loan, advance or capital contribution to any Person or (c) any Acquisition.

 “IRS” means the United States Internal Revenue Service. 

“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.

“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.

“Loan” means the Advances made under this Agreement.

“Loan Documents” means this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, any Joinder Agreements, the Intellectual Property Security Agreement, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.

“Market Capitalization” means, as of any date of determination, the product of (a) the number of outstanding shares of Common Stock publicly disclosed in the most recent filing of Borrower with the United States Securities Exchange Commission as outstanding as of such date of determination and (b) the closing price of Borrower’s Common Stock (as quoted on Bloomberg L.P.’s page or any successor page thereto of Bloomberg L.P. or if such page is not available, any other commercially available source).

“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrower and its Subsidiaries taken as a whole; or 

 

 

(ii) the ability of Borrower to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or the Lenders to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.

 “Maximum Term Loan Amount” means One Hundred Million and No/100 Dollars ($100,000,000). 

“Net Product Revenue Ratio” means, as of any date of determination, the ratio of (a) the outstanding amount of the Term Loan Advances to (b) T3M Net Product Revenue.

“New Drug Application” means a new drug application, submitted to the FDA under 21 U.S.C. § 355(b) for authorization to market a drug in the United States.

“Non-Core Intellectual Property” means any Intellectual Property not material to Borrower’s business upon prior consultation with Agent, which for the avoidance of doubt shall not include Intellectual Property in respect of [* * *].  

 “Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and between Hercules Capital, Inc. and G1 Therapeutics, Inc. dated as of April 6, 2020.  

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.

“Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.

“PDUFA Date” means the user fee goal date set forth in a written filing communication from the FDA with respect to the Borrower’s New Drug Application for [* * *].

“Performance Covenant” means each of Performance Covenant A, Performance Covenant B and Performance Covenant C.

“Performance Covenant A” means satisfaction of each of the following:  (i) Borrower’s Market Capitalization exceeds Seven Hundred Fifty Million Dollars ($750,000,000) and (ii) Borrower at all times maintains Qualified Cash in an amount not less than fifty percent (50%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount.

“Performance Covenant B” means Borrower at all times maintains Qualified Cash in an amount not less than one hundred twenty-five percent (125%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount.

 

 

“Performance Covenant C” means Borrower achieves T3M Net Product Revenue of at least the following, determined monthly as follows:

		
	
Month Ending
	
Minimum T3M Net Product Revenue

	
June 30, 2020 through and including December 31, 2021
	
65% of T3M Net Product Revenue included in the Forecast.  

 

	
January 31, 2022 through and including December 31, 2022
	
an amount equal to the outstanding principal amount of the Term Loan Advances divided by 2.75

	
January 31, 2023 and each month thereafter
	
an amount equal to the outstanding principal amount of the Term Loan Advances divided by 2.50

 

“Performance Milestone” means Borrower shall have provided evidence satisfactory to Agent that (i) [* * *] and (ii) [* * *].  

“Permitted Acquisition” means any Acquisition, in each case located entirely within the United States of America, which is conducted in accordance with the following requirements:

	
(a)
	
of a business or Person or product engaged in a line of business related to that of the Borrower or its Subsidiaries;

	
(b)
	
if such Acquisition is structured as a stock acquisition, then the Person so acquired shall either (i) become a wholly-owned Subsidiary of Borrower or of a Subsidiary and the Borrower shall comply, or cause such Subsidiary to comply, with Section 7.13 hereof or (ii) such Person shall be merged with and into Borrower (with the Borrower being the surviving entity);

	
(c)
	
if such Acquisition is structured as the acquisition or in-licensing of assets, such assets shall be acquired by Borrower, and shall be free and clear of Liens other than Permitted Liens;

	
(d)
	
the Borrower shall have delivered to the Lenders not less than ten (10) (or such shorter period as the Lenders may accept) nor more than forty five (45) days prior to the date of such Acquisition, notice of such Acquisition together with pro forma projected financial information, copies of all material documents relating to such acquisition, and historical financial statements for such acquired entity, division or line of business, in each case in form and substance satisfactory to the Lenders and demonstrating compliance with the covenants set forth in Section 7.20 hereof on a pro forma basis as if the Acquisition occurred on the first day of the most recent measurement period;

(e)        both immediately before and after such Acquisition no Default or Event of Default shall have occurred and be continuing; and

(f)        the sum of the purchase price of such proposed new Acquisition, computed on the basis of total acquisition consideration paid or incurred, or to be paid or incurred, by Borrower with respect thereto, including the amount of Permitted Indebtedness assumed or to which such assets, businesses or business or ownership interest or shares, or any Person so acquired, is subject, shall not be greater than (i) $1,000,000 for any single acquisition or group of related acquisitions or (ii) $2,500,000 for all such acquisitions during the term of this Agreement. 

“Permitted Bond Hedge Transaction” means any call or capped call option (or substantively equivalent derivative transaction) relating to Common Stock (or other securities or property following a 

 

 

merger event or other change of the Common Stock) purchased by Borrower in connection with the issuance of any Permitted Convertible Debt and as may be amended in accordance with its terms; provided that, the net purchase price of any such call option transaction less the amount received by Borrower in respect of any Permitted Warrant Transaction in connection with such issuance of Permitted Convertible Debt shall not exceed 15% of the gross proceeds to Borrower from such issuance of Permitted Convertible Debt; provided further that the terms, conditions and covenants of each such call option transaction are customary for agreements of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof.

 “Permitted Convertible Debt” means Indebtedness of the Borrower that is convertible into a fixed number (subject to customary anti-dilution adjustments, “make-whole” increases and other customary changes thereto) of shares of Common Stock (or other securities or property following a merger event or other change of the Common Stock), cash or any combination thereof (with the amount of such cash or such combination determined by reference to the market price of such Common Stock or such other securities); provided that such Indebtedness shall (a) not require any scheduled amortization or otherwise require payment of principal prior to, or have a scheduled maturity date earlier than, one hundred eighty (180) days after the Term Loan Maturity Date, (b) be unsecured, (c) not be guaranteed by any Subsidiary of Borrower, and (d) be on terms and conditions customary for Indebtedness of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof; provided further, that any cross-default or cross-acceleration event of default (each howsoever defined) provision contained therein that relates to indebtedness or other payment obligations of Borrower (or any of its Subsidiaries) (such indebtedness or other payment obligations, a “Cross-Default Reference Obligation”) contains a cure period of at least thirty (30) calendar days (after written notice to the issuer of such Indebtedness by the trustee or to such issuer and such trustee by holders of at least 25% in aggregate principal amount of such Indebtedness then outstanding) before a default, event of default, acceleration or other event or condition under such Cross-Default Reference Obligation results in an event of default under such cross-default or cross-acceleration provision.

“Permitted Indebtedness” means:  

(i)Indebtedness of Borrower in favor of the Lenders or Agent arising under this Agreement or any other Loan Document; 

(ii)Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; 

(iii)Indebtedness of up to $500,000 outstanding at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the cost of the Equipment financed with such Indebtedness; 

(iv)Indebtedness to trade creditors incurred in the ordinary course of business, including such Indebtedness incurred in the ordinary course of business with corporate credit cards in an amount not to exceed $500,000 at any time outstanding; 

(v)Indebtedness that also constitutes a Permitted Investment; 

(vi)Subordinated Indebtedness; 

(vii)reimbursement obligations in connection with letters of credit that are secured by Cash and issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed $250,000 at any time outstanding; 

 

 

(viii)other Indebtedness in an amount not to exceed $500,000 at any time outstanding; provided that if such Indebtedness is secured, such Liens must qualify as a Permitted Lien under clause (xv) of the definition thereof; 

(ix)intercompany Indebtedness as long as each of the obligor and the obligee under such Indebtedness is either the Borrower or a Subsidiary that has executed a Joinder Agreement; 

(x)Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements in each case, incurred in the ordinary course of business;

(xi)Permitted Convertible Debt in an aggregate principal amount not to exceed $350,000,000 at any one time outstanding; and

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

“Permitted Investment” means: 

(i)Investments existing on the Closing Date which are disclosed in Schedule 1B;

(ii)(a) 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 currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Services, (b) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from the date of investment therein, (d) money market accounts and (e) Investments in cash equivalents made pursuant to Borrower’s investment policy so long as such investment policy has been delivered to and approved by Agent; 

(iii)repurchases of stock from former employees, directors, or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities 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; 

(iv)Investments accepted in connection with Permitted Transfers; 

(v)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; 

(vi)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 (vi) shall not apply to Investments of Borrower in any Subsidiary; 

 

 

(vii)Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee stock purchase plans or other similar agreements approved by Borrower’s board of directors; 

(viii)Investments consisting of travel advances in the ordinary course of business; 

(ix)Investments in newly-formed Subsidiaries, provided that each such Subsidiary enters into a Joinder Agreement promptly after its formation by Borrower and execute such other documents as shall be reasonably requested by Agent; 

(x)Investments in Foreign Subsidiaries hereafter formed in an amount not to exceed $200,000 in any fiscal year;

(xi)joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $100,000 in the aggregate in any fiscal year; 

(xii)Permitted Acquisitions; 

(xiii)Borrower’s entry into (including payments of premiums in connection therewith), and the performance of obligations under, any Permitted Bond Hedge Transactions and Permitted Warrant Transactions in accordance with their terms; and 

(xiv)additional Investments that do not exceed $500,000 in the aggregate.

“Permitted Liens” means: 

(i)Liens in favor of Agent or the Lenders; 

(ii)Liens existing on the Closing Date which are disclosed in Schedule 1C; 

(iii)Liens for taxes, fees, assessments or other governmental charges or levies, which are not yet due or remain payable without penalty or which are being contested in good faith by appropriate proceedings diligently conducted; provided, that Borrower maintains adequate reserves therefor on Borrower’s Books in accordance with GAAP; 

(iv)Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Borrower’s business and imposed without action of such parties, which remain payable without penalty or which are being contested in good faith by appropriate proceedings diligently conducted; provided, that Borrower maintains adequate reserves therefor on Borrower’s Books in accordance with GAAP;

(v)Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder; 

(vi)the following deposits, to the extent made in the ordinary course of business:  deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of 

 

 

borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; 

(vii)Liens on Equipment or software or other intellectual property constituting purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;  

(viii)Liens incurred in connection with Subordinated Indebtedness;

(ix)leasehold interests in leases or subleases and licenses granted in the ordinary course of business and not interfering in any material respect with the business of the licensor; 

(x)Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; 

(xi)Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets); 

(xii)statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; 

(xiii)easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property; 

(xiv)Liens on Cash securing obligations permitted under clause (vii) of the definition of Permitted Indebtedness in an aggregate amount not to exceed $500,000 at any time; other Liens securing obligations in an amount not to exceed $500,000 at any time outstanding; provided that such Liens be limited to specific assets (other than Intellectual Property) and not all assets or substantially all assets of Borrower; provided further that no such Liens shall encumber any Intellectual Property;

(xv)Liens consisting of Permitted Out-Licenses; and 

(xvi)Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through (xvi) 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 (as may have been reduced by any payment thereon) does not increase.

“Permitted Out-Licenses” mean the following licenses entered into in the ordinary course of business and on an arms’ length basis:

(i)non-exclusive licenses and non-exclusive arrangements for the use of Intellectual Property;

 

 

(ii)licenses that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory; and

(iii)licenses that could not result in a legal transfer of title of the licensed property that may be exclusive as to territory, but only:

(w) as to discreet geographical areas outside of the United States of America, 

(x) with respect to [* * *], 

(y) with respect to [* * *] with the consent of the Agent, or

(z) for Non-Core Intellectual Property.

“Permitted Transfers” means: 

(i)sales of Inventory in the ordinary course of business, 

(ii)Permitted Out-Licenses, 

(iii)dispositions of worn-out, obsolete or surplus Equipment at fair market value in the ordinary course of business, and 

(iv)other Transfers of assets having a fair market value of not more than $500,000 in the aggregate in any fiscal year.

“Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) relating to Common Stock (or other securities or property following a merger event or other change of the Common Stock) and/or cash (in an amount determined by reference to the price of such Common Stock) sold by Borrower substantially concurrently with any purchase by Borrower of a related Permitted Bond Hedge Transaction and as may be amended in accordance with its terms; provided that (x) that the terms, conditions and covenants of each such call option transaction are customary for agreements of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof and (y) such call option transaction would be classified as an equity instrument in accordance with GAAP.

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.

“Qualified Cash” means the amount of Borrower’s Cash held in accounts subject to an Account Control Agreement in favor of Agent.

“Qualified Cash A/P Amount” means the amount of Borrower’s accounts payable under GAAP not paid after the 120th day following the invoice for such account payable.

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.

“Redemption Conditions” means, with respect to any payment of cash in respect of the principal amount of any Permitted Convertible Debt, satisfaction of each of the following events: (a) no 

 

 

Default or Event of Default shall exist or result therefrom, and (b) both immediately before and at all times after such redemption, Borrower’s Qualified Cash shall be no less than the sum of 150% of the outstanding Secured Obligations plus the Qualified Cash A/P Amount.

“Register” has the meaning specified in Section 11.7.

“Required Lenders” means, at any time, the holders of more than 50% of the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.

“Restricted License” means any material License or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such License or agreement or any other property (other than to the extent such assignment would be rendered invalid pursuant to Section 9-408 of the Code), or (b) for which a default under or termination of could interfere with the Agent’s right to sell any Collateral.

 “Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document, including any obligation to pay any amount now owing or later arising.

 “Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its reasonable discretion and subject to a “deep” subordination agreement (i.e., “deep” payment, lien and enforcement subordination) in form and substance satisfactory to Agent in its reasonable discretion.

“Subsequent Financing” means the closing of any Borrower financing which becomes effective after the Closing Date and is marketed to multiple investors.

“Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.

“T3M Net Product Revenue” means Borrower’s net product revenue (as determined in accordance with GAAP) solely from the sale of [* * *] (which shall not include any royalty, profit sharing, or milestone revenue), measured on a trailing three-month basis as of the date of the most recently delivered monthly financial statement in accordance with Section 7.1(a).

 

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.  

“Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance, Tranche 4 Advance and any other Term Loan funds advanced under this Agreement. 

“Term Loan Interest Rate” means for any day a per annum rate of interest equal to  the greater of either (i) (a) the prime rate as reported in The Wall Street Journal, plus (b) 6.40%, and (ii) 9.65%.

 “Term Loan Maturity Date” means June 1, 2024; provided, however, if Borrower achieves the Performance Milestone prior to the Amortization Date, then June 1, 2025; provided, further that if the applicable day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day.

 “Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. 

“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.

“Tranche 2 Draw Conditions” means (i) Borrower’s achievement of the Performance Milestone and (ii) both before and after giving effect to any such Tranche 2 Advance no Default or Event of Default shall have occurred and be continuing. 

“Tranche 3 Draw Conditions” means (i) Borrower’s achievement of the Performance Milestone, and (ii) both before and after giving effect to any such Tranche 3 Advance, (a) the Net Product Revenue Ratio shall be no greater than 2.75:1.00 and (b) no Default or Event of Default shall have occurred and be continuing. 

“Tranche 3 Facility Charge” means One Hundred Fifty Thousand Dollars ($150,000), which is payable to the Lenders in accordance with Section 4.2(d).

“Tranche 3 Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 3 Term Commitment” opposite such Lender’s name on Schedule 1.1.

“Tranche 4 Facility Charge” means one percent (1.00%) of the amount of Tranche 4 Advances funded, which is payable to the Lenders in accordance with Section 4.2(d).

“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral 

 

 

is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.  

“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

1.2The following terms are defined in the Sections or subsections referenced opposite such terms:

		
	
Defined Term
	
Section

	
Agent
	
Preamble

	
Assignee
	
11.14

	
Borrower
	
Preamble

	
Claims
	
11.11

	
Collateral
	
3.1

	
Confidential Information
	
11.13

	
End of Term Charge
	
2.6

	
Event of Default
	
9

	
Financial Statements
	
7.1

	
Indemnified Person
	
6.3

	
Lenders
	
Preamble

	
Liabilities
	
6.3

	
Maximum Rate
	
2.3

	
Open Source License
	
5.10

	
Participant Register
	
11.8

	
Prepayment Charge
	
2.5

	
Publicity Materials
	
11.19

	
Register
	
11.7

	
Rights to Payment
	
3.1

	
Tranche 1A Advance
	
2.2(a)(i)

	
Tranche 1B Advance
	
2.2(a)(ii)

	
Tranche 1 Advance
	
2.2(a)(ii)

	
Tranche 2 Advance
	
2.2(a)(iii)

	
Tranche 3 Advance
	
2.2(a)(iv)

	
Tranche 4 Advance
	
2.2(a)(v)

	
Unused Fee Commencement Date
	
2.2(e)

 

1.3Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement.  Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder 

 

 

shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.  For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

1.4Notwithstanding anything to the contrary in this Agreement or any other Loan Document, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. For the avoidance of doubt, and without limitation of the foregoing, Permitted Convertible Debt shall at all times be valued at the full stated principal amount thereof and shall not include any reduction or appreciation in value of the shares deliverable upon conversion thereof.

SECTION 2.  THE LOAN

2.1[Reserved] 

2.2Term Loan.

(a)Advances.  

(i)Subject to the terms of this Agreement, the Lenders will severally (and not jointly) make in an amount not to exceed its respective Term Commitment, and Borrower agrees to draw, a Term Loan Advance of Twenty Million Dollars ($20,000,000) on the Closing Date (the “Tranche 1A Advance”).  

(ii)Subject to the terms and conditions of this Agreement, beginning on the Closing Date and continuing through March 31, 2021 (or such later date as determined by Agent in its sole discretion upon Borrower’s request in connection with any anticipated PDUFA Date), the Lenders will severally (and not jointly) make in an amount not to exceed its respective Term Commitment, a Term Loan Advance of Ten Million Dollars ($10,000,000) (the “Tranche 1B Advance” and together with the Tranche 1A Advance, each a “Tranche 1 Advance”). 

(iii)Subject to the terms and conditions of this Agreement and satisfaction of the Tranche 2 Draw Conditions, beginning on January 1, 2021 and continuing through December 15, 2021 (or such later date as determined by Agent in its sole discretion upon Borrower’s request in connection with any anticipated PDUFA Date), Borrower may request and the Lenders shall severally (and not jointly) make one or more additional Term Loan Advances in an aggregate principal amount of up to Twenty Million Dollars ($20,000,000) in minimum increments of $5,000,000 (each, a “Tranche 2 Advance”).  

 

 

(iv)Subject to the terms and conditions of this Agreement and satisfaction of the Tranche 3 Draw Conditions, beginning on April 1, 2021 and continuing through December 31, 2022, Borrower may request and the Lenders shall severally (and not jointly) make one or more additional Term Loan Advances in an aggregate principal amount of up to Thirty Million Dollars ($30,000,000) in minimum increments of $5,000,000 (each, a “Tranche 3 Advance”).  

(v)Subject to the terms and conditions of this Agreement, and conditioned on approval by the Lenders’ investment committee in its sole discretion, on or before December 31, 2022, Borrower may request additional Term Loan Advances in an aggregate principal amount up to Twenty Million Dollars ($20,000,000) in minimum increments of $5,000,000 (each, a “Tranche 4 Advance”).  

(vi)The aggregate outstanding Term Loan Advances may be up to the Maximum Term Loan Amount.

(b) Advance Request.  To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five (5) Business Days before the Advance Date) to Agent.  The Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.

(c)Interest.  The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed.  The Term Loan Interest Rate will float and change on the day the prime rate as reported in the Wall Street Journal changes from time to time.

(d)Payment.  Borrower will pay interest on each Term Loan Advance on the first (1st) Business Day of each month, beginning the month after the Advance Date.  Borrower shall repay the aggregate Term Loan principal balance that is outstanding on the day immediately preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity obligations) are repaid.  The entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date.  Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense.  If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.  The Lenders will initiate debit entries to the Borrower’s account as authorized on the ACH Authorization (i) on each payment date of all periodic obligations payable to the Lenders under each Term Loan Advance and (ii) reasonable and invoiced out-of-pocket legal fees and costs incurred by Agent or the Lenders in connection with Section 11.12 of this Agreement; provided that, with respect to clause (i) above, in the event that the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s account for a certain amount of the periodic obligations due on a specific payment date, Borrower shall pay to the Lenders such amount of periodic obligations in full in immediately available funds on such payment date; provided, further, that, with respect to clause (i) above, if the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such payment date, Borrower shall pay to the Lenders such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which the Lenders or 

 

 

Agent notifies Borrower of such; provided, further, that, with respect to clause (ii) above, in the event that the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s account for certain amount of such out-of-pocket legal fees and costs incurred by Agent or the Lenders, Borrower shall pay to the Lenders such amount in full in immediately available funds within three (3) Business Days.

(e)Unused Fee.  In addition to the payments described in Section 2.2(d) above, Borrower shall pay to the Lenders from and after the later of (i) April 1, 2021 and (ii) the date that the Tranche 3 Draw Conditions are satisfied (such later date, the “Unused Fee Commencement Date”), until the earliest to occur of (i) December 31, 2022, (ii) the date that Borrower prepays the outstanding Secured Obligations, or (iii) the date that the Secured Obligations become due and payable in full, an unused fee accruing at the rate of 0.50% per annum on the available but undrawn amount of the Tranche 3 Term Commitments.  All such unused fees payable under this section 2.2(e) shall be payable quarterly in arrears on the last day of each fiscal quarter of Borrower occurring on and after the Unused Fee Commencement Date through and including December 31, 2022 and, in addition, on the earliest to occur of (i) the date (if on or prior to December 31, 2022) that Borrower prepays the outstanding Secured Obligations, or (ii) the date (if on or prior to December 31, 2022) that the Secured Obligations become due and payable in full.  Such unused fee shall be calculated on the basis of the actual number of days elapsed and a 360 day year. The amount of available but undrawn Tranche 3 Term Commitments shall be calculated each month in connection with the reporting under Section 7.1(a) and Section 7.1(d). 

2.3Maximum Interest.  Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”).  If a court of competent jurisdiction shall finally determine that Borrower has actually paid to the Lenders an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows:  first, to the payment of the Secured Obligations consisting of the outstanding principal; second, after all principal is repaid, to the payment of the Lenders’ accrued interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.  

2.4Default Interest.  In the event any payment is not paid on the scheduled payment date (or within three (3) Business Days of the scheduled payment date, provided that such late payment is due solely to an administrative or operational error of Agent or the Lenders or Borrower’s bank if Borrower had the funds to make the payment when due), an amount equal to four percent (4%) of the past due amount shall be payable on demand; provided that no such amount shall be payable if such nonpayment is due to Lenders’ failure to initiate debit entries pursuant to the ACH Authorization. Upon the occurrence and during the continuation of an Event of Default hereunder, all Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(c) plus four percent (4%) per annum.  In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(c) or Section 2.4, as applicable.

2.5Prepayment.  

 

 

(a)At its option upon at least seven (7) Business Days prior written notice to Agent, Borrower may prepay all or a portion of the outstanding Advances by paying the entire principal balance, or a portion thereof in minimum increments of Five Million Dollars ($5,000,000), all accrued and unpaid interest thereon, together with a prepayment charge equal to the following percentage of the Advance amount being prepaid: with respect to each Advance, if such Advance amounts are prepaid in any of the first twelve (12) months following the Closing Date, 3.00%; after twelve (12) months but prior to twenty-four (24) months, 2.00%; and after twenty-four (24) months but prior to thirty-six (36) months, 1.00% (each, a “Prepayment Charge”).  If at any time Borrower elects to make a prepayment, and at such time, there are outstanding Advances under multiple Tranches, the Prepayment Charge shall be determined by applying the amount of such prepayment in the following order: first, to the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding under the Tranche with the latest initial funding date; second, to the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding under the Tranche with the next latest initial funding date and so on until the entire principal balance of all Advances made hereunder (and all accrued but unpaid interest thereon) is paid in full.  Borrower agrees that the Prepayment Charge is a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances.  Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and the Prepayment Charge upon the occurrence of a Change in Control or any other prepayment hereunder. Notwithstanding the foregoing, Agent and the Lenders agree to waive the Prepayment Charge if Agent and the Lenders (in their sole and absolute discretion) agree in writing to refinance the Advances prior to the Term Loan Maturity Date.  

(b)At its option upon at least three (3) Business Days prior written notice to Agent, Borrower may prepay the portion of the outstanding Advances necessary to prevent an Event of Default under Section 9.2 with respect to the covenant in Section 7.20 and all accrued and unpaid interest thereon; provided that such prepayment does not exceed the amount required to prevent such Event of Default.  Any partial prepayments made pursuant to this Section 2.5(b) shall not be subject to a Prepayment Charge. For the avoidance of doubt, the amounts prepaid under this Section 2.5(b) shall not be available to be reborrowed.  

(c)Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any Secured Obligations (including principal and interest) in such order and priority as Agent may choose in its sole discretion.  For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.

2.6 End of Term Charge.  

(a)On any date that Borrower partially prepays the outstanding Secured Obligations pursuant to Section 2.5(a), Borrower shall pay the Lenders a charge of 6.95% of such Term Loan Advances being prepaid.

(b)On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full pursuant to Section 2.5(a), or (iii) the date that the Secured Obligations become due and payable in full, Borrower shall pay the Lenders a charge of (x) the greater of (A) Two Million Eighty-Five Thousand Dollars ($2,085,000) and (B) 6.95% of the aggregate amount of all Term Loan Advances funded minus (y) the aggregate amount of payments made pursuant to 

 

 

Section 2.6(a) (collectively with any charge made pursuant to Section 2.6(a), the “End of Term Charge”). 

(c)Notwithstanding the required payment date of any such End of Term Charge, the applicable pro rata portion of the End of Term Charge shall be deemed earned by the Lenders as of each date a Term Loan Advance is made.  For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.

2.7Pro Rata Treatment.  Each payment (including prepayment) on account of any fee and any reduction of the Term Loans shall be made pro rata according to the Term Commitments of the relevant Lender.

2.8Taxes; Increased Costs.  The Borrower, the Agent and the Lenders each hereby agree to the terms and conditions set forth on Addendum 1 attached hereto.

2.9Treatment of Prepayment Charge and End of Term Charge.  Borrower agrees that any Prepayment Charge and any End of Term Charge payable shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and Borrower agrees that it is reasonable under the circumstances currently existing and existing as of the Closing Date.  The Prepayment Charge and the End of Term Charge shall also be payable in the event the Secured Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure, or by any other means.  Borrower expressly waives (to the fullest extent it may lawfully do so) the provisions of any present or future statute or law that prohibits or may prohibit the collection of the foregoing Prepayment Charge and End of Term Charge in connection with any such acceleration.  Borrower agrees (to the fullest extent that each may lawfully do so): (a) each of the Prepayment Charge and the End of Term Charge is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (b) each of the Prepayment Charge and the End of Term Charge shall be payable notwithstanding the then prevailing market rates at the time payment is made; (c) there has been a course of conduct between the Lenders and Borrower giving specific consideration in this transaction for such agreement to pay the Prepayment Charge and the End of Term Charge as a charge (and not interest) in the event of prepayment or acceleration; (d) Borrower shall be estopped from claiming differently than as agreed to in this paragraph.  Borrower expressly acknowledges that its agreement to pay each of the Prepayment Charge and the End of Term Charge to the Lenders as herein described was on the Closing Date and continues to be a material inducement to the Lenders to provide the Term Loans.

SECTION 3.  SECURITY INTEREST

3.1As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in, to and under all of Borrower’s personal property and other assets including without limitation the following (except as set forth herein) whether now owned or hereafter acquired (collectively, the “Collateral”):  (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Documents, (j) Goods; and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrower’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the 

 

 

foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.

3.2Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include (a) any “intent to use” trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise, provided, that upon submission and acceptance by the United States Patent and Trademark Office of an amendment to allege use of an intent-to-use trademark application pursuant to 15 U.S.C. Section 1060(a) (or any successor provision) such intent-to-use application shall constitute Collateral, (b) nonassignable licenses or contracts, which by their terms require the 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, Sections 9406, 9407 and 9408 of the UCC) and (c) any Excluded Account.

SECTION 4.  CONDITIONS PRECEDENT TO LOAN

The obligations of the Lenders to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:

4.1Initial Advance.  On or prior to the Closing Date, Borrower shall have delivered to Agent the following:

(a)executed copies of the Loan Documents and all other documents and instruments reasonably required to create and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;

(b)a legal opinion of Borrower’s counsel in form and substance reasonably acceptable to Agent;

(c)certified copy of resolutions of Borrower’s board of directors evidencing approval of the Loan and other transactions evidenced by the Loan Documents;

(d)certified copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower;

(e)a certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified could have a Material Adverse Effect;

(f)payment of the Initial Facility Charge and reimbursement of Agent’s and the Lenders’ current expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance;

(g)all certificates of insurance and copies of each insurance policy required hereunder; and

(h)such other documents as Agent may reasonably request.

4.2All Advances.  On each Advance Date:

 

 

(a)Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(b), duly executed by Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request; provided that, if Agent and the Lenders make any Advance, then the requirement set forth in clause (ii) shall be deemed to have been satisfied to Agent’s knowledge with respect to such Advance.

(b)The representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(c)Borrower shall be in material compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Advance, no Default or Event of Default shall have occurred and be continuing.

(d)With respect to any Tranche 3 Advance, Borrower shall deliver a calculation detailing the Net Product Revenue Ratio and demonstrating compliance with the Tranche 3 Draw Conditions in form and substance reasonably acceptable to Agent.  

(e)With respect to the initial Tranche 3 Advance and any Tranche 4 Advance, the Borrower shall have paid the Tranche 3 Facility Charge or the Tranche 4 Facility Charge, as applicable. 

(f)Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.

4.3No Default.  As of the Closing Date and each Advance Date, no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. 

SECTION 5.  REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants that:

5.1Corporate Status.  Borrower is a corporation duly organized, legally existing and in good standing under the laws of its state of incorporation, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect.  Borrower’s present name, former names (if any), locations, place of formation, Tax identification number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date. 

5.2Collateral.  Borrower owns, or has good and valid title to, the Collateral, free of all Liens, except for Permitted Liens.  Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.  

5.3Consents.  Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other 

 

 

than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate of Incorporation, bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any contract or agreement or require the consent or approval of any other Person which has not already been obtained except for consents and approvals the failure of which to obtain would not be reasonably expected to have a Material Adverse Effect.  The individual or individuals executing the Loan Documents are duly authorized to do so.

5.4Material Adverse Effect.  No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect.

5.5Actions Before Governmental Authorities.  There are no actions, suits or proceedings at law or in equity or by or before any governmental authority now pending or, to the knowledge of Borrower, threatened in writing against or affecting Borrower or its property, that is reasonably expected to result in a Material Adverse Effect. 

5.6Laws.  Neither Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in a Material Adverse Effect.  Borrower is not in default in any manner under any provision of any agreement or instrument evidencing Indebtedness, or any other agreement to which it is a party or by which it is bound, which default is reasonably expected to result in a Material Adverse Effect.  

Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended.  Neither Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act.  Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005.  Neither Borrower’s nor any of its Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws.  Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary to continue their respective businesses as currently conducted.

None of Borrower, any of its Subsidiaries, or to their knowledge, any of Borrower’s or its Subsidiaries’ respective controlled Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti Terrorism Law, or (iii) is a Blocked Person.  None of Borrower, any of its Subsidiaries, or to the knowledge of Borrower, any of their controlled Affiliates or agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 

 

 

13224, any similar executive order or other Anti Terrorism Law.  None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations laws and regulations or (b) for any payment to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

5.7Information Correct and Current.  No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, or, when taken as a whole, contains or will contain any material misstatement of fact or, when taken together with all other such information or documents, omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available to Borrower, and (ii) the most current of such projections provided to Borrower’s board of directors. 

5.8Tax Matters.  Except as described on Schedule 5.8, (a) Borrower and its Subsidiaries have filed all federal and state income Tax returns and other material Tax returns that they are required to file, (b) Borrower and its Subsidiaries have duly paid all federal and state income Taxes and other material Taxes or installments thereof that they are required to pay, except Taxes being contested in good faith by appropriate proceedings and for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP, and (c) to the best of Borrower’s knowledge, no proposed or pending Tax assessments, deficiencies, audits or other proceedings with respect to Borrower or any Subsidiary have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.9Intellectual Property Claims.  Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property material to Borrower’s business.  Except as described on Schedule 5.9, (i) each of the material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) except as set forth in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), no claim has been made to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit C is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in breach of, nor has Borrower failed to perform any obligations under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in breach thereof or has failed to perform any obligations thereunder, in each case, to the extent such breach is reasonably expected to have a Material Adverse Effect.   

5.10Intellectual Property.  Except as described on Schedule 5.10, Borrower has all material rights with respect to Intellectual Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower.  Without limiting the generality of the foregoing, and in the case of Licenses, except for 

 

 

restrictions that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower, without condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and other items that are material to Borrower’s business and used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products except customary covenants in inbound license agreements and equipment leases where Borrower is the licensee or lessee.  Except as has been disclosed in the Perfection Certificate or pursuant to Section 7.1(d), Borrower is not a party to, nor is it bound by, any Restricted License.

No material software or other materials used by Borrower or any of its Subsidiaries (or used in any Borrower Products or any Subsidiaries’ products) are subject to an open-source or similar license (including but not limited to the General Public License, Lesser General Public License, Mozilla Public License, or Affero License) (collectively, “Open Source Licenses”) in a manner that would cause such software or other materials to have to be (i) distributed to third parties at no charge or a minimal charge (royalty-free basis); (ii) licensed to third parties to modify, make derivative works based on, decompile, disassemble, or reverse engineer; or (iii) used in a manner that does could require disclosure or distribution in source code form.

5.11Borrower Products.  Except as described on Schedule 5.11 or in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), no Intellectual Property owned by Borrower or Borrower Product is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the validity, use or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products.  Except as described in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), Borrower has not received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any Intellectual Property (or written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim.  Neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual Property or other rights of others in any material respect. 

5.12Financial Accounts.  Exhibit D, as may be updated by the Borrower in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

 

 

5.13Employee Loans.  Other than Permitted Investments, Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party.

5.14Capitalization and Subsidiaries.  Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto.  Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments.  Attached as Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.

SECTION 6.  INSURANCE; INDEMNIFICATION

6.1Coverage.  Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks customarily insured against in Borrower’s line of business.  Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3.  Borrower shall maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.  Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence and $5,000,000 in the aggregate.  So long as there are any Secured Obligations outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and deductibles.  If Borrower fails to obtain the insurance called for by this Section 6.1 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are immediately due and payable, bearing interest at the then highest rate applicable to the Secured Obligations, and secured by the Collateral.  Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter.  No payments by Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default.

6.2Certificates.  Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2.  Borrower’s insurance certificate shall state Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional insured for commercial general liability, a lenders loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lenders loss payable for property insurance and additional insured for liability insurance for any future property or liability insurance that Borrower may acquire from such insurer.  Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable endorsements for all risk property damage insurance.  All certificates of insurance will provide for a minimum of thirty (30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice shall be sufficient).  Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved.  Borrower shall provide Agent with copies of each insurance policy evidencing Borrower’s compliance with its insurance obligations in Sections 6.1 and 6.2, and upon entering or amending any insurance policy required hereunder, Borrower shall provide Agent with copies of such policies and shall deliver to Agent updated insurance certificates with respect to such policies concurrently with the monthly financial statements delivered pursuant to Section 7.1(a).

 

 

6.3Indemnity.  Borrower agrees to indemnify and hold Agent, the Lenders and their officers, directors, employees, agents, in-house attorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable and invoiced attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent resulting solely from any Indemnified Person’s gross negligence or willful misconduct.  This Section 6.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.  In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall survive the expiration or other termination of, this Agreement.

SECTION 7.  COVENANTS OF BORROWER

Borrower agrees as follows:

7.1Financial Reports.  Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):

(a)within thirty (30) days after the end of each month (provided that in the case of each month ended March 31, June 30, September 30, and December 31, within forty-five (45) days), unaudited interim and year-to-date financial statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year end adjustments, and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements; 

(b)within forty-five (45) days after the end of each fiscal quarter, unaudited interim and year-to-date financial statements as of the end of such fiscal quarter (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect,  certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year end adjustments;

(c)within ninety (90) days after the end of each fiscal year, unqualified audited financial statements as of the end of such fiscal year (prepared on a consolidated basis), including balance sheet and related statements of income and cash flows, and setting forth in comparative 

 

 

form the corresponding figures for the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Agent, accompanied by any management report from such accountants; 

(d)within thirty (30) days after the end of each month, a Compliance Certificate in the form of Exhibit E, which shall include a report showing (x) the T3M Net Product Revenue measured as of the last day of such month, (y) a list of new applications for Intellectual Property or notice of the acquisition thereof and (z) notice of entrance into any Restricted License;

(e)within thirty (30) days after the end of each month, a report showing agings of accounts receivable and accounts payable;

(f)promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower has made available to holders of its common stock and copies of any regular, periodic and special reports or registration statements that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or any national securities exchange;

(g)[reserved]; 

as soon as available and promptly following their approval by Borrower’s board of directors, but no later than ninety (90) days after the end of each fiscal year after the Closing Date, financial and business projections prepared in good faith by Borrower’s management and certified in writing by the Chief Executive Officer or Chief Financial Officer of Borrower and in form and substance reasonably acceptable to Agent, as well as budgets, operating plans and other financial information reasonably requested by Agent; and 

(h)immediate notice if Borrower or any Subsidiary has knowledge that Borrower, or any Subsidiary or any director or officer of Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering. 

	

	
Borrower shall not (without the consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its (a) accounting policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31.

	

	
The executed Compliance Certificate, and all Financial Statements required to be delivered pursuant to clauses (a), (b), (c) and (d) shall be sent via e-mail to [* * *] with a copy to [* * *];  provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent at: [* * *], attention Account Manager: G1 Therapeutics, Inc.

	

	
Notwithstanding the foregoing, documents required to be delivered under Sections 7.1(a), (b), (c) or (f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower emails a link thereto to Agent; provided that Borrower shall directly provide Agent all Financial Statements required to be delivered pursuant to Section 7.1(b) and (c) hereunder.

7.2Management Rights.  Borrower shall permit any representative that Agent or the Lenders authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as 

 

 

no Event of Default has occurred and is continuing, such examinations shall be limited to no more often than twice per fiscal year.  In addition, any such representative shall have the right to meet with management and officers of Borrower to discuss such books of account and records at reasonable time and upon reasonable notice during normal business hours.  In addition, Agent or the Lenders shall be entitled at reasonable times and intervals reasonably acceptable to Borrower to consult with and advise the management and officers of Borrower concerning significant business issues affecting Borrower, which consultations shall not unreasonably interfere with Borrower’s business operations; provided that the management and officers of Borrower are not obligated to accept such advice.  The parties intend that the rights granted Agent and the Lenders shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or the Lenders with respect to any business issues shall not be deemed to give Agent or the Lenders, nor be deemed an exercise by Agent or the Lenders of, control over Borrower’s management or policies. 

Further Assurances.  Borrower shall from time to time execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, promissory notes or other documents to perfect, give the highest priority to Agent’s Lien on the Collateral or otherwise evidence Agent’s rights herein.  Borrower shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary, or that Agent may reasonably request, to perfect and protect the Liens granted hereby and thereby.  In addition, and for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing statements (including an indication that the financing statement covers “all assets or all personal property” of Borrower in accordance with Section 9-504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of Borrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact for Borrower.  Borrower shall protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.  

7.3Indebtedness.  Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except for (a) the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion, (b) purchase money Indebtedness pursuant to its then applicable payment schedule, (c) prepayment by any Subsidiary of inter-company Indebtedness, (d) any refinancing of Indebtedness with Permitted Indebtedness or (e) as otherwise permitted hereunder or approved in writing by Agent.

Notwithstanding anything to the contrary in the foregoing, the issuance of, performance of obligations under (including any payments of interest), and conversion, exercise, repurchase, redemption (including, for the avoidance of doubt, a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock), settlement or early termination or cancellation of (whether in whole or in part and including by netting or set-off) (in each case, whether in cash, Common Stock or, following a merger event or other change of the Common Stock, other securities or property), or the satisfaction of any condition that would permit or require any of the foregoing, any Permitted Convertible Debt shall not constitute a prepayment of Indebtedness by Borrower for the purposes of this Section 7.4; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the 

 

 

aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Permitted Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Permitted Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of shares of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

7.4Collateral.  Borrower shall at all times keep the Collateral and all other property and assets used in Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting all or any portion the Collateral in excess of $500,000 in the aggregate, such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property and assets may be subject to Permitted Liens.  Borrower shall not agree with any Person other than Agent or the Lenders not to encumber its property other than (i) as is otherwise permitted in the definitions of “Permitted Transfers” and “Permitted Liens” and (ii) restrictions by reason of customary provisions restricting assignment, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements as the case may be).  Borrower shall not enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Borrower to create, incur, assume or suffer to exist any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (c) customary restrictions on the assignment of leases, licenses and other agreements. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens, provided however, that there shall be no Liens whatsoever on Intellectual Property), and shall give Agent prompt written notice of any legal process affecting such Subsidiary’s assets. 

 

 

7.5Investments.  Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries to do so, other than Permitted Investments.

Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.6 shall not prohibit the conversion by holders of (including any payment upon conversion, whether in cash, common stock or a combination thereof), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Permitted Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Permitted Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of shares of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

7.6Distributions.  Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest other than pursuant to employee, director or consultant repurchase plans or other similar agreements, provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest, or (b) declare or pay any cash dividend or make any other cash distribution on any class of stock or other Equity Interest, except that a Subsidiary may pay dividends or make other distributions to Borrower or any Subsidiary of Borrower, or (c) lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of $100,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of $100,000 in the aggregate.

Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit the issuance of, performance of, obligations under (including any payments of interest), and 

 

 

conversion, exercise, repurchase, redemption by holders of (including any payment upon conversion, whether in cash, common stock or a combination thereof), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Permitted Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Permitted Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of shares of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

7.7Transfers.  Except for Permitted Transfers, Borrower shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of its assets.

7.8Mergers and Consolidations.  Borrower shall not 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) a Subsidiary (or the target of any Permitted Acquisition) which is not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into another Borrower).

7.9Taxes.  Borrower shall, and shall cause each of its Subsidiaries to, pay when due all material Taxes of any nature whatsoever now or hereafter imposed or assessed against Borrower or the Collateral or upon Borrower’s ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.  Borrower shall, and shall cause each of its Subsidiaries to, accurately file on or before the due date therefor (taking into account proper extensions) all federal and state income Tax returns and other material Tax returns required to be filed.  Notwithstanding the foregoing, Borrower and its Subsidiaries 

 

 

may contest, in good faith and by appropriate proceedings diligently conducted, Taxes for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP.

7.10Corporate Changes.  Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without twenty (20) days’ (or such shorter period as Agent may agree) prior written notice to Agent.  Neither Borrower nor any Subsidiary shall suffer a Change in Control. Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America.  Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other than (w) Permitted Transfers, (x) sales of Inventory in the ordinary course of business, (y) relocations of Equipment having an aggregate value of up to $150,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit B to another location described on Exhibit B) unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the continental United States of America and, (iii) if such relocation is to a third party bailee, it has used commercially reasonable efforts to deliver a bailee agreement in form and substance reasonably acceptable to Agent.

7.11Deposit Accounts.  Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment Property, except with respect to which Agent has an Account Control Agreement; provided that no Account Control Agreement shall be required for any Excluded Account.  

7.12Borrower shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 20 days of formation, shall cause any such Subsidiary to execute and deliver to Agent a Joinder Agreement.

7.13[RESERVED]

7.14Notification of Event of Default.  Borrower shall notify Agent immediately of the occurrence of any Event of Default.

7.15[RESERVED]

7.16Use of Proceeds.  Borrower agrees that the proceeds of the Loans shall be used solely to pay related fees and expenses in connection with this Agreement and for working capital and general corporate purposes.  The proceeds of the Loans will not be used in violation of Anti-Corruption Laws or applicable Sanctions.

7.17[RESERVED]

7.18Compliance with Laws.

Borrower shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and shall, or cause its Subsidiaries to, obtain and maintain all required material governmental authorizations, approvals, licenses, franchises, permits or registrations reasonably necessary in connection with the conduct of Borrower’s business.

 

 

Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any officer, director or agent to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists.  Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti‐Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti‐Terrorism Law.

Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.

None of Borrower, any of its Subsidiaries or any of their respective directors, officers or employees, or to the knowledge of Borrower, any agent for Borrower or its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Loan, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

7.19Financial Covenants.

(a)Minimum Cash.  

(i)If Borrower fails to achieve the Performance Milestone by June 30, 2021, at all times on and after July 1, 2021 through the date that Borrower achieves the Performance Milestone, Borrower shall maintain Qualified Cash in an amount greater than or equal to the sum of Twenty Million and No/100 Dollars ($20,000,000) plus the Qualified Cash A/P Amount, and

(ii)If Borrower makes a cash payment in respect of Permitted Convertible Debt subject to satisfaction of the Redemption Conditions, Borrower shall, at all times thereafter, maintain Qualified Cash in the amount required by the defined term “Redemption Conditions”.

(b)Performance Covenant.  If Borrower achieves the Performance Milestone and Borrower draws any Advance (other than a Tranche 1 Advance), Borrower shall, from the later to occur of (a) the date of such Advance and (b) ninety (90) days following Borrower’s achievement of the Performance Milestone, Borrower shall satisfy either of (i) Performance Covenant A or Performance Covenant B, tested at all times, or (ii) Performance Covenant C, tested monthly.

7.20Intellectual Property.  The Borrower shall (i) protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Agent in writing of material infringements of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without 

 

 

Agent’s written consent.  If a Borrower decides to register any Copyrights or mask works in the United States Copyright Office, such Borrower shall:  (x) provide Agent with at least fifteen (15) days prior written notice of such Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office.  Borrower shall, together with the delivery of the Compliance Certificate referred to in Section 7.01(d), provide to Agent (x) copies of all applications that it files for Patents or for the registration of Trademarks, or (y) evidence that it has acquired any registered Trademarks, in each case, together with evidence of the recording of the intellectual property security agreement required for Agent to perfect and maintain a first priority perfected security interest in such property.  Borrower shall, together with the delivery of the Compliance Certificate referred to in Section 7.01(d), provide written notice to Agent of entering into or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public).  Borrower shall take such steps as Agent requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (1) any Restricted License to be deemed “Collateral” and for Agent to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (2) Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Agent’s rights and remedies under this Agreement and the other Loan Documents.

7.21Transactions with Affiliates.  Except as set forth on Schedule 7.22, Borrower shall not and shall not permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction of any kind involving payments or consideration in excess of $10,000 with any Affiliate of Borrower or such Subsidiary on terms that are less favorable to Borrower or such Subsidiary, as the case may be, than those that might be obtained in an arm’s length transaction from a Person who is not an Affiliate of Borrower or such Subsidiary.  

7.22Post-Closing Obligations.  Notwithstanding any provision herein or in any other Loan Document to the contrary, to the extent not actually delivered on or prior to the Closing Date, Borrower shall:

(a)deliver to Agent (or its designated agent), within fifteen (15) days of the Closing Date (or such later date as Agent may determine in its sole discretion), executed Account Control Agreements (i) among Borrower, Agent and DST Asset Manager Solutions, Inc. and (ii) among Borrower, Agent and Truist Bank (it being understood and agreed that the proceeds of the Loans shall not be transferred into any bank account that is not subject to an Account Control Agreement during such period); and

(b)use commercially reasonable efforts to deliver to Agent (or its designated agent), within thirty (30) days of the Closing Date (or such later date as Agent may determine in its sole discretion), an executed bailee waiver, in form and substance satisfactory to Agent in its sole discretion, for 5900 Martin Luther King Jr. Highway, Greenville, NC, Pitt County, 27834.

 

 

SECTION 8.  RIGHT TO invest

8.1The Lenders or their assignees or nominees shall have the right, in their discretion, to participate in any Subsequent Financing in an amount of up to Two Million and No/100 Dollars ($2,000,000) on the same timing, terms, conditions and pricing afforded to others participating in any such Subsequent Financing.

SECTION 9.  EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall be an Event of Default:

9.1Payments.  Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date; provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of Agent or the Lenders or Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment within three (3) Business Days following Borrower’s knowledge of such failure to pay; or

9.2Covenants.  Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other Loan Documents or any other agreement among Borrower, Agent and the Lenders, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.20 7.21, 7.22, and 7.23), any other Loan Document, or any other agreement among Borrower, Agent and the Lenders, such default continues for more than fifteen (15) days after the earlier of the date on which (i) Agent or the Lenders has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.20, 7.21, 7.22, and 7.23 the occurrence of such default; or 

9.3Material Adverse Effect.  A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect or a “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term under and as defined in any indenture governing any Permitted Convertible Debt has occurred; provided that solely for purposes of this Section 9.3, the failure to achieve the Performance Milestone, in and of itself, shall not constitute a Material Adverse Effect; or

9.4Representations.  Any representation or warranty made by Borrower in any Loan Document shall have been false or misleading in any material respect when made or when deemed made; or 

9.5Insolvency.  Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33 1/3% or more) of the assets or property of Borrower; or (vi) shall cease operations of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the foregoing actions described in 

 

 

clauses (i) through (vi); or (B) either (i) thirty (30) days shall have expired after the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) thirty (30) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or

9.6Attachments; Judgments.  Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment or judgments is/are entered for the payment of money (not covered by independent third party insurance as to which liability has not been rejected by such insurance carrier), individually or in the aggregate, of at least $250,000, or Borrower is enjoined or in any way prevented by court order from conducting any part of its business; or  

9.7Other Obligations.  The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness in excess of $250,000, or any other material agreement or obligation or any early payment is required or unwinding or termination occurs with respect to any Permitted Bond Hedge Transaction or Permitted Warrant Transaction, or any condition giving rise to the foregoing is met, in each case, with respect to which Borrower or its Affiliate is the “affected party” or “defaulting party” under the terms of such Permitted Bond Hedge Transaction or Permitted Warrant Transaction, if a Material Adverse Effect could reasonably be expected to result from such default, early payment, unwinding or termination.

9.8Stop Trade.  At any time, an SEC stop trade order or NASDAQ market trading suspension of Borrower’s Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a public market, provided that Borrower shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the Common Stock on another public market within sixty (60) days of such notice.

SECTION 10.  REMEDIES

10.1General.  Upon the occurrence and during the continuance of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall, accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5, all of the Secured Obligations (including, without limitation, the Prepayment Charge and the End of Term Charge) shall automatically be accelerated and made due and payable, in each case without any further notice or act).  Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact to:  exercisable during the existence of an Event of Default, (i) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (ii) demand, collect, sue, and give releases to any account debtor for monies due, settle and adjust disputes and claims about the accounts directly with account debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Agent’s 

 

 

or Borrower’s name, as Agent may elect); (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of Agent or a third party as the UCC permits; (vi) receive, open and dispose of mail addressed to Borrower; (vii) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; and (viii) notify all account debtors to pay Agent directly.  Borrower hereby appoints Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Secured Obligations have been satisfied in full and the Loan Documents have been terminated.  Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Secured Obligations have been fully repaid and performed and the Loan Documents have been terminated.  Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral.  All Agent’s rights and remedies shall be cumulative and not exclusive.

10.2Collection; Foreclosure.  Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect.  Any such sale may be made either at public or private sale at its place of business or elsewhere.  Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower.  Upon the occurrence and during the continuance of any Event of Default, Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and Borrower.  The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:

	
 
	

	
First, to Agent and the Lenders in an amount sufficient to pay in full Agent’s and the Lenders’ reasonable costs and professionals’ and advisors’ fees and expenses as described in Section 11.12;

	
 
	

	
Second, to the Lenders in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority as Agent may choose in its sole discretion; and

	
 
	

	
Finally, after the full and final payment in Cash of all of the Secured Obligations (other than inchoate obligations), to any creditor holding a junior Lien on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.

Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.

10.3No Waiver.  Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.  

 

 

10.4Cumulative Remedies.  The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative.  The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.

SECTION 11.  MISCELLANEOUS

11.1Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

11.2Notice.  Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:

(a)If to Agent:

HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and [* * *]
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: [* * *]
Telephone:  [* * *]

(b)If to the Lenders:

HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and [* * *]
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: [* * *] 
Telephone:  [* * *]

(c)If to Borrower:

G1 THERAPEUTICS, INC.  

700 Park Offices Drive, Suite 200

Research Triangle Part, NC 27709

 

 

Attention: [* * *]
email:  [* * *]
Telephone:  [* * *]

with a copy (which shall not constitute notice) to: 

Ropes & Gray LLP

800 Boylston Street

Boston, MA 02199

Attention: [* * *]

email: [* * *] 

Telephone: [* * *]

 

or to such other address as each party may designate for itself by like notice.

11.3Entire Agreement; Amendments.  

(a)This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s revised proposal letter dated May 2, 2020 and the Non-Disclosure Agreement).  

Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b).  The Required Lenders and Borrower party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Loan, reduce the stated rate of any interest or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Borrower from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.18 or Addendum 3 without the written consent of the Agent.  Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon Borrower, the Lenders, the Agent and all future holders of the Loans.

11.4No Strict Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or 

 

 

interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

11.5No Waiver.  The powers conferred upon Agent and the Lenders by this Agreement are solely to protect its rights hereunder and under the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or the Lenders to exercise any such powers.  No omission or delay by Agent or the Lenders at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Agent or the Lenders is entitled, nor shall it in any way affect the right of Agent or the Lenders to enforce such provisions thereafter.

11.6Survival.  All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and the Lenders and shall survive the execution and delivery of this Agreement. Sections 6.3, 11.14, 11.15 and 11.17 shall survive the termination of this Agreement, and Section 11.13 shall survive until the later of (i) two years after Borrower’s latest delivery to Agent of material non-public information and (ii) the termination of this Agreement.  

11.7Successors and Assigns.  The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower and its permitted assigns (if any).  Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect.  Agent and the Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower, and all of such rights shall inure to the benefit of Agent’s and the Lenders’ successors and assigns; provided that as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or under the Loan Documents to any party that is a direct competitor of Borrower (as identified by Borrower from time to time to Agent), it being acknowledged that in all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed.  Notwithstanding the foregoing, (x) in connection with any assignment by a Lender as a result of a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party and (y) in connection with a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party providing such financing or formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of a default, event of default or similar occurrence with respect to such financing or securitization transaction; provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such assignee as Agent reasonably shall require.  The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in the United States a register for the recordation of the names and addresses of the Lender(s), and the Term Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Agent and the Lender(s) shall treat each 

 

 

Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. The parties intend that any interest in or with respect to the Loans under this Agreement be treated as being issued and maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2), and 881(c)(2) of the Code and any regulations thereunder (and any successor provisions), including without limitation under United States Treasury Regulations Section 5f.103-1(c) and Proposed Regulations Section 1.163-5 (and any successor provisions), and the provisions of this Agreement shall be construed in a manner that gives effect to such intent.

11.8Participations.  Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant's interest in any commitments, loans, its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under the Code and United States Treasury Regulations, including without limitation under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.  Borrower agrees that each participant shall be entitled to the benefits of the provisions in Addendum 1 attached hereto (subject to the requirements and limitations therein, including the requirements under Section 7 of Addendum 1 attached hereto (it being understood that the documentation required under Section 7 of Addendum 1 attached hereto shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.7; provided that such participant shall not be entitled to receive any greater payment under Addendum 1 attached hereto, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the participant acquired the applicable participation.

11.9Governing Law.  This Agreement and the other Loan Documents have been negotiated and delivered to Agent and the Lenders in the State of California, and shall have been accepted by Agent and the Lenders in the State of California.  Payment to Agent and the Lenders by Borrower of the Secured Obligations is due in the State of California.  This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

11.10Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent that the reference requirement of Section 11.11 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court located in the State of California.  By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered 

 

 

thereby in connection with this Agreement or the other Loan Documents.  Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2.  Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

11.11Mutual Waiver of Jury Trial / Judicial Reference.  

(a)Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws.  EACH OF BORROWER, AGENT AND THE LENDERS SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Claims, including Claims that involve Persons other than Agent, Borrower and the Lenders; Claims that arise out of or are in any way connected to the relationship among Borrower, Agent and the Lenders; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.  

(b)If the waiver of jury trial set forth in Section 11.11(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California.  Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.    

(c)In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.10, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

11.12Professional Fees.  Borrower promises to pay Agent’s and the Lenders’ reasonable and invoiced fees and expenses necessary to finalize the loan documentation, including but not limited to reasonable attorneys’ fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable attorneys’ and other professionals’ fees and expenses incurred by Agent and the Lenders after the Closing Date in connection with or related to:  (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents, including representing Agent or the Lenders in any adversary proceeding or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

 

 

11.13Confidentiality.  Agent and the Lenders acknowledge that the information provided to Agent and the Lenders by Borrower is confidential and proprietary information of Borrower (the “Confidential Information”).  Accordingly, Agent and the Lenders agree that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting  Agent’s security interest in the Collateral shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and the Lenders may disclose any such information:  (a) to its Affiliates and its partners, investors, lenders, directors, officers, employees, agents, advisors, counsel, accountants, counsel, representative and other professional advisors if Agent or the Lenders in their sole discretion determines that any such party should have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the public or to the extent such information becomes publicly available other than as a result of a breach of this Section or becomes available to Agent or any Lender, or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming to have jurisdiction over Agent or the Lenders and any rating agency; (d) if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or the Lenders’ counsel; (e) to comply with any legal requirement or law applicable to Agent or the Lenders or demanded by any governmental authority; (f) to the extent reasonably necessary in connection with the exercise of, or preparing to exercise, or the enforcement of, or preparing to enforce, any right or remedy under any Loan Document (including Agent’s sale, lease, or other disposition of Collateral after default), or any action or proceeding relating to any Loan Document; (g) to any participant or assignee of Agent or the Lenders or any prospective participant or assignee, provided, that such participant or assignee or prospective participant or assignee is subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (h) otherwise to the extent consisting of general portfolio information that does not identify Borrower; or (i) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents.  Agent’s and the Lenders’ obligations under this Section 11.13 shall supersede all of their respective obligations under the Non-Disclosure Agreement.

11.14Assignment of Rights.  Borrower acknowledges and understands that Agent or the Lenders may, subject to Section 11.7, sell and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “Assignee”).  After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and the Lenders hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and the Lenders shall retain all rights, powers and remedies hereby given.  No such assignment by Agent or the Lenders shall relieve Borrower of any of its obligations hereunder.  Each Lender agrees that in the event of any transfer by it of the promissory note(s) (if any), it will endorse thereon a notation as to the portion of the principal of the promissory note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.

11.15Revival of Secured Obligations.  This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment 

 

 

for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment or transfer of Collateral is recovered from Agent or the Lenders.  The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, the Lenders or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Agent or the Lenders in Cash.

11.16Counterparts.  This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

11.17No Third Party Beneficiaries.  No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, the Lenders and Borrower unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, the Lenders and the Borrower. 

11.18Agency.  Agent and each Lender hereby agree to the terms and conditions set forth on Addendum 3 attached hereto.  Borrower acknowledges and agrees to the terms and conditions set forth on Addendum 3 attached hereto.

11.19Publicity.  None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other parties’ prior written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party's name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the "Publicity Materials"); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party, pursuant to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other party hereto to the extent reasonably practicable) and (ii) to comply with Section 11.13.

11.20[RESERVED]  

11.21Electronic Execution of Certain Other Documents.  The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic 

 

 

form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

(SIGNATURES TO FOLLOW)

 

 

IN WITNESS WHEREOF, Borrower, Agent and the Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

BORROWER:

G1 THERAPEUTICS, INC.

Signature:/s/ Jennifer Moses

Print Name:Jennifer Moses

Title:Chief Financial Officer

Accepted in Palo Alto, California:

AGENT:

HERCULES CAPITAL, INC.

Signature:/s/ Jennifer Choe

Print Name:Jennifer Choe

Title:Associate General Counsel

LENDERS:

HERCULES CAPITAL, INC.

Signature:/s/ Jennifer Choe

Print Name:Jennifer Choe

Title:Associate General Counsel 

 

 

All exhibits and schedules referred to in this Agreement have been omitted.  Copies of any omitted exhibit or schedule will be provided upon request.gthx-ex103_373.htm

Exhibit 10.3

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.

 

 

 

 

 

 

CO-PROMOTION AGREEMENT

by and between

G1 THERAPEUTICS, INC.

and

BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.

June 29, 2020

 

 

 

 

 

 

 

 

CO-PROMOTION AGREEMENT

This Co-Promotion Agreement (“Agreement”) is entered into and dated as of June 29, 2020 (the “Effective Date”) by and between G1 Therapeutics, Inc., a Delaware corporation, with offices at 700 Park Offices, Research Triangle Park, NC 27709 (“G1”), and Boehringer Ingelheim Pharmaceuticals, Inc., a Delaware corporation, with offices at 900 Ridgebury Road, Ridgefield, CT 06877 (“BI”). G1 and BI are each referred to individually as a “Party” and together as the “Parties”.

RECITALS

WHEREAS, G1 is a clinical-stage biopharmaceutical company, engaging in the discovery, development, and commercialization of small molecule therapeutics for the treatment of patients with cancer and owns or otherwise controls certain intellectual property rights, preclinical and clinical data and regulatory filings, and other information and know-how related to Trilaciclib (defined below), which is the subject of an NDA submission with the FDA for the prevention of chemotherapy-induced myelosuppression in small cell lung cancer (“SCLC”) patients with the potential for early approval and launch that may occur as early as [***];

WHEREAS, BI is a leading pharmaceutical company in the business of researching, developing, manufacturing and marketing novel treatments for human medicine, including through collaboration agreements;

WHEREAS, the Parties believe that it would be mutually beneficial to collaborate on promotional activities for the Product (defined below) and, accordingly, G1 desires to appoint BI as a co-exclusive promoter for Product within the Field, within the Territory, and BI desires to accept such appointment and conduct such activities, for Product within the Field, within the Territory;

NOW, THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Article 1 
DEFINITIONS

Unless otherwise defined in this Agreement, the following terms shall have the meanings provided hereunder:

1.1.“ABAC” shall have the meaning set forth in Section 4.3.7.

1.2.“Act” shall mean the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et seq., as it may be amended from time to time, and the regulations promulgated thereunder.

1.3.“Adverse Event” shall mean any untoward medical occurrence in a patient or clinical investigation subject who is administered the Product, but which does not necessarily have a causal relationship with the treatment for which the Product is used. An “Adverse Event” can include any unfavorable and unintended sign (including an abnormal laboratory finding), symptom or disease temporally associated with the use of the Product, whether or not related to the Product. A pre-existing condition that worsened in severity after administration of the Product would be considered an “Adverse Event”.

1.1.

1

 

1.4.“Affiliate” shall mean, any entity which directly or indirectly Controls, is Controlled by, or is under common Control with a Party. “Control,” for purposes of this definition, means direct or indirect ownership or control of more than 50% (fifty percent) of the voting interests of the Party or the power to direct or cause the direction of the management and policies of such Party whether by contract, through the majority ownership of voting capital stock or otherwise. “Controlled” shall be interpreted accordingly.

1.5. “Agreement” shall have the meaning set forth in the preamble to this Agreement.

1.6.“Alliance Managers” shall have the meaning set forth in Section 4.1.5. 

1.7.“Annual SCLC Net Sales” shall mean Net Sales, on a Contract Year basis, of Product in the Field, in the Territory.

1.8.“Applicable Laws” shall mean all applicable statutes, ordinances, regulations, codes, rules, and orders of any kind whatsoever of any Governmental Authority in the Territory pertaining to any of the activities and obligations contemplated by this Agreement, including, as applicable, the Act, the Generic Drug Enforcement Act of 1992 (21 U.S.C. § 335a et seq.), the Anti-Kickback Statute (42 U.S.C. § 1320a-7b et seq.), the Health Insurance Portability and Accountability Act of 1996, the Federal False Claims Act (31 U.S.C. §§ 3729-3733) (and applicable state false claims acts), the Physician Payments Sunshine Act, the Code, the Department of Health and Human Services Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers, released April 2003, the Antifraud and Abuse Amendment to the Social Security Act, the American Medical Association guidelines on gifts to physicians, generally accepted standards of good clinical practices adopted by current FDA regulations, as well as any state laws and regulations (i) impacting the promotion of pharmaceutical products, (ii) governing the provision of meals and other gifts to medical professionals, including pharmacists, or (iii) governing consumer protection and deceptive trade practices, including any state anti-kickback/fraud and abuse related laws, all as amended from time to time.

1.9.“BI Property” shall have the meaning set forth in Section 7.1.1.

1.10.“Business Day” shall mean each day of the week, excluding Saturday, Sunday and any day on which banking institutions in New York, New York, USA are closed.

1.11.“Change of Control” means, with respect to a Party, (a) a merger, reorganization or consolidation with a Third Party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent, or being converted into or exchanged for voting securities that do not represent, at least fifty percent (50%) of the combined voting power of the voting securities of the surviving entity or the parent corporation of the surviving entity immediately after such merger, reorganization or consolidation, (b) a transaction in which a Third Party becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, other than through the issuance of voting securities for the purpose of raising financing to one or more financial or institutional investors, or (c) the sale or other transfer of all or substantially all of such Party’s business or assets relating to the Product. 

1.12.“Claims” shall mean all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations or injunctions, in each case of a Third Party (including any Governmental Authority).

1.13.“Code” shall mean the Code on Interactions with Healthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America (PhRMA)/BIO, as it may be amended.

2

 

 

1.14.“Commercialize,” “Commercializing,” and “Commercialization” shall mean activities directed to manufacturing, obtaining pricing and reimbursement approvals for, marketing, promoting, distributing, importing, or selling the Product.

1.15.“Commercially Reasonable Efforts” shall mean, with respect to a Party’s obligations under this Agreement, a measure of effort and resources consistent with the exercise of prudent scientific and business judgment and the reasonable practices that would typically be exerted by a similarly situated pharmaceutical or biotechnology company of comparable size and capabilities as such company for the Development or Commercialization of a pharmaceutical product with similar characteristics owned by such company at a similar stage of development or commercialization as the Product, taking into account efficacy and safety considerations, and other relevant scientific, technical, and commercial factors, including product profile, the regulatory environment, competitiveness of the marketplace and market potential, and price and reimbursement status.

1.16.“Compliance Manager” shall have the meaning set forth in Section 4.3.7.

1.17.“Confidential Information” shall mean all secret, confidential, non-public and proprietary Know-How, whether provided in written, oral, graphic, video, computer or other form, provided by or on behalf of one Party to the other Party pursuant to this Agreement, including information relating to the disclosing Party’s existing or proposed research, development efforts, promotional efforts, regulatory matters, patent applications or business and any other materials that have not been made available by the disclosing Party to the general public. All such information related to this Agreement disclosed by or on behalf of a Party (or its Affiliate) to the other Party (or its Affiliate) pursuant to the Confidentiality Agreements shall be deemed to be such Party’s Confidential Information disclosed hereunder. For purposes of clarity, (a) G1’s Confidential Information shall include (i) all Product Materials unless and until made available by or on behalf of G1 to the general public and (ii) all Know-How specifically relating to the Product or its Commercialization that is developed by or on behalf of BI in connection with the performance of its obligations under this Agreement, (b) BI’s Confidential Information shall include any and all internal business procedures and business plans, client and marketing information and materials, customers, prospective customers financial information and ideas for new products and services, strategic data, forecasts, information technology, compliance program policies and procedures, and any other information which relates to the way BI conducts its business, and (c) the terms of this Agreement shall be considered Confidential Information of both Parties.  

1.18.“Confidentiality Agreements” shall mean (a) that certain Mutual Confidential Disclosure Agreement between the Parties dated and made effective [***] and (b) that certain Secrecy Agreement between the Parties dated and made effective [***]. 

1.19.“Contract Year” shall mean each successive one-year period following the First Commercial Sale.  The first Contract Year refers to the period beginning on the First Commercial Sale and ending one year thereafter. Successive Contract Years refer to the one-year periods following the end of the first Contract Year. 

1.20.“Development” shall mean non-clinical, pre-clinical and clinical drug discovery, research, or development activities, including without limitation quality assurance and quality control development, and any other activities reasonably related to or leading to the development and submission of information to a Regulatory Authority. When used as a verb, “Develop” means to engage in Development.

1.21.“Dispute” shall have the meaning set forth in Section 12.6.

3

 

1.22.“Dollar” or “$” shall mean United States dollar.

1.23.“Effective Date” shall have the meaning set forth in the preamble to this Agreement.

1.24.“FDA” shall mean the United States Food and Drug Administration or any successor agency performing comparable functions.

1.25.“Field” shall mean the prevention of chemotherapy-induced myelosuppression in SCLC patients.

1.26. “First Commercial Sale” shall mean the first commercial sale of the Product for monetary value by BI, G1, one or more of its Affiliates in an arm’s length transaction to a Third Party, including without limitation any final sale to a distributor or wholesaler under any non-conditional sale arrangement, of the Product in the Field in the Territory after Regulatory Approval of the Product has been granted in the Field in the Territory. For the avoidance of doubt, sales or transfers of the Product for clinical and non-clinical research and trials (including studies reasonably necessary to comply with Applicable Law or requests by a Regulatory Authority), early access programs or for compassionate or similar use, shall not be considered a First Commercial Sale.

1.27. “Fiscal Quarter” shall mean each successive period of three (3) calendar months commencing on [***]. 

1.28.“Fiscal Year” shall mean each successive period of (12) twelve months commencing on [***] and ending on [***]. 

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

1.30.“Governmental Authority” shall mean any court, agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member, which has competent and binding authority to decide, mandate, regulate, enforce, or otherwise control the activities of the Parties contemplated by this Agreement.

1.31.“G1 Trademarks and Copyrights” shall mean the logos, trade dress, slogans, domain names and housemarks of G1 or any of its Affiliates as may appear on any Product Materials or Product Labeling, in each case, as may be updated from time to time by G1. 

1.32.“Indemnified Party” shall have the meaning set forth in Section 10.3.

1.33.“Indemnifying Party” shall have the meaning set forth in Section 10.3.

1.34.“Intellectual Property” shall mean inventions, developments, discoveries, writings, trade secrets, Know-How, methods, practices, procedures, designs, improvements and other technology, whether or not patentable or copyrightable, and any Patent Rights, or copyrights based thereon.

1.35.“JPC” shall have the meaning set forth in Section 3.1.

1.36. “Know-How” shall mean information, whether or not in written form, including biological, chemical, pharmacological, toxicological, medical or clinical, analytical, quality, 

4

 

manufacturing, research, or sales and marketing information, including processes, methods, procedures, techniques, plans, programs and data.

1.37.“Losses” shall mean any and all amounts paid or payable to Third Parties with respect to a Claim (including any and all losses, damages, obligations, liabilities, fines, fees, penalties, awards, judgments, interest), together with all documented out-of-pocket costs and expenses, including attorney’s fees, reasonably incurred.

1.38.“Market Access Plan” shall mean a market access plan that sets forth, on a semi-annual basis (a) the agreed to key market access accounts to be targeted (e.g., Group Purchasing Organizations (“GPOs”), Integrated Delivery Networks, and professional oncology organizations (e.g., COA, NCODA)) to enable patient access to the Product, (b) the agreed to pre-defined customer-facing strategy and activities to be performed by the Oncology National Accounts Team, including attendance and participation at regional/national GPO meetings, interactions with GPOs to identify promotional/educational partnership opportunities, and interactions with key physician customers and accounts. The Market Access Plan as of the Effective Date is included in the Promotion Plan set forth on Schedule B hereto. 

1.39. “Net Sales” shall mean, for an applicable period, with respect to the Product, commencing with the First Commercial Sale, net sales as determined in accordance with GAAP, which, for the avoidance of doubt, shall comprise the gross amounts received by G1 or its Affiliates for arm’s length sales of the Product in the Field in the Territory to a Third Party (excluding any sales of G1 or its Affiliates), less the following deductions solely to the extent incurred or allowed with respect to such sales, and solely to the extent such deductions are in accordance with GAAP, and which are not already reflected as a deduction from the invoiced price: (a) discounts, including GPO administrative fees (to the extent not previously applied to such amounts received), charge-back payments, and rebates; (b) credits and allowances for damaged goods, rejections, recalls or returns of the Product; (c) allowances for doubtful or uncollectible amounts (provided that, such amounts shall be included in the computation of “Net Sales” to the extent subsequently collected or earned) and if the Product is sold by G1 or its Affiliates through intermediaries such as agents, consignees or co-promoters who do not purchase and take title to the Product, the promotion fee will be due only on sales to those Third Parties who actually purchase and take title to the Product through such intermediaries; and (d) payments to wholesalers in accordance with distribution service agreements. If the Product is distributed to Third Parties in connection with clinical and non-clinical research and trials (including studies reasonably necessary to comply with Applicable Law), Product samples, charitable purposes, promotional purposes, early access programs, compassionate sales or use, or an indigent program or similar bona fide arrangements for which G1 or any of its Affiliates for good faith business reasons receives consideration in respect thereof that is less than the average cost of goods for this Product, such consideration shall not be included in Net Sales.

1.40.“NDA” shall mean a New Drug Application filed with the FDA that is required for approval for the Product in the United States, and its foreign equivalent in the Territory.

1.41. “Oncology National Accounts Team” shall mean the personnel engaged in the execution of the Market Access Plan, the specific details of which are set forth in the Promotion Plan.

1.42.“Oncology Personnel” shall mean the Oncology National Accounts Team and the Oncology Sales Consultants.

1.43.“Oncology Sales Consultant” shall mean the personnel engaged in the execution of the Sales Plan the specific details of which are set forth in the Promotion Plan.

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1.44.“Party” shall have the meaning set forth in the preamble to this Agreement.

1.45.“Patent Rights” means (a) patents and patent applications, and any foreign counterparts thereof, (b) all divisionals, continuations, continuations-in-part of any of the foregoing, and any foreign counterparts thereof, and (c) all patents issuing on any of the foregoing, and any foreign counterparts thereof, together with all registrations, reissues, re‐examinations, supplemental protection certificates, substitutions or extensions thereof, and any foreign counterparts thereof.

1.46.“Person” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization or other entity, or government or political subdivision thereof.

1.47.“Pharmacovigilance Agreement” shall have the meaning set forth in Section 5.4.

1.48.“Pre-Launch Plan” shall mean a pre-launch plan that that sets forth, for the Oncology Personnel predefined, agreed to activities including Product and disease state training, region/territory business planning and key customer/account profiling, cross-functional partner planning and information sharing, and appropriate pre-launch customer engagements, as set forth in Schedule A, which the Parties may amend by mutual written agreement.

1.49.“Product” shall mean any product that contains Trilaciclib.

1.50.“Product Labeling” shall mean the labels and other written, printed or graphic matter upon (a) any container or wrapper utilized with the Product or (b) any written material accompanying the Product, including Product package inserts, in each case as approved by the FDA.

1.51.“Product Materials” shall have the meaning set forth in Section 4.4.1(a).

1.52.“Product Training Materials” shall have the meaning set forth in Section 4.4.1(a).

1.53.“Professionals” shall mean health care practitioners, consisting of physicians, nurse practitioners, physician assistants, pharmacists and any other medical professionals operating in their individual capacity or as part of an organization or institution, in the Territory with prescribing, formulary or dispensing authority (as authorized under Applicable Law) in the Territory for the Product.

1.54.“Promotional Materials” shall have the meaning set forth in Section 4.4.1(a).

1.55.“Promotion Plan” means the requirements set forth in Schedule B to this Agreement, as such shall be revised semiannually, and may, subject to the provisions of Section 3.4.2, be amended as needed; in either case in consultation with the JPC. The Promotion Plan shall consist of a Sales Plan and a Market Access Plan.

1.56.“Promotion Services” shall mean any and all customer engagement and market access activities with respect to the Product in the Territory, as set forth in the Promotion Plan or otherwise mutually agreed upon by the Parties in writing, in each case, in accordance with the terms of this Agreement. 

1.57.“Qualifying Customer Engagement” shall have the meaning provided in the Promotion Plan as described in Schedule B. 

1.1.

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1.58.“Regulatory Approval” shall mean any and all necessary approvals, licenses, registrations or authorizations from any Governmental Authority, in each case, necessary to Commercialize the Product in the Field and in the Territory.

1.59.“Regulatory Authority” means any national or supranational Governmental Authority, including without limitation the FDA that has responsibility for granting any licenses or approvals or granting pricing or reimbursement approvals necessary for the development, marketing, and sale of the Product in the Territory.

1.60.“Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Governmental Authority under Applicable Law with respect to the Product in the Territory to prevent Third Parties from Commercializing the Product in such country or jurisdiction, other than a Patent Right, including without limitation orphan drug exclusivity, pediatric exclusivity and rights conferred in the U.S. under the Hatch-Waxman Act or the FDA Modernization Act of 1997.

1.61.“Regulatory Filings” means any and all regulatory applications, filings, modifications, amendments, supplements, revisions, reports, submissions, authorizations, and Regulatory Approvals, and associated correspondence required to Develop and Commercialize the Product in the Territory, including without limitation any reports or amendments necessary to maintain Regulatory Approvals.

1.62.“Reports” shall have the meaning set forth in Section 4.2.1. 

1.63.“Restricted Period” shall have the meaning set forth in Section 2.3.1.

1.64.“Schedule” shall mean a schedule attached to this Agreement.

1.65.“Sales Forecast” shall have the meaning set forth in Section 4.1.3.

1.66.“Sales Plan” shall mean the written sales plan relating to promotion of the Product in the Field in the Territory by the Oncology Sales Consultants, which shall set forth, on a semi-annual basis, without limitation, the commercial activities geared towards achieving the Sales Forecasts provided in ARTICLE 3.  The Sales Plan as of the Effective Date is included in the Promotion Plan set forth on Schedule B hereto.

1.67.“SCLC” shall have the meaning set forth in the recitals to this Agreement.

1.68.“Senior Officer” shall mean, with respect to G1, its Chief Executive Officer and Chief Financial Officer (or such officer’s designee), and with respect to BI, its President and Chief Financial Officer (or such officer’s designee). From time to time, each Party may change its Senior Officer by giving written notice to the other Party.

1.69.“Standstill Period” shall have the meaning set forth in Section 2.3.3.

1.70.“Target Launch Date” shall mean the target date for the initial Commercialization of the Product in the Territory, which date shall be selected by G1, in its sole discretion; provided that (a) such target date shall be no earlier than [***] and (b) G1 shall provide notice of such target date to BI in writing no later than [***] following G1’s receipt from FDA of a Prescription Drug User Fee Act date for the NDA submitted by G1 and accepted for filing by FDA. 

1.71.“Term” shall have the meaning set forth in Section 11.1.

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1.72.“Territory” shall mean the United States of America and Puerto Rico.

1.73.“Third Party(ies)” shall mean any person or entity other than G1 and BI and their respective Affiliates.

1.74.“Transition Plan” shall have the meaning set forth in Section 11.3.6. 

1.75.“Trilaciclib” means G1’s intravenous (or IV) cyclin-dependent kinase 4 and 6 inhibitor designed to protect hematopoietic stem and progenitor cells during chemotherapy.

Article 2 
RIGHTS AND OBLIGATIONS

2.1Engagement; Grant of Rights; Exclusivity. During the Term, subject to the terms and conditions of this Agreement, G1 hereby grants to BI the co-exclusive right with G1 to promote the Product in the Territory in the Field, and to conduct the Promotion Services in accordance with the terms and conditions of this Agreement. BI shall have no other rights relating to the Product, except as specifically set forth in this Agreement. BI’s rights and obligations under this Section 2.1 are non-transferable, non-assignable, and non-delegable. BI shall not subcontract the Promotion Services with any Third Party (including any contract sales force). For clarity, BI shall not have any other license rights hereunder except as expressly set forth in this Section 2.1, nor any rights to sublicense any rights hereunder. During the Term, without the prior written consent of BI, which shall be given or withheld within its sole discretion, G1 shall not appoint any Third Party to perform Promotion Services or like services for the Product in the Field, in the Territory, provided that G1 will reserve the right to (a) supplement BI’s performance of Promotion Services and to perform Promotion Services using its own resources (e.g., G1 employees, contractors and consultants) and (b) engage Third Parties in connection with the Transition Plan.

2.2Retention of Rights. Except with respect to the co-exclusive rights granted to BI to conduct the Promotion Services for the Product in the Territory in the Field pursuant to Section 2.1, G1 retains all rights in and to the Product, including the right for G1 and its Affiliates to, in their sole discretion but without limiting BI’s obligations hereunder, promote the Product in the Territory and to perform any Promotion Services (whether alone or in coordination with BI) and to supplement BI’s performance of any Promotion Services, provided that such G1 activities will be at G1’s sole expense and will not materially or adversely impact BI’s ability to perform its obligations under this Agreement, to the extent such G1 activities impair BI’s ability to meeting the Minimum Annual Threshold, BI’s obligation to do so shall be waived. BI will facilitate (a) participation of G1 personnel in field rides with BI sales representatives and (b) attendance of G1 personnel in BI training sessions relating to the Product. G1 shall have the sole right, as between the Parties, to Develop and otherwise Commercialize the Product, including without limitation, determining the marketing and regulatory strategies for seeking (if and when appropriate) Regulatory Approvals and Regulatory Exclusivity in the Territory for Product in the Field, filing for such Regulatory Approvals and Regulatory Exclusivity for Product in the Territory, preparing, submitting, and maintaining any and all Regulatory Filings and Regulatory Approvals for Product in the Field in the Territory, and seeking any necessary Regulatory Approvals of Regulatory Authorities for Product Labeling and Promotional Materials to be used in connection with Commercializing Product in the Field in the Territory. G1 shall solely own and control any and all Regulatory Approvals and any and all other Regulatory Filings submitted in connection with seeking and maintaining Regulatory Approvals for the Product in the Field in the Territory. As between the Parties, G1 shall be responsible for all costs and expenses incurred by G1 in connection with the foregoing activities. Without limiting the generality of the foregoing, G1 specifically retains the following rights (and BI and its Affiliates shall have no rights to the following):

1.1.1

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2.2.1responsibility for all decisions regarding regulatory submissions and for all communications that relate to any Regulatory Approvals or other Regulatory Filings prior to and after any Regulatory Approval with respect to the Product in the Field in the Territory;

2.2.2responsibility for the manufacture and distribution of the Product, and any future development of the Product;

2.2.3responsibility for creation, development, and final approval of all Product Materials content (including submission of Promotional Materials to FDA’s Office of Prescription Drug Promotion, as applicable) with respect to the conduct of the Promotion Services for the Product, except as expressly set forth herein;

2.2.4selling and booking all sales of the Product;

2.2.5responsibility for the Product’s overall commercial strategy, including marketing, payer strategy, pricing, regulatory and other government affairs; 

2.2.6responsibility for handling all safety related activities related to the Product as set forth in ARTICLE 5 (including submitting all safety reports and interacting with Governmental Authorities with respect thereto) and initiating and managing any Product recalls; and

2.2.7determining the Target Launch Date for the Product in the Territory.

For clarity, except as provided in Sections 2.1 or 2.4, BI shall not acquire any license or other intellectual property interest, by implication or otherwise, in any technology, Know-How or other Intellectual Property owned or controlled by G1 or any of its Affiliates, and G1 is not providing any such technology, Know-How or other Intellectual Property, or any assistance related thereto, to BI for any use other than the performance of BI’s obligations under this Agreement.

2.3Non-Competition; Non-Solicitation; Standstill.

2.3.1Non-Competition. During the Term of this Agreement and through and including the [***] of termination of this Agreement (the “Restricted Period”), neither BI nor its Affiliates shall, directly or indirectly, market, offer for sale, sell, or promote any [***] without G1’s prior written consent, which shall be given or withheld within its sole discretion.

2.3.2Non-Solicitation. During Restricted Period, neither BI nor G1 (nor any of their respective Affiliates) shall directly or indirectly solicit for hire or employ as an employee, consultant or otherwise, any employee, consultant or other professional personnel of the other Party who has had direct involvement with the JPC, Promotion Services under this Agreement or G1’s Commercialization activities for the Product, without the other Party’s prior written consent, which shall not be unreasonably withheld; provided, however, that this restriction shall not apply to: (a) conducting any general solicitation not specifically targeted at any such employee; or (b) hiring any employee who responds to such general advertising or who approaches such Party or its Affiliates without any solicitation or inducement to leave the employ of such other Party or its Affiliates. 

2.3.3Standstill Period. BI agrees that during the Restricted Period (the “Standstill Period”), neither BI nor any of its controlled Affiliates shall, without the prior written consent of G1, directly or indirectly, in any manner:

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(a)acquire, offer or propose to acquire, solicit an offer to sell or agree to acquire, directly or indirectly, alone or in concert with others, by purchase or otherwise, any direct or indirect beneficial interest in any voting securities of G1 or any of its Affiliates or direct or indirect rights, warrants or options to acquire, or securities convertible into or exchangeable for, any voting securities of G1 or any of its Affiliates;

(b)make, or in any way participate in, directly or indirectly, alone or in concert with others, any “solicitation” of “proxies” to vote (as such terms are used in the proxy rules of the Securities and Exchange Commission promulgated pursuant to section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or seek to advise or influence in any manner whatsoever any Person with respect to the voting of any voting securities of G1 or any of its Affiliates;

(c)form, join with other security-holders or participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to G1 or its Affiliates or any voting securities of G1 or any of its Affiliates;

(d)acquire, offer to acquire or agree to acquire, directly or indirectly, alone or in concert with others, by purchase, exchange or otherwise, (i) a material portion of the assets, tangible or intangible, of G1 or any of its Affiliates or (ii) direct or indirect rights, warrants or options to acquire a material portion of the assets of G1 or any of its Affiliates, except for such assets as are then being offered for sale by G1 or any of its Affiliates;

(e)arrange, or in any way participate, directly or indirectly, in any financing for the purchase of any voting securities of G1 or its Affiliates or any securities convertible into or exchangeable or exercisable for any voting securities or assets of G1 or its Affiliates; 

(f)otherwise act, alone or in concert with others, to seek to propose to G1 or any of its stockholders any merger, business combination, tender or exchange offer, restructuring, recapitalization, liquidation or other transaction to or with BI or any of its Affiliates or otherwise seek, alone or in concert with others, to control, change or influence the management or board of directors of G1 or nominate any Person as a director who is not nominated by the then incumbent directors, or propose any matter to be voted upon by the stockholders of G1; or

(g)advise, assist or encourage any other Person in connection with any of the foregoing.

2.4G1 Trademarks and Copyrights.

2.4.1BI shall have the co-exclusive right to use the G1 Trademarks and Copyrights solely on Product Materials in order to perform the Promotion Services and solely in accordance with the terms and conditions of this Agreement. G1 shall promptly notify BI of any updates or changes to the G1 Trademarks and Copyrights on the Product Materials, and BI shall thereafter solely use such updated Product Materials in performing its obligations under this Agreement. BI shall promptly notify G1 upon becoming aware of any violation of this Section 2.4.1. 

2.4.2BI shall follow all instructions and guidelines of G1 (of which G1 shall provide BI copies) in connection with the use of any G1 Trademarks and Copyrights, and, if G1 reasonably objects to the manner in which any such G1 Trademarks and Copyrights are being used, BI shall immediately cease the use of any such G1 Trademarks and Copyrights in such manner upon written notice from G1 thereof. Without limiting the foregoing, BI shall also adhere to at least the same quality control provisions as companies in the pharmaceutical industry adhere to for their own trademarks and 

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copyrights. In all cases, BI shall use the G1 Trademarks and Copyrights with the necessary trademark (and copyright, as applicable) designations, and shall use the G1 Trademarks and Copyrights in a manner that does not derogate from G1’s rights in the G1 Trademarks and Copyrights. BI shall not at any time during the Term knowingly do or allow to be done any act or thing which will in any way impair or diminish the rights of G1 in or to the G1 Trademarks and Copyrights. All goodwill and improved reputation generated by BI’s use of the G1 Trademarks and Copyrights shall inure to the benefit of G1, and any use of the G1 Trademarks and Copyrights by BI shall cease at the end of the Term. BI shall have no rights under this Agreement in or to the G1 Trademarks and Copyrights except as specifically provided herein. 

Article 3 
JOINT PROMOTION COMMITTEE

3.1Formation of the Joint Promotion Committee. As soon as practicable, but no later than [***] prior to the Target Launch Date, the Parties shall form a Joint Promotion Committee (“JPC”) whose responsibilities during the Term shall be to oversee the activities set forth in Section 3.3. The JPC shall consist of [***] members, with [***] members designated by G1 and [***] members designated by BI, each with suitable seniority and relevant experience and expertise to enable such person to address matters falling within the purview of the JPC. All meetings of the JPC shall be chaired by one of the [***] representatives from G1. From time to time, each Party may change any of its representatives on the JPC by giving written notice to the other Party. The JPC shall determine a meeting schedule, provided that in any event meetings shall be conducted no less frequently than [***] by teleconference or in person, or as otherwise agreed by the Parties. In person meetings shall occur at such places as mutually agreed by the Parties.

3.2Meetings and Minutes. Each Party shall make all proposals for agenda items and shall provide all appropriate information with respect to such proposed items at least [***] in advance to the applicable meeting; provided that under exigent circumstances requiring input by the JPC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for that particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting, such consent not to be unreasonably withheld. The chairperson shall prepare and circulate for review and approval of the Parties minutes of each meeting within [***] after the meeting. Each Party shall bear its own costs for its members to attend such meetings.

3.3Purpose of the JPC. The purposes of the JPC shall be to, subject to Section 3.4:

3.3.1provide BI the opportunity to provide input and recommendations related to the Commercialization and product strategy for the Product in the Field, in the Territory;

3.3.2provide a forum to discuss and coordinate the Parties’ activities under this Agreement, in particular sales performance and metrics, and, subject to Section 3.4.2, develop, update, amend and approve the Sales Plan and the Market Access Plan, including information related to Oncology Personnel, customer-facing strategy, customer insights and feedback, as well as other information related to the Promotion Services performed for the Product in the Field, in the Territory;

3.3.3provide a forum to discuss Product Materials, Promotional Materials and strategy;

3.3.4provide a forum for discussing the [***] Sales Forecast and revisions thereto;

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3.3.5provide a forum for reviewing and agreeing on revisions to the Promotion Plan proposed by G1 semi-annually for each Contract Year (to be finalized by the JPC no later than [***] prior to each [***] period for each Contract Year), 

3.3.6provide a forum to review and discuss the Reports and reports of Net Sales and Product performance;

3.3.7perform such other responsibilities as may be mutually agreed upon by the Parties in writing from time to time; and

3.3.8provide a forum for the Parties to discuss any additional issues related to the Product or the performance of the Promotion Services that may arise during the Term of this Agreement.

For clarity the JPC shall have no authority to amend or modify any provisions of this Agreement and no authority to waive or definitively interpret the provisions of this Agreement. In connection with the JPC meetings contemplated under Section 3.2 (but in any event, no less frequently than each [***]), each Party shall provide to the other Party a written summary of the Reports.

3.4Decision Making.

3.4.1Quorum; Voting. The Parties agree that all JPC meetings shall include the [***] representatives of each Party. In the event, however, that a representative from either Party is unable to attend a meeting, that representative shall provide prompt notice to the JPC of their inability to attend the Meeting, and under no circumstance shall either Party have less than [***] representatives. Each Party shall have [***]. The JPC shall use good faith efforts to reach consensus on all matters properly brought before it. If the JPC does not reach [***] consensus on an issue at a meeting, or within a period of [***] thereafter, then the JPC shall submit in writing the respective positions of the Parties to the Senior Officers of the Parties. Such Senior Officers shall use good faith efforts to resolve promptly such matter, which good faith efforts shall include [***] between such Senior Officers within [***] after the JPC’s submission of such matter to them. Any final decision mutually agreed to in writing by the Senior Officers shall be conclusive and binding on the Parties. If the Senior Officers are not able to agree on the resolution of any such issue within [***] after such issue was first referred to them, then, subject to Section 3.4.2, G1 shall have the right to conclusively determine on the issue under dispute.

3.4.2BI Approvals. Any proposed change or amendment to the (a) Market Access Plan or (b) Sales Plan that would (i) [***] or (ii) [***], require the written approval of BI. 

Article 4 
BI PROMOTION SERVICES FOR THE PRODUCT

4.1Promotion Services.

4.1.1General. BI shall conduct the Promotion Services for the Product in the Field in the Territory in accordance with this Agreement, including, without limitation, in accordance with the then-current Promotion Plan.

4.1.2Oncology Sales Consultants and Oncology National Accounts Team. Without limiting the generality of the foregoing, BI shall hire, and continuing throughout the remainder of the Term, shall maintain at its sole cost and expense, a team of Oncology Sales Consultants with responsibility to execute on the Sales Plan, and an Oncology National Accounts Team to deliver activities in accordance with the Market Access plan. BI shall, at its sole cost and expense, provide and maintain 

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the Oncology Personnel at [***]. BI will be responsible for effective management of vacancies to ensure that all personnel in all roles (a) are employees of BI and members of BI’s dedicated U.S. commercial organization, (b) possess the skills, training and experience (consistent with industry standards) that are necessary to successfully promote or support oncology products in their assigned role, and (c) complete all Product-specific training and other sales training reasonably required by G1. BI shall have such Oncology Personnel in place as specified in the Promotion Plan in order to appropriately train on the Product prior to Target Launch Date. 

4.1.3Sales Forecast.

(a)No later than [***] prior to the Target Launch Date, G1 shall provide a final forecast of reasonably expected Net Sales of the Product in the Territory in the Field for a [***] period, including projected [***] Net Sales (the “Sales Forecast”). Thereafter, each [***] of the Term, G1 shall prepare and provide to BI an [***] Sales Forecast for such period. The Sales Forecast shall be updated by G1 from time to time as appropriate, discussed at the JPC, and comprise part of the Sales Plan.

(b)On a [***] basis, the JPC shall review actual Fiscal Year-to-date Net Sales performance compared to the Sales Forecast.

4.1.4Target Incentive Compensation. BI will ensure that a minimum of [***] weighting of [***] target bonus for each member of the Oncology Sales Consultants ties directly to the performance of the Product in each [***]. Such bonuses will not be capped in any [***]. The [***] target bonus for each member of the Oncology National Accounts Team will be based on a certain percentage that ties directly to the performance of the Product in each [***], together with a certain percentage of accomplishments related to the Product as evaluated through Management By Objectives, which collectively BI will ensure a minimum of [***] weighting of [***] target bonus for each member of the Oncology National Accounts Team.  

4.1.5Alliance Managers. Each Party shall appoint a person who shall oversee interactions between the Parties for all matters related to this Agreement, and any related agreements between the Parties (each an “Alliance Manager”). The Alliance Managers shall endeavor to ensure clear and responsive communication between the Parties and the effective exchange of information, and shall serve as a single point of contact for all matters arising under this Agreement. The Alliance Managers shall have the right to attend all JPC meetings,  and may bring to the attention of the JPC any matters and issues either of them reasonably believes should be discussed, and shall have such other responsibilities related to this agreement as the Parties may mutually agree in writing. Each Party may designate different Alliance Managers by notice in writing to the other Party. Alliance Managers shall have no authority to amend or modify any provisions of this Agreement and no authority to waive or definitively interpret the provisions of this Agreement. 

4.2Reports and Records

4.2.1Reports. G1 shall provide BI with certain information relating to the sale, Commercialization, marketing and promotion of the Product, and BI shall provide G1 with certain information reflecting the execution and activities of the Promotion Plan (“Reports”), as set forth in Schedule C. Through the JPC, the Parties shall agree on a mutually acceptable form of the Report.

4.2.2Records. BI shall keep accurate and complete records, consistent with pharmaceutical industry standards, of each Qualifying Customer Engagement and its obligations hereunder in connection therewith, and such records shall be kept for [***] after the end of the Fiscal 

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Year to which they relate. G1 shall have the right, at its own expense, during normal business hours and upon reasonable prior notice, through an independent Third Party reasonably acceptable to BI, and upon execution of a confidentiality agreement reasonably satisfactory to BI in form and substance, to inspect the applicable records and books maintained by BI relating to the Promotion Services solely for purposes of verifying BI’s compliance with the terms of this Agreement. For purposes of clarity, any such inspection right described in this Section 4.2.2 shall be limited to only those books and records of BI that are applicable to BI’s performance of its obligations under this Agreement and may be conducted no more than once per calendar year. Where necessary, on reasonable request, G1’s inspection rights shall include interviewing Oncology Personnel and other employees of BI. BI shall reasonably cooperate in any such inspection conducted by G1. G1 shall treat all information subject to review under this Section 4.2.2 in accordance with the confidentiality provisions of this Agreement.

4.3Compliance with Applicable Law.

4.3.1In conducting the Promotion Services hereunder, BI shall, and shall require all Oncology Personnel to, comply in all respects with Applicable Laws. In addition, G1 shall, and shall require all of its sales representatives to, comply in all respects with Applicable Laws in connection with its Development or Commercialization of the Product in the Territory.

4.3.2Neither BI or the Oncology Personnel, nor G1, its Affiliates or their respective licensees, shall offer, pay, solicit or receive any remuneration to or from any Professionals (including target prescribers), in order to induce referrals of or purchase of the Product.

4.3.3In performing the activities contemplated by this Agreement, neither BI or the Oncology Personnel, nor G1 or its Affiliates, shall make any payment, either directly or indirectly, of money or other assets to government or political party officials, officials of international public organizations, candidates for public office, or representatives of other businesses or persons acting on behalf of any of the foregoing where such payment would constitute violation of any Applicable Law. In addition, neither BI nor G1 shall make any payment, either directly or indirectly, to officials if such payment is for the purpose of unlawfully influencing decisions or actions with respect to the subject matter of this Agreement.

4.3.4No employee of BI nor its Affiliates shall have authority to give any direction, either written or oral, relating to the making of any commitment by G1 or its agents to any Third Party in violation of this Agreement.

4.3.5Neither BI nor G1 shall undertake any activity under or in connection with this Agreement which violates any Applicable Law.

4.3.6If, during the Term, either Party becomes aware of a failure to comply with Applicable Law or the terms of this Agreement by any member of the Oncology Personnel, such Party shall promptly, but no later than [***] after it becomes aware, notify the other Party of such violation and, as promptly as possible thereafter, shall notify the steps it has taken or intends to take to remediate such violation.

4.3.7Each Party hereby represents and warrants to the other Party that it, its owners, directors, officers, employees, sub-contractors and agents will act in full compliance with any applicable Anti-Bribery/Anti-Corruption (“ABAC”) laws and regulations, industry and professional codes of practice and will not offer, promise, pay or arrange for payment or giving of a bribe or any benefit, advantage or anything of value to any public official, individual, entity or any other Third Party in exchange for an improper advantage in any form either directly or indirectly.

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4.3.8As soon as practicable, but no later than [***] prior to the Target Launch Date, each Party shall appoint a representative to act as its compliance manager under this Agreement, each of which shall be routinely responsible for advising such Party on compliance matters and has suitable seniority and other relevant experience and expertise (each, a “Compliance Manager”). From time to time, each Party may change its Compliance Manager by giving written notice to the other Party. The Compliance Managers shall serve as a key point of contact between the Parties for compliance-related matters. Each Compliance Manager shall facilitate the resolution of any compliance issue with the Compliance Manager of the other Party. The Compliance Managers shall use good faith efforts to reach consensus on all compliance matters. If the Compliance Managers do not reach consensus on an issue promptly, then such issue shall be submitted to dispute resolution process described in Section 12.6. The Parties agree that the Oncology Personnel shall follow BI’s compliance program policies and procedures, and upon the reasonable request of G1 from time to time, BI shall deliver to G1 copies of BI’s compliance program policies and procedures which are applicable to the Oncology Personnel promotion of the Product. Other than as expressly stated herein, BI shall not be required to modify its compliance policies or practices in connection with the compliance-related provisions herein.

4.4Oncology Personnel Training; Product Materials.

4.4.1Training, Training Materials and Promotional Materials.

(a)Subject to the terms of this Section 4.4.1, G1 shall prepare and control the content of (i) all Product training materials for Oncology Personnel (the “Product Training Materials”) and (ii) all Product marketing and educational materials (the “Promotional Materials”) (the Product Training Materials and the Promotional Materials, collectively, the “Product Materials”). G1 shall be solely responsible for ensuring that the Product Materials prepared and approved by it are in compliance with the Regulatory Approval for the Product, the Product Labeling and Applicable Law. Once approved by G1 (or, upon mutual consent of the Parties, in parallel with G1’s review), the content of the Product Materials shall be provided by G1 to BI in advance of the Promotion Services to allow for BI to review such content and provide feedback to G1 in advance of use of the Product Materials. Within an average of [***] of receipt of such Product Materials, BI shall provide to G1 any comments and proposed revisions to such Product Materials that are related to any legal or regulatory concerns regarding any Applicable Law, the Regulatory Approval for the Product or the applicable Product Labeling. The Parties shall, in good faith, work together to mutually agree to either shorter or extended timeframes for review dependent on the content (i.e., length, volume, or type of content) of the Product Materials requiring review. G1 shall in good faith reasonably consider any such BI comments for inclusion in such Product Materials. In the event of any disagreement between the Parties regarding any feedback received from BI with respect to the Product Materials, G1 shall have the right to conclusively determine such matter; provided that, BI shall not be required to use any Product Materials that it reasonably believes violate Applicable Law. If BI has provided comments to G1 on the Product Materials and G1 accepts some or all of such comments, then, once revised, G1 shall provide to BI the revised versions of such Product Materials for further review by BI, in accordance with the terms and timelines of this Section 4.4.1(a) above. BI shall use only Product Materials approved by G1 in the performance of Promotion Services under this Agreement. The content of Product Materials shall not be modified or changed by BI or Oncology Personnel at any time without the prior written approval of G1 in each instance. G1 shall be responsible for the costs and expenses of creation and development, reproduction, printing and delivery of the Product Materials. The information regarding the Product that is provided by BI or Oncology Personnel as part of the Promotion Services shall not deviate from the Product Materials. The Parties shall coordinate the production and delivery of Product Materials to allow sufficient time to accommodate scheduled training meetings and distribution to Oncology Personnel. The Parties shall collaborate to finalize the Product Materials in accordance with this Section 4.4.1(a) in advance of the Target Launch Date.

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(b)By no later than [***] prior to the Target Launch Date, the Parties shall collaborate to plan and schedule training for the Oncology Personnel at a mutually acceptable time(s) and date(s), including a launch meeting at a mutually acceptable location. The costs and expenses of such launch meeting shall be [***], provided that [***] will bear all travel-related costs and expenses (e.g., transportation costs, lodging expenses, etc.) of its [***] who attend such launch meeting.  BI shall provide the initial and all subsequent training with the target of [***] live, in-person or virtual training sessions annually. BI shall have the right, but not the obligation, to conduct such additional training itself, provided that the BI trainers have been trained by G1, and provided further that G1 shall have the right to attend such training upon reasonable notice by G1 to BI. BI shall certify in writing to G1 that all Oncology Sales Consultants have completed the training described in this Section 4.4.1(b).

(c)BI and all Oncology Sales Consultants that are engaged in Promotion Services shall comply with the applicable provisions of the Code, and shall be trained on BI’s compliance policies, including those that are consistent with the applicable provisions of Sec. 1128B(b) of the Social Security Act and the American Medical Association Ethical Guidelines for Gifts to Physicians from Industry (which such training may have been accomplished prior to the Term), prior to commencing any Promotion Services. BI agrees that it shall train any employee or agent of BI who is involved in performing the activities contemplated by this Agreement on anti-corruption and anti-bribery at its own expense. 

(d)Oncology Sales Consultants shall conduct the Promotion Services only after having undergone the training described in this Section 4.4.

4.4.2Ownership of Product Materials. As between the Parties, G1 shall own all right, title and interest in and to any Product Materials (and all content contained therein) and any Product Labeling (and all content contained therein), including applicable copyrights and trademarks, and to the extent BI (or any of its Affiliates) obtains or otherwise has a claim to any of the foregoing, BI hereby assigns (and shall cause any applicable Affiliate to assign) all of its right, title and interest in and to such Product Materials (and content) and Product Labeling (and content) to G1 and BI agrees to (and shall cause its applicable Affiliate to) execute all documents and take all actions as are reasonably requested by G1 to vest title to such Product Materials (and content) and Product Labeling (and content) in G1 (or its designated Affiliate).

4.5Provisions Related to Oncology Personnel.

4.5.1Activities of Oncology Personnel. BI hereby agrees and acknowledges that the following shall apply with respect to itself and the Oncology Personnel.

(a)BI shall instruct and cause the Oncology Personnel to use only the Product Labeling and, subject to the terms of Section 4.4, Product Materials approved by G1 for the conduct of the Promotion Services for the Product and consistent with Applicable Laws. BI shall instruct 

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the Oncology Personnel and ensure that such Oncology Personnel limit their claims of efficacy and safety for such Product to those claims which are consistent with and do not exceed the Product Labeling and any Promotional Materials.

(b)BI acknowledges and agrees that G1 will not maintain or procure any worker’s compensation, healthcare, or other insurance for or on behalf of the Oncology Personnel, all of which shall be BI’s sole responsibility.

(c)BI acknowledges and agrees that all Oncology Personnel are employees of BI and are not, and are not intended to be treated as, employees of G1 or any of its Affiliates, and that such individuals are not, and are not intended to be, eligible to participate in any benefits programs or in any “employee benefit plans” (as such term is defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended) that are sponsored by G1 or any of its Affiliates or that are offered from time to time by G1 or its Affiliates to their own employees. All matters of compensation, benefits and other terms of employment for any such Oncology Personnel shall be solely a matter between BI and such individual. G1 shall not be responsible to BI, or to the Oncology Personnel, for any compensation, expense reimbursements or benefits (including vacation and holiday remuneration, healthcare coverage or insurance, life insurance, severance or termination of employment benefits, pension or profit-sharing benefits and disability benefits), payroll-related taxes or withholdings, or any governmental charges or benefits (including unemployment and disability insurance contributions or benefits and workmen’s compensation contributions or benefits) that may be imposed upon or be related to the performance by BI or such individuals of this Agreement, all of which shall be the sole responsibility of BI, even if it is subsequently determined by any Governmental Authority that any such individual may be an employee or a common law employee of G1 or any of its Affiliates or is otherwise entitled to such payments and benefits.

(d)BI shall be solely responsible for the acts and omissions of the Oncology Personnel that are not in compliance with Applicable Law and the terms of this Agreement while performing any of the activities under this Agreement. BI shall be solely responsible and liable for all probationary and termination actions taken by it, as well as for the formulation, content and dissemination (including content) of all employment policies and rules (including written probationary and termination policies) applicable to its employees.

(e)BI shall only perform the Promotion Services using Oncology Personnel, and, except in the ordinary course of business, BI shall not materially reduce the number of its Oncology Personnel.

4.5.2Termination of Employment; Cessation of Promotion Services. If any member of the Oncology Personnel leaves the employment of BI, or otherwise ceases to conduct the Promotion Services for the Product, BI shall, ensure that such departing member of the Oncology Personnel shall cease providing services in accordance with BI’s internal policies and procedures.

4.5.3Discipline. If G1 has a reasonable basis for believing any member of the Oncology Personnel has violated any Applicable Laws, or failed to comply with this Agreement, then G1 shall notify BI of the alleged violation and BI shall promptly investigate the matter and, if the allegation turns out to be true, shall take the appropriate remedial action. Subject to the foregoing, BI shall be solely responsible for taking any disciplinary actions in connection with its Oncology Personnel performance. If, at any time, G1 has any other compliance-related concerns regarding the performance of any Oncology Personnel, G1’s Compliance Manager shall notify BI’s Compliance Manager of such concerns in writing and the Compliance Managers shall discuss and resolve such matters.

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4.6Responsibility for BI Activity Costs and Expenses. Other than as expressly set out herein, BI shall be solely responsible for any and all costs and expenses incurred by BI or any of its Affiliates in connection with the conduct of the Promotion Services by the Oncology Personnel for the Product hereunder, including: (i) hiring and maintaining employees; (ii) conducting training and development activities; (iii) paying personnel expenses (e.g., salaries, bonuses, benefits, workers’ compensation premiums, unemployment insurance contributions and other payments required by Applicable Laws to be made on behalf of employees); (iv) fleet expenses; (v) technology expenses; (vi) travel, lodging and associated expenses (including those incurred in connection with attending any trainings); (vii) operations and overhead costs supporting its employees; (viii) routine sales and plan of action meetings and associated production costs; and (ix) funds for lunch-and-learns and local meetings displays/exhibits.  

4.7Additional Indications.  In the event that G1 is considering partnering with a Third Party to promote or market Trilaciclib during the Term for any additional indications, G1 will discuss with BI in good faith an option for BI to co-promote Trilaciclib in the Territory for such additional indications, provided that G1 shall have no obligation to grant BI any rights with respect to any additional indications for Trilaciclib.

4.8Data Exchange.  Each Party shall, at its own cost, reasonably cooperate with the other to effectively share and exchange data in relation to Commercialization activities under this Agreement in accordance with the terms set forth in the attached Schedule C.

Article 5 
REGULATORY, SAFETY AND SURVEILLANCE, COMMERCIAL MATTERS

5.1G1 Responsibility. As between the Parties, except as expressly set out herein, all regulatory matters regarding the Product shall be the responsibility of G1, including responsibility for all communications with Governmental Authorities, including but not limited to the FDA, related to the Product, and G1 shall have sole responsibility to seek and obtain any necessary approvals of any Product Labeling and the Promotional Materials used in connection with the Product, and for determining whether the same requires approval. As between the Parties, G1 shall be responsible for any reporting of matters regarding the manufacture, sale and promotion of the Product (including Adverse Events) to or with the FDA and other relevant Regulatory Authorities, in accordance with Applicable Laws. G1 shall maintain, at its cost, the Regulatory Approvals for the Product and shall comply with all Applicable Law relevant to the conduct of G1’s business with respect to the Product or pursuant to this Agreement, including, without limitation, all applicable requirements under the Act.

5.2BI Involvement. Except as expressly permitted herein, BI shall not, without G1’s prior written consent, correspond or communicate with the FDA or with any other Governmental Authority concerning the Product, or otherwise take any action concerning any Regulatory Approval or other authorization under which the Product is marketed or sold. If not prohibited by any Governmental Authority or Applicable Law, BI shall provide to G1, promptly upon receipt, copies of any communication from the FDA or other Governmental Authority related to the Product. If not prohibited by any Governmental Authority or Applicable Law, G1 has the right to review and comment on BI’s draft responses to any Governmental Authorities relevant to the Product prior to BI’s issuance of such response, and BI agrees to consider any comments and suggestions from G1 in good faith, provided such comments and suggestions would not violate Applicable Law.

5.3Inspections.

1.1.1

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5.3.1If not prohibited by any Governmental Authority or Applicable Law, BI shall notify G1 immediately upon receipt of any notice of inspection or investigation by any Governmental Authority related to or that BI reasonably believes may impact any aspect of the Promotion Services. If not prohibited by any Governmental Authority or Applicable Law, G1 shall have the right to have a representative present at any such portion of the inspection involving any Promotion Services. In such cases, BI shall (a) keep G1 fully informed of the progress and status of any such inspection or investigation, (b) prior to undertaking any action pursuant to this Section 5.3.1, notify G1 of the inspection or investigation, and disclose to G1 in writing the Governmental Authorities’ assertions, findings and related results of such inspection or investigation pertaining to the Promotion Services, and (c) provide full disclosure to G1 with respect to any action undertaken or proposed to be undertaken pursuant to this Section 5.3.1 prior to acting as it pertains to the Promotion Services. In addition, if such findings or the Governmental Authority requests or suggests that BI should change any aspect of the Promotion Services, the Parties shall work together to make any such modification; provided, however, that notwithstanding anything to the contrary herein, BI shall not be required to engage in any Promotion Services to the extent any finding or Governmental Authority has requested or suggested that BI may not engage in such activity. 

5.3.2If not prohibited by any Governmental Authority or Applicable Law, G1 shall notify BI immediately upon receipt of any notice of inspection or investigation by any Governmental Authority related to or that G1 reasonably believes may impact any aspect of the Promotion Services. In such cases, G1 shall (a) keep BI fully informed of the progress and status of any such inspection or investigation, (b) disclose to BI in writing the Governmental Authorities’ assertions, findings and related results of such inspection or investigation pertaining to the Product or its promotion, and (c) provide full disclosure to BI with respect to any action undertaken or proposed to be undertaken pursuant to this Section 5.3.2 prior to acting as it pertains to the Promotion Services. In addition, if such findings or the Governmental Authority requests or suggests that BI should change any aspect of the Promotion Services, the Parties shall work together to make any such modification; provided, however, that notwithstanding anything to the contrary herein, BI shall not be required to engage in any Promotion Services to the extent any finding or Governmental Authority has requested or suggested that BI may not engage in such activity.

5.4Pharmacovigilance. Subject to the terms of this Agreement, G1 and BI (under the guidance of their respective pharmacovigilance departments, or equivalent thereof) shall identify and finalize the responsibilities the Parties shall employ to protect patients and promote their well-being in a separate safety data exchange agreement (“Pharmacovigilance Agreement”). The Parties shall initiate negotiation of the Pharmacovigilance Agreement within [***] following the execution of this agreement, and conclude the Pharmacovigilance Agreement prior to Product launch. The Parties agree, that, such guidelines and procedures, as set forth in the Pharmacovigilance Agreement, shall provide that any Oncology Personnel or BI Affiliate that becomes aware of an Adverse Event shall follow all G1 policies and procedures regarding Adverse Event reporting, including G1’s Adverse Event Reporting standard operating procedure. G1 shall be responsible for providing Adverse Event training to BI for the Product prior to the Target Launch Date. The Pharmacovigilance Agreement shall provide that: (a) G1 shall be responsible for all pharmacovigilance activities regarding the Product, including signal detection, medical surveillance, risk management, medical literature review and monitoring, Adverse Event reporting and responses to Governmental Authority requests or enquiries, and shall provide information related thereto to BI, and (b) in the event BI receives safety information regarding the Product, or information regarding any safety-related regulatory request or inquiry, BI shall notify G1 as soon as practicable, but, in any event, within the timelines set forth in the Pharmacovigilance Agreement.

5.5Unsolicited Requests for Medical Information. BI shall direct to G1 any unsolicited requests for off-label medical information from health care professionals with respect to the Product 

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promptly following receipt by BI (but in no event later than [***] after receipt). G1 shall, within [***] following receipt of any such request from BI, address any such requests directly to the health care professional, and thereafter, G1 shall use Commercially Reasonable Efforts to notify BI that such response was provided.

5.6Recalls and Market Withdrawals. As between the Parties, G1 shall have the sole right to determine whether to implement, and to implement, a recall, field alert, withdrawal or other corrective action related to the Product. G1 shall bear the cost and expense of any such recall, field alert, withdrawal or other corrective action. Each Party shall promptly (but in any case, not later than [***] after) notify the other Party in writing of any order, request or directive of a court or other Governmental Authority to recall or withdraw the Product. BI shall reasonably cooperate with G1 with any recall, field alert, withdrawal or other corrective action related to the Product by requiring that Oncology Personnel inform (a) prescribers of any such recall, field alert, withdrawal or corrective action, and (b) G1 of any relevant information related thereto following such prescriber discussions. 

5.7Certain Reporting Responsibilities. Notwithstanding the foregoing provisions of this ARTICLE 5, each Party shall be responsible for its own federal, state and local government pricing reporting and payment transparency reporting in the Territory arising from its Product promotional activities and related expenditures pursuant to Applicable Law. It is the intention of the Parties that any payments and transfers of value by a Party, as such relate to the Product, shall constitute transfers of value by that Party and such Party shall be responsible for the reporting described in the immediately preceding sentence. However, if a Party is deemed to have provided any payments and transfers of value to a Third Party on behalf of the other Party as it relates to the Product, then such Party shall provide to the other Party, in a format reasonably acceptable to such other Party, the data and other information on a timely basis (i.e., in the case of manual reporting of such data and other information, within [***] following the end of each [***], and, in the case of automated reporting of such data and other information, on a periodic basis during each [***] as reasonably requested by such other Party) for such other Party’s reporting under the Physician Payments Sunshine Act and other Applicable Laws.

5.8Booking of Sales Revenues. G1 shall retain ownership of the rights to the Product and record on its books all revenues from sales of the Product. G1 shall be exclusively responsible for accepting and filling purchase orders, billing, and returns with respect to the Product. If BI receives an order for the Product, it shall promptly transmit such order to G1 (or its designee) for acceptance or rejection. G1 shall have sole responsibility for shipping, distribution and warehousing of the Product, and for the invoicing and billing of purchasers of the Product and for the collection of receivables resulting from the sales of the Product in the Territory.

5.9Returns. BI is not authorized to accept any Product returns. BI shall advise any customer who attempts to return any Product to BI (or its Affiliates) that such Product must be shipped by the customer to the facility designated by G1 from time to time (and in accordance with other instructions provided by G1). G1 shall provide to BI written instructions as to how BI should handle any Product that is actually physically returned to BI. BI shall take no other actions with respect to such return without the prior written consent of G1.

5.10Development; Manufacturing; Distribution; Marketing. G1 shall have the sole authority to Develop, Commercialize, manufacture, package, label, warehouse, sell and distribute the Product in the Territory. G1 shall use Commercially Reasonable Efforts to Develop and Commercialize at least one (1) Product in the Field in the Territory.  Following Regulatory Approval for the Product in the Field in the Territory, G1 shall use Commercially Reasonable Efforts to cause sufficient quantities of Product to be available in inventory to promptly fill orders throughout the Territory and otherwise meet the forecasted demand for Product in the Territory. If, despite such efforts, there is insufficient supply of 

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Product to meet demand, then G1 shall use Commercially Reasonable Efforts to promptly address such insufficiency. G1 shall contractually require (and shall use commercially reasonable efforts to enforce such contractual provisions) that all Product is manufactured, shipped, sold and distributed in accordance with all Product specifications and all Applicable Law and that its contract manufacturers or suppliers of Product operate their facilities in accordance with Applicable Law. G1 shall ensure that all Product Labeling complies with the applicable Regulatory Approval for the Product and Applicable Law. Other than as set forth in this Agreement, G1 shall be responsible for all marketing of the Product in the Territory.

Article 6 
FINANCIAL PROVISIONS

6.1Start-Up Payment.  G1 shall pay BI an initial, non-refundable, start-up payment of [***] (the “Start-Up Payment”), which payment will cover the [***] of BI’s activities under the Pre-Launch Plan. The Start-Up Payment will be paid in two (2) equal installments on the following dates: 

6.1.1[***] to be paid within [***] of [***], and

6.1.2 Subject to Section 11.2.8, [***] to be paid within [***]. 

6.2Additional Start-Up Payments.  G1 shall pay BI an additional start-up payment of [***] (the “Additional Start-Up Payment”) [***] beyond the [***] period of [***] until the [***], provided that, at the time of each such [***] payment, BI continues to conduct the activities under the Pre-Launch Plan. 

6.3Sales Payment.

6.3.1Calculation of Sales Payment.

(a)Subject to Section 6.3.2, commencing with the [***] following the [***], as consideration for the Promotion Services performed by BI, G1 shall pay BI a promotion fee based on Net Sales of all Product in the Territory in each [***] during the Term (the “Sales Payment”), calculated as follows: 

Contract Year 1: an amount equal to [***] of Annual SCLC Net Sales up to [***], plus an amount equal to [***] of Annual SCLC Net Sales exceeding [***]; but in no event an amount less than [***] for such Contract Year (the “Annual Floor”) 

Contract Year 2: an amount equal to [***] of Annual SCLC Net Sales up to [***], plus an amount equal to [***] of Annual SCLC Net Sales exceeding [***]; but in no event an amount less than the Annual Floor

Contract Year 3: an amount equal to [***] of Annual SCLC Net Sales up to [***], plus an amount equal to [***] of Annual SCLC Net Sales exceeding [***]; but in no event an amount less than the Annual Floor

(b)G1 shall make the Sales Payments on a [***] basis during the applicable Contract Year, subject to a true-up payment at the end of each Contract Year if the Annual Floor has not been met (the “Annual Floor True-Up”). When a [***] includes two (2) [***], the Net Sales for any 

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applicable month within such [***] that spans two (2) [***] will be allocated between the two (2) [***] on a pro-rata basis.

6.3.2Adjustment of Sales Payments. Notwithstanding the forgoing, if BI fails to deliver Qualifying Customer Engagements equal to at least [***] of the annual number of Qualifying Customer Engagements required under the Sales Plan for such Contract Year (the “Minimum Annual Threshold”), then (a) the Annual Floor will not apply for such Contract Year, (b) G1 will not be required to pay the Annual Floor True-Up (if any) for such Contract Year, and (c) BI will promptly refund to G1 an amount equal to the aggregate Sales Payments made for the applicable Contract Year multiplied by the actual percentage of Qualifying Customer Engagements not achieved. The [***] of the Qualifying Customer Engagements not achieved will be calculated by dividing the number of uncompleted Qualifying Customer Engagements by the total Qualifying Customer Engagements in the Promotion Plan as set forth in Schedule B. 

6.4Periodic Reports; Payments.

6.4.1[***] Reports and Payments. Within [***] after the end of each [***] during the Term, G1 shall provide to BI a written report setting forth in reasonable detail the calculation of the Net Sales for such [***] and the Sales Payment payable in respect of such Net Sales in accordance with Section 6.3. Within [***] after the end of each [***] during the Term, G1 shall pay to BI the portion of the promotion fee payable in respect of such Net Sales. 

6.4.2[***] Estimate Reports. Within [***] of the end of each [***] within each [***], G1 shall provide to BI a written report setting forth G1’s good faith estimate of the Net Sales for such [***]. The Parties acknowledge and agree that the [***] reports shall only set forth G1’s good faith estimates of the items contained therein and are being provided to BI for information purposes only and shall not be determinative of the any amounts due hereunder.

6.4.3Payment Adjustments. If new information becomes available after the close of a [***] under the process described in Section 6.4.1 that would adjust the amount of recognized Net Sales or payments under this Agreement, such adjustments shall be made in the [***] they become available. Additions and deductions in payments resulting from any adjustments shall be applied to the next regularly scheduled [***] payment.

6.4.4Disputes. Promptly upon receipt of the [***] reports described in this Section 6.4.4, BI shall review such reports and, in the event that BI disputes any of the items described in such report, BI shall promptly notify G1 of any such disputes within [***] of receipt of the applicable report. The Parties shall meet promptly thereafter to attempt to resolve such disputes. 

6.4.5Manner of Payment. All payments under this Agreement shall be made in US Dollars by wire transfer or Automated Clearing House to a bank account designated in writing by BI or G1, as applicable, which shall be designated at least [***] before such payment is due.

6.4.6Late Payments. If BI does not receive payment of any sum due to it on or before the due date, simple interest shall thereafter accrue on the sum due to BI from the due date until the date of payment at the [***] published in the Wall Street Journal on the due date [***] or the maximum rate allowable by Applicable Law, whichever is less. For clarity, any payments due from adjustments under Section 6.4.3 shall not be considered late payments.

6.5Taxes. To the extent G1 is required to deduct and withhold taxes from any payment to BI, G1 shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and 

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promptly transmit to BI an official tax receipt or other evidence of timely payment sufficient to enable BI to claim the payment of such taxes as a deduction or tax credit. Prior to any payments being made to BI under this agreement, BI shall provide to G1 any tax forms that may be reasonably necessary in order for G1 to not withhold tax and G1 shall dispense with withholding, as applicable. G1 shall provide BI with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of any withholding taxes deducted from payments to BI in any event.

6.6Recordkeeping. Each Party shall maintain complete and accurate books and records in sufficient detail, in accordance with GAAP (to the extent applicable and in accordance with the Agreement) and all Applicable Law, to enable verification of the performance of such Party’s obligations under this Agreement and any payments due to a Party under this Agreement. Unless otherwise specified herein, the books and records for a given Fiscal Year of the Term shall be maintained for a period of [***] after the end of such Fiscal Year or longer if required by Applicable Law.

6.7BI Rights. BI shall have the right, at its own expense, during normal business hours and upon reasonable prior notice, through an independent certified public accountant reasonably acceptable to G1, and upon execution of a confidentiality agreement reasonably satisfactory to G1 in form and substance, to inspect the applicable records and books maintained by G1 solely for purposes of verifying the accuracy of Net Sales amounts reported by G1 pursuant to Section 6.4.1 hereof and the fees payable by G1 to BI under this Agreement in respect of such amounts. For clarity, such inspection right described in this Section 6.7 shall be limited to only those books and records of payment reports and amounts owed to BI as a result of G1’s achievement of Net Sales of the Product in the Territory under this Agreement and (i) may be conducted no more than [***], and (ii) may only cover the most recently completed [***]. Disputes, if any, must be submitted to G1 within [***] after the completion of such inspection. G1 shall reasonably cooperate in any such inspection or audit conducted by BI. BI shall treat all information subject to review under this Section 6.7 in accordance with the confidentiality provisions of this Agreement.

Article 7 
INTELLECTUAL PROPERTY

7.1Ownership of Intellectual Property.

7.1.1BI Property. G1 acknowledges that BI owns or is licensed to use certain Know-How relating to proprietary sales and marketing information, methods and plans that has been independently developed or licensed by BI (such Know-How, the “BI Property”). The Parties agree that any improvement, enhancement or modification made, discovered, conceived, or reduced to practice by BI to any BI Property in performing its activities pursuant to this Agreement shall be deemed BI Property, and shall be the Confidential Information of BI. 

7.1.2G1 Property. G1 shall have and retain sole and exclusive right, title and interest in and to all Intellectual Property that is (a) owned or controlled by G1 as of the Effective Date, (b) made, discovered, conceived, reduced to practice or generated by G1 (or its employees or representatives) during the Term, or (c) made, discovered, conceived, reduced to practice or generated by BI (or its employees or representatives) in performing its activities pursuant to this Agreement other than the BI Property, and any such Intellectual Property shall be deemed the Confidential Information of G1. 

7.2Title to Trademarks and Copyrights. The ownership, and all goodwill from the use, of any G1 Trademarks and Copyrights shall at all times vest in and inure to the benefit of G1, and BI shall assign, and hereby does assign, any rights it may have in the foregoing to G1. BI shall not, directly or 

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indirectly, adopt, apply for or acquire any trademarks, trade names, or domain names that include or are confusingly similar to any of the G1 Trademarks and Copyrights.

7.3Protection of Trademarks and Copyrights. As between the Parties, G1 shall have the sole right (but not the obligation), as determined by G1 in its sole discretion, to (a) maintain the G1 Trademarks and Copyrights and (b) protect, enforce and defend the G1 Trademarks and Copyrights. BI shall give notice to G1 of any infringement of, or challenge to, the validity or enforceability of the G1 Trademarks and Copyrights promptly after learning of such infringement or challenge. If G1 institutes an action against Third Party infringers or takes action to defend the G1 Trademarks and Copyrights, BI shall reasonably cooperate with G1, at [***] cost and expense. Any recovery obtained by G1 as a result of such proceeding or other actions, whether obtained by settlement or otherwise, shall be retained by G1. BI shall not have any right to institute any action to defend or enforce the G1 Trademarks and Copyrights.

7.4Protection of Patent Rights. As between the Parties, G1 shall have the sole right (but not the obligation), as determined by G1 in its sole discretion, to (a) prosecute and maintain the G1 Patent Rights and (b) protect, enforce and defend the G1 Patent Rights. BI shall give notice to G1 of any misappropriation or infringement of, or challenge to, the validity or enforceability of the G1 Patent Rights promptly after learning of such misappropriation or infringement or challenge. If G1 institutes an action against Third Party infringers or takes action to stop the misappropriation or infringement of the G1 Patent Rights, BI shall reasonably cooperate with G1, at [***] cost and expense. Any recovery obtained by G1 as a result of such proceeding or other actions, whether obtained by settlement or otherwise, shall be retained by G1. BI shall not have any right to institute any action to defend or enforce the G1 Patent Rights.

7.5Disclosure of Know-How. Subject to the provisions of this Article 7, the Parties hereby agree and acknowledge that to the extent that either Party hereto has disclosed, or in the future discloses, to the other Party any Know-How or other Intellectual Property of such Party or its Affiliates pursuant to this Agreement, the other Party shall not acquire any ownership rights in such Know-How or other Intellectual Property by virtue of this Agreement or otherwise, and as between the Parties, all ownership rights therein shall remain with the disclosing Party (or its Affiliate).

Article 8 
CONFIDENTIALITY

8.1Confidential Information.

8.1.1Confidentiality and Non-Use. Each Party agrees that, during the Term and for a period of [***] thereafter, it shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as provided for in this Agreement (which includes the exercise of its rights or performance of any obligations hereunder) any Confidential Information furnished to it by or on behalf of the other Party pursuant to this Agreement, except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties. Without limiting the foregoing, each Party shall use at least the same standard of care as it uses to protect its own Confidential Information to ensure that its employees, agents, consultants and contractors do not disclose or make any unauthorized use of such Confidential Information. Each Party shall promptly notify the other upon discovery of any unauthorized use or disclosure of the other’s Confidential Information. Any and all information and materials disclosed by a Party pursuant to the Confidentiality Agreements shall be deemed Confidential Information disclosed pursuant to this Agreement. The foregoing confidentiality and non-use obligations shall not 

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apply to any portion of the other Party’s Confidential Information that the receiving Party can demonstrate by competent tangible evidence:

(a)was already known to the receiving Party or its Affiliate, other than under an obligation of confidentiality, at the time of disclosure to the receiving Party;

(b)was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

(c)became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party or its Affiliates in breach of this Agreement;

(d)was disclosed to the receiving Party or its Affiliate by a Third Party who has a legal right to make such disclosure and who did not obtain such information directly or indirectly from the other Party (or its Affiliate); or

(e)was independently discovered or developed by the receiving Party or its Affiliate without access to or aid, application, use of the other Party’s Confidential Information, as evidenced by a contemporaneous writing.

8.1.2Authorized Disclosure. Notwithstanding the obligations set forth in Section 8.1.1, a Party may disclose the other Party’s Confidential Information and the terms of this Agreement to the extent:

(a)such disclosure is reasonably necessary (x) to comply with the requirements of Governmental Authorities; or (y) for the prosecuting or defending litigation as contemplated by this Agreement;

(b)such disclosure is reasonably necessary to its Affiliates, employees, agents, consultants and contractors on a need-to-know basis for the sole purpose of performing its obligations or exercising its rights under this Agreement; provided that in each case, the disclosees are bound by obligations of confidentiality and non-use consistent with those contained in this Agreement and the disclosing Party shall be liable for any failures of such disclosees to abide by such obligations of confidentiality and non-use; or

(c)such disclosure is reasonably necessary to comply with Applicable Laws, including regulations promulgated by applicable securities exchanges, court order, administrative subpoena or order.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to Section 8.1.2(a) or 8.1.2(c), such Party shall, if permitted, promptly notify the other Party of such required disclosure and shall use reasonable efforts to assist the other Party (at the other Party’s cost) in obtaining, a protective order preventing or limiting the required disclosure.

8.2Public Announcements. No public announcement or statements (including presentations to investor meetings and customer updates) concerning the existence of or terms of this Agreement or incorporating the marks of the other Party or their respective Affiliates shall be made, either directly or indirectly, by either Party or a Party’s Affiliates, without first obtaining the written approval of the other Party and agreement upon the nature, text and timing of such announcement or disclosure. The Parties 

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agree that the Parties have the right to issue a joint communication / press release within sixty (60) days following the Effective Date of this Agreement, in a form to be agreed upon by the Parties. Neither Party may issue any other public announcement or press release relating to this agreement without the written approval of the other Party, which shall include the written approval of the content of such press release or public announcement. For clarity, the Parties agree that after a press release pursuant to this Section 8.2 hereof, the Parties may make subsequent public disclosures, disclosing the same content without having to again follow the procedures set forth herein; provided such information remains accurate as of such time. For clarity, the approval to issue a public announcement in addition to the initial press release referred to in the first sentence of this Section 8.2 does not imply any approval of the content of any subsequent public announcements. Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the Securities Exchange Commission and any other Governmental Authorities, including requests for confidential treatment of proprietary information of either Party included in any such disclosure. Once any written statement is approved for disclosure by the Parties or information is otherwise made public in accordance with this Section 8.2, either Party may make a subsequent public disclosure of the same contents of such statement in the same context as such statement without further approval of the other Party. Notwithstanding anything to the contrary contained herein, in no event shall either Party disclose any financial information of the other without the prior written consent of such other Party, unless such financial information already has been publicly disclosed by the Party owning the financial information or otherwise has been made part of the public domain by no breach of a Party of its obligations under this ARTICLE 8.

Article 9 
REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS

9.1Representations and Warranties of G1. G1 represents and warrants to BI as of the Effective Date that:

9.1.1it is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation;

9.1.2the execution, delivery and performance of this Agreement by it has been duly authorized by all requisite corporate action;

9.1.3it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

9.1.4this Agreement constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

9.1.5the execution, delivery and performance of this Agreement by G1 does not require the consent of any Person (including under any agreement with a Third Party) or the authorization of (by notice or otherwise) any Governmental Authority including the FDA;

9.1.6there is no action, suit or proceeding pending or, to the knowledge of G1, threatened, against G1 or any of its Affiliates, or to the knowledge of G1, any Third Party acting on their behalf, which would be reasonably expected to impair, restrict or prohibit the ability of G1 or BI to perform its obligations and enjoy the benefits of this Agreement;

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9.1.7it has no knowledge of any information relating to the safety or efficacy of the Product or any communications with any Governmental Authority, which would reasonably be expected to materially impair, restrict, prohibit or affect G1’s ability to perform its obligations and enjoy the benefits of this Agreement;

9.1.8it is in compliance in all material respects with all Applicable Laws applicable to the subject matter of this Agreement;

9.1.9it is not a party to any agreement or arrangement with any Third Party or under any obligation or restriction agreement (including any outstanding order, judgment or decree of any court or administrative agency) which in any way limits or conflicts with its ability to execute and deliver this Agreement and to fulfill any of its obligations under this Agreement;

9.1.10neither G1 nor any of its personnel (a) have been debarred under the 21 U.S.C. § 335a, (b) are excluded, debarred, suspended, or otherwise ineligible to participate in the federal health care programs or in federal procurement or nonprocurement programs, (c) are convicted of a criminal offense that falls within the ambit of the federal statute providing for mandatory exclusion from participation in federal health care programs but has not yet been excluded, debarred, suspended, or otherwise declared ineligible to participate in those programs, (d) are listed on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (e) are listed on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov). If, during the Term, G1 or any of its personnel becomes or is the subject of a proceeding that could lead to, as applicable, (i) debarment under 21 U.S.C. § 335a, (ii) exclusion, debarment, suspension or ineligibility to participate in the federal health care programs or in federal procurement or nonprocurement programs, (iii) convicted (or conviction) of a criminal offense that falls within the ambit of the federal statute providing for mandatory exclusion from participation in federal healthcare programs, (iv) listed (or listing) on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) listed (or listing) on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov), G1 shall immediately notify BI, and BI shall have the option to prohibit such Person from performing work relating to this Agreement or the Product; and

9.1.11the Product Materials provided by G1 to BI for the conduct of Promotion Services are, and shall be, compliant with the Regulatory Approval for the Product, the Product Labeling and Applicable Law.

9.2Representations and Warranties of BI. BI represents and warrants to G1 as of the Effective Date that:

9.2.1it is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation;

9.2.2the execution, delivery and performance of this Agreement by it has been duly authorized by all requisite corporate action;

9.2.3it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

9.2.4this Agreement constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the 

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availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity);

9.2.5the execution, delivery and performance of this Agreement by BI does not require the consent of any Person or the authorization of (by notice or otherwise) any Governmental Authority or the FDA;

9.2.6there is no action, suit or proceeding pending or, to the knowledge of BI, threatened, against BI or any of its Affiliates, or to the knowledge of BI, any Third Party acting on their behalf, which would be reasonably expected to impair, restrict or prohibit the ability of G1 or BI to perform its obligations and enjoy the benefits of this Agreement;

9.2.7it is in compliance in all material respects with all Applicable Laws applicable to the subject matter of this Agreement;

9.2.8it is not a party to any agreement or arrangement with any Third Party or under any obligation or restriction agreement (including any outstanding order, judgment or decree of any court or administrative agency) which in any way limits or conflicts with its ability to execute and deliver this Agreement and to fulfill any of its obligations under this Agreement;

9.2.9it has no knowledge of any information relating to any communications with any Governmental Authority, which would reasonably be expected to materially impair, restrict, prohibit or affect BI’s ability to perform its obligations and enjoy the benefits of this Agreement;

9.2.10neither BI nor any of its personnel (a) have been debarred under the 21 U.S.C. § 335a, (b) are excluded, debarred, suspended, or otherwise ineligible to participate in the federal health care programs or in Federal procurement or nonprocurement programs, (c) are convicted of a criminal offense that falls within the ambit of the federal statute providing for mandatory exclusion from participation in federal health care programs but has not yet been excluded, debarred, suspended, or otherwise declared ineligible to participate in those programs, (d) are listed on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (e) are listed on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov). If, during the Term, BI or any of its personnel become or are the subject of a proceeding that could lead to, as applicable, (i) debarment under 21 U.S.C. § 335a, (ii) exclusion, debarment, suspension or ineligibility to participate in the federal health care programs or in Federal procurement or nonprocurement programs, (iii) convicted (or conviction) of a criminal offense that falls within the ambit of the federal statute providing for mandatory exclusion from participation in federal healthcare programs, (iv) listed (or listing) on the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at http://oig.hhs.gov) or (v) listed (or listing) on the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at hhtp://epls.arnet.gov), BI shall immediately notify G1, and G1 shall have the option to prohibit such Person from performing work under this Agreement.

9.3Disclaimer of Warranty. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 4.3.7, SECTION 9.1, AND SECTION 9.2, G1 (AND ITS AFFILIATES) AND BI (AND ITS AFFILIATES) MAKE NO REPRESENTATIONS AND NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND G1 (AND ITS AFFILIATES) AND BI (AND ITS AFFILIATES) EACH SPECIFICALLY DISCLAIM ANY OTHER REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN OR ORAL, EXPRESS, STATUTORY OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR 

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PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY INTELLECTUAL PROPERTY OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

Article 10 
INDEMNIFICATION; LIMITATIONS ON LIABILITY

10.1Indemnification by G1. G1 shall defend, indemnify and hold harmless BI and its Affiliates and its and their respective officers, directors, employees, agents, representatives, successors and assigns from and against Third Party Claims, to the extent incurred or suffered by any of them to the extent resulting from or arising out of (a) any misrepresentation or breach of any representations, warranties, agreements or covenants of G1 under this Agreement, (b) negligence, willful misconduct or violation of Applicable Laws by G1 (or any of its Affiliates or its or their respective officers, directors, employees, agents or representatives), (c) the misappropriation or infringement of the intellectual property rights of any Third Party in connection with the Product, including from the use of the G1 Trademarks and Copyrights on Product Labeling or Product Materials in accordance with this Agreement, or (d) the Development and Commercialization of the Product by or on behalf of G1, its Affiliates and any of their respective licensees, including the death or personal injury to any person related to use of the Product; except in each case to the extent any such Claims, and all associated Losses, are caused by an item for which BI is obligated to indemnify G1 pursuant to Section 10.2.

10.2Indemnification by BI. BI shall defend, indemnify and hold harmless G1 and its Affiliates and its and their respective officers, directors, employees, agents, representatives, successors and assigns from and against all Third Party Claims, to the extent incurred or suffered by any of them to the extent resulting from or arising out of (a) any misrepresentation or breach of any representations, warranties, agreements or covenants of BI under this Agreement, (b) negligence, willful misconduct, or violation of Applicable Laws by BI (or any of its Affiliates or its and their respective officers, directors, employees, agents or representatives) (c) any off-label Promotion Services by BI related to the Product (except for Promotion Services expressly required under the Promotion Plan) , (d) the misappropriation or infringement of the intellectual property rights of any Third Party in connection with BI’s performance of the Promotion Services, or (e) labor disputes, Equal Employment Opportunity Commission charges or employment-related claims arising from or related to BI’s employees; except in each case to the extent any such Claims, and all associated Losses, are caused by an item for which G1 is obligated to indemnify BI pursuant to Section 10.1. 

10.3Indemnification Procedures. The Party seeking indemnification under Section 10.1 or 10.2, as applicable (the “Indemnified Party”) shall give prompt notice to the Party against whom indemnity is sought (the “Indemnifying Party”) of the assertion or commencement of any Claim in respect of which indemnity may be sought under Section 10.1 or 10.2, as applicable, and shall provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to give such notice shall relieve the Indemnifying Party of any liability hereunder only to the extent that the Indemnifying Party has suffered actual prejudice thereby. The Indemnifying Party shall assume and control the defense and settlement of any such action, suit or proceeding at its own expense; provided, however, if the Indemnified Party is G1, it shall assume and control the defense and settlement of any such action, suit or proceeding. The Indemnified Party shall, if requested by the Indemnifying Party, cooperate in all reasonable respects in such defense, at the Indemnifying Party’s expense. The Indemnified Party shall be entitled at its own expense to participate in such defense and to employ separate counsel for such purpose. For so long as the Indemnifying Party is diligently defending any proceeding pursuant to this Section 10.3, the Indemnifying Party shall not be liable under Section 10.1 or 10.2, as applicable, for any settlement effected without its consent. No Party shall enter into any compromise or settlement which commits the other Party to take, or to forbear to take, any action without 

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the other Party’s prior written consent (unless such compromise or settlement includes no payments by the Indemnified Party, an unconditional release of, and no admission of liability by, the Indemnified Party from all liability in respect of such Claim).

10.4Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN (OTHER THAN AS SET FORTH IN THE SECOND SENTENCE OF THIS SECTION 10.4), IN NO EVENT SHALL G1 (OR ITS AFFILIATES) OR BI (OR ITS AFFILIATES) BE LIABLE TO THE OTHER OR ANY OF THE OTHER PARTY’S AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING LOST PROFITS) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING SENTENCE SHALL NOT LIMIT (1) THE OBLIGATIONS [***], OR (2) DAMAGES AVAILABLE FOR A PARTY’S BREACH OF [***] AND THE [***].

10.5Insurance. Without limiting its indemnification obligations under this Agreement, the Parties agree to maintain in effect at all times during the Term, at each Party’s sole expense, the following minimum insurance coverage: (a) Statutory Workers’ Compensation, and Employer’s Liability Insurance in an amount of not less than [***] per accident; (b) Commercial General Liability Insurance in an amount of not less than [***] per occurrence and [***] annual aggregate; and (c) for any automobiles used in connection with the performance of Promotion Services, Commercial Automobile Liability Insurance with a combined single limit for bodily injury and property damage for the sum of not less than [***] each accident. Additionally, G1 shall maintain Products Liability Insurance in an amount of not less than [***] per claim in which policy BI shall be named as an additional insured. All certificate holders be given at least [***] prior written notice of any cancellation, non-renewal or termination of any of the above insurance policies.  All of the foregoing coverage shall be provided by an insurance company that is duly licensed and has a minimum A.M. Best rating of A-VIII. 

Article 11 
TERM AND TERMINATION

11.1Term. This Agreement shall become effective as of the Effective Date and, unless earlier terminated as provided in this ARTICLE 11, will terminate on the third (3rd) anniversary of the First Commercial Sale (the “Term”), provided that the Parties may mutually agree in writing to extend the Term pursuant to Section 12.8.

11.2Early Termination. A Party shall have the right to terminate this Agreement before the end of the Term as follows:

11.2.1by a Party upon written notice to the other Party in the event of a material breach of this Agreement by such other Party where such breach is not cured (if able to be cured) [***] following such other Party’s receipt of written notice of such breach (and any such termination shall become effective at the end of such [***] period unless the breaching Party has cured such breach prior to the expiration of such [***] period);

11.2.2by either Party upon written notice to the other Party if the Product has not obtained Regulatory Approval from the FDA by September 30, 2021;

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11.2.3by either Party upon [***] written notice to the other Party following the withdrawal of the Product from the market by G1 (or the decision by G1 to withdraw the Product from the market) due to (a) any decision, judgment, ruling or other requirement of the FDA, or (b) material safety concern;

11.2.4by BI for convenience (for any reason or no reason), upon [***] prior written notice to G1, which notice may only be given after the [***] of the [***] of the Product in the Territory such that the effective date of termination may not occur prior to the [***] of the [***] of the Product in the Territory;

11.2.5by BI at its sole discretion upon [***] written notice to G1 in the event of a Change of Control of G1;  

11.2.6by BI at its sole discretion upon written notice to G1 if the First Commercial Sale has not occurred by September 30, 2021; 

11.2.7by G1 for convenience (for any reason or no reason), upon [***] prior written notice to BI given any time after the Effective Date; 

11.2.8by G1 upon written notice to BI if G1 receives feedback from a Regulatory Authority that G1 reasonably believes, in good faith, indicates that FDA is unlikely to approve the NDA, which NDA was submitted to the FDA in June 2020; and

11.2.9by a Party immediately upon written notice to the other Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings with respect to such other Party, or upon an assignment of a substantial portion of the assets for the benefit of creditors by such other Party, or in the event a receiver or custodian is appointed for such other Party’s business or a substantial portion of such other Party’s business is subject to attachment or similar process; provided, however, in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within [***] after the filing thereof.

11.3Effects of Termination. 

11.3.1Cessation of Use and Return of Materials. Upon the expiration or effective date of termination of this Agreement, (a) all rights and obligations of both Parties hereunder shall immediately terminate, subject to any survival as set forth in Section 11.3.5, (b) BI, at G1’s direction, shall immediately return to G1 or destroy in accordance with all Applicable Laws all Product Materials, reports and other tangible items provided by or on behalf of G1 to BI or otherwise developed or obtained by BI pursuant to the terms of this Agreement (other than BI Property) (and at the request of G1, BI shall certify destruction of such materials if BI does not to return such materials to G1), (c) BI shall immediately cease all Promotion Services with respect to the Product, and (d) each of G1 and BI shall, at the other Party’s direction, either return to such other Party or destroy all Confidential Information of such other Party. 

11.3.2Limited Right to Retain Confidential Information. Notwithstanding the foregoing, each Party may retain archival copies of any Confidential Information to the extent required by law, regulation or professional standards or copies of Confidential Information created pursuant to the automatic backing-up of electronic files where the delivery or destruction of such files would cause undue hardship to the receiving Party, so long as any such archival or electronic file back-up copies are 

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accessible only to its legal or IT personnel, provided that such Confidential Information shall continue to be subject to the terms of this Agreement.  

11.3.3Sales Payments. Upon any termination or expiration of this Agreement, G1 shall pay BI a pro-rated Sales Payment for sales achieved as of such effective date of termination, at the percentage of Annual SCLC Net Sales applicable for such Contract Year (including a pro-rated Annual Floor payment if applicable). 

11.3.4Other Payment Obligations Upon Termination. Notwithstanding Section 11.3.3: 

(a)if this Agreement is (i) terminated by G1 for convenience pursuant to Section 11.2.7, or (ii) terminated by BI in the event of a Change of Control of G1 pursuant to Section 11.2.5 that occurs [***], then, in each case ((i) and (ii)), G1’s Annual Floor obligations will end on the effective date of such termination but G1 will pay BI: (A) [***] of the remaining Sales Payments actually achieved during the [***] if such termination notice is provided during the [***] of the Term or (B) [***] of the remaining Sales Payments actually achieved during the [***] if such termination notice is provided after the [***] of the Term; and 

(b)if this Agreement is terminated for any reason other than the reasons set forth in Section 11.3.4(a)(i) and Section 11.3.4(a)(ii), then G1’s Annual Floor obligations will end on the effective date of such termination and G1 will have no further payment obligations that accrue following such effective date of termination; provided that this Section 11.3.4(b) shall not be construed to limit the amount of damages available to either Party in the event that this Agreement is terminated by a Party for any material breach by the other Party pursuant to Section 11.2.1. 

11.3.5Survival. Termination or expiration of this Agreement shall be without prejudice to any rights that shall have accrued to the benefit of any Party prior to such termination or expiration. Notwithstanding any expiration or termination of this Agreement, such expiration or termination shall not relieve any Party from obligations which are expressly or by implication intended to survive expiration or termination, including Sections 2.3, 4.4.2, 5.7, 5.9, 10.1, 10.2, 10.3, 10.4, 11.3 and, Articles 7, 8 and 12 (to the extent applicable to implementation of the survival of the preceding Sections and Articles). 

11.3.6Transition Plan.  [***] prior to the expiration of this Agreement, each Party shall nominate a transition manager, and the transition managers will work together in good faith to develop a transition plan that facilitates an organized transition of activities performed by BI hereunder to G1 (the “Transition Plan”), which Transition Plan shall include the introduction of key customers to G1 and an orientation briefing on customers and accounts by the Oncology Sales Consultants in the Territory. [***] prior to the expiration of this Agreement, the transition managers will submit the Transition Plan to the JPC for approval.  [***] prior to the expiration of this Agreement, the Parties will reasonably cooperate to begin implementing the Transition Plan.

Article 12 
MISCELLANEOUS

12.1Force Majeure. Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement (other than any failure to make payments owed under this Agreement) to the extent such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, potentially including, embargoes, war, acts of war (whether war be declared or not), acts of terrorism, insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, or other 

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acts of God, or acts, omissions or delays in acting by any Governmental Authority. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practicable, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances and re-commence its performance hereunder as soon as practicable.

12.2Assignment. Except as provided in this Section 12.2, this Agreement may not be assigned or otherwise transferred, nor may any rights or obligations hereunder be assigned or transferred, by either Party, without the written consent of the other Party (such consent not to be unreasonably withheld); provided that a merger, sale of stock or comparable transaction shall not constitute an assignment. In the event either Party desires to make such an assignment or other transfer of this Agreement or any rights or obligations hereunder, such Party shall deliver a written notice to the other Party requesting the other Party’s written consent in accordance with this Section 12.2, and the other Party shall provide such Party written notice of its determination whether to provide such written consent within [***] following its receipt of such written notice from such Party. Notwithstanding the foregoing, (a) either Party may, without the other Party’s consent, assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate; and (b) G1 may assign this Agreement to a successor in interest in connection with the sale or other transfer of all or substantially all of such Party’s assets or rights relating to the Product; provided that such assignee shall remain subject to all of the terms and conditions hereof in all respects and shall assume all obligations of G1 hereunder whether accruing before or after such assignment. Any permitted assignee shall assume all assigned obligations of its assignor under this Agreement. Any attempted assignment not in accordance with this Section 12.2 shall be void. This Agreement shall be binding on, and inure to the benefit of, each Party, and its permitted successors and assigns.

12.3Severability. If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties. The Parties shall in such an instance use reasonable efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

12.4Notices. All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by e-mail (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier, or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

	
 
	
if to G1, to:
	

G1 Therapeutics, Inc.

700 Park Offices Drive

Suite 200 

Research Triangle Park, NC 27709
Attention: Chief Business Officer
E-Mail: [***]

With a copy to:

G1 Therapeutics, Inc.

700 Park Offices Drive

Suite 200 

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Research Triangle Park, NC 27709
Attention: General Counsel
E-Mail: [***]

 

	
 
	
if to BI, to:
	
Boehringer Ingelheim Pharmaceuticals, Inc. 

900 Ridgebury Road, 

Ridgefield, CT 06877
Attention: Senior Vice President of Specialty Care

E-mail: [***]

With a copy to:

Boehringer Ingelheim Pharmaceuticals, Inc. 

900 Ridgebury Road, 

Ridgefield, CT 06877
Attention: General Counsel

Email: [***]

or to such other address(es) as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice shall be deemed to have been given: (a) when delivered if personally delivered; (b) on the Business Day after dispatch if sent by nationally-recognized overnight courier; or (c) on the fifth (5th) Business Day following the date of mailing, if sent by mail.

12.5Governing Law. This Agreement and any and all matters arising directly or indirectly herefrom shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware applicable to agreements made and to be performed entirely in such state, including its statutes of limitation but without giving effect to the conflict of law principles thereof.

12.6Dispute Resolution. If a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith that (a) is expressly reserved for resolution pursuant to this Section 12.6 or (b) is outside of the decision-making authority of the JPC pursuant to Section 3.4 (a “Dispute”), then the Dispute shall be submitted to and finally settled by binding arbitration by JAMS under its Comprehensive Arbitration Rules and Procedures. A Dispute settled by an arbitrator shall be conducted by [***] arbitrators, each having ten years of experience in the pharmaceutical industry and also shall have served as an arbitrator at least three times prior to their service as an arbitrator in this arbitration. Within [***] of commencement of an arbitration each Party shall select [***] arbitrator and together select a [***] arbitrator who shall serve as a neutral arbitrator. The [***] designated arbitrators shall select a [***] neutral arbitrator within [***] of their selection if the Parties cannot agree on the [***] arbitrator. If the [***] arbitrators cannot agree on selection of a [***] arbitrator within [***] of their appointment, JAMS shall do so in accordance with its rules. The fees of the arbitrator(s) and JAMS shall be paid by the losing Party, which shall be designated by the arbitrator(s). If the arbitrator(s) is unable to designate a losing Party, it shall so state and the fees shall be split equally by the Parties. The arbitrator(s) is hereby empowered to award any monetary remedy allowed by Applicable Law, including money damages, prejudgment interest and attorneys’ fees, and to grant final, complete, interim or interlocutor relief, provided the arbitrator(s) shall not be permitted to award any equitable remedies, including injunctive relief. Notwithstanding any provision of this Agreement to the contrary, the Parties reserve the right to (a) pursue actions of equitable remedies, including injunctive relief, exclusively in the federal and state courts located in Wilmington, Delaware, including actions for the purposes of an order to compel arbitration, for preliminary relief in aid of 

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arbitration and for a injunctive or equitable relief to maintain the status quo or prevent irreparable harm prior to the appointment of the arbitrators, and (b) to pursue actions for the enforcement of any monetary remedy issued pursuant to this Section 12.6 in any court of competent jurisdiction in the Territory.

12.7Entire Agreement; Amendments. This Agreement, together with the Schedules hereto, contains the entire understanding of the Parties with respect to the subject matter hereof. Any other express or implied agreements and understandings, negotiations, writings and commitments, either oral or written, in respect to the subject matter hereof (including the Confidentiality Agreements, but solely with respect to information which is deemed Confidential Information hereunder) are superseded by the terms of this Agreement. The Schedules to this Agreement are incorporated herein by reference and shall be deemed a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representative(s) of both Parties hereto.

12.8Headings. The captions to the several Articles, Sections and subsections hereof are not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Articles and Sections hereof.

12.9Independent Contractors. It is expressly agreed that BI and G1 shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither BI nor G1 shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

12.10Third Party Beneficiaries. Except as set forth in ARTICLE 10, no Person other than G1 and BI (and their respective Affiliates and permitted successors and assignees hereunder) shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

12.11Waiver. The waiver by either Party hereto of any right hereunder, or of any failure of the other Party to perform, or of any breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach by or failure of such other Party whether of a similar nature or otherwise.

12.12Cumulative Remedies. No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

12.13Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

12.14Use of Names. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name, trademark or logo of the other Party for any purpose in connection with the performance of this Agreement.

12.15Further Actions and Documents. Each Party agrees to execute, acknowledge and deliver all such further instruments, and to do all such further acts, as may be reasonably necessary or appropriate to carry out the intent and purposes of this Agreement.

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12.16Certain Conventions. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, or Schedule shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, or Schedule, of or to, as the case may be, this Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa, (d) whenever any provision of this Agreement uses the term “including” (or “includes”), such term shall be deemed to mean “including without limitation” (or “includes without limitations”), and (e) references to any Articles or Sections include Sections and subsections that are part of the references’ Article or Section (e.g., a section numbered “Section 2.2.1” would be part of “Section 2.2”, and references to “ARTICLE 2” or “Section 2.2” would refer to material contained in the subsection described as “Section 2.2.1”).

12.17Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile or electronic mail (including pdf) and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes and shall have the same force and effect as original signatures.

[signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

G1 THERAPEUTICS, INC.

By:  /s/ Mark Velleca

Name:  Mark Velleca
Title:  Chief Executive Officer

 

 

BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.

By: /s/ Jean-Michel Boers

Name: Jean-Michel Boers
Title: President

BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.

By:  /s/ Sheila Denton

Name: Sheila Denton
Title: General Counsel

 

 

 

[Signature Page to Co-Promotion Agreement]

 

All exhibits and schedules referred to in this Agreement have been omitted.  Copies of any omitted exhibit or schedule will be provided to the U.S. Securities and Exchange Commission upon request.

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