AMENDMENT NO. 004
Exhibit
10.8
AMENDMENT
NO. 004
THIS
AMENDMENT NO. 004 (“Amendment”) is made as of the 9th day of May, 2006, between
General Electric Capital Corporation (“Secured Party”) and Discovery
Laboratories, Inc. (“Debtor”) in connection with that certain Master Security
Agreement, dated as of December 20, 2002, as amended from time to time
(“Agreement”). The terms of this Amendment No. 004 are hereby incorporated into
the Agreement as though fully set forth therein.
Secured
Party and Debtor mutually desire to amend the Agreement as set forth below.
Section references below refer to the section numbers of the Agreement.
In
consideration of Secured Party (i) extending the Anticipated Funding Period
under the Confidential Loan Proposal dated October 18, 2004 (“Proposal”) for an
additional period of six (6) months and (ii) making available, subject to the
funding conditions contained in the Proposal, the entire Loan Amount under
the
Proposal (notwithstanding that FDA approval to market Debtor’s Surfaxin™ for RDS
in premature infants (“FDA Approval”) has not been obtained), Debtor agrees that
all existing Indebtedness and all advances from and after the date of this
Amendment No, 004 shall be subject to the Agreement as amended by this
Amendment.
Subsection
2(l) is
hereby added and read as follows:
“(i)
Subject to the rights of PharmaBio Development Inc. (“PharmaBio”) under that
certain Amended and Restated Security Agreement dated December 10, 2001, as
amended and restated as of November 3, 2004 (the PharmaBio Agreement”) and any
rights granted under the terms of this Amendment, Debtor will not subject its
Intellectual Property, as defined in Section 7 below, or permit its Intellectual
Property to made the subject of any liens, claims or encumbrances of any kind
whatsoever, except for Permitted Liens as defined in subsection (k) of this
Section. The prohibitions described in this Section 2(l)(i) shall terminate
upon
Debtor’s receipt of the FDA Approval.
(ii)
Supplemental Collateral. Capitalized terms used but not defined in this Section
2(l)(ii) and not defined in the Agreement shall have the meanings given to
them
in the PharmaBio Agreement.
(A)
Debtor grants to Secured Party, its successors and assigns to Secured Party,
its
successors and assigns, a security interest in all of the Supplemental
Collateral.
(B)
For
purposes of this Section 2(l), “Supplemental Collateral” shall mean (but only to
the extent the following elements of the Supplemental Collateral relate to
or
arise out of or in connection with the sale, lease, conveyance, transfer or
disposition of any right, title or interest in, to or under the Product, the
Product Intellectual Property or the License Agreement in the Territory) all
right, title and interest of Borrower in, to and under any and all of the
following, whether now existing or hereafter existing or acquired from time
to
time, in the Territory: (a) all Accounts, Chattel Paper, Contract Rights,
Contracts, Commercial Tort Claims, Deposit Accounts, Documents, General
Intangibles, Instruments, monies, Payment Intangibles, Promissory Notes and
Receivables, relating to, arising out of or in connection with any sale, lease,
conveyance, transfer or disposition of any right, title or interest in, to
or
under the Product, the Product Intellectual Property or the License Agreement;
(b) all regulatory applications, filings or similar items related to the
Product, including without limitation the NDA for the Product and all
supplements, records, and reports that are required to be maintained under
applicable FDA regulations and all related correspondence to and from the FDA,
and all clinical data related to any such regulatory applications, filings
or
similar items; (c) all books, records, computer information, files, documents,
data or other materials related to or arising out of or in connection with
any
and all of the foregoing; and (d) all Proceeds of any and all of the foregoing;
provided,
however,
that
the Supplemental Collateral shall not include the Product Intellectual Property
or the License Agreement themselves; provided,
further,
that
the Supplemental Collateral shall not include Proceeds derived from or in
connection with the sale, lease, conveyance, transfer or disposition of any
right, title or interest in Intellectual Property of Borrower to the extent,
and
only to the extent, that such Proceeds relate to the sale, lease, conveyance,
transfer or disposition of any right, title or interest in products other than
the Product. For the avoidance of doubt, the Supplemental Collateral shall
not
include any payment rights or proceeds to which Borrower is entitled under
any
third party licensing agreements involving the Product, the Product Intellectual
Property or the License Agreement (each a “Product Licensing Agreement”);
provided,
however,
that
the Supplemental Collateral shall include the proceeds of any outright sale
or
other similar disposition by Borrower of any or all its rights under any such
Product Licensing Agreement.
(C)
The
Supplemental Collateral shall for all purposes constitute “Collateral” under the
terms of the Agreement; provided, however, that the Secured Party’s security
interest in the Supplemental Collateral shall be subordinate to those granted
to
PharmaBio under the PharmaBio Agreement, notwithstanding the time, order or
method of attachment or perfection of security interests, or the time or order
of filing of financing statements or other liens or security interests of
Secured Party or PharmaBio. Secured Party expressly acknowledges and agrees
that
(i) Secured Party expressly agrees that it shall not exercise any rights
provided in this Section 2(l) seek to enforce any remedy with respect to the
Supplemental Collateral until such time as the obligations of Debtor to
PharmaBio have been fully discharged, and (ii) the security interest granted
to
Secured Party by Borrower in the Supplemental Collateral provides only a right
to receive proceeds of any sale, conveyance, transfer or disposition described
in the above definition of Supplemental Collateral and does not provide Secured
Party with any right to commence or demand commencement of any such sale, lease,
conveyance, transfer or disposition or to exercise any other remedies with
respect to the Supplemental Collateral.
(D)
The
rights of Secured Party in and to the Supplemental Collateral granted under
this
Section 2(l)(ii) shall terminate upon the earlier to occur of (x) receipt by
Debtor of the FDA Approval, and (y) payment in full of Debtor’s Obligations
under the PharmaBio Agreement, but only so long as Debtor
has 12 months of cash burn at the time of such payment. If Debtor does not
have
12 months of cash burn at the time of such payment Secured
Party’s rights in and to the Supplemental Collateral shall terminate at any time
thereafter upon demonstration by Debtor that such 12 month cash burn status
has
been achieved.
(E)
Secured Party agrees that, to the extent that Supplemental Collateral is applied
to satisfy any Indebtedness of Debtor to Secured Party under the Debt Documents,
as provided under the terms of this Agreement, Secured Party shall be deemed
to
have consented to any such prepayment.
(F)
Upon
termination of the security interest provided herein, either pursuant to this
Section 2(l) or as a consequence of the full payment by Debtor of all
Indebtedness, Secured Party hereby agrees that it will immediately file
termination statements and execute such other documents and acknowledgments
that
Debtor may reasonably request; provided, that if Secured Party shall fail to
file any termination statement, Secured Party agrees that Debtor as the true
and
lawful attorney-in-fact of Secured Party, may take all appropriate action,
including filing termination statements, to effect the termination of the
security interest provided herein.
Subsection
7(a)(xvi) is
hereby amended and restated in its entirety as follows:
“(xvi)
Debtor or any guarantor or other obligor for any of the Indebtedness
sells,
transfers, assigns, mortgages, pledges, leases, grants a security interest
in or
encumbers any or all of Debtor’s Intellectual Property now existing or hereafter
acquired. For purposes of Subsection 2(l)(i) and this Subsection
7(a)(xvii), “Intellectual Property” shall consist of Debtor’s material owned or
licensed patents, trademarks and copyrights used in Debtor’s research and
development activities in connection with the development of its drug
pipeline;
provided,
that
licenses or sublicenses by the Debtor of its Intellectual Property as
part of a research and development or similar arrangement or otherwise
related to the development, marketing and distribution of its drug products
shall be excluded. For the avoidance of doubt, Intellectual Property shall
not include computer programs owned or leased by Debtor for use in the
administration of its general business activities or installed in computer
hardware that is not a part of Debtor’s research and development activities.
Debtor shall provide Secured Party with a listing of licenses and
sublicenses granted to third parties within ten (10) days of receipt of written
request. Upon
Debtor’s receipt of the FDA Approval this Subsection 7(a)(xvi) shall terminate
and none of the events described herein shall constitute a default under this
Agreement.”
EXCEPT
AS
EXPRESSLY PROVIDED IN SECTION 2(l) OF THE AGREEMENT, ADDED ABOVE, TERMS USED,
BUT NOT OTHERWISE DEFINED IN THIS AMENDMENT SHALL HAVE THE MEANINGS GIVEN TO
THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE PROVISIONS
OF THE AGREEMENT AND THIS AMENDMENT NO. 004, THEN THIS AMENDMENT NO. 004 SHALL
CONTROL.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Amendment No.004 by signature of their
respective authorized representative set forth below.
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General
Electric Capital Corporation
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Discovery
Laboratories, Inc.
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By: /s/
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By:
/s/
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Name:
/s/ ▇▇▇▇
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Name:
/s/ ▇▇▇▇ ▇.
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Title:
SVP
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Title:
Executive
VP,
CFO
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