|
Delaware
(State or other jurisdiction of incorporation or organization) |
| |
3829
(Primary Standard Industrial Classification Code Number) |
| |
45-4524096
(I.R.S. Employer Identification Number) |
|
|
Mark J. Macenka
Michael J. Minahan Goodwin Procter LLP 100 Northern Ave. Boston, MA 02210 (617) 570-1000 |
| |
Eric Blanchard
Darren DeStefano Brent Siler Cooley LLP 55 Hudson Yards New York, NY 10001 (212) 479-6000 |
|
|
Large Accelerated Filer
☐
|
| |
Accelerated Filer
☐
|
|
|
Non-Accelerated Filer
☒
|
| |
Smaller Reporting Company
☒
|
|
| | | |
Emerging Growth Company
☒
|
|
| | ||||||||||||||||||||||||||||
Title of each Class of
Securities to be Registered |
| | |
Shares to be
Registered |
| | |
Proposed Maximum
Aggregate Offering Price Per Share(1) |
| | |
Maximum
Aggregate Offering Price(1) |
| | |
Amount of
Registration Fee(2) |
| ||||||||||||
Common Stock, par value $0.001 per share
|
| | | | | 7,187,500 | | | | | | $ | 17.00 | | | | | | $ | 122,187,500 | | | | | | $ | 13,331 | | |
| | |
Amount
to be Paid |
| |||
SEC registration fee
|
| | | $ | 13,331 | | |
FINRA filing fee
|
| | | | 18,829 | | |
Nasdaq Global Market listing fee
|
| | | | 150,000 | | |
Printing and mailing
|
| | | | 165,000 | | |
Legal fees and expenses
|
| | | | 1,200,000 | | |
Accounting fees and expenses
|
| | | | 1,060,000 | | |
Transfer agent and registrar fees and expenses
|
| | | | 5,000 | | |
Miscellaneous
|
| | | | 87,840 | | |
Total
|
| | | $ | 2,700,000 | | |
EXHIBIT
NUMBER |
| |
EXHIBIT TABLE
|
|
10.12*** | | | Lease by Harbor Industrial Development LLC to the Registrant, dated January 2, 2018, as amended | |
10.13*** | | | 2020 Employee Stock Purchase Plan | |
10.14*** | | | Senior Executive Cash Incentive Bonus Plan | |
21.1*** | | | Subsidiaries of the Registrant | |
23.1*** | | | | |
23.2*** | | | Consent of Goodwin Procter LLP (included in Exhibit 5.1) | |
24.1*** | | | Power of Attorney (included on signature page to the registration statement dated November 25, 2020) | |
|
Signature
|
| |
Title
|
|
|
/s/ Kevin J. Knopp, Ph.D.
Kevin J. Knopp, Ph.D.
|
| |
Chief Executive Officer and Director
(Principal Executive Officer) |
|
|
/s/ Joseph H. Griffith IV
Joseph H. Griffith IV
|
| |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
|
*
Nicolas Barthelemy
|
| |
Director
|
|
|
*
Keith L. Crandell
|
| |
Director
|
|
|
*
E. Kevin Hrusovsky
|
| |
Director
|
|
|
*
Sharon Kedar
|
| |
Director
|
|
|
*
J. Michael Ramsey, Ph.D.
|
| |
Director
|
|
|
*
Mark Spoto
|
| |
Director
|
|
|
*By:
/s/ Kevin J. Knopp, Ph.D.
Kevin J. Knopp, Ph.D.
Attorney-in-Fact |
| | | | | | |
Exhibit 10.6
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
AMENDED AND RESTATED
EXCLUSIVE LICENSE AGREEMENT
This Amended and Restated Exclusive License Agreement (the ‘‘Agreement”) is entered into as of this 20th day of May, 2015 (the “Restatement Effective Date”) between The University of North Carolina at Chapel Hill having an address at 100 Europa Drive, Suite 430, Chapel Hill, North Carolina, 27517 (“University”) and 908 Devices Inc., a corporation organized and existing under the laws of the State of Delaware having its principal office/place of business at 27 Drydock Ave., 7th Floor, Boston, MA 02210 (the “Licensee”).
WITNESSETH
WHEREAS, University owns and controls valuable inventions listed in Appendix A, including an invention jointly owned by the University of Arizona (“UA”) and University jointly own a valuable invention known as ‘‘Microfabricated Ionization Source,” University File No. 12-0142 and “A Microfabricated Ionizer Chip,” UA File No. 12-077 (“UNC-UA Invention”) (collectively “Invention” or “Inventions”); and
WHEREAS, the Inventions were developed by J. Michael Ramsey and others while employees, students, or postdoctoral fellows of University and Stanley Pau of UA; and
WHEREAS, University and UA have entered into an inter-institutional agreement effective June 6, 2012 wherein UA has granted University an exclusive license, with the right to sublicense, to its rights in UNC-UA Invention for the sole purpose of University entering into this agreement with Licensee and the exclusive right to manage patenting and licensing of UNC-UA Invention; and
WHEREAS, University exclusively controls all right, title and interest in the Invention and the Patent Rights and Copyrights; and
WHEREAS, University desired to license its rights in the Invention in a manner that will benefit the public and best facilitate the distribution of useful products and the utilization of new processes; and
WHEREAS, Licensee is a University start-up company and has at least one University faculty member as a founder; and
WHEREAS, Licensee has submitted a development plan indicating Licensee’s strategies to develop and commercialize the technology and University has determined, based upon such business plan, that granting a license to its rights in the Invention to Licensee will benefit the public and best facilitate the distribution of useful products and the utilization of new processes; and
WHEREAS, Licensee and University entered into an Exclusive License Agreement dated June 6, 2012, which was amended by Amendment No. 1 to Exclusive License Agreement with an effective date of April 23, 2013, and by Amendment No. 2 to Exclusive License Agreement dated August 12, 2014 (as so amended, the “Original Agreement”);
1
WHEREAS, Licensee and University desire to amend and restate the Original Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual promises and covenants contained in this Agreement and for good and valuable consideration, including the payment by Licensee to University of an Option Fee in the amount of $30,000.00 upon execution of this Agreement, it is agreed by and between University and Licensee as follows:
ARTICLE 1: DEFINITIONS
1.1 “Affiliate” means every entity, which directly or indirectly, or through one or more intermediaries, controls, is controlled by, or is under common control with Licensee. An entity is deemed to be in control of another corporation or entity if (a) it owns or directly or indirectly controls at least 50% of the voting stock of the other corporation or (b) in the absence of ownership of at least 50% of the voting stock of a corporation, or in the case of a non-corporate entity, if it possesses directly or indirectly, the power to direct or cause the direction of the management and policies of such entity.
1.2 “Combination Product” means any product that is comprised of a combination of (i) a Licensed Product and (ii) any active ingredient(s), device(s), delivery system(s) or other technology(ies) for which rights are not included in the License but, with respect to the item(s) in (ii), which may each or collectively form the basis for a separately saleable product.
1.3 “Compulsory Royalty” shall have the meaning set forth in Section 3.9.
1.4 “Confidential Information” means any information disclosed by one party to the other party which is identified as confidential at the time of disclosure, including information consisting of data; research results; technology; software; materials; patents; copyrighted works; know-how; business or product plans; marketing, sales or other financial information; Progress Reports; Royalty Reports; and Improvements.
1.5 “Copyrights” means any software, computer programs, documentation, algorithms, or other materials subject to copyright protection included in the Invention and listed in Appendix A, which shall be amended from time to time to indicate the then current Copyrights.
1.6 “Equity Securities” means any capital shares of Licensee (including without limitation common and preferred shares), and any securities of Licensee that are convertible into any capital shares of Licensee.
1.7 “Exchange Consideration” shall have the meaning set forth in Section 3.6.
1.8 “Existing Patent Rights” means Patent Rights that claim or cover the Inventions listed in Appendix A as of the Restatement Effective Date, including patent applications that claim or cover such Inventions that may be prepared and filed after the Restatement Effective Date, provided that with respect to Inventions listed in Appendix A labeled “none pending,” the foregoing applies only to the extent that University owns or controls such rights.
2
1.9 “Fully Diluted Basis” means all of Licensee’s Equity Securities either outstanding or reserved for issuance, assuming the exercise of all options, warrants and other convertible securities and the conversion of all preferred stock and convertible debt instruments and assuming the grant of all shares reserved under any equity incentive or similar plans.
1.10 “Improvement” means any and all inventions either:
(i) relating to microscale mass spectrometry made on or prior to June 6, 2015 that (1) are not Patent Rights or Copyrights, (2) were conceived of or reduced to practice at University in the laboratory of J. Michael Ramsey, (3) have been disclosed to University’s Office of Technology Development, and (4) are not obligated to any third party under a separate agreement,
OR
(ii) arising out of research sponsored by Licensee in the laboratory of J. Michael Ramsey and disclosed to University’s Office of Technology Development.
1.1l “Invention” means inventions listed in Appendix A,
1.12 “Joint Inventions” means inventions that are made jointly by University and Licensee or any of their respective officers, employees, contractors or students.
1.13 “Licensed Field” means, and is limited to, the practice of the Invention and any Improvements for chemical and biochemical analysis.
1.14 “Licensed Products” means any method or process, composition, product, or component part thereof covered in whole or in part by a Valid Claim within the Patent Rights or covered by the Copyrights.
(i) MMS Licensed Products means a Licensed Product covered by Valid Claims of Patent Rights for use in micro mass spectrometry and designated as such in Appendix A and B
(ii) LPS Licensed Products means a Licensed Product covered by Valid Claims of Patent Rights for use in liquid phase separation and designated as such in Appendix A and B
1.15 “Licensed Territory” means the entire world.
1.16 “Limited Licensed Field” means, and is limited to, the practice of the Invention for chemical and biochemical analysis.
1.17 “Limited Patent Rights” shall be identified in Appendices A and B under the respective “Patent Rights” headings as that subset of Patent Rights for which the license granted is limited to Section 2.1 (iii). Patent prosecution expenses will be shared pro rata with all non-exclusive licensees.
1.18 “Net Sales” means the total invoiced sales price for Licensed Products sold by Licensee or an Affiliate to customers, wholesalers, distributors and other third parties less (i) sales taxes or other taxes (other than income taxes), (ii) shipping and insurance charges, (iii) actual allowances for returned or defective goods and (iv) trade discounts, but not cash discounts. Licensed Products will be considered sold when billed out, when delivered or when paid for before delivery, whichever first occurs. Notwithstanding the foregoing, Net Sales shall not include, and shall be deemed zero with respect to, (i) the distribution of reasonable quantities of promotional samples of Licensed Products, (ii) Licensed Products provided for clinical trials, research purposes, or charitable or compassionate use purposes.
3
1.19 “Option” means the option granted under Section 2.4 of this Agreement.
1.20 “Option Fee” means ten thousand dollars ($10,000).
1.21 “Option Period” means the period of ninety (90) days after Licensee’s receipt of written notification of an Improvement from University’s Office of Technology Development.
1.22 “Option Term” means three (3) years after the Original Effective Date which shall be automatically extended so long as Licensee sponsors research in the laboratory of J. Michael Ramsey.
1.23 “Original Effective Date” means June 6. 2012.
1.24 “Patent Rights” means (i) any United States, foreign or international patents and/or patent applications covering the Invention (or its use or manufacture) owned or controlled by University as of the Original Effective Date or during the term of this Agreement, (ii) any continuations, divisionals, provisionals, continued prosecution applications, substitutions, extensions and term restorations, registrations, confirmations, re-examinations, renewals, or reissues of any of the foregoing, (iii) any foreign counterpart of any of the foregoing, and (iv) continuations-in-part and any foreign counterpart thereof, to the extent any continuations-in-part claim technology is an Improvement and would be incorporated into the Patent Rights pursuant to Section 2.4 but for the limitation included in Section 1.10(i)(l). Patent Rights as of the Restatement Effective Date are listed in Appendix B, which is incorporated herein and shall be amended from time to time to include Existing Patent Rights and the then current Patent Rights.
1.25 “Progress Report” means a written report summarizing Licensee’s material technical and other efforts made towards first commercial sale for all Licensed Products under development. Such reports shall include, without limitation, reasonably detailed summaries of (i) development and commercialization of Licensed Products, (ii) collaborations with third parties and sublicensing efforts, (iii) progress toward completing milestones described on Appendix C, (iv) key management changes and total number of employees, (v) Licensee’s finances, (vi) scientific and business goals for the next year, (vii) summary of any payments due under Article 3, and (viii) any other company information which may materially impact Licensee’s ability to develop Licensed Product.
1.26 “Royalty Report” means a written report detailing the number, description, aggregate selling prices, and Net Sales of Licensed Products (and a listing of the relevant Patent Rights and Copyrights where the Licensed Product is covered by less than all of the Patent Rights or Copyrights) sold or otherwise disposed of in each calendar quarter upon which royalty is payable, the amount of Sublicensing Royalty Revenue received during each calendar quarter, and the royalty payment amounts due under Article 3.
4
1.27 “Sublicensee” means any third party to whom rights are granted by Licensee (or an Affiliate) with respect to the Patent Rights or Copyrights. “Sublicensee” shall also include any third party to whom such rights are granted through further sublicense by a Sublicensee.
1.28 “Sublicensing Revenue” means any consideration actually received by Licensee or an Affiliate from a third party as consideration for the grant of rights to Patent Rights or Copyrights (net of any tax or similar withholding obligations imposed by any tax or other government authority(ies) that are not reasonably recoverable by Licensee). Sublicensing Revenue includes, but is not limited to, upfront fees, license maintenance fees, and milestone payments, or other payments, including the fair market value of any non-cash consideration, received by Licensee in consideration for any rights granted to Patent Rights or Copyrights under a sublicense agreement, and excludes (i) Sublicensing Royalty Revenue, (ii) purchases of equity or debt of Licensee or any Affiliate, (iii) fair market value payments made in connection with research and development agreements, joint ventures, partnerships or collaboration agreements where Licensee or an Affiliate is obligated to perform research, development or commercialization of any Licensed Product(s), (iv) the grant to Licensee of intellectual property rights related to the technology described in the Patent Rights or Copyrights, and (v) other payments made by a Sublicensee as consideration for Licensee’s or an Affiliate’s performance of services or provision of goods, provided such services or goods are not Licensed Products or, if such services or goods are Licensed Products, (a) the provision of such services or goods results in Net Sales pursuant to which a royalty is payable under Section 3.4 or (b) the provision of such services or goods constitutes one or more of the following: (1) the distribution of reasonable quantities of promotional samples of Licensed Products or (2) the provision of Licensed Products for clinical trials, research purposes, or charitable or compassionate use purposes.
1.29 “Sublicensing Royalty Revenue” means sales-based royalties, sales milestone payments, other payments calculated on the basis of sales, and minimum sales royalties actually received by Licensee or its Affiliate from a third party as consideration for the grant of rights to Patent Rights or Copyrights (net of any tax or similar withholding obligations imposed by any tax or other government authority(ies) that are not reasonably recoverable by Licensee).
1.30 “Valid Claim” means an issued, unexpired, or pending claim contained within the Patent Rights.
1.31 Other Definitional Provisions.
(i) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, schedule and exhibit references are to this Agreement unless otherwise specified. The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. The term “including” is not limiting and means “including without limitation”.
(ii) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”
(iii) References to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement.
5
(iv) References to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
(v) The captions and headings of this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.
ARTICLE 2: GRANT OF LICENSE AND OPTION
2.1 License. University hereby grants to Licensee and its Affiliates:
(i) | an exclusive license under the Patent Rights (but excluding the Limited Patent Rights) to make, use, sell, have made, have sold, offer for sale and import Licensed Products in the Licensed Field and Licensed Territory, with the right to sublicense as set forth in Article 6, subject to all the terms and conditions of this Agreement; |
(ii) | an exclusive license under the Copyrights to use, distribute, translate, reproduce, transmit, perform, display, demonstrate, make derivatives or collective works of, modify, adapt, copy and otherwise exploit the Copyrights to create Licensed Products in the Licensed Field and Licensed Territory, with the right to sublicense as set forth in Article 6, subject to all the terms and conditions of this Agreement; |
(iii) | a co-exclusive license with no more than one other licensee under the Limited Patent Rights to make, use, sell, have made, have sold, offer for sale and import Licensed Products in the Limited Licensed Field and Licensed Territory with the right to sublicense as set forth in Article 6, subject to all the terms and conditions of this Agreement. |
2.2 Reservation of University Rights. University reserve the rights to practice under the Patent Rights and Copyrights for its own internal research, teaching and educational purposes, without payment of royalties, provided that the exercise of such reserved rights by University shall not (a) be for the benefit of any for-profit entity nor (b) include any human use or clinical administration without prior written approval from Licensee, such approval not to be unreasonably withheld. University shall also retain the right to permit other academic and nonprofit research institutions to practice under the Patent Rights and Copyrights for their own internal research, teaching and educational purposes, without payment of royalties, provided that the exercise of such reserved rights by such entities shall not (c) be for the benefit of any for-profit entity nor (d) include any human use or clinical administration.
2.3 Government Rights and Requirements. Notwithstanding anything hereunder, any and all licenses and other rights granted hereunder are limited by and subject to the rights and requirements of the United States Government which may arise out of its sponsorship of the research which led to the conception or reduction to practice of the Invention. The United States Government is entitled to the rights provided under the provisions of 35 U.S.C. §§ 200-212 and applicable regulations of Title 37 of the Code of Federal Regulations. Further Licensee agrees, as required by 35 U.S.C. § 204, that any Licensed Products used or sold in the United States shall be substantially manufactured in the United States.
6
2.4 Time-Limited Option to Improvements, To the extent that it is able to, University hereby grants Licensee an exclusive option to exclusively license University’s rights in Improvements for the period of the Option Term upon the terms and conditions set forth in this Section 2.4. University shall notify Licensee of Improvements within thirty (30) days of University’s Office of Technology Development receipt of invention disclosure describing such Improvements. Such option shall be in effect for each Improvement for the entire Option Period applicable to such Improvement. The Option Term can be extended by mutual agreement of the parties in a written amendment to this Agreement.
Licensee may exercise its option to exclusively license University’s rights in each such Improvement upon (i) written notice of such to University and (ii) payment to University in the amount of ten thousand dollars ($10,000) per each Improvement (“Option Fee”) within the Option Period. Within thirty (30) days of University’s receipt of the Option Fee, the parties shall execute a written amendment to this Agreement to include the optioned Improvement in the then current definition of Inventions and Patent Rights.
In the event Licensee does not exercise its option under this Section 2.4, Licensee shall have no rights, title or interest in such Improvement.
2.5 No Implied Rights. Licensee shall obtain no implied license rights to the Patent Rights or Copyrights. Any rights not expressly granted to Licensee shall be retained by University.
2.6 Technology Transfer. Promptly after the Effective Date, University will make available to Licensee data, materials, models and related information that embody or relate to the Invention and that would be reasonably useful for Licensee in the exercise of its rights hereunder. Licensee and University shall cooperate in good faith to facilitate this transfer of material and information, including without limitation, through meetings at the University or at other facilities as the parties may agree.
ARTICLE 3: CONSIDERATION
3.1 License Fee. As consideration for the License and Option granted under this Agreement, Licensee issued to the University 180,000 shares of common stock of Licensee within ninety (90) days of the Original Effective Date.
3.2 Patent Expenses Incurred Prior to Activating the License. Licensee shall bear the cost of all reasonable, documented patent expenses incurred prior to the Original Effective Date and during the Option Period associated with the preparation, filing, prosecuting, issuance and maintenance of all patent applications and patents included within the Patent Rights, and such amounts shall be due to University within thirty (30) days of the first anniversary of the Original Effective Date. The amount owed for patent expenses incurred prior to the Original Effective Date is estimated to be no greater than zero dollars ($0.00). Beginning on the Original Effective Date, the University shall send invoices to Licensee on a monthly basis; such invoices shall indicate the then current amount owed to University for patent expenses incurred prior to the date of such invoice.
3.3 Patent Expenses Incurred After Activation of the License. Licensee shall bear the cost of all reasonable, documented patent expenses incurred upon activation of the License, continuing for the life of this Agreement, and associated with the preparation, filing, prosecuting, issuance and maintenance of all patent applications and patents included within the Patent Rights. Said amounts for on-going patent expenses shall be paid to University within thirty (30) days of Licensee’s receipt of an invoice from University; such invoices shall be sent to Licensee on a monthly basis.
7
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
3.4 Earned Royalty. Beginning on the Original Effective Date and continuing for the life of this Agreement, Licensee shall pay University a running royalty, equal to the percentage of Net Sales indicated below, of all Licensed Products.
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
3.5 Annual License Maintenance Fee. Licensee shall pay an Annual License Maintenance Fee to University in the amount indicated in the Schedule below. Each such Annual License Maintenance Fee payment shall be fully creditable against any payments that would otherwise become due and payable under Section 3.4 or Section 3.6 during the same calendar year in respect of which such Annual License Maintenance Fee is due and payable.
Annual License Maintenance Fee Schedule
Years | Date Due | Amount | ||||
3rd complete calendar year following the Original Effective Date through the 5th complete calendar year following the Original Effective Date | Each March 15th beginning on March 15, 2015 and continuing through March 15, 2018 | $ | 15,000 | |||
6th complete calendar year following the Original Effective Date and each calendar year thereafter | Each March 15th beginning on March 15, 2018 and continuing throughout the term of this Agreement | $ | 30,000 |
3.6 Sublicense Fees. In respect to sublicenses granted by Licensee under Article 6
3.6.1 Licensee shall pay to University an amount equal to [***] of Sublicensing Revenue within 30 days of Licensee’s receipt of Sublicensing Revenue; and
3.6.2 Licensee shall pay to University an amount equal to [***] of Sublicensing Royalty Revenue provided that, notwithstanding the foregoing, the total payment due University under this Section 3.6.2 with respect to Sublicensing Royalty Revenue during any particular quarter shall not, in any event, exceed an amount equal to the royalties that would have been due to University with respect to the Licensed Products had Licensee itself sold such Licensed Product, based on such Sublicensee’s net sales of such Licensed (determined in a manner substantially similar to the manner in which Net Sales are determined under this Agreement for Licensee’s sales of Licensed Products) and calculated in a manner consistent with Sections 3.4, 3.7, 3.8, and 3.9. Any such payments shall be made concurrently with the submission of Royalty Reports as set forth in Section 4.2.
8
Licensee shall not sell or transfer to a third party Licensee’s interest in all or a portion of any future Sublicensing Revenue and/or Sublicensing Royalty Revenue under such sublicense agreement(s) in exchange for a single cash payment or series of cash payments (the “Exchange Consideration”) without the prior written approval of University, such approval not to be unreasonably withheld. In the event that University approves such sale or transfer, (a) the portion of any Exchange Consideration reasonably allocated by Licensee to the value of its interest in such future Sublicensing Revenue shall be treated as Sublicensing Revenue for purposes of this Section 3.6 and (b) the portion of any such Exchange Consideration reasonably allocated by Licensee to the value of its interest in such future Sublicensing Royalty Revenue shall be treated as Sublicensing Royalty Revenue for purposes of this Section 3.6. For the avoidance of doubt, to the extent Exchange Consideration has been allocated to the value of Licensee’s interest in future Sublicensing Revenue or Sublicensing Royalty Revenue, any such Sublicensing Revenue or Sublicensing Royalty Revenue shall thereafter not be included within the definitions of Sublicensing Revenue or Sublicensing Royalty Revenue originally established in Article 1.
3.7 Royalty Stacking. In the event that Licensee is required to pay royalties pursuant to one or more licenses to intellectual property rights entered into by Licensee for use in connection with the manufacture, use, or sale of any Licensed Product, or to avoid infringement-related litigation with respect to the practice of the Patent Rights, then Licensee may deduct an amount equal to fifty percent (50%) of such third party royalties from any royalty amounts due University hereunder, provided that in no event shall the royalties otherwise due University be less than fifty percent (50%) of the royalties that would be payable to University absent the effects of this Section 3.7.
3.8 Combination Product. If a Licensed Product is sold as part of a Combination Product, Net Sales shall be calculated by multiplying Net Sales for such Combination Product by the fraction A/(A+B) where A is the invoice price of the Licensed Product when sold separately, and B is the aggregate invoice price of the independent subproduct(s) in the combination when sold separately. If either the Licensed Product or the independent subproduct(s) is(are) not at that time sold separately, than the allocation of Net Sales shall be commercially reasonable and determined by good faith negotiation between University and Licensee, based on the relative value of the Licensed Product and independent subproduct(s), consistent with the formula provided above.
3.9 Compulsory Licensing. Should a compulsory license be granted, or be the subject of a possible grant, by Licensee or an Affiliate to a third party under the applicable laws, rules, regulations, guidelines, or other directives of any governmental or supranational agency in the Licensed Territory under the Patent Rights, Licensee shall notify University, including any material information concerning such compulsory license, and the running royalty rates payable under Section 3.4 for sales of Licensed Products in such country will be adjusted to equal any lower royalty rate granted to such third party for such country with respect to the sales of such Licensed Products therein (the “Compulsory Royalty”).
9
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
3.10 Inventions. As between the parties, inventorship of new inventions made after the Original Effective Date, including Improvements, shall be determined in accordance with U.S. law and ownership shall follow inventorship. All fees, royalties, and other payments due to University under this Agreement shall be made in United States Dollars. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made using the exchange rate published in the Wall Street Journal on the last business day of the calendar quarterly reporting period to which such royalty payments relate. If payments are made by check, check shall be made to “The University of North Carolina at Chapel Hill” and shall be sent to “License Administrator” at University mailing address pursuant to Section 13.6. If Licensee elects to make payments by wire, Licensee shall pay all fees associated with processing the wired payment and shall follow the wire instructions below:
Bank Name: | Bank of America, NA |
Address: | 100 West 33rd Street |
New York, NY 10001, USA | |
ABA Number: | [***] |
[***] | |
Account Number: | [***] |
Account Name: | UNC-CH Endowment, Trust & Special Funds |
Type of Account: | Depository |
Incoming Foreign Wires Should Include: | Swift (BIC) # BOFAUS3N |
Contact #: | 800-715-1000 ext 21598 |
Note: All incoming wires shall specify “The Office of Technology Development” and “UNC ref. No. 09-0096”.
3.11 In the event royalty payments or fees are not received by University when due, Licensee shall pay to University default interest on such unpaid amount at a rate equal to interest and charges at the lower of (a) the then-current prime lending rate as published by the American East Coast edition of the Wall Street Journal or (b) the maximum rate of interest allowed by law on the total royalties or fees overdue.
3.12 In the event of default in payment of any payment owing to University under the terms of this Agreement, and if it becomes necessary for University to undertake legal action to collect said payment, Licensee shall pay reasonable, documented legal fees and costs incurred by University in connection therewith.
ARTICLE 4 REPORTS AND RECORDS
4.1 Licensee shall submit a Progress Report to University on or before March 15th of each calendar year after the Original Effective Date and continuing throughout the life of this Agreement. Progress Reports are subject to the confidentiality obligations of Article 12.
4.2 Licensee shall submit Royalty Reports to University beginning the quarter during which the first commercial sale of Licensed Product is made and continuing throughout the life of this Agreement according to the following schedule:
10
Quarterly Royalty Report Schedule
Reporting Quarter | Report Due Date |
1st Quarter (January, February, March) | June 15th |
2nd Quarter (April, May, June) | September 15tb |
3rd Quarter (July, August, September) | December 15th |
4th Quarter (October, November, December) | March 15th (following year) |
Reports shall specify whether royalties are being remitted for MMS Licensed Products or LPS Licensed Products,
4.3 Licensee shall keep complete, true and accurate books of account and records for the purpose of showing the derivation of all amounts payable to University under this Agreement. Such books and records shall be kept at Licensee’s principal place of business during the term of this Agreement, and for three (3) years from the date of the last sale of Licensed Product, and shall be open at all reasonable times for inspection by a representative of University for the purpose of verifying Licensee’s royalty statements or Licensee’s compliance in other respects with this Agreement. The University representative shall be obliged to treat as confidential all relevant matters.
4.4 Inspections made under Section 4.3 shall be at the expense of University, unless an underpayment to University under this Agreement exceeding the greater of (i) five thousand dollars ($5,000) or (ii) five percent (5%) of the amount properly due with respect to the audited period is discovered in the course of any such inspection, whereupon all reasonable, documented costs relating thereto shall be paid by Licensee. Licensee shall promptly pay to University the full amount of any such underpayment, together with interest thereon as specified in Article 3.
ARTICLE 5: DUE DILIGENCE
5.1 Licensee must diligently pursue the development and commercialization of Licensed Products, which shall include production of Licensed Products for testing and development, governmental approval where applicable, and sale. The acts of Affiliates, Sublicensees, and third party contractors shall be deemed the acts of Licensee for purposes of satisfying this Section 5.1.
5.2 Licensee shall achieve the performance milestones set forth in Appendix C, which is incorporated herein, on the time frames indicated. The parties acknowledge that the dates or timelines outlined or established for the achievement of such milestones assume that product candidates do not encounter regulatory or other delays for reasons outside of Licensee’s reasonable control. Licensee and University shall negotiate in good faith the extension of these dates in the event that, despite the use by Licensee of commercially reasonable efforts, Licensee fails to achieve any stated milestones by the dates or timelines outlined or established therefore. Notwithstanding the foregoing, Licensee shall have the right to extend the deadline one time for each milestones set forth in Appendix C for a period of twelve additional months by written notice to University and upon payment of fifty thousand dollars ($50,000) thirty (30) days prior to the due date of such milestone. Such payment shall not be refundable nor creditable toward any other amounts owed by Licensee under this Agreement. University’s sole and exclusive remedy with respect to Licensee’s breach of this Article 5 shall be its right to terminate this Agreement in accordance with Section 7.3.
11
ARTICLE 6: SUBLICENSING
6.1 Licensee may sublicense any and all rights licensed hereunder, with such rights including the right to permit Sublicensees to further sublicense such rights. Licensee shall notify University in writing and provide University with a copy of each sublicense agreement entered into by Licensee granting Sublicensee rights to any and all rights licensed hereunder and each amendment thereto within thirty (30) days after its execution.
6.2 Licensee shall not grant sublicenses to the rights granted hereunder for no consideration or solely in exchange for the grant to Licensee of intellectual property rights unrelated to the technology described in the Patent Rights or Copyrights.
6.3 Licensee shall require that any agreement granting a third party rights to the Patent Rights or Copyrights:
(i) be consistent with the terms, conditions and limitations of this Agreement;
(ii) contain an acknowledgment by the Sublicensee of University’s disclaimer of warranty and limitation on University’s liability substantially similar to those provided by Article 10;
(iii) shall require Sublicensee to indemnify University with respect to such Sublicensee’s exercise of its rights under the Patent Rights or Copyrights in a manner substantially similar to the manner in which Licensee has agreed to indemnify University under Section 11.1;
(iv) comply with Sections 2.3, 13.11 and 13.12 of this Agreement.
If any sublicense agreement granting any rights to the Patent Rights or Copyrights does not comport with above requirements, then that agreement shall be invalid and unenforceable.
6.4 University agrees that, to the extent provided for in each sublicense granted under this Agreement and so long as such sublicense does not impose any obligations on University in excess of those imposed on University herein, all sublicenses granted with respect to the rights granted under this Agreement shall survive termination of this Agreement and will automatically be assigned to University upon such termination, in order to provide for the applicable Sublicensee’s continued enjoyment of its rights thereunder.
6.5 Licensee shall be responsible to University for the performance of its Sublicensees under each sublicense agreement granting rights to any Patent Rights or Copyrights.
12
6.6 After the third anniversary of the Original Effective Date, University shall provide written notice to Licensee of any request made by a third party to develop a product requiring use of the Patent Rights or Copyrights (a “Proposed Product”) within fifteen (15) days of receiving such request.
6.6.1 In the event that such Proposed Product has not been identified as under development in a Progress Report, then within thirty (30) days of receiving from or providing to University such written notice of a third party request for a sublicense, Licensee shall elect one of the following options:
(i) | Provide University with written notice in the form of a Progress Report that Licensee, Affiliate or Sublicensee of either of the foregoing has initiated commercially reasonable efforts to develop, make, use and sell a Licensed Product that is essentially the same as or would commercially compete with the Proposed Product; or |
(ii) | Provide University with written notice in the form of a Progress Report that Licensee, Affiliate or Sublicensee of either of the foregoing has plans to initiate commercially reasonable efforts, within eighteen (18) months of the date said written notice is due University, to develop, make, use and sell a Licensed Product that is essentially the same as or would commercially compete with the Proposed Product; or |
(iii) | Begin good faith negotiations with such third party to sublicense Licensee’s rights in the Patent Rights or Copyrights that are necessary or commercially justifiable for such third party to make, use and sell Proposed Product; or |
(iv) | Grant back to University limited rights in the Patent Rights under this Agreement for the sole purpose of allowing University to sublicense the Patent Rights or Copyrights that are necessary or commercially justifiable for such third party to make, use and sell Proposed Product. |
6.6.2 If Licensee elects to negotiate with prospective sublicensee for a sublicense to develop, make, use and sell the Proposed Product as provided for in Section 6.6.1 (iii), Licensee shall make a good faith effort to complete negotiations with the prospective sublicensee within one hundred and eighty (180) days from the date on which it began negotiations. For the purposes of this Section 6.6.2, Licensee shall have made a good faith effort to complete negotiations if it has offered a sublicense to the prospective sublicensee the terms of which include:
(i) | reasonable financial terms taking into account the field in which the sublicense is being offered and Licensee’s obligations to University pursuant to this Agreement, |
(ii) | minimum performance requirements which would not be unreasonably burdensome upon the prospective sublicensee, and |
(iii) | non-financial terms which are consistent with Licensee ‘s obligations to University under this Agreement. |
6.6.3 Within thirty days of the end of the one hundred and eighty (180) day negotiation period, Licensee shall:
(i) | provide University a copy of the fully executed sublicense with such third party, or |
(ii) | meet with University representatives and provide documentation of reasons that (a) Licensee and/or such third party chose not to proceed with good faith negotiation or (b) negotiations between Licensee and such third party failed. |
6.6.4 In the event that Licensee fails to make a good faith effort as required by Section 6.6.2 and such third party still desires to develop, make use and sell Proposed Product, Licensee shall immediately grant back to University limited rights in its rights in the Patent Rights or Copyrights under this Agreement for the sole purpose of University sublicensing such rights to the third party.
6.7 Upon reasonable request by University, Licensee shall meet with University and discuss in good faith an agreement to grant a third party a license to make, use and sell Licensed Product solely for use in the developing world (as defined by the World Bank); however, Licensee retains discretion regarding whether to grant any such license.
13
ARTICLE 7: TERM AND TERMINATION
7.1 Any license granted pursuant to Article 2 is exclusive for a term beginning on the Original Effective Date and, unless terminated sooner as herein provided, ending, on a country-by-country and Licensed Product-by-Licensed Product basis, at the expiration of the last to expire Valid Claim included in the Patent Rights covering a particular Licensed Product in a particular country or at the expiration of the Copyrights covering the relevant Licensed Product.
7.2 University may, by written notice to Licensee, terminate this Agreement during any April subsequent to the year 2015, if Licensee, its Affiliates, Sublicensees, or any contractors of any of the foregoing have not practiced the Invention during the calendar year which precedes such April.
7.3 It is expressly agreed that, notwithstanding the provisions of any other paragraph of this Agreement, if Licensee should materially breach this Agreement and fail to cure any such breach within ninety (90) days of receipt of written notice from University describing such breach, University has the right to terminate this Agreement. A material breach is a material violation of or material failure to keep or perform any covenant, condition, or undertaking of this Agreement, including, but not limited to Licensee’s:
(i) | failure to deliver to University any payment at the time or times that such payment is due to University under this Agreement, |
(ii) | failure to provide Progress Reports and Royalty Reports as set forth in Article 4, |
(iii) | failure to meet or achieve performance milestones as set forth in Appendix C, |
(iv) | execution of a sublicense that fails to comport with Section 6.3, |
(v) | failure to possess and failure to maintain insurance as set forth in Section 11.3, or |
(v) | failure to comply with the requirements of Article 3. |
7.4 Licensee may terminate this Agreement at any time upon giving written notice of not less than sixty (60) days to University.
7.5 Upon termination of this Agreement or upon termination in whole or in part;
(i) Licensee shall provide University with a written inventory of all Licensed Products in the possession or under the control of Licensee (including any in the process of manufacture). Except with respect to termination for uncured material breach pursuant to Section 7.3, Licensee shall have the privilege of disposing of the inventory of such Licensed Products within a period of one hundred and eighty (180) days of such termination upon conditions most favorable to University that Licensee can reasonably obtain.
(ii) Licensee shall also have the right to complete performance of all contracts requiring use of Patent Rights or Copyrights for sale of Licensed Products (except in the case of termination for uncured material breach pursuant to Section 7.3) or Licensed Products within and beyond said period of one hundred and eighty (180) days, provided that Licensee’s right to continue performance under any such contract shall not exceed one year. All Licensed Products in the possession or under the control of Licensee (including any in the process of manufacture) which are not disposed of as provided above shall, to the extent permitted by applicable law, be delivered to University or otherwise disposed of in compliance with all applicable laws, in University’s reasonable discretion, and at Licensee’s sole expense.
7.6 Any termination or cancellation under any provision of this Agreement shall not relieve Licensee of its obligation to pay any royalty or other fees (including attorney’s fees pursuant to Section 8.1 below) due to University at the time of such termination or cancellation.
14
ARTICLE 8: PATENT PROSECUTION AND MAINTENANCE
8.1 Patent filings and prosecution for all Patent Rights licensed hereunder to Licensee shall be by counsel of University’s choosing, subject to Licensee’s consent (such consent not to be unreasonably withheld) and shall be in the name of University, according to U.S. patent law. University and Licensee shall meet as needed with such patent counsel to determine and implement a strategy for the preparation, prosecution and maintenance of the Patent Rights, University and such patent counsel shall ensure that Licensee promptly receives copies of all correspondence, (including, but not limited to, applications, Office Actions, responses, etc.), minutes of any meetings or teleconference, and filings and submissions relating thereto upon receipt from applicable patent authorities and that Licensee shall have the right, and University shall provide Licensee a reasonable opportunity, to comment and advise University on the content of any materials submitted to patent authorities, provided, however, that University shall have the right to make the final decisions for all matters associated with such prosecution and maintenance.
8.2 Regarding prosecution and maintenance of foreign patent applications corresponding to the U.S. Patent applications described in Section 8.1 above, Licensee shall designate in writing that country or those countries, if any, in which Licensee desires such corresponding patent application(s) to be filed. All such applications shall be in University’s name.
8.3 By written notification to University at least thirty (30) days in advance of any filing or response deadline, or fee due date, Licensee may elect not to have a patent application filed in any particular country or not to pay expenses associated with prosecuting or maintaining any patent application or patent, provided that Licensee pays for all costs incurred up to University’s receipt of such notification. Failure to provide any notification shall be considered by University to be Licensee’s notice that it expressly wishes to support any particular patent(s) or patent application(s). Upon notice that Licensee elects not to have a patent application filed or patent maintained in any particular country, or not to pay expenses associated with prosecuting or maintaining any patent application or patent, University may at its sole discretion file, prosecute, and/or maintain such patent applications or patents at its own expense and for its own benefit, and any rights or license granted hereunder held by Licensee, Affiliates, or Sublicensee(s) to such patent application(s) or patent(s) shall terminate and the parties shall amend Appendix B to reflect the then current Patent Rights.
8.4 For Patent Rights claiming Joint Inventions in which the lead inventor is a University employee, student or staff University shall control the preparation, filing, prosecution and maintenance of such Patent Right pursuant to the terms of this Article 8.
8.5 Upon written approval from University, for Patent Rights claiming Joint Inventions in which the lead inventor is an employee of Licensee, Licensee shall control the preparation, prosecution and maintenance of such patents at its sole expense. Such University approval shall not be unreasonably withheld and shall be granted within fifteen (15) days of University’s Office of Technology Development receiving a report of invention submitted by University Inventor and written request from Licensee to manage patent preparation, prosecution and maintenance of such patent, In the event Licensee is controlling the preparation, filing, prosecution and maintenance of Joint Inventions, Licensee and such patent counsel shall ensure that University promptly receives copies of all correspondence, (including, but not limited to, applications, Office Actions, responses, etc.), minutes of any meetings or teleconference, and filings and submissions relating thereto upon receipt from applicable patent authorities and that University shall have the right, and Licensee shall provide University a reasonable opportunity, to comment and advise Licensee on the content of any materials submitted to patent authorities, provided, however, that Licensee shall have the right to make the final decisions for all matters associated with such prosecution and maintenance.
15
ARTICLE 9: INFRINGEMENT
9.1 If any third party claims patent infringement against Licensee, as result of Licensee’s use of the Patent Rights, then Licensee shall promptly notify University thereof in writing, setting forth the facts of such claim in reasonable detail. As between the parties to this Agreement, Licensee shall have the first and primary right and responsibility at its own expense to defend and control the defense of any such claim against Licensee, by counsel of its own choice. Licensee shall be free to enter into a settlement, consent judgment, or other voluntary disposition of any such claim, provided that any settlement, consent judgment or other voluntary disposition of any such claim which (i) materially limits the scope, validity, or enforceability of patents included in the Patent Rights or (ii) admits fault or wrongdoing on the part of University must be approved by University, such approval not being unreasonably withheld. Licensee’s request for such approval shall include complete copies of final settlement documents, a detailed summary of such settlement, and any other information material to such settlement. University shall provide Licensee notice of its approval or denial within fifteen (15) business days of any request for such approval by Licensee, provided that (i) in the event University wishes to deny such approval, such notice shall include a detailed written description of University’ reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) University shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such fifteen (15) day period in accordance herewith. Any amounts paid to any third party as damages or other compensation with respect to infringement of a third parties rights shall be treated as third party royalties that Licensee shall be entitled to deduct from royalties due University in accordance with Section 3.7. Subject to the policies of the Board of Governors of the University of North Carolina and the laws of the State of North Carolina, University agrees to cooperate with Licensee in any reasonable manner deemed by Licensee to be necessary in defending any such action. Licensee shall reimburse University for any reasonable, documented out of pocket expenses incurred in providing such assistance.
9.2 In the event that any Patent Rights licensed to Licensee are infringed by a third party, Licensee shall have the exclusive first and primary right, but not the obligation, to institute, prosecute and control any action or proceeding with respect to such infringement, by counsel of its choice, including any declaratory judgment action arising from such infringement. Licensee shall be free to enter into a settlement, consent judgment, or other voluntary disposition with respect to any such action, provided that any settlement, consent judgment or other voluntary disposition thereof which (i) materially limits the scope, validity, or enforceability of patents included in the Patent Rights or (ii) admits fault or wrongdoing on the part of University must be approved by University, such approval not to be unreasonably withheld. Licensee’s request for such approval shall include complete copies of final settlement documents, a detailed summary of such settlement, and any other information material to such settlement. University shall provide Licensee notice of its approval or denial within fifteen (15) business days of any request for such approval by Licensee, provided that (i) in the event University wishes to deny such approval, such notice shall include a detailed written description of University’ reasonable objections to the proposed settlement, consent judgment, or other voluntary disposition and (ii) University shall be deemed to have approved of such proposed settlement, consent judgment, or other voluntary disposition in the event it fails to provide such notice within such fifteen (15) day period in accordance herewith. If Licensee recovers monetary damages in the form of lost profits from a third party infringer as a remedy for the infringement of Patent Rights licensed hereunder, then Licensee shall first apply such recovery to the costs and expenses incurred in obtaining or negotiating for such recovery (including attorneys’ fees), and pay to University the royalties on the remaining portion of such lost profits at the rate specified in Section 3.6(i). If Licensee recovers monetary damages in the form of a reasonable royalty as a remedy for the infringement of Patent Rights, then, after applying such royalty to the recovery of the costs and expenses incurred in obtaining or negotiating for such royalty (including attorneys’ fees), the remaining amount of any such royalty shall be treated as Sublicensing Royalty Revenue in accordance with Section 3.6.2.
9.3 If Licensee elects not to enforce any patent within the Patent Rights, then Licensee shall notify University in writing within six (6) months of receiving notice that an infringement exists. University may, at its own expense and control, following the earlier of (i) such notice from Licensee or (ii) the expiration of such six (6) month period without Licensee electing to take any action with respect to such alleged or actual infringement, take steps to defend or enforce any patent within the Patent Rights and recover, for its own account, any damages, awards or settlements resulting therefrom.
9.4 Notwithstanding the foregoing, and in University’s sole discretion, University shall be entitled to participate through counsel of its own choosing in any legal action involving the Invention and Patent Rights. Nothing in the foregoing Sections shall be construed in any way which would limit the authority of the Attorney General of North Carolina.
16
ARTICLE 10: REPRESENTATIONS
10.1 University makes no representations or warranties;
(i) that any patent will issue on the Invention, or
(ii) of the validity of any patent included in the Patent Rights or that practice under such patents shall be free of infringement.
10.2 University represents, to its actual knowledge that as of each of the Original Effective Date and the Restatement Effective Date, (i) the entire right, title, and interest in the University’s Rights in the Existing Patent Rights, the technology claimed therein, and Inventions will be assigned to University free and clear of all liens, claims and encumbrances of any inventor or any nongovernmental third party, (ii) that University has all requisite power and authority to grant the licenses contained in this Agreement under said Existing Patent Rights, (iii) University have not entered into any agreements, other than grants from the U.S. Government which provide for the rights described in Section 2.3, with any third party with respect to the Existing Patent Rights and Copyrights, the technology claimed therein, or Inventions, (iv) University’ execution and performance of this Agreement will not result in a breach of any other contract to which they are, or will become, a party, and (v) University has not received any notification, and does not possess any information reasonably indicating, that the Existing Patent Rights or Copyrights are invalid or that the exercise by Licensee of the rights granted hereunder will infringe on any patent or other proprietary right of any third party.
10.3 UNIVERSITY DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCT(S) AND SERVICE(S) LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, UNIVERSITY ADDITIONALLY DISCLAIM ALL OBLIGATIONS AND LIABILITIES ON THE PART OF UNIVERSITY AND INVENTORS, FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS’ AND EXPERTS’ FEES, AND COURT COSTS (EVEN IF UNIVERSITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, FEES OR COSTS), ARISING OUT OF OR IN CONNECTION WITH LICENSEE’S, AFFILIATES, AND SUBLICENSEES’ MANUFACTURE, USE, OR SALE OF THE PRODUCT(S) AND SERVICE(S) LICENSED UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH DAMAGES OR OTHER LIABILITIES RESULT FROM THE UNIVERSITY OR ITS EMPLOYEES’ INTENTIONAL MISCONDUCT. LICENSEE, ITS AFFILIATE(S), AND SUBLICENSEE(S) ASSUME ALL RESPONSIBILITY AND LIABILITY FOR LOSS OR DAMAGE CAUSED BY A PRODUCT AND/OR SERVICE MANUFACTURED, USED, OR SOLD BY LICENSEE, ITS SUBLICENSEE(S), AND AFFILIATE(S) WHICH IS A LICENSED PRODUCT(S) AS DEFINED IN THIS AGREEMENT, EXCEPT TO THE EXTENT SUCH DAMAGES OR OTHER LIABILITIES RESULT FROM THE UNIVERSITY’S OR ITS EMPLOYEES’ INTENTIONAL MISCONDUCT.
10.4 EXCEPT WITH RESPECT TO BREACHES OF SECTION 12 AND THE INDEMNIFICATION PROVIDED UNDER SECTION 11, NO PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTIES ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT.
17
ARTICLE 11: INDEMNIFICATION
11.1 Licensee agrees to indemnify, hold harmless and defend University and UA, their officers, employees, and agents, against any and all claims, suits, losses, damages, costs, fees, and expenses asserted by third parties, both government and private, to the extent resulting from or arising out of (i) Licensee’s breach of this Agreement, (ii) Licensee’s failure to comply with any applicable laws, rules or regulations, or (iii) the exercise of Licensee’s rights under this Agreement, provided such losses do not result from the University or its employees’ gross negligence, intentional misconduct, breach of this Agreement, or failure to comply with any applicable laws, rules, or regulations.
11.2 Any person or entity claiming indemnification under Section 11.1 (each an “Indemnitee”) shall notify Licensee in writing promptly upon becoming aware of any claim that may be an indemnification claim (it being understood and agreed, however, that the failure by an Indemnitee to give such notice shall not relieve the Licensee of its indemnification obligation under this Agreement except and only to the extent that the Licensee is actually prejudiced as a result of such failure to give notice). Licensee and University shall agree upon the appropriate and most efficient means for the defense of each indemnification claim. The Indemnitee shall not settle or compromise an indemnification claim which would impose liability on the Licensee, without the prior written consent of the Licensee, which consent, in each case, shall not be unreasonably withheld or delayed. Licensee shall not settle or compromise an indemnification claim in any manner which would impose liability on the Indemnitee, without the prior written consent of the Indemnitee, which consent, in each case, shall not be unreasonably withheld or delayed. Each party shall reasonably cooperate with the other party and shall make available to the each other all pertinent information under such party’s control as reasonably necessary to defend against an indemnification claim.
11.3 Licensee is required to maintain in force at its sole cost and expense, with reputable insurance companies, general liability insurance and products liability insurance coverage in an amount reasonably sufficient to protect against liability under Sections 11.1 above.
ARTICLE 12: MISCELLANEOUS
12.1 University Confidential Information: The University may from time to time, disclose its Confidential Information to Licensee. Licensee shall not disclose University’s Confidential Information to any third party except as follows:
(i) | to its Affiliates, Sublicensees, and any employees, officers, directors, contractors, or other agents or representatives of Licensee or any of the foregoing for purposes related to the exercise of the rights granted under this Agreement; or |
(ii) | under conditions of confidentiality to prospective or actual investors, lenders, acquirors, sublicensees, strategic partners, and investment bankers in connection with its financing, acquisition, licensing, development, commercialization, and stockholder relations activities; or |
(iii) | with the prior written consent of University, as applicable, |
provided that, Licensee requires such recipients of University’s Confidential Information to protect the confidentiality of such Confidential Information. Licensee may also disclose University’s Confidential Information as it reasonably deems necessary or advisable in connection with the prosecution, maintenance, defense and enforcement of the Patent Rights or Copyrights or in connection with the pursuit or maintenance of regulatory or marketing approvals for, or commercialization of, Licensed Products.
18
12.2 Disclosures to University: Licensee, through its employees or other agents, may disclose its Confidential Information to University. University shall:
(i) | not disclose such Confidential Information to any third party, |
(ii) | treat such information with the same degree of care as it treats its own confidential information, which shall be no less than reasonable, and |
(iii) | only use such information for purposes of enforcing its rights under this Agreement. |
12.3 Limits on Confidential Information: Confidential Information under this Agreement shall not include information:
(i) | which at the time of disclosure is in the public domain; |
(ii) | after disclosure, becomes part of the public domain by publication or otherwise, except by the breach of this Agreement by either party; |
(iii) | was (a) in the recipient party’s possession in documentary form at the time of disclosure or (b) independently developed by or for the recipient party by any person or persons who had no knowledge or benefit of the other party s Confidential Information, as evidenced by written documentation; |
(iv) | a party received without obligation of confidentiality or limitation on use from a third party who had the lawful right to disclose such information and who did not obtain such information under an obligation of confidentiality to either party; and |
Confidential Information disclosed under this Agreement shall not be deemed to be within the foregoing exceptions merely because such information is embraced by more general information in the public domain or in the possession of a party. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because individual features are in the public domain or in the party’s possession, but only if the combination itself and its principle of operation are in the public domain or in the party’s possession.
12.4 Notwithstanding any other provision of this Agreement, disclosure by a recipient party of the other party’s Confidential Information shall not be precluded if such disclosure:
(i) | is in response to a valid order of a court or to another governmental body of the United States or any political subdivision thereof; or |
(ii) | is required by law or regulation; |
provided, however, that, in either case, the party required to make such disclosures shall (1) have made reasonable effort to give prompt notice to the other party to permit it to seek a protective order or grant of confidentiality, (2) cooperate with the other party’s efforts to seek confidential or protective treatment of such information, as reasonably requested by the other party, and (3) minimize the extent of any such disclosure.
19
12.5 University shall be free to publish the results of its research and educational activities as it sees fit, provided that prior to any publication of any particular technology claimed, described, or enabled in the Patent Rights or Copyrights:
(i) | University shall provide Licensee with a manuscript of any proposed paper or an abstract of any proposed presentation describing such technology at least forty-five (45) days prior to its submission for publication or presentation, and |
(ii) | as reasonably requested by Licensee, University shall (a) delete from such publication any of Licensee’s Confidential Information, (b) delay the submission of such publication or presentation for an additional period of up to forty-five (45) days in order to allow Licensee to pursue patent protection for any of its intellectual property described therein, or (c) instruct its patent counsel to make such patent filings or conduct the prosecution of the patents and patent applications included in the Patent Rights as appropriate prior to publication or presentation of such material to prevent the loss of any rights granted under this Agreement. |
After any publication of any particular technology claimed, described, or enabled in the Patent Rights, University shall have no further obligations under this Section 12.5 with respect to the publication of such technology.
ARTICLE 13. MISCELLANEOUS
13.1 This Agreement is binding upon and shall inure to the benefit of University, its successors and assigns. However, this Agreement shall be personal to Licensee, and it is not assignable by Licensee to any other person or entity without the prior written consent of University, such consent to be in University’s sole discretion. Notwithstanding the foregoing, Licensee shall be free to assign this Agreement and its rights and obligations hereunder without University’s consent (i) to any Affiliate or (ii) in connection with any sale of substantially all of Licensee’s assets or business (or that portion of its assets or business related to the subject matter of this Agreement), merger, acquisition, consolidation, reorganization, or other similar transaction, provided that Licensee shall not be released of its obligations existing at the time of such assignment.
13.2 It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default.
13.3 No party shall, without prior written consent of the other party, use the name or any trademark or trade name owned by the other party, or owned by an affiliate or parent corporation of the other party, in any publication, publicity, advertising, or otherwise, except that Licensee may identify University as licensor of the Patent Rights, Copyrights and Licensed Products and University may identify Licensee as exclusive licensee of Patent Rights and Copyrights. It is understood that University’s agreement under this Section is subject to the provisions of NC Public Records Act. G.S. Ch 132.
13.4 Notwithstanding Section 13.3 above, University may disclose the existence of this Agreement and non-confidential information regarding the status of Licensee’s commercialization of License Products in a press release, on-line, or otherwise, and on the website of University’s Office of Technology Development throughout the life of this Agreement with the prior written approval of the Licensee, such approval not to be unreasonably withheld. Further, the parties agree to cooperate with each other in preparing, reviewing and approving such disclosures, Licensee’s approval for each disclosure not to be unreasonably withheld.
20
13.5 Neither party hereto is an agent of the other for any purpose.
13.6 Any notice required or permitted to be given to the parties hereto shall be in writing and deemed to have been properly given if delivered in person or mailed by first-class mail to the other party at the appropriate address as set forth below. Other addresses may be designated in writing by the parties during the term of this Agreement.
13.7 This Agreement shall be interpreted and construed in accordance with the laws of the State of North Carolina. The State and Federal Courts of North Carolina shall have exclusive jurisdiction to hear any legal action arising out of this Agreement.
13.8 In the event that a court of competent jurisdiction holds any provision of this Agreement to be invalid, such holding shall have no effect on the remaining provisions of this Agreement, and they shall continue in full force and effect.
13.9 All rights and obligations contained in this Agreement, which by its nature or effect contemplate performance or observance subsequent to termination of this Agreement will survive and remain binding upon and for the benefit of the parties, its successors and permitted assigns.
13.10 Anything contained in this Agreement to the contrary notwithstanding, the obligations of the Licensee shall be subject to all laws, present and future and regulations, of any government having jurisdiction over the Licensee, and to orders, regulations, directions, or requests of any such government. Licensee shall undertake to comply with and be solely responsible for complying with such laws applicable to Licensee.
13.11 Exports of Licensed Products may be subject to U.S. export control laws and regulations, including, without limitation, the Export Administration Regulations (15 CFR 730-774) and the International Traffic in Arms Regulations (22 CFR 120-130), and may be subject to export or import regulations in countries other than the United States. Licensee assumes all obligations and responsibility for assuring that use of the Licensed Products is in compliance with all applicable export control laws and regulations. Further, Licensee agrees to require Sublicensees to comply with said obligations and responsibility.
21
13.12 Licensee shall, and agrees to require Sublicensees to, comply with any patent marking requirements of the intellectual property laws of the applicable countries in the Licensed Territory to the extent any failure to do so would materially and adversely affect the Licensed Product, the Patent Rights, or either party’s ability to avail itself of all potential remedies for any infringement of the Patent Rights.
13.13 Licensee shall be solely responsible for the payment of any and all taxes, fees, duties and other payments incurred in relation to its manufacture, use and sale of the systems and methods covered by the Patent Rights or Copyrights or Licensed Products. Licensee shall, as between the parties, be responsible for applying for and obtaining any approvals, authorizations, or validations necessary to effectuate the terms of this Agreement under the laws of the appropriate national laws of each of the countries in the Licensed Territory.
13.14 If any one or more of the provisions of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction, the provision shall be considered severed from this Agreement and shall not serve to invalidate any remaining provisions hereof. The parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by the parties when entering into this Agreement may be realized.
13.15 It is understood and agreed between University and Licensee that this Agreement constitutes the entire agreement, both written and oral, between the parties, and amends and restates the Original Agreement in its entirety, and that all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, shall be abrogated, cancelled, and are null and void and of no effect. Without limiting the foregoing, any provision of the Original Agreement not included in this Agreement is terminated as of the date hereof.
[Signature page to follow.]
22
APPENDIX A
INVENTIONS
University
File
Number |
Report of Invention Title | Patent Status |
Patent
Rights Type
Licensed Product |
09-0096 | Micro Mass Spectrometry Ionization Source | none pending | Patent Rights MMS |
11-0018 | Integrated ion trap and RFcircuitry for mass spectrometry | none pending | Patent Rights MMS |
12-0136 | CITSIM Ion Trap Simulation Software | copyright | None MMS |
12-0138 | Modular and Compact Cylindrical Ion Trap Configuration | none pending | Patent Rights MMS |
12-0142 | Microfabricated Ionization Source | patent pending | Patent Rights MMS |
12-0143 | High Pressure Mass Spectrometry | patent authorized | Patent Rights MMS |
12-0144 | High-pressure, low-power electron sources | none pending | Patent Rights MMS |
12-0145 | Ion Trap Array Faraday Cup Detector | none pending | Patent Rights MMS |
12-0146 | Microscale Mass Spectrometry System | patent pending | Patent Rights MMS |
12-0147 | Ion trap electrode designs for controlling capacitance | none pending | Patent Rights MMS |
13-0060 | Stretched Length Ion Trap Geometry | patent issued | Patent Rights MMS |
14-0141 | High Pressure Mass Spectrometry Signal Enhancement by Means of Convective Transport | patent pending | Patent Rights MMS |
15-0012 | Electrospray Ionization Interface to High Pressure Mass Spectrometry | patent authorized | Patent Rights MMS |
15-0087 | Method of sample injection for chemical separations in microfluidic devices | patent authorized | Patent Rights MMS |
11-0069 | Microfabricated Multiemitter Electrospray Ionization Devices | patent pending | Limited Patent Rights LPS |
12-0151 | Methodology for Sample Processing and Electrospray Ionization | patent pending | Limited Patent Rights LPS |
APPENDIX B
PATENT RIGHTS AND COPYRIGHTS
PATENT
USPTO
Serial or Patent
Number |
Atty Ref Number | ROI | Inventors | Title |
Patent
Rights Type
Licensed Product |
Temp12-0143US | 5470-640PR | 12-0143 | J Ramsey | High Pressure Mass Spectrometry | Patent Rights MMS |
13/804,911 | 5470-639 | 12-0146 | J Ramsey | Microscale Mass Spectrometry Systems, Devices and Related Methods | Patent Rights MMS |
PCT/US2014/019289 | 5470-639WO | 12-0146 | J Ramsey | Microscale Mass Spectrometry Systems, Devices and Related Methods | Patent Rights MMS |
8,878,127 (13/840,653 ) | 104409-0103 | 13-0060 | J Ramsey Kevin Schultze | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS |
PCT/US2013/042031 | 104409-0104 | 13-0060 | J Ramsey Kevin Schultze | Miniature Charged Particle Trap With elongated Trapping Region for Mass Spectrometry | Patent Rights MMS |
14/456,686 | 104409-0104 | 13-0060 | J Ramsey Kevin Schultze | Miniature Charged Particle Trap With elongated Trapping Region for Mass Spectrometry | Patent Rights MMS |
62/010,050 | 5470-713PR | 14-0141 | Bruno Coupier, J Ramsey, Kevin Schultze | High Pressure Mass Spectrometry Signal Enhancement by Means of Convective Transport | Patent Rights MMS |
New 14-0141 | 5470-713US | 14-0141 | Bruno Coupier, J Ramsey, Kevin Schultze | High Pressure Mass Spectrometry Signal Enhancement by Means of Convective Transport | Patent Rights MMS |
New 15-0012 | TBD | 15-0012 | TBD | Electrospray Ionization Interface to High Pressure Mass Spectrometry | Patent Rights MMS |
New 15-0087 | TBD | 15-0087 | TBD | Method of sample injection for chemical separations in microfluidic devices | Patent Rights MMS |
14/402,278 | 5470-636 | 12-0151 | J Ramsey, N. Batz, J. Mellors | Integrated Sample Processing for Electrospray Ionization Devices | Limited Patent Rights LPS |
13806595,8 | 5470-636EP | 12-0151 | J. Ramsey, N. Balz, J. Mellors | Integrated Sample Processing for Electrospray Ionization Devices | Limited Patent Rights LPS |
14/001,549 | 5470-591 | 11-0069 | J. Ramsey, A. Chambers | Microchips with Integrated Multiple Electrospray Ionization Emitters and Related Methods, Systems and Devices | Limited Patent Rights LPS |
12757244.4 | 5470-591 EP | 11-0069 | J. Ramsey, A. Chambers | Microchips with Integrated Multiple Electrospray Ionization Emitters and Related Methods, Systems and Devices | Limited Patent Rights LPS |
COPYRIGHT |
University File Number | Title | Authors/Contributors |
12-0136 | CITSIM Ion Trap Simulation Software | Sorin Mitran |
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
APPENDIX C
MILESTONES
[***]
AMENDMENT No. 1 TO AMENDED AND RESTATED LICENSE AGREEMENT
This first Amendment to the Amended and Restated Exclusive License Agreement dated May 20, 2015 (hereinafter referred to as the “Agreement”) by and between The University of North Carolina at Chapel Hill (“University”) and 908 Devices, Inc. (“Licensee”) is effective as of the date of the last signature written below.
WHEREAS, the parties now wish to amend the Agreement to update Appendix A of the .Agreement to include the Improvements known as “Method for Integrating Solid Phase Extraction with Microchip Capillary Electrophoresis-Electrospray Ionization” (UNC# 16-0017) as an Invention and to update Appendix B of the Agreement to include the related Patent Rights;
WHEREAS, the parties agree to be bound by the terms and conditions of the Agreement, as amended herein:
NOW THEREFORE, the parties agree as follows:
1. | The following Improvement shall be defined as an Invention and a license under the related Patent Rights shall be granted to Licensee and its Affiliates pursuant to Paragraph 2.1(i) of the Agreement: |
· | UNC# 16-0017, “Method for Integrating Solid Phase Extraction with Microchip Capillary Electrophoresis-Electrospray Ionization” |
2. | Appendix A shall be deleted in the entirety and replaced with the attached .Appendix A. |
3. | Appendix B shall be deleted in the entirely and replaced with the attached Appendix B. |
4. | Capitalized terms used herein have the same meaning as was given them in the Agreement. |
5. | Other than as amended herein, the Agreement remains in full force and effect. |
IN WITNESS WHEREOF, The parties have executed this Amendment to the Agreement, as indicated below.
THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL | 908 DEVICES INC. | |
/s/ Jacqueline Quay | /s/ Kevin J. Knopp | |
Jacqueline Quay | Kevin J. Knopp | |
Director of Licensing, | CEO | |
Office of Commercialization and Economic Development | ||
1/5/15 | 1/4/15 | |
Date | Date |
APPENDIX A
Inventions
University File No. | Report of Invention Title | Patent Status |
Patent
Rights Type /
Licensed Product |
09-0096 | Micro Mass Spectrometry lonization Source | None Pending | Patent Rights MMS |
11-0018 | Integrated Ion Trap and RF Circuitry for Mass Spectrometry | None Pending | Patent Rights MMS |
12-0136 | CITSIM lon Trap Simulation Software | Copyright | None MMS |
12-0138 | Modular and Compact Cylindrical Ion Trap Configuration | None Pending | Patent Rights MMS |
12-0142 | Microfabricated Ionization Source | None Pending | Patent Rights MMS |
12-0143 | High Pressure Mass Spectrometry | Patent Authorized | Patent Rights MMS |
12-0144 | High Pressure, Low Power Electron Sources | None Pending | Patent Rights MMS |
12-0145 | Ion Trap Array Faraday Cup Detector | None Pending | Patent Rights MMS |
12-0146 | Microscale Mass Spectrometry System | Patent Pending | Patent Rights MMS |
12-0147 | Ion Trap Electrode Designs for Controlling Capacitance | None Pending | Patent Rights MMS |
13-0060 | Stretched Length Ion Trap Geometry | Patent Pending / Issued | Patent Rights MMS |
14-0141 | High Pressure Mass Spectrometry Signal Enhancement by Means of Convective Transport | Patent Pending | Patent Rights MMS |
15-0012 | Electrospray Ionization Interlace to High Pressure Mass Spectrometry | Patent Pending | Patent Rights MMS |
15-0087 | Method of Sample Injection for Chemical Separations in Microfluidic Devices | Patent Pending | Patent Rights MMS |
16-0017 | Method for Integrating Solid Phase Extraction with Microchip Capillary Electrophomsis-Electrospray Ionization | Patent Pending | Patent Rights MMS |
11-0069 | Microfabricated Multiemitter Elecirospray lonizaiion Devices | Patent Pending / Issued | Limited Patent Rights MMS |
12-0151 | Methodology for Sample Processing and Electrospray Ionization | Patent Pending | Limited Patent Rights MMS |
APPENDIX B
Patent Rights and Copyrights
PATENT | ||||||
University
File No. |
Atty
Reference No. |
Patent
Application
No. |
Patent
No. |
Inventors | Title |
Patent
Rights Type Licensed Product |
11-0069 | 5470-591 | 14/001,549 | 9,006,648 | Ramsey, Chambers | Microchips with Integrated Multiple Electrospray Ionization Emitters and Related Methods, Systems and Devices | Limited Patent Rights LPS |
11-0069 | 12757244.4 | Ramsey | Microfabricated Multiemitter Electrospray Ionization Devices | Limited Patent Rights LPS | ||
12-0143 | Temp 12-0143US | Ramsey | High Pressure Mass Spectrometry | Patent Rights MMS | ||
12-0146 | 13/804,911 | Ramsey | Microscale Mass Spectrometry Systems, Devices and Related Methods | MMS Patent Rights MMS | ||
12-0146 | PCT/US2014/019289 | Ramsey | Microscale Mass Spectrometry Systems, Devices, and Related Methods | Patent Rights MMS | ||
12-0151 | 14/402,278 | Ramsey, Batz, Mellors | Integrated Sample Processing for Electrospray Ionization Devices | Limited Patent Rights LPS | ||
12-0151 | 13806595.8 | Ramsey | Integrated Sample Processing for Electrospray Ionization . Devices | Limited Patent Rights LPS | ||
13-0060 | 13/840,653 | 8,878,127 | Ramsey, Schultze | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS |
13-0060 | 14/456,686 | Ramsey, Schultze | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS | ||
13-0060 | NEW13-0060CON | Ramsey | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS | ||
13-0060 | 13877607.5 | Ramsey | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS | ||
13-0060 | NEW13-0060CN | Ramsey | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS | ||
13-0060 | NEW 13-0060JP | Ramsey | Miniature Charged Particle Trap with Elongated Trapping Region for Mass Spectrometry | Patent Rights MMS | ||
14-0141 | 14/743,623 | Ramsey, Coupler, Schultze | Mass Spectrometry Systems with Convective Flow of Buffer Gas for Enhanced Signals and Related Methods | Patent Rights MMS | ||
15-0012 | PCT/US2015/030380 | Ramsey, Gilliand | Electrospray Ionization Interface to High Pressure Mass Spectrometry | Patent Rights MMS | ||
15-0012 | 14/710,344 | Ramsey, Gilliand | Electrospray Ionization Interface to High Pressure Mass Spectrometry | Patent Rights MMS | ||
15-0087 | 14/708,906 | Ramsey, Mellors, Redman | Pressure Driven Microfluidic Injection for Chemical Separations |
Patent Rights MMS
LPS |
||
16-0017 | 62/243,919 | Mellors, Black, Ramsey | Solid Phase Extraction with Microchip Capillary Electrophoresis-Electrospray Ionization |
Patent Rights MMS
LPS |
COPY RIGHT | ||
University File No. | Title | Authors/Cortributors |
12-0136 | CITSIM Ion Trap Simulation Software | Sorin Mitran |
Exhibit 10.7
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
LIMITED EXCLUSIVE COMMERCIAL FIELD OF USE
PATENT LICENSE AGREEMENT
This Exclusive Commercial Patent License Agreement is between UT-Battelle, LLC (UT-Battelle), a Tennessee non-profit limited liability company (“Licensor”), and 908 Devices inc., a Delaware corporation having an address at 27 Drydock Avenue, 8th Floor, Boston, MA 02210 (“Licensee”), hereinafter referred to singly as the “Party” or jointly as the “Parties.”
ARTICLE 1
BACKGROUND
1.1 | Licensor manages and operates the Oak Ridge National Laboratory under its Prime Contract No. DE-AC05-00OR22725 with the United States Department of Energy (“DOE”), an agency of the United States Government. |
1.2 | Licensor has rights in certain patents and patent applications listed in Exhibit A. |
1.3 | Licensee desires, and Licensor is willing to grant, an exclusive license under such patents and patent applications in certain fields of use. |
1.4 | This Agreement specifically includes Exhibit A, LICENSED PATENTS, Exhibit B, TERM SHEET & FINANCIAL OBLIGATIONS, Exhibit C, DEVELOPMENT AND COMMERCIALIZATION PLAN, and Exhibit D, SUBSCRIPTION AGREEMENT, which are attached. |
1.5 | Except as provided in Article 8, the license will run through the Term of this Agreement. |
1.6 | This Agreement is being executed by the Parties simultaneously with companion Patent License Agreement PLA-1669 (the “PLA-1669 License”). |
ARTICLE 2
DEFINITIONS
2.1 | As used in this Agreement, the following terms will have the meanings set forth below: |
“Accounting Period” means the period from January 1 through December 31 of each year, with the first Accounting Period beginning on the Effective Date.
1
“Combination Products” are Licensed Products which infringe or contribute to the infringement of a claim of patents or patent applications other than the Licensed Patents and to which Licensee has obtained an ownership interest or a royalty-bearing license.
“Combination Gross Sales” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Combination Products by Licensee. In the event Licensee does not, during the Term of this Agreement, Dispose of Combination Products that were made during the Term of this Agreement, the fair market value of such Combination Products (as if there had been a Disposition to a third party) will be included in Combination Gross Sales.
“Combination Net Sales” means the Combination Gross Sales, less the total of all:
a. | sales tariffs, duties, taxes, or other governmental charges imposed on the Combination Products; |
b. | outbound transportation prepaid or allowed; |
c. | amounts allowed or credited on returns; and |
d. | normal and customary trade, quantity, cash and other similar discounts, actually taken, wholesaler chargebacks, and rebates. |
For avoidance of doubt, Combination Net Sales shall not include, and shall be deemed to be zero, with respect to (i) the distribution of reasonable quantities of promotional samples of Combination Products and (ii) Combination Products provided for use in clinical trials, research purposes or charitable or compassionate use.
“Dispose” or “Disposition” means the sale, lease or other transfer of Licensed Products and/or Combination Products.
“Effective Date” means the date of the signature of the last Party to sign this Agreement.
“Field(s) of Use” means and is limited to mass spectrometry used in the following Fields of Use:
Field of Use 1: Military, public safety, intelligence, national security, and homeland security, including chemical and biological warfare defense and explosives detection, whether such use is by public (governmental) employees, agencies or authorities or private entities;
2
Field of Use 2: Clinical diagnostics, medical instrumentation, and analytical instruments for life sciences applications;
Field of Use 3: Industrial process monitoring; and
Field of Use 4: Food and environmental testing and safety.
“Government” means the Federal Government of the United States of America, including all of its agencies and authorities.
“Government’s License Rights” means the Government’s nonexclusive, nontransferable, irrevocable, paid-up license to practice or to have practiced for or on behalf of the United States the Licensed Patents throughout the world, pursuant to 35 USC 202(c)(4).
“Gross Sales” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Licensed Products by Licensee. In the event Licensee does not, during the Term of this Agreement, Dispose of Licensed Products that were made during the Term of this Agreement, the fair market value of such Licensed Products (as if there had been a Disposition to a third party) will be included in Gross Sales.
“Licensed Patents” means each patent and patent application listed in Exhibit A, and any patents issuing in any country at any time from such application and any divisions, continuations, continuations-in-part (excluding those claims in such continuations-in-part applications that do not relate to uses within the Field(s) of Use) thereof, and all reissues, reexaminations, substitutes, or extensions of any such patents, and all patent applications corresponding to any of the foregoing. The term “Licensed Patents” does not include any patent found to be unenforceable or invalid by a final adjudication by a Court of competent jurisdiction.
“Licensed Products” means any device, apparatus, product, compound, composition of matter, product-by-process, kit, system, material, or algorithm the manufacture, use, sale, offer for sale, or import of which, but for the license granted in this Agreement, would infringe or contribute to the infringement of a claim of a Licensed Patent.
3
“Net Sales” means the Gross Sales less the total of all:
a. | sales tariffs, duties, taxes, or other governmental charges imposed on the Licensed Products; |
b. | outbound transportation prepaid or allowed; |
c. | amounts allowed or credited on returns; and |
d. | normal and customary trade, quantity, cash and other similar discounts, actually taken, wholesaler chargebacks, and rebates. |
For avoidance of doubt. Net Sales shall not include, and shall be deemed to be zero, with respect to (i) the distribution of reasonable quantities of promotional samples of Licensed Products and (ii) Licensed Products provided for use in clinical trials, research purposes or charitable or compassionate use.
“Patent Costs” means the verifiable costs related to the preparation, filing, prosecution and maintenance of U.S. and foreign Licensed Patents.
“Royalty” and “Royalties” mean the payments owed to Licensor specified in Exhibit B. “Sublicensee” means a third party to whom Licensee has granted a sublicense of rights granted under Section 3.1.
“Sublicensing Revenue” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Licensed Products by a Sublicensee, including any license fees, royalties and milestone payments or other consideration.
“Sublicensing Royalties” mean the payments owed to Licensor based on Sublicensing Revenue as specified in Exhibit B.
“Term” means the period of time starting on the Effective Date and continuing until expiration of the last to expire Licensed Patents.
ARTICLE 3
GRANT
3.1 | Licensor grants to Licensee, and Licensee accepts for the Term of this Agreement, subject to the terms and conditions set forth herein, an exclusive license under the Licensed Patents to make, have made, use, offer to sell, sell. Dispose of, and import (subject to 6.1) the Licensed Products in the Field(s) of Use throughout the world. In addition, Licensor grants to Licensee and Licensee accepts for the Term of this Agreement, the right to grant subliecnses in accordance with Article 5 of this Agreement. |
4
3.2 | Licensee’s exclusive commercial license is subject to, and will in no way restrict, the Government’s License Rights. |
3.3 | Licensee’s exclusive license is subject to, and will in no way restrict, the march-in rights of the Government pursuant to 35 USC 203. |
3.4 | Licensor retains the right to grant licenses to not-for-profit research and educational institutions solely to perform research for non-commercial purposes in the Field(s) of Use. |
3.5 | Licensor may, in its sole discretion, grant licenses to the Licensed Patents outside the Field(s) of Use. |
3.6 | Licensee acknowledges that no license is granted or implied under, and expressly agrees not to make, have made, use, offer to sell, sell. Dispose of, and import the Licensed Products outside the Field of Use. Licensee agrees that making, having made, using, offering to sell, selling, Disposing of, and importing the Licensed Products outside the Field of Use is a breach of this Agreement. |
ARTICLE 4
CONSIDERATION AND FINANCIAL OBLIGATIONS
4.1 | In consideration for the License, Licensee agrees to comply with the provisions of this Agreement, to issue the Equity Securities as set forth herein, to pay all fees, Royalties, costs, and all other consideration within the time periods and as otherwise specified in this Agreement for the Term, and to use commercially reasonable efforts to satisfy the requirements of the Commercialization Plan set forth in Exhibit C. Prompt payment of all amounts due to Licensor and satisfaction of the Commercialization Plan requirements are material to this Agreement. |
4.2 | Licensee will pay to Licensor a fixed license fee in the amount specified in Exhibit B (Execution Fee), which will be nonrefundable and not creditable against any Royalties. Exhibit B specifies when the Execution Fee is due and payable. In the event of termination of this Agreement, the entire unpaid balance of the Execution Fee will be due and payable on or before the effective date of termination. |
5
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
4.3 | Licensee will reimburse Licensor for Patent Costs as provided in Exhibit B, Part G, within thirty (30) days of submission of the proof of costs incurred by Licensor. If Licensee elects to discontinue reimbursement of Patent Costs of any patent or patent application, then that patent or patent application will be excluded from the Licensed Patents, and all rights relating to the patent or patent application will revert to Licensor and may be freely licensed by Licensor to others. |
4.4 | All payments will be made to Licensor in U.S. dollars by wire transfer in accordance with the following wire instructions, unless and until written notice is provided by Licensor of a change in the wire instructions: |
First Tennessee Bank, Memphis –[***]
For further credit to First Tennessee, Knoxville –[***]
Beneficiary UT-Battelle, LLC
S.W.I.F.T. Code is FTBMUS44
4.5 | Licensee will owe no Royalties and no Sublicensing Royalties on its or any Sublicensee’s Dispositions of Licensed Products involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, whether the Government is acting as the purchaser or the payor, because of the Government’s License Rights. Licensee will report all Revenue and Sublicensing Revenue received from such Dispositions by providing a Government control number and identification of the Government agency in the written report for the pertinent Accounting Period. |
4.6 | In the event that Licensee fails to make any payment due to Licensor within the time period prescribed for such payment under this Agreement, then the unpaid or overdue amount will bear interest at the rate of one and one half percent (1.5%) per month from the date when payment was due until payment in full, with interest, is made. In addition, Licensee agrees to reimburse Licensor for any costs or expenses, including attorney’s fees, incurred by Licensor in collection of such overdue payments. |
6
ARTICLE 5
SUBLICENSES
5.1 | All sublicenses must be in accordance with the terms of this Agreement. |
5.2 | Licensee will only enter into sublicenses that arc not transferable by Sublicensees, and only transferable by Licensee to Licensor. |
5.3 | All sublicenses must be approved in writing by Licensor in advance of execution by Licensee. Such approval will not be unreasonably withheld by Licensor. |
5.4 | Effective on the date of termination of this Agreement for any reason prior to the end of the Term, Licensee hereby assigns to Licensor each approved sublicense that is in effect on the date of termination, including the right to receive all income from Sublicensees. Licensee will include notification of this provision in all sublicenses. |
5.5 | Licensee will provide a copy of each sublicense to Licensor within thirty (30) days of the execution of each sublicense. |
5.6 | Licensee will pay to Licensor Sublicensing Royalties in the amounts and at the times specified in Exhibit B. |
5.7 | Subject to Article 9, Licensee must enforce all sublicenses at its cost. The Licensee will be responsible for the acts or omissions of its Sublicensees. Each sublicense granted by the Licensee will include an audit right by Licensor of the same scope as provided in Article 7 with respect to the Licensee and will include Licensor’s right to enforce the Licensed Patents. No sublicense agreement will contain any provision which would cause the grant to extend beyond the Term of this Agreement. |
5.8 | Licensee will require Sublicensees (a) to keep records and submit reports to Licensee of the same type and for the same Accounting Periods as required in Article 7, and (b) to submit to Licensor at the same time Licensee is required to submit a written report under Article 7, a report of all uses and Dispositions and the amount of payments made to Licensee in connection with such use. |
5.9 | Licensee will not grant to Sublicensees the right to grant sublicenses or the right to enforce any Licensed Patent. |
7
ARTICLE 6
CONDITIONS OF GRANT
6.1 | Licensee agrees that any Licensed Products for use or sale in the United States will be substantially manufactured in the United States as and to the extent required by U.S. law, Department of Energy Regulations and Licensor’s Prime Contract. Licensee will include this U.S. manufacture requirement in all sublicenses that Licensee grants. |
6.2 | Licensee will mark all Licensed Products in accordance with the statutes of the United States relating to marking of patented articles (sec 35 U.S.C. § 287). Licensee will include this marking requirement in all sublicenses that Licensee grants. Any such marking may indicate that Licensee has a license from Licensor. Otherwise, Licensee is prohibited from using Licensor’s name or the name “Oak Ridge National Laboratory” in any such marking or any advertising, promotion or commercialization of Licensed Products without written approval of Licensor; provided however, that Licensee shall be permitted to disclose factual information concerning the source of the rights licensed hereunder, for example, by identifying Licensor as the licensor of the rights hereunder or by identifying Oak Ridge National Laboratory as the institution where the Licensed Patents were invented, provided that such disclosures are not promotional in nature and do not suggest an endorsement of any Licensed Product by Licensor, Oak Ridge National Laboratory, the U.S. government, or any of their affiliates or agencies. |
6.3 | The rights and licenses granted by Licensor in this Agreement arc personal to Licensee and may not be assigned or otherwise transferred in whole or in part except by (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation in which the outstanding shares of the Company’s capital stock are converted into or exchanged for securities of the successor entity and the holders of the Company as outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iii) the sale, in a single transaction or series of related transactions, of all or a majority of the Company as capital stock to an unrelated person or entity (an “Acquisition”). In the event of an Acquisition, Licensee may assign its rights and obligations under this Agreement to the merging or acquiring entity, effective on the date the merger or acquisition becomes effective, provided that all the following requirements have been satisfied in advance of the merger or acquisition: |
6.3.1 | Licensee notifies Licensor within forty-five (45) calendar days prior to said merger or acquisition; |
8
6.3.2 | Licensors approve the other parties involved in such transaction, it being understood that such approval by Licensors may only be refused if any such other party is a Restricted Entity; |
6.3.3 | Licensee shall have paid all royalties, fees and payments due Licensor; |
6.3.4 | The merging or acquiring entity has agreed to comply with the terms and conditions of this Agreement; and |
6.3.5 | If the merging or acquiring entity is subject to ownership or control by a non-U.S. entity, the Licensee has obtained DOE approval of the assignment and will comply with the DOE’s foreign ownership and control justification criteria then in effect. |
For purposes of this Section 6.3, the term “Restricted Entity” means any person or entity identified on the Denied Persons List published by the Bureau of Industrial Security, or any entity incorporated or having a principle place of business in an embargoed country as defined in Part 746 of the Export Administration Regulations.
6.4. | Licensee will not pledge its rights under this Agreement for any reason, including as security to obtain financing, without the prior written approval of Licensor. The Parties agree that any such pledge by Licensee without such approval by Licensor will be an automatic, material and incurable breach of the Agreement resulting in termination of the Agreement effective as of the attempt by Licensee to make such pledge. |
6.5. | Licensee hereby agrees that, in the event Licensee, by its own actions, or the action of any of its shareholders or creditors, files or has filed against it a case under the Bankruptcy Code of 1978, as previously or hereafter amended, Licensor shall be entitled to relief from the automatic stay of Section 362 of Title 11 of the U.S. Code, as amended, to pursue any rights and remedies available to it under the License. Licensee hereby waives the benefits of such automatic stay and consents and agrees to raise no objection to such relief. |
9
ARTICLE 7
RECORDS, REPORTS, AND ROYALTY PAYMENTS
7.1 | Licensee will keep and make available to Licensor for audit, inspection and copying by Licensor or its designee, including an accounting firm, adequate and sufficiently detailed records to enable Licensee’s financial obligations, including obligations incurred as a result of sublicensing in accordance with 5.6, if applicable, required under this Agreement to be easily determined. Licensee will maintain these records for a period of three (3) years after the end of the last Accounting Period to which the records refer. In the event an examination of Licensee’s records reveals an underpayment of more than 5% of the accurate Royalty amount, Licensee will pay all costs incurred by Licensor related to the examination of records in addition to paying the balance due. |
7.2. | Licensee will provide Licensor a written report for each Accounting Period during the Term of this Agreement, no later than thirty (30) days after the end of each Accounting Period, that identifies for such Accounting Period: |
(a) | the total Gross Sales received by Licensee from the making, use, or Disposition of Licensed Products itemized by domestic and/or foreign rights; |
(b) | the total amount of sales tariffs, duties and/or taxes imposed on the Licensed Products manufactured in the United States; |
(c) | the total outbound transportation costs prepaid or allowed; |
(d) | the total amounts allowed or credited on returns; and, |
(e) | the total amount of Royalties due to Licensor. |
The first such report will include this information for all Licensed Products Disposed of between the Effective Date and the end of the first Accounting Period.
10
7.3 | Licensee will submit a written report to Licensor within thirty (30) days after the date of any termination or expiration of this Agreement which contains the same information required in 7.2 above for Licensed Products made, used, or Disposed of prior to such expiration or termination that were not previously reported to Licensor. At the time this report is submitted. Licensee will pay to Licensor all Royalties and any other consideration due Licensor. |
ARTICLE 8
BREACH AND TERMINATION
8.1 | This Agreement may be terminated by either Party for any material breach of the Agreement by the other Party. Such termination will be effective sixty (60) days after written notice specifying the breach to the other Party. If the specified breach is cured before the effective date of termination, the Agreement will not be terminated. |
8.2 | In the event Licensee cither (a) fails to make payment to Licensor of Royalties or other consideration in accordance with this Agreement or (b) fails to use commercially reasonable efforts to satisfy the requirements of the Commercialization Plan in Exhibit C, Licensor may, at its sole discretion, terminate this Agreement with respect to specified Licensed Patents. Such a termination shall not terminate any obligations which have accrued as of the date of such termination, including any obligation to pay any Royalties. |
8.3 | In addition to termination, in the event of a material breach by Licensee, Licensor may pursue any rights and remedies available to it by law. |
8.4 | This Agreement will not be terminated for any breach that is the result of an act of God, acts or omissions of any government or agency thereof, compliance with rules, regulations, or orders of any governmental authority or any office, department, agency, or instrumentality thereof, fire, storm, flood, earthquake, accident, acts of the public enemy or terrorism, war, rebellion, insurrection, riot, sabotage, invasion, quarantine, restriction, transportation embargoes, or failures or delays in transportation. |
8.5 | Any termination of this Agreement will not impact Licensor’s ownership interest, if any, in Licensee. |
11
8.6 | The rights and remedies granted herein, and any other rights or remedies which the Parties may have, cither at law or in equity, are cumulative and not exclusive of others, |
8.7 | Neither Party will be relieved of any obligation or liability under this Agreement arising from any act or omission committed prior to the termination date. Upon termination, Licensee will execute any documents necessary to achieve the transfer to Licensor of all rights to which Licensor may be entitled under this Agreement. |
8.8 | Licensee may terminate this Agreement for any reason if Licensee provides Licensor with sixty (60) calendar days prior notice of its intent to terminate and pays Licensor all patent reimbursement fees owed at the time or termination, if applicable, and all other fees and Royalties due or the pro rata portion of any Minimum Annual Royalties due in, or at the end of, the year of termination under Exhibit B, whichever is greater. |
8.9 | This Agreement will terminate automatically upon a final adjudication of invalidity, unenforceability, or the extinguishment of all Licensed Patents, for any reason. |
8.10 | This Agreement will terminate automatically if Licensee contests the validity or enforceability of any Licensed Patent, or requests reexamination of any Licensed Patent. |
8.11 | Licensee will terminate a sublicense automatically if the Sublicensee contests the validity or enforceability of any Licensed Patent, or requests reexamination of any Licensed Patent. |
8.12 | Expiration or termination of this Agreement will be without prejudice to any rights that may have accrued to the benefit of a Party prior to such expiration or termination. |
12
ARTICLE 9
INFRINGEMENT
9.1 | Licensee will notify Licensor in writing of any suspected infringement of the Licensed Patents in the Field of Use, and each Party will inform the other of any evidence of such suspected infringement within a reasonable time of obtaining such evidence. |
9.2 | Licensee will have the right during the term of this Agreement to institute, prosecute, and settle at its own expense suits for infringement of the Licensed Patents for any infringement occurring within the Field of Use, and if required by law, Licensor will join as party plaintiff in such suit. Licensee shall obtain Licensor’s consent before instituting any such action, such consent not to be unreasonably withheld. For avoidance of doubt, it shall not be unreasonable for Licensor to withhold such consent in the event that the proposed enforcement action would reasonably be anticipated to result in a narrowing of the scope of any of the Licensed Patents or a finding that the asserted claims of a Licensed Patent are invalid. Licensee shall not be permitted to settle any such action in a manner that limits the scope of any Licensed Patent or that admits liability or fault on the part of the Licensor. Licensee will be entitled to retain all damages and any other consideration recovered at successful conclusion of the suit. |
9.3 | In the event Licensee decides not to bring any such suit, Licensee will so notify Licensor and Licensor may bring such suit. Where such suit is brought by Licensor, Licensor will be entitled to retain all damages and any other consideration recovered at successful conclusion of the suit. |
9.4 | Licensor will have the right in its absolute discretion during the Term of this Agreement to commence suits for infringement of the Licensed Patents for any infringement outside the Field of Use. |
9.5 | Notwithstanding the pendency of any infringement (or other) claim or action by or against Licensee, Licensee will have no right to reduce, terminate or suspend (or escrow) payment of any amounts required to be paid to Licensor pursuant to this Agreement. |
13
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 | Licensee represents and warrants that it will not export any technical information (or the direct product thereof) furnished to Licensee, cither directly or indirectly by Licensor in the grant of license to the Licensed Patents, from the United States of America, directly or indirectly without first complying with all requirements of the Export Administration Regulations, including the requirement for obtaining any export license, if applicable. Licensee will indemnify, defend and hold harmless Licensor, DOE, their respective members, officers, directors, agents, employees, and persons acting on their behalf, (“Indemnitees”) from liability involving the violation of such export regulations, either directly or indirectly, by Licensee. |
10.2 | Licensee will indemnify, defend and hold harmless Licensor, DOE, their respective members, officers, directors, agents, employees, and persons acting on their behalf, (“Indemnitees”) from liability involving the violation of such export regulations, either directly or indirectly, by Licensee. |
10.3 | Licensee acknowledges it may be subject to criminal liability under U.S. laws for Licensee’s failure to obtain any required export license. |
10.4 | Licensee agrees to indemnify and hold harmless Indemnitees from and against any and all liabilities, penalties, fines, forfeitures, claims, demands, causes of action, damages, and costs and expenses (including the costs of defense, prosecution and/or settlement, including, but not limited to, attorney’s fees) incurred in connection with any action asserted by a third party, and caused by, arising out of or related to, in whole or in part. Licensee’s and/or any Sublicensee’s exercise of rights under this Agreement or any other action or inaction relating to Licensed Patents, Licensed Products, or Licensed Processes, including, but not limited to, claims or demands of product liability, personal injury, death, damage to property or violation of any laws or regulations, except for those arising from Licensor’s negligence or breach of this Agreement or the PL A -1669 Agreement. |
10.5 | This agreement is entered into by UT-Battelle in its private capacity. It is understood and agreed that the U.S. Government is not a party to this agreement and in no manner whatsoever shall be liable for, nor assume any responsibility or obligation for, any claim, cost or damages arising out of or resulting from this Agreement or the subject matter licensed. |
14
10.6 | Nothing in this Agreement shall be deemed to be a representation or warranty by Licensor or the U.S. Government of the validity of any of the patents or the accuracy, safety, or usefulness for any purpose, of any technical information, techniques, or practices at any time made available by Licensor. Neither the U.S. Government nor Licensor nor any member company of Licensor shall have any liability whatsoever to Licensee or any other person for or on account of any injury, loss, or damage of any kind or nature sustained by, or any damage assessed or asserted against, or any other liability incurred by or imposed upon Licensee or any other person, arising out of or in connection with or resulting from: |
(A) | The production, use, or sale of any apparatus or product, or the practice of the Licensed Patents; |
(B) | The use of any technical information, techniques, or practices disclosed by Licensor; or |
(C) | Any advertising or other promotional activities with respect to any of the foregoing, and Licensee shall hold the U.S. Government, Licensor, and any member company of Licensor harmless in the event the U.S. Government, Licensor or any member company of Licensor is held liable. |
Licensor represents that (i) it has the right to grant all of the rights granted herein, subject to the rights of the Government of the United States of America referenced in Article 3, and (ii) all inventors of the inventions claimed in the Licensed Patents have assigned all of their right, title and interest in and to such inventions, and in and to such patents, to Licensor.
ARTICLE 11
DISCLAIMERS
11.1 | NEITHER LICENSOR, DOE, NOR PERSONS ACTING ON THEIR BEHALF WILL BE RESPONSIBLE FOR ANY INJURY TO OR DEATH OF PERSONS OR OTHER LIVING THINGS OR DAMAGE TO OR DESTRUCTION OF PROPERTY OR FOR ANY OTHER LOSS, DAMAGE, OR INJURY OF ANY KIND WHATSOEVER RESULTING FROM LICENSOR’S GRANT OF LICENSE TO LICENSEE UNDER THIS AGREEMENT. |
15
11.2 | ALL LICENSED PATENTS, INFORMATION, MATERIALS OR SERVICES FURNISHED UNDER OR WITH THIS AGREEMENT (“DELIVERABLES”) ARE PROVIDED ON AN “AS IS” BASIS. NEITHER LICENSOR, DOE, NOR PERSONS ACTING ON THEIR BEHALF MAKE ANY REPRESENTATIONS, OR EXTEND ANY WARRANTIES, EITHER EXPRESS OR IMPLIED: (a) WITH RESPECT TO THE VALIDITY OF THE LICENSED PATENTS; (b) WITH RESPECT TO THE MERCHANTABILITY, ACCURACY, COMPLETENESS, FITNESS FOR USE OR USEFULNESS OF ANY DELIVERABLES; (c) THAT THE USE OF ANY SUCH DELIVERABLES WILL NOT INFRINGE PRIVATELY OWNED RIGHTS; (d) THAT THE DELIVERABLES WILL NOT RESULT IN INJURY OR DAMAGE WHEN USED FOR ANY PURPOSE; (e) THAT THE DELIVERABLES WILL ACCOMPLISH THE INTENDED RESULTS OR ARE SAFE FOR ANY PURPOSE, INCLUDING THE INTENDED OR PARTICULAR PURPOSE; OR (f) WITH RESPECT TO USE, OR DISPOSITION BY LICENSEE OR ITS VENDEES OR OTHER TRANSFEREES OF LICENSED PRODUCTS INCORPORATING OR MADE BY USE OF (1) INVENTIONS LICENSED UNDER THIS AGREEMENT OR (2) INFORMATION, IF ANY, FURNISHED UNDER THE AGREEMENT. FURTHERMORE, LICENSOR AND DOE HEREBY SPECIFICALLY DISCLAIM ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, FOR ANY LICENSED PRODUCTS RESULTING FROM LICENSOR’S GRANT OF LICENSE HEREUNDER. IT IS AGREED THAT NEITHER LICENSOR NOR DOE WILL BE LIABLE FOR CONSEQUENTIAL, SPECIAL, OR INCIDENTAL DAMAGES IN ANY EVENT. LICENSEE AND ITS SUBLICENSEES WILL MAKE NO WARRANTY, EXPRESS OR IMPLIED, ON BEHALF OF LICENSOR OR THE DOE. |
16
11.3 | Nothing in this Agreement will be construed as |
a. | an obligation of the Licensor to bring or prosecute actions or suits against third parties for infringement (except to the extent and in the circumstances stated in Article 9); or |
b. | an obligation of the Licensor to furnish any manufacturing or technical information or technical assistance, or |
c. | conferring a right to use in advertising, publicity, or otherwise any trademark or name of Licensor (except to the extent stated in 6.2); or |
d. | granting by implication, estoppel, or otherwise, any licenses or rights under patents of Licensor other than Licensed Patents, regardless of whether such other patents are dominant of or subordinate to any Licensed Patents. |
ARTICLE 12
GENERAL
12.1 | All notices and reports will be addressed to the Parties as follows: |
If to Licensor:
Accounting Administration, Partnerships | Facsimile |
UT-Battelle, LLC | (865) 576-9465 |
One Bethel Valley Road | Phone |
Oak Ridge, Tennessee 37831-6196 | (865) 241-2353 |
collinssml@ornl.gov |
If to Licensee:
Kevin Knopp | Facsimile |
908 Devices Inc. | (978) 909-9004 |
27 Drydock Avenue, 8th Floor | Phone |
Boston, MA 02210 | (978) 729-4478 |
12.2 | All stock certificates, if any, will be sent to the address for notices. |
12.3 | Any notice, report or any other communication required to be given will be in writing and delivered either: (a) personally, (b) by express, registered or certified first-class mail, (c) by commercial courier, or (d) by facsimile with machine confirmation of transmission. |
17
12.4 | The failure of cither Party to enforce a provision of this Agreement or to exercise any right or remedy will not be a waiver of such provision or of such rights or remedies or the right of the Parties thereafter to enforce each and every provision, right or remedy. |
12.5 | This Agreement may be amended or modified only by a written instrument signed by both Parties. |
12.6 | The determination by a Court of competent jurisdiction that any part, term, or provision of this Agreement is illegal or unenforceable, will not affect the validity of the remaining provisions of this Agreement. |
12.7 | Licensor may assign this Agreement and all rights, duties and obligations hereunder, to DOE or a successor contractor to Licensor, as may be required under its prime contract with DOE. |
12.8 | This Agreement will be construed according to the laws of the State of Tennessee and the United States of America and in the English language. Any action brought to enforce any provision or obligation hereunder will be brought in the Federal District Court for the Eastern District of Tennessee. However, il jurisdiction is not found in Federal Court, actions will be brought in Tennessee in either Knox, Roane, or Anderson County Court. |
12.9 | This Agreement is solely for the benefit of the Parties, represents the entire and integrated agreement between the Parties, and supercedes all prior negotiations, representations, and agreements, either written or oral. This Agreement, and each and every provision thereof, is for the exclusive benefit of Licensor and Licensee and not for the benefit of any third party, except to the extent expressly provided in the Agreement. |
ARTICLE 13
OFFER
The offer to execute this Agreement shall expire if this Agreement is not signed by Licensee and returned to Licensor on or before June 15, 2012.
18
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement of be executed in duplicate originals by its duly authorized officers or representatives.
UT-BATTELLE, LLC
By: | /s/ Michael J. Paulus |
|
||
Name: | Michael J. Paulus | |||
Title: | Director, Technology Transfer | |||
Date: | 8 June 2012 | |||
908 DEVICES INC. | ||||
By: | /s/ Kevin J. Knopp | |||
Name | Kevin J. Knopp | |||
Title: | President & CEO | |||
Date: | 6/13/12 |
19
EXHIBIT A: LICENSED PATENTS
Docket No. |
Country | Title | Inventor(s) | Ser. No./Pat. No. | Filing/Issue Date |
1114 | US | Pulsed Discharge Ionization Source for Miniature Ion Mobility Spectrometers |
John M. Ramsey; William B. Whitten; Jun Xu |
6,822,225 | 11/23/2004 |
1114 | JP | Pulsed Discharge Ionization Source for Miniature Ion Mobility Spectrometers |
John M. Ramsey; William B. Whitten; Jun Xu |
JP 4522866 B2 | 9/10/2003 |
1114 | EPO | Pulsed Discharge Ionization Source for Miniature Ion Mobility Spectrometers |
John M. Ramsey; William B. Whitten; Jun Xu |
EP App 3816115.4 |
9/10/2003 |
1209 | US | Ion trap array-based systems and methods for chemical analysis |
John M. Ramsey; William B. Whitten |
6,933,498 | 8/23/2005 |
Initials | |||
UT-Battelle: |
|
||
Date: | 6/8/12 | ||
Licensee: |
|
||
Date: | 6/13/12 | ||
20
EXHIBIT B: TERM SHEET & FINANCIAL OBLIGATIONS
A. | Type of License: |
Field of Use Exclusive
B. | Field(s) of Use: |
Field of Use 1: Military, public safety, intelligence, national security, and homeland security, including chemical and biological warfare defense and explosives detection, whether such use is by public (governmental) employees, agencies or authorities or private entities;
Field of Use 2: Clinical diagnostics, medical instrumentation, and analytical instruments for life sciences applications;
Field of Use 3: Industrial process monitoring; and
Field of Use 4: Food and environmental testing and safety.
C. | Execution Fee: |
In consideration for the execution of this Agreement, Licensee agrees to pay Licensor an Execution Fee comprising Payments and to convey to Licensor a Convertible Promissory Note as follows:
1. | Cash Payments: |
(a) | Five Thousand U.S. Dollars (US$5,000) within fifteen (15) business days of Effective Date; and |
(b) | Fifteen Thousand U.S. Dollars (US$15,000) within fifteen (15) business days of the beginning of the second Accounting Period. |
This Agreement is being entered into by the Parties simultaneously with PLA- 1669 License. A percentage of the Cash Payments paid by Licensee under this Agreement will be deemed to be the Cash Payments for the PLA-1669 License.
2. | Grant of Equity: |
Licensee will issue to the Licensor 120,000 shares of common stock of Licensee. If, immediately prior to the Trigger Financing Date, the shares issued to Licensor under the immediately preceding sentence constitute less than $ 120,000 worth of stock on a pre-money basis (as such value is calculated for purposes of the offering occurring on the Trigger Financing Date), then Licensee shall issue additional shares of common stock to Licensor such that immediately after such issuance and immediately prior to the Trigger Financing Date, the total number of shares issued to Licensor by Licensee shall be equal to $120,000 worth of stock on a pre-money basis (as such value is calculated for purposes of the offering occurring on the Trigger Financing Date); it being understood that no additional shares or other securities will be issuable to the Licensor in connection with or as a result of the Equity Securities being issued in the transaction that results in the Trigger Financing Date. The issuance(s) of common stock to Licensor shall be made in accordance with a subscription agreement in substantially the form attached hereto as Exhibit D to be entered into by and between Licensor and Licensee as of the Effective Date.
21
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
For purposes of this Exhibit B, the term “Trigger Financing Date” means the date on which Licensee receives a cumulative total of two million dollars ($2,000,000) in cash in exchange for the issuance of Equity Securities in one or more offerings and the term “Equity Securities” means any capital shares of Licensee (including without limitation common and preferred shares), and any securities of Licensee that are convertible into any capital shares of Licensee.
A percentage of the Equity issued by Licensee under this Agreement will be deemed to be the Equity issued to Licensee for the PLA-1669 License.
D. | Running Royalty Rate Structure: |
1) | Net Sales Royalty: Licensee will pay a Royalty to Licensor each year during the Term within thirty (30) days of the end of each Accounting Period of [***] of the Net Sales. |
A percentage of the Net Sales Royalty paid by Licensee under this Agreement will be attributed to the Net Sales Royalty for the PLA-1669 License.
2) | Combination Net Sales Royalty: Licensee will pay a Royalty to Licensor each year within thirty (30) days of the end of each Accounting Period of [***] of the Combination Net Sales. |
A percentage of the Combination Net Sales Royalty paid by Licensee under this Agreement will be attributed to the Combination Net Sales Royalty for the PLA-1669 License.
E. | Annual Minimum Royalty: |
Licensee will pay Licensor the difference between the amount of the total Running Royalty plus Sublicensing Royalties and the Annual Minimum Royalty in the event that the Running Royalty due under Paragraph B plus the Sublicensing Royalties due under Paragraph F together do not equal or exceed the Annual Minimum Royalty set out in the table below.
Accounting Period | Annual Minimum Royalty | |
1 | Zero U.S. Dollars ($0.00) | |
2 | Zero U.S. Dollars ($0.00) | |
3 | Zero U.S. Dollars ($0.00) | |
4 | Twenty Thousand U.S. Dollars (US$20,000) | |
5 | Twenty Thousand U.S. Dollars (US$20,000) | |
6 and each Accounting | Seventy Thousand U.S. Dollars (US$70,000) | |
Period thereafter |
22
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
A percentage of the Annual Minimum Royalty paid by Licensee under this Agreement will be attributed to the Annual Minimum Royalty for the PLA-1669 License.
F. | Sublicense Royalty: |
Licensee will pay to Licensor a portion of all Sublicensing Revenue in the amounts set out below, such payment being due and payable by Licensee at the time Licensee’s payment of its Royalties owed under this Agreement for the same Accounting Period are due and payable. For each sublicense executed during the first four (4) Accounting Periods, Licensee will pay Licensor [***] of all Sublicensing Revenue owed to Licensee by each Sublicensee over the life of each sublicense. For each sublicense executed during the fifth (5th) Accounting Period and each Accounting Period thereafter, Licensee will pay Licensor [***] of all Sublicensing Revenue owed to Licensee by each Sublicensee over the life of each sublicense.
A percentage of the Sublicensing Revenue paid by Licensee under this Agreement will be attributed to the Sublicensing Revenue for the PLA-1669 License.
G. | Reimbursement of Patent Costs: |
Licensee will reimburse Licensor solely for the Patent Costs described below in accordance with Paragraph 4.4 of the Agreement:
1. | patent costs incurred after January 3, 2014 for U.S. Licensed Patents, and |
2. | patent costs incurred after the Effective Date of this Agreement for Licensed Patents that are not U.S. Licensed Patents. |
NOTICE
This Exhibit contains financial and commercial information that is BUSINESS SENSITIVE and the Parties hereby agree not to use or disclose this Exhibit to any third party’ without the advance written approval of the other Party, except: (1) to those necessary to enable the Parties to perform under this Agreement; (2) as may be required by the UT-Battelle Prime Contract with the DOE under the same restrictions as set forth herein; or (3) in event of breach of any provision of this Agreement by either Party, to those deemed necessary by the non-breaching Party to enforce the non-breaching Party’s rights under the Agreement.
Initials | |||
UT-Battelle: |
|
||
Date: | 6/8/12 | ||
Licensee: |
|
||
Date: | 6/13/12 | ||
23
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
EXHIBIT C: DEVELOPMENT AND COMMERCIALIZATION PLAN
[***]
24
NOTICE
This Exhibit contains financial and commercial information that is BUSINESS SENSITIVE and the Parties hereby agree not to use or disclose this Exhibit to any third party without the advance written approval of the other Party, except: (1) to those necessary to enable the Parties to perform under this Agreement; (2) as may be required by the UT-Battelle Prime Contract with the DOE under the same restrictions as set forth herein; or (3) in event of breach of any provision of this Agreement by either Party, to those deemed necessary by the non-breaching Party to enforce the non-breaching Party’s rights under the Agreement.
Initials | |||
UT-Battelle: |
|
||
Date: | 6/8/12 | ||
Licensee: |
|
||
Date: | 6/13/12 | ||
25
EXHIBIT D SUBSCRIPTION AGREEMENT
(attached)
26
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the “Agreement”) is made and entered into as of 6/13 , 2012 (the “Effective Date”), by and between 908 Devices Inc., a Delaware corporation (the “Company”), and UT-Battelle, LLC, managing and operating the Oak Ridge National Laboratory under its Prime Contract No. DE-AC05-OOOR22725 with the United States Department of Energy (“DOE”), an agency of the United States Government, (the “Purchaser”).
WHEREAS, the Company and the Purchaser entered into a Limited Exclusive Commercial Field of Use Patent License Agreement (the “License Agreement”) dated as of the Effective Date, pursuant to which the Purchaser is granting, and the Company is receiving a license (the “License”) for certain valuable inventions, the consideration for which includes shares of the capital stock of the Company.
WHEREAS, on the terms and subject to the conditions set forth herein, the Purchaser desires to subscribe for, and the Company proposes to issue to the Purchaser, one hundred and twenty thousand (120,000) shares (together with any other such shares as are issued to Purchaser in accordance with the License Agreement, the “Subscribed Shares”) of the Company’s Common Stock, par value $0,001 per share (the “Common Stock”) as partial consideration for the License.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth and of other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. The following capitalized terms, as used in this Agreement, shall have the meanings set forth below.
1.1 “Acquisition” means the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares of the Company’s capital stock are converted into or exchanged for securities of the successor entity and the holders of the Company as outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iv) the sale, in a single transaction or series of related transactions, of all or a majority of the Company as capital stock to an unrelated person or entity.
1.2 “Person” shall mean an individual, a corporation, a partnership, a joint venture, a trust, an unincorporated organization, a limited liability company, a government and any agency or political subdivision thereof.
1.3 “Securities Act” shall mean the Securities Act of 1933, as it may be amended from time to time, and the rules and regulations thereunder.
1.4 “Shares” shall means, at any time, shares of (i) common stock, and (ii) any other equity securities now or hereafter issued by the Company, together with any options thereon and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend, stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, recapitalization, merger, consolidation or other corporate reorganization).
1.5 “Stockholders” shall mean all holders of capital stock of the Company.
1.6 “Transfer” shall mean any direct or indirect transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in or other disposal or attempted disposal of all or any portion of a security, any interest or rights in a security, or any rights under this Agreement. “Transferred” means the accomplishment of a Transfer, and “Transferee” means the recipient of a Transfer.
2. Purchase and Sale of Subscribed Shares.
2.1 Purchase and Sale of Subscribed Shares. Subject to the terms and conditions set forth herein and in the License Agreement, upon the execution hereof, the Company shall Transfer to the Purchaser, and the Purchaser shall accept from the Company, the Subscribed Shares as partial consideration of the License.
2.2 Delivery of Certificates Representing Purchased Subscribed Shares. The Company shall deliver to the Purchaser a certificate in the name of the Purchaser representing the Subscribed Shares transferred to the Purchaser.
3. Restrictions on Transfer; Right of Refusal; Drag-Along Right
3.1 Restrictions on Transfer. Except as allowed in Section 6.4 below, Purchaser agrees that it will not, without the prior written consent of the Board of Directors of the Company, Transfer all or any portion of the Shares now owned or hereafter acquired by the Purchaser, except in connection with, and strictly in compliance with the conditions of this Section 3.
3.2 Right of Refusal. In the event that the Purchaser entertains a bona fide offer to purchase all or any portion of the Shares held by the Purchaser (a “Transaction Offer”) from any other Person (a “Buyer”), such Purchaser may, at its discretion, Transfer such Shares pursuant to and in accordance with the following provisions of this Section 3.2:
(a) Offer Notice. The Purchaser shall cause the Transaction Offer and all of the terms thereof to be reduced to writing and shall promptly notify the Company of such Purchaser’s desire to effect the Transaction Offer and otherwise comply with the provisions of this Section 3.2 (such notice, the “Offer Notice”). The Purchaser’s Offer Notice shall constitute an irrevocable offer to sell all, but not less than all, of the Shares which are the subject of the Transaction Offer (the “Offered Shares”) to the Company, on the basis described below, at a purchase price equal to the price contained in, and on the same terms and conditions of, the Transaction Offer. The Offer Notice shall be accompanied by a true copy of the Transaction Offer (which, to the extent permitted by the terms of the Transaction Offer, shall identify the Buyer and all relevant information in connection therewith).
2
(b) Company Option. The Company shall have the option to purchase all or a portion of the Offered Shares. At any time within twenty (20) days alter receipt by the Company of the Offer Notice (the “Company Option Period”), the Company may elect to accept the offer to purchase with respect to any or all of the Offered Shares and shall give written notice of such election (the “Company Acceptance Notice”) to the Purchaser within the Company Option Period, which notice shall indicate the number of Shares that the Company is willing to purchase. The Company Acceptance Notice shall constitute a valid, legally binding and enforceable agreement for the sale and purchase of the Shares covered by the Company Acceptance Notice. If the Company accepts the offer to purchase all of the Offered Shares, the closing for such purchase of the Offered Shares by the Company under this Section 3.2(b) shall take place within thirty (30) days following the expiration of the Company Option Period, at the offices of the Purchaser or on such other date or at such other place as may be agreed to by the Purchaser and the Company.
(c) Valuation of Property. In the event that the price set forth in the Offer Notice is stated in consideration other than cash or cash equivalents, the Purchaser and the Company shall mutually determine the fair market value of such consideration, reasonably and in good faith, and the Company may effect its purchase under this Section 3.2 by payment of such fair market value in cash or cash equivalents.
(d) Sale to Third Party. In the event that the Company does not elect to exercise the rights to purchase under this Section 3.2 with respect to all of the Shares proposed to be sold, the Purchaser may sell all such Shares to the Buyer on the terms and conditions set forth in the Offer Notice. Prior to the effectiveness of any Transfer to a Buyer hereunder, such Buyer shall have entered into a joinder agreement pursuant to which such Buyer will assume all the obligations hereunder as if such Buyer were the Purchaser.
3.3 Lock-Up. The Purchaser agrees, if requested by the Company and any underwriter engaged by the Company, not to sell or otherwise transfer or dispose of any Shares (including, without limitation, pursuant to Rule 144 under the Securities Act) held by him, her or it for such period following the effective date of any registration statement of the Company filed under the Securities Act as the Company or such underwriter shall specify reasonably and in good faith. If requested by the underwriter engaged by the Company, the Purchaser shall execute a separate letter reflecting the agreement set forth in this Section 3.3.
3
3.4 Drag-Along Rights. In the event of an Acquisition in which the holders of a majority of the Common Stock of the Company (the “Approving Holders”) exercise the Drag-Along Right (as defined below), the Purchaser shall be obligated to and shall, upon the written request of such Approving Holders: (i) sell, transfer and deliver, or cause to be sold, transferred and delivered, to the third-party buyer a pro rata portion of Shares held by the Purchaser, on the same terms applicable to the Approving Holders and/or (ii) execute and deliver such instruments of conveyance and transfer and take such other action, including voting all Shares held by the Purchaser in favor of any Acquisition approved by the Approving Holders and executing any purchase agreements, merger agreements, escrow agreements or related documents, as the third-party buyer may reasonably require and that such Approving Holders shall have executed, in order to carry out the terms and provisions of this Section 3.5 (the “Drag-Along Right”). IN FURTHERANCE OF THE FOREGOING, FOR PURPOSES OF ANY ACQUISITION IN WHICH THE APPROVING HOLDERS ARE ENTITLED TO, AND DO, EXERCISE THE DRAG-ALONG RIGHT, THE PURCHASER HEREBY GRANTS TO THE DESIGNEE OF THE APPROVING HOLDERS AN IRREVOCABLE PROXY TO VOTE THE SHARES HELD BY THE PURCHASER IN FAVOR OF ANY ACQUISITION FOR WHICH THE DRAG-ALONG RIGHT IS APPLICABLE HEREUNDER. SUCH PROXY IS COUPLED WITH AN INTEREST AND IS VALID FOR A PERIOD OF TEN (10) YEARS FROM THE DATE OF THIS AGREEMENT.
4. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof to the Company as follows:
4.1 Investment Representation. The Purchaser is an “accredited investor” under Regulation D of the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Purchaser is aware that the Subscribed Shares have not been registered under the Securities Act, or qualified under any state securities laws. The Subscribed Shares are being acquired for investment purposes only and not for sale or with a view to distribution of all or any part thereof in violation of the securities laws.
4.2 Access to Information. The Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of its purchase of the Subscribed Shares and regarding the business, financial affairs and other aspects of the Company, and it has further had the opportunity to obtain any information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which it deems necessary to evaluate its investment or to verify the accuracy of information otherwise provided to it.
4.3 Restricted Securities. The Purchaser understands that the Subscribed Shares will be characterized as “restricted securities” under the Securities Act and that under such laws and applicable regulations, the Subscribed Shares may be resold without registration under the Securities Act only in certain limited circumstances, and that otherwise the Subscribed Shares must be held indefinitely. The Purchaser further represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and the conditions which must be met in order for Rule 144 to be available for resale of “restricted securities,” and understands the resale limitations imposed by the Securities Act.
4
4.4 Authority. The Purchaser has all required power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by The Purchaser and (assuming the due authorization, execution and delivery by the Company) constitutes the legal, valid and binding obligation of the Purchaser, enforceable against him in accordance with its terms.
4.5 Organization. The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.
5. Representations and Warranties of the Company. The Company represents and warrants as of the date hereof to the Purchaser as follows:
5.1 Authorization. The Company has all requisite corporate power and authority to execute and deliver this Agreement, sell the Subscribed Shares and otherwise perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Purchaser) this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms.
5.2 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
6. Miscellaneous.
6.1 Governing Law. This Agreement and all matters arising hereunder shall be governed by and construed under the laws of the State of Tennessee, without regard to its conflicts of law rules or provisions.
6.2 Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable under the applicable law of any jurisdiction, (i) the remainder of this Agreement or the application of such provisions to other persons or circumstances or in other jurisdictions shall not be affected thereby, (ii) such invalid, illegal, or unenforceable provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such law, and (iii) such invalid, illegal, or unenforceable provision shall not affect the validity or enforceability of any other provision of this Agreement.
6.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original, and all of which when taken together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
6.4 Notwithstanding anything to the contrary herein, this Agreement, and all Shares received hereunder, may be Transferred by the Purchaser to the DOE or its designee without any notice to, or approval of Company upon the termination or expiration of Purchasers Prime Contract with the DOE; provided that any and all such transferees shall enter into a joinder agreement pursuant to which each such transferee will assume all the obligations hereunder as if such transferee were the Purchaser as a precondition to the effectiveness of such transfer.
[Reminder of Page Intentionally left Blank]
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the date first written above.
COMPANY: | |||
908 DEVICES INC. | |||
By: | /s/ Kevin Knopp | ||
Name: | Kevin Knopp | ||
Title: | Chief Executive Officer and President |
[Signature Page to Subscription Agreement]
PURCHASER: | ||||
UT-BATTELLE, LLC | ||||
By: | /s/ Michael J. Paulus | |||
Name: | Michael J. Paulus | |||
Title: | Director, Technology Transfer | |||
[Signature Page to Subscription Agreement]
PLA-1670-PFTT
AMENDMENT 1
TO
LIMITED EXCLUSIVE COMMERCIAL FIELD OF USE PATENT
LICENSE AGREEMENT
Between
UT-BATTELLE, LLC
Operator of the Oak Ridge National Laboratory
Under its U.S. Department of Energy Contract No. DE-AC05-00OR22725
(hereinafter “UT-Battelle”)
AND
908 DEVICES, INC.
(hereinafter “Licensee”)
This Amendment 1, made effective on August 2, 2013 (“Effective Date”), is entered into by UT-Battelle and the Licensee, with both hereinafter referred to collectively as the “Parties.”
WITNESSETH:
WHEREAS, the Parties entered into Limited Exclusive Commercial Field of Use Patent License Agreement PLA-1670-PFTT having an effective date of June 13, 2012 (the “Agreement”), and WHEREAS, the Parties now desire to amend the Agreement to revise the field of use definition, NOW THEREFORE, the Parties agree to this Amendment 1 as follows: In Article 2,
DEFINITIONS, re-write “Field of Use 3” as follows:
“Field of Use 3: “Industrial process monitoring, which includes but is not limited to the following industrial process: exploration, production, and management of hydrocarbon and water reservoirs, and the development or management of facilities for storing fluids, such as carbon dioxide and natural gas, in subsurface reservoirs; and”
1
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 1 to be duly executed in their respective names by their duly authorized representatives.
UT-BATTELLE, LLC | ||||
By: | /s/ Michael J. Paulus |
|
||
Name: | Michael J. Paulus | |||
Title: | Director, Technology Transfer | |||
Date: | 6 Aug 2013 | |||
908 DEVICES, INC. | ||||
By: | /s/ Kevin J Knopp | |||
Name: | Kevin J Knopp | |||
Title: | President & CEO | |||
Date: | 8/5/13 |
2
Exhibit 10.8
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
PLA-1669
LIMITED EXCLUSIVE COMMERCIAL FIELD OF USE PATENT LICENSE AGREEMENT
This Exclusive Commercial Patent License Agreement is between UT-Battelle, LLC (UT-Battelle), a Tennessee non-profit limited liability company (“Licensor”), and 908 Devices Inc., a Delaware corporation having an address at 27 Drydock Avenue, 8th Floor, Boston, MA 02210 (“Licensee”), hereinafter referred to singly as the “Party” or jointly as the “Parties.”
ARTICLE 1
BACKGROUND
1.1 | Licensor manages and operates the Oak Ridge National Laboratory under its Prime Contract No. DE-AC05-00OR22725 with the United States Department of Energy (“DOE”), an agency of the United States Government. |
1.2 | Licensor has rights in certain patents and patent applications listed in Exhibit A. |
1.3 | Licensee desires, and Licensor is willing to grant, an exclusive license under such patents and patent applications in certain fields of use. |
1.4 | This Agreement specifically includes Exhibit A, LICENSED PATENTS, Exhibit B, TERM SHEET & FINANCIAL OBLIGATIONS, Exhibit C, DEVELOPMENT AND COMMERCIALIZATION PLAN, and Exhibit D, SUBSCRIPTION AGREEMENT, which are attached. |
1.5 | Except as provided in Article 8, the license will run through the Term of this Agreement. |
1.6 | This Agreement is being executed by the Parties simultaneously with companion Patent License Agreement PLA-1670-PFTT (the “PLA-1670-PFTT License”). |
ARTICLE 2
DEFINITIONS
2.1 | As used in this Agreement, the following terms will have the meanings set forth below: |
“Accounting Period” means the period from January 1 through December 31 of each year, with the first Accounting Period beginning on the Effective Date.
1
“Combination Products” are Licensed Products which infringe or contribute to the infringement of a claim of patents or patent applications other than the Licensed Patents and to which Licensee has obtained an ownership interest or a royalty-bearing license.
“Combination Gross Sales” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Combination Products by Licensee. In the event Licensee does not, during the Term of this Agreement, Dispose of Combination Products that were made during the Term of this Agreement, the fair market value of such Combination Products (as if there had been a Disposition to a third party) will be included in Combination Gross Sales.
“Combination Net Sales” means the Combination Gross Sales, less the total of all:
a. | sales tariffs, duties, taxes, or other governmental charges imposed on the Combination Products; |
b. | outbound transportation prepaid or allowed; |
c. | amounts allowed or credited on returns; and |
d. | normal and customary trade, quantity, cash and other similar discounts, actually taken, wholesaler chargebacks, and rebates. |
For avoidance of doubt, Combination Net Sales shall not include, and shall be deemed to be zero, with respect to (i) the distribution of reasonable quantities of promotional samples of Combination Products and (ii) Combination Products provided for use in clinical trials, research purposes or charitable or compassionate use.
“Dispose” or “Disposition” means the sale, lease or other transfer of Licensed Products and/or Combination Products.
“Effective Date” means the date of the signature of the last Party to sign this Agreement. “Field(s) of Use” means and is limited to mass spectrometry used in the following Fields of Use:
Field of Use 1: Military, public safety, intelligence, national security, and homeland security, including chemical and biological warfare defense and explosives detection, whether such use is by public (governmental) employees, agencies or authorities or private entities;
2
Field of Use 2: Clinical diagnostics, medical instrumentation, and analytical instruments for life sciences applications;
Field of Use 3: Industrial process monitoring; and
Field of Use 4: Food and environmental testing and safety.
“Government” means the Federal Government of the United States of America, including all of its agencies and authorities.
“Government’s License Rights” means the Government’s nonexclusive, nontransferable, irrevocable, paid-up license to practice or to have practiced for or on behalf of the United States the Licensed Patents throughout the world, pursuant to 35 USC 202(c)(4).
“Gross Sales” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Licensed Products by Licensee. In the event Licensee does not, during the Term of this Agreement, Dispose of Licensed Products that were made during the Term of this Agreement, the fair market value of such Licensed Products (as if there had been a Disposition to a third party) will be included in Gross Sales.
“Licensed Patents” means each patent and patent application listed in Exhibit A, and any patents issuing in any country at any time from such application and any divisions, continuations, continuations-in-part (excluding those claims in such continuations-in-part applications that do not relate to uses within the Field(s) of Use) thereof, and all reissues, reexaminations, substitutes, or extensions of any such patents, and all patent applications corresponding to any of the foregoing. The term “Licensed Patents” does not include any patent found to be unenforceable or invalid by a final adjudication by a Court of competent jurisdiction.
“Licensed Products” means any device, apparatus, product, compound, composition of matter, product-by-process, kit, system, material, or algorithm the manufacture, use, sale, offer for sale, or import of which, but for the license granted in this Agreement, would infringe or contribute to the infringement of a claim of a Licensed Patent.
3
“Net Sales” means the Gross Sales less the total of all:
a. | sales tariffs, duties, taxes, or other governmental charges imposed on the Licensed Products; |
b. | outbound transportation prepaid or allowed; |
c. | amounts allowed or credited on returns; and |
d. | normal and customary trade, quantity, cash and other similar discounts, actually taken, wholesaler chargebacks, and rebates. |
For avoidance of doubt, Net Sales shall not include, and shall be deemed to be zero, with respect to (i) the distribution of reasonable quantities of promotional samples of Licensed Products and (ii) Licensed Products provided for use in clinical trials, research purposes or charitable or compassionate use.
“Patent Costs” means the verifiable costs related to the preparation, filing, prosecution and maintenance of U.S. and foreign Licensed Patents.
“Royalty” and “Royalties” mean the payments owed to Licensor specified in Exhibit B. “Sublicensee” means a third party to whom Licensee has granted a sublicense of rights granted under Section 3.1.
“Sublicensing Revenue” means the U.S. Dollar value of all consideration to which Licensee is entitled for the Disposition of Licensed Products by a Sublicensee, including any license fees, royalties and milestone payments or other consideration.
“Sublicensing Royalties” mean the payments owed to Licensor based on Sublicensing Revenue as specified in Exhibit B.
“Term” means the period of time starting on the Effective Date and continuing until expiration of the last to expire Licensed Patents.
ARTICLE 3
GRANT
3.1 | Licensor grants to Licensee, and Licensee accepts for the Term of this Agreement, subject to the terms and conditions set forth herein, an exclusive license under the Licensed Patents to make, have made, use, offer to sell, sell, Dispose of, and import (subject to 6.1) the Licensed Products in the Field(s) of Use throughout the world. In addition, Licensor grants to Licensee and Licensee accepts for the Term of this Agreement, the right to grant sublicenses in accordance with Article 5 of this Agreement. |
4
3.2 | Licensee’s exclusive commercial license is subject to, and will in no way restrict, the Government’s License Rights. |
3.3 | Licensee’s exclusive license is subject to, and will in no way restrict, the march-in rights of the Government pursuant to 35 USC 203. |
3.4 | Licensor retains the right to grant licenses to not-for-profit research and educational institutions solely to perform research for non-commercial purposes in the Field(s) of Use. |
3.5 | Licensor may, in its sole discretion, grant licenses to the Licensed Patents outside the Field(s) of Use. |
3.6 | Licensee acknowledges that no license is granted or implied under, and expressly agrees not to make, have made, use, offer to sell, sell, Dispose of, and import the Licensed Products outside the Field of Use. Licensee agrees that making, having made, using, offering to sell, selling, Disposing of, and importing the Licensed Products outside the Field of Use is a breach of this Agreement. |
ARTICLE 4
CONSIDERATION AND FINANCIAL OBLIGATIONS
4.1 | In consideration for the License, Licensee agrees to comply with the provisions of this Agreement, to issue the Equity Securities as set forth herein, to pay all fees, Royalties, costs, and all other consideration within the time periods and as otherwise specified in this Agreement for the Term, and to use commercially reasonable efforts to satisfy the requirements of the Commercialization Plan set forth in Exhibit C. Prompt payment of all amounts due to Licensor and satisfaction of the Commercialization Plan requirements are material to this Agreement. |
4.2 | Licensee will pay to Licensor a fixed license fee in the amount specified in Exhibit B (Execution Fee), which will be nonrefundable and not creditable against any Royalties. Exhibit B specifies when the Execution Fee is due and payable. In the event of termination of this Agreement, the entire unpaid balance of the Execution Fee will be due and payable on or before the effective date of termination. |
5
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
4.3 | Licensee will reimburse Licensor for Patent Costs as provided in Exhibit B, Part G, within thirty (30) days of submission of the proof of costs incurred by Licensor. If Licensee elects to discontinue reimbursement of Patent Costs of any patent or patent application, then that patent or patent application will be excluded from the Licensed Patents, and all rights relating to the patent or patent application will revert to Licensor and may be freely licensed by Licensor to others. |
4.4 | All payments will be made to Licensor in U.S. dollars by wire transfer in accordance with the following wire instructions, unless and until written notice is provided by Licensor of a change in the wire instructions: |
First Tennessee Bank, Memphis – [***]
For further credit to First Tennessee, Knoxville – [***]
Beneficiary UT-Battelle, LLC
S.W.I.F.T. Code is FTBMUS44
4.5 | Licensee will owe no Royalties and no Sublicensing Royalties on its or any Sublicensee’s Dispositions of Licensed Products involving Government funds, including funds derived through a Military Assistance Program of the Government or otherwise derived through the Government, whether the Government is acting as the purchaser or the payor, because of the Government’s License Rights. Licensee will report all Revenue and Sublicensing Revenue received from such Dispositions by providing a Government control number and identification of the Government agency in the written report for the pertinent Accounting Period. |
4.6 | In the event that Licensee fails to make any payment due to Licensor within the time period prescribed for such payment under this Agreement, then the unpaid or overdue amount will bear interest at the rate of one and one half percent (1.5%) per month from the date when payment was due until payment in full, with interest, is made. In addition, Licensee agrees to reimburse Licensor for any costs or expenses, including attorney’s fees, incurred by Licensor in collection of such overdue payments. |
6
4.7 | For avoidance of doubt, if royalties are paid under this Article 4 on “Net Sales” or “Combination Net Sales” of a Product, and such sale proceeds also qualify as “Net Sales” or “Combination Net Sales” under the PLA-1670-PFTT License, then the amounts so paid as royalties hereunder shall be fully creditable, on a dollar-for-dollar basis, against any royalties that would otherwise be due and payable under the PLA-1670-PFTT License. |
ARTICLE 5
SUBLICENSES
5.1 | All sublicenses must be in accordance with the terms of this Agreement. |
5.2 | Licensee will only enter into sublicenses that are not transferable by Sublicensees, and only transferable by Licensee to Licensor. |
5.3 | All sublicenses must be approved in writing by Licensor in advance of execution by Licensee. Such approval will not be unreasonably withheld by Licensor. |
5.4 | Effective on the date of termination of this Agreement for any reason prior to the end of the Term, Licensee hereby assigns to Licensor each approved sublicense that is in effect on the date of termination, including the right to receive all income from Sublicensees. Licensee will include notification of this provision in all sublicenses. |
5.5 | Licensee will provide a copy of each sublicense to Licensor within thirty (30) days of the execution of each sublicense. |
5.6 | Licensee will pay to Licensor Sublicensing Royalties in the amounts and at the times specified in Exhibit B. |
5.7 | Subject to Article 9, Licensee must enforce all sublicenses at its cost. The Licensee will be responsible for the acts or omissions of its Sublicensees. Each sublicense granted by the Licensee will include an audit right by Licensor of the same scope as provided in Article 7 with respect to the Licensee and will include Licensor’s right to enforce the Licensed Patents. No sublicense agreement will contain any provision which would cause the grant to extend beyond the Term of this Agreement. |
5.8 | Licensee will require Sublicensees (a) to keep records and submit reports to Licensee of the same type and for the same Accounting Periods as required in Article 7, and (b) to submit to Licensor at the same time Licensee is required to submit a written report under Article 7, a report of all uses and Dispositions and the amount of payments made to Licensee in connection with such use. |
7
5.9 | Licensee will not grant to Sublicensees the right to grant sublicenses or the right to enforce any Licensed Patent. |
5.10 | For avoidance of doubt, if amounts are paid under this Article 4 as a percentage of Sublicensing Revenues, and such amounts also qualify as “Sublicensing Revenues” under the PLA-1670-PFTT License, then the amounts so paid as a percentage of Sublicensing Revenues hereunder shall be fully creditable, on a dollar-for-dollar basis, against any amounts that would otherwise be due and payable under the PLA-1670-PFTT License as a percentage of “Sublicensing Revenues.” |
ARTICLE 6
CONDITIONS OF GRANT
6.1 | Licensee agrees that any Licensed Products for use or sale in the United States will be substantially manufactured in the United States as and to the extent required by U.S. law, Department of Energy Regulations and Licensor’s Prime Contract. Licensee will include this U.S. manufacture requirement in all sublicenses that Licensee grants. |
6.2 | Licensee will mark all Licensed Products in accordance with the statutes of the United States relating to marking of patented articles (see 35 U.S.C. § 287). Licensee will include this marking requirement in all sublicenses that Licensee grants. Any such marking may indicate that Licensee has a license from Licensor. Otherwise, Licensee is prohibited from using Licensor’s name or the name “Oak Ridge National Laboratory” in any such marking or any advertising, promotion or commercialization of Licensed Products without written approval of Licensor; provided however, that Licensee shall be permitted to disclose factual information concerning the source of the rights licensed hereunder, for example, by identifying Licensor as the licensor of the rights hereunder or by identifying Oak Ridge National Laboratory as the institution where the Licensed Patents were invented, provided that such disclosures are not promotional in nature and do not suggest an endorsement of any Licensed Product by Licensor, Oak Ridge National Laboratory, the U.S. government, or any of their affiliates or agencies. |
8
6.3 | The rights and licenses granted by Licensor in this Agreement are personal to Licensee and may not be assigned or otherwise transferred in whole or in part except by (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation in which the outstanding shares of the Company’s capital stock are converted into or exchanged for securities of the successor entity and the holders of the Company as outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iii) the sale, in a single transaction or series of related transactions, of all or a majority of the Company as capital stock to an unrelated person or entity (an “Acquisition”). In the event of an Acquisition, Licensee may assign its rights and obligations under this Agreement to the merging or acquiring entity, effective on the date the merger or acquisition becomes effective, provided that all the following requirements have been satisfied in advance of the merger or acquisition: |
6.3.1 | Licensee notifies Licensor within forty-five (45) calendar days prior to said merger or acquisition; |
6.3.2 | Licensors approve the other parties involved in such transaction, it being understood that such approval by Licensors may only be refused if any such other party is a Restricted Entity; |
6.3.3 | Licensee shall have paid all royalties, fees and payments due Licensor; |
6.3.4 | The merging or acquiring entity has agreed to comply with the terms and conditions of this Agreement; and |
6.3.5 | If the merging or acquiring entity is subject to ownership or control by a non-U.S. entity, the Licensee has obtained DOE approval of the assignment and will comply with the DOE’s foreign ownership and control justification criteria then in effect. |
For purposes of this Section 6.3, the term “Restricted Entity” means any person or entity identified on the Denied Persons List published by the Bureau of Industrial Security, or any entity incorporated or having a principle place of business in an embargoed country as defined in Part 746 of the Export Administration Regulations.
9
6.4. | Licensee will not pledge its rights under this Agreement for any reason, including as security to obtain financing, without the prior written approval of Licensor. The Parties agree that any such pledge by Licensee without such approval by Licensor will be an automatic, material and incurable breach of the Agreement resulting in termination of the Agreement effective as of the attempt by Licensee to make such pledge. |
6.5. | Licensee hereby agrees that, in the event Licensee, by its own actions, or the action of any of its shareholders or creditors, files or has filed against it a case under the Bankruptcy Code of 1978, as previously or hereafter amended, Licensor shall be entitled to relief from the automatic stay of Section 362 of Title 11 of the U.S. Code, as amended, to pursue any rights and remedies available to it under the License. Licensee hereby waives the benefits of such automatic stay and consents and agrees to raise no objection to such relief. |
ARTICLE 7
RECORDS, REPORTS, AND ROYALTY PAYMENTS
7.1 | Licensee will keep and make available to Licensor for audit, inspection and copying by Licensor or its designee, including an accounting firm, adequate and sufficiently detailed records to enable Licensee’s financial obligations, including obligations incurred as a result of sublicensing in accordance with 5.6, if applicable, required under this Agreement to be easily determined. Licensee will maintain these records for a period of three (3) years after the end of the last Accounting Period to which the records refer. In the event an examination of Licensee’s records reveals an underpayment of more than 5% of the accurate Royalty amount, Licensee will pay all costs incurred by Licensor related to the examination of records in addition to paying the balance due. |
7.2. | Licensee will provide Licensor a written report for each Accounting Period during the Term of this Agreement, no later than thirty (30) days after the end of each Accounting Period, that identifies for such Accounting Period: |
10
(a) | the total Gross Sales received by Licensee from the making, use, or Disposition of Licensed Products itemized by domestic and/or foreign rights; |
(b) | the total amount of sales tariffs, duties and/or taxes imposed on the Licensed Products manufactured in the United States; |
(c) | the total outbound transportation costs prepaid or allowed; |
(d) | the total amounts allowed or credited on returns; and, |
(e) | the total amount of Royalties due to Licensor. |
The first such report will include this information for all Licensed Products Disposed of between the Effective Date and the end of the first Accounting Period.
7.3 | Licensee will submit a written report to Licensor within thirty (30) days after the date of any termination or expiration of this Agreement which contains the same information required in 7.2 above for Licensed Products made, used, or Disposed of prior to such expiration or termination that were not previously reported to Licensor. At the time this report is submitted, Licensee will pay to Licensor all Royalties and any other consideration due Licensor. |
ARTICLE 8
BREACH AND TERMINATION
8.1 | This Agreement may be terminated by either Party for any material breach of the Agreement by the other Party. Such termination will be effective sixty (60) days after written notice specifying the breach to the other Party. If the specified breach is cured before the effective date of termination, the Agreement will not be terminated. |
8.2 | In the event Licensee either (a) fails to make payment to Licensor of Royalties or other consideration in accordance with this Agreement or (b) fails to use commercially reasonable efforts to satisfy the requirements of the Commercialization Plan in Exhibit C, Licensor may, at its sole discretion, terminate this Agreement with respect to specified Licensed Patents. Such a termination shall not terminate any obligations which have accrued as of the date of such termination, including any obligation to pay any Royalties. |
11
8.3 | In addition to termination, in the event of a material breach by Licensee, Licensor may pursue any rights and remedies available to it by law. |
8.4 | This Agreement will not be terminated for any breach that is the result of an act of God, acts or omissions of any government or agency thereof, compliance with rules, regulations, or orders of any governmental authority or any office, department, agency, or instrumentality thereof, fire, storm, flood, earthquake, accident, acts of the public enemy or terrorism, war, rebellion, insurrection, riot, sabotage, invasion, quarantine, restriction, transportation embargoes, or failures or delays in transportation. |
8.5 | Any termination of this Agreement will not impact Licensor’s ownership interest, if any, in Licensee. |
8.6 | The rights and remedies granted herein, and any other rights or remedies which the Parties may have, either at law or in equity, are cumulative and not exclusive of others. |
8.7 | Neither Party will be relieved of any obligation or liability under this Agreement arising from any act or omission committed prior to the termination date. Upon termination, Licensee will execute any documents necessary to achieve the transfer to Licensor of all rights to which Licensor may be entitled under this Agreement. |
8.8 | Licensee may terminate this Agreement for any reason if Licensee provides Licensor with sixty (60) calendar days prior notice of its intent to terminate and pays Licensor all patent reimbursement fees owed at the time or termination, if applicable, and all other fees and Royalties due or the pro rata portion of any Minimum Annual Royalties due in, or at the end of, the year of termination under Exhibit B, whichever is greater. |
8.9 | This Agreement will terminate automatically upon a final adjudication of invalidity, unenforceability, or the extinguishment of all Licensed Patents, for any reason. |
8.10 | This Agreement will terminate automatically if Licensee contests the validity or enforceability of any Licensed Patent, or requests reexamination of any Licensed Patent. |
12
8.11 | Licensee will terminate a sublicense automatically if the Sublicensee contests the validity or enforceability of any Licensed Patent, or requests reexamination of any Licensed Patent. |
8.12 | Expiration or termination of this Agreement will be without prejudice to any rights that may have accrued to the benefit of a Party prior to such expiration or termination. |
8.13 | This Agreement will terminate automatically upon the termination or expiration, whichever occurs first, of the PLA-1670-PFTT License. |
ARTICLE 9
INFRINGEMENT
9.1 | Licensee will notify Licensor in writing of any suspected infringement of the Licensed Patents in the Field of Use, and each Party will inform the other of any evidence of such suspected infringement within a reasonable time of obtaining such evidence. |
9.2 | Licensee will have the right during the term of this Agreement to institute, prosecute, and settle at its own expense suits for infringement of the Licensed Patents for any infringement occurring within the Field of Use, and if required by law, Licensor will join as party plaintiff in such suit. Licensee shall obtain Licensor’s consent before instituting any such action, such consent not to be unreasonably withheld. For avoidance of doubt, it shall not be unreasonable for Licensor to withhold such consent in the event that the proposed enforcement action would reasonably be anticipated to result in a narrowing of the scope of any of the Licensed Patents or a finding that the asserted claims of a Licensed Patent are invalid. Licensee shall not be permitted to settle any such action in a manner that limits the scope of any Licensed Patent or that admits liability or fault on the part of the Licensor. Licensee will be entitled to retain all damages and any other consideration recovered at successful conclusion of the suit. |
9.3 | In the event Licensee decides not to bring any such suit, Licensee will so notify Licensor and Licensor may bring such suit. Where such suit is brought by Licensor, Licensor will be entitled to retain all damages and any other consideration recovered at successful conclusion of the suit. |
13
9.4 | Licensor will have the right in its absolute discretion during the Term of this Agreement to commence suits for infringement of the Licensed Patents for any infringement outside the Field of Use. |
9.5 | Notwithstanding the pendency of any infringement (or other) claim or action by or against Licensee, Licensee will have no right to reduce, terminate or suspend (or escrow) payment of any amounts required to be paid to Licensor pursuant to this Agreement. |
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 | Licensee represents and warrants that it will not export any technical information (or the direct product thereof) furnished to Licensee, either directly or indirectly by Licensor in the grant of license to the Licensed Patents, from the United States of America, directly or indirectly without first complying with all requirements of the Export Administration Regulations, including the requirement for obtaining any export license, if applicable. Licensee will indemnify, defend and hold harmless Licensor, DOE, their respective members, officers, directors, agents, employees, and persons acting on their behalf, (“Indemnitees”) from liability involving the violation of such export regulations, either directly or indirectly, by Licensee. |
10.2 | Licensee will indemnify, defend and hold harmless Licensor, DOE, their respective members, officers, directors, agents, employees, and persons acting on their behalf, (“Indemnitees”) from liability involving the violation of such export regulation, either directly or indirectly, by Licensee. |
10.3 | Licensee acknowledges it may be subject to criminal liability under U.S. laws for Licensee’s failure to obtain any required export license. |
10.4 | Licensee agrees to indemnify and hold harmless Indemnitees from and against any and all liabilities, penalties, fines, forfeitures, claims, demands, causes of action, damages, and costs and expenses (including the costs of defense, prosecution and/or settlement, including, but not limited to, attorney’s fees) incurred in connection with any action asserted by a third party, and caused by, arising out of or related to, in whole or in part, Licensee’s and/or any Sublicensee’s exercise of rights under this Agreement or any other action or inaction relating to Licensed Patents, Licensed Products, or Licensed Processes, including, but not limited to, claims or demands of product liability, personal injury, death, damage to property or violation of any laws or regulations, except for those arising from Licensor’s negligence or breach of this Agreement or the PLA-1670-PFTT Agreement. |
14
Licensor represents that (i) it has the right to grant all of the rights granted herein, subject to the rights of the Government of the United States of America referenced in Article 3, and (ii) all inventors of the inventions claimed in the Licensed Patents have assigned all of their right, title and interest in and to such inventions, and in and to such patents, to Licensor.
ARTICLE 11
DISCLAIMERS
11.1 | NEITHER LICENSOR, DOE, NOR PERSONS ACTING ON THEIR BEHALF WILL BE RESPONSIBLE FOR ANY INJURY TO OR DEATH OF PERSONS OR OTHER LIVING THINGS OR DAMAGE TO OR DESTRUCTION OF PROPERTY OR FOR ANY OTHER LOSS, DAMAGE, OR INJURY OF ANY KIND WHATSOEVER RESULTING FROM LICENSOR’S GRANT OF LICENSE TO LICENSEE UNDER THIS AGREEMENT. |
11.2 | ALL LICENSED PATENTS, INFORMATION, MATERIALS OR SERVICES FURNISHED UNDER OR WITH THIS AGREEMENT (“DELIVERABLES”) ARE PROVIDED ON AN “AS IS” BASIS. NEITHER LICENSOR, DOE, NOR PERSONS ACTING ON THEIR BEHALF MAKE ANY REPRESENTATIONS, OR EXTEND ANY WARRANTIES, EITHER EXPRESS OR IMPLIED: (a) WITH RESPECT TO THE VALIDITY OF THE LICENSED PATENTS; (b) WITH RESPECT TO THE MERCHANTABILITY, ACCURACY, COMPLETENESS, FITNESS FOR USE OR USEFULNESS OF ANY DELIVERABLES; (c) THAT THE USE OF ANY SUCH DELIVERABLES WILL NOT INFRINGE PRIVATELY OWNED RIGHTS; (d) THAT THE DELIVERABLES WILL NOT RESULT IN INJURY OR DAMAGE WHEN USED FOR ANY PURPOSE; (e) THAT THE DELIVERABLES WILL ACCOMPLISH THE INTENDED RESULTS OR ARE SAFE FOR ANY PURPOSE, INCLUDING THE INTENDED OR PARTICULAR PURPOSE; OR (f) WITH RESPECT TO USE, OR DISPOSITION BY LICENSEE OR ITS VENDEES OR OTHER TRANSFEREES OF LICENSED PRODUCTS INCORPORATING OR MADE BY USE OF (1) INVENTIONS LICENSED UNDER THIS AGREEMENT OR (2) INFORMATION, IF ANY, FURNISHED UNDER THE AGREEMENT. FURTHERMORE, LICENSOR AND DOE HEREBY SPECIFICALLY DISCLAIM ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, FOR ANY LICENSED PRODUCTS RESULTING FROM LICENSOR’S GRANT OF LICENSE HEREUNDER. IT IS AGREED THAT NEITHER LICENSOR NOR DOE WILL BE LIABLE FOR CONSEQUENTIAL, SPECIAL, OR INCIDENTAL DAMAGES IN ANY EVENT. LICENSEE AND ITS SUBLICENSEES WILL MAKE NO WARRANTY, EXPRESS OR IMPLIED, ON BEHALF OF LICENSOR OR THE DOE. |
15
11.3 | Nothing in this Agreement will be construed as |
a. | an obligation of the Licensor to bring or prosecute actions or suits against third parties for infringement (except to the extent and in the circumstances stated in Article 9); or |
b. | an obligation of the Licensor to furnish any manufacturing or technical information or technical assistance, or |
c. | conferring a right to use in advertising, publicity, or otherwise any trademark or name of Licensor (except to the extent stated in 6.2); or |
d. | granting by implication, estoppel, or otherwise, any licenses or rights under patents of Licensor other than Licensed Patents, regardless of whether such other patents are dominant of or subordinate to any Licensed Patents. |
16
ARTICLE 12
GENERAL
12.1 | All notices and reports will be addressed to the Parties as follows: |
If to Licensor: | |
Accounting Administration, Partnerships | Facsimile |
UT-Battelle, LLC | (865) 576-9465 |
One Bethel Valley Road | Phone |
Oak Ridge, Tennessee 37831-6196 | (865) 241-2353 |
E-Mail Collinssm1©ornl.gov | |
If to Licensee: | |
Kevin Knopp | Facsimile |
908 Devices Inc. | (978) 909-9004 |
27 Drydock Avenue, 8th Floor | Phone |
Boston, MA 02210 | (978) 729-4478 |
12.2 | All stock certificates, if any, will be sent to the address for notices. |
12.3 | Any notice, report or any other communication required to be given will be in writing and delivered either: (a) personally, (b) by express, registered or certified first-class mail, (c) by commercial courier, or (d) by facsimile with machine confirmation of transmission. |
12.4 | The failure of either Party to enforce a provision of this Agreement or to exercise any right or remedy will not be a waiver of such provision or of such rights or remedies or the right of the Parties thereafter to enforce each and every provision, right or remedy. |
12.5 | This Agreement may be amended or modified only by a written instrument signed by both Parties. |
12.6 | The determination by a Court of competent jurisdiction that any part, term, or provision of this Agreement is illegal or unenforceable, will not affect the validity of the remaining provisions of this Agreement. |
12.7 | Licensor may assign this Agreement and all rights, duties and obligations hereunder, to DOE or a successor contractor to Licensor, as may be required under its prime contract with DOE. |
17
12.8 | This Agreement will be construed according to the laws of the State of Tennessee and the United States of America and in the English language. Any action brought to enforce any provision or obligation hereunder will be brought in the Federal District Court for the Eastern District of Tennessee. However, if jurisdiction is not found in Federal Court, actions will be brought in Tennessee in either Knox, Roane, or Anderson County Court. |
12.9 | This Agreement is solely for the benefit of the Parties, represents the entire and integrated agreement between the Parties, and supercedes all prior negotiations, representations, and agreements, either written or oral. This Agreement, and each and every provision thereof, is for the exclusive benefit of Licensor and Licensee and not for the benefit of any third party, except to the extent expressly provided in the Agreement. |
ARTICLE 13
OFFER
The offer to execute this Agreement shall expire if this Agreement is not signed by Licensee and returned to Licensor on or before June 15, 2012.
18
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement of be executed in duplicate originals by its duly authorized officers or representatives.
UT-BATTELLE, LLC
By: | /s/ Michael J. Paulus |
|
|
Name: | Michael J. Paulus | ||
Title: | Director, Technology Transfer | ||
Date: | 8 June 2012 | ||
908 DEVICES INC. | |||
By: | /s/ Kevin J Knopp | ||
Name: | Kevin J Knopp | ||
Title: | President & CEO | ||
Date: | 6/13/12 |
19
EXHIBIT A: LICENSED PATENTS
Docket
No. |
Country | Title | Inventor(s) | Ser. No./Pat. No. |
Filing/Issue
Date |
683 | US | Microscale ion trap mass spectrometer | John M. Ramsey; William B. Whitten; Oleg Kornienko | 6,469,298 | 10/22/2002 |
683 | JP | Microscale ion trap mass spectrometer | John M. Ramsey; William B. Whitten; Oleg Kornienko | 2001-5252000 | 9/20/2000 |
683 | UK | Microscale ion trap mass spectrometer | John M. Ramsey; William B. Whitten; Oleg Kornienko | 1218921 | 6/11/2008 |
683 | DE | Microscale ion trap mass spectrometer | John M. Ramsey; William B. Whitten; Oleg Kornienko | 1218921 | 6/11/2008 |
1505 | US | Controlled Kinetic energy Ion Source for Miniature Ion Trap and Related Spectroscopy System and Method | Verbeck, Whitten, Moxom | 7,838,820 | 11/23/2010 |
Initials | ||
UT-Battelle: |
|
|
Date: | 6/8/12 | |
Licensee: |
|
|
Date: | 6/13/12 |
20
EXHIBIT B: TERM SHEET & FINANCIAL OBLIGATIONS
A. Type of License:
Field of Use Exclusive
B. Field(s) of Use:
Field of Use 1: Military, public safety, intelligence, national security, and homeland security, including chemical and biological warfare defense and explosives detection, whether such use is by public (governmental) employees, agencies or authorities or private entities.
Field of Use 2: Clinical diagnostics, medical instrumentation, and analytical instruments for life sciences applications.
Field of Use 3: Industrial process monitoring.
Field of Use 4: Food and environmental testing and safety.
C. Execution Fee:
1) Cash Payments
This Agreement is being entered into by the Parties simultaneously with PLA-1670-PFTT License. A percentage of the Cash Payments paid by Licensee under PLA-1670-PFTT License will be deemed to be the Cash Payments for this Agreement. For avoidance of doubt, no additional amount shall be payable hereunder as a Cash Payment.
2) Grant of Equity
A percentage of the Equity issued by Licensee under PLA-1670-PFTT License will be deemed to be the Equity issued to Licensee under this Agreement. For avoidance of doubt, no additional Equity will be issued by Licensee under this Agreement.
D. Running Royalty Rate Structure:
1) A percentage of the Net Sales Royalty paid by Licensee under PLA-1670-PFTT License will be attributed to the Net Sales Royalty for this Agreement. For avoidance of doubt, no Net Sales Royalty will be due or payable under this Agreement.
2) A percentage of the Combination Net Sales Royalty paid by Licensee under PLA-1670-PFTT License will be attributed to the Combination Net Sales Royalty for this Agreement. For avoidance of doubt, no Combination Net Sales Royalty will be due or payable under this Agreement.
21
E. Annual Minimum Royalty:
A percentage of the Annual Minimum Royalty paid by Licensee under PLA-1670-PFTT License will be attributed to the Annual Minimum Royalty for this Agreement. For avoidance of doubt, no Annual Minimum Royalty will be due or payable under this Agreement.
F. Sublicense Revenue:
A percentage of the Sublicensing Revenue paid by Licensee under PLA-1670-PFTT License will be attributed to the Sublicensing Revenue for this Agreement. For avoidance of doubt, no Sublicensing Revenue will be due or payable under this Agreement.
G. Reimbursement of Patent Costs:
Licensee will reimburse Licensor for Patent Costs in accordance with Paragraph 4.4 of the Agreement as follows:
1. patent costs after January 3, 2014 based on U.S. Licensed Patents, and
2. patent costs after the Effective Date of this Agreement based on Licensed Patents that are not U.S. Licensed Patents.
NOTICE
This Exhibit contains financial and commercial information that is BUSINESS SENSITIVE and the Parties hereby agree not to use or disclose this Exhibit to any third party without the advance written approval of the other Party, except: (1) to those necessary to enable the Parties to perform under this Agreement; (2) as may be required by the UT-Battelle Prime Contract with the DOE under the same restrictions as set forth herein; or (3) in event of breach of any provision of this Agreement by either Party, to those deemed necessary by the non-breaching Party to enforce the non-breaching Party’s rights under the Agreement.
Initials | ||
UT-Battelle: |
|
|
Date: | 6/8/12 | |
Licensee: |
|
|
Date: | 6/13/12 |
22
EXHIBIT C: DEVELOPMENT AND COMMERCIALIZATION PLAN
Licensee agrees to the complete milestones as set forth in Exhibit C of PLA-1670-PFTT.
NOTICE
This Exhibit contains financial and commercial information that is BUSINESS SENSITIVE and the Parties hereby agree not to use or disclose this Exhibit to any third party without the advance written approval of the other Party, except: (1) to those necessary to enable the Parties to perform under this Agreement; (2) as may be required by the UT-Battelle Prime Contract with the DOE under the same restrictions as set forth herein; or (3) in event of breach of any provision of this Agreement by either Party, to those deemed necessary by the non-breaching Party to enforce the non-breaching Party’s rights under the Agreement.
Initials | ||
UT-Battelle: |
|
|
Date: | 6/8/12 | |
Licensee: |
|
|
Date: | 6/13/12 |
23
EXHIBIT D SUBSCRIPTION AGREEMENT
(attached)
24
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the “Agreement”) is made and entered into as of 6/13, 2012 (the “Effective Date”), by and between 908 Devices Inc., a Delaware corporation (the “Company”), and UT-Battelle, LLC, managing and operating the Oak Ridge National Laboratory under its Prime Contract No. DE-AC05-00OR22725 with the United States Department of Energy (“DOE”), an agency of the United States Government. (the “Purchaser”).
WHEREAS, the Company and the Purchaser entered into a Limited Exclusive Commercial Field of Use Patent License Agreement (the “License Agreement”) dated as of the Effective Date, pursuant to which the Purchaser is granting, and the Company is receiving a license (the “License”) for certain valuable inventions, the consideration for which includes shares of the capital stock of the Company.
WHEREAS, on the terms and subject to the conditions set forth herein, the Purchaser desires to subscribe for, and the Company proposes to issue to the Purchaser, one hundred and twenty thousand (120,000) shares (together with any other such shares as are issued to Purchaser in accordance with the License Agreement, the “Subscribed Shares”) of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”) as partial consideration for the License.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations hereinafter set forth and of other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. The following capitalized terms, as used in this Agreement, shall have the meanings set forth below.
1.1 “Acquisition” means the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger, reorganization or consolidation in which the outstanding shares of the Company’s capital stock are converted into or exchanged for securities of the successor entity and the holders of the Company as outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (iv) the sale, in a single transaction or series of related transactions, of all or a majority of the Company as capital stock to an unrelated person or entity.
1.2 “Person” shall mean an individual, a corporation, a partnership, a joint venture, a trust, an unincorporated organization, a limited liability company, a government and any agency or political subdivision thereof.
1.3 “Securities Act” shall mean the Securities Act of 1933, as it may be amended from time to time, and the rules and regulations thereunder.
1.4 “Shares” shall means, at any time, shares of (i) common stock, and (ii) any other equity securities now or hereafter issued by the Company, together with any options thereon and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend, stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, recapitalization, merger, consolidation or other corporate reorganization).
1.5 “Stockholders” shall mean all holders of capital stock of the Company.
1.6 “Transfer” shall mean any direct or indirect transfer, donation, sale, assignment, pledge, hypothecation, grant of a security interest in or other disposal or attempted disposal of all or any portion of a security, any interest or rights in a security, or any rights under this Agreement. “Transferred” means the accomplishment of a Transfer, and “Transferee” means the recipient of a Transfer.
2. Purchase and Sale of Subscribed Shares.
2.1 Purchase and Sale of Subscribed Shares. Subject to the terms and conditions set forth herein and in the License Agreement, upon the execution hereof, the Company shall Transfer to the Purchaser, and the Purchaser shall accept from the Company, the Subscribed Shares as partial consideration of the License.
2.2 Delivery of Certificates Representing Purchased Subscribed Shares. The Company shall deliver to the Purchaser a certificate in the name of the Purchaser representing the Subscribed Shares transferred to the Purchaser.
3. Restrictions on Transfer; Right of Refusal; Drag-Along Right
3.1 Restrictions on Transfer. Except as allowed in Section 6.4 below, Purchaser agrees that it will not, without the prior written consent of the Board of Directors of the Company, Transfer all or any portion of the Shares now owned or hereafter acquired by the Purchaser, except in connection with, and strictly in compliance with the conditions of this Section 3.
3.2 Right of Refusal. In the event that the Purchaser entertains a bona fide offer to purchase all or any portion of the Shares held by the Purchaser (a “Transaction Offer”) from any other Person (a “Buyer”), such Purchaser may, at its discretion, Transfer such Shares pursuant to and in accordance with the following provisions of this Section 3.2:
(a) Offer Notice. The Purchaser shall cause the Transaction Offer and all of the terms thereof to be reduced to writing and shall promptly notify the Company of such Purchaser’s desire to effect the Transaction Offer and otherwise comply with the provisions of this Section 3.2 (such notice, the “Offer Notice”). The Purchaser’s Offer Notice shall constitute an irrevocable offer to sell all, but not less than all, of the Shares which are the subject of the Transaction Offer (the “Offered Shares”) to the Company, on the basis described below, at a purchase price equal to the price contained in, and on the same terms and conditions of, the Transaction Offer. The Offer Notice shall be accompanied by a true copy of the Transaction Offer (which, to the extent permitted by the terms of the Transaction Offer, shall identify the Buyer and all relevant information in connection therewith).
2
(b) Company Option. The Company shall have the option to purchase all or a portion of the Offered Shares. At any time within twenty (20) days after receipt by the Company of the Offer Notice (the “Company Option Period”), the Company may elect to accept the offer to purchase with respect to any or all of the Offered Shares and shall give written notice of such election (the “Company Acceptance Notice”) to the Purchaser within the Company Option Period, which notice shall indicate the number of Shares that the Company is willing to purchase. The Company Acceptance Notice shall constitute a valid, legally binding and enforceable agreement for the sale and purchase of the Shares covered by the Company Acceptance Notice. If the Company accepts the offer to purchase all of the Offered Shares, the closing for such purchase of the Offered Shares by the Company under this Section 3.2(b) shall take place within thirty (30) days following the expiration of the Company Option Period, at the offices of the Purchaser or on such other date or at such other place as may be agreed to by the Purchaser and the Company.
(c) Valuation of Property. In the event that the price set forth in the Offer Notice is stated in consideration other than cash or cash equivalents, the Purchaser and the Company shall mutually determine the fair market value of such consideration, reasonably and in good faith, and the Company may effect its purchase under this Section 3.2 by payment of such fair market value in cash or cash equivalents.
(d) Sale to Third Party. In the event that the Company does not elect to exercise the rights to purchase under this Section 3.2 with respect to all of the Shares proposed to be sold, the Purchaser may sell all such Shares to the Buyer on the terms and conditions set forth in the Offer Notice. Prior to the effectiveness of any Transfer to a Buyer hereunder, such Buyer shall have entered into a joinder agreement pursuant to which such Buyer will assume all the obligations hereunder as if such Buyer were the Purchaser.
3.3 Lock-Up. The Purchaser agrees, if requested by the Company and any underwriter engaged by the Company, not to sell or otherwise transfer or dispose of any Shares (including, without limitation, pursuant to Rule 144 under the Securities Act) held by him, her or it for such period following the effective date of any registration statement of the Company filed under the Securities Act as the Company or such underwriter shall specify reasonably and in good faith. If requested by the underwriter engaged by the Company, the Purchaser shall execute a separate letter reflecting the agreement set forth in this Section 3.3.
3
3.4 Drag-Along Rights. In the event of an Acquisition in which the holders of a majority of the Common Stock of the Company (the “Approving Holders”) exercise the Drag-Along Right (as defined below), the Purchaser shall be obligated to and shall, upon the written request of such Approving Holders: (i) sell, transfer and deliver, or cause to be sold, transferred and delivered, to the third-party buyer a pro rata portion of Shares held by the Purchaser, on the same terms applicable to the Approving Holders and/or (ii) execute and deliver such instruments of conveyance and transfer and take such other action, including voting all Shares held by the Purchaser in favor of any Acquisition approved by the Approving Holders and executing any purchase agreements, merger agreements, escrow agreements or related documents, as the third-party buyer may reasonably require and that such Approving Holders shall have executed, in order to carry out the terms and provisions of this Section 3.5 (the “Drag-Along Right”). IN FURTHERANCE OF THE FOREGOING, FOR PURPOSES OF ANY ACQUISITION IN WHICH THE APPROVING HOLDERS ARE ENTITLED TO, AND DO, EXERCISE THE DRAG-ALONG RIGHT, THE PURCHASER HEREBY GRANTS TO THE DESIGNEE OF THE APPROVING HOLDERS AN IRREVOCABLE PROXY TO VOTE THE SHARES HELD BY THE PURCHASER IN FAVOR OF ANY ACQUISITION FOR WHICH THE DRAG-ALONG RIGHT IS APPLICABLE HEREUNDER. SUCH PROXY IS COUPLED WITH AN INTEREST AND IS VALID FOR A PERIOD OFTEN (10) YEARS FROM THE DATE OF THIS AGREEMENT.
4. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof to the Company as follows:
4.1 Investment Representation. The Purchaser is an “accredited investor” under Regulation D of the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Purchaser is aware that the Subscribed Shares have not been registered under the Securities Act, or qualified under any state securities laws. The Subscribed Shares are being acquired for investment purposes only and not for sale or with a view to distribution of all or any part thereof in violation of the securities laws.
4.2 Access to Information. The Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of its purchase of the Subscribed Shares and regarding the business, financial affairs and other aspects of the Company, and it has further had the opportunity to obtain any information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which it deems necessary to evaluate its investment or to verify the accuracy of information otherwise provided to it.
4.3 Restricted Securities. The Purchaser understands that the Subscribed Shares will be characterized as “restricted securities” under the Securities Act and that under such laws and applicable regulations, the Subscribed Shares may be resold without registration under the Securities Act only in certain limited circumstances, and that otherwise the Subscribed Shares must be held indefinitely. The Purchaser further represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and the conditions which must be met in order for Rule 144 to be available for resale of “restricted securities,” and understands the resale limitations imposed by the Securities Act.
4
4.4 Authority. The Purchaser has all required power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by The Purchaser and (assuming the due authorization, execution and delivery by the Company) constitutes the legal, valid and binding obligation of the Purchaser, enforceable against him in accordance with its terms.
4.5 Organization. The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.
5. Representations and Warranties of the Company. The Company represents and warrants as of the date hereof to the Purchaser as follows:
5.1 Authorization. The Company has all requisite corporate power and authority to execute and deliver this Agreement, sell the Subscribed Shares and otherwise perform its obligations hereunder. This Agreement has been duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the Purchaser) this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms.
5.2 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
6. Miscellaneous.
6.1 Governing Law. This Agreement and all matters arising hereunder shall be governed by and construed under the laws of the State of Tennessee, without regard to its conflicts of law rules or provisions.
6.2 Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable under the applicable law of any jurisdiction, (i) the remainder of this Agreement or the application of such provisions to other persons or circumstances or in other jurisdictions shall not be affected thereby, (ii) such invalid, illegal, or unenforceable provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such law, and (iii) such invalid, illegal, or unenforceable provision shall not affect the validity or enforceability of any other provision of this Agreement.
6.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original, and all of which when taken together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
6.4 Notwithstanding anything to the contrary herein, this Agreement, and all Shares received hereunder, may be Transferred by the Purchaser to the DOE or its designee without any notice to, or approval of Company upon the termination or expiration of Purchasers Prime Contract with the DOE; provided that any and all such transferees shall enter into a joinder agreement pursuant to which each such transferee will assume all the obligations hereunder as if such transferee were the Purchaser as a precondition to the effectiveness of such transfer.
[Reminder of Page Intentionally left Blank]
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the date first written above.
COMPANY: | |||
908 DEVICES INC. | |||
By: | /s/ Kevin Knopp | ||
Name: | Kevin Knopp | ||
Title: | Chief Executive Officer and President |
[Signature Page to Subscription Agreement]
PURCHASER: | |||
UT-BATTELLE, LLC | |||
By: | /s/ Michael J. Paulus | ||
Name: | Michael J. Paulus | ||
Title: | Director, Technology Transfer |
[Signature Page to Subscription Agreement]
PLA-1669
AMENDMENT 1
TO
LIMITED EXCLUSIVE COMMERCIAL FIELD OF USE PATENT
LICENSE AGREEMENT
Between
UT-BATTELLE, LLC
Operator of the Oak Ridge National Laboratory
Under its U.S. Department of Energy Contract No. DE-AC05-00OR22725
(hereinafter “UT-Battelle”)
AND
908 DEVICES, INC.
(hereinafter “Licensee”)
This Amendment 1, made effective on August 2, 2013 (“Effective Date”), is entered into by UT-Battelle and the Licensee, with both hereinafter referred to collectively as the “Parties.”
WITNESSETH:
WHEREAS, the Parties entered into Limited Exclusive Commercial Field of Use Patent License Agreement PLA-1669 having an effective date of June 13, 2012 (the “Agreement”), and WHEREAS, the Parties now desire to amend the Agreement to revise the field of use definition and clarify when the Agreement will expire,
NOW THEREFORE, the Parties agree to this Amendment 1 as follows: In Article 2, DEFINITIONS, re-write “Field of Use 3” as follows:
“Field of Use 3: “Industrial process monitoring, which includes but is not limited to the following industrial process: exploration, production, and management of hydrocarbon and water reservoirs, and the development or management of facilities for storing fluids, such as carbon dioxide and natural gas, in subsurface reservoirs; and”
Re-write Article 8.13 as follows:
“8.13 This Agreement will terminate automatically upon the termination (but not the expiration) of the PLA-1670-PFTT License and, notwithstanding the expiration of the PLA-1670-PFTT License, Licensee shall continue to pay to Licensor for the remaining term of this Agreement: (i) a Net Sales Royalty on sales of Licensed Products (as defined in this Agreement) at the rate provided in Exhibit B of the expired PLA-1670-PFTT License, (ii) a Combination Net Sales Royalty on sales of Combination Products (as defined in this Agreement) at the rate provided in Exhibit B of the expired PLA-1670-PFTT License, and (iii) a percentage of Sublicensing Revenue (as defined in this Agreement) at the rate provided in Exhibit B of the expired PLA-1670-PFTT License.”
1
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment 1 to be duly executed in their respective names by their duly authorized representatives.
UT-BATTELLE, LLC | |||
By: | /s/ Michael J. Paulus |
|
|
Name: | Michael J. Paulus | ||
Title: | Director, Technology Transfer | ||
Date: | 6 Aug 2013 | ||
908 DEVICES, INC. | |||
By: | /s/ Kevin J Knopp | ||
Name: | Kevin J Knopp | ||
Title: | President & CEO | ||
Date: | 8/5/13 |
2
Exhibit 10.9
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
908 DEVICES INC.
SIGNATURE BANK
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (this "Agreement") is entered into as of August 29, 2019 by and between SIGNATURE BANK ("Bank") and 908 DEVICES INC. ("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions:
"Accounts" means all presently existing and hereafter arising accounts, contract rights, payment intangibles, and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's Books relating to any of the foregoing.
"Affiliate" means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person's senior executive officers, directors, and partners.
"Amortization Start Date" is the first (1st) day of the calendar month immediately following the end of the Draw Period.
"Bank Expenses" means all: reasonable costs or expenses (including reasonable documented attorneys' fees and expenses) incurred by Bank in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank's reasonable documented attorneys' fees and expenses incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.
"Borrower's Books" means all of Borrower's books and records including: ledgers; records concerning Borrower's assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of New York are authorized or required to close.
"Change in Control" shall mean a transaction in which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such "person" or "group" to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.
"Client Reporting File" means that certain Client Reporting File provided to Borrower by Bank in connection with the execution hereof, as may be amended from time to time.
"Closing Date" means the date of this Agreement.
"Code" means the New York Uniform Commercial Code.
"Collateral" means the property described on Exhibit A attached hereto.
"Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards, or merchant services issued or provided for the account of that Person; and (iii) all obligations arising under any agreement or arrangement designed to protect such 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 Bank in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
"Copyrights" means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof.
"Credit Extension" means each Term Loan Advance or any other extension of credit by Bank for the benefit of Borrower hereunder.
"Daily Balance" means the amount of the Obligations owed at the end of a given day.
"Draw Period" is the period of time from the Closing Date through February 28, 2021.
"Equipment" means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.
"Event of Default" has the meaning assigned in Article 8.
"GAAP" means generally accepted accounting principles as in effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations.
"Insolvency Proceeding" means any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
"Intellectual Property" means all of Borrower's right, title, and interest in and to the following: Copyrights, Trademarks and Patents; all trade secrets, all design rights, claims for damages by way of past, present and future infringement of any of the rights included above, all licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights; all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and all proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.
"Inventory" means all inventory in which Borrower has or acquires any interest, including work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or possession, actual or constructive, of Borrower, including such inventory as is temporarily out of its custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's Books relating to any of the foregoing.
2
"Investment" means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
"Liquidity Ratio" is a ratio of (a) the sum of (i) unrestricted cash held by Borrower in accounts at Bank, plus (ii) an amount equal to fifty percent (50%) of Borrower's net trade accounts receivable, to (b) all Obligations owing from Borrower to Bank.
"Loan Documents" means, collectively, this Agreement, the Warrant, any note or notes executed by Borrower, and any other agreement entered into in connection with this Agreement, all as amended or extended from time to time.
"Material Adverse Effect" means the occurrence of any circumstance which would be reasonably likely to have a material adverse effect on (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or (iii) Borrower's interest in, or the value, perfection or priority of Bank's security interest in the Collateral.
"Negotiable Collateral" means all letters of credit of which Borrower is a beneficiary, notes, drafts, instruments, securities, documents of title, and chattel paper, and Borrower's Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise.
"Patents" means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
"Periodic Payments" means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;
(c) Indebtedness secured by a lien described in clause (c) of the defined term "Permitted Liens," provided (i) such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness and (ii) such Indebtedness does not exceed Five Hundred Thousand Dollars ($500,000) in the aggregate at any given time;
(d) Subordinated Debt;
(e) trade accounts payable incurred in the ordinary course of business;
(f) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business; and
(g) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (e) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.
3
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the Schedule;
(b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor's Corporation or Moody's Investors Service,
(iii) certificates of deposit maturing no more than one (1) year from the date of investment therein issued by Bank and
(iv) money market funds at least ninety-five percent (95.0%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (iii) of this paragraph (b);
(c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower;
(d) Investments accepted in connection with Transfers permitted by Section 7.1;
(e) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business and in an amount not to exceed One Hundred Thousand Dollars ($100,000) per year, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower's Board and in an amount not to exceed One Hundred Dollars ($100,000) per year;
(f) 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 business; and
(g) 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 paragraph (h) shall not apply to Investments of Borrower in any Subsidiary.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Bank's security interests;
(c) Liens (i) upon or in any equipment which was not financed by Bank acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or (ii) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;
4
(e) Liens to secure payment of workers' compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);
(f) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (e) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;
(g) leases or subleases of real property granted in the ordinary course of Borrower's business (or, if referring to another Person, in the ordinary course of such Person's business), and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the ordinary course of Borrower's business (or, if referring to another Person, in the ordinary course of such Person's business), if the leases, subleases, licenses and sublicenses do not prohibit granting Bank a security interest therein;
(h) non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business, and licenses of Intellectual Property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United States; and
(i) Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections 8.4 and 8.7.
"Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most recently announced by Bank, as its "prime rate," whether or not such announced rate is the lowest rate available from Bank.
"Reg W Affiliate" means an "affiliate" as such term is set forth in Section 23A(b)(1) of the Federal Reserve Act (12 USC 371c).
"Responsible Officer" means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Controller of Borrower.
"Schedule" means the schedule of exceptions attached hereto and approved by Bank, if any.
"Subordinated Debt" means any debt incurred by Borrower that is subordinated to the debt owing by Borrower to Bank on terms acceptable to Bank (and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation, company or partnership in which (i) any general partnership interest or (ii) more than 50% of the stock or other units of ownership which by the terms thereof has the ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.
"Term Loan Advance" and "Term Loan Advances" are defined in Section 2.1(a)(i).
"Term Loan Advance Payment" is defined in Section 2.1(a)(ii).
"Term Line" means a credit extension of up to Fifteen Million Dollars ($15,000,000).
"Term Loan Maturity Date" means August 1, 2023.
"Trademarks" means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
5
"Transition Accounts" is defined in Section 6.7.
"Warrant" is that certain Warrant to Purchase Stock dated as of the Closing Date issued by Borrower in favor of Bank, together with any other Warrant issued by Borrower in favor of Bank theretofore or thereafter.
1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all calculations made hereunder shall be made in accordance with GAAP. When used herein, the terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 Credit Extensions.
Borrower promises to pay to the order of Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof.
(a) Term Loan Advances.
(i) Subject to and upon the terms and conditions of this Agreement, during the Draw Period, Borrower may request and Bank shall make term loan advances in an aggregate amount not to exceed the Term Line (each a "Term Loan Advance" and collectively, the "Term Loan Advances"). Each Term Loan Advance shall be in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000). The aggregate outstanding amount of the Term Loan Advances shall not, at any time, exceed the Term Line.
(ii) The Term Loan Advances shall be "interest-only" during the Draw Period, with interest due and payable in accordance with Section 2.3 hereof. Beginning on the Amortization Start Date and continuing on the first (1st) day of each month thereafter, the Term Loan Advances shall be payable in thirty (30) equal monthly installments of principal plus accrued and unpaid interest (each a "Term Loan Advance Payment"). Borrower's final Term Loan Advance Payment, due on the Term Loan Maturity Date, shall include all outstanding principal and accrued and unpaid interest on the Term Loan Advances. Term Loan Advances, once repaid, may not be reborrowed. Borrower may prepay any Term Loan Advances at any time without penalty or premium.
(iii) When Borrower desires to obtain a Term Loan Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail or facsimile transmission to be received no later than 2:00 p.m. Eastern time three (3) Business Days before the day on which the Term Loan Advance is to be made. Such notice shall be substantially in the form set forth in the Client Reporting File. The notice shall be signed by a Responsible Officer or its designee.
2.2 Aggregate Limit on Credit Extensions. Notwithstanding anything else set forth in this Agreement, the aggregate principal amount of the Credit Extensions shall not exceed Fifteen Million Dollars ($15,000,000) at any time.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rate for Term Loan Advances. Except as set forth in Section 2.3(b), the Term Loan Advances shall bear interest, on the outstanding Daily Balance thereof, at a rate equal to the greater of (i) one half of one percentage point (0.50%) above the Prime Rate or (ii) six percentage points (6.00%).
(b) Late Fee; Default Rate. If any payment is not made within ten (10) days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) five percent (5.00%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law, not in any case to be less than Twenty-Five Dollars ($25.00). All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five percentage points (5.00%) above the interest rate applicable immediately prior to the occurrence of the Event of Default.
6
(c) Payments. Interest hereunder shall be due and payable on the first (1st) calendar day of each month during the term hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower's deposit accounts (other than trust, agency or escrow accounts). Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings, duties, impositions or other charges, to the end that Bank will receive the entire amount of any Obligations payable hereunder, regardless of source of payment.
(d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed.
2.4 Crediting Payments. Prior to the occurrence and continuance of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, the receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied to conditionally reduce Obligations, but shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 2:00 noon Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.
2.5 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. On the Closing Date, a facility fee equal to Twenty-Five Thousand Dollars ($25,000), which shall be nonrefundable;
(b) Good Faith Deposit. Borrower has paid to Bank a deposit of Twenty-Five Thousand Dollars ($25,000) (the "Good Faith Deposit"), to initiate Bank's due diligence review process. The Good Faith Deposit shall be utilized to pay Bank Expenses and, if any amount remains thereafter, the facility fee described in clause (a) of this Section 2.5; and
(c) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, including reasonable attorneys' fees and expenses and, after the Closing Date, all Bank Expenses, including reasonable attorneys' fees and expenses, as and when they are incurred by Bank.
2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section 13.7, shall continue in full force and effect for so long as any Obligations (other than inchoate indemnification or reimbursement obligations) remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain in effect for so long as any Obligations (other than inchoate indemnification or reimbursement obligations) are outstanding.
3. CONDITIONS OF LOANS.
3.1 Conditions Precedent to Effectiveness. The effectiveness of the Loan Documents is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement;
7
(c) UCC National Form Financing Statement;
(d) a Warrant to Purchase Stock;
(e) payment of the fees and Bank Expenses then due specified in Section 2.5 hereof;
(f) current financial statements of Borrower;
(g) evidence that Borrower in compliance with all covenants set forth in Section 6.7 as of the Closing Date;
(h) evidence satisfactory to Bank that the insurance policies required by Section 6.6 hereof are in full force and effect (except evidence of endorsements and evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank, as set forth in Section 6.11(a));
(i) a payoff letter from Hercules Capital;
(j) confirmation that Borrower is not involved in material litigation;
(k) the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of Closing Date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to the closing of the Loan Documents; and
(l) such other documents, and completion of such other matters, as Bank may have
reasonably requested.
3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is further subject to the following conditions:
(a) Borrower shall be in compliance with Section 6.7 hereof;
(b) the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Revolving Advance Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension. The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2; and
(c) Bank determines to its satisfaction that there has not been a Material Adverse Change.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date hereof, in each case subject only to Permitted Liens.
4.2 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank, at the request of Bank, all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue the perfection of Bank's security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. Borrower from time to time may deposit with Bank specific time deposit accounts to secure specific Obligations. Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the Obligations (other than inchoate indemnification or reimbursement obligations) are outstanding.
8
4.3 Right to Inspect. Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower's usual business hours but no more than once a year (unless an Event of Default has occurred and is continuing), to inspect Borrower's Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of its state of incorporation and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to be so qualified or licensed could not reasonably be expected to have a Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents by Borrower are within Borrower's powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower's Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement to which Borrower is a party or by which Borrower is bound. Borrower is not in default under any material agreement to which it is a party or by which it is bound.
5.3 No Prior Encumbrances. Borrower has good and marketable title to its property, free and clear of Liens, except for Permitted Liens.
5.4 Intentionally Omitted
5.5 Merchantable Inventory. All Inventory is in all material respects of good and marketable quality, free from all material defects, except for Inventory for which adequate reserves have been made.
5.6 Intellectual Property. Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted by Borrower to its customers in the ordinary course of business. Each of the Patents is valid and enforceable, and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and to the best of Borrower's knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party. Except as set forth in the Schedule, Borrower's rights as a licensee of intellectual property do not give rise to more than five percent (5%) of its gross revenue in any given month, including without limitation revenue derived from the sale, licensing, rendering or disposition of any product or service. Except as set forth in the Schedule, Borrower is not a party to, or bound by, any agreement that prohibits the grant by Borrower of a security interest in Borrower's rights under such agreement.
5.7 Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower has not done business within the five (5) years prior to the Closing Date under any name other than that specified on the signature page hereof. The chief executive office of Borrower is located at the address indicated in Section 10 hereof. All Borrower's Inventory and Equipment (other than mobile Equipment such as laptop computers that are in the possession of Borrower's employees or agents) is located only at the location set forth in Section 10 hereof.
5.8 Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which an adverse decision could reasonably be expected to have a Material Adverse Effect, or a material adverse effect on Borrower's interest or Bank's security interest in the Collateral.
5.9 No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and its Subsidiaries that Bank has received from Borrower fairly present in all material respects Borrower's financial condition as of the date thereof and Borrower's consolidated results of operations for the period then ended. There has not been a material adverse change in the consolidated financial condition of Borrower and its Subsidiaries since the date of the most recent of such financial statements submitted by Borrower to Bank.
9
5.10 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.
5.11 Regulatory Compliance. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA, and no event has occurred resulting from Borrower's failure to comply with ERISA that could reasonably be expected to result in Borrower's incurring any material liability. Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, violation of which could reasonably be expected to have a Material Adverse Effect.
5.12 Environmental Condition. Except as disclosed in the Schedule, none of Borrower's or any Subsidiary's properties or assets has ever been used by Borrower or any Subsidiary or, to Borrower's knowledge, by previous owners or operators, in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance other than in accordance with applicable law; to Borrower's knowledge, none of Borrower's properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned by Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal, state or other governmental agency concerning any action or omission by Borrower or any Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment.
5.13 Taxes. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein other than immaterial taxes in an amount not to exceed Ten Thousand Dollars ($10,000) per year.
5.14 Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments.
5.15 Government Consents. Borrower and each Subsidiary have obtained all material consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower's business as currently conducted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
5.16 Accounts. Except as set forth on the Schedule, none of Borrower's nor any Subsidiary's deposit accounts or securities accounts is maintained or invested with a Person other than Bank.
5.17 Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank in connection with the Loan Documents or the transactions contemplated thereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading in light of the circumstances in which it was made.
6. AFFIRMATIVE COVENANTS.
Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its and (except as permitted by Section 7.3) each of its Subsidiaries' corporate existence and good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which it is required under applicable law, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a Material Adverse Effect.
10
6.2 Government Compliance. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected to have a Material Adverse Effect.
6.3 Financial Statements, Reports, Certificates. Borrower shall deliver the following to Bank: (a) as soon as available, but in any event within thirty (30) days after the end of each calendar month, a company prepared consolidated balance sheet, income statement, and cash flow statement covering Borrower's consolidated operations during such period, prepared in accordance with GAAP, consistently applied, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (b) as soon as available, but in any event within one hundred eighty (180) days after the end of Borrower's fiscal year, audited consolidated financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an unqualified opinion on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank (or an opinion qualified for going concern so long as Borrower's investors provide additional equity as needed); (c) copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to holders of Subordinated Debt and, if applicable, all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (d) promptly upon receipt of notice thereof, a report of any legal actions pending or, to Borrower's knowledge, threatened against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of Two Hundred Thousand Dollars ($200,000) or more; (e) as soon as available, but in any event within forty-five (45) days after the beginning of each fiscal year of Borrower, (i) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (ii) annual financial projections for the following fiscal year as approved by Borrower's board of directors, together with any related business forecasts used in the preparation of such annual financial projections; and (f) such budgets, sales projections, operating plans or other financial information of Borrower and/or its Subsidiaries as Bank may reasonably request from time to time.
Within thirty (30) days after the last day of each month, Borrower shall deliver to Bank aged listings of accounts receivable and accounts payable.
Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in substantially the form set forth in the Client Reporting File.
Bank shall have a right from time to time hereafter to audit Borrower's Accounts and appraise Collateral at Borrower's expense, provided that such audits will be conducted no more often than every twelve (12) months unless an Event of Default has occurred and is continuing.
6.4 Inventory; Returns. Borrower shall keep all Inventory in good and marketable condition, free from all material defects except for Inventory for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist at the time of the execution and delivery of this Agreement. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims, where the return, recovery, dispute or claim involves more than Two Hundred Thousand Dollars ($200,000).
6.5 Taxes. Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Bank, on its reasonable request, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make, and will cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required of it by applicable laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon Bank's reasonable request, furnish Bank with proof reasonably satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower.
11
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
6.6 Insurance.
(a) Borrower, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Borrower's business is conducted on the date hereof. Borrower shall also maintain insurance relating to Borrower's business, ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form, with such companies, and in such amounts as are reasonably satisfactory to Bank. All such policies of property insurance shall contain a lender's loss payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as an additional lender's loss payee thereof, and all general liability insurance policies shall show Bank as an additional insured and shall specify that the insurer must give at least thirty (30) days' notice to Bank before canceling its policy for any reason. Upon Bank's reasonable request, Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. Upon the occurrence and during the continuance of an Event of Default, all proceeds payable under any such policy shall, at the option of Bank, be payable to Bank to be applied on account of the Obligations.
6.7 Accounts. Borrower shall, (i) maintain and shall cause each of its Subsidiaries to maintain all its depository and operating accounts, and its primary investment accounts with Bank and (ii) endeavor to utilize and shall cause each of its Subsidiaries to endeavor to utilize Bank's International Banking Division for any international banking services required by Borrower, including, but not limited to, foreign currency wires, hedges, swaps, FX Contracts, and Letters of Credit; provided, however, notwithstanding the foregoing, so long as Borrower has, on or prior to the Closing Date, transferred at least Nine Million Dollars ($9,000,000) to its accounts at Bank, for a period of time not to exceed one hundred twenty (120) days from the Closing Date, Borrower may maintain up to Two Million Dollars ($2,000,000) in its accounts at Silicon Valley Bank listed on the Perfection Certificate delivered to Bank on or prior to the Effective Date (the "Transition Accounts") provided that beginning on the date that is thirty (30) days following the Closing Date, all amounts in excess of Five Hundred Thousand Dollars ($500,000) in such accounts shall be swept to Borrower's accounts at Bank no less frequently than weekly, and no control agreements shall be required in connection with the Transition Accounts.
6.8 Financial Covenants. Borrower shall maintain:
(a) Minimum Liquidity Ratio. At all times from the Closing Date through December 31, 2019, a Liquidity Ratio of at least 1.00 to 1.00.
(b) Minimum Cash. At all times beginning on January 1, 2020, a balance of unrestricted cash at Bank in an amount not less than Three Million Dollars ($3,000,000).
(c) Minimum Revenue. Borrower and Bank agree to, no later than March 15, 2020, enter into an amendment to this Agreement to set a cumulative quarterly revenue covenant (determined in accordance with GAAP) which shall be targeted at the greater of [***].
6.9 Intellectual Property Rights.
(a) If Borrower applies for any patent or the registration of any trademark or servicemark with the United States Patent and Trademark Office, Borrower shall give Bank written of such application or registration with the next financial statements to be delivered to the Bank under Section 6.3(a), including the date of such filing and the registration or application numbers, if any. Borrower shall (i) give Bank not less than thirty (30) days prior written notice of the filing of any applications or registrations with the United States Copyright Office, including the title of such intellectual property rights to be registered, as such title will appear on such applications or registrations, and the date such applications or registrations will be filed, and (ii) prior to the filing of any such applications or registrations, shall execute such documents as Bank may reasonably request for Bank to maintain its perfection in such intellectual property rights to be registered by Borrower, and upon the reasonable request of Bank, shall file such documents simultaneously with the filing of any such applications or registrations. Upon filing any such applications or registrations with the United States Copyright Office, Borrower shall promptly provide Bank with (i) a copy of such applications or registrations, without the exhibits, if any, thereto, (ii) evidence of the filing of any documents reasonably requested by Bank to be filed for Bank to maintain the perfection and priority of its security interest in such intellectual property rights, and (iii) the date of such filing.
12
(b) Bank may audit Borrower's Intellectual Property to confirm compliance with this Section, provided such audit may not occur more often than once per year, unless an Event of Default has occurred and is continuing. Bank shall have the right, but not the obligation, to take, at Borrower's sole expense, any actions that Borrower is required under this Section to take but which Borrower fails to take, after fifteen (15) days' notice to Borrower. Borrower shall reimburse and indemnify Bank for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this Section.
6.10 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement.
6.11 Post-Closing Requirements.
(a) No later than thirty (30) days after the Closing Date, Borrower shall have delivered to Bank, evidence reasonably satisfactory to Bank that the endorsements required by Section 6.6 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank.
(b) No later than sixty (60) days after the Closing Date, Borrower shall have delivered to Bank, a landlord's waiver in favor of Bank for Borrower's leased location at 645 Summer St., Boston, MA 02110, by the landlord thereof, together with the duly executed signatures thereto.
7. NEGATIVE COVENANTS.
Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, other than: (i) Transfers of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (iii) consisting of Permitted Liens and Permitted Investments; (iv) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (v) consisting of Borrower's use or transfer of money for the purchase of goods and services in the ordinary course of business and in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; or (vi) Transfers of worn-out, obsolete or surplus Equipment which was not financed by Bank.
7.2 Change in Business; Change in Control or Executive Office. Engage in any business, or permit any of its Subsidiaries to engage in any business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto (or incidental thereto); or cease to conduct business in the manner conducted by Borrower as of the Closing Date; or suffer or permit a Change in Control; or without thirty (30) days prior written notification to Bank, relocate its chief executive office or state of incorporation or change its legal name; or without Bank's prior written consent, change the date on which its fiscal year ends; or suffer a change on its board of directors which results in the failure of at least one (1) managing director of ARCH Venture Partners or its Affiliates to serve as a voting member, in such case without the prior written consent of Bank which may be withheld in Bank's sole discretion.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, provided that a Subsidiary may merge with or into Borrower or another Subsidiary.
13
7.4 Indebtedness. Create, incur, assume or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any Lien with respect to any of its property (including without limitation, its Intellectual Property), or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or agree with any Person other than Bank not to grant a security interest in, or otherwise encumber, any of its property (including without limitation, its Intellectual Property), or permit any Subsidiary to do so.
7.6 Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, or permit any of its Subsidiaries to do so, except that Borrower may repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase.
7.7 Investments. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments; or maintain or invest any of its deposit accounts or securities accounts with a Person other than Bank or permit any of its Subsidiaries to do so unless such Person has entered into an account control agreement with Bank in form and substance reasonably satisfactory to Bank; or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower.
7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a non-affiliated Person. Without the prior written consent of Bank in its sole and absolute discretion, no part of the proceeds of the Credit Extensions may be used (i) to purchase any asset or securities (A) issued by an Reg W Affiliate of Bank, (B) in respect of which, and during any period when, any Reg W Affiliate of Bank has acted as an underwriter, (C) sold by any Reg W Affiliate of Bank acting as a principal, (D) if the transaction would otherwise result in a violation of Regulation W issued by the Board of Governors of the Federal Reserve System of the United States, as may be amended from time to time, or (E) if the transaction would not comply with 12 C.F.R. 223.16; (ii) to pay, in whole or in part, directly or indirectly, any loan made by any Reg W Affiliate of Bank; or (iii) for the benefit of, or to transfer such proceeds to, any Reg W Affiliate of Bank.
7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated Debt without Bank's prior written consent.
7.10 Inventory and Equipment. Store the Inventory or the Equipment (other than mobile Equipment such as laptop computers that are in the possession of Borrower's employees or agents) with a bailee, warehouseman, or other third party unless the third party has been notified of Bank's security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank's benefit or (b) is in pledge possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Store or maintain any Equipment (other than mobile Equipment such as laptop computers that are in the possession of Borrower's employees or agents) or Inventory at a location other than the location set forth in Section 10 of this Agreement.
7.11 Compliance. Become an "investment company" or be controlled by an "investment company," within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose. Fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation, which violation could reasonably be expected to have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank's Lien on the Collateral, or permit any of its Subsidiaries to do any of the foregoing.
14
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of default by Borrower under this Agreement (each an "Event of Default").
8.1 Payment Default. If Borrower fails to pay, when due, any of the Obligations;
8.2 Covenant Default.
(a) If Borrower fails to perform any obligation under Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.7, 6.8, 6.9 or 6.11 or violates any of the covenants contained in Article 7 of this Agreement; or
(b) If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within ten days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the ten day period or cannot after diligent attempts by Borrower be cured within such ten day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.
8.3 Material Adverse Effect. If there occurs any circumstance or circumstances that could reasonably be expected to have a Material Adverse Effect;
8.4 Attachment. If any portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be required to be made during such cure period);
8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within forty-five (45) days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);
8.6 Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party or by which it is bound resulting in a right by a third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Thousand Dollars ($200,000) or which could reasonably be expected to have a Material Adverse Effect;
8.7 Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Thousand Dollars ($200,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); or
8.8 Misrepresentations. If any material misrepresentation or material misstatement exists when made now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.
15
9. BANK'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following (to the extent not prohibited by applicable law), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately due and payable without any action by Bank);
(b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;
(d) Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate at a location reasonably convenient to Bank and Borrower. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank's determination appears to be prior or superior to its security interest and to pay all expenses reasonably incurred in connection therewith. With respect to any of Borrower's owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge by Borrower, in order to exercise any of Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(e) Set off and apply to the Obligations then due any and all (i) balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge by Borrower, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section 9.1, Borrower's rights under all licenses and all franchise agreements shall inure to Bank's benefit;
(g) Dispose of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate;
(h) Bank may credit bid and purchase at any public sale; and
(i) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank's designated officers, or employees) as Borrower's true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank's security interest in the Accounts; (b) endorse Borrower's name on any checks or other forms of payment or security that may come into Bank's possession; (c) sign Borrower's name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower's policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) to file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral. The appointment of Bank as Borrower's attorney in fact, and each and every one of Bank's rights and powers, being coupled with an interest, is irrevocable until all of the Obligations (other than inchoate indemnification or reimbursement obligations) have been fully repaid and performed and Bank's obligation to provide Credit Extensions hereunder is terminated.
16
9.3 Accounts Collection. At any time after the occurrence of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank's security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank's trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.
9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; (b) set up such reserves under a loan facility in Section 2.1 as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.6 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.
9.5 Bank's Liability for Collateral. So long as Bank complies with applicable law and reasonable banking practices, Bank shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 Remedies Cumulative. Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given.
9.7 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES. All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 10.
17
If to Borrower: |
908 DEVICES INC. 645 Summer St. Boston, MA 02110 Attn: Joseph H. Griffith, Chief Financial Officer Email: jgriffith@908devices.com |
With a copy to:
|
Goodwin Procter LLP 100 Northern Ave. Boston, MA 02210 Attn: Mark D. Smith Email: marksmith@goodwinlaw.com
|
If to Bank: |
SIGNATURE BANK Signature Bank — Venture Banking Group 565 Fifth Avenue, 12th Floor New York, New York 10017 Attn: Lisa Foussianes Email: lfoussianes@signatureny.com |
The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.
11. GOVERNING LAW. This Agreement shall be deemed to have been made under and shall be governed by the laws of the State of New York (without regard to choice of law principles except as set forth in Section 5-1401 of the New York General Obligations Law) in all respects, including matters of construction, validity and performance, and that none of its terms or provisions may be waived, altered, modified or amended except as Bank may consent thereto in writing duly signed for and on its behalf.
12. JURISDICTION AND JURY TRIAL WAIVER.
12.1 Borrower hereby irrevocably consents that any suit, legal action or proceeding against borrower or any of its properties with respect to any of the rights or obligations arising directly or indirectly under or relating to this note or any other loan document may be brought in any jurisdiction, including, without limitation, any New York state or United States Federal Court located in the southern district of New York, as Bank may elect, and by execution and delivery of this note, Borrower hereby irrevocably submits to and accepts with regard to any such suit, legal action or proceeding, for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Borrower hereby irrevocably consents to the service of process in any such suit, legal action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, return receipt requested, to borrower at its address set forth herein. The foregoing shall not limit the right of Bank to serve process in any other manner permitted by law or to bring any suit, legal action or proceeding or to obtain execution of judgment in any other jurisdiction.
12.2 Borrower hereby irrevocably waives any objection which borrower may now or hereafter have to the laying of venue of any suit, legal action or proceeding arising directly or indirectly under or relating to this note or any other loan document in any state or federal court located in any jurisdiction, including without limitation, any state or federal court located in the southern district of New York chosen by Bank in accordance with this Section xxii and hereby further irrevocably waives any claim that a court located in the southern district of New York is not a convenient forum for any such suit, legal action or proceeding.
12.3 Borrower hereby irrevocably agrees that any suit, legal action or proceeding commenced by Borrower with respect to any rights or obligations arising directly or indirectly under or relating to this note or any other loan document (except as expressly set forth therein to the contrary) shall be brought exclusively in any New York state or United States Federal Court located in the southern district of New York.
18
12.4 Borrower hereby waives any defense or claim based on marshaling of assets or election or remedies or guaranties.
12.5 Borrower and Bank (by its acceptance of this Agreement) hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to any obligation of Borrower or this note or any other loan document.
13. GENERAL PROVISIONS.
13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank's prior written consent, which consent may be granted or withheld in Bank's sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits hereunder; provided however so long as no Event of Default has occurred and is continuing Bank shall not assign its obligations, rights or benefits hereunder to (i) any direct competitor of Borrower or (ii) any vulture debt fund.
13.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct.
13.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.
13.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
13.5 Amendments in Writing, Integration. Neither this Agreement nor the Loan Documents can be amended or terminated orally. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the Loan Documents, if any, are merged into this Agreement and the Loan Documents.
13.6 Counterparts/Acceptance. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Bank hereby acknowledges and agrees that this Agreement has been executed and accepted by Bank in the state of New York.
13.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations (other than inchoate indemnification or reimbursement obligations) remain outstanding or Bank has any obligation to make Credit Extensions to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 13.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.
13.8 Confidentiality. In handling any confidential information Bank and all employees and agents of Bank, including but not limited to accountants, shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) to the subsidiaries or affiliates of Bank (who agree to be subject to comparable confidentiality obligations) in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Loans who agree to be subject to comparable confidentiality obligations, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a third party, provided Bank does not have actual knowledge that such third party is prohibited from disclosing such information.
19
13.9 Patriot Act Notice. Bank notifies Borrower that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the "Patriot Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes names and addresses and other information that will allow Bank to identify Borrower in accordance with the Patriot Act.
13.10 Marketing Consent. Borrower hereby authorizes Bank and its affiliates, at their respective sole expense, and with prior approval by Borrower, to publish such tombstones and give such other publicity to this Agreement as each may from time to time determine in its sole discretion. The foregoing authorization shall remain in effect unless Borrower notifies Bank in writing that such authorization is revoked.
[Balance of Page Intentionally Left Blank]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
908 DEVICES INC. | ||
By: | /s/ Joseph H. Griffith IV | |
Name: | Joseph H. Griffith IV | |
Title: | Treasurer and Chief Financial Officer | |
SIGNATURE BANK | ||
By: | /s/ Lisa Foussianes | |
Name: | Lisa Foussianes | |
Title: | SVP |
[Signature Page to Loan and Security Agreement]
EXHIBIT A
DEBTOR: 908 DEVICES INC.
SECURED PARTY: SIGNATURE BANK
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of Borrower (herein referred to as "Borrower" or "Debtor") whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor's books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;
(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the New York Uniform Commercial Code, as amended or supplemented from time to time.
Notwithstanding the foregoing, the Collateral shall not include (1) any permit, approval or license issued or granted by a governmental authority to the extent that the grant by Borrower of a security interest to Bank therein is prohibited by applicable law or would result in the termination or revocation thereof, or (2) any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present and future infringement of any of the foregoing (collectively, the "Intellectual Property"); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the "Rights to Payment"). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Bank's security interest in the Rights to Payment.
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
SCHEDULE OF EXCEPTIONS
[***]
CORPORATE RESOLUTIONS TO BORROW
Borrower: 908 DEVICES INC.
I, the undersigned Secretary or Assistant Secretary of 908 DEVICES INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and complete copies of the Certificate of Incorporation, as amended, and the Bylaws of the Corporation, each of which is in full force and effect on the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in lieu of a meeting), the following resolutions (the "Resolutions") were adopted.
BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below:
NAMES | POSITION | ACTUAL SIGNATURES | ||
Kevin J. Knopp | President and Chief Execute Officer | |||
Joseph H. Griffith IV | Treasurer and Chief Financial Officer | |||
acting for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from SIGNATURE BANK ("Bank"), on such terms as may be agreed upon between the officers, employees, or agents of the Corporation and Bank, such sum or sums of money as in their judgment should be borrowed, without limitation.
Execute Loan Documents. To execute and deliver to Bank that certain Loan and Security Agreement dated as of (the "Loan Agreement") and any other agreement entered into between Corporation and Bank in connection with the Loan Agreement, including any amendments, all as amended or extended from time to time (collectively, with the Loan Agreement, the "Loan Documents"), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion thereof.
Grant Security. To grant a security interest to Bank in the Collateral described in the Loan Documents, which security interest shall secure all of the Corporation's Obligations, as described in the Loan Documents.
Negotiate Items. To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable.
Warrants. To issue Bank warrants to purchase the Corporation's capital stock.
Letters of Credit. To execute letter of credit applications and other related documents pertaining to Bank's issuance of letters of credit.
Corporate Credit Cards. To execute corporate credit card applications and agreements and other related documents pertaining to Bank's provision of corporate credit cards.
1
Further Acts. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Bank. Any such notice shall not affect any of the Corporation's agreements or commitments in effect at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on August 29, 2019 and attest that the signatures set opposite the names listed above are their genuine signatures.
CERTIFIED AND ATTESTED BY: | ||
X | ||
Christopher Brown | ||
Secretary of Borrower |
2
ATTACHMENT A
CERTIFICATE OF INCORPORATION
Attachment A
3
State
of Delaware
Secretary of State Division of Corporations Delivered 03:36 PM 04/11/2019 FILED 03:36 PM 04/11/2019 SR 20192766060 - File Number 5103607 |
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
908 DEVICES INC.
908 Devices Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
FIRST: The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of Delaware on February 10, 2012 under the name "908 Devices Inc."
SECOND: The Fifth Amended and Restated Certificate of Incorporation of the Corporation in the form attached hereto as Exhibit A has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware by the directors and stockholders of the Corporation.
THIRD: The Fifth Amended and Restated Certificate of Incorporation so adopted reads in full as set forth in Exhibit A attached hereto and is hereby incorporated herein by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by the President this 11th day of April, 2019.
908 DEVICES INC. | ||
By: | /s/ Kevin Knopp | |
Kevin Knopp, President |
4
EXHIBIT A
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
908 DEVICES INC.
ARTICLE I
The name of the Corporation is 908 Devices Inc.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
The total number of shares of capital stock which the Corporation shall have authority to issue is 61,061,965, of which (i) 24,121,106 shares shall be preferred stock, par value $0.001 per share (the "Preferred Stock"), and (ii) 36,940,859 shares shall be common stock, par value $0.001 per share (the "Common Stock").
The voting powers, designations, preferences, powers and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions of each class of capital stock of the Corporation, shall be as provided in this Article IV.
A. PREFERRED STOCK
1. Designation. A total of 8,490,778 shares of the Corporation's Preferred Stock shall be designated as a series known as Series A Participating Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred Stock"). A total of 4,650,216 shares of the Corporation's Preferred Stock shall be designated as a series known as Series B Participating Convertible Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock"). A total of 3,788,068 shares of the Corporation's Preferred Stock shall be designated as a series known as Series C Participating Convertible Preferred Stock, par value $0.001 per share (the "Series C Preferred Stock"). A total of 4,409,850 shares of the Corporation's Preferred Stock shall be designated as a series known as Series D Participating Convertible Preferred Stock, par value $0.001 per share (the "Series D Preferred Stock"). A total of 2,782,194 shares of the Corporation's Preferred Stock shall be designated as a series known as Series E Participating Convertible Preferred Stock, par value $0.001 per share (the "Series E Preferred Stock").
2. Voting.
(a) Election of Series A Director. The holders of outstanding shares of Series A Preferred Stock shall, voting together as a single class, be entitled to elect one (1) Director of the Corporation (a "Series A Director"). Except as provided in Section A.2(a)(iv) below, such Director shall be elected by a plurality vote, with the elected candidate being the candidate receiving the greatest number of affirmative votes (with each holder of Series A Preferred Stock entitled to cast one vote for or against each candidate with respect to each share of Series A Preferred Stock held by such holder) of the outstanding shares of Series A Preferred Stock, with votes cast against such candidates and votes withheld having no legal effect. The election of such Director shall occur (i) at the annual meeting of holders of capital stock, (ii) at any special meeting of holders of capital stock if such meeting is called for the purpose of electing directors, (iii) at any special meeting of holders of Series A Preferred Stock called by holders of not less than a majority of the outstanding shares of Series A Preferred Stock or (iv) by the written consent of holders of a majority of the outstanding shares of Series A Preferred Stock. If at any time when any share of Series A Preferred Stock is outstanding any such Director should cease to be a Director for any reason, the vacancy shall only be filled by the vote or written consent of the holders of the outstanding shares of Series A Preferred Stock, voting together as a separate class, in the manner and on the basis specified above or as otherwise provided by law. The holders of outstanding shares of Series A Preferred Stock may, in their sole discretion, determine not to elect one or more Directors as provided herein from time to time, and during any such period the Board of Directors shall not be deemed unduly constituted solely as a result of such vacancy.
(b) Election of Series B Director. The holders of outstanding shares of Series B Preferred Stock shall, voting together as a single class, be entitled to elect one (1) Director of the Corporation (a "Series B Director"). Except as provided in Section A.2(b)(iv) below, such Director shall be elected by a plurality vote, with the elected candidate being the candidate receiving the greatest number of affirmative votes (with each holder of Series B Preferred Stock entitled to cast one vote for or against each candidate with respect to each share of Series B Preferred Stock held by such holder) of the outstanding shares of Series B Preferred Stock, with votes cast against such candidates and votes withheld having no legal effect. The election of such Directors shall occur (i) at the annual meeting of holders of capital stock, (ii) at any special meeting of holders of capital stock if such meeting is called for the purpose of electing directors, (iii) at any special meeting of holders of Series B Preferred Stock called by holders of not less than a majority of the outstanding shares of Series B Preferred Stock or (iv) by the written consent of holders of a majority of the outstanding shares of Series B Preferred Stock. If at any time when any share of Series B Preferred Stock is outstanding any such Director should cease to be a Director for any reason, the vacancy shall only be filled by the vote or written consent of the holders of the outstanding shares of Series B Preferred Stock, voting together as a separate class, in the manner and on the basis specified above or as otherwise provided by law. The holders of outstanding shares of Series B Preferred Stock may, in their sole discretion, determine not to elect such Director as provided herein from time to time, and during any such period the Board of Directors shall not be deemed unduly constituted solely as a result of such vacancy.
3
(c) Election of Series E Director. The holders of outstanding shares of Series E Preferred Stock shall, voting together as a single class, be entitled to elect one (1) Director of the Corporation (a "Series E Director," and collectively with the Series A Director and Series B Director, the "Preferred Directors"). Except as provided in Section A.2(c)(iv) below, such Director shall be elected by a plurality vote, with the elected candidate being the candidate receiving the greatest number of affirmative votes (with each holder of Series E Preferred Stock entitled to cast one vote for or against each candidate with respect to each share of Series E Preferred Stock held by such holder) of the outstanding shares of Series E Preferred Stock, with votes cast against such candidates and votes withheld having no legal effect. The election of such Directors shall occur (i) at the annual meeting of holders of capital stock, (ii) at any special meeting of holders of capital stock if such meeting is called for the purpose of electing directors, (iii) at any special meeting of holders of Series E Preferred Stock called by holders of not less than a majority of the outstanding shares of Series E Preferred Stock or (iv) by the written consent of holders of a majority of the outstanding shares of Series E Preferred Stock. If at any time when any share of Series E Preferred Stock is outstanding any such Director should cease to be a Director for any reason, the vacancy shall only be filled by the vote or written consent of the holders of the outstanding shares of Series E Preferred Stock, voting together as a separate class, in the manner and on the basis specified above or as otherwise provided by law. The holders of outstanding shares of Series E Preferred Stock may, in their sole discretion, determine not to elect such Director as provided herein from time to time, and during any such period the Board of Directors shall not be deemed unduly constituted solely as a result of such vacancy.
(d) Election of Remaining Directors. The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Corporation not elected pursuant to Sections A.2(a), A.2(b), and A.2(c).
(e) Voting Generally. Each outstanding share of Preferred Stock shall be entitled to a number of votes equal to the number of shares of Common Stock into which such share of Preferred Stock is then convertible pursuant to Section A.6 hereof as of the record date for the vote or written consent of stockholders, if applicable. Each holder of outstanding shares of Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the by-laws of the Corporation (the "By-laws") and shall vote with holders of the Common Stock, voting together as a single class, upon all matters submitted to a vote of stockholders, excluding those matters required to be submitted to a class or series vote pursuant to the terms hereof (including, without limitation, Section A.8) or by law.
3. Dividends.
(a) The holders of shares of Series E Preferred Stock, in preference to the holders of Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative dividends at the rate of eight percent (8%) per share of the Series E Original Issue Price per annum (as adjusted for subsequent stock dividends, stock splits, combinations, recapitalizations or the like with respect to such share) from the date of original issuance of such share (the "Closing Date").
(b) The holders of shares of Series D Preferred Stock, in preference to the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative dividends at the rate of eight percent (8%) per share of the Series D Original Issue Price per annum (as adjusted for subsequent stock dividends, stock splits, combinations, recapitalizations or the like with respect to such share) from the Closing Date with respect to such share.
(c) The holders of shares of Series C Preferred Stock, in preference to the holders of Series B Preferred Stock, Series A Preferred Stock and Common Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative dividends at the rate of eight percent (8%) per share of the Series C Original Issue Price per annum (as adjusted for subsequent stock dividends, stock splits, combinations, recapitalizations or the like with respect to such share) from the Closing Date with respect to such share.
4
(d) The holders of shares of Series B Preferred Stock and Series A Preferred Stock, in preference to the holders of Common Stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative dividends at the rate of eight percent (8%) per share of the applicable Original Issue Price of such series of Preferred Stock per annum (as adjusted for subsequent stock dividends, stock splits, combinations, recapitalizations or the like with respect to such share) from the Closing Date with respect to such share.
(e) Subject to obtaining any consent required under Section A.8(f) below, after the foregoing dividends on the Preferred Stock shall have been paid, then the Corporation may (when, as and if declared by the Board of Directors) declare and distribute in such year dividends among the holders of Preferred Stock and the holders of Common Stock pro rata based on the number of shares of Common Stock held by each, determined on an as-if-converted basis (assuming full conversion of all such shares of such series of Preferred Stock) as of the record date with respect to the declaration of such dividends. For the avoidance of doubt, the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock shall participate on a pari passu basis in any distribution or dividend declared or paid to the Common Stock or any series of Preferred Stock ranking junior to the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock on the basis of the number of shares of Common Stock into which it is then convertible.
4. Liquidation; Merger, etc.
(a) Series E Preferred Stock Liquidation Preference. Upon any liquidation, dissolution or winding up of the Corporation and its subsidiaries, whether voluntary or involuntary (a "Liquidation Event"), each holder of outstanding shares of Series E Preferred Stock shall be entitled to be paid in cash, before any amount shall be paid or distributed to the holders of the Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Common Stock or any other capital stock ranking on liquidation junior to the Series E Preferred Stock, an amount (the "Series E Preference Amount") per share equal to (A) $6.29 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like, the "Series E Original Issue Price"), plus (B) an amount equal to all declared but unpaid dividends on such share of Series E Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like). If the amounts available for distribution by the Corporation to holders of Series E Preferred Stock upon a Liquidation Event are not sufficient to pay the aggregate Series E Preference Amount due to such holders, such holders of Series E Preferred Stock shall share ratably on a pari passu basis in any distribution in connection with such Liquidation Event in proportion to the full respective preferential amounts to which they are entitled with respect to shares of Series E Preferred Stock.
(b) Series D Preferred Stock Liquidation Preference. Upon any Liquidation Event, following payment of the Series E Preference Amount, each holder of outstanding shares of Series D Preferred Stock shall be entitled to be paid in cash, before any amount shall be paid or distributed to the holders of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Common Stock or any other capital stock ranking on liquidation junior to the Series D Preferred Stock, an amount (the "Series D Preference Amount") per share equal to (A) $5.6351 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like, the "Series D Original Issue Price"), plus (B) an amount equal to all declared but unpaid dividends on such share of Series D Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like). If the amounts available for distribution by the Corporation to holders of Series D Preferred Stock upon a Liquidation Event are not sufficient to pay the aggregate Series D Preference Amount due to such holders, such holders of Series D Preferred Stock shall share ratably on a pari passu basis in any distribution in connection with such Liquidation Event in proportion to the full respective preferential amounts to which they are entitled with respect to shares of Series D Preferred Stock.
5
(c) Series C Preferred Stock Liquidation Preference. Upon any Liquidation Event, following payment of each of the Series E Preference Amount and the Series D Preference Amount, each holder of outstanding shares of Series C Preferred Stock shall be entitled to be paid in cash, before any amount shall be paid or distributed to the holders of the Series B Preferred Stock, Series A Preferred Stock, Common Stock or any other capital stock ranking on liquidation junior to the Series C Preferred Stock, an amount (the "Series C Preference Amount") per share equal to (A) $3.45 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like, the "Series C Original Issue Price"), plus (B) an amount equal to all declared but unpaid dividends on such share of Series C Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like). If the amounts available for distribution by the Corporation to holders of Series C Preferred Stock upon a Liquidation Event are not sufficient to pay the aggregate Series C Preference Amount due to such holders, such holders of Series C Preferred Stock shall share ratably on a pari passu basis in any distribution in connection with such Liquidation Event in proportion to the full respective preferential amounts to which they are entitled with respect to shares of Series C Preferred Stock.
(d) Series A and B Preferred Stock Liquidation Preference. Upon a Liquidation Event, following payment of each of the Series E Preference Amount, Series D Preference Amount and Series C Preference Amount in full, each holder of outstanding shares of Series A Preferred Stock and Series B Preferred Stock shall be entitled to be paid in cash, before any amount shall be paid or distributed to the holders of the Common Stock or any other capital stock ranking on liquidation junior to the Series A Preferred Stock and Series B Preferred Stock (the Common Stock and such other capital stock being referred to collectively as, "Junior Stock"), an amount per share equal to (x) in the case of the Series A Preferred Stock (the "Series A Preference Amount"), (A) $1.00 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like, the "Series A Original Issue Price"), plus (B) an amount equal to all declared but unpaid dividends on such share of Series A Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like) and (y) in the case of the Series B Preferred Stock (the "Series B Preference Amount"), (A) $1.801 (as adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like, the "Series B Original Issue Price"), plus (B) an amount equal to all declared but unpaid dividends on such share of Series B Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like). The "Original Issue Price" shall mean the Series A Original Issue Price, in the case of the Series A Preferred Stock, the Series B Original Issue Price, in the case of the Series B Preferred Stock, the Series C Original Issue Price, in the case of the Series C Preferred Stock, the Series D Original Issue Price, in the case of the Series D Preferred Stock and the Series E Original Issue Price, in the case of the Series E Preferred Stock. If the amounts available for distribution by the Corporation to holders of Series A Preferred Stock and Series B Preferred Stock upon a Liquidation Event are not sufficient to pay the aggregate Series A Preference Amount and Series B Preference Amount due to such holders, such holders of Series A Preferred Stock and Series B Preferred Stock shall share ratably on a pari passu basis in any distribution in connection with such Liquidation Event in proportion to the full respective preferential amounts to which they are entitled with respect to shares of Series A Preferred Stock and/or Series B Preferred Stock.
6
(e) Participation Rights. If the assets and funds of the Corporation legally available for distribution to the Corporation's stockholders exceed the aggregate preferential amounts payable to the holders of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock and Series A Preferred Stock pursuant to Sections A.4(a), A.4(b), A.4(c) and A.4(d), then, after such preferential amounts (including the full Series E Preference Amount, Series D Preference Amount, Series C Preference Amount, Series B Preference Amount and Series A Preference Amount) shall have been paid, the remaining assets and funds of the Corporation available for distribution to the Corporation's stockholders shall be distributed, subject to Section A.4(i), ratably among the holders of shares of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock, in each case in accordance with their terms (where each outstanding share of Preferred Stock is treated for this purpose as having been converted into the largest number of shares of Common Stock into which such share of Preferred Stock could then be converted pursuant to Section A.6) until (i) for the holders of Series E Preferred Stock, the aggregate amount of the payments made to such holders pursuant to Section A.4(a) and this Section A.4(e) equals two and one half times the aggregate Series E Preference Amount, (ii) for the holders of Series D Preferred Stock, the aggregate amount of the payments made to such holders pursuant to Section A.4(b) and this Section A.4(e) equals two times the aggregate Series D Preference Amount, (iii) for the holders of Series C Preferred Stock, the aggregate amount of the payments made to such holders pursuant to Section A.4(c) and this Section A.4(e) equals three times the aggregate Series C Preference Amount, (iv) for the holders of Series B Preferred Stock, the aggregate amount of the payments made to such holders pursuant to Section A.4(d) and this Section A.4(e) equals three times the aggregate Series B Preference Amount, and (v) for the holders of Series A Preferred Stock, the aggregate amount of the payments made to such holders pursuant to Section A.4(d) and this Section A.4(e) equals four times the aggregate Series A Preference Amount. Thereafter, any remaining assets and funds of the Corporation available for distribution to the Corporation's stockholders shall be distributed ratably among the holders of Common Stock. In the event that a share of Series E Preferred Stock, Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock and/or Series A Preferred Stock would be entitled to an amount in excess of amounts that such share would be entitled to pursuant to the foregoing provisions of Sections A.4(a) through (e) in connection with a Liquidation Event, if such share of Preferred Stock was converted to a share of Common Stock pursuant to Section A.6(a) as of immediately prior to the Liquidation Event and shared ratably in any distribution in connection with such Liquidation Event on an as converted to Common Stock basis, then such share shall be deemed to have so converted.
(f) Deemed Liquidation Events. Each of the following events shall be treated as a Liquidation Event, unless the holders of (i) a majority of the voting power of the outstanding shares of Preferred Stock voting together as a single class (a "Majority Interest") and (ii) a majority of the outstanding shares of Series E Preferred Stock (the "Series E Deemed Liquidation Consent") elect otherwise; provided however, if the amounts available for distribution by the Corporation to holders of Series D Preferred Stock upon such Liquidation Event would not be sufficient to pay the aggregate Series D Preference Amount if such event was treated as a Liquidation Event, such waiver shall also require the written election of the holders of not less than sixty percent (60%) of the Series D Preferred Stock then outstanding (the "Series D Deemed Liquidation Consent"), provided further, that the Series E Deemed Liquidation Consent and the Series D Deemed Liquidation Consent shall not be required in connection with a Change of Control Transaction in which (i) the holders of capital stock of the Corporation immediately prior to such Change of Control Transaction continue to hold at least thirty five percent (35%) of the voting power of the capital stock of the surviving business entity in equal proportion to their holdings prior to such Change of Control Transaction, (ii) no cash consideration is paid to any holder of capital stock of the Corporation in such holder's capacity as a holder of capital stock of the Corporation, (iii) the acquirer in such transaction does not have an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") and (iv) there is no readily available public market for the capital stock received by the holders of capital stock of the Corporation in connection with such transaction: (A) any merger or consolidation of the Corporation into or with another business entity (except one in which the shares of capital stock of the Corporation immediately prior to such merger or consolidation continue to represent at least a majority of the voting power of the capital stock of the surviving business entity) (a "Change of Control Transaction"), (B) any sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, of all or substantially all of the assets of the Corporation and its subsidiaries taken as a whole (an "Asset Sale"), or (C) a sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, of all or substantially all of the Corporation's and its subsidiaries' intellectual property (together with any Asset Sale, each a "Disposition"). All consideration payable to the stockholders of the Corporation in connection with any such Change of Control Transaction, or all consideration payable to the Corporation, together with all other available assets of the Corporation (net of obligations owed by the Corporation that are senior to the Preferred Stock), in connection with any Disposition, upon the consummation of such Change of Control Transaction, shall be, as applicable, paid by the purchaser to the holders of, or distributed by the Corporation in redemption (out of funds legally available therefor) of, the Preferred Stock and any Junior Stock in accordance with the preferences and priorities set forth in Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e) above, with such preferences and priorities specifically intended to be applicable in any such Change of Control Transaction or Disposition, as if any such transaction were a Liquidation Event. In furtherance of the foregoing, the Corporation shall take such actions as are necessary to give effect to the provisions of this Section A.4(f), including without limitation, (1) in the case of a Change of Control Transaction, causing the definitive agreement relating to such Change of Control Transaction to provide for a rate at which the shares of Preferred Stock are converted into or exchanged for cash, new securities or other property which gives effect to the preferences and priorities set forth in Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e), or (2) in the case of a Disposition, redeeming the Preferred Stock in a manner that gives effect to the preferences and priorities set forth in Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e). The Corporation shall promptly provide to the holders of shares of Preferred Stock such information concerning the terms of such Change of Control Transaction or Disposition, and the value of the assets of the Corporation as may reasonably be requested by the holders of Preferred Stock. The amount deemed distributed to the holders of Preferred Stock upon any such transaction shall be the cash or the value of the property, rights or securities distributed to such holders by the Corporation or the acquiring person, firm or other entity, as applicable.
7
(g) Valuation of Securities or Other Non-Cash Consideration. For purposes of valuing any securities or other noncash consideration to be delivered to the holders of the Preferred Stock in connection with any transaction to which Section A.4(f) is applicable, the following shall apply:
(i) If any such securities are traded on a nationally recognized securities exchange or inter dealer quotation system, the value shall be deemed to be the average of the closing prices of such securities on such exchange or system over the 30 day period ending three (3) business days prior to the closing;
(ii) If any such securities are traded over the counter, the value shall be deemed to be the average of the closing bid prices of such securities over the 30 day period ending three (3) business days prior to the closing; and
(iii) If there is no active public market for such securities or other noncash consideration, the value shall be the fair market value thereof, as determined by the Board of Directors (including at least two of the Preferred Directors) in good faith, provided that if a Majority Interest objects to such valuation, the valuation shall be determined by a mutually agreed to investment banker, the fees of which shall be paid by the Corporation.
(h) Allocation. In the event of a Liquidation Event pursuant to Section A.4(f), if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the definitive agreement relating to such Liquidation Event shall provide that (i) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the "Initial Consideration") shall be allocated among the holders of capital stock of the Corporation in accordance with Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e) as if the Initial Consideration were the only consideration payable in connection with such Liquidation Event and (ii) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e) after taking into account the previous payment of the Initial Consideration as part of the same transaction.
8
(i) Series E Preferred Stock Proceeds. Notwithstanding anything set forth in this Section A.4 to the contrary, in the event of any liquidation, dissolution or winding up of the Corporation and its subsidiaries, including any event treated as a Liquidation Event pursuant to A.4(f), in which net proceeds to the Corporation's equity holders (whether paid directly in a Change of Control Transaction or by redemption in a Disposition) is above One Hundred Seventy Five Million Dollars ($175,000,000), the Series E Preferred Stock will be entitled to receive total proceeds per share (treating escrow, holdback, earnouts and other contingent consideration in a manner consistent with Section A.4(h) herein) in an amount equal to no less than two times the Series E Original Issue Price prior to any distribution of such proceeds to other shares of capital stock.
5. Redemption.
(a) Optional Redemption; Redemption Date. At any time on or after April 11th, 2024, the holder(s) of a Majority Interest may elect to have all (but not less than all) of the outstanding shares of Preferred Stock redeemed. In such event, the Corporation shall redeem all (but not less than all) of the outstanding shares of Preferred Stock, out of funds legally available therefor, for an amount equal to the aggregate Redemption Price specified in Section A.5(b). Any election by a Majority Interest pursuant to this Section A.5(a) shall be made by written notice to the Corporation and the other holders of Preferred Stock at least fifteen (15) days prior to the elected redemption date (the "Redemption Date"). Upon such election, all holders of Preferred Stock shall be deemed to have elected to have their shares of Preferred Stock redeemed pursuant to this Section A.5(a) and such election shall bind all holders of Preferred Stock. Notwithstanding anything to the contrary contained herein, (i) each holder of shares of Preferred Stock shall have the right to elect to give effect to the conversion rights contained in Section A.6(a) instead of giving effect to the provisions contained in this Section A.5(a) with respect to the shares of Preferred Stock held by such holder, and (ii) each holder of Series E Preferred Stock shall have the right to opt out of such election to redeem shares of Series E Preferred Stock, instead of giving effect to the provisions contained in Section A.5(a) with respect to the shares of Series E Preferred Stock held by such holder.
(b) Redemption Price. The price for each share of Preferred Stock redeemed pursuant to this Section A.5 shall be an amount equal to, (i) in the case of the Series A Preferred Stock, the Series A Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Series A Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), (ii) in the case of the Series B Preferred Stock, the Series B Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Series B Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), (iii) in the case of the Series C Preferred Stock, the Series C Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Series C Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), (iv) in the case of the Series D Preferred Stock, the Series D Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Series D Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), and (v) in the case of the Series E Preferred Stock, the Series E Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Series E Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like) (the "Redemption Price"). The aggregate Redemption Price shall be payable in cash in immediately available funds to the respective holders of the Preferred Stock on the Redemption Date in accordance with the preferences and priorities set forth in Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e) above.
9
(c) Insufficient Funds. If the funds of the Corporation legally available to redeem shares of Preferred Stock on the Redemption Date are insufficient to redeem the total number of such shares required to be redeemed on such date, the Corporation shall (i) take any action necessary or appropriate, to the extent reasonably within its control, to remove promptly any impediments to its ability to redeem the total number of shares of Preferred Stock required to be so redeemed, including, without limitation, (A) to the extent permissible under applicable law, reducing the stated capital of the Corporation or causing a revaluation of the assets of the Corporation under Section 154 of the Delaware General Corporation Law to create sufficient surplus to make such redemption and (B) incurring any indebtedness necessary to make such redemption, and (ii) in any event, use any funds that are legally available to redeem the maximum possible number of such shares from the holders of such shares to be redeemed in proportion to the respective number of such shares that otherwise would have been redeemed if all such shares had been redeemed in full. At any time thereafter when additional funds of the Corporation are legally available to redeem such shares of Preferred Stock, the Corporation shall immediately use such funds to redeem the balance of the shares that the Corporation became obligated to redeem on the Redemption Date (but which it has not yet redeemed) at such applicable Redemption Price to the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock in accordance with the preferences and priorities set forth in Sections A.4(a), A.4(b), A.4(c), A.4(d) and A.4(e) above (with all shares of Series E Preferred Stock to be redeemed prior to any other shares of Preferred Stock).
(d) Interest. If any shares of Preferred Stock are not redeemed on the Redemption Date for any reason, all such unredeemed shares shall remain outstanding and entitled to all the rights and preferences provided herein, and the Corporation shall pay interest on the Redemption Price applicable to such unredeemed shares at an aggregate per annum rate equal to twelve percent (12%), with such interest to accrue daily in arrears and to be compounded annually; provided, however, that in no event shall such interest exceed the maximum permitted rate of interest under applicable law (the "Maximum Permitted Rate"). In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided, however, that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable Redemption Date to the extent permitted by law.
10
6. Conversion. Shares of Preferred Stock shall be converted into Common Stock in accordance with the following:
(a) Voluntary Conversion. The holders of shares of Preferred Stock may convert such shares into Common Stock at any time after the date of issuance of such shares of Preferred Stock as follows:
(i) Upon the written election of the holder thereof and without payment of any additional consideration, each outstanding share of Preferred Stock held by such holder shall be converted into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing (A) the applicable Original Issue Price plus an amount equal to all declared but unpaid dividends on such share of Preferred Stock (such amount to be adjusted for any stock splits, stock dividends, combinations, recapitalizations and the like), by (B) the applicable Conversion Price at the time in effect for such series of Preferred Stock (such quotient, the "Conversion Rate"). The initial "Conversion Price" per share for shares of Preferred Stock shall be the Original Issue Price for such series of Preferred Stock, subject to adjustment as set forth in Section A.7. Any election by a holder of Preferred Stock pursuant to this Section A.6(a)(i) shall be made by written notice to the Corporation, and such notice may be given at any time and from time to time after the Closing Date and through and including the day which is one (1) day prior to the Redemption Date or the closing of any transaction contemplated by Section A.4(e).
(ii) Upon the written election of both (i) a Majority Interest and (ii) holders of a majority of shares of Series E Preferred Stock then outstanding (a "Series E Majority"), without the payment of any additional consideration, all (but not less than all) of the outstanding shares of Preferred Stock shall be converted into fully paid and nonassessable shares of Common Stock at the applicable Conversion Rate. Any election by a Majority Interest pursuant to this Section A.6(a)(ii) shall be made by written notice to the Corporation and the other holders of Preferred Stock, and such notice may be given at any time after the Closing Date through and including the date which is one (1) day prior to the closing of any transaction contemplated by Section A.4(e). Upon such election, all holders of the Preferred Stock shall be deemed to have elected to voluntarily convert all outstanding shares of Preferred Stock into shares of Common Stock pursuant to this Section A.6(a)(ii) and such election shall bind all holders of Preferred Stock. Notwithstanding the foregoing, in the event a conversion pursuant to this Section A.6(a)(ii) is to occur in connection with a Liquidation Event, and the amounts available for distribution by the Corporation to holders of Series D Preferred Stock upon such Liquidation Event would not be sufficient to pay the aggregate Series D Preference Amount due to such holders, solely for purposes of this Section A.6(a)(ii) as it applies to the Series D Preferred Stock, in addition to the written election of a Majority Interest, the written election of the holders of not less than sixty percent (60%) of the Series D Preferred Stock then outstanding shall be required to consent to the conversion of all of the outstanding shares of Series D Preferred Stock into shares of Common Stock (the "Series D Conversion Approval").
(b) Automatic Conversion. Each share of Preferred Stock shall automatically be converted, without the payment of any additional consideration, into fully paid and nonassessable shares of Common Stock at the applicable Conversion Rate as of, and in all cases subject to, the closing of the Corporation's first underwritten public offering on a firm commitment basis pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock (i) at a price per share of Common Stock of not less than $7.86 (appropriately adjusted for stock splits, stock dividends, combinations, recapitalizations and the like), and (ii) with respect to which the Corporation receives aggregate net proceeds attributable to sales for the account of the Corporation (before deduction of underwriting discounts and commissions) of not less than $40,000,000 (a "QPO"). If a closing of a QPO occurs, all outstanding shares of Preferred Stock shall be deemed to have been converted into shares of Common Stock immediately prior to such closing.
11
(c) Procedure for Conversion.
(i) Voluntary Conversion. Upon election to convert pursuant to Section A.6(a)(i), the relevant holder or holders of Preferred Stock shall surrender the certificate or certificates representing the shares of Preferred Stock being converted to the Corporation, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) or shall deliver an affidavit of loss to the Corporation, at its principal executive office or such other place as the Corporation may from time to time designate by notice to the holders of the Preferred Stock. Upon surrender of such certificate(s) or delivery of an affidavit of loss, the Corporation shall issue and send by hand delivery, by courier or by first class mail (postage prepaid) to the holder thereof or to such holder's designee, at the address designated by such holder, certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. The issuance of certificates for Common Stock upon conversion of Preferred Stock shall be deemed effective as of the date of surrender of such Preferred Stock certificates or delivery of such affidavit of loss and will be made without charge to the holders of such shares for any issuance tax in respect thereof or other costs incurred by the Corporation in connection with such conversion and the related issuance of such stock.
(ii) Automatic Conversion. As of the closing of a QPO (the "Automatic Conversion Date") or upon election to convert pursuant to Section A.6(a)(ii), all outstanding shares of Preferred Stock shall be converted into shares of Common Stock without any further action by the holders of such shares and whether or not the certificates representing such shares of Preferred Stock are surrendered to the Corporation. On the Automatic Conversion Date, all rights with respect to the shares of Preferred Stock so converted shall terminate, except any of the rights of the holders thereof upon surrender of their certificate or certificates therefor or delivery of an affidavit of loss thereof to receive certificates for the number of shares of Common Stock into which such shares of Preferred Stock have been converted. If so required by the Corporation, certificates surrendered for conversion shall be endorsed for transfer, in a form satisfactory to the Corporation, accompanied by duly executed stock powers related thereto. The Corporation shall issue and deliver to such holder, promptly (and in any event in such time as is sufficient to enable such holder to participate in such QPO) at such office and in its name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which the shares of the Preferred Stock surrendered are convertible on the Automatic Conversion Date.
(d) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all outstanding shares of Preferred Stock, the Corporation will take such corporate action as may be necessary to increase the number of its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, and to reserve the appropriate number of shares of Common Stock for issuance upon such conversion.
(e) No Closing of Transfer Books. The Corporation shall not close its books against the transfer of shares of Preferred Stock in any manner that would interfere with the timely conversion of any shares of Preferred Stock.
12
7. Adjustments.
(a) Adjustments to the Conversion Price. Except as provided in Section A.7(b) and except in the case of an event described in Section A.7(c), if and whenever after the date this Fifth Amended and Restated Certificate of Incorporation is first filed with the Secretary of State of Delaware (the "Filing Date") the Corporation shall issue or sell, or is, in accordance with this Section A.7(a), deemed to have issued or sold, any shares of Common Stock for a consideration per share less than the applicable Conversion Price of a series of Preferred Stock in effect immediately prior to such issuance or sale, then, upon such issuance or sale (or deemed issuance or sale), such Conversion Price shall be reduced to the price determined by dividing (i) the sum of (A) the Common Stock Deemed Outstanding (as defined below) immediately prior to such issuance or sale (or deemed issuance or sale) multiplied by the applicable Conversion Price then in effect and (B) the consideration, if any, received by the Corporation upon such issuance or sale (or deemed issuance or sale) by (ii) the Common Stock Deemed Outstanding immediately after such issuance or sale (or deemed issuance or sale).
For purposes of this Section A.7(a), the following shall also be applicable:
(i) Issuance of Rights or Options. If the Corporation shall, at any time after the Filing Date, in any manner grant (whether directly or by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called "Options" and such convertible or exchangeable stock or securities being called "Convertible Securities"), in each case for consideration per share (determined as provided in this paragraph and in Section A.7(a)(vi)) less than the applicable Conversion Price then in effect, whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options, or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon exercise of such Options, shall be deemed to have been issued as of the date of granting of such Options, at a price per share equal to the amount determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such Options, plus, in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the issuance or sale of such Convertible Securities and upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock deemed to have been so issued. Except as otherwise provided in Section A.7(a)(iii), no adjustment of the Conversion Price of a series of Preferred Stock shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation shall, at any time after the Filing Date, in any manner issue or sell any Convertible Securities for consideration per share (determined as provided in this paragraph and in Section A.7(a)(vi)) less than a Conversion Price then in effect, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued as of the date of the issuance or sale of such Convertible Securities, at a price per share equal to the amount determined by dividing (A) the total amount, if any, received or receivable by the Corporation as consideration for the issuance or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock deemed to have been so issued; provided, that (1) except as otherwise provided in Section A.7(a)(iii), no adjustment of the Conversion Price of a series of Preferred Stock shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities and (2) if any such issuance or sale of such Convertible Securities is made upon exercise of any Options to purchase any such Convertible Securities, no further adjustment of a Conversion Price shall be made by reason of such issuance or sale.
13
(iii) Change in Option Price or Conversion Rate. If there shall occur a change in (A) the maximum number of shares of Common Stock issuable in connection with any Option referred to in Section A.7(a)(i) or any Convertible Securities referred to in Section A.7(a)(i) or (ii), (B) the purchase price provided for in any Option referred to in Section A.7(a)(i), (C) the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in Section A.7(a)(i) or (ii) or (D) the rate at which Convertible Securities referred to in Section A.7(a)(i) or (ii) are convertible into or exchangeable for Common Stock (in each case, other than in connection with an event described in Section A.7(b)), then the applicable Conversion Price in effect at the time of such event shall be adjusted to the Conversion Price for such series of Preferred Stock that would have been in effect at such time had such Options or Convertible Securities that are still outstanding provided for such changed maximum number of shares, purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment the Conversion Price then in effect for such series of Preferred Stock is thereby reduced; and on the termination of any such Option or any such right to convert or exchange such Convertible Securities, the Conversion Price then in effect hereunder shall be increased to the Conversion Price that would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination (i.e., to the extent that fewer than the number of shares of Common Stock deemed to have been issued in connection with such Option or Convertible Securities were actually issued), never been issued or been issued at such higher price, as the case may be.
(iv) Stock Dividends. If the Corporation, at any time or from time to time after the Filing Date, shall declare or make, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or make any other distribution upon any stock of the Corporation payable in Common Stock, Options or Convertible Securities, any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration, and the Conversion Price will be adjusted pursuant to this Section A.7(a); provided, that no adjustment shall be made to the Conversion Price as a result of such dividend or distribution if the holders of the shares of Preferred Stock are entitled to, and do, receive such dividend or distribution in accordance with Section A.3; and, provided, further, that if any adjustment is made to the Conversion Price as a result of the declaration of a dividend and such dividend is not effected, the Conversion Price shall be appropriately readjusted to the Conversion Price in effect had such dividend not been declared.
(v) Other Dividends and Distributions. If the Corporation, at any time or from time to time after the Filing Date, shall declare or make, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities or other property of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of the outstanding shares of Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of such other securities of the Corporation or the value of such other property that they would have received had the Preferred Stock been converted into Common Stock on the date of such event and had such holders thereafter, during the period from the date of such event to and including the conversion date, retained such securities or other property receivable by them during such period giving application to all adjustments called for during such period under Section A.7 with respect to the rights of the holders of the outstanding shares of Preferred Stock; and, provided, further, however, that no such adjustment shall be made if the holders of such series of Preferred Stock simultaneously receive a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
14
(vi) Consideration for Stock. If the Corporation, at any time or from time to time after the Filing Date, shall issue or sell, or is deemed to have issued or sold, any shares of Common Stock for cash, the consideration received therefor shall be deemed to be the amount received or to be received by the Corporation therefor (determined with respect to deemed issuances and sales in connection with Options and Convertible Securities in accordance with clause (A) of Section A.7(a)(i) or Section A.7(a)(ii), as appropriate) as determined in good faith by the Board of Directors of the Corporation and the holders of not less than a Majority Interest. In case any shares of Common Stock shall be issued or sold, or deemed issued or sold, for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be deemed to be the fair value of such consideration received or to be received by the Corporation (determined with respect to deemed issuances and sales in connection with Options and Convertible Securities in accordance with clause (A) of Section A.7(a)(i) or Section A.7(a)(ii), as appropriate) as determined in good faith by the Board of Directors of the Corporation and the holders of not less than a Majority Interest. In case any Options shall be issued in connection with the issuance and sale of other securities of the Corporation, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Corporation and the holders of not less than a Majority Interest. Anything herein to the contrary notwithstanding, if in any case described in this Section A.7(a)(vi) the Corporation and the holders of a Majority Interest are unable to reach agreement as to the value of such consideration, then the value thereof will be determined by an independent appraisal by a mutually agreed to investment banker, the fees of which shall be paid by the Corporation.
(vii) Record Date. In case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
(viii) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation; provided, that the disposition of any such shares shall be considered an issuance or sale of Common Stock for the purpose of this Section A.7.
(ix) Other Issuances or Sales. In calculating any adjustment to a Conversion Price pursuant to this Section A.7(a), any Options or Convertible Securities that provide, as of the effective date of such adjustment, for the issuance upon exercise or conversion thereof of an indeterminable number of shares of Common Stock shall (together with the shares of Common Stock issuable upon exercise or conversion thereof) be disregarded; provided, that at such time as the number of shares of Common Stock issuable upon exercise or conversion of such Options or Convertible Securities becomes determinable, such Conversion Price shall be adjusted as provided in Section A.7(a)(iii) above.
(x) Common Stock Deemed Outstanding. For purposes of this Section A.7, the term "Common Stock Deemed Outstanding" shall mean, at any time, the sum of (A) the number of shares of Common Stock outstanding immediately prior to the Filing Date (including for this purpose all shares of Common Stock issuable upon exercise or conversion of any vested Options or Convertible Securities outstanding and exercisable immediately prior to the Filing Date), plus (B) the number of shares of Common Stock issued or sold (or deemed issued or sold) after the Filing Date (including for this purpose all shares of Common Stock issuable upon exercise or conversion of any vested Options or Convertible Securities outstanding and exercisable immediately prior to the Filing Date).
15
(b) Certain Issues of Common Stock Excepted. Anything herein to the contrary notwithstanding, the Corporation shall not be required to make any adjustment of the Conversion Price of any series of Preferred Stock in the case of the issuance from and after the Filing Date of (i) shares of Common Stock upon conversion of shares of Preferred Stock, (ii) shares of Common Stock or options therefor to directors, officers, employees or consultants of the Corporation in connection with their service as directors of the Corporation, their employment by the Corporation or their retention as consultants by the Corporation, in each case authorized by the Board of Directors, including at least two of the Preferred Directors, and issued pursuant to any equity incentive plans approved by the Board of Directors, (iii) as part of the consideration payable in the acquisition of another entity by the Corporation by merger, purchase of all or substantially all of the assets of such entity, stock purchase or other reorganization of such entity, in each case as authorized by the Board of Directors, including at least two of the Preferred Directors, (iv) to a bank or other financial institution (not to exceed two percent (2%) of all outstanding securities) to secure a lending or equipment leasing transaction, in each case as authorized by the Board of Directors, including at least two of the Preferred Directors, (v) to a business partner, government laboratory or university to advance strategic business objectives, as authorized by the Board of Directors, including at least two of the Preferred Directors, and (vi) with respect to an adjustment to the Conversion Price of a particular series of Preferred Stock, if the Corporation receives a waiver of such adjustment from the holders of a majority of the shares of such series of Preferred Stock ("Excluded Shares").
(c) Subdivision or Combination of Common Stock. In case the Corporation shall at any time after the Filing Date subdivide its outstanding shares of Common Stock into a greater number of shares (by any stock split, stock dividend or otherwise), the Conversion Price of each series of Preferred Stock in effect immediately prior to such subdivision shall be proportionately reduced, and, conversely, in case the Corporation shall at any time after the Filing Date combine its outstanding shares of Common Stock into a smaller number of shares (by any reverse stock split or otherwise), the Conversion Price of each series of Preferred Stock in effect immediately prior to such combination shall be proportionately increased. In the case of any such subdivision, no further adjustment shall be made pursuant to Section A.7(a)(iv) by reason thereof.
(d) Reorganization or Reclassification. If any capital reorganization or reclassification of the capital stock of the Corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition of such reorganization or reclassification, lawful and adequate provisions shall be made whereby each holder of a share or shares of Preferred Stock shall thereupon have the right to receive, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore receivable upon the conversion of such share or shares of Preferred Stock, as the case may be, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such Common Stock immediately theretofore receivable upon such conversion had such reorganization or reclassification not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of such holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Conversion Price) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of such conversion rights.
8. Covenants.
(a) For so long as at least 2,412,110 shares of Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of not less than a Majority Interest:
(i) declare or pay any dividends other than dividends on the Preferred Stock as provided in Section A.3 or make any distributions of cash, property or securities of the Corporation in respect of its capital stock, or apply any of its assets to the redemption, retirement, purchase or other acquisition of its capital stock, directly or indirectly, through subsidiaries or otherwise, except for (A) the redemption of Preferred Stock pursuant to and as provided in this Fifth Amended and Restated Certificate of Incorporation, or (B) the repurchase of the Excluded Shares described in Section A.7(b)(ii) above upon termination of employment of the holder of such Excluded Shares, and approved by the Board, including at least two of the Preferred Directors;
16
(ii) reclassify any capital stock in a manner that adversely affects the designations, preferences, powers and/or the relative, participating, optional or other special rights, or the restrictions provided for the benefit of, the Preferred Stock;
(iii) authorize or issue, or obligate itself to issue, any equity security or debt security convertible into an equity security of the Corporation or create (by reclassification or otherwise) any new class or series of shares having rights, preferences or privileges senior to or on a parity with the Preferred Stock), or permit any subsidiary of the Corporation to issue such securities to any person or entity other than the Corporation or create such new class or series of shares;
(iv) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, (A) this Fifth Amended and Restated Certificate of Incorporation (including, without limitation, increasing the total number of shares of Preferred Stock that the Corporation shall have the authority to issue) or (B) the By-laws of the Corporation as in effect on the Closing Date, in a manner that alters or changes the right, preferences or privileges of the Preferred Stock or is otherwise adverse to the Preferred Stock;
(v) effect any Liquidation Event, or any other event described in Section A.4(f) hereof;
(vi) effect the sale, transfer or license of all or substantially all of the assets of the Corporation or any subsidiary of the Corporation to any person or entity other than the Corporation or a wholly-owned subsidiary of the Corporation;
(vii) increase or decrease to the authorized size of the Board of Directors;
(viii) take any action that results in the appointment or removal of the Chief Executive Officer;
(ix) take any action that results in a public offering of any shares of Common Stock;
(x) incur any indebtedness (including by issuance of any debt security), except for indebtedness that does not exceed $250,000 in the aggregate;
(xi) acquire any business with a value in excess of $2,000,000;
(xii) cause the Corporation to have any non-wholly owned subsidiaries or spin out or sell any subsidiary of the Corporation or any entity created by the Corporation;
(xiii) change the principal business of the Corporation, enter new lines of business or exit any current line of business, or permits any subsidiary to take such action;
(xiv) take any other action not described in Section A.8(a)(i)-(xiii) if such action alters or changes the rights, preferences or privileges of the Preferred Stock; or
(xv) enter into any agreement to do any of the foregoing that is not expressly made conditional on obtaining the affirmative vote or written consent of the holders of not less than a Majority Interest.
17
(b) For so long as at least 828,078 shares of Series A Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of a majority of the Series A Preferred Stock then outstanding:
(i) alter or change the rights, preferences or privileges of the Series A Preferred Stock in a manner that adversely alters or changes the rights, preferences or privileges of the Series A Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be; or
(ii) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, this Fifth Amended and Restated Certificate of Incorporation (including, without limitation, increasing or decreasing the total number of shares of Series A Preferred Stock that the Corporation shall have the authority to issue) or the By-laws of the Corporation as in effect on the Closing Date in a manner that adversely alters or changes the rights, preferences or privileges of the Series A Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be.
(c) For so long as at least 444,198 shares of Series B Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of not less than a majority of the Series B Preferred Stock then outstanding:
(i) alter or change the rights, preferences or privileges of the Series B Preferred Stock in a manner that adversely alters or changes the rights, preferences or privileges of the Series B Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be; or
(ii) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, this Fifth Amended and Restated Certificate of Incorporation (including, without limitation, increasing or decreasing the total number of shares of Series B Preferred Stock that the Corporation shall have the authority to issue) or the By-laws of the Corporation as in effect on the Closing Date in a manner that adversely alters or changes the rights, preferences or privileges of the Series B Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be.
(d) For so long as at least 376,806 shares of Series C Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of not less than sixty percent (60%) of the Series C Preferred Stock then outstanding:
(i) alter or change the rights, preferences or privileges of the Series C Preferred Stock in a manner that adversely alters or changes the rights, preferences or privileges of the Series C Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be; or
18
(ii) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, this Fifth Amended and Restated Certificate of Incorporation (including, without limitation, increasing or decreasing the total number of shares of Series C Preferred Stock that the Corporation shall have the authority to issue) or the By-laws of the Corporation as in effect on the Closing Date in a manner that adversely alters or changes the rights, preferences or privileges of the Series C Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be.
(e) For so long as at least 425,901 shares of Series D Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of not less than sixty percent (60%) of the Series D Preferred Stock then outstanding:
(i) alter or change the rights, preferences or privileges of the Series D Preferred Stock in a manner that adversely alters or changes the rights, preferences or privileges of the Series D Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be; or
(ii) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, this Fifth Amended and Restated Certificate of Incorporation (including, without limitation, increasing or decreasing the total number of shares of Series D Preferred Stock that the Corporation shall have the authority to issue) or the By-laws of the Corporation as in effect on the Closing Date in a manner that adversely alters or changes the rights, preferences or privileges of the Series D Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be.
(f) For so long as at least 278,219 shares of Series E Preferred Stock remain outstanding (such amount to be adjusted for any stock splits, dividends, combinations, recapitalizations and the like) as of the applicable date, the Corporation shall not (in any case, by merger, consolidation, operation of law or otherwise), without first having obtained the affirmative vote or written consent of the holders of not less than a majority of the Series E Preferred Stock then outstanding:
(i) alter or change the rights, preferences or privileges of the Series E Preferred Stock in a manner that adversely alters or changes the rights, preferences or privileges of the Series E Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be;
(ii) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) any provision of, or add any provision to, this Fifth Amended and Restated Certificate of Incorporation or the By-laws of the Corporation as in effect on the Closing Date in a manner that adversely alters or changes the rights, preferences or privileges of the Series E Preferred Stock, unless the rights, preferences or privileges of each series of Preferred Stock are similarly and proportionally altered, changed, amended or terminated, as the case may be;
19
(iii) increase or decrease the total number of shares of Series E Preferred Stock that the Corporation shall have the authority to issue;
(iv) purchase or redeem (or permit any subsidiary to redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (ii) repurchases of any Common Stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of employment or service at a price no greater than the applicable price of such shares; or
(v) amend, waive, alter or repeal (whether by merger, consolidation, operation of law, or otherwise) the following sections of this Fifth Amended and Restated Certificate of Incorporation in a manner that adversely alters or changes the rights, preferences of privileges of the Series E Preferred Stock: Section A.2(c), Section A.3(a), Section A.4(a), Section A.4(e), Section A.4(f), Section A.4(g), Section A.4(h), Section A.4(i), Section A.5(a), Section A.5(b), Section A.5(c), Section A.6(a), Section A.6(b), Section A.7 or this Section A.8(f). For the avoidance of doubt, the authorization, creation or issuance of any equity security (including, any security convertible into or exercisable into any equity security) having rights, preferences or privileges which are senior to or on parity with any of the rights, preferences or privileges of the Series E Preferred Stock shall not in and of itself, be deemed to adversely affect the holders of Series E Preferred Stock for purposes of this Section A.8(f).
Any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect. Further, the Corporation shall not, by amendment, alteration or repeal of this Fifth Amended and Restated Certificate of Incorporation (whether by merger, consolidation, operation of law, or otherwise) or through any Liquidation Event, any event described in Section A.4(f) hereof, or any other reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, agreement or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation and shall at all times in good faith assist in the carrying out of all the provisions of this Article IV and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Preferred Stock against impairment.
9. Notice; Adjustments; Waivers.
(a) Liquidation Events, Etc. In the event (i) the Corporation establishes a record date to determine the holders of any class of securities who are entitled to receive any dividend or other distribution or who are entitled to vote at a meeting (or by written consent) in connection with any of the transactions identified in clause (ii) hereof, or (ii) any Liquidation Event, event deemed a Liquidation Event pursuant to Section A.4(f) hereof, QPO or any other public offering becomes reasonably likely to occur, the Corporation shall mail or cause to be mailed by first class mail (postage prepaid) to each holder of Preferred Stock at least thirty (30) days prior to such record date specified therein or the expected effective date of any such transaction, whichever is earlier, a notice specifying (A) the date of such record date for the purpose of such dividend or distribution or meeting or consent and a description of such dividend or distribution or the action to be taken at such meeting or by such consent, (B) the date on which any such Liquidation Event, event deemed a Liquidation Event pursuant to Section A.4(f) hereof, QPO or other public offering is expected to become effective, and (C) the date on which the books of the Corporation shall close or a record shall be taken with respect to any such event. Such notice shall be accompanied by a certificate prepared by the chief financial officer of the Corporation describing in reasonable detail (1) the facts of such transaction, (2) the amount(s) per share of Preferred Stock or Common Stock each holder of Preferred Stock would receive pursuant to the applicable provisions of this Fifth Amended and Restated Certificate of Incorporation, and (3) the facts upon which such amounts were determined.
20
(b) Adjustments; Calculations. Upon the occurrence of each adjustment or readjustment of the Conversion Price of a series of Preferred Stock pursuant to Section A.7, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of such series of Preferred Stock a certificate setting forth in reasonable detail (i) such adjustment or readjustment, (ii) the applicable Conversion Price before and after such adjustment or readjustment, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder's shares of such series of Preferred Stock. All such calculations shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share as the case may be.
(c) Waiver of Notice. The holder or holders of a Majority Interest may, at any time upon written notice to the Corporation, waive any notice or certificate delivery provisions specified herein for the benefit of such holders, and any such waiver shall be binding upon all holders of such securities.
(d) Other Waivers. Subject to the provisions of Section 8(f)(v) and any other provision hereof requiring the consent of holders of a particular series of Preferred Stock, the holder or holders of a Majority Interest may, at any time upon written notice to the Corporation, waive compliance by the Corporation with any term or provision herein, provided that any such waiver shall be binding upon all holders of Preferred Stock and their respective transferees so long as any such waiver does not affect any holder of outstanding shares of Preferred Stock in a manner materially different than any other holder. Notwithstanding anything to the contrary contained within this Fifth Amended and Restated Certificate of Incorporation, no waiver of the adjustment provisions contained in Section A.7 shall be effective with respect to the Series E Preferred Stock without the written election of a Series E Majority.
10. No Reissuance of Preferred Stock. No share or shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
11. Contractual Rights of Holders. The various provisions set forth herein for the benefit of the holders of the Preferred Stock shall be deemed contract rights enforceable by them, including, without limitation, one or more actions for specific performance.
B. COMMON STOCK
1. Voting.
(a) Election of Directors. The holders of Common Stock voting together as a single class shall be entitled to elect three (3) Directors of the Corporation. Such Directors shall be elected by a plurality vote, with the elected candidates being the candidates receiving the greatest number of affirmative votes (with each holder entitled to cast one vote for or against each candidate with respect to each share held by such holder), with votes cast against such candidates and votes withheld having no legal effect. The election of such Directors shall occur at the annual meeting of holders of capital stock or at any special meeting called and held in accordance with the By-laws of the Corporation, or by consent in lieu thereof in accordance with this Fifth Amended and Restated Certificate of Incorporation and applicable law. The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Preferred Stock), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Corporation.
21
(b) Voting Generally. Except as otherwise expressly provided herein or required by law, each holder of outstanding shares of Common Stock shall be entitled to one (1) vote in respect of each share of Common Stock held thereby of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. Notwithstanding the provisions of Section 242(b)(2) of the Delaware General Corporation Law, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of a majority of the outstanding shares of Common Stock and Preferred Stock voting together as a single class. For the avoidance of doubt, each holder of Preferred Stock shall be entitled to one (1) vote per share of Common Stock into which it is convertible on the applicable date on all matters submitted to a vote of holders of Common Stock as a class (including, without limitation, pursuant to Section B.1(a) above or this Section B.1(b)).
2. Dividends. Subject to the payment in full of all preferential dividends to which the holders of the Preferred Stock are entitled hereunder, the holders of Common Stock shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board of Directors may determine in its sole discretion, with holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Common Stock sharing pari passu in such dividends, as contemplated by Section A.3.
ARTICLE V
In furtherance of and not in limitation of powers conferred by statute, it is further provided:
1. Election of Directors need not be by written ballot unless the By-laws of the Corporation so provide.
2. Except as provided in Article IV, Section A.8, the Board of Directors is expressly authorized to adopt, amend or repeal the By-laws of the Corporation to the extent specified therein.
ARTICLE VI
Meetings of stockholders may be held within or without the State of Delaware, as the By-laws may provide.
ARTICLE VII
To the extent permitted by law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated in the By-laws of the Corporation or from time to time by its Board of Directors.
22
ARTICLE VIII
A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director of the Corporation, except for liability (a) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for any transaction from which the Director derived an improper personal benefit. If the Delaware General Corporation Law is amended after the effective date of this Fifth Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware.
Any repeal or modification of this Article VIII, Article IX or Article XI by the stockholders of the Corporation or by an amendment to the Delaware General Corporation Law shall not adversely affect any right or protection with respect to any acts or omissions occurring before such repeal or modification of a person serving as a Director prior to or at the time of such repeal or modification.
ARTICLE IX
The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An "Excluded Opportunity" is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any Director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, "Covered Persons"), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person's capacity as a Director of the Corporation.
ARTICLE X
Except as otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Fifth Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this Company is authorized to provide indemnification of (and advancement of expenses to) directors, officers, employees and other agents of this Company (and any other persons to which Delaware law permits this Company to provide indemnification), through Bylaw provisions, agreements with any such director, officer, employee or other agent or other person, vote of stockholders or disinterested directors, or otherwise, in excess of the indemnification and advancement otherwise permitted by the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or nonstatutory), with respect to actions for breach of duty to a corporation, its stockholders and others.
ARTICLE XII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation's certificate of incorporation or By-laws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
23
ATTACHMENT B
BYLAWS OF THE CORPORATION
Attachment B
BY-LAWS
of
908 DEVICES INC.
(the "Corporation")
1. Stockholders
(a) Annual Meeting. The annual meeting of stockholders shall be held for the election of directors each year at such place, date and time as shall be designated by the Board of Directors. Any other proper business may be transacted at the annual meeting. If no date for the annual meeting is established or said meeting is not held on the date established as provided above, a special meeting in lieu thereof may be held or there may be action by written consent of the stockholders on matters to be voted on at the annual meeting, and such special meeting or written consent shall have for the purposes of these By-laws or otherwise all the force and effect of an annual meeting.
(b) Special Meetings. Special meetings of stockholders may be called by the Chief Executive Officer, if one is elected, or, if there is no Chief Executive Officer, a President, or by the Board of Directors, but such special meetings may not be called by any other person or persons. The call for the meeting shall state the place, date, hour and purposes of the meeting. Only the purposes specified in the notice of special meeting shall be considered or dealt with at such special meeting.
(c) Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a notice stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present and vote at such meeting, and, in the case of a special meeting, the purpose or purposes of the meeting, shall be given by the Secretary (or other person authorized by these By-laws or by law) not less than ten (10) nor more than sixty (60) days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the Certificate of Incorporation or under these By-laws is entitled to such notice. If mailed, notice is given when deposited in the mail, postage prepaid, directed to such stockholder at such stockholder's address as it appears in the records of the Corporation. Without limiting the manner by which notice otherwise may be effectively given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (the "DGCL").
If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
(d) Quorum. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting, present in person or represented by proxy, shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. The stockholders present at a duly constituted meeting may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to reduce the voting shares below a quorum.
(e) Voting and Proxies. Except as otherwise provided by the Certificate of Incorporation or by law, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by either written proxy or by a transmission permitted by Section 212(c) of the DGCL, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or is irrevocable and coupled with an interest. Proxies shall be filed with the Secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting.
(f) Action at Meeting. When a quorum is present, any matter before the meeting shall be decided by vote of the holders of a majority of the shares of stock vo ting on such matter except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. Any election of directors by stockholders shall be determined by a plurality of the votes cast, except where a larger vote is required by law, by the Certificate of Incorporation or by these By-laws. The Corporation shall not directly or indirectly vote any share of its own stock; provided, however, that the Corporation may vote shares which it holds in a fiduciary capacity to the extent permitted by law.
(g) Presiding Officer. Meetings of stockholders shall be presided over by the Chairman of the Board, if one is elected, or in his or her absence, the Vice Chairman of the Board, if one is elected, or if neither is elected or in their absence, a President. The Board of Directors shall have the authority to appoint a temporary presiding officer to serve at any meeting of the stockholders if the Chairman of the Board, the Vice Chairman of the Board or a President is unable to do so for any reason.
(h) Conduct of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the presiding officer of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the presiding officer of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
2
(i) Action without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required or permitted by law to be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office, by hand or by certified mail, return receipt requested, or to the Corporation's principal place of business or to the officer of the Corporation having custody of the minute book. Every written consent shall bear the date of signature and no written consent shall be effective unless, within sixty (60) days of the earliest dated consent delivered pursuant to these By-laws, written consents signed by a sufficient number of stockholders entitled to take action are delivered to the Corporation in the manner set forth in these By-laws. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
(j) Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section 1(j) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting in the manner provided by law. The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law.
2. Directors
(a) Powers. The business of the Corporation shall be managed by or under the direction of a Board of Directors who may exercise all the powers of the Corporation except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.
(b) Number and Qualification. Unless otherwise provided in the Certificate of Incorporation or in these By-laws, the number of directors which shall constitute the whole board shall be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.
3
(c) Vacancies; Reduction of Board. A majority of the directors then in office, although less than a quorum, or a sole remaining Director, may fill vacancies in the Board of Directors occurring for any reason and newly created directorships resulting from any increase in the authorized number of directors. In lieu of filling any vacancy, the Board of Directors may reduce the number of directors.
(d) Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws, directors shall hold office until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
(e) Removal. To the extent permitted by law, a director may be removed from office with or without cause by vote of the holders of a majority of the shares of stock entitled to vote in the election of directors.
(f) Meetings. Regular meetings of the Board of Directors may be held without notice at such time, date and place as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called, orally or in writing, by the Chief Executive Officer, if one is elected, or, if there is no Chief Executive Officer, the President, or by two or more Directors, designating the time, date and place thereof. Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting.
(g) Notice of Meetings. Notice of the time, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary, or Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the directors calling the meeting. Notice shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communications, sent to such director's business or home address at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to such director's business or home address at least forty-eight (48) hours in advance of the meeting.
(h) Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business. Less than a quorum may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice.
(i) Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, unless otherwise provided in the following sentence, a majority of the directors present may take any action on behalf of the Board of Directors, unless a larger number is required by law, by the Certificate of Incorporation or by these By-laws. So long as there are two (2) or fewer Directors, any action to be taken by the Board of Directors shall require the approval of all Directors.
4
(j) Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
(k) Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, establish one or more committees, each committee to consist of one or more directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these By-laws.
Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but in the absence of such rules its business shall be conducted so far as possible in the same manner as is provided in these By-laws for the Board of Directors. All members of such committees shall hold their committee offices at the pleasure of the Board of Directors, and the Board may abolish any committee at any time.
3. Officers
(a) Enumeration. The officers of the Corporation shall consist of one or more Presidents (who, if there is more than one, shall be referred to as Co-Presidents), a Treasurer, a Secretary, and such other officers, including, without limitation, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board.
5
(b) Election. The Presidents, Treasurer and Secretary shall be elected annually by the Board of Directors at their first meeting following the annual meeting of stockholders. Other officers may be chosen by the Board of Directors at such meeting or at any other meeting.
(c) Qualification. No officer need be a stockholder or Director. Any two or more offices may be held by the same person. Any officer may be required by the Board of Directors to give bond for the faithful performance of such officer's duties in such amount and with such sureties as the Board of Directors may determine.
(d) Tenure. Except as otherwise provided by the Certificate of Incorporation or by these By-laws, each of the officers of the Corporation shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders and until such officer's successor is elected and qualified or until such officer's earlier resignation or removal. Any officer may resign by delivering his or her written resignation to the Corporation, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
(e) Removal. The Board of Directors may remove any officer with or without cause by a vote of a majority of the directors then in office.
(f) Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.
(g) Chairman of the Board and Vice Chairman. Unless otherwise provided by the Board of Directors, the Chairman of the Board of Directors, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.
Unless otherwise provided by the Board of Directors, in the absence of the Chairman of the Board, the Vice Chairman of the Board, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Vice Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.
(h) Chief Executive Officer. The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.
(i) Presidents. The Presidents shall, subject to the direction of the Board of Directors, each have general supervision and control of the Corporation's business and any action that would typically be taken by a President may be taken by any Co-President. If there is no Chairman of the Board or Vice Chairman of the Board, a President shall preside, when present, at all meetings of stockholders and the Board of Directors. The Presidents shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.
6
(j) Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.
(k) Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation, except as the Board of Directors may otherwise provide. The Treasurer shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate.
Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors may from time to time designate.
(1) Secretary and Assistant Secretaries. The Secretary shall record the proceedings of all meetings of the stockholders and the Board of Directors (including committees of the Board) in books kept for that purpose. In the absence of the Secretary from any such meeting an Assistant Secretary, or if such person is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation) and shall have such other duties and powers as may be designated from time to time by the Board of Directors.
Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors may from time to time designate.
(m) Other Powers and Duties. Subject to these By-laws, each officer of the Corporation shall have in addition to the duties and powers specifically set forth in these By-laws, such duties and powers as are customarily incident to such officer's office, and such duties and powers as may be designated from time to time by the Board of Directors.
4. Capital Stock
(a) Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by a President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Such signatures may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. The Corporation shall be permitted to issue fractional shares.
7
(b) Transfers. Subject to any restrictions on transfer, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.
(c) Record Holders. Except as may otherwise be required by law, by the Certificate of Incorporation or by these By-laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-laws.
It shall be the duty of each stockholder to notify the Corporation of such stockholder's post office address.
(d) Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not precede the date on which it is established, and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, more than ten (10) days after the date on which the record date for stockholder consent without a meeting is established, nor more than sixty (60) days prior to any other action. In such case only stockholders of record on such record date shall be so entitled notwithstanding any transfer of stock on the books of the Corporation after the record date.
If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (ii) the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in this state, to its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded, and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
(e) Lost Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
8
5. Indemnification
(a) Definitions. For purposes of this Section 5:
(i) "Corporate Status" describes the status of a person who is serving or has served (A) as a Director of the Corporation, (B) as an Officer of the Corporation, (C) as a Non-Officer Employee of the Corporation, or (D) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity for which such person is or was serving at the request of the Corporation. For purposes of this Section 5(a)(i), a Director, Officer or Non-Officer Employee of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, "Corporate Status" shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person's activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation;
(ii) "Director" means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation;
(iii) "Disinterested Director" means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;
(iv) "Expenses" means all reasonable attorneys fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding;
(v) "Liabilities" means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement;
(vi) "Non-Officer Employee" means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer;
9
(vii ) "Officer" means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation;
(viii) "Proceeding" means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and
(xi) "Subsidiary" shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.
(b) Indemnification of Directors and Officers. Subject to the operation of Section 5(d) of these By-laws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to the extent authorized in subsections (i) through (iv) of this Section 5(b).
(i) Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Director's or Officer's behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director's or Officer's Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
(ii) Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director's or Officer's behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director's or Officer's Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made under this Section 5(b)(ii) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper.
10
(iii) Survival of Rights. The rights of indemnification provided by this Section 5(b) shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives.
(iv) Actions by Directors or Officers. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding (including any parts of such Proceeding not initiated by such Director or Officer) was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Officer's or Director's rights to indemnification or, in the case of Directors, advancement of Expenses under these Bylaws in accordance with the provisions set forth herein.
(c) Indemnification of Non-Officer Employees. Subject to the operation of Section 5(d) of these By-laws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee's behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee's Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 5(c) shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation.
(d) Determination. Unless ordered by a court, no indemnification shall be provided pursuant to this Section 5 to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (i) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (ii) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (iii) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Corporation.
11
(e) Advancement of Expenses to Directors Prior to Final Disposition.
(i) The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director's Corporate Status within thirty (30) days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding not initiated by such Director) was (A) authorized by the Board of Directors of the Corporation, or (B) brought to enforce such Director's rights to indemnification or advancement of Expenses under these By-laws.
(ii) If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Section 5 shall not be a defense to an action brought by a Director for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.
(iii) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.
(f) Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition.
(i) The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.
12
(ii) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.
(g) Contractual Nature of Rights.
(i) The provisions of this Section 5 shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Section 5 is in effect, in consideration of such person's past or current and any future performance of services for the Corporation. Neither amendment, repeal or modification of any provision of this Section 5 nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Section 5 shall eliminate or reduce any right conferred by this Section 5 in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in question, regardless of when or if any proceeding with respect to such act or omission is commenced. The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Section 5 shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.
(ii) If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty (60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Section 5 shall not be a defense to an action brought by a Director or Officer for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.
13
(iii) In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.
(h) Non-Exclusivity of Rights. The rights to indemnification and advancement of Expenses set forth in this Section 5 shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise.
(i) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person's Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Section 5.
(j) Other Indemnification. The Corporation's obligation, if any, to indemnify or provide advancement of Expenses to any person under this Section 5 as a result of such person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the "Primary Indemnitor"). Any indemnification or advancement of Expenses under this Section 5 owed by the Corporation as a result of a person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies.
6. Miscellaneous Provisions
(a) Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall end on December 31 of each year.
(b) Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.
(c) Execution of Instruments. Subject to any limitations which may be set forth in a resolution of the Board of Directors, all deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by, a President, or by any other officer, employee or agent of the Corporation as the Board of Directors may authorize.
(d) Voting of Securities. Unless the Board of Directors otherwise provides, a President, any Vice President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this Corporation.
14
(e) Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.
(f) Corporate Records. The original or attested copies of the Certificate of Incorporation, By-laws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock and transfer records, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept at the principal office of the Corporation, at the office of its counsel, or at an office of its transfer agent.
(g) Certificate of Incorporation. All references in these By-laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.
(h) Amendments. These By-laws may be altered, amended or repealed, and new By-laws may be adopted, by the stockholders or by the Board of Directors; provided, that (a) the Board of Directors may not alter, amend or repeal any provision of these By-laws which by law, by the Certificate of Incorporation or by these By-laws requires action by the stockholders and (b) any alteration, amendment or repeal of these By-laws by the Board of Directors and any new By-law adopted by the Board of Directors may be altered, amended or repealed by the stockholders.
(i) Waiver of Notice. Whenever notice is required to be given under any provision of these By-laws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting needs to be specified in any written waiver or any waiver by electronic transmission.
Adopted February 10, 2012
15
AMENDMENT NO. 1 TO BY-LAWS
of
908 DEVICES INC.
(the "Corporation")
The By-laws of the Corporation, dated February 10, 2012 (the "By-laws"), are hereby amended as follows:
1. | Section 2(h) of the By-laws is hereby deleted in its entirety and replaced with the following: |
"(h) Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business. Less than a quorum may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice. Notwithstanding the foregoing, for so long as the Security Control Agreement dated as of March 1, 2016, by and among the Corporation, SAEV Guernsey Holding Limited ("SAEV") and the U.S. Department of Defense (the "Security Control Agreement") remains in effect, unless the Inside Director recuses himself from a meeting, a quorum must include at least one Outside Director. For purposes hereof, the terms "Inside Director" and "Outside Director" shall have the following meanings:
"Inside Director" shall mean a member of the Board of Directors who is not an Officer Director, an Outside Director, or otherwise appointed to the Board of Directors by any U.S. controlled companies and individuals, excluding SAEV, that, directly or through subsidiaries, own the majority of the Corporation's issued and outstanding Common Stock and Preferred Stock (as those terms are defined in the Certificate of Incorporation); provided, that any member of the Board of Directors who is also a significant shareholder, director, officer, employee, agent or representative of SAEV, or any entity that directly or indirectly controls the SAEV, is directly or indirectly controlled by SAEV, or is directly or indirectly under common control with SAEV, is deemed to be an Inside Director;
"Officer Director" shall mean a member of the Board of Directors who is a cleared officer of the Corporation; and
"Outside Director" shall mean an existing non-employee member of the Board of Directors who meets the qualifications set forth in the National Industrial Security Program Operating Manual 2-300 (the "NISPOM") § 2-305 and whose qualifications and eligibility are otherwise approved by the Defense Security Service ("DSS") in advance and in writing."
2. | Section 2(k) of the By-laws is hereby amended by inserting the following as a new paragraph immediately after the first paragraph in Section 2(k): |
"The Board of Directors shall, by resolution passed by a majority of the whole Board of Directors, establish a Government Security Committee (the "GSC") for so long as the Security Control Agreement remains in effect, consisting of each Outside Director and Officer Director, if any, which will, among other things, ensure that the Corporation's directors, officers, employees, representatives and agents comply with the provisions of the Security Control Agreement and take any such actions as required by the Security Control Agreement or pursuant to any charter governing the GSC to be adopted by the Board of Directors. The GSC must designate an Outside Director to serve as Chairman of the GSC. The Chairman of the GSC must designate a member of the GSC to be the Secretary of the GSC.
The Board of Directors shall, by resolution passed by a majority of the whole Board of Directors, establish a Compensation Committee (the "Compensation Committee") for so long as the Security Control Agreement remains in effect, consisting of at least one Outside Director, which will, among other things, be responsible for reviewing the annual compensation of the Company Principals and making recommendations to the Board of Directors for approval. For purposes hereof, the term "Company Principals" shall have the following meaning:
"Company Principals" shall mean those persons who, pursuant to Section 2-104 of the NISPOM, must be granted personnel security clearances or be excluded from classified access pursuant to Section 2-106 of the NISPOM, and at a minimum, will include each director and each incumbent officer occupying an office expressly authorized in the Corporation's charter documents and any other person identified by the GSC, whose determination shall be subject to review and approval of DSS as a person occupying a position that would enable him or her to adversely affect the Corporation's policies or practices in the performance of classified contracts."
Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the By-laws.
Except as expressly modified hereby, the By-laws and all of the provisions contained therein shall remain in full force and effect.
Adopted March 1, 2016
2