TERM LOAN AND SECURITY
AGREEMENT
THIS TERM
LOAN AND SECURITY AGREEMENT (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the “
Agreement ”), dated as of
, 2009 (“ Effective Date ”), is made and entered
into by and among (a) NxStage Medical, Inc. , a company
organized and existing under the laws of Delaware, United States of
America (“ NxStage Medical ”), EIR Medical,
Inc . (“ EIR ”), a company organized and
existing under the laws of Massachusetts, United States of America,
Medisystems Services Corporation (“Medisystems
Services”) , a company organized and existing under the
laws of Nevada, United States of America, Medisystems
Corporation (“Medisystems”) , a company organized
and existing under the laws of Washington, United States of
America, each as a borrower hereunder (NxStage Medical, EIR,
Medisystems Services, and Medisystems being referred to
collectively herein as the “ Borrowers ” and
each as a “ Borrower ”); (b) Medimexico s. de
R.L. de C.V. , a company organized and existing under the laws
of Mexico, NxStage Verwaltungs GmbH , a company organized
and existing under the laws of Germany, NxStage GmbH & Co.
KG , a company organized and existing under the laws of
Germany, Medisystems Europe S.p.A, a company organized and
existing under the laws of Italy, each as a guarantor hereunder and
solely for the purposes of Article 9 hereof (Medimexico,
NxStage Verwaltungs, NxStage GmbH, and Medisystems Europe being
referred to collectively herein as the “ Guarantors
” and each as a “ Guarantor ”), and (c)
Asahi Kasei Kuraray Medical Co., Ltd., a corporation
organized and existing under the law of Japan, as the lender
hereunder (“ Asahi ”). Unless otherwise set
forth herein, the Borrowers and the Guarantors are referred to
collectively herein as “ NxStage ” and the
Borrowers and Asahi are referred to collectively herein as the
“ Parties ” and each as a “ Party
.”
WHEREAS, NxStage Medical and Asahi entered into the
“Letter of Intent” dated September 19, 2008
(“ LOI ”) in order to negotiate agreements
between the Parties under which NxStage Medical and Asahi intend to
establish a strategic alliance in the field of hemodialysis,
hemofiltration, hemodiafiltration, and/or ultrafiltration therapies
(“ Extracorporeal Therapies ”) to capitalize on
Asahi’s membrane technology and market presence and on
NxStage Medical’s market presence and experience in
disposables and machine technology in the field of Extracorporeal
Therapies; and
WHEREAS, as a part of such strategic alliance, and in
connection with and as a condition to entering into the
“Technology and Trademark License Agreement,” NxStage
has requested that Asahi makes available to the Borrowers the term
loan as described herein, and Asahi is willing to make such loan to
the Borrowers under the terms and conditions herein set
forth.
NOW,
THEREFORE , in
consideration of the premises and the agreements, provisions and
covenants herein contained, NxStage and Asahi agree as
follows:
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1.1
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Certain Defined
Terms.
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The
following terms have the following meanings:
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(1)
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“ Accounts ”
means collectively any “account” (as defined in
Article 9 of the UCC), any accounts receivable (whether in the
form of payments for services rendered or goods sold, rents,
license fees or otherwise), any “payment intangibles”
(as defined in Article 9 of the UCC), and IP Proceeds and all
other rights to payment and/or reimbursement of every kind and
description, whether or not earned by performance.
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(2)
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“ Account Debtors
” means “account debtor”, as defined in
Article 9 of the UCC, and any other obligor in respect of an
Account.
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(3)
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“ Affiliate ”
means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control
with, such Person, where “control” means direct or
indirect beneficial ownership of fifty percent (50%) or more of the
voting stock or equity of or by such other Person, or fifty percent
(50%) or more of the interest in the income of such other
Person.
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(4)
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“ Anti-Terrorism Laws
” means any Laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective
September 24, 2001), the USA PATRIOT Act, the Laws comprising
or implementing the Bank Secrecy Act, and the Laws administered by
OFAC.
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(5)
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“ Asset Disposition
” means any sale, lease, license, transfer, assignment or
other consensual disposition by NxStage of any asset.
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(6)
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“ Blocked Person
” means any Person: (a) listed in the annex to, or is
otherwise subject to the provisions of, Executive Order
No. 13224, (b) owned or controlled by, or acting for or
on behalf of, any Person that is listed in the annex to, or is
otherwise subject to the provisions of, Executive Order
No. 13224, (c) with which Asahi is prohibited from
dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law, (d) that commits, threatens or conspires
to commit or supports “terrorism” as defined in
Executive Order No. 13224, or (e) that is named a
“specially designated national” or “blocked
person” on the most current list published by OFAC or other
similar list or is named as a “listed person” or
“listed entity” on other lists made under any
Anti-Terrorism Law.
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(7)
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“ Business Day ”
means any day except a Saturday, Sunday or other day on which
either the New York Stock Exchange is closed, or on which
commercial banks in New York City are authorized by law to
close.
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(8)
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“ CERCLA ” means
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
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(9)
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“ Change of Control
” means, as to any Person, any one of the following events:
(i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership, directly or indirectly, of more
than fifty percent (50%) of the total voting power of the stock
then outstanding of such Person normally entitled to vote in
elections of directors of such Person; (ii) such Person
consolidates with or merges into another entity, or any entity
consolidates with or merges into such Person, in either event
pursuant to a transaction in which more than fifty percent (50%) of
the total voting power of the stock outstanding of the surviving
entity normally entitled to vote in elections of directors of the
surviving entity is not held by the parties holding at least fifty
percent (50%) of such total voting power of
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such Person preceding such
consolidation or merger; or (iii) such Person conveys,
transfers or leases all or substantially all of its assets to a
another entity not an Affiliate of such Person. Notwithstanding the
foregoing, the acquisition/ownership of more than 50% by any
Existing Stockholder or two or more Existing Stockholders (meaning
any stockholder of NxStage Medical as of the Effective Date which
beneficially owns, together with its Affiliates, more than five
percent (5%) of the outstanding capital stock of NxStage Medical as
of the Effective Date) will not constitute a Change of Control. As
soon as available after the Effective Date, NxStage shall provide
Asahi with the list of the Existing Stockholders.
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(10)
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“ Closing Date ”
means the date that is the date on which the Transaction Funds are
released by the Funds Escrow Agent as described in Section 3
of the Escrow Agreement.
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(11)
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“ Code ” means
the Internal Revenue Code of 1986, as amended from time to
time.
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(12)
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“ Collaboration
Agreement ” means the NxStage & Asahi Collaboration
Agreement, dated as of the Effective Date, entered into by NxStage
Medical and Asahi, as the same may be amended, modified, or
supplemented from time to time.
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(13)
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“ Collateral ”
means all property, now existing or hereafter acquired, that is
mortgaged or pledged to, or purported to be subjected to a Lien in
favor of, Asahi pursuant to this Agreement and the Security
Documents, including, without limitation, all of the property
described in Schedule 7.1 hereto.
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(14)
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“ Contingent Obligation
” means, with respect to any Person, any direct or indirect
liability of such Person: (a) with respect to any Debt of
another Person (a “ Third Party Obligation ”) if
the purpose or intent of such Person incurring such liability, or
the effect thereof, is to provide assurance to the obligee of such
Third Party Obligation that such Third Party Obligation will be
paid or discharged, or that any agreement relating thereto will be
complied with, or that any holder of such Third Party Obligation
will be protected, in whole or in part, against loss with respect
thereto; (b) under any swap agreement or other derivative
instrument, to the extent not yet due and payable; (c) to make
take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement
(excluding purchase contracts for a specified amount of goods at a
specified price in the Ordinary Course of Business and consistent
with past practices); or (d) for any obligations of another
Person pursuant to any guaranty or pursuant to any agreement to
purchase, repurchase or otherwise acquire any obligation or any
property constituting security therefor, to provide funds for the
payment or discharge of such obligation or to preserve the
solvency, financial condition or level of income of another Person.
The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guarantied or otherwise supported or,
if not a fixed and determinable amount, the maximum amount so
guarantied or otherwise supported.
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(15)
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“ Controlled Group
” means all members of any group of corporations and all
members of a group of trades or businesses (whether or not
incorporated) under common control which, together with NxStage,
are treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b) of
ERISA.
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(16)
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“ Debt ” of a
Person means at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds,
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debentures, notes or other similar
instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade
accounts payable arising and paid on a timely basis and in the
Ordinary Course of Business, (d) all capital leases of such
Person, (e) all non-contingent obligations of such Person to
reimburse any bank or other Person in respect of amounts paid under
banker’s acceptance or similar instrument, (f) all
equity securities of such Person subject to repurchase or
redemption otherwise than at the sole option of such Person, (g)
all obligations secured by a Lien on any asset of such Person,
whether or not such obligation is otherwise an obligation of such
Person, (h) “earnouts”, purchase price adjustments,
profit sharing arrangements, deferred purchase money amounts and
similar payment obligations or continuing obligations of any nature
of such Person arising out of purchase and sale contracts;
(i) all Debt of others guaranteed by such Person;
(j) off-balance sheet liabilities and/or Pension Plan
liabilities or Multiemployer Plan liabilities of such Person; and
(k) obligations arising under bonus, deferred compensation,
incentive compensation or similar arrangements, other than those
arising in the Ordinary Course of Business. Without duplication or
limitation of any of the foregoing, Debt of NxStage shall include
the Term Loan.
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(17)
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“ Default ” means
any condition or event which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
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(18)
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“ Deposit Account
” means a “deposit account” (as defined in
Article 9 of the UCC).
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(19)
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“ Dollars ” or
“ $ ” means the lawful currency of the United
States of America.
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(20)
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“ DSU License Agreement
” means the License Agreement, dated as of June 1, 2007,
entered into by DSU Medical Corporation, as licensor, and
Medisystems, as licensee, as amended, modified, and supplemented as
of the Effective Date.
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(21)
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“ Environmental Laws
” means any and all applicable Laws relating to the
environment or the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants,
medical wastes, Hazardous Materials or wastes into the environment,
including ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, medical wastes, Hazardous Materials or
wastes or the clean-up or other remediation thereof.
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(22)
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“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as the same
may be amended, modified or supplemented from time to time, and any
successor statute thereto, and any and all rules or regulations
promulgated from time to time thereunder.
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(23)
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“ Escrow Agreement
” means the Document Escrow Agreement, dated as of
May 13, 2009, entered into by NxStage Medical and
Asahi.
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(24)
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“ Event of Default
” has the meaning set forth in Section 8.1.
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(25)
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“ FF&E ”
means all present and future Field Equipment upon which a first
priority security interest may be perfected under the UCC by the
filing of a financing statement and which filed security interest
cannot be primed by some other means of perfection under the UCC,
and specifically excluding any vehicles and any goods or other
personal property upon
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which a lien or security interest
may be acquired or perfected under laws other than the
UCC.
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(26)
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“ Field Equipment
” means only System One cyclers, Pure Flow systems and all
components thereof, and similar products that are updates thereto
or developments thereon, which are leased to end users.
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(27)
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“ Financing Documents
” means this Agreement and the Note, as any or all of the
same may be amended, supplemented, restated or otherwise modified
from time to time.
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(28)
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“ GAAP ” means
generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the United States
accounting profession), which are applicable to the circumstances
as of the date of determination.
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(29)
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“ Governmental
Authority ” means any nation or government, any state or
other political subdivision thereof, and any agency, department or
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any
corporation or other Person owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing, whether
domestic or foreign.
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(30)
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“ Hazardous Materials
” means (a) any “hazardous substance” as
defined in CERCLA, (b) any “hazardous waste” as
defined by the Resource Conservation and Recovery Act,
(c) asbestos, (d) polychlorinated biphenyls,
(e) petroleum, its derivatives, by-products and other
hydrocarbons, (f) mold, and (g) any other pollutant,
medical waste, toxic, radioactive, caustic or otherwise hazardous
substance regulated under Environmental Laws.
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(31)
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“ Intellectual Property
” means, with respect to any Person, all patents, patent
applications and like protections, including improvements,
divisions, continuation, renewals, reissues, extensions and
continuations in part of the same, trademarks, trade names, trade
styles, trade dress, service marks, logos and other business
identifiers and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, and the goodwill
of the business of such Person connected with and symbolized
thereby, copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and
derivative works, whether published or unpublished, technology,
know-how and processes, operating manuals, trade secrets, computer
hardware and software, rights to unpatented inventions and all
applications and licenses therefor, used in or necessary for the
conduct of business by such Person and all claims for damages by
way of any past, present or future infringement of any of the
foregoing.
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(32)
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“ Investment ”
means any investment in any Person, whether by means of acquiring
(whether for cash, property, services, securities or otherwise) or
holding securities, capital contributions, loans, time deposits,
advances, guaranties or otherwise. The amount of any Investment
shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with
respect thereto.
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(33)
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“IP Proceeds”
means all Accounts,
General Intangibles (including Payment Intangibles), license and
royalty fees and other revenues, Proceeds, income or rights to
payment arising out of or relating to the use, sale, licensing,
financing or disposition of any of the Intellectual Property
(nothing herein implying the secured party’s consent to any
such sale, licensing, financing or disposition).
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(34)
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“ Laws ” means
any and all federal, state, provincial, territorial, local and
foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, injunctions,
governmental agreements and governmental restrictions, whether now
or hereafter in effect, which are applicable to the Borrowers in
any particular circumstance. “Laws” includes, without
limitation, Environmental Laws.
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(35)
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“ Lien ” means,
with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating
a security interest, in respect of such asset. For the purposes of
this Agreement and the other Financing Documents, the Borrowers
shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
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(36)
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“ Litigation ”
means any action, suit or proceeding before any court, mediator,
arbitrator or Governmental Authority.
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(37)
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“ Material Adverse
Effect ” means with respect to any event, act, condition
or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with
any other event or events, act or acts, condition or conditions,
occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of
(i) the rights and remedies of Asahi under any Financing
Document, or the ability of any Borrower to perform any of its
material obligations under any Financing Document, (ii) the
legality, validity or enforceability of any Financing Document,
(iii) the existence, perfection or priority of any security
interest in any material Collateral granted in any Financing
Document, or (iv) the value of any material Intellectual
Property or material Collateral.
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(38)
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“ Material Contracts
” means (a) employment agreements covering the
management of the Borrowers, (b) collective bargaining
agreements or other similar labor agreements covering any employees
of the Borrowers, (c) agreements for managerial, consulting or
similar services to which any Borrower is a party or by which it is
bound (other than those agreements with employees and other
regularly provided legal and accounting services),
(d) agreements regarding any Borrower, its assets or
operations or any investment therein to which any of its equity
holders is a party or by which it is bound, (e) real estate
leases, Intellectual Property licenses, agreements providing for
the sale or transfer of rights to Intellectual Property providing
for ongoing royalty or similar payment to the seller or transferor,
or other lease or license agreements to which any Borrower is a
party, either as lessor or lessee, or as licensor or licensee
(other than “shrinkwrap” licenses or other licenses
arising from the purchase of “off the shelf” products),
or seller/transferor or buyer/transferee, (f) customer,
distribution, marketing or supply agreements to which
any
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Borrower is a party that require
payment of more than $2,000,000 in any year, (g) partnership
agreements to which any Borrower is a general partner or joint
venture agreements to which any Borrower is a party, (h) third
party billing arrangements to which any Borrower is a party, or (i)
any other agreements or instruments to which any Borrower is a
party, and the breach, nonperformance or cancellation of which, or
the failure of which to renew, could reasonably be expected to have
a Material Adverse Effect, provided that, in each case with respect
to the preceding clauses (a), (c), (d) and (e) such
agreement or contract requires payment of more than $250,000 in any
year.
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(39)
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“ Maturity Date ”
means the earlier of May 31, 2013 and the date that any Change
of Control of NxStage Medical occurs.
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(40)
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“ Maximum Lawful Rate
” has the meaning set forth in Section 2.4.
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(41)
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“ Multiemployer Plan
” means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA.
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(42)
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“ Note ” shall
have the meaning set forth in Section 2.3.
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(43)
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“ Obligations ”
means all obligations, liabilities and indebtedness (monetary
(including post-petition interest, whether or not allowed) or
otherwise) of NxStage under this Agreement or any other Financing
Document, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due (but not including
obligations under any stock issued to Asahi pursuant to
Section 2.1(b)).
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(44)
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“ OFAC ” means
the U.S. Department of Treasury Office of Foreign Assets
Control.
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(45)
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“ OFAC Lists ”
means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order
No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any
other list of terrorists or other restricted Persons maintained
pursuant to any of the rules and regulations of OFAC or pursuant to
any other applicable Executive Orders.
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(46)
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“ Ordinary Course of
Business ” means, in respect of any transaction involving
any Borrower, the ordinary course of business of the Borrower, as
conducted by the Borrower in accordance with past
practices.
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(47)
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“ Organizational
Documents ” means, with respect to any Person other than
a natural person, the documents by which such Person was organized
(such as a certificate of incorporation, certificate of limited
partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or
other forms of preferred equity) and which relate to the internal
governance of such Person (such as by-laws, a partnership agreement
or an operating, limited liability or members
agreement).
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(48)
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“ PBGC ” means
the Pension Benefit Guaranty Corporation and any Person succeeding
to any or all of its functions under ERISA.
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(49)
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“ Pension Plan ”
means an employee pension benefit plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the
Code.
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(50)
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“ Permits ” means
all governmental licenses, authorizations, provider numbers,
supplier numbers, registrations, permits, drug or device
authorizations and approvals, certificates, franchises,
qualifications, accreditations, consents and approvals required
under all applicable Laws and required in order to carry on its
business as now conducted.
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(51)
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“ Permitted Acquisition
” means (i) the acquisition of all or substantially all
of the assets of another Person, or of a business line or a unit or
division of another Person or (ii) a merger, consolidation, or
amalgamation of any Borrower (A) that is a transaction among
one or more of the Borrowers and any other Borrower or Borrowers or
(B) is among one or more of the Borrowers and one or more
other Persons and results in one or more Borrowers as the surviving
entity or entities; provided, that after giving
effect to such acquisition, merger, consolidation, or amalgamation,
no Event of Default has occurred and is continuing or would exist
after giving effect to such acquisition, merger, consolidation, or
amalgamation, and that, after giving effect to such acquisition,
consolidation, or amalgamation, there is no Change of Control of
NxStage Medical.
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(52)
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“ Permitted Asset
Dispositions ” means the following Asset Dispositions
provided that at the time of such Asset Disposition, no Default or
Event of Default exists or would result from such Asset
Disposition: (i) dispositions of Inventory and FF&E in the
Ordinary Course of Business and not pursuant to any bulk sale,
(ii) the granting of non-exclusive licenses in the Ordinary
Course of Business, (iii) Asset Dispositions of obsolete or
worn out property, (iv) other Asset Dispositions of up to
$2,000,000 in the aggregate per fiscal year, and (v) other
dispositions approved by Asahi.
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(53)
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“ Permitted Contest
” means, with respect to any tax obligation or other
obligation allegedly or potentially owing from any Borrower to any
governmental tax authority or other third party, a contest
maintained in good faith by appropriate proceedings promptly
instituted and diligently conducted and with respect to which such
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made on the books
and records and financial statements of any Borrower; provided,
however , that (a) compliance with the obligation that is
the subject of such contest is effectively stayed during such
challenge; (b) no Borrower’s title to, and its right to
use, the Collateral is adversely affected thereby and Asahi’s
Lien and priority on the Collateral are not adversely affected,
altered or impaired thereby; (c) the Collateral or any part
thereof or any interest therein shall not be in any danger of being
sold, forfeited or lost by reason of such contest; and (d) upon a
final determination of such contest, the applicable Borrower or
Borrowers shall promptly comply with the requirements
thereof.
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(54)
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“ Permitted Contingent
Obligations ” means: (a) Contingent Obligations
arising in respect of the Debt under the Financing Documents ;
(b) Contingent Obligations outstanding on the date of this
Agreement and set forth on Schedule 5.1 (including any
refinancings or extensions thereof, but not including any increases
in the amount thereof); (c) Contingent Obligations incurred in
the Ordinary Course of Business with respect to surety and appeal
bonds, performance bonds, customs bonds and other similar
obligations
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with respect to bonds provided to
utilities with respect to utility services provided to Borrowers in
the Ordinary Course of Business, not to exceed $500,000 in the
aggregate at any time outstanding; (d) Contingent Obligations
resulting from endorsements for collections or deposits in the
Ordinary Course of Business; (e) Contingent Obligations
arising from warranty and indemnity claims resulting from Permitted
Asset Dispositions; (f) Contingent Obligations arising from a
Permitted Contest, (g) Contingent Obligations constituting
Permitted Liens; (h) Contingent Obligations, if any, arising
under swap agreements or other derivative instruments entered into
by Borrowers; (i) Contingent Obligations on account of
reimbursement obligations under letters of credit that constitute
Permitted Indebtedness; and (j) all other Contingent
Obligations not permitted by the preceding clauses but incurred in
the Ordinary Course of Business, not to exceed $250,000 in the
aggregate at any time outstanding.
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(55)
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“Permitted
Distributions” means the following Restricted
Distributions: (a) dividends by any Subsidiary of a Borrower
to such Borrower; (b) dividends payable solely in common
stock; and (c) repurchases of stock of former employees,
directors or consultants pursuant to stock repurchase agreements so
long as an Event of Default does not exist at the time of such
repurchase and would not exist after giving effect to such
repurchase, provided that such repurchases do not exceed $250,000
in the aggregate per fiscal year.
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(56)
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“Permitted
Indebtedness” means: (a) the Obligations;
(b) Debt incurred as a result of endorsing negotiable
instruments received in the Ordinary Course of Business;
(c) purchase money Debt not to exceed $10,000,000 at any time
(whether in the form of a loan or a lease) used solely to acquire
equipment used in the Ordinary Course of Business and secured only
by such equipment and related attachments (including any
refinancing or extensions thereof, but not including any increases
in the amount thereof); (d) Debt existing on the date of this
Agreement and described on Schedule 5.1 (including any
refinancings or extensions thereof, but not including any increases
in the amount thereof); (e) Debt, if any, arising under swap
agreements or other derivative instruments; (f) trade accounts
payable arising and paid on a timely basis and in the Ordinary
Course of Business and obligations to employees, consultants,
independent contractors, and professionals in the Ordinary Course
of Business; (g) Debt in the form of insurance premiums
financed through the applicable insurance company;
(h) obligations in the form of letters of credit existing on
the Closing Date; (i) Debt among the Borrowers and Guarantors;
(j) reimbursement obligations in connection with letters of
credit up to $1,500,000 in the aggregate at any one time; and
(k) other Debt not permitted by the preceding clauses in an
amount not exceeding $30,000,000 in the aggregate, at any
time.
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(57)
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“ Permitted Investments
” means: (a) Investments shown on
Schedule 5.5 and existing on the Closing Date; (b)
(i) cash equivalents, and (ii) any similar short term
Investments permitted by the Borrowers’ investment policies,
as amended from time to time, provided that any new investment
policy (and any material amendments to the current policy or any
new policy, including the current policy) has been approved in
writing by Asahi in its reasonable discretion; (c) Investments
consisting of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the Ordinary Course of
Business; (d) Investments consisting of loans to employees,
officers or directors relating to the purchase of equity securities
of any Borrower pursuant to employee stock purchase plans or
agreements approved by the applicable Borrower’s Board of
Directors (or other
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governing body), but the aggregate
of all such loans outstanding may not exceed $250,000 at any time;
(e) Investments consisting of relocation loans or advances to
current or prospective employees in an amount not to exceed
$200,000 in the aggregate at any time; (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;
(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 subpart (g) shall not apply to Investments
of any Borrower in any of its Subsidiaries; (h) Investments
consisting of Deposit Accounts or Securities Accounts permitted
under Section 5.7; (i) Investments by any Borrower in any
Borrower or Guarantor; (j) Investments consisting of the
acquisition of all or substantially all of the capital stock of
another Person or the formation of a new Subsidiary provided that
after giving effect to such acquisition, no Event of Default has
occurred and is continuing or would exist after giving effect to
such acquisition, there shall be no decrease in NxStage’s
tangible net worth after giving effect to such acquisition (as
confirmed to Asahi pursuant to a written certificate from a
Responsible Officer of NxStage Medical), the aggregate amount of
cash paid for such acquisitions (together with all Permitted
Acquisitions) shall not exceed $5,000,000 per year or $10,000,000
in the aggregate and the NxStage shall have complied with
Section 5.5(b); and (k) other Investments in an amount
not exceeding $250,000 in the aggregate, at any time.
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(58)
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“ Permitted Liens
” means: (a) deposits or pledges of cash to secure
obligations under workmen’s compensation, social security or
similar laws, or under unemployment insurance (but excluding Liens
arising under ERISA) pertaining to NxStage’s employees, if
any; (b) deposits or pledges of cash to secure bids, tenders,
contracts (other than contracts for the payment of money or the
deferred purchase price of property or services), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the Ordinary Course of Business;
(c) carrier’s, warehousemen’s, mechanic’s,
workmen’s, materialmen’s or other like Liens on
Collateral arising in the Ordinary Course of Business with respect
to obligations which are not due, or which are being contested
pursuant to a Permitted Contest; (d) Liens on Collateral for
taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or the subject of a Permitted
Contest; (e) attachments, appeal bonds, judgments and other
similar Liens on Collateral, for sums not exceeding $250,000 in the
aggregate arising in connection with court proceedings;
provided, however , that the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby
are the subject of a Permitted Contest; (f) Liens and
encumbrances in favor of Asahi under the Financing Documents;
(g) Liens on assets to the extent existing on the Effective
Date and set forth on Schedule 5.2 ;
(h) any Lien on any assets securing Debt permitted under
subpart (c) of the definition of Permitted Indebtedness,
provided, however , that such Lien attaches concurrently
with or within twenty (20) days after the acquisition thereof;
(i) any immaterial real estate easement, right of way,
restriction, defect or irregularity in title; (j) Liens on
cash in a segregated account in an amount not to exceed $1,500,000
to secure Debt permitted pursuant to subpart (j) of Permitted
Indebtedness; and (k) Liens on assets other than Collateral
securing Debt permitted pursuant to subpart (k) of Permitted
Indebtedness.
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(59)
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“ Person ” means
any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership,
joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other
organization, whether or not a legal entity, and any Governmental
Authority.
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(60)
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“ Responsible Officer
” means any of the Chief Executive Officer or Chief Financial
Officer of NxStage Medical.
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(61)
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“ Restricted
Distribution ” means as to any Person (a) any
dividend or other distribution (whether in cash, securities or
other property) on any equity interest in such Person (except those
payable solely in its equity interests of the same class),
(b) any payment on account of (i) the purchase,
redemption, retirement, defeasance, surrender, cancellation,
termination or acquisition of any equity interests in such Person
or any claim respecting the purchase or sale of any equity interest
in such Person or (ii) any option, warrant or other right to
acquire any equity interests in such Person, (c) any
management fees, salaries or other fees or compensation to any
Person other than NxStage Medical holding an equity interest in the
Borrowers (other than (A) payments of ordinary compensation
consistent with past practices to individuals, (B) directors
fees, (C) the issuance of stock options or restricted stock to
employees and board members, and (D) advances and
reimbursements to employees or directors, all in the Ordinary
Course of Business and consistent with past practices), or
(d) any lease or rental payments to an Affiliate or Subsidiary
of the Borrowers that is not a Borrower or a Guarantor, except
allocations or other payments at fair market value reasonably
proportionate to actual use.
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(62)
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“ SEC ” means the
United States Securities and Exchange Commission.
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(63)
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“ Securities Account
” means a “securities account” (as defined in
Article 9 of the UCC), an investment account, or other account
in which Investment Property or Securities are held or invested for
credit to or for the benefit of Borrowers.
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(64)
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“ Security Document
” means this Agreement and any other agreement, document or
instrument executed concurrently herewith or at any time hereafter
pursuant to which Asahi or any other Person either
(a) guaranties payment or performance of all or any portion of
the Obligations, and/or (b) provides, as security for all or
any portion of the Obligations, a Lien on any of its assets in
favor of Asahi for its own benefit, as any or all of the same may
be amended, supplemented, restated or otherwise modified from time
to time.
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(65)
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“ Solvent ”
means, with respect to any Person, that such Person (a) owns
and will own assets the fair saleable value of which are
(i) greater than the total amount of its liabilities
(including Contingent Obligations) required to be classified upon a
balance sheet as liabilities in accordance with GAAP, and
(ii) greater than the amount that will be required to pay the
probable liabilities of its then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to it; (b) has
capital that is not unreasonably small in relation to its business
as presently conducted or after giving effect to any contemplated
transaction; and (c) does not intend to incur and does not
believe that it will incur debts beyond its ability to pay such
debts as they become due.
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(66)
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“ Subsidiary ”
means, with respect to any Person, (a) any corporation of
which an aggregate of more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether, at the time, capital stock of any other
class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned legally or beneficially by
such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate
the vote of more than fifty percent (50%) of such capital stock
whether by proxy, agreement, operation of law or otherwise, and
(b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits
or capital contribution) of more than fifty percent (50%) or of
which any such Person is a general partner or may exercise the
powers of a general partner. Unless the context otherwise requires,
each reference to a Subsidiary shall be a reference to a Subsidiary
of Borrowers.
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(67)
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“ Taxes ” has the
meaning set forth in Section 2.5.
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(68)
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“ Technology Trademark and
License Agreement ” means that Technology and Trademark
License Agreement, dated as of the Effective Date, entered into by
NxStage Medical and Asahi, as the same may be amended, modified, or
supplemented from time to time.
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(69)
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“ Term Loan ” has
the meaning set forth in Section 2.1(a).
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(70)
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“ UCC ” means the
Uniform Commercial Code of the State of New York or of any other
state the laws of which are required to be applied in connection
with the perfection of security interests in any
Collateral.
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(71)
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“ United States ”
means the United States of America.
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(72)
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“ Work-In-Process
” means Inventory that is not a product that is finished and
approved by the Borrowers in accordance with applicable Laws and
the Borrowers’ normal business practices for release and
delivery to customers.
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1.2
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Accounting Terms and
Determinations. Accounting terms not defined in
this Agreement shall be construed following GAAP, and calculations
and determinations must be made following GAAP, in each case,
applied on a basis consistent with the most recent audited
financial statements of the Borrowers delivered to Asahi prior to
the Closing Date; provided , however, that if at any time
any change in GAAP would affect the computation of any financial
ratio or financial requirement set forth in any Financing Document,
and either the Borrowers or Asahi shall so request, Asahi and the
Borrowers shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of
such change in GAAP.
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1.3
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Other Definitional
Provisions. References in this Agreement to
“Articles”, “Sections”,
“Annexes”, “Exhibits” or
“Schedules” shall be to Articles, Sections, Annexes,
Exhibits or Schedules of or to this Agreement unless otherwise
specifically provided. Any term defined herein may be used in the
singular or plural. “Include”, “includes”
and “including” shall be deemed to be followed by
“without limitation”. Except as otherwise specified
or
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limited herein, references to any
Person include the successors and assigns of such Person.
References “from” or “through” any date
mean, unless otherwise specified, “from and including”
or “through and including”, respectively. References to
any statute or act shall include all related current regulations
and all amendments and any successor statutes, acts and
regulations. References to any statute or act, without additional
reference, shall be deemed to refer to federal statutes and acts of
the United States. References to any agreement, instrument or
document shall include all schedules, exhibits, annexes and other
attachments thereto. As used in this Agreement, the meaning of the
term “material” or the phrase “in all material
respects” is intended to refer to an act, omission, violation
or condition which reflects or could reasonably be expected to
result in a Material Adverse Effect. References to capitalized
terms that are not defined herein, but are defined in the UCC,
shall have the meanings given them in the UCC. All Riders attached
hereto are hereby incorporated herein by this reference and made a
part hereof. Headings and captions used in the Financing Documents
(including the Exhibits, Schedules and Annexes hereto and thereto)
are included for convenience of reference only and shall not be
given any substantive effect.
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2.1
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Term Loan.
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(a)
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Loan Amount. On the terms and
subject to the conditions set forth herein, Asahi agrees to make to
NxStage Medical a term loan in an original principal amount equal
Forty Million Dollars ($40,000,000) (the “ Term Loan
”). NxStage Medical shall have no right to reborrow any
portion of the Term Loan that is repaid or prepaid from time to
time. The Term Loan shall be funded on the Closing Date, and
principal shall be due and payable on the Maturity Date.
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(b)
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Repayment at Maturity; Optional
Prepayments; Conversion.
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(A)
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The
Term Loan and any then unpaid interest thereon shall become due and
payable, and the Borrowers shall repay the Term Loan in full
together with any then unpaid interest thereon, on the Maturity
Date in U.S. Dollars.
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(B)
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Asahi may require, by delivering a
written notice to NxStage Medical no more than ninety
(90) days and no less than sixty (60) days prior to the
Maturity Date, that all of (but not only a portion of) the
principal and interest on the Term Loan that is unpaid as of the
Maturity Date be converted into shares of NxStage Medical’s
common stock, with the number of shares to be determined based upon
the average closing stock price of NxStage Medical’s common
stock, as reported on the Global NASDAQ Market during the thirty
(30) Business Days preceding the Maturity Date.
Notwithstanding the foregoing, Asahi’s election to be paid in
NxStage Medical’s common stock shall under no circumstance
result in Asahi receiving more than 10% of the common shares of
NxStage Medical’s common stock outstanding as of the Maturity
Date, provided that Asahi and NxStage may mutually agree, each in
its own sole discretion, to increase this 10% limitation to an
amount up to 20%.
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(C)
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NxStage Medical may from time to
time, with at least two (2) Business Days prior delivery to
Asahi of an appropriately payment notification, prepay the Term
Loan in whole or in part.
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(c)
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Joint and Several Liability of the
Borrowers. The obligations of the Borrowers to repay the Term Loan
shall be joint and several.
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2.2
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Interest and Interest
Calculation.
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(a)
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Interest . From and following the Closing
Date, the Term Loan shall bear interest at the rate of eight
percent (8%) per annum on the outstanding balance of the Term Loan,
subject to any default rate pursuant to Section 8.3. Fifty
percent (50%) of all interest accruing on the Term Loan shall be
paid in arrears on the first (1st) day of each November and May,
beginning with November 1, 2009; with the remaining interest
compounded at the rate of eight percent (8%) annually, and due and
payable on the Maturity Date. Interest on all other Obligations
shall be payable on demand.
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(b)
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Computation of Interest. All
interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. The date of funding of the Term Loan
shall be included in the calculation of interest. The date of
payment of the Term Loan shall be excluded from the calculation of
interest.
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2.3
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Note. The Term Loan shall be evidenced by
a note executed by the Borrowers (“ Note ”) in
an original principal amount equal to Forty Million Dollars
($40,000,000).
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2.4
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Maximum Interest.
In no event shall the
interest charged with respect to the Term Loan exceed the maximum
amount permitted under the laws of the Commonwealth of
Massachusetts or of any other applicable jurisdiction.
Notwithstanding anything to the contrary herein or elsewhere, if at
any time the rate of interest payable with respect to the Term Loan
(the “ Stated Rate ”) would exceed the highest
rate of interest permitted under any applicable law to be charged
(the “ Maximum Lawful Rate ”), then for so long
as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable shall be equal to the Maximum Lawful Rate;
provided, however , that if at any time thereafter the
Stated Rate is less than the Maximum Lawful Rate, the Borrowers
shall, to the extent permitted by law, continue to pay interest at
the Maximum Lawful Rate until such time as the total interest
received is equal to the total interest which would have been
received had the Stated Rate been (but for the operation of this
provision) the interest rate payable. Thereafter, the interest rate
payable shall be the Stated Rate unless and until the Stated Rate
again would exceed the Maximum Lawful Rate, in which event this
provision shall again apply. In no event shall the total interest
received by the Asahi exceed the amount which it could lawfully
have received had the interest been calculated for the full term
hereof at the Maximum Lawful Rate. If, notwithstanding the prior
sentence, the Asahi has received interest hereunder in excess of
the Maximum Lawful Rate, such excess amount shall be applied to the
reduction of the principal balance of the Term Loan, and if no such
principal is then outstanding, such excess or part thereof
remaining shall be paid to the Borrowers. In computing interest
payable with reference to the Maximum Lawful Rate applicable
to
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Asahi, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such
calculation is made.
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2.5
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Taxes; Capital Adequacy.
All payments of
principal and interest on the Term Loan and all other amounts
payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp,
documentary, payroll, employment, property or franchise taxes and
other taxes, fees, duties, levies, assessments, withholdings or
other charges of any nature whatsoever (including interest and
penalties thereon) imposed by any taxing authority, excluding taxes
imposed on or measured by Asahi’s net income by the
jurisdictions under which Asahi is organized or conducts business
and excluding any taxes arising as a consequence of Asahi not being
a United States person (all non-excluded items being called “
Taxes ”). (a) If any withholding or deduction
from any payment to be made by any Borrower hereunder is required
in respect of any Taxes pursuant to any applicable Law, then such
Borrower will: (i) pay directly to the relevant authority the
full amount required to be so withheld or deducted;
(ii) promptly forward to Asahi an official receipt or other
documentation reasonably satisfactory to Asahi evidencing such
payment to such authority; and (iii) pay to Asahi such
additional amount or amounts as is necessary to ensure that the net
amount actually received by Asahi will equal the full amount Asahi
would have received had no such withholding or deduction been
required. (b) If any Taxes are directly asserted against Asahi
with respect to any payment received by Asahi hereunder, Asahi may
pay such Taxes and NxStage Medical will promptly pay such
additional amounts (including any penalty, interest or expense) as
is necessary in order that the net amount received by Asahi after
the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount Asahi would have received had such
Taxes not been asserted so long as such amounts have accrued on or
after the day which is one hundred
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