UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2019
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission File Number: 001-34885
AMYRIS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 55-0856151 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, CA 94608
(510) 450-0761
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.0001 par value per share | AMRS | The Nasdaq Stock Market, LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | x |
| Non-accelerated filer | o | Smaller reporting company | x |
| Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Shares outstanding of the Registrant's common stock:
| Class | Outstanding as of September 26, 2019 |
| Common Stock, $0.0001 par value per share | 103,400,207 |
EXPLANATORY NOTE
As described in additional detail in the Explanatory Note to our Annual Report on Form 10-K filed on October 1, 2019 for the fiscal year ended December 31, 2018 (the 2018 Form 10-K), on April 5, 2019 and May 14, 2019, the Audit Committee (the Audit Committee) of the Board of Directors of the Company (the Board) and the Board, respectively, determined that the Company would restate its interim condensed consolidated financial statements for the quarterly and year-to-date periods ended March 31, 2018, June 30, 2018 and September 30, 2018 (collectively, the 2018 Non-Reliance Periods). The Company also disclosed that investors should no longer rely upon (i) the Company’s previously released condensed consolidated financial statements for the 2018 Non-Reliance Periods, (ii) earnings releases for the 2018 Non-Reliance Periods and (iv) other communications relating to the Company’s previously released condensed consolidated financial statements for the 2018 Non-Reliance Periods. The restated financial statements for such periods are included in Part II, Item 8 of the 2018 Form 10-K/A filed on October 4, 2019.
This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019 reflects the comparative restated quarterly financial data for the three and six months ended June 30, 2018 contained in the 2018 Form 10-K/A filed on October 4, 2019.
Due to the restatement of our historical financial statements, we were unable to file the 2018 Form 10-K and 10-K/A until October 1, 2019 and October 4, 2019, respectively. We were unable to file this Quarterly Report on Form 10-Q until the 2018 Form 10-K was filed, which was after the prescribed August 9, 2019 due date and the five day extension period provided by Rule 12b-25 promulgated under the Securities Exchange Act of 1934.
AMYRIS, INC.
TABLE OF CONTENTS
| 3 |
PART I
AMYRIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In thousands, except shares and per share amounts) | June
30, 2019 | December
31, 2018 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 940 | $ | 45,353 | ||||
| Restricted cash | 493 | 741 | ||||||
| Accounts receivable, net of allowance of $112 and $642 | 15,805 | 16,003 | ||||||
| Accounts receivable - related party, net of allowance of $26 and $0 | 3,696 | 1,349 | ||||||
| Accounts receivable, unbilled - related party | – | 8,021 | ||||||
| Inventories | 13,961 | 9,693 | ||||||
| Deferred cost of products sold - related party | 1,489 | 489 | ||||||
| Prepaid expenses and other current assets | 9,801 | 10,566 | ||||||
| Total current assets | 46,185 | 92,215 | ||||||
| Property, plant and equipment, net | 24,260 | 19,756 | ||||||
| Accounts receivable, unbilled, noncurrent - related party | 1,203 | 1,203 | ||||||
| Deferred cost of products sold, noncurrent - related party | 15,894 | 2,828 | ||||||
| Restricted cash, noncurrent | 960 | 960 | ||||||
| Recoverable taxes from Brazilian government entities | 3,100 | 3,005 | ||||||
| Right-of-use assets under leases (Note 2) | 25,542 | – | ||||||
| Other assets | 5,672 | 7,958 | ||||||
| Total assets | $ | 122,816 | $ | 127,925 | ||||
| Liabilities, Mezzanine Equity and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 31,459 | $ | 26,844 | ||||
| Accrued and other current liabilities | 28,113 | 28,979 | ||||||
| Lease liabilities (Note 2) | 9,918 | – | ||||||
| Contract liabilities | 12,737 | 8,236 | ||||||
| Debt, current portion (instrument measured at fair value $72,461 and $57,918, respectively) | 79,429 | 124,010 | ||||||
| Related party debt, current portion | 28,220 | 23,667 | ||||||
| Total current liabilities | 189,876 | 211,736 | ||||||
| Long-term debt, net of current portion | 10,494 | 43,331 | ||||||
| Related party debt, net of current portion | 50,601 | 18,689 | ||||||
| Lease liabilities, net of current portion (Note 2) | 17,215 | – | ||||||
| Derivative liabilities | – | 42,796 | ||||||
| Other noncurrent liabilities | 29,964 | 23,192 | ||||||
| Total liabilities | 298,150 | 339,744 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Mezzanine equity: | ||||||||
| Contingently redeemable common stock (Note 5) | 5,000 | 5,000 | ||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock - $0.0001 par value, 5,000,000 shares authorized as of June 30, 2019 and December 31, 2018, and 14,656 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | – | – | ||||||
| Common stock - $0.0001 par value, 250,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 101,186,738 and 76,564,829 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 10 | 8 | ||||||
| Additional paid-in capital | 1,479,415 | 1,346,996 | ||||||
| Accumulated other comprehensive loss | (43,479 | ) | (43,343 | ) | ||||
| Accumulated deficit | (1,617,217 | ) | (1,521,417 | ) | ||||
| Total Amyris, Inc. stockholders’ deficit | (181,271 | ) | (217,756 | ) | ||||
| Noncontrolling interest | 937 | 937 | ||||||
| Total stockholders' deficit | (180,334 | ) | (216,819 | ) | ||||
| Total liabilities, mezzanine equity and stockholders' deficit | $ | 122,816 | $ | 127,925 | ||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 4 |
AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except shares and per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenue: | ||||||||||||||||
| Renewable products (includes related party revenue of $0, $144, $2 and $295, respectively) | $ | 12,120 | $ | 6,633 | $ | 24,004 | $ | 11,828 | ||||||||
| Licenses and royalties (includes related party revenue of $40,682, ($513), $40,302 and $7,405, respectively) | 40,964 | (513 | ) | 41,082 | 7,442 | |||||||||||
| Grants and collaborations (includes related party revenue of $2,646, $1,738, $3,042 and $2,471, respectively) | 9,610 | 8,939 | 11,982 | 13,648 | ||||||||||||
| Total revenue (includes related party revenue of $43,328, $1,369, $43,346 and $10,171, respectively) | 62,694 | 15,059 | 77,068 | 32,918 | ||||||||||||
| Cost and operating expenses: | ||||||||||||||||
| Cost of products sold | 15,121 | 6,534 | 32,828 | 11,849 | ||||||||||||
| Research and development | 19,222 | 15,669 | 37,061 | 33,494 | ||||||||||||
| Sales, general and administrative | 30,862 | 19,454 | 59,115 | 37,554 | ||||||||||||
| Total cost and operating expenses | 65,205 | 41,657 | 129,004 | 82,897 | ||||||||||||
| Loss from operations | (2,511 | ) | (26,598 | ) | (51,936 | ) | (49,979 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Loss on divestiture | – | – | – | (1,778 | ) | |||||||||||
| Interest expense | (15,217 | ) | (9,580 | ) | (27,751 | ) | (19,558 | ) | ||||||||
| (Loss) gain from change in fair value of derivative instruments | — | 21,990 | (2,039 | ) | (36,367 | ) | ||||||||||
| Loss from change in fair value of debt | (14,444 | ) | – | (16,574 | ) | – | ||||||||||
| Loss upon extinguishment of debt | (5,875 | ) | (26 | ) | (5,875 | ) | (26 | ) | ||||||||
| Other income (expense), net | (41 | ) | (168 | ) | (156 | ) | 524 | |||||||||
| Total other income (expense), net | (35,577 | ) | 12,216 | (52,395 | ) | (57,205 | ) | |||||||||
| Loss before income taxes | (38,088 | ) | (14,382 | ) | (104,331 | ) | (107,184 | ) | ||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||
| Net loss attributable to Amyris, Inc. | (38,088 | ) | (14,382 | ) | (104,331 | ) | (107,184 | ) | ||||||||
| Less: deemed dividend related to proceeds discount and issuance costs upon conversion of Series D | (34,964 | ) | – | (34,964 | ) | – | ||||||||||
| Add: losses allocated to participating securities | 2,255 | 970 | 4,690 | 7,932 | ||||||||||||
| Net loss attributable to Amyris, Inc. common stockholders | $ | (70,797 | ) | $ | (13,412 | ) | $ | (134,605 | ) | $ | (99,252 | ) | ||||
| Loss per share attributable to common stockholders, basic and diluted | $ | (0.76) | $ | (0.24 | ) | $ | (1.59 | ) | $ | (1.87 | ) | |||||
| Weighted-average shares of common stock outstanding used in computing loss per share of common stock, basic and diluted | 92,785,752 | 54,932,411 | 84,831,269 | 53,076,975 | ||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 5 |
AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss attributable to Amyris, Inc. | $ | (38,088 | ) | $ | (14,382 | ) | $ | (104,331 | ) | $ | (107,184 | ) | ||||
| Foreign currency translation adjustment | (1,100 | ) | (827 | ) | (136 | ) | (964 | ) | ||||||||
| Comprehensive loss attributable to Amyris, Inc. | $ | (39,188 | ) | $ | (15,209 | ) | $ | (104,467 | ) | $ | (108,148 | ) | ||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 6 |
AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT AND MEZZANINE EQUITY
(Unaudited)
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except number of shares) | Shares | Amount | Shares | Amount | Additional
Paid-in Capital | Accumulated
Other Comprehensive Loss | Accumulated
Deficit | Noncontrolling
Interest | Total
Stockholders' Deficit | Mezzanine
Equity - Common Stock | ||||||||||||||||||||||||||||||
| December 31, 2018 | 14,656 | $ | – | 76,564,829 | $ | 8 | $ | 1,346,996 | $ | (43,343 | ) | $ | (1,521,417 | ) | $ | 937 | $ | (216,819 | ) | $ | 5,000 | |||||||||||||||||||
| Cumulative effect of change in accounting principle for ASU 2017-11 (see "Recently Adopted Accounting Pronouncements" in Note 1) | – | – | – | – | 32,512 | – | 8,531 | – | 41,043 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | – | – | 450,568 | – | 1 | – | – | – | 1 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | – | – | 3,612 | – | 13 | – | – | – | 13 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock | – | – | 191,672 | – | (9 | ) | – | – | – | (9 | ) | – | ||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | 3,452 | – | – | – | 3,452 | – | ||||||||||||||||||||||||||||||
| Fair value of bifurcated embedded conversion feature in connection with debt modification | – | – | – | – | 398 | – | – | – | 398 | – | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | 964 | – | – | 964 | – | ||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | (66,243 | ) | – | (66,243 | ) | – | ||||||||||||||||||||||||||||
| Balances at March 31, 2019 | 14,656 | – | 77,210,681 | 8 | 1,383,363 | (42,379 | ) | (1,579,129 | ) | 937 | (237,200 | ) | 5,000 | |||||||||||||||||||||||||||
| Issuance of common stock in private placement | – | – | 3,610,944 | 1 | 14,221 | – | – | – | 14,222 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock in private placement - related party | – | – | 10,478,338 | – | 39,499 | – | – | – | 39,499 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon conversion of debt | – | – | 7,101,468 | 1 | 34,650 | – | – | – | 34,651 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon ESPP purchase | – | 131,460 | – | 464 | – | – | – | 464 | – | |||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | – | – | 2,064,606 | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||
| Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock | – | – | 589,241 | – | (347 | ) | – | – | – | (347 | ) | – | ||||||||||||||||||||||||||||
| Issuance of warrants in connection with debt accounted for at fair value | – | – | – | – | 4,428 | – | – | – | 4,428 | – | ||||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | 3,375 | – | – | – | 3,375 | – | ||||||||||||||||||||||||||||||
| Other | – | – | – | – | (238 | ) | – | – | – | (238 | ) | – | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | (1,100 | ) | – | – | (1,100 | ) | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | (38,088 | ) | – | (38,088 | ) | – | ||||||||||||||||||||||||||||
| Balances at June 30, 2019 | 14,656 | $ | – | 101,186,738 | $ | 10 | $ | 1,479,415 | $ | (43,479 | ) | $ | (1,617,217 | ) | $ | 937 | $ | (180,334 | ) | $ | 5,000 | |||||||||||||||||||
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||
| (In thousands, except number of shares) | Shares | Amount | Shares | Amount | Additional
Paid-in Capital | Accumulated
Other Comprehensive Loss | Accumulated
Deficit | Noncontrolling
Interest | Total Stockholders' Deficit | Mezzanine
Equity - Common Stock | ||||||||||||||||||||||||||||||
| December 31, 2017 | 22,171 | – | 45,637,433 | 5 | 1,114,546 | (42,156 | ) | (1,290,420 | ) | 937 | (217,088 | ) | 5,000 | |||||||||||||||||||||||||||
| Cumulative effect of change in accounting principle for ASC 606 (see "Significant Accounting Policies" in Note 1) | – | – | – | – | – | (803 | ) | – | (803 | ) | – | |||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | – | – | 162,392 | – | 835 | – | – | – | 835 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock in private placement, net of issuance costs | – | – | 13,529 | – | 92 | – | – | – | 92 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | – | – | 7,004 | – | 81 | – | – | – | 81 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock | – | – | 30,489 | – | (66 | ) | – | – | – | (66 | ) | – | ||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | 1,278 | – | – | – | 1,278 | – | ||||||||||||||||||||||||||||||
| Other | – | – | – | – | 93 | – | – | – | 93 | – | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | (137 | ) | – | – | (137 | ) | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | (92,802 | ) | – | (92,802 | ) | – | |||||||||||||||||||||||||||||
| Balances at Balance as of March 31, 2018 | 22,171 | – | 45,850,847 | 5 | 1,116,859 | (42,293 | ) | (1,384,025 | ) | 937 | (308,517 | ) | 5,000 | |||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | – | – | 3,638,938 | – | 24,788 | – | – | – | 24,788 | – | ||||||||||||||||||||||||||||||
| Issuance of warrants | – | – | – | – | 9,438 | – | – | – | 9,438 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock in private placement, net of issuance costs | – | – | 191,639 | – | 1,323 | – | – | – | 1,323 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon conversion of preferred stock | (2,837 | ) | – | 450,307 | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | – | – | 36,051 | – | 195 | – | – | – | 195 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock upon ESPP purchase | – | – | 87,768 | – | 269 | – | – | – | 269 | – | ||||||||||||||||||||||||||||||
| Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock | – | – | 85,130 | – | (147 | ) | – | – | – | (147 | ) | – | ||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | 1,900 | – | – | – | 1,900 | – | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | (827 | ) | – | – | (827 | ) | – | ||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | (14,382 | ) | – | (14,382 | ) | – | ||||||||||||||||||||||||||||
| Balances at June 30, 2018 | 19,334 | – | 50,340,680 | 5 | 1,154,625 | (43,120 | ) | (1,398,407 | ) | 937 | (285,960 | ) | 5,000 | |||||||||||||||||||||||||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 7 |
AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||||
| (In thousands) | 2019 | 2018 | ||||||
| Operating activities | ||||||||
| Net loss | $ | (104,331 | ) | $ | (107,184 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Loss from change in fair value of debt | 16,574 | — | ||||||
| Amortization of debt discount | 7,260 | 8,229 | ||||||
| Stock-based compensation | 6,827 | 3,178 | ||||||
| Loss upon extinguishment of debt | 5,875 | 26 | ||||||
| Expense for warrants issued for covenant waivers | 4,428 | — | ||||||
| Amortization of right-of-use assets under operating leases | 5,846 | — | ||||||
| Loss from change in fair value of derivative liability | 2,039 | 36,367 | ||||||
| Depreciation and amortization | 1,722 | 2,944 | ||||||
| Write-down of property, plant and equipment | 438 | — | ||||||
| (Gain) loss on disposal of property, plant and equipment | (4 | ) | 942 | |||||
| Gain on foreign currency exchange rates | (36 | ) | (31 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (2,147 | ) | 10,956 | |||||
| Accounts receivable, unbilled – related party | 8,021 | (5,150 | ) | |||||
| Inventories | (4,310 | ) | (1,313 | ) | ||||
| Deferred cost of products sold | (14,066 | ) | — | |||||
| Prepaid expenses and other assets | (1,000 | ) | (1,678 | ) | ||||
| Accounts payable | 4,532 | 3,087 | ||||||
| Accrued and other liabilities | 7,659 | (6,720 | ) | |||||
| Lease liabilities | (8,096 | ) | — | |||||
| Contract liabilities | 4,512 | 1,859 | ||||||
| Net cash used in operating activities | (58,257 | ) | (54,488 | ) | ||||
| Investing activities | ||||||||
| Change in short-term investments | — | (157 | ) | |||||
| Purchases of property, plant and equipment | (5,951 | ) | (4,207 | ) | ||||
| Net cash used in investing activities | (5,951 | ) | (4,364 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of common stock in private placements, net of issuance costs - related party | 39,500 | — | ||||||
| Proceeds from issuance of common stock in private placements, net of issuance costs | 14,221 | 1,416 | ||||||
| Proceeds from issuance of debt, net of issuance costs | 18,614 | 36,105 | ||||||
| Proceeds from issuance of common stock upon ESPP purchase | 464 | 270 | ||||||
| Proceeds from exercises of common stock options | 13 | 248 | ||||||
| Proceeds from exercises of warrants | 1 | 14,549 | ||||||
| Principal payments on debt | (52,145 | ) | (37,037 | ) | ||||
| Payment of minimum employee taxes withheld upon net share settlement of restricted stock units | (356 | ) | (185 | ) | ||||
| Principal payments on financing leases | (258 | ) | (593 | ) | ||||
| Net cash provided by financing activities | 20,054 | 14,773 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (507 | ) | (78 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (44,661 | ) | (44,157 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 47,054 | 61,012 | ||||||
| Cash, cash equivalents and restricted cash at end of the period | $ | 2,393 | $ | 16,855 | ||||
| Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets | ||||||||
| Cash and cash equivalents | $ | 940 | $ | 14,050 | ||||
| Restricted cash, current | 493 | 1,846 | ||||||
| Restricted cash, noncurrent | 960 | 959 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 2,393 | $ | 16,855 | ||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 8 |
AMYRIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(Unaudited)
| Six Months Ended June 30, | ||||||||
| (In thousands) | 2019 | 2018 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 7,986 | $ | 8,634 | ||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Right-of-use assets under operating leases recorded upon adoption of ASC 842 (Note 2) | $ | 29,713 | $ | — | ||||
| Lease liabilities recorded upon adoption of ASC 842 (Note 2) | $ | 33,552 | $ | — | ||||
| Cumulative effect of change in accounting principle for ASU 2017-11 (Note 2) | $ | 41,043 | $ | — | ||||
| Issuance of common stock upon conversion of convertible notes | $ | 34,650 | $ | — | ||||
| Acquisition of property, plant and equipment under accounts payable, accrued liabilities and notes payable | $ | 1,026 | $ | 744 | ||||
| Acquisition of right-of-use assets under operating leases | $ | 1,675 | $ | — | ||||
| Accrued interest added to debt principal | $ | 448 | $ | 1,894 | ||||
| Fair value of warrants recorded as debt discount in connection with debt modification | $ | 398 | $ | — | ||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
| 9 |
AMYRIS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
Amyris, Inc. (Amyris or the Company) is a leading industrial biotechnology company that applies its technology platform to engineer, manufacture and sell high performance, natural, sustainably-sourced products into the Health & Wellness, Clean Beauty, and Flavor & Fragrance markets. The Company's proven technology platform enables the Company to rapidly engineer microbes and use them as catalysts to metabolize renewable, plant-sourced sugars into large volume, high-value ingredients. The Company's biotechnology platform and industrial fermentation process replace existing complex and expensive manufacturing processes. The Company has successfully used its technology to develop and produce many distinct molecules at commercial volumes.
The accompanying unaudited condensed consolidated financial statements of Amyris, Inc. should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2018 (the 2018 Form 10-K/A), from which the condensed consolidated balance sheet as of December 31, 2018 is derived. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Raizen Joint Venture Agreement
On May 10, 2019, the Company and Raizen Energia S.A. (Raizen) entered into a joint venture agreement relating to the formation and operation of a joint venture relating to the production, sale and commercialization of alternative sweetener products. In connection with the formation of the joint venture, among other things, (i) the joint venture will construct a manufacturing facility on land owned by Raizen and leased to the joint venture (the Sweetener Plant), (ii) the Company will grant to the joint venture an exclusive, royalty-free, worldwide, license to certain technology owned by the Company relevant to the joint venture’s business, and (iii) the Company and Raizen will enter into a shareholders agreement setting forth the rights and obligations of the parties with respect to, and the management of, the joint venture. The formation of the joint venture is subject to certain conditions, including certain regulatory approvals and the achievement of certain technological and economic milestones relating to the Company’s existing production of its alternative sweetener product. If such conditions are not satisfied by December 31, 2019, the joint venture will automatically terminate. In addition, notwithstanding the satisfaction of the closing conditions, Raizen may elect not to consummate the formation and operation of the joint venture, in which event, the Company will retain the right to construct and operate the Sweetener Plant.
Upon the closing of the joint venture, each party will make an initial capital contribution to the joint venture of 2,500,000 Brazilian Real (R$2,500,000) and the joint venture will be owned 50% by the Company and 50% by Raizen. Within 60 days of the formation, the parties will make an aggregate cash contribution to the joint venture of U.S.$9.0 million to purchase certain fixed assets currently owned by the Company and located at the site of the Company’s former joint venture with Sao Martinho S.A. in Pradopolis, Brazil for U.S.$3.0 million, as well as to pay for costs related to the removal and transportation of such assets to the site of the Sweetener Plant. In addition, within six months of the formation, the Company will contribute to the joint venture its existing supply agreements related to its alternative sweetener product, subject to certain exceptions, in exchange for shares of dividend-bearing preferred stock in the joint venture, which will be entitled, for a period of 10 years commencing from the initial date of operation of the Sweetener Plant, to certain priority fixed cumulative dividends including, in the event that certain technological and economic milestones are met in any fiscal quarter, a percentage of the operating cash flow of the joint venture in such quarter.
After the formation of the joint venture, subject to certain exceptions, the parties will not conduct activities similar or identical to the joint venture except through the joint venture. In the event that certain technological and economic milestones are not met in any fiscal year beginning with the third fiscal year after formation of the joint venture and ending with the seventh fiscal year after formation of the joint venture, Raizen shall have the right to sell all of its shares in the joint venture to the Company at a price per share equal to the higher of the book value and the amount of Raizen’s investments in the joint venture, as adjusted for Raizen’s cost of capital.
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The Company is evaluating the accounting treatment for its future interest in the joint venture under ASC 810, Consolidations and ASC 323, Equity Method and Joint Ventures and will conclude once the corporate governance and economic participation structure is finalized and the formation of the joint venture is consummated.
Going Concern
The Company has incurred significant operating losses since its inception and expects to continue to incur losses and negative cash flows from operations for at least the next 12 months following the issuance of these condensed consolidated financial statements. As of June 30, 2019, the Company had negative working capital of $143.7 million (compared to negative working capital of $119.5 million as of December 31, 2018), and an accumulated deficit of $1.6 billion.
As of June 30, 2019, the Company's debt (including related party debt), net of debt discount of $13.1 million, totaled $168.7 million, of which $107.6 million is classified as current. Subsequent to June 30, 2019, the Company entered into arrangements with lenders to extend maturities and convert certain debt obligations into common stock; see Note 12, "Subsequent Events" for more information. The Company's debt service obligations through June 30, 2020 are $128.9 million, including $21.3 million of anticipated cash interest payments. The Company's debt agreements contain various covenants, including certain restrictions on the Company's business that could cause the Company to be at risk of defaults, such as restrictions on additional indebtedness and cross-default clauses. A failure to comply with, or cure non-compliance events or obtain waivers for covenant violations, and other provisions of the Company’s debt instruments, including any failure to make a payment when required, would generally result in events of default under such instruments, which could permit acceleration of such indebtedness. If such indebtedness is accelerated, it would generally also constitute an event of default under the Company’s other outstanding indebtedness, permitting acceleration of a substantial portion of the Company's outstanding indebtedness. Subsequent to June 30, 2019, on September 16, 2019, the Company failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note (see Note 12, “Subsequent Events”), when due. Such failure triggered cross-defaults under other debt instruments of the Company with an aggregate principal amount of approximately $143.7 million, which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. The Company subsequently received waivers from holders of $143.7 million principal amount of such debt instruments. The Company does not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for the Company will be reached. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, which could have a material adverse effect on the Company’s financial condition.
Cash and cash equivalents of $0.9 million as of June 30, 2019 are not sufficient to fund expected future negative cash flows from operations and cash debt service obligations through June 30, 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's ability to continue as a going concern will depend, in large part, on its ability to raise additional capital through equity offerings or debt financings and extend or refinance existing debt maturities by restructuring a majority of its convertible debt, which is uncertain and outside the control of the Company. Further, the Company's operating plan for the 12 months ending June 30, 2020 contemplates a significant reduction in its net operating cash outflows as compared to the year ended December 31, 2018, resulting from (i) revenue growth from sales of existing and new products with positive gross margins, (ii) significantly increased cash inflows from grants and collaborations, and (iii) reduced production costs as a result of manufacturing and technical developments. If the Company is unable to complete these actions, it expects to be unable to meet its operating cash flow needs and its obligations under its existing debt facilities. This could result in an acceleration of its obligation to repay all amounts outstanding under those facilities, and it may be required to obtain additional equity or debt financing, which may not occur timely or on reasonable terms, if at all, and/or liquidate its assets. In such a scenario, the value the Company receives for its assets in liquidation or dissolution could be significantly lower than the value reflected in these condensed consolidated financial statements.
On September 16, 2019, the Company failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note when due. The failure resulted in an event of default under the Second Exchange Note and also triggered cross-defaults under other debt instruments of the Company which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. The Company subsequently received waivers from substantially all holders of such other debt instruments to waive the right to accelerate. As a result, the indebtedness with respect to which the Company has obtained such waivers continues to be classified as long-term on the Company’s balance sheet. The indebtedness reflected by the Second Exchange Note continues to be classified as a current liability on the Company’s balance sheet. In addition, as a result of the payment default, the conversion price of the Second Exchange Note is subject to adjustment in accordance with the terms of the Second Exchange Note.
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The Company does not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for the Company will be reached. The Company has executed a term sheet with an existing investor for a term loan, the proceeds of which would be used to repay a portion of the Second Exchange Note. However, there can be no assurance that the Company will be able to obtain such financing on its expected timeline, or on acceptable terms, if at all. Even if the Company does obtain such financing, it will not have sufficient funds to repay the Second Exchange Note in full without obtaining additional financing, which the Company is attempting to source. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Significant Accounting Policies
Note 1, "Basis of Presentation and Summary of Significant Accounting Policies", to the audited consolidated financial statements in the 2018 Form 10-K/A includes a discussion of the significant accounting policies and estimates used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company's significant accounting policies and estimates during the three and six months ended June 30, 2019, except for the Company's adoption of these accounting standards on January 1, 2019:
| • | Accounting Standards Codification (ASC) Topic 842 (ASC 842), Leases; and | |
| • | ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments with Down Round Features. |
Revenue Recognition
The Company recognizes revenue from the sale of renewable products, licenses of and royalties from intellectual property, and grants and collaborative research and development services. Revenue is measured based on the consideration specified in a contract with a customer and recognized when, or as, the Company satisfies a performance obligation by transferring control over a product or service to a customer. The Company generally does not incur costs to obtain new contracts. The costs to fulfill a contract are expensed as incurred.
The Company accounts for a contract when it has approval and commitment to perform from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of the consideration is probable. Changes to contracts are assessed for whether they represent a modification or should be accounted for as a new contract. The Company considers the following indicators among others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If a transaction does not meet the Company's indicators of being a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis.
The Company’s significant contracts and contractual terms with its customers are presented in Note 10, "Revenue Recognition" in Part II, Item 8 of the 2018 Form 10-K/A.
The Company recognizes revenue when control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s renewable products are delivered to customers from the Company’s facilities with shipping terms typically specifying F.O.B. shipping point.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company's contracts may contain multiple performance obligations if a promise to transfer the individual goods or services is separately identifiable from other promises in the contracts and, therefore, is considered distinct. For contracts with multiple performance obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction price using the relative selling price basis.
The following is a description of the principal goods and services from which the Company generates revenue.
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Renewable Product Sales
Revenues from renewable product sales are recognized as a distinct performance obligation on a gross basis as the Company is acting as a principal in these transactions, with the selling price to the customer recorded net of discounts and allowances. Revenues are recognized at a point in time when control has passed to the customer, which typically is upon the renewable products leaving the Company’s facilities with the first transportation carrier. The Company, on occasion, may recognize revenue under a bill and hold arrangement, whereby the customer requests and agrees to purchase product but requests delivery at a later date. Under these arrangements, control transfers to the customer when the product is ready for delivery, which occurs when the product is identified separately as belonging to the customer, the product is ready for shipment to the customer in its current form, and the Company does not have the ability to direct the product to a different customer. It is at this point that the Company has the right to payment, the customer obtains legal title, and the customer has the significant risks and rewards of ownership. The Company’s renewable product sales do not include rights of return. Returns are accepted only if the product does not meet product specifications and such nonconformity is communicated to the Company within a set number of days of delivery. The Company offers a two-year assurance-type warranty to replace squalane products that do not meet Company-established criteria as set forth in the Company’s trade terms. An estimate of the cost to replace the squalane products sold is made based on a historical rate of experience and recognized as a liability and related expense when the renewable product sale is consummated.
Licenses and Royalties
Licensing of Intellectual Property: When the Company’s intellectual property licenses are determined to be distinct from the other performance obligations identified in the arrangement, revenue is recognized from non-refundable, up-front fees allocated to the license at a point in time when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For intellectual property licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front-fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognized.
Royalties from Licensing of Intellectual Property: The Company earns royalties from the licensing of its intellectual property whereby the licensee uses the intellectual property to produce and sell its products to its customers and the Company shares in the profits.
When the Company’s intellectual property license is the only performance obligation, or it is the predominant performance obligation in arrangements with multiple performance obligations, the Company applies the sales-based royalty exception and revenue is estimated and recognized at a point in time when the licensee’s product sales occur. Estimates of sales-based royalty revenues are made using the most likely outcome method, which is the single amount in a range of possible amounts derived from the licensee’s historical sales volumes and sales prices of its products and recent commodity market pricing data and trends.
When the Company’s intellectual property license is not the predominant performance obligation in arrangements with multiple performance obligations, the royalty represents variable consideration and is allocated to the transaction price of the predominant performance obligation which generally is the supply of renewable products to the Company's customers. Revenue is estimated and recognized at a point in time when the renewable products are delivered to the customer. Estimates of the amount of variable consideration to include in the transaction price are made using the expected value method, which is the sum of probability-weighted amounts in a range of possible amounts determined based on the cost to produce the renewable product plus a reasonable margin for the profit share. The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Also, the transaction price is reduced for estimates of customer incentive payments payable by the Company for certain customer contracts.
Grants and Collaborative Research and Development Services
Collaborative Research and Development Services: The Company earns revenues from collaboration agreements with customers to perform research and development services to develop new molecules using the Company’s technology and to scale production of the molecules for commercialization and use in the collaborator’s products. The collaboration agreements generally include providing the Company's collaborators with research and development services and with licenses to the Company’s intellectual property to use the technology underlying the development of the molecules and to sell its products that incorporate the technology. The terms of the Company's collaboration agreements typically include one or more of the following: advance payments for the research and development services that will be performed, nonrefundable upfront license payments, milestone payments to be received upon the achievement of the milestone events defined in the agreements, and royalty payments upon the commercialization of the molecules in which the Company shares in the customer’s profits.
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Collaboration agreements are evaluated at inception to determine whether the intellectual property licenses represent distinct performance obligations separate from the research and development services. If the licenses are determined to be distinct, the non-refundable upfront license fee is recognized as revenue at a point in time when the license is transferred to the licensee and the licensee is able to use and benefit from the license while the research and development service fees are recognized over time as the performance obligations are satisfied. The research and development service fees represent variable consideration. Estimates of the amount of variable consideration to include in the transaction price are made using the expected value method, which is the sum of probability-weighted amounts in a range of possible amounts. The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Revenue is recognized over time using either an input-based measure of labor hours expended or a time-based measure of progress towards the satisfaction of the performance obligations. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized.
Collaboration agreements that include milestone payments are evaluated at inception to determine whether the milestone events are considered probable of achievement and estimates are made of the amount of the milestone payments to include in the transaction price using the most likely amount method which is the single amount in a range of possible amounts. If it is probable that a significant revenue reversal will not occur, the estimated milestone payment amount is included in the transaction price. Each reporting period, the Company re-evaluates the probability of achievement of the milestone events and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative basis, which would affect collaboration revenues in the period of adjustment. Generally, revenue is recognized using an input-based measure of progress towards the satisfaction of the performance obligations, which can be based on labor hours expended or time-based in proportion to the estimated total project effort or total projected time to complete. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized. Certain performance obligations are associated with milestones agreed between the Company and its customer. Revenue generated from the performance of services in accordance with these milestones is recognized upon confirmation from the customer that the milestone has been achieved. In these cases, amounts recognized are constrained to the amount of consideration received upon achievement of the milestone.
The Company generally invoices its collaborators on a monthly or quarterly basis, or upon the completion of the effort or achievement of a milestone, based on the terms of each agreement. Contract liability arises from amounts received in advance of performing the research and development activities and is recognized as revenue in future periods as the performance obligations are satisfied.
Grants: The Company earns revenues from grants with government agencies to, among other things, provide research and development services to develop molecules using the Company’s technology, and create research and development tools to improve the timeline and predictability for scaling molecules from proof of concept to market by reducing time and costs. Grants typically consist of research and development milestone payments to be received upon the achievement of the milestone events defined in the agreements.
The milestone payments are evaluated at inception to determine whether the milestone events are considered probable of achievement and estimates are made of the amount of the milestone payments to include in the transaction price using the most likely amount method which is the single amount in a range of possible amounts. If it is probable that a significant revenue reversal will not occur, the estimated milestone payment amount is included in the transaction price. Each reporting period, the Company re-evaluates the probability of achievement of the milestone events and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative basis, which would affect collaboration revenues in the period of adjustment. Revenue is recognized over time using a time-based measure of progress towards the satisfaction of the performance obligations. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized.
For descriptions of the Company's other significant accounting policies, see the 2018 Form 10-K/A.
Accounting Standards or Updates Recently Adopted
In the six months ended June 30, 2019, the Company adopted these accounting standards or updates:
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Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The standard requires the recognition of lease liabilities and right-of-use (ROU) assets on the balance sheet arising from lease transactions at the lease commencement date and the disclosure of key information about leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an additional transition method in which the lease standard is applied at the adoption date and recognized as a cumulative-effect adjustment to retained earnings without adjustment to comparative periods (collectively Topic 842). The amendment has the same effective date and transition requirements as the lease standard.
The Company adopted this standard on January 1, 2019 using the modified retrospective approach and elected the package of practical expedients permitted under transition guidance, which allowed the Company to carry forward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs, where applicable. The Company did not elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date and did not elect the practical expedient pertaining to land easements as this is not applicable to the Company’s current contracts. The Company elected the post-transition practical expedient to not separate lease components from non-lease components for all leases of manufacturing equipment. The Company also elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset.
The adoption of this standard had the net effect of increasing both assets and liabilities by $25.7 million, after considering prepaid and other current and noncurrent assets previously recorded on the condensed consolidated balance sheet, but did not have a material impact on the condensed consolidated statements of operations or cash flows. The most significant impact relates to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for the Company's operating leases; and (2) providing significant new disclosures about the Company's leasing activities.
Upon adoption, the Company recognized operating lease liabilities of $33.6 million, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company also recognized ROU assets of $29.7 million, which represents the operating lease liability, adjusted for prepaid expenses and deferred rent. The difference between the operating lease ROU assets and lease liabilities reflects the net of advanced rent payments and deferred rent balances that were derecognized at the time of adoption.
Financial Instruments with "Down Round" Features In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments with Down Round Features. The amendments of this ASU update the classification analysis of certain equity-linked financial instruments, or embedded features, with down round features, as well as clarify existing disclosure requirements for equity-classified instruments. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The accounting standard update became effective in the first quarter of fiscal year 2019, and the Company adopted the standard using a modified retrospective approach. Since the adoption of ASU 2017-11 would have classified the warrants effected as equity at inception, the cumulative-effect adjustment should (i) record the issuance date value of the warrants as if they had been equity classified at the issuance date, (ii) reverse the effects of changes in the fair value of the warrants that had been recorded in the statement of operations of each period, and (iii) eliminate the derivative liabilities from the balance sheet. Upon adoption, the Company (i) recorded an increase of $32.5 million to additional paid-in capital, (ii) recorded a decrease to accumulated deficit of $8.5 million and (iii) decreased the warrant liability by $41.0 million.
Recent Accounting Standards or Updates Not Yet Effective
Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The accounting standard update will be effective beginning in the first quarter of fiscal 2020, with removed and modified disclosures to be adopted on a retrospective basis, and new disclosures to be adopted on a prospective basis. The Company is in the initial stages of evaluating the impact of the standard on its condensed consolidated financial statements.
Collaborative Revenue Arrangements In November 2018, the FASB issued ASU 2018-18, Clarifying the Interaction between Topic 808 and Topic 606, that clarifies the interaction between the guidance for certain collaborative arrangements and Topic 606, the new revenue recognition standard. A collaborative arrangement is a contractual arrangement under which two or more parties actively participate in a joint operating activity and are exposed to significant risks and rewards that depend on the activity’s commercial success. The ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard. The accounting standard update will be effective beginning in the first quarter of fiscal year 2020 retroactively. The Company does not believe that the impact of the new standard on its condensed consolidated financial statements will be material.
Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ASU 2016-13 will become effective for the Company beginning in the first quarter of fiscal year 2020. The Company does not believe that the impact of the new standard on its condensed consolidated financial statements will be material.
Use of Estimates and Judgements
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements.
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2. Balance Sheet Details
Inventories
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Raw materials | $ | 4,389 | $ | 3,901 | ||||
| Work-in-process | 1,697 | 539 | ||||||
| Finished goods | 7,875 | 5,253 | ||||||
| Inventories | $ | 13,961 | $ | 9,693 | ||||
Deferred cost of products sold - related party
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Deferred cost of products sold - related party | $ | 1,489 | $ | 489 | ||||
| Deferred cost of products sold, noncurrent - related party | 15,894 | 2,828 | ||||||
| Total | $ | 17,383 | $ | 3,317 | ||||
In November 2018, the Company amended the supply agreement with DSM to secure capacity at the Brotas 1 facility for sweetener production through 2022. See Note 10, “Revenue Recognition” in Part II, Item 8 of the 2018 Form 10-K/A for information regarding the November 2018 Supply Agreement Amendment. The supply agreement was included as an element of a combined transaction with DSM, which resulted in a fair value allocation of $24.4 million to the manufacturing capacity fees, of which $3.3 million was recorded as deferred cost of products sold at December 31, 2018. During the six months ended June 30, 2019, the Company paid an additional $14.1 million of reservation capacity fees, which was recorded as additional deferred cost of products sold. The remaining $6.9 million capacity fees will be recorded as deferred cost of products sold in the period the additional payments are made to DSM. The deferred cost of products sold asset is expensed to cost of products sold on a units of production basis as the Company's sweetener product is sold over the five-year term of the supply agreement. Each quarter, the Company evaluates its future production volumes and adjusts the unit cost to be expensed over the remaining estimated production volume. Due to the Company's commercial launch of the product in December 2018, amortization of the deferred cost of products sold asset has been insignificant through June 30, 2019. The deferred cost of products sold asset is evaluated for recoverability at each period end.
Prepaid expenses and other current assets
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Prepayments, advances and deposits | $ | 3,147 | $ | 5,644 | ||||
| Recoverable taxes from Brazilian government entities | 1,787 | 631 | ||||||
| Other | 4,867 | 4,291 | ||||||
| Total prepaid expenses and other current assets | $ | 9,801 | $ | 10,566 | ||||
Property, Plant and Equipment, Net
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Machinery and equipment | $ | 47,553 | $ | 43,713 | ||||
| Leasehold improvements | 40,817 | 39,922 | ||||||
| Computers and software | 10,307 | 9,987 | ||||||
| Furniture and office equipment, vehicles and land | 3,349 | 3,016 | ||||||
| Construction in progress | 2,245 | 1,749 | ||||||
| 104,271 | 98,387 | |||||||
| Less: accumulated depreciation and amortization | (80,011 | ) | (78,631 | ) | ||||
| Property, plant and equipment, net | $ | 24,260 | $ | 19,756 | ||||
During the three and six months ended June 30, 2019 and 2018, the Company capitalized the following amounts of internal labor costs required to automate, integrate and ready certain laboratory and plant equipment for its intended use:
| (In thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Capitalized internally-developed software | $ | 120 | $ | 800 | $ | 320 | $ | 1,580 | ||||||||
During the three and six months ended June 30, 2019 and 2018, Depreciation and amortization expense, including amortization of assets under capital leases, was as follows:
| (In thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Depreciation and amortization expense | $ | 873 | $ | 1,383 | $ | 1,722 | $ | 2,944 | ||||||||
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Leases
Operating Leases
The Company has entered into operating leases primarily for administrative offices, laboratory equipment and other facilities. The operating leases have remaining terms that range from 1 year to 5 years, and often include one or more options to renew. These renewal terms can extend the lease term from 1 to 5 years and are included in the lease term when it is reasonably certain that the Company will exercise the option. The operating leases are classified as ROU assets under operating leases on the Company's June 30, 2019 Consolidated Balance Sheet and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make operating lease payments is included in "Lease liabilities" and "Lease liabilities, net of current portion" on the Company's June 30, 2019 Consolidated Balance Sheet. Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use assets of $29.7 million and lease liabilities for operating leases of $33.6 million on January 1, 2019. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term. As of June 30, 2019, total right-of-use assets and operating lease liabilities were $25.5 million and $26.7 million, respectively. All operating lease expense is recognized on a straight-line basis over the lease term. In the three and six months ended June 30, 2019, the Company recorded $3.0 million and $5.8 million of operating lease amortization that was charged to expense, and $1.8 million and $3.6 million, respectively, of operating lease amortization for certain contract manufacturing arrangements that was capitalized to inventory.
Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company has certain contracts for real estate and marketing which may contain lease and non-lease components which it has elected to treat as a single lease component.
Information related to the Company's right-of-use assets and related lease liabilities were as follows:
| (In thousands) | Six Months Ended June 30, 2019 | |||
| Cash paid for operating lease liabilities | $ | 10,660 | ||
| Right-of-use assets obtained in exchange for new operating lease obligations(1) | $ | 31,293 | ||
| Weighted-average remaining lease term (in years) | 2.6 | |||
| Weighted-average discount rate | 18.0 | % | ||
(1) Includes $29.7 million for operating leases existing on January 1, 2019 and $1.6 million for operating leases that commenced during the six months ended June 30, 2019.
Financing Leases
The Company has entered into financing leases primarily for laboratory and computer equipment. Assets purchased under financing leases are included in "Property, plant and equipment, net" on the condensed consolidated balance sheets. For financing leases, the associated assets are depreciated or amortized over the shorter of the relevant useful life of each asset or the lease term. Property, plant and equipment, net includes $5.3 million and $5.0 million of machinery and equipment under financing leases as of June 30, 2019 and December 31, 2018, respectively. Accumulated amortization of assets under financing leases totaled $2.7 million and $2.3 million as of June 30, 2019 and December 31, 2018, respectively.
Maturities of Financing and Operating Leases
Maturities of lease liabilities as of June 30, 2019 were as follows:
| Years ending December 31: (In thousands) | Financing Leases | Operating Leases | Total Leases | |||||||||
| 2019 (remaining six months) | $ | 235 | $ | 8,027 | $ | 8,262 | ||||||
| 2020 | 199 | 9,660 | 9,859 | |||||||||
| 2021 | 1 | 7,227 | 7,228 | |||||||||
| 2022 | – | 7,400 | 7,400 | |||||||||
| 2023 | – | 3,034 | 3,034 | |||||||||
| Thereafter | – | – | – | |||||||||
| Total lease payments | 435 | 35,348 | 35,783 | |||||||||
Less: amount representing interest | (14 | ) | (8,636 | ) | (8,650 | ) | ||||||
| Total lease liability | $ | 421 | $ | 26,712 | $ | 27,133 | ||||||
| Current lease liability | $ | 385 | $ | 9,533 | $ | 9,918 | ||||||
| Noncurrent lease liability | 36 | 17,179 | 17,215 | |||||||||
| Total lease liability | $ | 421 | $ | 26,712 | $ | 27,133 | ||||||
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Other Assets
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Contingent consideration | $ | 4,286 | $ | 4,286 | ||||
| Deposits | 297 | 2,465 | ||||||
| Other | 1,089 | 1,207 | ||||||
| Other assets | $ | 5,672 | $ | 7,958 | ||||
Accrued and Other Current Liabilities
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Accrued interest | $ | 6,876 | $ | 3,853 | ||||
| Payroll and related expenses | 6,164 | 9,220 | ||||||
| Contract termination fees | 4,342 | 6,247 | ||||||
| Asset retirement obligation | 3,232 | 3,063 | ||||||
| Tax-related liabilities | 2,434 | 2,139 | ||||||
| Professional services | 1,302 | 1,173 | ||||||
| Other | 3,763 | 3,284 | ||||||
| Total accrued and other current liabilities | $ | 28,113 | $ | 28,979 | ||||
Other noncurrent liabilities
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Refund liability | $ | 12,500 | $ | – | ||||
| Contract liability, net of current portion (Note 9) | 1,449 | 1,587 | ||||||
| Contract termination fees, net of current portion | 8,678 | 7,715 | ||||||
| Liability for unrecognized tax benefit | 6,582 | 6,582 | ||||||
| Other | 755 | 868 | ||||||
| Deferred rent, net of current portion(1) | – | 6,440 | ||||||
| Total other noncurrent liabilities | $ | 29,964 | $ | 23,192 | ||||
(1) Deferred rent at December 31, 2018 was reclassified to ROU asset upon the adoption on January 1, 2019 of ASC 842, "Leases".
3. Fair Value Measurement
Liabilities Measured and Recorded at Fair Value on a Recurring Basis
The following tables summarize liabilities measured at fair value, and the respective fair value by input classification level within the fair value hierarchy:
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| 6% Convertible Notes Due 2021 | $ | – | $ | – | $ | 72,461 | $ | 72,461 | $ | – | $ | – | $ | 57,918 | $ | 57,918 | ||||||||||||||||
| Freestanding derivative instruments in connection with the issuance of debt and equity instruments | – | – | – | – | – | – | 42,796 | 42,796 | ||||||||||||||||||||||||
| Total liabilities measured and recorded at fair value | $ | – | $ | – | $ | 72,461 | $ | 72,461 | $ | – | $ | – | $ | 100,714 | $ | 100,714 | ||||||||||||||||
There were no transfers between levels during the periods presented.
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6% Convertible Notes Due 2021
The Company issued $60.0 million of 6% Convertible Notes Due 2021 on December 10, 2018 and elected the fair value option of accounting for this instrument. At June 30, 2019, outstanding principal was $58.0 million, and the fair value was $72.5 million, which was measured at the noteholders’ put option price of 125% of outstanding principal. See Note 4, “Debt” for further information related to this debt instrument and the noteholders’ put option. For the six months ended June 30, 2019, the Company recorded a $16.6 million loss from change in fair value of debt in connection with the 6% Convertible Notes Due 2021, as follows:
| In thousands | ||||
| Fair value at December 31, 2018 | $ | 57,918 | ||
| Less: principal paid | (2,031 | ) | ||
| Loss on change in fair value | 16,574 | |||
| Fair value at June 30, 2019 | $ | 72,461 | ||
Derivative Liabilities Recognized in Connection with the Issuance of Debt and Equity Instruments
The following table provides a reconciliation of the beginning and ending balances for the Company's derivative liabilities recognized in connection with the issuance of debt and equity instruments, measured at fair value using significant unobservable inputs (Level 3):
| (In thousands) | Equity-related Derivative Liability | Debt-related Derivative Liability | Total Derivative Liability | |||||||||
| Balance at December 31, 2018 | $ | 41,272 | $ | 1,524 | $ | 42,796 | ||||||
| Derecognition upon adoption of ASU 2017-11 | (39,513 | ) | (1,524 | ) | (41,037 | ) | ||||||
| Change in fair value of derivative liabilities | 2,039 | – | 2,039 | |||||||||
| Derecognition on extinguishment | (3,798 | ) | – | (3,798 | ) | |||||||
| Balance at June 30, 2019 | $ | – | $ | – | $ | – | ||||||
As of June 30, 2019, the derivative liabilities in connection with the November 2018 Securities Purchase Agreement with DSM were settled and extinguished through cash payment.
Assets and Liabilities Recorded at Carrying Value
Financial Assets and Liabilities
The carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities and low market interest rates, if applicable. Loans payable, credit facilities and convertible notes are recorded at carrying value (except for the 6% Convertible Notes Due 2021, which are recorded at fair value), which is representative of fair value at the date of acquisition. For loans payable and credit facilities recorded at carrying value, the Company estimates fair value using observable market-based inputs (Level 2); for convertible notes, the Company estimates fair value based on rates currently offered for instruments with similar maturities and terms (Level 3). The carrying amount (the total amount of net debt presented on the balance sheet) of the Company's debt at June 30, 2019, excluding the 6% Convertible Notes that the Company records at fair value, was $96.3 million. The fair value of such debt at June 30, 2019 was $98.6 million and was determined by (i) discounting expected cash flows using current market discount rates estimated for certain of the debt instruments and (ii) using third-party fair value estimates for the remaining debt instruments.
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4. Debt
Net carrying amounts of debt are as follows:
| June 30, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||
| (In thousands) | Principal | Unamortized Debt (Discount) Premium | Change in Fair Value | Net Balance | Principal | Unamortized Debt (Discount) Premium | Change in Fair Value | Net Balance | ||||||||||||||||||||||||
| Convertible notes payable | ||||||||||||||||||||||||||||||||
| 6% convertible notes due 2021 | $ | 57,969 | $ | – | $ | 14,492 | $ | 72,461 | $ | 60,000 | $ | – | $ | (2,082 | ) | $ | 57,918 | |||||||||||||||
| August 2013 financing convertible note | 4,863 | (90 | ) | – | 4,773 | 4,415 | (70 | ) | – | 4,345 | ||||||||||||||||||||||
| 2015 Rule 144A convertible notes | – | – | – | – | 37,887 | (2,413 | ) | – | 35,474 | |||||||||||||||||||||||
| 2014 Rule 144A convertible notes | – | – | – | – | 24,004 | (867 | ) | – | 23,137 | |||||||||||||||||||||||
| 62,832 | (90 | ) | 14,492 | 77,234 | 126,306 | (3,350 | ) | (2,082 | ) | 120,874 | ||||||||||||||||||||||
| Related party convertible notes payable | ||||||||||||||||||||||||||||||||
| 2014 Rule 144A convertible notes | 9,705 | – | – | 9,705 | 24,705 | (1,038 | ) | – | 23,667 | |||||||||||||||||||||||
| Loans payable and credit facilities | ||||||||||||||||||||||||||||||||
| Ginkgo note | 12,000 | (3,609 | ) | – | 8,391 | 12,000 | (4,047 | ) | – | 7,953 | ||||||||||||||||||||||
| Other loans payable | 5,323 | (973 | ) | – | 4,350 | 4,910 | (1,047 | ) | – | 3,863 | ||||||||||||||||||||||
| GACP secured term loan facility | – | – | – | – | 36,000 | (1,349 | ) | – | 34,651 | |||||||||||||||||||||||
| 17,323 | (4,582 | ) | – | 12,741 | 52,910 | (6,443 | ) | – | 46,467 | |||||||||||||||||||||||
| Related party loans payable | ||||||||||||||||||||||||||||||||
| Foris secured term loan facility | 36,000 | (3,054 | ) | – | 32,946 | – | – | – | – | |||||||||||||||||||||||
| Foris unsecured notes | 16,500 | – | – | 16,500 | – | – | – | – | ||||||||||||||||||||||||
| DSM note | 25,000 | (5,382 | ) | – | 19,618 | 25,000 | (6,311 | ) | – | 18,689 | ||||||||||||||||||||||
| $ | 77,500 | $ | (8,436 | ) | $ | – | 69,064 | $ | 25,000 | $ | (6,311 | ) | $ | – | 18,689 | |||||||||||||||||
| Total debt | $ | 167,360 | $ | (13,108 | ) | $ | 14,492 | 168,744 | $ | 228,921 | $ | (17,142 | ) | $ | (2,082 | ) | 209,697 | |||||||||||||||
| Less: current portion | (107,649 | ) | (147,677 | ) | ||||||||||||||||||||||||||||
| Long-term debt, net of current portion | $ | 61,095 | $ | 62,020 | ||||||||||||||||||||||||||||
The 6% convertible notes due 2021 have been classified as current in the June 30, 2019 and December 31, 2018 balance sheets, due to certain events subsequent to June 30, 2019 but prior to the issuance of the June 30, 2019 and December 31, 2018 financial statements. See Note 12, "Subsequent Events" for additional information.
August 2013 Financing Convertible Note
On January 14, 2019, Wolverine Flagship Fund Trading Limited (Wolverine) agreed to waive payment of the August 2013 Financing Convertible Note held by Wolverine at its January 15, 2019 maturity until July 15, 2019 in exchange for a fee, payable on or prior to July 15, 2019, of $0.6 million. The Company concluded that the term extension represented a debt modification, and the fee was accounted for as additional debt discount to be amortized over the remaining term. Effective July 15, 2019, the due date of the waiver fee was extended to October 13, 2019 and will bear interest at a rate of 1.75% per month, compounded, from July 16, 2019 to the date of payment.
On July 2, 2019, the Company and Wolverine entered into an exchange agreement whereby the parties agreed to extinguish the August 2013 Financing Convertible Note held by Wolverine in exchange for 1,767,632 shares of common stock and a warrant to purchase 1,080,000 shares of common stock. See Note 12, “Subsequent Events” for additional information.
LSA Amendment, Assignment and Waiver
On April 4, 2019, the Company and GACP amended the Loan and Security Agreement, dated June 29, 2018 (the LSA), to (i) effective December 31, 2018, eliminate the conditions giving rise to the early maturity date, so that loans under the GACP Term Loan Facilities would have a maturity date of July 1, 2021, (ii) remove certain Company intellectual property related to the Cannabinoid Agreement from the lien granted by the Company to GACP under the LSA, (iii) eliminate the Company’s ability to obtain the Incremental GACP Term Loan Facility, (iv) eliminate the Company’s reinvestment rights with respect to mandatory prepayments upon asset sales, (v) restrict the Company’s ability to pay interest and principal on other indebtedness without the consent of GACP, and (vi) provide that the Company must have at all times at least $15 million of unrestricted, unencumbered cash subject to a control agreement in favor of GACP.
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On April 4, 2019, the Company and GACP entered into a waiver agreement, pursuant to which GACP agreed to waive breaches of certain covenants under the LSA occurring prior to, as of and after December 31, 2018 through April 8, 2019, including covenants related to quarterly minimum revenues, minimum liquidity amounts and a minimum asset coverage ratio. In connection with such waiver, the Company agreed to pay GACP fees of $0.8 million, which the Company paid in April 2019.
On April 15, 2019, the Company, GACP and Foris Ventures, LLC (Foris, an entity affiliated with director John Doerr of Kleiner Perkins Caufield & Byers, a current stockholder, and an owner of greater than five percent of the Company’s outstanding common stock) entered into a Loan Purchase Agreement, pursuant to which Foris agreed to purchase and assume from GACP, and GACP agreed to sell and assign to Foris, the outstanding loans under the LSA and all documents and assets related thereto. In connection with such purchase and assignment, the Company agreed to repay Foris $2.2 million of the purchase price paid by Foris to GACP, which the Company accounted for as additional debt discount. The closing of the loan purchase and assignment occurred on April 16, 2019. See Note 12, Subsequent Events for more information regarding the LSA.
On August 14, 2019, the Company and Foris entered into an Amendment No 5 and Waiver to the LSA (the LSA Amendment and Waiver), pursuant to which (i) the maturity date of the loans under the LSA was extended from July 1, 2021 to July 1, 2022, (ii) the interest rate for the loans under the LSA was modified from the sum of (A) the greater of (x) the prime rate as reported in the Wall Street Journal or (y) 4.75% plus (B) 9% to the greater of (A) 12% or (B) the rate of interest payable with respect to any indebtedness of the Company, (iii) the amortization of the loans under the LSA was delayed until December 16, 2019, (iv) certain accrued and future interest and agency fee payments under the LSA were delayed until December 16, 2019, (v) certain covenants under the LSA, including related definitions, were amended to provide the Company with greater operational and financial flexibility, including, without limitation, to permit the incurrence of the indebtedness under the Naxyris Loan Facility (as described below) and the granting of liens with respect thereto, subject to the terms of an intercreditor agreement between Foris and Naxyris S.A. (Naxyris) governing the respective rights of the parties with respect to, among other things, the assets securing the Naxyris Loan Agreement and the LSA (the Intercreditor Agreement), (vi) certain outstanding unsecured promissory notes issued by the Company to Foris on April 8, 2019, June 11, 2019, July 10, 2019 and July 26, 2019 (as described below under “Foris Credit Agreements”), in an aggregate principal amount of $32.5 million, as well as the Company LPA Obligation, were added to the loans under the LSA, made subject to the LSA and secured by the security interest in the collateral granted to Foris under the LSA, and such promissory notes and contractual obligation were cancelled in connection therewith, and (vii) Foris agreed to waive certain existing defaults under the LSA. After giving effect to the LSA Amendment and Waiver, there is $71.0 million aggregate principal amount of loans outstanding under the LSA, including with respect to covenants related to quarterly minimum revenues, minimum liquidity amounts and a minimum asset coverage ratio. In connection with the entry into the LSA Amendment and Waiver, on August 14, 2019 the Company issued to Foris a warrant to purchase up to 1,438,829 shares of Common Stock at an exercise price of $2.87 per share, with an exercise term of two years from issuance. Pursuant to the terms of the warrant, Foris may not exercise the Foris Warrant to the extent that, after giving effect to such exercise, Foris, together with its affiliates, would beneficially own in excess of 19.99% of the number of shares of common stock outstanding after giving effect to such exercise, unless the Company has obtained stockholder approval to exceed such limit in accordance with Nasdaq rules and regulations, which the Company intends to seek at its 2019 annual meeting of stockholders.
Foris Credit Agreements
On April 8, 2019, the Company and Foris entered into a credit agreement to make available to the Company an unsecured credit facility in an aggregate principal amount of $8.0 million (the April Foris Credit Agreement), which the Company borrowed in full on April 8, 2019 and issued to Foris a promissory note in the principal amount of $8.0 million (the April Foris Note). The April Foris Note has a maturity date of October 14, 2019, which has no stated interest rate. The Company agreed to pay Foris a fee of $1.0 million, payable on or prior to the maturity date of the April Foris Note (the April Foris Note Fee); provided, that the April Foris Note Fee will be reduced to $0.5 million if the Company repays the April Foris Note in full by July 15, 2019. The Company is accruing the fee over the term of the note. The April Foris Note is subordinated in right of payment to the $4.8 million Tranche II Note held by Wolverine (see Note 4, “Debt” above).
On June 11, 2019, the Company and Foris entered into a credit agreement to make available to the Company an unsecured credit facility in an aggregate principal amount of $8.5 million, which the Company borrowed in full on June 11, 2019 and issued to Foris a promissory note in the principal amount of $8.5 million (the June Foris Note). The June Foris Note (i) accrues interest at a rate of 12.5% per annum from and including June 11, 2019, which interest is payable on the maturity date or the earlier repayment or other satisfaction of the June Foris Note, and (ii) matures on August 28, 2019; provided, that if certain warrants held by DSM N.V. (together with its affiliates, DSM) are exercised, then the maturity date of the June Foris Note will be the business day immediately following such exercise.
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The Company may at its option repay the amounts outstanding under the April Foris Note (including the April Foris Note Fee) and the June Foris Note before their respective maturity dates, in whole or in part, at a price equal to 100% of the amount being repaid plus, in the case of the June Foris Note, accrued and unpaid interest on such amount to the date of repayment.
On August 14, 2019, the April Foris Note, the June Foris Note and the July Foris Notes (see Note 12, Subsequent Events) were added to the loans under the LSA, made subject to the LSA and secured by the security interest in the collateral granted to Foris under the LSA, and such notes were cancelled in connection therewith. See Note 12, Subsequent Events for more information.
2015 and 2014 Rule 144A Convertible Notes
On April 16, 2019, the Company repaid in cash the $37.9 million outstanding balance under the 2015 Rule 144A Convertible Notes.
On May 10, 2019, the Company exchanged $13.5 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by certain non-affiliated investors, including accrued and unpaid interest thereon for an aggregate of 3,479,008 shares of common stock and warrants to purchase an aggregate of 1,391,603 shares of common stock at an exercise price of $5.02 per share, with an exercise term of two years from issuance, in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act of 1933, as amended (the Securities Act). See Note 6. "Stockholders’ Deficit" for more information on this conversion and new warrants.
On May 14, 2019, the Company exchanged $5.0 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by Foris, including accrued and unpaid interest thereon for 1,122,460 shares of common stock and a warrant to purchase up to 352,638 shares of common stock at an exercise price of $4.56 per share, with an exercise term of two years from issuance, in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. See Note 6. "Stockholders’Deficit" for more information on this conversion and new warrant.
On May 15, 2019, the Company exchanged $10.0 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by Maxwell (Mauritius) Pte Ltd for 2,500,000 shares of common stock in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. See Note 6. “Stockholders’ Deficit” for more information on this conversion.
The Company evaluated the May 2019 exchanges described above and concluded that the transactions resulted in debt extinguishment. The Company recorded a $5.9 million loss on extinguishment of the 2014 144A Convertible Notes in the three months ended June 30, 2019. The loss represented the difference between the $30.8 million fair value of common shares issued upon conversion, $3.8 million fair value of warrants issued and $0.4 million of fees incurred, less the $29.1 million carrying value of the debt that was extinguished. The 7.1 million common shares issued upon conversion were valued at the Company's closing stock price at the date of each exchange. The fair value of the warrants was measured using the Black-Scholes option pricing model, with the following parameters: stock price $4.27 - $4.54; strike price $4.56 - $5.02; volatility 95.8%; risk-free interest rate 2.20% - 2.26%; and expected dividend yield 0%.
On May 15, 2019, the Company exchanged $9.7 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by Total Raffinage Chimie (Total) for a new senior convertible note with an equal principal amount and with substantially identical terms, except that the new note had a maturity date of June 14, 2019, in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. Effective June 14, 2019, the Company and Total agreed to extend the maturity date of the new note from June 14, 2019 to July 18, 2019. The Company accounted for this exchange as a debt modification; however, no additional fees were paid, and the modification had no impact on interest expense in the three months ended June 30, 2019. Effective July 18, 2019, the Company and Total agreed to (i) further extend the maturity date of the new note from July 18, 2019 to August 28, 2019 and (ii) increase the interest rate on the new note to 10.5% per annum, beginning July 18, 2019. Effective August 28, 2019, the Company and Total agreed to (i) further extend the maturity date of the new note from August 28, 2019 to October 28, 2019 and (ii) increase the interest rate on the new note to 12% per annum, beginning August 28, 2019.
6% Convertible Notes Due 2021 Exchanges
On May 15, 2019 and June 24, 2019, the Company exchanged $53.3 million and $4.7 million principal amount, respectively, of the 6% Convertible Notes due 2021, including accrued and unpaid interest thereon, representing all then-outstanding 6% Convertible Notes due 2021, for new senior convertible notes with an equal principal amount and warrants to purchase up to 2,000,000 and 181,818 shares of common stock, respectively, at an exercise price of $5.12 per share, with an exercise term of two years from issuance, in private exchanges pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. The new notes have substantially identical terms as the 6% Convertible Notes due 2021 being exchanged, except that (i) the holders agreed to waive, until July 22, 2019, certain covenants relating to the effectiveness of the registration statement covering the shares of common stock issuable upon conversion of, or otherwise pursuant to, the new notes and the filing by the Company of reports with the SEC and (ii) during the period from July 22, 2019 to July 29, 2019, inclusive, the holders have the right to require the Company to redeem the new notes, in whole or in part, at a price equal to 125% of the principal amount being redeemed. The Company considered the issuance of the warrant as compensation to the noteholders for waiving certain covenant violations during the period, and recorded a $4.4 million charge to interest expense for the fair value of the warrants. The fair value of the warrants was determined using a Black-Scholes model with the following inputs: 94% - 96% volatility, 1.72% - 2.16% risk-free interest rate, 2-year term, $3.55 - $4.39 issuance-date stock price, and 0% expected dividend yield.
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The Company has elected the fair value accounting option for the 6% Convertible Notes due 2021 and has recorded the fair value of the put option as an adjustment to the carrying value of the 6% Convertible Notes due 2021. The exercise price of the warrants is subject to standard adjustments but does not contain any anti-dilution protection, and the warrants only permit “cashless” or “net” exercise after the six-month anniversary of issuance, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the applicable warrant. In addition, the holders may not exercise the warrants, and the Company may not affect any exercise of the warrants, to the extent that, after giving effect to such exercise, the applicable holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding after giving effect to such exercise. See Note 12, "Subsequent Events" for more information regarding the 6% Convertible Notes due 2021.
Future Minimum Payments
Future minimum payments under the Company's debt agreements as of June 30, 2019 are as follows:
| (In thousands) | Convertible Notes | Loans Payable and Credit Facilities | Related Party Convertible Notes | Related Party Loans Payable and Credit Facilities | Total | |||||||||||||||
| 2019 (remaining six months) | $ | 81,006 | $ | 3,748 | $ | 9,815 | $ | 24,674 | $ | 119,243 | ||||||||||
| 2020 | 3,926 | 1,759 | — | 10,854 | 16,539 | |||||||||||||||
| 2021 | 2,318 | 1,662 | — | 61,260 | 65,240 | |||||||||||||||
| 2022 | — | 13,451 | — | — | 13,451 | |||||||||||||||
| 2023 | — | 399 | — | — | 399 | |||||||||||||||
| Thereafter | — | 2,268 | — | — | 2,268 | |||||||||||||||
| Total future minimum payments | 87,250 | 23,287 | 9,815 | 96,788 | 217,140 | |||||||||||||||
| Less: amount representing interest | (9,680 | ) | (5,964 | ) | (110 | ) | (19,288 | ) | (35,042 | ) | ||||||||||
| Less: future conversion of accrued interest to principal | (246 | ) | — | — | — | (246 | ) | |||||||||||||
| Present value of minimum debt payments | 77,324 | 17,323 | 9,705 | 77,500 | 181,852 | |||||||||||||||
| Less: current portion of debt principal and fair value adjustment | (77,324 | ) | (2,392 | ) | (9,705 | ) | (20,100 | ) | (109,521 | ) | ||||||||||
| Noncurrent portion of debt principal | $ | — | $ | 14,931 | $ | — | $ | 57,400 | $ | 72,331 | ||||||||||
5. Mezzanine Equity
Mezzanine equity at June 30, 2019 and December 31, 2018 is comprised of proceeds from shares of common stock sold on May 10, 2016 to the Bill & Melinda Gates Foundation (Gates Foundation). In connection with the stock sale, the Company and the Gates Foundation entered into an agreement under which the Company agreed to expend an aggregate amount not less than the proceeds from the stock sale to develop a yeast strain that produces artemisinic acid and/or amorphadiene at a low cost and to supply such artemisinic acid and amorphadiene to companies qualified to convert artemisinic acid and amorphadiene to artemisinin for inclusion in artemisinin combination therapies used to treat malaria. If the Company defaults in its obligation to use the proceeds from the stock sale as set forth above or defaults under certain other commitments in the agreement, the Gates Foundation will have the right to request that the Company redeem, or facilitate the purchase by a third party, the shares then held by the Gates Foundation at a price per share equal to the greater of (i) the closing price of the Company’s common stock on the trading day prior to the redemption or purchase, as applicable, or (ii) an amount equal to $17.10 plus a compounded annual return of 10%.
As of June 30, 2019, the Company's remaining research and development obligation under this arrangement was $0.5 million.
6. Stockholders' Deficit
Private Placements
On April 16, 2019, the Company sold and issued to Foris 6,732,369 shares of common stock at a price of $2.87 per share, for aggregate proceeds to the Company of $20.0 million (the Foris Investment), as well as a warrant to purchase up to 5,424,804 shares of common stock at an exercise price of $2.87 per share, with an exercise term of two years from issuance, in a private placement pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act, for aggregate cash proceeds to the Company of $20.0 million (the Foris Investment). The Company evaluated the warrants for derivative liability treatment and concluded that the instruments met the indexation criteria to be accounted for in equity.
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On April 26, 2019, the Company sold and issued (i) 2,832,440 shares of common stock at a price of $5.12 per share, as well as a warrant to purchase up to 3,983,230 shares of common stock at an exercise price of $5.12 per share, with an exercise term of two years from issuance, to Foris and (ii) an aggregate of 2,043,781 shares of common stock at a price of $4.02 per share, as well as warrants to purchase up to an aggregate of 1,635,025 shares of common stock at an exercise price of $5.02 per share, with an exercise term of two years from issuance, to certain other non-affiliated investors, in each case in private placements pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act, for aggregate cash proceeds to the Company of $15.0 million from Foris and and $8.2 million from non-affiliated investors, for a total of $23.2 million. The Company evaluated the warrants for derivative liability treatment and concluded that the instruments met the indexation criteria to be accounted for in equity.
On April 29, 2019, the Company sold and issued (i) 913,529 shares of common stock at a price of $4.76 per share, as well as warrants to purchase up to an aggregate of 1,212,787 shares of common stock at an exercise price of $4.76 per share, with an exercise term of two years from issuance, to affiliates of Vivo Capital LLC (Vivo, an entity affiliated with director Frank Kung and which owns greater than five percent of our outstanding common stock and has the right to designate one member of the Company’s Board of Directors) and (ii) an aggregate of 323,382 shares of common stock at a price of $4.02 per share, as well as warrants to purchase up to an aggregate of 258,704 shares of common stock at an exercise price of $5.02 per share, with an exercise term of two years from issuance, to certain other non-affiliated investors, in each case in private placements pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act, for aggregate cash proceeds to the Company of $4.5 million from Vivo and $1.3 million from non-affiliated investors, for a total of $5.8 million. The Company evaluated the warrants for derivative liability treatment and concluded that the instruments met the indexation criteria to be accounted for in equity.
On May 3, 2019, the Company sold and issued 1,243,781 shares of common stock at a price of $4.02 per share, as well as a warrant to purchase up to 995,024 shares of common stock at an exercise price of $5.02 per share, with an exercise term of two years from issuance, to a non-affiliated investor in a private placement pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act, for aggregate cash proceeds to the Company of $5 million. The Company evaluated the warrants for derivative liability treatment and concluded that the instruments met the indexation criteria to be accounted for in equity.
The exercise price of the warrants issued in the foregoing private placements is subject to standard adjustments but does not contain any anti-dilution protection, and the warrants only permit “cashless” or “net” exercise after the six-month anniversary of issuance of the applicable warrant, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the applicable warrant. In addition, in connection with the foregoing private placements, the Company agreed not to effect any exercise or conversion of any Company security, and the investors agreed not to exercise or convert any portion of any Company security, to the extent that after giving effect to such exercise or conversion, the applicable investor, together with its affiliates, would beneficially own in excess of 19.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise or conversion, and the warrant contained a similar limitation. The Company intends to seek stockholder approval for Foris to exceed such limitation in accordance with Nasdaq rules and regulations at its 2019 annual meeting of stockholders.
2014 Rule 144A Convertible Notes Exchanges
On May 10, 2019, the Company exchanged $13.5 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by certain non-affiliated investors, including accrued and unpaid interest thereon for an aggregate of 3,479,008 shares of common stock and warrants to purchase an aggregate of 1,391,603 shares of common stock at an exercise price of $5.02 per share, with an exercise term of two years from issuance, in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. See Note 4, "Debt" for information about the accounting treatment for this debt exchange and related equity issuance.
On May 14, 2019, the Company exchanged $5.0 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by Foris, including accrued and unpaid interest thereon up to, but excluding, May 15, 2019, for 1,122,460 shares of common stock and a warrant to purchase up to 352,638 shares of common stock at an exercise price of $4.56 per share, with an exercise term of two years from issuance, in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. See Note 4, "Debt" for information about the accounting treatment for this debt exchange and related equity issuance.
On May 15, 2019, the Company exchanged $10.0 million aggregate principal amount of the 2014 Rule 144A Convertible Notes held by Maxwell (Mauritius) Pte Ltd for 2,500,000 shares of common stock in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. See Note 4, "Debt" for information about the accounting treatment for this debt exchange and related equity issuance.
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The exercise price of the warrants issued in the foregoing exchanges is subject to standard adjustments but does not contain any anti-dilution protection, and the warrants only permit “cashless” or “net” exercise after the six-month anniversary of the exercisability of the applicable warrant, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the applicable warrant. In addition, (i) the exercisability of the warrant issued to Foris is subject to stockholder approval in accordance with Nasdaq rules and regulations, which the Company intends to seek at its 2019 annual meeting of stockholders, and (ii) each other warrant provides that the Company may not effect any exercise of such warrant to the extent that, after giving effect to such exercise, the applicable holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding after giving effect to such exercise.
Warrants
In connection with various debt and equity transactions (see Note 5, "Debt" and Note 7, “Stockholders’ Deficit” in Part II, Item 8 of the 2018 Form 10-K/A), the Company has issued warrants exercisable for shares of common stock. The following table summarizes warrants activity for the three and six months ended June 30, 2019:
| Transaction | Number Outstanding as of December 31, 2018 | Additional Warrants Issued | Exercises | Number Outstanding as of March 31, 2019 | Additional Warrants Issued | Exercises | Number Outstanding as of June 30, 2019 | |||||||||||||||||||||
| August 2018 warrant exercise agreements | 12,097,164 | – | – | 12,097,164 | – | – | 12,097,164 | |||||||||||||||||||||
| May 2017 cash and dilution warrants | 6,292,798 | – | – | 6,292,798 | 4,795,924 | (1,924,673 | ) | 9,164,049 | ||||||||||||||||||||
| April 2019 PIPE warrants | – | – | – | – | 8,084,770 | – | 8,084,770 | |||||||||||||||||||||
| August 2017 cash and dilution warrants | 3,968,116 | – | – | 3,968,116 | 3,028,983 | – | 6,997,099 | |||||||||||||||||||||
| April 2019 Foris warrant | – | – | – | – | 5,424,804 | – | 5,424,804 | |||||||||||||||||||||
| April 2018 warrant exercise agreements | 3,616,174 | – | – | 3,616,174 | – | – | 3,616,174 | |||||||||||||||||||||
| May-June 2019 6% Note Exchange Warrants | – | – | – | – | 2,181,818 | – | 2,181,818 | |||||||||||||||||||||
| May 2019 6.50% Note Exchange Warrants | – | – | – | – | 1,744,241 | – | 1,744,241 | |||||||||||||||||||||
| July 2015 related party debt exchange | 663,228 | – | (471,204 | ) | 192,024 | 245,558 | (245,558 | ) | 192,024 | |||||||||||||||||||
| February 2016 related party private placement | 171,429 | – | – | 171,429 | – | – | 171,429 | |||||||||||||||||||||
| July 2015 private placement | 81,197 | – | (8,547 | ) | 72,650 | – | – | 72,650 | ||||||||||||||||||||
| Other | 1,406 | – | – | 1,406 | – | – | 1,406 | |||||||||||||||||||||
| 26,891,512 | – | (479,751 | ) | 26,411,761 | 25,506,098 | (2,170,231 | ) | 49,747,628 | ||||||||||||||||||||
Due to certain down-round adjustments to other equity-related instruments during the three months ended June 30, 2019, approximately 8.1 million shares became available under the May 2017 and August 2017 cash and dilution warrants and the Temasek funding warrant. Approximately 2.2 million shares were exercised under the dilution warrants, which resulted in zero proceeds to the Company. A portion of the warrant exercises was net share settled, and a total of 2,064,606 and 2,515,174 shares were issued upon exercise during the three and six months ended June 30, 2019.
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7. Loss Per Share
For the three and six months ended June 30, 2019 and June 30, 2018, basic loss per share was the same as diluted loss per share, because the inclusion of all potentially dilutive securities outstanding was antidilutive.
The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The two-class method also requires losses for the period to be allocated between common stock and participating securities based on their respective rights if the participating security contractually participates in losses. The Company’s convertible preferred stock are participating securities as they contractually entitle the holders of such shares to participate in dividends and contractually require the holders of such shares to participate in the Company’s losses.
The following table presents the calculation of basic and diluted loss per share:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except shares and per share amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Numerator: | ||||||||||||||||
| Net loss attributable to Amyris, Inc. | $ | (38,088 | ) | $ | (14,382 | ) | $ | (104,331 | ) | $ | (107,184 | ) | ||||
| Less: deemed dividend related to proceeds discount and issuance costs upon conversion of Series D | (34,964 | ) | — | (34,964 | ) | — | ||||||||||
| Add: losses allocated to participating securities | 2,255 | 970 | 4,690 | 7,932 | ||||||||||||
| Net loss attributable to Amyris, Inc. common stockholders | $ | (70,797 | ) | $ | (13,412 | ) | $ | (134,605 | ) | $ | (99,252 | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted | 92,785,752 | 54,932,411 | 84,831,269 | 53,076,975 | ||||||||||||
| Loss per share attributable to common stockholders, basic and diluted | $ | (0.76 | ) | $ | (0.24 | ) | $ | (1.59 | ) | $ | (1.87 | ) | ||||
The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted loss per share of common stock because including them would have been antidilutive:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Period-end stock options to purchase common stock | 5,535,538 | 5,424,330 | 5,535,538 | 5,424,330 | ||||||||||||
| Convertible promissory notes(1) | 11,007,316 | 8,390,819 | 11,007,316 | 8,390,819 | ||||||||||||
| Period-end common stock warrants | 49,747,628 | 24,341,772 | 49,747,628 | 24,341,772 | ||||||||||||
| Period-end restricted stock units | 5,284,742 | 5,211,584 | 5,284,742 | 5,211,584 | ||||||||||||
| Period-end preferred stock | 2,955,732 | 4,053,905 | 2,955,732 | 4,053,905 | ||||||||||||
| Total potentially dilutive securities excluded from computation of diluted loss per share | 74,530,956 | 47,422,410 | 74,530,956 | 47,422,410 | ||||||||||||
______________
| (1) | The potentially dilutive effect of convertible promissory notes was computed based on conversion ratios in effect as of the respective period end dates. A portion of the convertible promissory notes issued carries a provision for a reduction in conversion price under certain circumstances, which could potentially increase the dilutive shares outstanding. Another portion of the convertible promissory notes issued carries a provision for an increase in the conversion rate under certain circumstances, which could also potentially increase the dilutive shares outstanding. |
8. Commitments and Contingencies
Contingencies
The Company has levied indirect taxes on sugarcane-based biodiesel sales that took place several years ago by Amyris Brasil Ltda. (see Note 13, “Divestiture” in Part II, Item 8 of the 2018 Form 10-K/A) to customers in Brazil, based on advice from external legal counsel. In the absence of definitive rulings from the Brazilian tax authorities on the appropriate indirect tax rate to be applied to such product sales, the actual indirect rate to be applied to such sales could differ from the rate the Company levied.
On April 3, 2019, a securities class action complaint was filed against Amyris and our CEO, John G. Melo, and former CFO (and current Chief Business Officer), Kathleen Valiasek, in the U.S. District Court for the Northern District of California. The complaint seeks unspecified damages on behalf of a purported class that would comprise all persons and entities that purchased or otherwise acquired our securities between March 15, 2018 and March 19, 2019. The complaint alleges securities law violations based on statements and omissions made by the Company during such period. Subsequent to the filing of the securities class action complaint described above, on June 21, 2019 and October 1, 2019, respectively, two separate purported shareholder derivative complaints were filed in the U.S. District Court for the Northern District of California (Bonner v. Doerr, et al., Case No. 4:19-cv-03621 and Carlson v. Doerr, et al., Case No. 4:19-cv-06230) based on similar allegations to those made in the securities class action complaint described above. The derivative complaints name Amyris, Inc. as a nominal defendant and name a number of the Company’s current and former officers and directors as additional defendants. The lawsuits seek to recover, on the Company's behalf, unspecified damages purportedly sustained by the Company in connection with allegedly misleading statements and omissions made in connection with the Company’s securities filings. The derivative complaints also seek a series of changes to the Company’s corporate governance policies, restitution to the Company from the individual defendants, and an award of attorneys’ fees. These cases are in the initial pleadings stage. We believe the complaints lack merit, and intend to defend ourselves vigorously. Given the early stage of these proceedings, it is not yet possible to reliably determine any potential liability that could result from these matters.
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The Company is subject to disputes and claims that arise or have arisen in the ordinary course of business and that have not resulted in legal proceedings or have not been fully adjudicated. Such matters that may arise in the ordinary course of business are subject to many uncertainties and outcomes are not predictable with reasonable assurance and therefore an estimate of all the reasonably possible losses cannot be determined at this time. Therefore, if one or more of these legal disputes or claims resulted in settlements or legal proceedings that were resolved against the Company for amounts in excess of management's expectations, the Company's consolidated financial statements for the relevant reporting period could be materially adversely affected.
Other Matters
Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company but will only be recorded when one or more future events occur or fail to occur. The Company's management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgement. In assessing loss contingencies related to legal proceedings that are pending against and by the Company or unasserted claims that may result in such proceedings, the Company's management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
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9. Revenue Recognition and Contract Assets and Liabilities
Disaggregation of Revenue
The following table presents revenue by major product and service, as well as by primary geographical market, based on the location of the customer:
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
| (In thousands) | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | |||||||||||||||||||||||||
| United States | $ | 5,806 | $ | – | $ | 6,408 | $ | 12,214 | $ | 2,339 | $ | – | $ | 4,624 | $ | 6,963 | ||||||||||||||||
| Europe | 2,102 | 40,964 | 3,197 | 46,263 | 2,987 | (513 | ) | 4,315 | 6,789 | |||||||||||||||||||||||
| Asia | 3,899 | – | – | 3,899 | 1,113 | – | – | 1,113 | ||||||||||||||||||||||||
| South America | 295 | – | 5 | 300 | 194 | – | – | 194 | ||||||||||||||||||||||||
| Other | 18 | – | – | 18 | – | – | – | – | ||||||||||||||||||||||||
| $ | 12,120 | $ | 40,964 | $ | 9,610 | $ | 62,694 | $ | 6,633 | $ | (513 | ) | $ | 8,939 | $ | 15,059 | ||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
| (In thousands) | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | |||||||||||||||||||||||||
| United States | $ | 12,879 | $ | – | $ | 6,901 | $ | 19,780 | $ | 4,301 | $ | – | $ | 5,832 | $ | 10,133 | ||||||||||||||||
| Europe | 4,956 | 41,082 | 4,826 | 50,864 | 5,421 | 7,442 | 7,816 | 20,679 | ||||||||||||||||||||||||
| Asia | 5,617 | – | 250 | 5,867 | 1,791 | – | – | 1,791 | ||||||||||||||||||||||||
| South America | 515 | – | 5 | 520 | 215 | – | – | 215 | ||||||||||||||||||||||||
| Other | 37 | – | – | 37 | 100 | – | – | 100 | ||||||||||||||||||||||||
| $ | 24,004 | $ | 41,082 | $ | 11,982 | $ | 77,068 | $ | 11,828 | $ | 7,442 | $ | 13,648 | $ | 32,918 | |||||||||||||||||
Significant Revenue Agreements During the Six Months Ended June 30, 2019
Cannabinoid Agreement
On May 2, 2019, the Company consummated a $300 million research, collaboration and license agreement (the Cannabinoid Agreement) with LAVVAN, Inc., a newly formed investment-backed company (Lavvan), for the development, manufacture and commercialization of cannabinoids, subject to certain closing conditions. Under the agreement, the Company would perform research and development activities and Lavvan would be responsible for the commercialization of the cannabinoids developed under the agreement. The Cannabinoid Agreement is being principally funded on a milestone basis, with the Company also entitled to receive certain supplementary research and development funding from Lavvan. The Company could receive aggregate funding of up to $300 million over the term of the Cannabinoid Agreement if all of the milestones are achieved. Additionally, the agreement provides for profit share to the Company on Lavvan's gross profit margin once products are commercialized; these payments will be due for the next 20 years. On May 2, 2019, the parties consummated the transactions contemplated by the Cannabinoid Agreement, including the formation of a special purpose entity to hold certain intellectual property created during the collaboration (the Cannabinoid Collaboration IP), the licensing of certain Company intellectual property to Lavvan, the licensing of the Cannabinoid Collaboration IP to the Company and Lavvan, and the granting by the Company to Lavvan of a lien on the Company background intellectual property being licensed to Lavvan under the Cannabinoid Agreement, which lien would be subordinated to the lien on such intellectual property under the LSA (see Note 5, “Debt” in Part II, Item 8 of the 2018 Form 10-K/A).
The Cannabinoid Agreement is accounted for as a revenue contract under ASC 606, with the total transaction price estimated and updated on a quarterly basis, subject to the variable consideration constraint guidance in ASC 606 using the most likely outcome method to estimate the variable consideration associated with the identified performance obligations, which the Company concluded to be research and development services. The Company initially estimated the total unconstrained transaction price to be $85 million, based on a high probability of achieving certain underlying milestones. The Company constrained $215 million of variable consideration related to milestones which were not probable of being achieved as of June 30, 2019. The Company determined the performance obligation is delivered over time and that revenue recognition is based on an input measure of progress of hours incurred compared to total estimated hours to be incurred (i.e., proportional performance). Estimates of variable consideration are updated quarterly, with cumulative adjustments to revenue recorded as necessary. The Company received a $10.0 million milestone payment during the second quarter of 2018 and recognized $3.5 million of collaboration revenue under the Cannabinoid Agreement for the three and six months ended June 30, 2019 and recorded a $6.5 million contract liability as of June 30, 2019, related to the partially unsatisfied performance obligation.
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DSM Agreements
On April 16, 2019, the Company assigned to DSM, and DSM assumed, all of the Company’s rights and obligations under the December 2017 DSM Value Sharing Agreement, as amended, for aggregate consideration to the Company of $57.0 million, which included $7.4 million of the third and final annual royalty payment due under the original agreement received on March 29, 2019 (see Note 10, "Revenue Recognition" in Part II, Item 8 of the 2018 Form 10-K/A). On April 16, 2019, the Company received net cash of $21.7 million, with the remaining $27.9 million used by the Company to offset past due trade payables (including interest) under the 2017 Supply Agreement, obligation under the November 2018 Securities Purchase Agreement, and manufacturing capacity fees under the provisions of Amendment No. 1 to the 2017 Supply Agreement (see Note 11, "Related Party Transactions" in Part II, Item 8 of the 2018 Form 10-K/A). The original Value Sharing Agreement was accounted for as a single performance obligation in connection with a license with fixed and determinable consideration and variable consideration that was accounted for pursuant to the sales-based royalty scope exception. The April 16, 2019 assignment of the Value Sharing Agreement was accounted for as a contract modification under ASC 606, that resulted in additional fixed and determinable consideration of $37.1 million and variable consideration of $12.5 million. The effect of the contract modification on the transaction price, and on the Company’s measure of progress toward complete satisfaction of the performance obligation, was recognized as an adjustment to revenue at the date of the contract modification on a cumulative catch-up basis. As a result, the Company recognized $37.1 million of licenses and royalties revenue in the three and six months ended June 30, 2019, due to fully satisfying the performance obligation. The $12.5 million of prepaid variable consideration is recorded as a refund liability in other noncurrent liabilities, to be reduced as subsequent sales of products occur under the original license. The Company also recognized $3.6 million of previously deferred revenue under the December 2017 DSM Value Sharing Agreement, as the remaining underlying performance obligation was fully satisfied through the April 16, 2019 assignment of the Value Sharing Agreement to DSM.
In addition, on April 16, 2019 the Company and DSM entered into amendments to the 2017 Supply Agreement and the 2017 Performance Agreement, as well as the Quota Purchase Agreement relating to the December 2017 sale of Amyris Brasil to DSM (see Note 10, “Revenue Recognition” and Note 13, “Divestiture” in Part II, Item 8 of the 2018 Form 10-K/A), pursuant to which (i) DSM agreed to reduce certain manufacturing costs and fees paid by the Company related to the production of farnesene under the Supply Agreement through 2021, as well as remove the priority of certain customers over the Company with respect to production capacity at the Brotas, Brazil facility, (ii) the Company agreed to provide DSM rights to conduct certain process and downstream recovery improvements under the Performance Agreement at facilities other than the Brotas, Brazil facility in exchange for DSM providing the Company with a license to such improvements and (iii) the Company released DSM from its obligation to provide manufacturing and support services under the Quota Purchase Agreement in connection with the Company’s planned new manufacturing facility, which is no longer to be located at the Brotas, Brazil location.
In connection with the significant revenue agreements discussed above and others previously disclosed (see Note 10, “Revenue Recognition” in Part II, Item 8 of the 2018 Form 10-K/A), the Company recognized the following revenues for the three and six months ended June 30, 2019 and 2018:
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
| (In thousands) | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | |||||||||||||||||||||||||
| DSM - related party | $ | – | $ | 40,682 | $ | 2,646 | $ | 43,328 | $ | – | $ | (513 | ) | $ | 1,737 | $ | 1,224 | |||||||||||||||
| Givaudan | 1,240 | – | – | 1,240 | 2,109 | – | 1,358 | 3,467 | ||||||||||||||||||||||||
| Firmenich | – | 282 | 277 | 559 | – | – | 1,219 | 1,219 | ||||||||||||||||||||||||
| DARPA | – | – | 2,721 | 2,721 | – | – | 4,191 | 4,191 | ||||||||||||||||||||||||
| Subtotal revenue from significant revenue agreements | 1,240 | 40,964 | 5,644 | 47,848 | 2,109 | (513 | ) | 8,505 | 10,101 | |||||||||||||||||||||||
| Revenue from all other customers | 10,880 | – | 3,966 | 14,846 | 4,524 | – | 434 | 4,958 | ||||||||||||||||||||||||
| Total revenue from all customers | $ | 12,120 | $ | 40,964 | $ | 9,610 | $ | 62,694 | $ | 6,633 | $ | (513 | ) | $ | 8,939 | $ | 15,059 | |||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
| (In thousands) | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | Renewable Products | Licenses and Royalties | Grants and Collaborations | Total | |||||||||||||||||||||||||
| DSM - related party | $ | 2 | $ | 40,302 | $ | 3,042 | $ | 43,346 | $ | – | $ | 7,405 | $ | 2,470 | $ | 9,875 | ||||||||||||||||
| Givaudan | 2,815 | – | – | 2,815 | 3,184 | – | 2,859 | 6,043 | ||||||||||||||||||||||||
| Firmenich | 1,891 | 780 | 1,005 | 3,676 | 207 | 37 | 2,486 | 2,730 | ||||||||||||||||||||||||
| DARPA | – | – | 2,909 | 2,909 | – | – | 5,038 | 5,038 | ||||||||||||||||||||||||
| Subtotal revenue from significant revenue agreements | 4,708 | 41,082 | 6,956 | 52,746 | 3,391 | 7,442 | 12,853 | 23,686 | ||||||||||||||||||||||||
| Revenue from all other customers | 19,296 | – | 5,026 | 24,322 | 8,437 | – | 795 | 9,232 | ||||||||||||||||||||||||
| Total revenue from all customers | $ | 24,004 | $ | 41,082 | $ | 11,982 | $ | 77,068 | $ | 11,828 | $ | 7,442 | $ | 13,648 | $ | 32,918 | ||||||||||||||||
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Contract Assets and Liabilities
When a contract results in revenue being recognized in excess of the amount the Company has invoiced or has the right to invoice to the customer, a contract asset is recognized. Contract assets are transferred to accounts receivable, net when the rights to the consideration become unconditional.
Contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services such that control has not passed to the customer.
Trade receivables related to revenue from contracts with customers are included in accounts receivable on the condensed consolidated balance sheets, net of the allowance for doubtful accounts. Trade accounts receivable are recorded at the point of renewable product sale or in accordance with the contractual payment terms for licenses and royalties, and grants and collaborative research and development services for the amount payable by the customer to the Company for sale of goods or the performance of services.
Contract Balances
The following table provides information about accounts receivable, contract liabilities and refund liability from contracts with customers:
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Accounts receivable, net | $ | 15,805 | $ | 16,003 | ||||
| Accounts receivable - related party, net | $ | 3,696 | $ | 1,349 | ||||
| Accounts receivable, unbilled - related party | $ | – | $ | 8,021 | ||||
| Accounts receivable, unbilled, noncurrent - related party | $ | 1,203 | $ | 1,203 | ||||
| Contract liabilities, current | $ | 12,737 | $ | 8,236 | ||||
| Contract liabilities, noncurrent(1) | $ | 1,449 | $ | 1,587 | ||||
| Refund liability | $ | 12,500 | $ | – | ||||
(1) As of June 30, 2019 and December 31, 2018, contract liabilities, noncurrent is presented in Other noncurrent liabilities in the condensed consolidated balance sheets.
Unbilled receivables, noncurrent at both balance sheet dates relate to the Company’s right to consideration from DSM for performance fees. The Company’s right to cash receipt for these minimum royalty amounts occurs on or before December 31, 2019. From December 31, 2018 to June 30, 2019, the combination of current and noncurrent unbilled receivables decreased by $2.1 million as the result of invoices issued to DSM during the period. An $8.0 unbilled accounts receivable was originally due on December 31, 2019 but was paid early by DSM. The $0.6 million difference between the original amount due and the $7.4 million cash payment was recorded as a $0.4 million reduction of value share revenue during the quarter and a $0.2 million charge to interest expense.
Remaining Performance Obligations
The following table provides information regarding the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) based on the Company's existing agreements with customers as of June 30, 2019.
| (In thousands) | As of June 30, 2019 | |||
| Remaining 2019 | $ | 17,680 | ||
| 2020 | 38,508 | |||
| 2021 | 31,172 | |||
| 2022 and thereafter | – | |||
| Total from all customers | $ | 87,360 | ||
In accordance with the disclosure provisions of ASC 606, the table above excludes estimated future revenues for performance obligations that are part of a contract that has an original expected duration of one year or less or a performance obligation with variable consideration that is recognized using the sales-based royalty exception for licenses of intellectual property. Additionally, approximately $232.6 million of estimated future revenue is excluded from the table above, as that amount represents constrained variable consideration.
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10. Related Party Transactions
Related Party Debt
See Note 4, "Debt" above for related party debt as of June 30, 2019 and December 31, 2018.
Related Party Accounts Receivable and Unbilled Receivables
Related party accounts receivable and unbilled receivables as of June 30, 2019 and December 31, 2018 were as follows:
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Accounts receivable: | ||||||||
| DSM | $ | 3,696 | $ | 1,071 | ||||
| Novvi | – | 188 | ||||||
| Total | – | 90 | ||||||
| $ | 3,696 | $ | 1,349 | |||||
| Accounts receivable, unbilled, current: | ||||||||
| DSM | $ | – | $ | 8,021 | ||||
| Accounts receivable, unbilled, noncurrent: | ||||||||
| DSM | $ | 1,203 | $ | 1,203 | ||||
Related Party Joint Ventures
The Company holds a 50% interest in the Aprinnova joint venture for business-to-business sales of cosmetic ingredients. This joint venture is consolidated in the accompanying condensed consolidated financial statements.
11. Stock-based Compensation
The Company’s stock option activity and related information for the six months ended June 30, 2019 was as follows:
| Quantity of Stock Options | Weighted- average Exercise Price | Weighted-average Remaining Contractual Life, in Years | Aggregate Intrinsic Value, in Thousands | |||||||||||||
| Outstanding - December 31, 2018 | 5,390,270 | $ | 11.55 | 8.5 | $ | 29 | ||||||||||
| Granted | 270,633 | $ | 3.67 | |||||||||||||
| Exercised | (3,612 | ) | $ | 3.68 | ||||||||||||
| Forfeited or expired | (121,753 | ) | $ | 10.39 | ||||||||||||
| Outstanding - June 30, 2019 | 5,535,538 | $ | 11.19 | 8.2 | $ | 141 | ||||||||||
| Vested or expected to vest after June 30, 2019 | 4,953,402 | $ | 11.91 | 8.1 | $ | 132 | ||||||||||
| Exercisable at June 30, 2019 | 1,202,809 | $ | 32.99 | 6.0 | $ | 29 | ||||||||||
The Company’s restricted stock units (RSUs) activity and related information for the six months ended June 30, 2019 was as follows:
| Quantity of Restricted Stock Units | Weighted- average Grant- date Fair Value | Weighted- average Remaining Contractual Life, in Years | ||||||||||
| Outstanding - December 31, 2018 | 5,294,803 | $ | 5.50 | 1.7 | ||||||||
| Awarded | 1,148,866 | $ | 3.73 | |||||||||
| RSUs released | (868,975 | ) | $ | 5.76 | ||||||||
| RSUs forfeited | (289,952 | ) | $ | 5.62 | ||||||||
| Outstanding - June 30, 2019 | 5,284,742 | $ | 5.06 | 1.6 | ||||||||
| Vested or expected to vest after June 30, 2019 | 4,913,990 | $ | 5.07 | 1.5 | ||||||||
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Stock-based compensation expense related to employee and non-employee options, RSUs and ESPP during the three and six months ended June 30, 2019 and 2018 was allocated to research and development expense and sales, general and administrative expense as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Research and development | $ | 676 | $ | 333 | $ | 1,339 | $ | 696 | ||||||||
| Sales, general and administrative | 2,699 | 1,567 | 5,488 | 2,482 | ||||||||||||
| Total stock-based compensation expense | $ | 3,375 | $ | 1,900 | $ | 6,827 | $ | 3,178 | ||||||||
As of June 30, 2019, there was unrecognized compensation expense of $28.9 million related to stock options and RSUs. The Company expects to recognize this expense over a weighted-average period of 2.9 years.
Evergreen Shares for 2010 Equity Incentive Plan and 2010 Employee Stock Purchase Plan
In February 2019, the Company's Board of Directors (the Board) approved increases to the number of shares available for issuance under the Company's 2010 Equity Incentive Plan (the Equity Plan) and 2010 Employee Stock Purchase Plan (the Purchase Plan). These shares in connection with the Equity Plan represented an automatic annual increase in the number of shares available for grant and issuance under the Equity Plan of 3,828,241 shares. This increase is equal to approximately 5.0% of the 76,564,829 total outstanding shares of the Company’s common stock as of December 31, 2018. This automatic increase was effective as of January 1, 2019. These shares in connection with the Purchase Plan represented an automatic annual increase in the number of shares reserved for issuance under the Purchase Plan of 383,824 shares. This increase is equal to approximately 0.5% of the 76,564,829 total outstanding shares of the Company’s common stock as of December 31, 2018. This automatic increase was effective as of January 1, 2019.
12. Subsequent Events
Exchange of August 2013 Financing Convertible Note
On July 8, 2019, the August 2013 Financing Convertible Note held by Wolverine (see Note 4, “Debt”) was exchanged for 1,767,632 shares of common stock and a warrant to purchase 1,080,000 shares of common stock in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. The exercise price of the warrant is subject to standard adjustments but does not contain any anti-dilution protection, and the warrant only permits “cashless” or “net” exercise after the six-month anniversary of issuance, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the warrant. In addition, Wolverine may not exercise the warrant to the extent that, after giving effect to such exercise, Wolverine, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding after giving effect to such exercise.
Foris Credit Agreements
On July 10, 2019, the Company and Foris entered into a credit agreement to make available to the Company an unsecured credit facility in an aggregate principal amount of $16.0 million (the July Foris Credit Agreement), of which the Company borrowed $8.0 million on July 10, 2019 and $8.0 million on July 26, 2019 and issued to Foris promissory notes, each in the principal amount of $8.0 million, on such dates (the July Foris Notes). The July Foris Notes (i) accrue interest at a rate of 12.5% per annum from and including the respective date of issuance, which interest is payable on the maturity date or the earlier repayment or other satisfaction of the applicable July Foris Note, and (ii) mature on December 31, 2019. In connection with the entry into the July Foris Credit Agreement, the Company and Foris amended the warrant issued to Foris on August 17, 2018 (see Note 7, “Stockholders’ Deficit” in Part II, Item 8 of the 2018 Form 10-K/A) to reduce the exercise price of such warrant from $7.52 per share to $2.87 per share.
The Company may at its option repay the amounts outstanding under the July Foris Notes before their respective maturity dates, in whole or in part, at a price equal to 100% of the amount being repaid plus, accrued and unpaid interest on such amount to the date of repayment.
On August 14, 2019, the April Foris Note (see Note 4, “Debt”), the June Foris Note (see Note 4, “Debt”) and the July Foris Notes were added to the loans under the LSA, made subject to the LSA and secured by the security interest in the collateral granted to Foris under the LSA, and such notes were canceled in connection therewith. See below under “LSA Amendments and Waivers” for additional information.
On August 28, 2019, the Company and Foris entered into a credit agreement to make available to the Company an unsecured credit facility in an aggregate principal amount of $19.0 million (the August Foris Credit Agreement), which the Company borrowed in full on August 28, 2019 and issued to Foris a promissory note in the principal amount of $19.0 million (the August Foris Note). The August Foris Note (i) accrues interest at a rate of 12% per annum from and including August 28, 2019, which interest is payable quarterly in arrears on each March 31, June 30, September 30 and December 31, beginning December 31, 2019, and (ii) matures on January 1, 2023. The Company may at its option repay the amounts outstanding under the August Foris Note before the maturity date, in whole or in part, at a price equal to 100% of the amount being repaid plus accrued and unpaid interest on such amount to the date of repayment.
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In connection with the entry into the August Foris Credit Agreement, on August 14, 2019 the Company issued to Foris a warrant to purchase up to 4,871,795 shares of Common Stock at an exercise price of $3.90 per share, with an exercise term of two years from issuance in a private placement pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act. The exercise price of the warrant is subject to standard adjustments but does not contain any anti-dilution protection, and the warrant only permits “cashless” or “net” exercise after the six-month anniversary of issuance, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the warrant. In addition, Foris may not exercise the warrant to the extent that, after giving effect to such exercise, Foris, together with its affiliates, would beneficially own in excess of 19.99% of the number of shares of common stock outstanding after giving effect to such exercise, unless the Company has obtained stockholder approval to exceed such limit in accordance with Nasdaq rules and regulations, which the Company intends to seek at its 2019 annual meeting of stockholders.
Also, on August 28, 2019 in connection with the entry into the August Foris Credit Agreement, the Company and Foris amended the warrant issued to Foris on April 26, 2019 (see Note 6, “Stockholders’ Deficit”) to reduce the exercise price of such warrant from $5.12 per share to $3.90 per share, and amended the warrant issued to Foris on May 14, 2019 (see Note 6, “Stockholders’ Deficit”) to reduce the exercise price of such warrant from $4.56 per share to $3.90 per share.
Exchanges of 6% Convertible Notes due 2021
On July 24, 2019, Company further exchanged $53.3 million principal amount of the previously-exchanged 6% Convertible Senior Notes due 2021 (see Note 4, “Debt”), as well as the warrant to purchase up to 2,000,000 shares of common stock issued on May 15, 2019, for a new senior convertible note with a principal amount of $68.3 million (the Second Exchange Note) and a new warrant to purchase up to 2,000,000 shares of common stock at an exercise price of $2.87 per share, with an exercise term of two years from May 15, 2019 (the Second Exchange Warrant) in a private exchange pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. The Second Exchange Note and Second Exchange Warrant have substantially similar terms as the note and warrant, respectively, issued on May 15, 2019, except that (i) the principal amount of the Second Exchange Note would be $68.3 million, reflecting accrued and unpaid interest and late charges under the exchanged note and a 25% premium accruing as a result of the Company’s failure to make an installment payment on the exchanged note due July 1, 2019 in the amount of $6.4 million, provided that upon an event of default under the Second Exchange Note, the Company would not be required to redeem the Second Exchange Note in cash at a price greater than the intrinsic value of the shares of common stock underlying the Second Exchange Note, (ii) the Second Exchange Note bears interest at a rate of 18% per annum, (iii) the holder agreed to extend its waiver of certain covenant breaches relating to the failure by the Company to timely file periodic reports with the SEC from July 22, 2019 to September 16, 2019, (iv) the first installment date under the Second Exchange Note will occur on October 1, 2019, (v) the Company is required to (A) make principal payments on the Second Exchange Note in the amount of $3.2 million on each of August 2, 2019 and August 22, 2019, and (B) pay all remaining amounts then outstanding under the Second Exchange Note on September 16, 2019, and if the Company fails to make any such payment on the applicable payment date, the conversion price of the Second Exchange Note will be reset to the volume-weighted average price of the common stock on the trading day immediately following the Company’s filing of a Current Report on Form 8-K with respect to its failure to make the payment due on September 16, 2019, if such volume-weighted average price is lower than the conversion price of the Second Exchange Note then in effect, subject to a price floor and (vi) the Second Exchange Warrant has an exercise price of $2.87 per share.
On July 26, 2019, one of the holders of the senior convertibles notes issued in exchange for the 6% Convertible Notes due 2021, holding a senior convertible note in the principal amount of $4.7 million issued on June 24, 2019, exercised its right to require the Company to redeem such note in whole at a price equal to 125% of the principal amount being redeemed, plus accrued and unpaid interest on such note to the date of repayment. Redemption of such note was initially due on July 30, 2019 and subsequently extended to August 30, 2019. The Company redeemed such note in full on August 30, 2019.
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On September 16, 2019, the Company failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note when due. The failure resulted in an event of default under the Second Exchange Note and also triggered cross-defaults under other debt instruments of the Company which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. The Company subsequently received waivers from substantially all holders of such other debt instruments to waive the right to accelerate. As a result, the indebtedness with respect to which the Company has obtained such waivers continues to be classified as long-term on the Company’s balance sheet. The indebtedness reflected by the Second Exchange Note continues to be classified as a current liability on the Company’s balance sheet. In addition, as a result of the payment default, the conversion price of the Second Exchange Note is subject to adjustment in accordance with the terms of the Second Exchange Note.
The Company does not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for the Company will be reached. The Company has executed a term sheet with an existing investor for a term loan, the proceeds of which would be used to repay a portion of the Second Exchange Note. However, there can be no assurance that the Company will be able to obtain such financing on its expected timeline, or on acceptable terms, if at all. Even if the Company does obtain such financing, it will not have sufficient funds to repay the Second Exchange Note in full without obtaining additional financing, which the Company is attempting to source. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Nikko Loan Agreement
On July 29, 2019, the Company and Nikko Chemicals Co., Ltd. (Nikko) entered into a loan agreement (the Nikko Loan Agreement) to make available to the Company secured loans in an aggregate principal amount of $5.0 million, to be issued in separate installments of $3.0 million and $2.0 million, respectively, with each installment being subject to certain closing conditions, including the entry into certain commercial agreements and other arrangements relating to the Aprinnova JV (see Note 11, “Related Party Transactions” in Part II, Item 8 of the 2018 Form 10-K/A). On July 30, 2019, the Company borrowed the first installment of $3.0 million under the Nikko Loan Agreement and received net cash proceeds of $2.8 million, with the remaining $0.2 million being withheld by Nikko as prepayment of the interest payable on such loan through the maturity date. On August 8, 2019, the Company borrowed the remaining $2.0 million available under the Nikko Loan Agreement and received net cash proceeds of $1.9 million, with the remaining $0.1 million being withheld by Nikko as prepayment of the interest payable on such loan through the maturity date. The loans (i) mature on December 18, 2020, (ii) accrue interest at a rate of 5% per annum from and including the applicable loan date through the maturity date, which interest is required to be prepaid in full on the date of the applicable loan, and (iii) are secured by a first-priority lien on 12.8% of the Aprinnova JV interests owned by the Company.
Aprinnova Working Capital Loan
Effective July 31, 2019, the Company and Nikko agreed to extend the term of the Second Aprinnova Note (see Note 5, “Debt” in the 2018 Form 10-K/A) from August 1, 2019 to August 1, 2020.
LSA Amendments and Waivers
On August 14, 2019, the Company and Foris entered into an Amendment No. 5 and Waiver to the LSA (the LSA Amendment and Waiver), pursuant to which (i) the maturity date of the loans under the LSA was extended from July 1, 2021 to July 1, 2022, (ii) the interest rate for the loans under the LSA was modified from the sum of (A) the greater of (x) the prime rate as reported in the Wall Street Journal or (y) 4.75% plus (B) 9% to the greater of (A) 12% or (B) the rate of interest payable with respect to any indebtedness of the Company, (iii) the amortization of the loans under the LSA was delayed until December 16, 2019, (iv) certain accrued and future interest and agency fee payments under the LSA were delayed until December 16, 2019, (v) certain covenants under the LSA, including related definitions, were amended to provide the Company with greater operational and financial flexibility, including, without limitation, to permit the incurrence of the indebtedness under the Naxyris Loan Facility (as described below) and the granting of liens with respect thereto, subject to the terms of an intercreditor agreement between Foris and Naxyris S.A. (Naxyris) governing the respective rights of the parties with respect to, among other things, the assets securing the Naxyris Loan Agreement and the LSA (the Intercreditor Agreement), (vi) certain outstanding unsecured promissory notes issued by the Company to Foris on April 8, 2019, June 11, 2019, July 10, 2019 and July 26, 2019 (as described below under “Foris Credit Agreements”), in an aggregate principal amount of $32.5 million, as well as the Company LSA Obligation, were added to the loans under the LSA, made subject to the LSA and secured by the security interest in the collateral granted to Foris under the LSA, and such promissory notes and contractual obligation were canceled in connection therewith, and (vii) Foris agreed to waive certain existing defaults under the LSA. After giving effect to the LSA Amendment and Waiver, there is $71.0 million aggregate principal amount of loans outstanding under the LSA, including with respect to covenants related to quarterly minimum revenues, minimum liquidity amounts and a minimum asset coverage ratio. In connection with the entry into the LSA Amendment and Waiver, on August 14, 2019 the Company issued to Foris a warrant to purchase up to 1,438,829 shares of Common Stock at an exercise price of $2.87 per share, with an exercise term of two years from issuance. Pursuant to the terms of the warrant, Foris may not exercise the Foris Warrant to the extent that, after giving effect to such exercise, Foris, together with its affiliates, would beneficially own in excess of 19.99% of the number of shares of common stock outstanding after giving effect to such exercise, unless the Company has obtained stockholder approval to exceed such limit in accordance with Nasdaq rules and regulations, which the Company intends to seek at its 2019 annual meeting of stockholders.
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Naxyris Loan and Security Agreement
On August 14, 2019, the Company, certain of the Company’s subsidiaries (the Subsidiary Guarantors) and, as lender, Naxyris, an existing stockholder of the Company and an investment vehicle owned by Naxos Capital Partners SCA Sicar, which is affiliated with NAXOS S.A.R.L. (Switzerland), for which director Carole Piwnica serves as director, entered into a Loan and Security Agreement (the Naxyris Loan Agreement) to make available to the Company a secured term loan facility in an aggregate principal amount of up to $10,435,000 (the Naxyris Loan Facility), which the Company borrowed in full on August 14, 2019.
Loans under the Naxyris Loan Facility have a maturity date of July 1, 2022 and accrue interest at a rate per annum equal to the greater of (i) 12% or (ii) the rate of interest payable with respect to any indebtedness of the Company plus 25 basis points, which interest will be payable monthly in arrears, provided that all interest accruing from and after August 14, 2019 through December 1, 2019 shall be due and payable on December 15, 2019.
The obligations of the Company under the Naxyris Loan Facility are (i) guaranteed by the Subsidiary Guarantors and (ii) secured by a perfected security interest in substantially all of the assets of the Company and the Subsidiary Guarantors (the Collateral), junior in payment priority to Foris subject to certain limitations and exceptions, as well as the terms of the Intercreditor Agreement (as defined above).
Mandatory prepayments of the outstanding amounts under the Naxyris Loan Facility will be required upon the occurrence of certain events, including asset sales, a change in control, and the incurrence of additional indebtedness, subject to certain exceptions and reinvestment rights. Outstanding amounts under the Naxyris Loan Facility must also be prepaid to the extent that the borrowing base exceeds the outstanding principal amount of the loans under the Naxyris Loan Facility. In addition, the Company may at its option prepay the outstanding principal amount of the loans under the Naxyris Loan Facility in full before the maturity date. Any prepayment of the loans under the Naxyris Loan Facility prior to the maturity date, whether pursuant to a mandatory or optional prepayment, is subject to a prepayment charge equal to one year’s interest at the then-current interest rate for the Naxyris Loan Facility. Upon the repayment of the loans under the Naxyris loan facility, whether on the maturity date or earlier pursuant to an optional or mandatory prepayment, the Company will pay Naxyris an end of term fee. In addition, (i) the Company will be required to pay a fee equal to 6% of any amount the Company fails to pay within three business days of its due date and (ii) any interest that is not paid when due will be added to principal and will bear compound interest at the applicable rate.
The affirmative and negative covenants in the Naxyris Loan Agreement relate to, among other items: (i) payment of taxes; (ii) financial reporting; (iii) maintenance of insurance; and (iv) limitations on indebtedness, liens, mergers, consolidations and acquisitions, transfers of assets, dividends and other distributions in respect of capital stock, investments, loans and advances, and corporate changes. The Naxyris Loan Agreement also contains financial covenants, including covenants related to minimum revenue, liquidity, and asset coverage.
DSM Credit Agreements
On September 17, 2019, the Company and DSM entered into a credit agreement (the “2019 DSM Credit Agreement”) to make available to the Company a secured credit facility in an aggregate principal amount of $8.0 million, to be issued in separate installments of $3.0 million, $3.0 million and $2.0 million, respectively, with each installment being subject to certain closing conditions, including the payment of certain existing obligations of the Company to DSM. On September 17, 2019, the Company borrowed the first installment of $3.0 million under the 2019 DSM Credit Agreement, all of which proceeds were used to pay certain existing obligations of the Company to DSM, and issued to DSM a promissory note in the principal amount of $3.0 million. On September 19, 2019, the Company borrowed the second installment of $3.0 million under the 2019 DSM Credit Agreement, all of which proceeds were used to pay certain existing obligations of the Company to DSM, and issued to DSM a promissory note in the principal amount of $3.0 million. On September 23, 2019, the Company borrowed the final installment of $2.0 million under the 2019 DSM Credit Agreement, $1.5 million of which proceeds were used to pay certain existing obligations of the Company to DSM, and issued to DSM a promissory note in the principal amount of $2.0 million. The promissory notes issued under the 2019 DSM Credit Agreement (i) mature on August 7, 2022, (ii) accrue interest at a rate of 12.5% per annum from and including the applicable date of issuance, which interest is payable quarterly in arrears on each January 1, April 1, July 1 and October 1, beginning January 1, 2020, and (iii) are secured by a first-priority lien on certain Company intellectual property licensed to DSM. The Company may at its option repay the amounts outstanding under the 2019 DSM Credit Agreement before the maturity date, in whole or in part, at a price equal to 100% of the amount being repaid plus accrued and unpaid interest on such amount to the date of repayment. In addition, the Company is required to repay the amounts outstanding under the 2019 DSM Credit Agreement (i) in an amount equal to the gross cash proceeds, if any, received by the Company upon the exercise by DSM of any of the common stock purchase warrants issued by the Company to DSM on May 11, 2017 or August 7, 2017 (see Note 7, “Stockholders’ Deficit” in Part II, Item 8 of the 2018 Form 10-K/A) and (ii) in full upon the request of DSM at any time following the receipt by the Company of at least $50.0 million of gross cash proceeds from one or more sales of equity securities of the Company on or prior to June 30, 2020.
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September 2019 Credit Agreements
On September 10, 2019, the Company entered into separate credit agreements (the “Investor Credit Agreements”) with each of Schottenfeld Opportunities Fund II, L.P., Phase Five Partners, LP and Koyote Trading, LLC (the “Investors”) to make available to the Company unsecured credit facilities in an aggregate principal amount of $12.5 million, which the Company borrowed in full on September 10, 2019 and issued to the Investors separate promissory notes in the aggregate principal amount of $12.5 million (the “Investor Notes”). Each Investor Note (i) accrues interest at a rate of 12% per annum from and including September 10, 2019, which interest is payable quarterly in arrears on each March 31, June 30, September 30 and December 31, beginning December 31, 2019, and (ii) matures on January 1, 2023. The Company may at its option repay the amounts outstanding under the Investor Notes before the maturity date, in whole or in part, at a price equal to 100% of the amount being repaid plus accrued and unpaid interest on such amount to the date of repayment.
In connection with the entry into the Investor Credit Agreements, on September 10, 2019, the Company issued to the Investors warrants to purchase up to an aggregate of 3,205,128 shares of common stock at an exercise price of $3.90 per share, with an exercise term of two years from issuance in a private placement pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated under the Securities Act. The exercise price of the warrants is subject to standard adjustments but does not contain any anti-dilution protection, and the warrants only permit “cashless” or “net” exercise after the six-month anniversary of issuance of the applicable warrant, and only to the extent that there is not an effective registration statement covering the resale of the shares of common stock underlying the applicable warrant. In addition, no Investor may exercise its warrant to the extent that, after giving effect to such exercise, such Investor, together with its affiliates, would beneficially own in excess of 9.99% of the number of shares of common stock outstanding after giving effect to such exercise. In addition, the Company agreed to file a registration statement providing for the resale by the Investors of the shares of common stock underlying the warrants with the SEC within 60 days following the date of the issuance of the warrants and to use commercially reasonable efforts to (i) cause such registration statement to become effective within 120 days following the date of the issuance of the warrants and (ii) keep such registration statement effective until the Investors no longer beneficially own any such shares of common stock or such shares of common stock are eligible for resale under Rule 144 under the Securities Act without regard to volume limitations. If the Company fails to file the registration statement by the filing deadline or the registration statement is not declared effective by the effectiveness deadline, or the Company fails to maintain the effectiveness of the registration statement as required by the warrants, then the exercise price of the warrants will be reduced by 10%, and by an additional 5% if such failure continues for longer than 90 days, subject to an exercise price floor of $3.31 per share, provided that upon the cure by the Company of such failure, the exercise price of the warrants will revert to $3.90 per share.
In connection with the entry into the Investor Credit Agreements and the issuance of the warrants, on September 10, 2019, the Company and the Investors entered into a Standstill Agreement (the “Investor Standstill Agreement”), pursuant to which the Investors agreed that, until the earliest to occur of (i) the Investors no longer beneficially owning any shares underlying the warrants, (ii) the Company entering into a definitive agreement involving the direct or indirect acquisition of all or a majority of the Company’s equity securities or all or substantially all of the Company’s assets or (iii) a person or group, with the prior approval of the Company’s Board of Directors (the “Board”), commencing a tender offer for all or a majority of the Company's equity securities, neither the Investors nor any of their respective affiliates will (without the prior written consent of the Board), among other things, (i) acquire any loans, debt securities, equity securities, or assets of the Company or any of its subsidiaries, or rights or options with respect thereto, except that the Investors shall be permitted to (a) purchase the shares underlying the warrants pursuant to the exercise of the warrants and (b) acquire beneficial ownership of up to 6.99% of the common stock, or (ii) make any proposal, public announcement, solicitation or offer with respect to, or otherwise solicit, seek or offer to effect, or instigate, encourage, or assist any third party with respect to: (a) any business combination, merger, tender offer, exchange offer, or similar transaction involving the Company or any of its subsidiaries; (b) any restructuring, recapitalization, liquidation, or similar transaction involving the Company or any of its subsidiaries; (c) any acquisition of any of the Company’s loans, debt securities, equity securities or assets, or rights or options with respect thereto; or (d) any proposal to seek representation on the Board or otherwise seek to control or influence the management, Board, or policies of the Company, in each case subject to certain exceptions.
Ginkgo Note Amendment
On September 29, 2019, in connection with Ginkgo granting certain waivers under the November 2017 Ginkgo Note and the Ginkgo Partnership Agreement (see Note 5, “Debt” and Note 10, "Revenue Recognition" in Part II, Item 8 of the 2018 Form 10-K/A), (i) the Company and Ginkgo amended the November 2017 Ginkgo Note to increase the interest rate from 10.5% per annum to 12% per annum, beginning October 1, 2019 and (ii) the Company agreed to pay Ginkgo a cash waiver fee of $1.3 million, payable in installments on December 15, 2019 and March 31, 2020.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. These discussions contain forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934 (the Exchange Act). These forward-looking statements include, but are not limited to, statements concerning our strategy of achieving a significant reduction in net cash outflows in 2019 and 2020, aspects of our future operations, our future financial position, including obtaining project financing for a new manufacturing facility, expectations for our future revenues, margins and projected costs, expectations regarding demand and acceptance for our technologies and products, introductions of new products, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the 2018 Form 10-K) and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.
Overview and Recent Developments
Amyris, Inc. (the Company, Amyris, we, us or our) is a leading industrial biotechnology company that applies its technology platform to engineer, manufacture and sell high performance, natural, sustainably-sourced products into the Health & Wellness, Clean Beauty, and Flavor & Fragrance markets. Our proven technology platform enables us to rapidly engineer microbes and use them as catalysts to metabolize renewable, plant-sourced sugars into large volume, high-value ingredients. Our biotechnology platform and industrial fermentation process replace existing complex and expensive manufacturing processes. We have successfully used our technology to develop and produce nine distinct molecules at commercial volumes, leading to more than 15 commercial ingredients used by thousands of leading global brands.
We believe that industrial synthetic biology represents a third industrial revolution, bringing together biology and engineering to generate new, more sustainable materials to meet the growing global demand for bio-based replacements for petroleum-based and traditional animal- or plant-derived ingredients. We continue to build demand for our current portfolio of products through an extensive sales network provided by our collaboration partners that represent leading companies for our target market sectors. We also have a small group of direct sales and distributors who support our Clean Beauty market. Via our partnership model, our partners invest in the development of each molecule to bring it from the lab to commercial scale and use their extensive sales force to sell our ingredients and formulations to their customers as part of their core business. We capture long-term revenue both through the production and sale of the molecule to our partners and through royalty revenues (previously referred to as value share) from our partners' product sales to their customers.
We were founded in 2003 in the San Francisco Bay area by a group of scientists from the University of California, Berkeley. Our first major milestone came in 2005 when, through a grant from the Bill & Melinda Gates Foundation, we developed technology capable of creating microbial strains that produce artemisinic acid, which is a precursor of artemisinin, an effective anti-malarial drug. In 2008, we granted royalty-free licenses to allow Sanofi-Aventis to produce artemisinic acid using our technology. Building on our success with artemisinic acid, in 2007 we began applying our technology platform to develop, manufacture and sell sustainable alternatives to a broad range of markets.
We focused our initial development efforts primarily on the production of Biofene®, our brand of renewable farnesene, a long-chain, branched hydrocarbon molecule that we manufacture through fermentation using engineered microbes. Our farnesene derivatives are sold in thousands of products as nutraceuticals, skincare products, fragrances, solvents, polymers, and lubricant ingredients. The commercialization of farnesene pushed us to create a more cost efficient, faster and accurate development process in the lab and drive manufacturing costs down. This investment has enabled our technology platform to rapidly develop microbial strains and commercialize target molecules. In 2014, we began manufacturing additional molecules for the Flavor & Fragrance industry; in 2015 we began investing to expand our capabilities to other small molecule chemical classes beyond terpenes via our collaboration with the Defense Advanced Research Projects Agency (DARPA); and in 2016 we expanded into proteins.
We have invested over $600 million in infrastructure and technology to create microbes that produce molecules from sugar or other feedstocks at commercial scale. This platform has been used to design, build, optimize and upscale strains producing nine distinct molecules at commercial volumes, leading to more than 15 commercial ingredients used by thousands of leading global brands. Our time to market for molecules has decreased from seven years to less than a year for our most recent molecule, mainly due to our ability to leverage the technology platform we have built.
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Our technology platform has been in active use since 2007 and has been integrated with our commercial production since 2011, creating an organism development process that we believe makes us an industry leader in the successful scale-up and commercialization of biotech-produced ingredients. The key performance characteristics of our platform that we believe differentiate us include our proprietary computational tools, strain construction tools, screening and analytics tools, and advanced lab automation and data integration. Having this fully integrated with our large-scale manufacturing process and capability enables us to always engineer with the end specification and requirements guiding our technology. Our state-of-the-art infrastructure includes industry-leading strain engineering and lab automation located in Emeryville, California, pilot scale production facilities in Emeryville, California and Campinas, Brazil, a demonstration-scale facility in Campinas, Brazil and a commercial-scale production facility in Leland, North Carolina, which is owned and operated by our Aprinnova joint venture to convert our Biofene into squalane and other final products.
We are able to use a wide variety of feedstocks for production, but have focused on accessing Brazilian sugarcane for our large-scale production because of its renewability, low cost and relative price stability. We have also successfully used other feedstocks such as sugar beets, corn dextrose, sweet sorghum and cellulosic sugars at various manufacturing facilities.
Several years ago, we made the strategic decision to transition our business model from collaborating and commercializing molecules in low margin commodity markets to higher margin specialty markets. We began the transition by first commercializing and supplying farnesene-derived squalane as a cosmetic ingredient sold to formulators and distributors. We also entered into collaboration and supply agreements for the development and commercialization of molecules within the Flavor & Fragrance and Clean Beauty markets where we utilize our strain generation technology to develop molecules that meet the customer’s rigorous specifications.
During this transition, we solidified the business model of partnering with our customers to create sustainable, high performing, low-cost molecules that replace an ingredient in their supply chain, commercially scale and manufacture those molecules, and share in the profits earned by our customers once our customer sells its product into these specialty markets. These three steps constitute our collaboration revenues, renewable product revenues, and royalty revenues (previously referred to as value share revenues).
During 2017, we completed several development agreements with DSM and others for new products such as Vitamin A, a human nutrition molecule and others, and in late 2018 we began commercial production and shipment of a new sweetener product developed from the Reb M molecule, which is a superior sweetener and sugar replacement. Our goal is to bring two to three new molecules per year to commercial production in the future.
In 2017, we decided to monetize the use of one of our lower margin molecules, farnesene, in the Vitamin E and Lubricants specialty markets while retaining any associated royalties, and licensed farnesene to Koninklijke DSM N.V. (DSM) for use in these fields. Also in 2017, we sold to DSM our subsidiary Amyris Brasil Ltda. (Amyris Brasil), which operated our purpose-built, large-scale manufacturing facility located in Brotas, Brazil.
The Brotas facility was built to batch manufacture one commodity product at a time (originally for high-volume production of biofuels, a business Amyris has exited), which is an inefficient manufacturing process that is not suited for the high margin specialty markets in which we operate today. We currently manufacture nine specialty products and expect to increase the number of specialty products we manufacture by two to three products a year. The inefficiencies we experienced included having to idle the facility for two weeks at a time to prepare for the next product batch manufacture. These inefficiencies caused our cost of goods sold to be significantly higher. We are building a new purpose-built, large-scale specialty ingredients plant in Brazil, which we anticipate will allow for the manufacture of five products concurrently and over 10 different products annually. As part of the December 2017 sale of Brotas, we contracted with DSM for the use of Brotas to manufacture products for us to fulfill our product supply commitments to our customers until our new production facility becomes operational.
In September 2019, we obtained the necessary permits and broke ground on our Specialty Ingredients Plant (SIP). We expect the facility to be fully operational in Q1 of 2021. This facility will allow us to manufacture five products at once and to produce both our specialty ingredients portfolio and our new sweetener product. During construction, we are manufacturing our products at four contract manufacturing sites in Brazil, the U.S. and Spain.
In addition, in May 2019 we entered into an agreement with Raizen Energia S.A. (Raizen) for the formation and operation of a joint venture relating to the production, sale and commercialization of alternative sweetener products whereby the parties would construct a manufacturing facility exclusively for sweetener molecules on land owned by Raizen and leased to the joint venture; see Note 12, “Subsequent Events” in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.
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Also, in May 2019, we consummated a $300 million research, collaboration and license agreement with LAVVAN, Inc., a newly formed investment-backed company (Lavvan), for the development, manufacture and commercialization of cannabinoids. Under the agreement, we would perform research and development activities and Lavvan would be responsible for the commercialization of the cannabinoids developed under the agreement. The Cannabinoid Agreement is being principally funded on a milestone basis, with Amyris also entitled to receive certain supplementary research and development funding from Lavvan. We could receive aggregate funding of up to $300 million over the term of the Cannabinoid Agreement if all of the milestones are achieved. Additionally, the agreement provides for profit share to Amyris on Lavvan's gross profit margin once products are commercialized; these payments will be due for the next 20 years.
Sales and Revenue
We recognize revenue from product sales, license fees and royalties, and grants and collaborations.
We have research and development collaboration arrangements for which we receive payments from our collaborators, which include DARPA, DSM, Firmenich SA (Firmenich), Givaudan International SA (Givaudan), and others. Some of our collaboration arrangements provide for advance payments to us in consideration for grants of exclusivity or research efforts that we will perform. In 2017 we signed collaboration agreements for an infant nutrition ingredient, and in 2018 we signed a collaboration agreement for two vitamins that we expect will contribute to our collaboration revenue and ultimately product sales. Our collaboration agreements, which may require us to achieve milestones prior to receiving payments, are expected to contribute revenues from product sales and royalties (previously referred to as value share) if and when they are commercialized. See Note 10, “Revenue Recognition” in Part II, Item 8 of the 2018 Form 10-K/A for additional information.
All of our non-government partnerships include commercial terms for the supply of molecules we successfully upscale and produce at commercial volumes. The first molecule to generate revenue for us outside of farnesene was a fragrance molecule launched in 2015. Since the launch, the product has continued to grow in sales year over year. In 2016, we launched our second fragrance molecule and in 2017, we launched our third fragrance molecule as well as our first cosmetic active ingredient. Our partners for these molecules are indicating continued strong growth due to their cost advantaged position, high purity and sustainable production method. We are continuing to identify new opportunities to apply our technology and deliver sustainable access to key molecules. As a result, we have a pipeline that we believe can deliver two to three new molecules each year over the coming years with a flavor ingredient, a cosmetic active ingredient and a fragrance molecule. In 2019, we are commercially producing and shipping our Reb M product that we believe is a superior sweetener and sugar replacement for food and beverages.
As part of the DSM acquisition in 2017 of our farnesene for Vitamin E business, we would receive a royalty payment on certain sales by Nenter & Co., Inc. of Vitamin E utilizing farnesene produced and sold by DSM from our technology. In addition, DSM would be obligated to pay us minimum royalties totaling $18.1 million for 2019 and 2020, of which we received $9.3 million as a discounted accelerated payment (from an original payment amount of $10.0 million) during 2018. In April 2019, we assigned the right to receive such royalty payments to DSM for total consideration of $57 million, which included $7.4 million for early payment of the third and final annual royalty payment due under the original agrement. See Note 9, "Revenue Recognition", in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
We have several other collaboration molecules in our development pipeline with partners including DSM, Givaudan and Firmenich that we expect will contribute revenues from product sales and royalties (previously referred to as value share) if and when they are commercialized.
Critical Accounting Policies and Estimates
Management's discussion and analysis of results of operations and financial condition are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). We believe that the critical accounting policies described in this section are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgements, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates.
Our most critical accounting estimates include:
| • | Recognition of revenue including arrangements with multiple performance obligations; |
| • | Valuation and allocation of fair value to various elements of complex related party transactions; |
| • | The valuation of freestanding and embedded derivatives, which impacts gains or losses on such derivatives, the carrying value of debt, preferred stock, interest expense and deemed dividends; and |
| • | The valuation of debt for which we have elected fair value accounting. |
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For more information about our critical accounting estimates and policies, see Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" in Part I, Item 1 of this Quarterly Report on Form 10-Q and in Part II, Item 8 of the 2018 Form 10-K/A.
Results of Operations
Revenue
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenue | ||||||||||||||||
| Renewable products | $ | 12,120 | $ | 6,633 | $ | 24,004 | $ | 11,828 | ||||||||
| Licenses and royalties | 40,964 | (513 | ) | 41,082 | 7,442 | |||||||||||
| Grants and collaborations | 9,610 | 8,939 | 11,982 | 13,648 | ||||||||||||
| Total revenue | $ | 62,694 | $ | 15,059 | $ | 77,068 | $ | 32,918 | ||||||||
Three Months Ended June 30, 2019 and 2018
Total revenue increased by 316% to $62.7 million for the three months ended June 30, 2019 compared to the same period in 2018. The increase was primarily due to a $41.5 million increase in licenses and royalties revenue and a $5.5 million increase in renewable products revenue.
Renewable products revenue increased by 83% to $12.1 million for the three months ended June 30, 2019 compared to the same period in 2018, with increases among all renewable products, led by RebM, Squalene and Biossance.
Licenses and royalties revenue increased to $41.0 million for the three months ended June 30, 2019 compared to the same period in 2018, primarily due to $40.7 million of royalty revenue from DSM related to the assignment of the December 2017 DSM Value Sharing Agreement (see Note 9, “Revenue Recognition” in Part I, Item 1 of this Quarterly Report on Form 10-Q) during the current period, as compared to negative $0.5 million from DSM during the prior year period. The negative revenue in the three months ended June 30, 2018 reflects an early payment discount taken during that period.
Grants and collaborations revenue increased by 8% to $9.6 million for the three months ended June 30, 2019 compared to the same period in 2018, primarily due to collaboration revenue from Lavvan, partially offset by decreases from other collaboration partners.
Six Months Ended June 30, 2019 and 2018
Total revenue increased by 134% to $77.1 million for the six months ended June 30, 2019 compared to the same period in 2018. The increase was primarily due to a $33.6 million increase in licenses and royalties revenue and a $12.2 million increase in renewable products revenue.
Renewable products revenue increased by 103% to $24.0 million for the six months ended June 30, 2019 compared to the same period in 2018, with increases among all renewable products, led by RebM, Squalene and Biossance.
Licenses and royalties revenue increased to $41.1 million for the six months ended June 30, 2019 compared to the same period in 2018, primarily due to $40.7 million of royalty revenue from DSM related to the assignment of the December 2017 DSM Value Sharing Agreement (see Note 9, “Revenue Recognition” in Part I, Item 1 of this Quarterly Report on Form 10-Q) during the current period, as compared to negative $0.5 million during the prior year period.
Grants and collaborations revenue decreased by 12% to $12.0 million for the six months ended June 30, 2019 compared to the same period in 2018, primarily due to decreases in revenue from DARPA as our program with them winds down and Givaudan, partially offset by first-time revenue from Lavvan.
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Costs and Operating Expenses
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Cost and operating expenses | ||||||||||||||||
| Cost of products sold | $ | 15,121 | $ | 6,534 | $ | 32,828 | $ | 11,849 | ||||||||
| Research and development | 19,222 | 15,669 | 37,061 | 33,494 | ||||||||||||
| Sales, general and administrative | 30,862 | 19,454 | 59,115 | 37,554 | ||||||||||||
| Total cost and operating expenses | $ | 65,205 | $ | 41,657 | $ | 129,004 | $ | 82,897 | ||||||||
Cost of Products Sold
Cost of products sold includes the raw materials, labor and overhead, amounts paid to contract manufacturers, inventory write-downs, and costs related to production scale-up. Because of our product mix, our overall cost of products sold does not necessarily increase or decrease proportionately with changes in our renewable product revenues.
Three Months Ended June 30, 2019 and 2018
Cost of products sold increased by 131% to $15.1 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to costs associated with ramping up our RebM sweetener product, which we began shipping in late 2018. The remainder of the increase was due to an increase in volume of products sold.
Six Months Ended June 30, 2019 and 2018
Cost of products sold increased by 177% to $32.8 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to costs associated with ramping up our RebM sweetener product, which we began shipping in late 2018. The remainder of the increase was due to an increase in volume of products sold.
Research and Development Expenses
Three Months Ended June 30, 2019 and 2018
Research and development expenses increased by 23% to $19.2 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to increases in employee compensation and equipment rental costs, and a decrease in capitalization of labor costs.
Six Months Ended June 30, 2019 and 2018
Research and development expenses increased by 11% to $37.1 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to an increase in employee compensation and a decrease in capitalization of labor costs.
Sales, General and Administrative Expenses
Three Months Ended June 30, 2019 and 2018
Sales, general and administrative expenses increased by 59% to $30.9 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to increases in employee compensation, outside services, audit fees and new product marketing costs. The increase in employee compensation was driven by increased head count, the timing of changes in our compensation plan for most non-executive level employees, and increased stock-based compensation related to increased head count.
Six Months Ended June 30, 2019 and 2018
Sales, general and administrative expenses increased by 57% to $59.1 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to increases in employee compensation, outside services, audit fees and new product marketing costs. The increase in employee compensation was driven by increased head count, the timing of changes in our compensation plan for most non-executive level employees, and increased stock-based compensation related to increased head count.
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Other (Expense) Income, Net
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Loss on divestiture | $ | – | $ | – | $ | – | $ | (1,778 | ) | |||||||
| Interest expense | (15,217 | ) | (9,580 | ) | (27,751 | ) | (19,558 | ) | ||||||||
| (Loss) gain from change in fair value of derivative instruments | – | 21,990 | (2,039 | ) | (36,367 | ) | ||||||||||
| Loss from change in fair value of debt | (14,444 | ) | – | (16,574 | ) | – | ||||||||||
| Loss upon extinguishment of debt | (5,875 | ) | (26 | ) | (5,875 | ) | (26 | ) | ||||||||
| Other income (expense), net | (41 | ) | (168 | ) | (156 | ) | 524 | |||||||||
| Total other income (expense), net | $ | (35,577 | ) | $ | 12,216 | $ | (52,395 | ) | $ | (57,205 | ) | |||||
Three Months Ended June 30, 2019 and 2018
Total other expense, net was $35.6 million for the three months ended June 30, 2019, compared to total other income, net of $12.2 million for the same period in 2018. The $47.8 million change was primarily due to a $22.0 million decrease in gain from change in fair value of derivative instruments, a $14.4 million loss from change in fair value of debt, a $5.8 million increase in loss upon extinguishment of debt, and a $5.6 million increase in interest expense. The decrease in gain from change in fair value of derivative instruments was due to the extinguishment of certain equity-related derivatives in the second and third quarter of 2018, which no longer impact the 2019 quarters, and in part, as the result of adopting ASU 2017-11, "Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments with Down Round Features" which eliminated the need to record a derivative liability for equity instruments with down-round anti-dilution provisions. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" and Note 3, "Fair Value Measurement" in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of the adoption impact to our condensed consolidated financial statements.
Six Months Ended June 30, 2019 and 2018
Total other expense, net was $52.4 million for the six months ended June 30, 2019, compared to total other expense, net of $57.2 million for the same period in 2018. The $4.8 million decrease was primarily due to a $34.3 million decrease in loss from change in fair value of derivative instruments, partly offset by a $16.6 million loss from change in fair value of debt in 2019, a $8.2 million increase in interest expense, and a $5.8 million increase in loss upon extinguishment of debt. The decrease in loss from change in fair value of derivative instruments was due to the extinguishment of certain equity-related derivatives in the second and third quarter of 2018, which no longer impact the 2019 quarters, and in part, as the result of adopting ASU 2017-11, as described in the previous paragraph.
Provision for Income Taxes
Three and Six Months Ended June 30, 2019 and 2018
For the three and six months ended June 30, 2019 and 2018, we recorded $0 provisions for income taxes.
Liquidity and Capital Resources
| (In thousands) | June 30, 2019 | December 31, 2018 | ||||||
| Working capital deficit, excluding cash and cash equivalents | $ | (143,691 | ) | $ | (119,521 | ) | ||
| Cash and cash equivalents | $ | 940 | $ | 45,353 | ||||
| Debt and capital lease obligations | $ | 195,877 | $ | 210,376 | ||||
| Accumulated deficit | $ | (1,617,217 | ) | $ | (1,521,417 | ) | ||
| Six Months Ended June 30, | ||||||||
| (In thousands) | 2019 | 2018 | ||||||
| Net cash (used in) provided by: | ||||||||
| Operating activities | $ | (58,257 | ) | $ | (54,488 | ) | ||
| Investing activities | $ | (5,951 | ) | $ | (4,364 | ) | ||
| Financing activities | $ | 20,054 | $ | 14,773 | ||||
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Liquidity. We have incurred significant operating losses since our inception, and we expect to continue to incur losses and negative cash flows from operations through at least the next 12 months following issuance of the condensed consolidated financial statements. As of June 30, 2019, we had negative working capital, excluding cash and cash equivalents and short-term investments, of $143.7 million, (compared to negative working capital (excluding cash) of $119.5 million as of December 31, 2018), an accumulated deficit of $1.6 billion, and cash and cash equivalents of $0.9 million (compared to $45.4 million as of December 31, 2018).
As of June 30, 2019, our debt (including related party debt), net of deferred discount and issuance costs of $13.1 million, totaled $168.7 million, of which $107.6 million is classified as current. Our debt agreements contain various covenants, including certain restrictions on our business that could cause us to be at risk of defaults, such as restrictions on additional indebtedness and cross-default clauses. A failure to comply with the covenants, or cure non-compliance or obtain waivers for covenants violations, and other provisions of our debt instruments, including any failure to make a payment when required, would generally result in events of default under such instruments, which could permit acceleration of such indebtedness. If such indebtedness is accelerated, it would generally also constitute an event of default under our other outstanding indebtedness, permitting acceleration of a substantial portion of our outstanding indebtedness.
On September 16, 2019, we failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note when due. The failure resulted in an event of default under the Second Exchange Note and also triggered cross-defaults under other debt instruments of Amyris which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. We subsequently received waivers from substantially all holders of such other debt instruments to waive the right to accelerate. As a result, the indebtedness with respect to which Amyris has obtained such waivers continues to be classified as long-term on our balance sheet. The indebtedness reflected by the Second Exchange Note continues to be classified as a current liability on our balance sheet. In addition, as a result of the payment default, the conversion price of the Second Exchange Note is subject to adjustment in accordance with the terms of the Second Exchange Note.
We do not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for us will be reached. We have executed a term sheet with an existing investor for a term loan, the proceeds of which would be used to repay a portion of the Second Exchange Note. However, there can be no assurance that we will be able to obtain such financing on its expected timeline, or on acceptable terms, if at all. Even if we do obtain such financing, it will not have sufficient funds to repay the Second Exchange Note in full without obtaining additional financing, which we are attempting to source. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our condensed consolidated financial statements as of and for the three and six months ended June 30, 2019 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Due to the factors described above, there is substantial doubt about our ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. Our ability to continue as a going concern will depend, in large part, on our ability to extend existing debt maturities by restructuring a majority of our convertible debt, which is uncertain and outside management's control. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, which could have a material adverse effect on our financial condition. In addition, if we are unable to continue as a going concern, we may be unable to meet our obligations under our existing debt facilities, which could result in an acceleration of our obligation to repay all amounts outstanding under those facilities, and we may be forced to liquidate our assets. In such a scenario, the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.
Our operating plan for the next 12 months contemplates a significant reduction in our net operating cash outflows as compared to the year ended December 31, 2018, resulting from (i) revenue growth from sales of existing and new products with positive gross margins, (ii) significantly increased cash inflows from grants and collaborations, and (iii) reduced production costs as a result of manufacturing and technical developments. Finally, by mid-2020, we plan to obtain project financing for construction of a new production facility in Brazil. If we are unable to complete these actions, we expect to be unable to meet our operating cash flow needs and our obligations under our existing debt facilities.
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If we are unable to generate sufficient cash contributions from product sales, licenses and royalties, and payments from existing and new collaboration partners, and new financing commitments due to contractual restrictions and covenants, we will need to obtain additional funding from equity or debt financings, which may not occur in a timely manner or on reasonable terms, if at all, agree to burdensome covenants, grant further security interests in our assets, enter into collaboration and licensing arrangements that require us to relinquish commercial rights, or grant licenses on terms that are not favorable.
If we do not achieve our planned operating results, our ability to continue as a going concern would be jeopardized and we may need to take the following actions to support our liquidity needs during the next 12 months:
| • | Shift focus to existing products and customers with significantly reduced investment in new product and commercial development efforts; |
| • | Reduce expenditures for third party contractors, including consultants, professional advisors and other vendors; |
| • | Reduce or delay uncommitted capital expenditures, including expenditures related to the construction and commissioning of the new production facility in Brazil, non-essential facility and lab equipment, and information technology projects; and |
| • | Closely monitor our working capital position with customers and suppliers, as well as suspend operations at pilot plants and demonstration facilities. |
Implementing this plan could have a negative impact on our ability to continue our business as currently contemplated, including, without limitation, delays or failures in our ability to:
| • | Achieve planned production levels; |
| • | Develop and commercialize products within planned timelines or at planned scales; and |
| • | Continue other core activities. |
We expect to fund operations for the foreseeable future with cash and investments currently on hand, cash inflows from collaborations, grants, product sales, license and royalties and equity and debt financings, to the extent necessary. Some of our research and development collaborations are subject to risk that we may not meet milestones. Future equity and debt financings, if needed, are subject to the risk that we may not be able to secure financing in a timely manner or on reasonable terms, if at all. Our planned working capital and capital expenditure needs for the remainder of 2019 are dependent on significant inflows of cash from renewable product sales, license and royalties and existing collaboration partners, as well as additional funding from new collaborations.
Cash Flows during the Six Months Ended June 30, 2019 and 2018
Cash Flows from Operating Activities
Our primary uses of cash from operating activities are costs related to the production and sale of our products and personnel-related expenditures, offset by cash received from renewable product sales, licenses and royalties, and grants and collaborations.
For the six months ended June 30, 2019, net cash used in operating activities was $58.3 million, consisting primarily of a $38.1 million net loss, partially offset by $51.0 million of favorable non-cash adjustments that were primarily comprised of $7.3 million of debt discount amortization, $6.8 million of stock-based compensation and a $16.6 million loss on change in fair value of debt. Additionally, there was a $4.9 million increase in working capital.
For the six months ended June 30, 2018, net cash used in operating activities was $54.5 million, consisting of a $107.2 million net loss, $67.6 million of favorable non-cash adjustments and a $0.1 million increase in working capital. The non-cash adjustments were primarily comprised of a $36.4 million loss from change in fair value of derivative liabilities and $8.2 million of debt discount amortization.
Cash Flows from Investing Activities
For the six months ended June 30, 2019 and June 30, 2018, net cash used in investing activities was $6.0 million, and $4.2 million, respectively, comprised of property, plant and equipment purchases.
Cash Flows from Financing Activities
For the six months ended June 30, 2019, net cash provided by financing activities was $20.1 million, primarily comprised of $54.1 million of net proceeds from common stock issuances and $18.6 million of net proceeds from debt issuances, offset by $52.1 million of debt principal payments.
For the six months ended June 30, 2018, net cash provided by financing activities was $14.8 million, primarily comprised of $36.1 million of proceeds from issuance of debt, net of issuance costs, and $14.5 million proceeds from issuance of warrants, offset by $37.0 million of debt principal payments.
| 44 |
Off-Balance Sheet Arrangements
June 30, 2019, we did not have any material off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
Contractual Obligations
The following is a summary of our contractual obligations as of June 30, 2019:
| Payable by year ending December 31, (In thousands) | Total | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | |||||||||||||||||||||
| Principal payments on debt | $ | 182,098 | $ | 107,744 | $ | 3,951 | $ | 55,868 | $ | 12,281 | $ | 293 | $ | 1,961 | ||||||||||||||
| Interest payments on debt (1) | 35,042 | 11,499 | 12,588 | 9,372 | 1,170 | 106 | 307 | |||||||||||||||||||||
| Financing and operating leases | 35,783 | 8,262 | 9,859 | 7,228 | 7,400 | 3,034 | - | |||||||||||||||||||||
| Manufacturing reservation fee | 6,893 | 6,893 | - | - | - | - | - | |||||||||||||||||||||
| Partnership payment obligation | 11,906 | 3,175 | 3,175 | 3,175 | 2,381 | - | - | |||||||||||||||||||||
| Inducement fee | 4,585 | 2,745 | 1,840 | - | - | - | - | |||||||||||||||||||||
| Total | $ | 276,307 | $ | 140,318 | $ | 31,413 | $ | 75,643 | $ | 23,232 | $ | 3,433 | $ | 2,268 | ||||||||||||||
____________________
| (1) | Does not include any obligations related to make-whole interest or down-round provisions. Fixed and variable interest rates are described in Note 5, "Debt" in Part II, Item 8 of this Annual Report on Form 10-K/A. Future interest payments shown above for variable-rate debt instruments are measured on the basis of interest rates for such instruments as of June 30, 2019. The fixed interest rates are more fully described in Note 5, "Debt" in Part II, Item 8 of the 2018 10-K/A. |
| 45 |
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (Exchange Act). In designing and evaluating the disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit of possible controls and procedures.
Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2019. This conclusion was based on the material weaknesses in our internal control over financial reporting described in Part II, Item 9A, “Controls and Procedures” of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018 (the 2018 Form 10-K/A). The material weaknesses have not been remediated as of June 30, 2019.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. If not remediated, the material weakness in our internal control over financial reporting described in the 2018 Form 10-K/A could result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected on a timely basis.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended June 30, 2019, there were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
| 46 |
PART II
On April 3, 2019, a securities class action complaint was filed against Amyris and our CEO, John G. Melo, and former CFO (and current Chief Business Officer), Kathleen Valiasek, in the U.S. District Court for the Northern District of California. The complaint seeks unspecified damages on behalf of a purported class that would comprise all persons and entities that purchased or otherwise acquired our securities between March 15, 2018 and March 19, 2019. The complaint alleges securities law violations based on statements and omissions made by the Company during such period. Subsequent to the filing of the securities class action complaint described above, on June 21, 2019 and October 1, 2019, respectively, two separate purported shareholder derivative complaints were filed in the U.S. District Court for the Northern District of California (Bonner v. Doerr, et al., Case No. 4:19-cv-03621 and Carlson v. Doerr, et al., Case No. 4:19-cv-06230) based on similar allegations to those made in the securities class action complaint described above. The derivative complaints name Amyris, Inc. as a nominal defendant and name a number of the Company’s current and former officers and directors as additional defendants. The lawsuits seek to recover, on the Company's behalf, unspecified damages purportedly sustained by the Company in connection with allegedly misleading statements and omissions made in connection with the Company’s securities filings. The derivative complaints also seek a series of changes to the Company’s corporate governance policies, restitution to the Company from the individual defendants, and an award of attorneys’ fees. These cases are in the initial pleadings stage. We believe the complaints lack merit, and intend to defend ourselves vigorously. Given the early stage of these proceedings, it is not yet possible to reliably determine any potential liability that could result from these matters.
We may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of our business. Such matters are subject to many uncertainties and there can be no assurance that legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, results of operations, financial position or cash flows.
The risks described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the 2018 Form 10-K) could materially and adversely affect our business, financial condition and results of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. The “Risk Factors” section of the 2018 Form 10-K remains current in all material respects.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
See Note 4, “Debt” and Note 6, “Stockholders’ Deficit” in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding unregistered sales of equity securities during the three months ended June 30, 2019.
No underwriters or agents were involved in the issuance or sale of such securities. The securities were issued in private placements pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act) and Regulation D promulgated under the Securities Act or in private exchanges pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act. The investors participating in the offerings or exchanges acquired the applicable securities for investment purposes only and without intent to resell, were able to fend for themselves in these transactions, and are accredited investors as defined in Rule 501 of Regulation D promulgated under Section 3(b) of the Securities Act. These purchasers had adequate access, through their relationships with us, to information about us.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the three months ended June 30, 2019, we failed to make required interest payments under the November 2017 Ginkgo Note and the LSA (see Note 5, “Debt” in Part II, Item 8 of the 2018 Form 10-K/A and Note 4, “Debt” and Note 12, “Subsequent Events” in Part I, Item 1 of this Quarterly Report on Form 10-Q), in each case which defaults were not cured within 30 days. The total amounts of such defaults were, in respect of interest under the November 2017 Ginkgo Note, $0.2 million and, in respect of interest under the LSA, $0.9 million. On August 14, 2019, we received an extension for such interest payments under the LSA until December 16, 2019; see Note 12, “Subsequent Events” in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. On September 29, 2019, we received an extension for such interest payments under the November 2017 Ginkgo Note until December 15, 2019; see Note 12, “Subsequent Events” in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
| 47 |
None.
| 48 |
| a | Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated under the Exchange Act. |
| b | Translation to English from Portuguese in accordance with Rule 12b-12(d) of the regulations promulgated by the Securities and Exchange Commission under the Exchange Act. |
| c | Indicates management contract or compensatory plan or arrangement. |
| d | This certification shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
| 49 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMYRIS, INC. | |||
| By: | /s/ John G. Melo | ||
| John G. Melo | |||
| President and Chief Executive Officer (Principal Executive Officer) | |||
| October 7, 2019 | |||
| By: | /s/ Jonathan Wolter | ||
| Jonathan Wolter | |||
| Interim Chief Financial Officer (Principal Financial Officer) | |||
| October 7, 2019 | |||
50
Exhibit 2.01
Execution Version
AMENDMENT NO. 2 TO
QUOTA PURCHASE AGREEMENT
This Amendment No. 2 to the Quota Purchase Agreement, dated as of November 17, 2017 (the “Agreement”), between Amyris, Inc., a Delaware corporation, AB Technologies LLC, a Delaware limited liability company (collectively, the “Seller”), and DSM Produtos Nutricionais Brasil S.A., a Brazilian corporation (the “Purchaser” and together with the Seller, the “Parties”) is made between the Seller and the Purchaser as of April 16, 2019 (this “Second Amendment”), with the express consenting of Amyris Biotecnologia do Brasil Ltda. (current corporate name of SMA Indústria Química Ltda.), a limited liability company with its principal place of business in the city of Pradópolis, State of São Paulo, at São Martinho Farm, Rural Area, Zip Code 14850-000, enrolled with the CNPJ/MF under No. 12.065.083/0001-86 (“SMA”). Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Agreement or in the First Amendment (and in the Commitment for Land Agreement attached thereto) (as defined below), as the case may be. This Second Amendment shall become effective as of the date that Amyris, Inc. or any of its affiliates receives the Cash Payment in accordance with that certain letter agreement dated April 16, 2019 regarding the Assignment of Value Sharing Agreement.
WHEREAS, the Parties entered into the Agreement regarding the sale by the Seller and the purchase by the Purchaser of all the issued and outstanding quotas of the capital stock of the Amyris Brasil Ltda., a limited company with its principal place of business in the city of Campinas, State of São Paulo, at Rua James Clerk Maxwell, No. 315, Techno Park, Zip Code 13069-380, enrolled with the CNPJ/MF under No. 09.379.224/0001-20 (“Company”), which was merged into Purchaser on January 2nd, 2019 being the Purchaser the legal successor of the Company for all legal purposes;
WHEREAS, in accordance with Section 5.18 of the Agreement, promptly after the date of the Agreement, the Parties should negotiate the terms and conditions of the Sublease pursuant to which the Company would sublease to SMA the land underlying the Brotas 2 Facility;
WHEREAS, also as provided in Section 5.17(b) of the Agreement, the Purchaser and the Reorganized Company should provide to the Seller and its Subsidiaries those Services mutually agreed by the Parties in order to allow for the operation of the Brotas 2 Facility as contemplated by the Seller to be conducted. Services should be made available for such period of time until the Brotas 2 Facility was fully operational and met its production targets. In addition, it was expected that prior to the date the Brotas 2 Facility was fully operational and met its production targets, the Seller might require access to the Brotas 1 Facility and on-site training from Purchaser’s employees to Seller’s employees at the Brotas 2 Facility;
WHEREAS, on December 26, 2017, the landlord of the Leased Rural Real Property granted an express authorization for the Company to partially assign the real estate interests over Brotas 2 Facility and consented that the document formalizing such assignment would be timely drafted by mutual agreement;
WHEREAS, on December 28, 2017 the Parties entered into the Amendment No. 1 to the Agreement (the “First Amendment”);
WHEREAS, Part B of Schedule 5.10 of the Agreement, as amended by the First Amendment, set forth that as part of the Post-Closing Registrations the Company should enter into a sublease or direct lease with SMA with respect to the land underlying the Brotas 2 Facility in accordance with the Commitment for Land Agreement in the form attached as Exhibit B to such Schedule 5.10;
WHEREAS, the Commitment for Land Agreement intended to formalize the terms and conditions according to which the Company, in the capacity of tenant under the Rural Real Property Lease Agreement, and SMA should engage with the landlord under the Rural Real Property Lease Agreement, to discuss the manner in which the real estate interests as between the Brotas 1 Facility and the Brotas 2 Facility should be apportioned in order that SMA would become entitled to interests over the area related to the Brotas 2 Facility;
WHEREAS, since the Closing Date, SMA has actually occupied a portion of the Brotas 2 Facility, but until this date SMA, the Company and the landlord have not executed any additional written agreement regarding the real estate of the Brotas 2 Facility;
WHEREAS, SMA has informed the Purchaser that it is no longer interested in occupying the area related to Brotas 2 Facility;
WHEREAS, the Parties have successfully negotiated with the landlord the maintenance of the terms regarding the components the landlord supplies to SMA, in accordance with Section 1(b) of the Commitment for Land Agreement, and no further action is required in such respect;
WHEREAS, the Parties have agreed that the Purchaser’s notice contact information has changed under Section 11.02 of the Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties, with the consent of SMA, agree to amend the Agreement, the First Amendment and the Commitment for Land Agreement as follows:
| 1. | Termination of any and all Obligations relating to the Lease of the Brotas 2 Facility. SMA hereby declares and the Company acknowledges that SMA decided not to build and operate its new industrial plant on the area of the Brotas 2 Facility. The Parties hereby decide, by mutual agreement, to amend the Agreement, the First Amendment and the Commitment for Land Agreement to terminate any and all obligations of the Parties, the Company and SMA to negotiate and/or enter into any further agreement among them or with the landlord regarding the lease of the real estate of the Brotas 2 Facility, including, without limitation, the obligations provided by Sections 5.17(b) and 5.18 of the Agreement; Sections 1(a), 2 and 3 of the Commitment for Land Agreement; and Section B.2 of Schedule 5.10 of the Agreement, as amended by the First Amendment, which are entirely revoked effective on this date, without any compensation of any nature by any Party to another. |
| 2. | Transition Services Agreement. The Purchaser and the Reorganized Company are not obliged to grant access nor provide the Seller and its Subsidiaries Services to allow for the operation of the Brotas 2 Facility. The parties shall continue to negotiate in good faith a corresponding amendment to the Transition Services Agreement executed on December 28, 2017 to reflect a mutually negotiated reduction of its scope. |
| 2 |
| 3. | Brotas 2 Facility’s Occupancy. Although SMA will no longer build and operate its new industrial plant on the area of Brotas 2 Facility, since the Closing Date SMA has actually occupied and used a portion of the area of Brotas 2 Facility, as described in the sketch (“croquí”) of Exhibit I hereto (the “Occupied Area”), without the payment of any rent. In such Occupied Area SMA has stored equipment and raw material related to the construction of an industrial plant of conversion by fermentation of sugars into production flavors, fragrances, cosmetics, food and nutraceuticals segments . In this sense, the Parties agree as follows: |
| (i) | Effective on a date to be mutually agreed in good faith, the SMA shall cease to occupy and use the Occupied Area for any purpose, removing before such date any and all equipment or material belonging to SMA that are currently stored in the Occupied Area, returning the Occupied Area to the Purchaser/Company clean and in good conditions of conservation, use and maintenance, and Purchaser/Company shall provide SMA with such access as required by SMA in order to perform the foregoing obligations; and |
| (ii) | Seller and SMA represent and warrant that they are aware of the terms of the Rural Real Property Lease Agreement and, during all the term of the sublease of the Occupied Area, they undertake to comply with any and all conditions set forth therein that might be, in any manner, related to the Occupied Area, directly or indirectly, as well as to comply with any and all rules currently in force, specially regulatory and environmental rules, bearing directly with any and all costs, damages and/or penalties resulting from their acts or omissions. |
| 4. | Replacement of representative person and posting address to the Purchaser. Section 11.02(b) of the Agreement is here by deleted and amended restated to read: |
“(b) If to the Purchaser:
DSM Produtos Nutricionais Brasil S.A
Av. Presidente Juscelino Kubitschek, 1.909, Torre Sul, 5o andar
São Paulo – SP, CEP: 04543-907, Brazil
Phone:
Attention:
Email:
with a copy (which shall not constitute notice) to:
Latham & Watkins, LLP
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
Facsimile:
Attention:
Email:”
| 3 |
| 5. | No Other Amendments. Except as provided above, the Agreement and the First Amendment shall remain in full force and effect, and the execution of this Second Amendment is not a waiver by either Party of any of the terms or provisions of the Agreement or of the First Amendment. |
| 6. | Counterparts. This Second Amendment may be executed in one or more counterparts, each of which shall be deemed and original, but all of which together shall constitute one and the same document. |
[Remainder of Page Intentionally Left Blank.]
| 4 |
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Second Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized, along with the consent of Amyris Brasil and SMA.
| Parties: | |||
| AMYRIS, INC. | |||
| By: | /s/ John Melo | ||
| Name: John Melo | |||
| Title: Chief Executive Officer | |||
| AB TECHNOLOGIES LLC | |||
| By: | /s/ John Melo | ||
| Name: John Melo | |||
| Title: Chief Executive Officer | |||
| DSM PRODUTOS NUTRICIONAIS BRASIL S.A. | |||
| By: | /s/ Marcelo P. Castanares | ||
| Name: Marcelo P. Castanares | |||
| Title: Finance Director | |||
| By: | /s/ Mauricio M. Adade | ||
| Name: Mauricio M. Adade | |||
| Title: President DSM LATAM | |||
| [Signatures continue on the page below] | |||
[Signature Page to Amendment No. 2 to the Quota Purchase Agreement]
| Consenting Parties: | |||
| AMYRIS BIOTECNOLOGIA DO BRASIL LTDA. | |||
| By: | /s/ Reginaldo Schwery | ||
| Name: Reginaldo Schwery | |||
| Title: CFO | |||
| By: | /s/ Giani Ming Valent | ||
| Name: Giani Ming Valent, PMP | |||
| Title: Diretor de Engenharia | |||
[Signature Page to Amendment No. 2 to the Quota Purchase Agreement]
Exhibit 4.01
AMYRIS, INC.
PROMISSORY NOTE
| $8,000,000 | Issuance date: April 8, 2019 |
AMYRIS, INC., a Delaware corporation (the “Company”), for value received, hereby promises to pay to FORIS VENTURES, LLC, or registered assigns (the “Holder”), the principal sum of Eight Million Dollars ($8,000,000), or such lesser amount as shall then equal the outstanding principal amount hereunder, plus a fee of One Million Dollars ($1,000,000) (the “Note Fee”), unless already paid pursuant to the terms hereof, on October 14, 2019 (the “Maturity Date”); provided, however, that the Note Fee shall be Five Hundred Thousand Dollars ($500,000) if the Obligations are paid in full on or before July 15, 2019.
Payment of the principal of this Note, as well as the Note Fee, shall be made upon the surrender of this Note to the Company at its chief executive office (or such other office within the United States as shall be designated by the Company to the holder hereof) (the “Designated Office”) on the Maturity Date or such earlier date in accordance with the terms of this Note. All amounts payable in cash with respect to this Note shall be made by wire transfer to the holder, provided that if the holder shall not have furnished wire instructions in writing to the Company no later than the business day immediately prior to the date on which the Company makes such payment, such payment may be made by U.S. dollar check mailed to the address of the holder as such address shall appear in the Company register.
This Note was issued pursuant to the Credit Agreement, dated as of April 8, 2019 (as amended from time to time, the “Agreement”), by and among the Company, the original holder of this Note and is subject to provisions of the Agreement. Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Agreement.
Notwithstanding anything to the contrary herein, this Note is subordinated in right of payment to that certain Tranche II Senior Convertible Note issued on January 15, 2014 by the Company to Wolverine Flagship Fund Trading Limited (the “Senior Debt”). For the avoidance of doubt, the Lender will not demand or receive from the Company (and the Company will not pay to the Lender) all or any part of this Note, including without limitation the Note Fee, by way of payment, prepayment, setoff, lawsuit or otherwise, nor will the Lender commence, or cause to commence, prosecute or participate in any administrative, legal or equitable action against the Company, for so long as any portion of the Senior Debt (other than any contingent obligations for which no claim has been asserted) remains outstanding; provided, however, that if a proceeding has been commenced by or against the Company, the Lender may file a claim or statement of interest with respect to this Note, the Lender may file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding, or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Lender, vote on any plan of reorganization and make any filings and motions that are, in each case, not in contravention of the provisions of this Agreement, with respect to this Note, and the Lender may exercise any rights or remedies as unsecured creditors against the Company so long as doing so is not, directly or indirectly, inconsistent with, or in violation of, the terms of this provision.
1. Redemption. This Note, including the Note Fee, is subject to redemption, in whole or from time to time in part (in any amount that is an integral multiple of $1,000), upon not less than five (5) days’ prior written notice in the manner provided in Section 5(b) hereof, at the election of the Company, at a redemption price of 100% of the amount hereof.
2. Certain Covenants. Until the Obligations hereunder are paid in full:
(a) The Company will maintain or cause to be maintained its corporate or other organizational existence and good standing in its jurisdiction of incorporation and maintain its qualification in each jurisdiction where the failure to so qualify would reasonably be expected to have a Material Adverse Effect.
(b) The Company will comply with all applicable statutes, regulation and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, other than those the noncompliance with which would not have, and which would not reasonably be expected to have, a Material Adverse Effect.
(c) The Company will cause the proceeds of the loans evidenced under this Note to be used solely (a) as working capital and (b) to fund the Company’s general business requirements, and not for personal, family or household purposes.
(d) The Company will execute any further instruments and take any further action as the Holder reasonably requests to effect the purposes of this Note or the Agreement.
3. Events of Default.
(a) “Event of Default”, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any amount upon this Note when it becomes due and payable;
(ii) default in the performance, or breach, of any covenant of the Company herein (other than a default in the performance or breach of which is specifically dealt with elsewhere in this Section 3(a)) and continuance of such default or breach for a period of 10 days;
(iii) the commencement against the Company of an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated bankrupt or insolvent and such case or proceeding is not dismissed or stayed within 45 days;
(iv) the commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against either the Company, or the filing by either the Company of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by either the Company of an assignment for the benefit of creditors, or the admission by either the Company in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action;
(v) The Company or any Person acting for the Company makes any representation, warranty, or other statement now or later in this Note or the Agreement or in any writing delivered to the Holder or to induce the Holder in connection with this Note, the Agreement or any other document entered into in connection with this Note or the Agreement or to enter this Note, the Agreement or any other document entered into in connection with this Note or the Agreement, and such representation, warranty, or other statement is incorrect in any material respect when made;
(vi) there occurs a breach or default under the Senior Debt which permits acceleration of any amounts outstanding under the Senior Debt; or
(vii) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of fifty percent (50.0%) or more of the ordinary voting power for the election of directors of the Company (determined on a fully diluted basis).
(b) Upon the occurrence and during the continuance of an Event of Default, the Holder may (a) declare all Obligations hereunder immediately due and payable (but if an Event of Default described in Section 3(a)(iv) or 3(a)(v) occurs all Obligations hereunder are immediately due and payable without any action by the Holder) and (b) exercise all rights and remedies available to the Holder under this Note, the Agreement or at law or equity. The Company will give the Holder notice, within five (5) business days of the occurrence thereof, of any Event of Default of which it is or becomes aware. Such notice shall be given in the manner provided in Section 4(b).
4. Other.
(a) No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of this Note, as well as the Note Fee, at the times and places herein prescribed or to repay this Note as herein provided.
(b) The Company will give prompt written notice to the Holder of any change in the location of the Designated Office. Any notice to the Company or to the Holder shall be given in the manner set forth in the Credit Agreement.
(c) The transfer of this Note is registrable on the register maintained by the Company upon surrender of this Note for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Note for registration of transfer, the Company and any agent of the Company may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.
(d) This Note shall be governed by and construed in accordance with the internal laws of the State of California, without regard to the conflicts of law provisions of the State of California.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
Dated: April 8, 2019
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
Exhibit 4.02
Security pUrchase AGREEMENT
This Security Purchase Agreement (this “Agreement”) is made as of April 15, 2019 (the “Effective Date”) by and between Amyris, Inc., a Delaware corporation (the “Company”), and Foris Ventures, LLC (“Purchaser”).
1. Issuance of Securities. Effective as the Effective Date, the Company will issue and sell to Purchaser (i) 6,732,369 shares (the “Shares”) of the Company’s Common Stock, $0.0001 par value per share (the “Common Stock”) and (ii) a warrant in the form attached hereto as Exhibit A (the “Warrant”), registered in the name of the Purchaser, to purchase up to 5,424,804 shares of the Company’s Common Stock, with an exercise price per share equal to $2.87, subject to adjustment therein (the “Warrant Shares” and, together with the Shares and the Warrant, the “Securities”). Purchaser will purchase the Shares at a price of $2.87 per Share in cash, which price is the last closing sale price of the Company’s common stock on the Nasdaq Stock Market prior to the entry into this Agreement, and which has been determined by the Company’s Board of Directors to be the fair market value per share of the Shares. The total purchase price payable by the Purchaser for the Securities is $20,000,000 (the “Total Purchase Price”).
2. Closing and Delivery.
(a) Closing. The closing (“Closing”) of the transactions contemplated hereby shall be held at the offices of Fenwick & West LLP, 801 California Street, Mountain View, California 94041 within two Business Days of the date of this Agreement (such date, the “Closing Date”), or at such other time and place as the Company and the Purchaser mutually agree upon. “Business Day” shall mean any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
(b) Delivery. At the Closing, the Company shall execute and deliver to the Purchaser the Warrant and the Purchaser shall pay the Company the applicable Total Purchase Price in immediately available funds. Promptly following the Closing, the Company shall deliver to the Purchaser a single stock certificate representing the number of Shares purchased by the Purchaser, such stock certificate to be registered in the name of the Purchaser, or in such nominee’s or nominees’ name(s) as designated by the Purchaser in writing, against payment of the purchase price therefor by wire transfer of immediately available funds to such account or accounts as the Company shall designate in writing to Purchaser.
3. Company Representations. The Company represents and warrants to Purchaser as follows:
(a) Organization and Standing. The Company is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under the Transaction Agreements (a “Material Adverse Effect”).
(b) Power. The Company has all requisite power to execute and deliver this Agreement, to sell and issue the Securities hereunder, and to carry out and perform its obligations under the terms of this Agreement and the Warrant (the “Transaction Agreements”).
(c) Authorization. The execution, delivery, and performance of the Transaction Agreements by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “Enforceability Exceptions”).
(d) Consents and Approvals. Except for any Current Report on Form 8-K or Notice of Exempt Offering of Securities on Form D to be filed by the Company in connection with the transaction contemplated hereby, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transaction contemplated by the Transaction Agreements. Assuming the accuracy of the representations of the Purchaser in Section 3, no consent, approval, authorization or other order of, or registration, qualification or filing with, any court, regulatory body, administrative agency, self-regulatory organization, stock exchange or market (including The Nasdaq Stock Market), or other governmental body is required for the execution and delivery of the Transaction Agreements, the valid issuance, sale and delivery of the Securities to be sold pursuant to this Agreement other than such as have been or will be made or obtained, or for any securities filings required to be made under federal or state securities laws applicable to the offering of the Securities.
(e) Non-Contravention. Except as disclosed in Schedule 3(e), the execution and delivery of the Transaction Agreements, the issuance, sale and delivery of the Securities to be sold by the Company under this Agreement, the performance by the Company of its obligations under the Transaction Agreements and/or the consummation of the transaction contemplated hereby will not (a) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (ii) the Company’s Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (iii) any statute or law, judgment, decree, rule, regulation, ordinance or order of any court or governmental or regulatory body (including The Nasdaq Stock Market), governmental agency, arbitration panel or authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any if its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject. For purposes of this Section 2(e), the term “material” shall apply to agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound involving obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 in a 12-month period.
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(f) Shares. The Shares are duly authorized and when issued pursuant to the terms of this Agreement will be validly issued, fully paid, and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Agreement at the time a transfer is proposed. Except as disclosed in Schedule 3(f), the issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(g) Authorization of the Warrants. The Warrants have been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
(h) Authorization of the Warrant Shares. The Warrant Shares issuable upon exercise of the Warrants have been duly authorized and reserved for issuance upon exercise by all necessary corporate action and such shares, when issued upon such exercise in accordance of the terms of the Warrants, will be validly issued and will be fully paid and non-assessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Warrant Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Agreement at the time a transfer is proposed. Except as disclosed in Schedule 3(f), the issuance and delivery of the Warrant Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other Person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(i) No Registration. Assuming the accuracy of each of the representations and warranties of the Purchaser, the issuance by the Company of the Securities is exempt from registration under the Securities Act of 1933, as amended.
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4. Investment Representations. In connection with the receipt of the Securities pursuant to this Agreement, Purchaser represents to the Company the following:
(a) The execution, delivery and performance by Purchaser of this Agreement do not and will not contravene or constitute a default under, or violation of, or be subject to penalties under, (i) any agreement (or require the consent of any party under any such agreement that has not been made or obtained) to which Purchaser is a party, or (ii) any judgment, injunction, order, decree or other instrument binding upon Purchaser, except where such contravention, default, violation or failure to obtain a consent, individually or in the aggregate, would not reasonably be expected to impair Purchaser’s ability to perform fully any obligation which Purchaser has or will have under this Agreement.
(b) Purchaser understands the definition of the term “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”), and qualifies as an accredited investor.
(c) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Purchaser is acquiring the Securities for investment for its own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to transfer the Securities to any other person or entity in such a “distribution.”
(d) Purchaser understands that the Securities have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(e) Purchaser understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Purchaser must hold the Securities indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser acknowledges that the Company has no obligation to register or qualify the Securities for resale.
(f) By reason of his business and financial experience, Purchaser has the ability to protect her own interests in connection with the purchase of the Securities.
5. Restrictive Legends and Stop-Transfer Orders.
The certificate or certificates representing the Securities shall bear such legends as the Company deems to be required for the purpose of compliance with applicable Federal or state securities laws or as otherwise required by law.
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6. Beneficial Ownership Limitation.
The Company shall not effect any exercise or conversion of any Company security, and the Purchaser shall not have the right to exercise or convert any portion of any Company security, to the extent that after giving effect to such issuance after exercise or conversion, the Purchaser (together with the Purchaser’s affiliates, and any other persons acting as a group together with the Purchaser or any of the Purchaser’s affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Purchaser and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise or conversion of the Company security with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise or conversion of the remaining, nonexercised or nonconverted portion of the Company security to which such determination is being made that is beneficially owned by the Purchaser or any of its Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Purchaser or any of its Attribution Parties. Except as set forth in the preceding sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, it being acknowledged by the Purchaser that the Purchaser is solely responsible for any schedules required to be filed in accordance therewith.. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 5, in determining the number of outstanding shares of Common Stock, the Purchaser may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the U.S. Securities and Exchange Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Purchaser, the Company shall within two trading days confirm orally and in writing to the Purchaser the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company by the Purchaser or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 19.99% of the number of shares of the Common Stock outstanding. The Purchaser, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 5. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.
7. Fees and Expenses. The Company shall pay the reasonable fees and expenses of Purchaser in connection with the transactions contemplated hereby.
8. Miscellaneous.
(a) This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
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(b) This Agreement may be executed in two counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
(c) The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.
[Signature Pages Follow]
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The undersigned has executed this Agreement as of the date first set forth above.
| the company: | |||
| AMYRIS, inc. | |||
| By: | /s/ Kathleen Valiasek | ||
| (Signature) | |||
| Name: | Kathleen Valiasek | ||
| Title: | Chief Financial Officer | ||
| Address: | |||
| 5885 Hollis Street, Suite 100 | |||
| Emeryville, CA 94608 | |||
| Attention: General Counsel | |||
| Facsimile: | |||
| Email: | |||
| A-1 |
The undersigned has executed this Agreement as of the date first set forth above.
| PURCHASER: | |||
| FORIS VENTURES, LLC | |||
| /s/ Barbara Hager | |||
| (Signature) | |||
| Name: | Barbara Hager | ||
| Title: | |||
| Address: | |||
| c/o | |||
| Attention: | |||
| Facsimile: | |||
| Email: | |||
8
Exhibit 4.03
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
AMYRIS, INC.
| Warrant Shares: 5,424,804 | Issue Date: April 16, 2019 |
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Foris Ventures, LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the two (2) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Amyris, Inc., a Delaware corporation (the “Company”), up to five million four hundred and twenty four thousand eight hundred and four (5,424,804) shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated April 15, 2019, among the Company and the Holder.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by electronic (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”). Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $2.87, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering the resale of the Warrant Shares subject to the applicable Notice of Exercise is not available for the resale of such Warrant Shares, at any time after the six month anniversary of the Initial Exercise Date, this Warrant may be exercised, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
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(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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Notwithstanding anything herein to the contrary, on the Termination Date, if a registration statement covering the resale of the Warrant Shares is not available for the resale of the Warrant Shares, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d) Mechanics of Exercise.
| i. | Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within two (2) Trading following delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. |
ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
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iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
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vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e). Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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b) [INTENTIONALLY OMITTED]
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time after the Original Issue Date the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then each Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, but excluding any dividend that results in adjustment to the Conversion Price pursuant to Section 3(a) above) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.
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e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (as if the exercise of the Warrant occurred immediately prior to the occurrence of such Fundamental Transaction), at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of common stock of the successor or acquiring corporation or shares of Common Stock of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall within two (2) Trading Days deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
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ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4(a) of the Warrant Exercise Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issue date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 4(a) of the Warrant Exercise Agreement.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
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Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares.
1. During the period the Warrant is outstanding from and after the Initial Exercise Date, the Company covenants that it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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2. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
3. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Warrant Exercise Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Warrant Exercise Agreement.
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i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
[Signature page to Warrant]
NOTICE OF EXERCISE
To: AMYRIS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Applicable Exercise Price: $
(3) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(4) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
| Name of Investing Entity: | ||
| Signature of Authorized Signatory of Investing Entity: | ||
| Name of Authorized Signatory: | ||
| Title of Authorized Signatory: | ||
| Date: |
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |||
| (Please Print) | |||
| Address: | |||
| (Please Print) | |||
| Phone Number: | |||
| Email Address: | |||
| Dated: | _______________ __, ______ | ||
| Holder’s Signature: | |||
| Holder’s Address: | |||
Exhibit 4.04
AMRYIS, INC.
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement (this “Amendment”) is made as of April 26, 2019 by and between Amyris, Inc., a Delaware corporation (the “Company”), and Foris Ventures, LLC (the “Holder”).
RECITALS
WHEREAS, The Company issued and sold a warrant (the “Warrant”) to the Holder, pursuant to the terms of that certain Securities Purchase Agreement dated as of April 15, 2019 (the “Purchase Agreement”) between the Company and the Holder.
WHEREAS, The Company and the Holder now desire to amend certain provisions of the Warrant in certain respects as set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Warrant Amendment.
(a) Section 2(e) of the Warrant shall be amended and restated to read in its entirety as follows:
“e) Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below); provided, that the Beneficial Ownership Limitation shall not apply in the event that the Company obtains stockholder approval for issuances of shares of Common Stock in excess of the Beneficial Ownership Limitation and otherwise satisfies the requirements of Nasdaq Stock Market Rule 5635. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.”
2. No Other Amendments. Except as expressly set forth above, all of the terms and conditions of the Warrant remain in full force and effect.
3. Miscellaneous.
(a) Governing Law. This Amendment and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
(b) Counterparts. This Amendment may be executed in two counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
[SIGNATURE PAGES FOLLOW]
| -2- |
The undersigned has executed this Warrant Amendment Agreement as of the date first set forth above.
| the company: | |||
| AMYRIS, inc. | |||
| By: | /s/ Kathleen Valiasek | ||
| (Signature) | |||
| Name: | Kathleen Valiasek | ||
| Title: | Chief Financial Officer | ||
| Address: | |||
| 5885 Hollis Street, Suite 100 | |||
| Emeryville, CA 94608 | |||
| Attention: General Counsel | |||
| Facsimile: | |||
| Email: | |||
[SIGNATURE PAGE TO WARRANT AMENDMENT AGREEMENT]
The undersigned has executed this Warrant Amendment Agreement as of the date first set forth above.
| PURCHASER: | |||
| FORIS VENTURES, LLC | |||
| /s/ Barbara Hager | |||
| (Signature) | |||
| Name: | |||
| Title: | |||
| Address: | |||
| c/o | |||
| Attention: | |||
| Facsimile: | |||
| Email: | |||
Exhibit 4.07
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
AMYRIS, INC.
| Warrant Shares: 960,225 | Issue Date: May 10, 2019 |
THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, LMAP KAPPA LIMITED or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the two (2) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Amyris, Inc., a Delaware corporation (the “Company”), up to nine hundred sixty thousand two hundred and twenty five (960,225) shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the “Exchange Agreement”), dated May 10, 2019, among the Company and the Holder, as such definitions are in effect on May 10, 2019.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by electronic (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”). Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $5.02, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering the resale of the Warrant Shares subject to the applicable Notice of Exercise is not available for the resale of such Warrant Shares, at any time after the six month anniversary of the Initial Exercise Date, this Warrant may be exercised, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:
| (A) = | as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
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(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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Notwithstanding anything herein to the contrary, on the Termination Date, if a registration statement covering the resale of the Warrant Shares is not available for the resale of the Warrant Shares, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within two (2) Trading following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day commencing one Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or
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Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) [INTENTIONALLY OMITTED]
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time after the Original Issue Date the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then each Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, but excluding any dividend that results in adjustment to the Conversion Price pursuant to Section 3(a) above) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (as if the exercise of the Warrant occurred immediately prior to the occurrence of such Fundamental Transaction), at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of common stock of the successor or acquiring corporation or shares of Common Stock of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall within two (2) Trading Days deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issue date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) [INTENTIONALLY OMITTED]
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
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d) Authorized Shares.
During the period the Warrant is outstanding from and after the Initial Exercise Date, the Company covenants that it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
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e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Exchange Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Exchange Agreement.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
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m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
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NOTICE OF EXERCISE
TO: AMYRIS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Applicable Exercise Price: $
(3) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(4) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
| Name of Investing Entity: | ||
| Signature of Authorized Signatory of Investing Entity: | ||
| Name of Authorized Signatory: | ||
| Title of Authorized Signatory: | ||
| Date: |
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |||
| (Please Print) | |||
| Address: | |||
| (Please Print) | |||
| Phone Number: | |||
| Email Address: | |||
| Dated: | _______________ __, ______ | ||
| Holder’s Signature: | |||
| Holder’s Address: | |||
18
Exhibit 4.08
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
AMYRIS, INC.
| Warrant Shares: 431,378 | Issue Date: May 10, 2019 |
THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, Silverback Opportunistic Credit Master Fund Limited or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the two (2) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Amyris, Inc., a Delaware corporation (the “Company”), up to four hundred thirty one thousand three hundred and seventy eight (431,378) shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Exchange Agreement (the “Exchange Agreement”), dated May 10, 2019, among the Company and the Holder, as such definitions are in effect on May 10, 2019.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by electronic (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (“Notice of Exercise”). Within two (2) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
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b) Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $5.02, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering the resale of the Warrant Shares subject to the applicable Notice of Exercise is not available for the resale of such Warrant Shares, at any time after the six month anniversary of the Initial Exercise Date, this Warrant may be exercised, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
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(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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Notwithstanding anything herein to the contrary, on the Termination Date, if a registration statement covering the resale of the Warrant Shares is not available for the resale of the Warrant Shares, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
| d) | Mechanics of Exercise. |
i. Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise and (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within two (2) Trading following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day commencing one Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
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e) Holder’s Exercise Limitations. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
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Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) [INTENTIONALLY OMITTED]
c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time after the Original Issue Date the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then each Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
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d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction, but excluding any dividend that results in adjustment to the Conversion Price pursuant to Section 3(a) above) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction (as if the exercise of the Warrant occurred immediately prior to the occurrence of such Fundamental Transaction), at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of common stock of the successor or acquiring corporation or shares of Common Stock of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall within two (2) Trading Days deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
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Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original issue date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) [INTENTIONALLY OMITTED]
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
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d) Authorized Shares.
During the period the Warrant is outstanding from and after the Initial Exercise Date, the Company covenants that it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
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e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Exchange Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Exchange Agreement.
i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
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m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
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NOTICE OF EXERCISE
To: AMYRIS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Applicable Exercise Price: $
(3) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(4) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
| Name of Investing Entity: | ||
| Signature of Authorized Signatory of Investing Entity: | ||
| Name of Authorized Signatory: | ||
| Title of Authorized Signatory: | ||
| Date: |
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | |||
| (Please Print) | |||
| Address: | |||
| (Please Print) | |||
| Phone Number: | |||
| Email Address: | |||
| Dated: | _______________ __, ______ | ||
| Holder’s Signature: | |||
| Holder’s Address: | |||
Exhibit 4.09
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
WARRANT TO PURCHASE COMMON STOCK
| Company: | Amyris, Inc., a Delaware corporation |
| Number of Shares: | 352,638 |
| Class of Stock: | Common Stock |
| Warrant Price: | $4.56 per share |
| Issue Date: | May 14, 2019 |
| Expiration Date: | The 2nd anniversary after the Issue Date |
THIS WARRANT TO PURCHASE COMMON STOCK (this “Warrant”) certifies that, for good and valuable consideration, FORIS VENTURES, LLC (together with any registered holder from time to time of this Warrant or any holder of the shares issuable or issued upon exercise of this Warrant, “Holder”) is entitled to purchase the number of fully paid and nonassessable shares of the class of securities of the Company at the Warrant Price, all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. This Warrant is issued in connection with the Exchange Agreement, dated as of May 10, 2019, as amended from time to time (the “Exchange Agreement”), between Company and the Holder. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Exchange Agreement.
ARTICLE 1 EXERCISE.
1.1. Conditions to Exercise. Holder may not exercise this Warrant unless and until the exercise of this Warrant, and the issuance of the Shares (as defined below) upon exercise hereof, has been approved by the Company’s stockholders at a duly called and held annual or special meeting of the stockholders of the Company in accordance with the Restated Certificate of Incorporation and Restated Bylaws of the Company and otherwise satisfies the requirements of Nasdaq Stock Market Rule 5635 (the “Exercise Condition”). Upon satisfaction of the Exercise Condition and thereafter up to and including the Expiration Date, this Warrant shall be exercisable for three hundred fifty two thousand six hundred and thirty eight (352,638) shares of the Company’s Common Stock (subject to adjustment as provided herein) (the “Shares”). The number of Shares and the Warrant Price are subject to adjustment as provided herein, and all references to “Shares” and “Warrant Price” herein shall be deemed to include any such adjustment or series of adjustments.
1.2. Method of Exercise.
(a) Mechanics. This Warrant may be exercised by the Holder on any day on or after the date the Exercise Condition has been satisfied (an “Exercise Date”), in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the number of Shares as to which this Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as defined in Section 1.3). The Holder shall not be required to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than all of the Shares shall have the same effect as cancellation of the original of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Shares. Execution and delivery of an Exercise Notice for all of the then-remaining Shares shall have the same effect as cancellation of the original of this Warrant after delivery of the Shares in accordance with the terms hereof. On or before the third (3rd) Trading Day following the date on which the Company has received such Exercise Notice, the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Exercise Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Shares with respect to which this Warrant has been exercised, irrespective of the date such Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Shares (as the case may be). If this Warrant is submitted in connection with any exercise pursuant to this Section 1 and the number of Shares represented by this Warrant submitted for exercise is greater than the number of Shares being acquired upon an exercise and upon surrender of this Warrant to the Company by the Holder, then, at the request of the Holder, the Company shall as soon as practicable and in no event later than two (2) Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant representing the right to purchase the number of Shares purchasable immediately prior to such exercise under this Warrant, less the number of Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded down to the nearest whole number. The Company shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent) that may be payable with respect to the issuance and delivery of Shares upon exercise of this Warrant. Notwithstanding the foregoing, except in the case where an exercise of this Warrant is validly made pursuant to a Cashless Exercise), the Company’s failure to deliver Shares to the Holder on or prior to the later of ((i) two (2) Trading Days after receipt of the applicable Exercise Notice and (ii) one (1) Trading Day after the Company’s receipt of the Aggregate Exercise Price (or valid notice of a Cashless Exercise (such later date, the “Share Delivery Deadline”) shall not be deemed to be a breach of this Warrant.
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(b) Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, on or prior to the Share Delivery Deadline, if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, to issue and deliver to the Holder (or its designee) a certificate for the number of Shares to which the Holder is entitled and register such Shares on the Company’s share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the balance account of the Holder or the Holder’s designee with DTC for such number of Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant (as the case may be), and if on or after such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then, in addition to all other remedies available to the Holder, the Company shall, within two (2) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such Shares) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such Shares or credit the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of Shares to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Shares multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii). Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the terms hereof.
1.3. Cashless Exercise Right. Notwithstanding anything contained herein to the contrary, if a registration statement covering the resale of the Shares subject to the applicable Exercise Notice is not available for the resale of such Shares, at any time after the six month anniversary of the satisfaction of the Exercise Condition and on or before the Expiration Date, this Warrant may be exercised, in whole or in part, at the election of the Holder in its sole discretion, by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Shares determined according to the following formula (a “Cashless Exercise”):
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| Net Number = (A x B) - (A x C) | ||
| B |
For purposes of the foregoing formula:
A= the total number of Shares with respect to which this Warrant is then being exercised.
B= the fair market value of each Share shall be the average for the five Trading Days immediately prior to the date of determination thereof of the last reported sale price regular way on each such day, or, in the case no such sale takes place on any such day, the average of the reported closing bid and asked prices regular way of the shares of Common Stock on such day, in each case as quoted on the Principal Market, as reported by Bloomberg or such other principal securities exchange or inter-dealer quotation system on which the shares of Common Stock are then traded.
C= the Warrant Price then in effect for the applicable Shares at the time of such exercise.
1.4. Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this Warrant, and, if applicable, the Company receives payment of the aggregate Warrant Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired. Holder shall be deemed to own and have all of the rights associated with any Shares or other securities or property to which it is entitled pursuant to this Warrant upon the exercise or conversion of the Warrant in accordance with this Article 1.
1.5. Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation on surrender and cancellation of this Warrant, the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
1.6. Treatment of Warrant Upon Acquisition of Company.
1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” shall mean the occurrence of any of the following: (i) the consolidation of the Company with, or the merger of the Company with or into, another “person” (as such term is used in Rule 13d-3 and Rule 13d-5 of the Exchange Act), or the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, or the consolidation of another “person” with, or the merger of another “person” into, the Company, other than in each case pursuant to a transaction in which the “persons” that “beneficially owned” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, the Voting Shares (as defined below) of the Company immediately prior to the transaction “beneficially own”, directly or indirectly, Voting Shares representing at least a majority of the total voting power of all outstanding classes of voting stock of the surviving or transferee person; (ii) the adoption by the Company of a plan relating to the liquidation or dissolution of the Company; (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” becomes the “beneficial owner” directly or indirectly, of more than 50% of the Voting Shares of the Company (measured by voting power rather than number of shares); or (iv) the first day on which a majority of the members of the Company’s Board of Directors (the “Board”) does not consist of Continuing Directors (as defined below). For the purposes of this Article 1.7.1, (i) “Voting Shares” of any person shall mean capital shares or capital stock of such person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency, and (ii) “Continuing Director” shall mean, as of any date of determination, any member of the Board who (i) was a member of the Board on the Issue Date or (ii) was nominated for election or elected to the Board with the approval of a majority of the Continuing Directors who were members of the Board at the time of such nomination or election and who voted with respect to such nomination or election; provided that a majority of the members of the Board voting with respect thereto shall at the time have been Continuing Directors.
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1.6.2 Treatment of Warrant at Acquisition. In the event of an Acquisition, either (a) Holder shall exercise or convert his Warrant in full with respect to all remaining Shares for which the Warrant is then exercisable and such exercise or conversion will be deemed effective immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise or convert the Warrant, this Warrant will expire upon the consummation of such Acquisition. The Company shall provide Holder with written notice of the foregoing (together with such reasonable information as Holder may request in connection with such contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less than ten (10) days prior to the closing of the proposed Acquisition.
1.7. Insufficient Authorized Shares. If at any time while the Warrant remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrant at least a number of shares of Common Stock equal to 100% (the “Required Reserve Amount”) of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrant then outstanding, then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrant then outstanding.
ARTICLE 2 ADJUSTMENTS TO THE SHARES.
2.1. Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the Shares payable in common stock of the Company, or other securities, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of shares of common stock of the Company to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend occurred. If the Company subdivides the Shares by reclassification or otherwise into a greater number of shares or takes any other action which increases the amount of stock for which this Warrant is exercisable, the number of Shares subject to the Warrant shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares subject to the Warrant shall be proportionately decreased.
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2.2. Reclassification, Exchange, Combinations or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant (other than an Acquisition which is subject to the provisions of Article 1.6), Holder shall be entitled to receive, upon exercise or conversion of this Warrant the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. The Company or its successor shall promptly issue to Holder an amendment to this Warrant setting forth the number and kind of such new securities or other property issuable upon exercise or conversion of this Warrant as a result of such reclassification, exchange, substitution or other event that results in a change of the number and/or class of securities issuable upon exercise or conversion of this Warrant. The amendment to this Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Article 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
2.3. Rights Upon Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock (which dividend or other distribution has not already been given to the Holder of the Warrant), by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant and prior to the Expiration Date, then, in each such case:
(a) any Warrant Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Price by a fraction of which (i) the numerator shall be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator shall be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and
(b) the number of Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding paragraph (a); provided that in the event that the Distribution is of shares of Common Stock(“Other Shares of Common Stock”) of a company whose common shares are traded on a national securities exchange or a national automated quotation system, then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate warrant price equal to the product of the amount by which the warrant price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of Shares calculated in accordance with the first part of this paragraph (b).
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2.4. Other Adjustment Events. If any event occurs of the type contemplated by the provisions of this Article 2 but not expressly provided for by such provisions, then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Price and the number of Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Article 2.4 will increase the Warrant Price or decrease the number of Shares as otherwise determined pursuant to this Article 2.
2.5. No Impairment. Without the consent of the Holder, the Company shall not by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article against impairment.
2.6. Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder in cash equivalent to the amount computed by multiplying the fractional interest by the fair market value of a full Share.
2.7. Certificate as to Adjustments. Upon each adjustment of the Warrant Price and Shares, the Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer, Corporate Secretary or a senior financial officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price and Shares in effect upon the date thereof and the series of adjustments leading to such Warrant Price and Shares.
ARTICLE 3 REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company represents and warrants to the Holder as follows:
3.1. Representations and Warranties. The Company represents and warrants and covenants to the Holder as follows: all Shares which may be issued upon the exercise of the purchase right represented by this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company will at all times reserve and keep available, out of its authorized but unissued share of Common Stock, solely for the purpose of providing the exercise or conversion of this Warrant, the aggregate number of Shares issuable upon exercise or conversion of this Warrant. The Company will use its reasonable best efforts to ensure that the Shares may be issued without violation of any law or regulation applicable to the Company or of any requirement of any securities exchange applicable to the Company on which the Shares are listed or traded.
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3.2. No Stockholder Rights. Except as provided in this Warrant, and other than with regard to shares of the Company’s common stock acquired by Holder other than pursuant to the exercise of this Warrant, the Holder will not have any rights as a stockholder of the Company until the exercise of this Warrant.
3.3. Charges, Taxes and Expenses. Issuance of certificates for Shares to the Holder upon the exercise or conversion of this Warrant shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company.
ARTICLE 4 MISCELLANEOUS.
4.1. Term. Following the satisfaction of the Exercise Condition described in Article 1.1, this Warrant will be exercisable in whole or in part at any time and from time to time on or before the Expiration Date.
4.2. Legends. This Warrant and the Shares shall be imprinted with a legend in substantially the following form:
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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4.3. Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise of this Warrant may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of the Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D under the Securities Act; provided, however, in any such transfer the transferee shall agree to be bound by the terms of this Warrant as if an original holder hereof.
4.4. Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Exchange Agreement.
4.5. Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the parties against which enforcement of such change, waiver, discharge or termination is sought.
4.6. Counterparts. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.
4.7. Amendment. This Warrant may be amended and the observance of any term of this Warrant may be waived only with the written consent of the Company and the Holder.
4.8. Binding Effect. This Warrant shall be binding upon any successors or assigns of the Company.
4.9. Governing Law. This Warrant, and the provisions, rights, obligations, and conditions set forth herein, and the legal relations between the parties hereto, including all disputes and claims, whether arising in contract, tort, or under statute, shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to its conflict of law provisions.
ARTICLE 5 CERTAIN DEFINITIONS.
“Bloomberg” means Bloomberg Financial Markets.
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 5.11. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
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“Principal Market” means The Nasdaq Stock Market.
“Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York time).
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
[Signature Page to Warrant]
Exhibit A
EXERCISE NOTICE
TO BE EXECUTED BY THE
REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
AMYRIS, INC.
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Shares”) of Amyris, Inc. a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
| ____________ | a “Cash Exercise” with respect to _________________ Shares; and/or |
| ____________ | a “Cashless Exercise” with respect to _______________ Shares. |
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.
3. Delivery of Shares. The Company shall deliver to Holder, or its designee or agent as specified below, __________ Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | |
| ☐ | Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: |
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: | ||
| Date: | _____________ __, | |||
| Name of Registered Holder | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Tax ID: | ||||
| Facsimile: | ||||
| E-mail Address: | ||||
Exhibit 4.12
THIS SECURITY AND THE SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE ACQUIRER:
| (1) | REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND |
| (2) | AGREES FOR THE BENEFIT OF AMYRIS, INC. THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT: |
| (A) | AMYRIS, INC. OR ANY SUBSIDIARY THEREOF, OR |
| (B) | PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT. |
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY ARE HELD BY AN AFFILIATE OF THE COMPANY AND ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER UNDER RULE 144 UNDER THE SECURITIES ACT.
AMYRIS, INC.
Senior Convertible Note
| Issuance Date: May 29, 2014 | U.S. $9,705,000 |
| Exchange Date: May 15, 2019 |
Amyris, Inc., a company duly incorporated and validly existing under the laws of the state of Delaware in the United States of America (the “Company”), which term includes any successor corporation, for value received hereby promises to pay to Total Raffinage Chimie SA or its registered assigns (the “Holder”), the principal sum of NINE MILLION SEVEN HUNDRED AND FIVE THOUSAND UNITED STATES DOLLARS (U.S. $9,705,000) on June 14, 2019 (the “Maturity Date”). The Principal Amount of this Note and interest thereon, as provided herein, shall be payable at any office maintained by the Company for such purpose. The Company will pay principal of this Note and interest thereon, as provided herein, in immediately available funds to the Holder on the Maturity Date and each Fundamental Change Purchase Date or other payment date, as the case may be.
This Senior Convertible Note (this “Note”) is issued pursuant to that certain Exchange Agreement, dated May 15, 2019, by and between the Company and the Holder (the “Exchange Agreement”) in exchange for that certain 6.50% Convertible Senior Note due 2019, with an aggregate principal amount of $9,705,000 (the “Original Note”), which was originally issued pursuant to the Indenture dated as of May 29, 2014 (the “Indenture”) between the Company and Wells Fargo Bank, National Association, as Trustee. Capitalized terms used but not defined herein shall have such meanings as are ascribed to such terms in the Indenture. In the case of any conflict between this Note and the Indenture, the provisions of this Note shall control. For the avoidance of doubt, all references herein to the Indenture refer to the form of the Indenture, regardless of whether the Indenture continues to be in force and effect, except that all references to the Trustee therein shall be deemed, to the extent applicable, to refer to the Holder to the extent applicable, and otherwise shall be disregarded.
Interest. The Note will bear interest at a rate of 6.50% per year. Interest on the Note will accrue from, and including, May 15, 2019, or from the most recent date to which interest has been paid or duly provided for. Interest will be payable on the Maturity Date. In certain circumstances, the Holder shall be entitled to receive Additional Interest in accordance with the terms and provisions of Section 8.03 of the Indenture, which is incorporated herein by reference mutatis mutandis. Payments of the Fundamental Change Purchase Price that are not made when due will accrue interest per annum at the then-applicable interest rate for the Note from the required date of payment.
Interest will be paid to the person in whose name the Note is registered at the Close of Business on the Business Day preceding the Maturity Date. Interest on the Note will be computed on the basis of a 360-day year composed of twelve 30-day months. Interest will cease to accrue on the Note upon its maturity, conversion, or repurchase in connection with a Fundamental Change.
Ranking. The Note constitutes a general unsecured and unsubordinated obligation of the Company.
Validity of Note and Waiver of Defenses. The Company acknowledges the validity, priority and enforceability of this Note as a debt instrument and any of the obligations hereunder and waives (on behalf of itself, and any other person, entity or other party in interest that may claim by, through, or on the Company’s behalf) any right, claim, or defense to this Note or the obligations hereunder on the grounds that they should be recharacterized as or subordinated to the level of equity.
No Redemption at the Option of the Company. The Note may not be redeemed at the option of the Company and no sinking fund is provided for the Note.
Purchase at the Option of the Holder Upon a Fundamental Change. Subject to the terms and conditions of Article 7 of the Indenture, which is incorporated herein by reference mutatis mutandis, the Company shall become obligated, at the option of the Holder, to repurchase the Note if a Fundamental Change occurs at any time prior to the Maturity Date at 100% of the Principal Amount together with accrued and unpaid interest to, but excluding, the Fundamental Change Purchase Date, which amount will be paid in cash.
Withdrawal of Fundamental Change Purchase Notice. Holder has the right to withdraw, in whole or in part, any Fundamental Change Purchase Notice by delivering to the Company a written notice of withdrawal in accordance with Article 7 of the Indenture, or in the event this Note is held in book entry form, in accordance with the Applicable Procedures of DTC. The right to withdraw the Fundamental Change Purchase Notice will terminate at the Close of Business on the Business Day immediately preceding the relevant Fundamental Change Purchase Date.
Payment of Fundamental Change Purchase Price. If money sufficient to pay the Fundamental Change Purchase Price of this Note on a Fundamental Change Purchase Date is deposited with the Company on the Fundamental Change Purchase Date, this Note will cease to be outstanding and interest will cease to accrue on this Note (or portions thereof) immediately after the Close of Business on such Fundamental Change Purchase Date, and the Holder thereof shall have no other rights as such (other than the right to receive the Fundamental Change Purchase Price upon surrender of this Note).
Conversion. Subject to and upon compliance with the relevant provisions of the Indenture (including without limitation the conditions of conversion of this Note set forth in Article 6 thereof, which is incorporated herein by reference mutatis mutandis), the Holder has the right, at its option, to convert the Principal Amount hereof or any portion of such principal which is $1,000 or an integral multiple of $1,000 in excess thereof, into shares of Common Stock at the Applicable Conversion Rate. The Conversion Rate is initially 17.8073 shares of Common Stock per $1,000 Principal Amount of Notes (equivalent to an initial Conversion Price of approximately $56.16), subject to adjustment in certain events described in the Indenture, as and to the extent provided therein. Upon conversion, the Company will deliver shares of Common Stock and Early Conversion Payment, if applicable, as set forth in the Indenture. No fractional shares will be issued upon any conversion, but a payment in cash will be made, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Notes for conversion. If the Holder is exercising its right to require repurchase on a Fundamental Change Purchase Date, this Note may be converted only if the Holder withdraws the related election to exercise such right in accordance with the applicable terms of the Indenture, which are incorporated herein by reference mutatis mutandis.
In the event of a deposit or withdrawal of an interest in this Note, including an exchange, transfer, repurchase, or conversion of this Note in part only, the Company shall make an adjustment on its records to reflect such deposit or withdrawal in accordance with the rules and procedures of the Depositary.
Events of Default. Article 8 of the Indenture is incorporated herein by reference mutatis mutandis. For the avoidance of doubt, subject to certain exceptions identified in Article 8 of the Indenture, if an Event of Default shall occur and be continuing, the Principal Amount plus interest through such date on the Note may be declared due and payable by the Holder, who shall be entitled to any and all remedies available to the Trustee under the Indenture. Any notice required to be provided to the Trustee under the terms of the Indenture shall be provided to the Company. Failure to pay any and all obligations under this Note on the Maturity Date shall constitute an Event of Default and immediate and automatic acceleration thereof making such obligations due and payable immediately, without any requirement of notice or any other action, permitting the Holder to enforce payment thereof pursuant to all remedies available to the Trustee under the Indenture.
Registration of Transfer and Exchange. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in the United States, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate Principal Amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or exchange, but the Company and the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company and any agent of the Company may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company nor any agent of the Company shall be affected by notice to the contrary.
Denominations. This Note is issuable only in registered form in denominations of $1,000 and any integral multiple of $1,000 in excess thereof, as provided in the Indenture and subject to certain limitations therein set forth. This Note is exchangeable for a like aggregate Principal Amount of a different authorized denomination, as requested by the Holder surrendering the same.
Governing Law. THIS NOTE, AND ANY CLAIM, CONTROVERSY, OR DISPUTE ARISING UNDER OR RELATED TO THIS NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
Consent to Jurisdiction. The Company and Holder hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any New York State court or federal court of the United States sitting in the State and City of New York, County and Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and the Company and Holder each hereby irrevocably and unconditionally agree that all claims in respect of any such action or proceeding may be heard and determined in such state court sitting in the State and City of New York, County and Borough of Manhattan or, to the extent permitted by law, in such federal court sitting in the State and City of New York, County and Borough of Manhattan.
Venue. The Company and Holder hereby irrevocably and unconditionally waive, to the fullest extent they may legally and effectively do so, any objection which they may now or hereafter have to the laying of venue of any suit, action proceeding arising out of or relating to this Note in any New York State or federal court. The Company and Holder each hereby irrevocably waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
AMYRIS, INC.
By: /s/ Kathleen Valiasek_______
Name: Kathleen Valiasek
Title: Chief Financial Officer
Date: May 15, 2019
Exhibit 4.13
Senior Convertible Note Maturity Extension
June 20, 2019
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, California 94608
Attention: Kathleen Valiasek
| Re: | Extension of Senior Convertible Note due June 14, 2019 |
Ladies and Gentlemen:
WHEREAS, Total Raffinage Chimie S.A. (the “Investor”) is the holder of that certain Senior Convertible Note due June 14, 2019, issued by Amyris, Inc. (the “Company”) in the principal amount of $9,705,000, (the “Note”; capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Note), which Note is convertible into shares (the “Conversion Shares”, and, together with the Note, the “Securities”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in accordance with the terms of the Note, pursuant and subject to the terms and conditions set forth in that certain Exchange Agreement, dated May 15, 2019, between the Company and the Investor, and this agreement (this “Agreement”); and
WHEREAS, the Company and the Investor desire to extend the maturity date of the Note and to make certain other changes to the Note as set forth herein.
NOW, THEREFORE, in consideration of the promises, undertakings and obligations set forth herein, the sufficiency of which consideration is hereby acknowledged, each of the undersigned parties agree with each other as follows:
1. Extension of Maturity Date. Subject to the terms and conditions of this Agreement, effective June 14, 2019, (i) the maturity date of the Note shall be extended to July 18, 2019, and (ii) the Note shall provide that the Company shall not effect any conversion thereof, and Investor shall not have the right to convert any portion thereof, to the extent that such Investor (together with such Investor’s Affiliates, and any Persons acting as a group together with such Investor or any of such Investor’s Affiliates) would beneficially own in excess of 9.9% of the Company’s issued and outstanding shares of Common Stock after giving effect to such conversion, unless 61 days’ prior notice to waive such provision is given in writing by the Investor. In connection therewith, the Company shall re-issue the Note in the form set forth in Exhibit A attached hereto, and the Investor shall return the existing Note, each in accordance with the provisions of Section 2 below. For the avoidance of doubt, the Investor waives any failure by the Company to pay the principal of, and accrued and unpaid interest on, the Note on or prior to June 14, 2019.
2. Mechanics of Note Issuance and Cancellation. Within three (3) business days from the date hereof, (i) the Company shall re-issue the Note, in the form set forth in Exhibit A attached hereto, by delivering an originally executed re-issued Note to Investor’s counsel at the offices of Dentons US LLP at 1221 Avenue of the Americas, New York, NY 10020, Attn: Brian Lee, and (ii) the Investor shall return the originally executed existing Note to the Company at its headquarters, for cancellation, it being acknowledged by the Company that the existing Note shall not be cancelled until and unless an attorney at Dentons US LLP acknowledges receipt of the re-issued Note on behalf of Investor. For the avoidance of doubt, the parties agree that the re-issuance of the Note reflecting the terms of this Agreement is solely for the convenience of Investor and shall not be deemed the issuance of a new security distinct from the Note.
3. Representations and Warranties of the Company. The Company represents and warrants to the Investor that, as of the date hereof:
(a) Organization and Standing. The Company and each of its Significant Subsidiaries (as defined in Regulation S-X of the Securities Act) is duly incorporated, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its Significant Subsidiaries has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company and each of its Significant Subsidiaries is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Agreement or the Note.
(b) Power. The Company has all requisite power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.
(c) Authorization. The execution, delivery, and performance of this Agreement by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.
(d) Capitalization. The capitalization of the Company, on a fully diluted basis, is as set forth herein as Schedule 4(d), which information is true, complete and accurate.
(e) Validity of Note and Waiver of Defenses. The Company acknowledges the validity, priority and enforceability of the Note as a debt instrument and any of the obligations thereunder and waives (on behalf of itself, and any other person, entity or other party in interest that may claim by, through, or on the Company’s behalf) any right, claim, or defense to the Note or any of the obligations thereunder on the grounds that they should be recharacterized as or subordinated to the level of equity.
4. Representations and Warranties of the Investor. The Investor hereby represents and warrants to and covenants with the Company that, as of the date hereof:
(a) Organization and Good Standing. The Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Due Authorization. The Investor has the requisite power and authority to enter into and perform its obligations under this Agreement.
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5. Covenants and Negative Covenants of the Company.
(a) Indebtedness. Until such time as the Note is paid in full or converted into Conversion Shares, the Company shall not, without the prior written consent of the Investor, make any cash payment on or with respect to the principal amount of, or purchase, redeem, defease or otherwise settle in whole or in part any Indebtedness of the Company, except that the Company may (i) make regularly scheduled interest payments on Indebtedness of the Company outstanding as of the date hereof, (ii) purchase, redeem, defease or otherwise settle, in whole or in part, any Indebtedness of the Company by means of the conversion of such Indebtedness into shares of Common Stock, and (iii) pay up to $200,000 in the aggregate in connection with certain principal amortization payments to holders of Indebtedness of the Company outstanding as of the date hereof. For purposes of this Section 5, “Indebtedness” shall mean any amount, excluding trade payables occurring in the ordinary course of business, that (i) is owed by the Company resulting from borrowed money, or (ii) is evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof).
(b) Removal of Restrictive Legend(s). At such time as the Investor shall be eligible to sell securities of the Company that Investor holds pursuant to Rule 144(b) of the Securities Act (“Rule 144(b)”), the Company shall use best efforts to promptly remove any restrictive legend relating to the Securities Act on Investor’s restricted securities that are eligible to be sold under Rule 144(b). Such best effort shall include, but is not limited to, Company’s diligent efforts following the date hereof and prior to Investor becoming Rule 144(b) eligible, to work with its outside counsel and transfer agent to prepare forms of documentation relating to removal of the aforementioned restrictive legend(s). The Company agrees that securities of the Company that Investor acquired from the Company (or from an Affiliate of the Company) more than one year prior to the relevant date of determination are eligible for resale under Rule 144(b) on the date that is 91 days following such time as (i) Investor beneficially owns less than 10% of the Company’s outstanding shares of Common Stock and (ii) Investor does not have a designee on the Board of Directors of the Company.
6. Disclosure. At or prior to 9:00 a.m., New York City time, on the second business day after the date hereof, the Company shall file a press release or Current Report on Form 8-K announcing the execution of this Agreement, which press release or Current Report on Form 8-K the Company acknowledges and agrees will disclose all material non-public information, if any, with respect to the terms of this Agreement.
7. Waiver and Amendment. Neither this Agreement, the Note nor any provisions hereof shall be modified, changed, discharged, waived or terminated except by an instrument in writing signed by the Company and the Investor.
8. Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
9. Governing Law/Venue. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. Each of the Company and the Investor (a) agrees that any legal suit, action or proceeding arising out of or relating to this agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b) waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.
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10. Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
11. Counterparts. This Agreement may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other transmission (e.g. , “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
12. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid overnight courier or registered or certified mail, return receipt requested, postage prepaid to, in the case of the Company, the following address and, in the case of the Investor, the address provided on the signature page of the Investor (or such other address as any party shall have specified by notice in writing to the other):
| If to the Company: |
Amyris, Inc. 5885 Hollis Street, Suite 100 Emeryville, California 94608 Fax: Attention: General Counsel |
13. Binding Effect. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
14. Severability. If any term or provision (in whole or in part) of this Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
15. Release. In consideration of the agreements of the Investor set forth in this Agreement, the Company, its affiliates and subsidiaries, and all of their respective directors, officers, agents, heirs, personal representatives, predecessors, successors and assigns (individually and collectively, the “Releasors”), hereby fully, finally, and forever release and discharge the Investor, its affiliates and subsidiaries, and its any of their successors, assigns, directors, officers, employees, agents, and representatives (including those on the board of Company or any of its subsidiaries or affiliates) from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits of whatever kind or nature, in law or equity, the Releasors or any of them have, whether known or unknown, in respect of, relating to, or concerning this Agreement, the Securities, or any other potential agreement or transaction relating to the Securities arising from events occurring prior to the date hereof.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first written above.
AMYRIS, INC.
By: /s/ Kathleen Valiasek
Name: Kathleen Valiasek
Title: Chief Business Officer
[Note Maturity Extension Signature Page]
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first written above.
INVESTOR:
TOTAL RAFFINAGE CHIMIE S.A.
By: /s/ Frédéric Gimenez_______
Name: Frédéric Gimenez
Title: Senior VP Corporate Affairs
Address for Notices:
TOTAL RAFFINAGE CHIMIE S.A.
2 place Jean Millier
92400 Courbevoie, FRANCE
Attention:
[Note Maturity Extension Signature Page]
Exhibit A
Form of Re-Issued Note
See attached.
THIS SECURITY AND THE SHARES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE ACQUIRER:
| (1) | REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND |
| (2) | AGREES FOR THE BENEFIT OF AMYRIS, INC. THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT: |
| (A) | AMYRIS, INC. OR ANY SUBSIDIARY THEREOF, OR |
| (B) | PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT. |
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY ARE HELD BY AN AFFILIATE OF THE COMPANY AND ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER UNDER RULE 144 UNDER THE SECURITIES ACT.
AMYRIS, INC.
Senior Convertible Note
| Issuance Date: May 29, 2014 | U.S. $9,705,000 |
| Exchange Date: May 15, 2019 | |
| Re-issued June __, 2019 |
Amyris, Inc., a company duly incorporated and validly existing under the laws of the state of Delaware in the United States of America (the “Company”), which term includes any successor corporation, for value received hereby promises to pay to Total Raffinage Chimie SA or its registered assigns (the “Holder”), the principal sum of NINE MILLION SEVEN HUNDRED FIVE THOUSAND UNITED STATES DOLLARS (U.S. $9,705,000) on July 18, 2019 (the “Maturity Date”). The Principal Amount of this Note and interest thereon, as provided herein, shall be payable at any office maintained by the Company for such purpose. The Company will pay principal of this Note and interest thereon, as provided herein, in immediately available funds to the Holder on the Maturity Date and each Fundamental Change Purchase Date or other payment date, as the case may be.
This Senior Convertible Note (this “Note”) is issued pursuant to that certain Senior Convertible Note Maturity Extension, dated June 20, 2019, by and between the Company and the Holder (the “Agreement”) in connection with the re-issuance of that certain Senior Convertible Note due June 14, 2019, with an aggregate principal amount of $9,705,000 (the “Original Note”), which was originally issued pursuant to that certain exchange agreement dated May 15, 2019, pursuant to which the Original Note was issued in exchange for a certain 6.50% Convertible Senior Note due 2019, which was issued pursuant to an Indenture dated as of May 29, 2014 (the “Indenture”) between the Company and Wells Fargo Bank, National Association, as Trustee. Capitalized terms used but not defined herein shall have such meanings as are ascribed to such terms in the Indenture. In the case of any conflict between this Note and the Indenture, the provisions of this Note shall control. For the avoidance of doubt, all references herein to the Indenture refer to the form of the Indenture, regardless of whether the Indenture continues to be in force and effect, except that all references to the Trustee therein shall be deemed, to the extent applicable, to refer to the Holder to the extent applicable, and otherwise shall be disregarded.
Interest. The Note will bear interest at a rate of 6.50% per year. Interest on the Note will accrue from, and including, May 15, 2019, or from the most recent date to which interest has been paid or duly provided for. Interest will be payable on the Maturity Date. In certain circumstances, the Holder shall be entitled to receive Additional Interest in accordance with the terms and provisions of Section 8.03 of the Indenture, which is incorporated herein by reference mutatis mutandis. Payments of the Fundamental Change Purchase Price that are not made when due will accrue interest per annum at the then-applicable interest rate for the Note from the required date of payment.
Interest will be paid to the person in whose name the Note is registered at the Close of Business on the Business Day preceding the Maturity Date. Interest on the Note will be computed on the basis of a 360-day year composed of twelve 30-day months. Interest will cease to accrue on the Note upon its maturity, conversion, or repurchase in connection with a Fundamental Change.
Ranking. The Note constitutes a general unsecured and unsubordinated obligation of the Company.
Validity of Note and Waiver of Defenses. The Company acknowledges the validity, priority and enforceability of this Note as a debt instrument and any of the obligations hereunder and waives (on behalf of itself, and any other person, entity or other party in interest that may claim by, through, or on the Company’s behalf) any right, claim, or defense to this Note or the obligations hereunder on the grounds that they should be recharacterized as or subordinated to the level of equity.
No Redemption at the Option of the Company. The Note may not be redeemed at the option of the Company and no sinking fund is provided for the Note.
Purchase at the Option of the Holder Upon a Fundamental Change. Subject to the terms and conditions of Article 7 of the Indenture, which is incorporated herein by reference mutatis mutandis, the Company shall become obligated, at the option of the Holder, to repurchase the Note if a Fundamental Change occurs at any time prior to the Maturity Date at 100% of the Principal Amount together with accrued and unpaid interest to, but excluding, the Fundamental Change Purchase Date, which amount will be paid in cash.
Withdrawal of Fundamental Change Purchase Notice. Holder has the right to withdraw, in whole or in part, any Fundamental Change Purchase Notice by delivering to the Company a written notice of withdrawal in accordance with Article 7 of the Indenture, or in the event this Note is held in book entry form, in accordance with the Applicable Procedures of DTC. The right to withdraw the Fundamental Change Purchase Notice will terminate at the Close of Business on the Business Day immediately preceding the relevant Fundamental Change Purchase Date.
Payment of Fundamental Change Purchase Price. If money sufficient to pay the Fundamental Change Purchase Price of this Note on a Fundamental Change Purchase Date is deposited with the Company on the Fundamental Change Purchase Date, this Note will cease to be outstanding and interest will cease to accrue on this Note (or portions thereof) immediately after the Close of Business on such Fundamental Change Purchase Date, and the Holder thereof shall have no other rights as such (other than the right to receive the Fundamental Change Purchase Price upon surrender of this Note).
Conversion. Subject to and upon compliance with the relevant provisions of the Indenture (including without limitation the conditions of conversion of this Note set forth in Article 6 thereof, which is incorporated herein by reference mutatis mutandis), the Holder has the right, at its option, to convert the Principal Amount hereof or any portion of such principal which is $1,000 or an integral multiple of $1,000 in excess thereof, into shares of Common Stock at the Applicable Conversion Rate. The Conversion Rate is initially 17.8073 shares of Common Stock per $1,000 Principal Amount of Notes (equivalent to an initial Conversion Price of approximately $56.16), subject to adjustment in certain events described in the Indenture, as and to the extent provided therein. Upon conversion, the Company will deliver shares of Common Stock and Early Conversion Payment, if applicable, as set forth in the Indenture. No fractional shares will be issued upon any conversion, but a payment in cash will be made, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Notes for conversion. If the Holder is exercising its right to require repurchase on a Fundamental Change Purchase Date, this Note may be converted only if the Holder withdraws the related election to exercise such right in accordance with the applicable terms of the Indenture, which are incorporated herein by reference mutatis mutandis. Notwithstanding the foregoing, the Company shall not effect any conversion of this Note, and Holder shall not have the right to convert any portion of this Note, to the extent that such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of 9.9% of the Company’s issued and outstanding shares of Common Stock after giving effect to such conversion, unless 61 days’ prior notice to waive this provision is given in writing by the Holder.
In the event of a deposit or withdrawal of an interest in this Note, including an exchange, transfer, repurchase, or conversion of this Note in part only, the Company shall make an adjustment on its records to reflect such deposit or withdrawal in accordance with the rules and procedures of the Depositary.
Events of Default. Article 8 of the Indenture is incorporated herein by reference mutatis mutandis. For the avoidance of doubt, subject to certain exceptions identified in Article 8 of the Indenture, if an Event of Default shall occur and be continuing, the Principal Amount plus interest through such date on the Note may be declared due and payable by the Holder, who shall be entitled to any and all remedies available to the Trustee under the Indenture. Any notice required to be provided to the Trustee under the terms of the Indenture shall be provided to the Company. Failure to pay any and all obligations under this Note on the Maturity Date shall constitute an Event of Default and immediate and automatic acceleration thereof making such obligations due and payable immediately, without any requirement of notice or any other action, permitting the Holder to enforce payment thereof pursuant to all remedies available to the Trustee under the Indenture.
Registration of Transfer and Exchange. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in the United States, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate Principal Amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or exchange, but the Company and the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company and any agent of the Company may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company nor any agent of the Company shall be affected by notice to the contrary.
Denominations. This Note is issuable only in registered form in denominations of $1,000 and any integral multiple of $1,000 in excess thereof, as provided in the Indenture and subject to certain limitations therein set forth. This Note is exchangeable for a like aggregate Principal Amount of a different authorized denomination, as requested by the Holder surrendering the same.
Governing Law. THIS NOTE, AND ANY CLAIM, CONTROVERSY, OR DISPUTE ARISING UNDER OR RELATED TO THIS NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
Consent to Jurisdiction. The Company and Holder hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any New York State court or federal court of the United States sitting in the State and City of New York, County and Borough of Manhattan, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and the Company and Holder each hereby irrevocably and unconditionally agree that all claims in respect of any such action or proceeding may be heard and determined in such state court sitting in the State and City of New York, County and Borough of Manhattan or, to the extent permitted by law, in such federal court sitting in the State and City of New York, County and Borough of Manhattan.
Venue. The Company and Holder hereby irrevocably and unconditionally waive, to the fullest extent they may legally and effectively do so, any objection which they may now or hereafter have to the laying of venue of any suit, action proceeding arising out of or relating to this Note in any New York State or federal court. The Company and Holder each hereby irrevocably waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
AMYRIS, INC.
By: ______________________
Name: Kathleen Valiasek
Title: Chief Business Officer
Date: June __, 2019
Exhibit 4.14
AMYRIS, INC.
PROMISSORY NOTE
| $8,500,000 | Issuance date: June 11, 2019 |
Amyris, Inc., a Delaware corporation (the “Company”), for value received, hereby promises to pay to FORIS VENTURES, LLC, or registered assigns (the “Holder”), the principal sum of Eight Million Five Hundred Thousand Dollars ($8,500,000), or such lesser amount as shall then equal the outstanding principal amount hereunder, on the earlier of (i) the business day immediately following the date that the Company provides written notice to the Holder that DSM International B.V. (“DSM”) has exercised all of its common stock purchase warrants issued by the Company to DSM on May 11, 2017 and August 7, 2017 and that currently have an exercise price of $2.87 per share (the “DSM Warrants”) and (ii) August 28, 2019 (the “Maturity Date”) and to pay interest thereon, from the date of this Note, or from the most recent date to which interest has been paid on this Note, at the rate of twelve and one-half percent (12.5%) per annum (calculated on a simple interest basis) until the Maturity Date or the earlier repayment or other satisfaction of this Note.
Payment of the principal of this Note shall be made upon the surrender of this Note to the Company at its chief executive office (or such other office within the United States as shall be designated by the Company to the holder hereof) (the “Designated Office”) on the Maturity Date or such earlier date in accordance with the terms of this Note. All amounts payable in cash with respect to this Note shall be made by wire transfer to the holder, provided that if the holder shall not have furnished wire instructions in writing to the Company no later than the business day immediately prior to the date on which the Company makes such payment, such payment may be made by U.S. dollar check mailed to the address of the holder as such address shall appear in the Company register. Notwithstanding anything contained herein or in that certain common stock purchase warrant issued by the Company to the Holder on April 16, 2019 (the “April 16 Warrant”) to the contrary, provided that DSM has exercised in full all of the DSM Warrants, the Holder shall be permitted, upon written notice to the Company, to pay the exercise price for any shares of the Company’s common stock, par value $0.0001 per share, issuable upon exercise of the April 16 Warrant (the “Warrant Shares”) by surrendering to the Company all, or any portion, of this Note and all or such portion of the outstanding amounts due pursuant to this Note, as applicable, shall be cancelled in exchange for the payment of the exercise price for such Warrant Shares and, if the Holder surrenders less than all of this Note, the Company shall promptly thereafter issue to the Holder a new promissory note for the remaining amounts under this Note.
This Note was issued pursuant to the Credit Agreement, dated as of June 11, 2019 (as amended from time to time, the “Agreement”), by and among the Company, the original holder of this Note and is subject to provisions of the Agreement. Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Agreement.
1. Redemption. This Note is subject to redemption, in whole or from time to time in part (in any amount that is an integral multiple of $1,000), upon not less than five (5) days’ prior written notice in the manner provided in Section 4(b) hereof, at the election of the Company, at a redemption price of 100% of the amount hereof, together with accrued and unpaid interest to, but excluding, the redemption date.
2. Certain Covenants. Until the Obligations hereunder are paid or otherwise satisfied in full:
| (a) | The Company will maintain or cause to be maintained its corporate or other organizational existence and good standing in its jurisdiction of incorporation and maintain its qualification in each jurisdiction where the failure to so qualify would reasonably be expected to have a Material Adverse Effect. |
| (b) | The Company will comply with all applicable statutes, regulation and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property, other than those the noncompliance with which would not have, and which would not reasonably be expected to have, a Material Adverse Effect. |
| (c) | The Company will cause the proceeds of the loans evidenced under this Note to be used solely (a) as working capital and (b) to fund the Company’s general business requirements, and not for personal, family or household purposes. |
| (d) | The Company will execute any further instruments and take any further action as the Holder reasonably requests to effect the purposes of this Note or the Agreement. |
3. Events of Default.
| (a) | “Event of Default”, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): |
| (i) | default in the payment of any amount upon this Note when it becomes due and payable; |
| (ii) | default in the performance, or breach, of any covenant of the Company herein (other than a default in the performance or breach of which is specifically dealt with elsewhere in this Section 3(a)) and continuance of such default or breach for a period of 10 days; |
| (iii) | the commencement against the Company of an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated bankrupt or insolvent and such case or proceeding is not dismissed or stayed within 45 days; |
| (iv) | the commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against either the Company, or the filing by either the Company of a petition or answer or consent seeking reorganization or similar relief under any applicable Federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by either the Company of an assignment for the benefit of creditors, or the admission by either the Company in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; |
| (v) | The Company or any Person acting for the Company makes any representation, warranty, or other statement now or later in this Note or the Agreement or in any writing delivered to the Holder or to induce the Holder in connection with this Note, the Agreement or any other document entered into in connection with this Note or the Agreement or to enter this Note, the Agreement or any other document entered into in connection with this Note or the Agreement, and such representation, warranty, or other statement is incorrect in any material respect when made; or |
| (vi) | at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of fifty percent (50.0%) or more of the ordinary voting power for the election of directors of the Company (determined on a fully diluted basis). |
| (b) | Upon the occurrence and during the continuance of an Event of Default, the Holder may (a) declare all Obligations hereunder immediately due and payable (but if an Event of Default described in Section 3(a)(iv) or 3(a)(v) occurs all Obligations hereunder are immediately due and payable without any action by the Holder) and (b) exercise all rights and remedies available to the Holder under this Note, the Agreement or at law or equity. The Company will give the Holder notice, within five (5) business days of the occurrence thereof, of any Event of Default of which it is or becomes aware. Such notice shall be given in the manner provided in Section 4(b). |
4. Other.
| (a) | No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times and places herein prescribed or to repay or otherwise satisfy this Note as herein provided. |
| (b) | The Company will give prompt written notice to the Holder of any change in the location of the Designated Office. Any notice to the Company or to the Holder shall be given in the manner set forth in the Agreement. |
| (c) | The transfer of this Note is registrable on the register maintained by the Company upon surrender of this Note for registration of transfer at the Designated Office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by, the holder hereof or such holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. Such securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. No service charge shall be made for any such registration of transfer, but the Company may require payment of a sum sufficient to recover any tax or other governmental charge payable in connection therewith. Prior to due presentation of this Note for registration of transfer, the Company and any agent of the Company may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. |
| (d) | This Note shall be governed by and construed in accordance with the internal laws of the State of California, without regard to the conflicts of law provisions of the State of California. |
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
Dated: June 11, 2019
| Amyris, Inc. | |||
By: |
/s/ Kathleen Valiasek | ||
| Name: | Kathleen Valiasek | ||
| Title: | Chief Business Officer | ||
Exhibit 10.01
Confidential |
Execution Version
IN ACCORDANCE WITH ITEM 601(b)(10)(iv) OF REGULATION S-K, CERTAIN CONFIDENTIAL INFORMATION HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. THE CONFIDENTIAL INFORMATION IS DENOTED HEREIN BY [*].
AMENDMENT NO. 2 TO
SUPPLY AGREEMENT
This Amendment No. 2 to the Supply Agreement (this “Amendment”) is entered into as of April 16, 2019, between DSM Nutritional Products AG, Wurmisweg 576, 4303 Kaiseraugst, Switzerland, (hereinafter "DSM”) and Amyris, Inc., 5885 Hollis Street, Emeryville, CA 94608, USA (hereinafter “Amyris”) (each of DSM and Amyris hereinafter referred to as a “Party”, together referred to as the “Parties”).
WHEREAS, Amyris entered into a Supply Agreement, dated as of December 28, 2017, with DSM Produtos Nutricionais Brasil S.A. (the “Agreement”);
WHEREAS, On January 12, 2018, DSM’s affiliate DSM Produtos Nutricionais Brasil S.A. assigned all of its rights, title and interest in the Agreement to DSM;
WHEREAS, On November 19, 2018 the Parties entered into Amendment No. 1 to the Agreement;
WHEREAS, the Parties desire to further amend the Agreement; and
NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
| 1. | Amendments. |
| a. | Section 1.9 of the Agreement is hereby deleted and amended and restated to read: |
“[Reserved]”
| b. | Section 2.3 of the Agreement is hereby amended and restated (solely to remove the reference therein to the “Novvi Contract”) and shall read in its entirety as follows: |
“Upon the Effective Date, Amyris will provide to DSM a product forecast for the calendar year 2018 (each, a “Product Forecast”). Thereafter, by the fifteenth (15th) business day of the first month of each new quarter, Amyris will provide to DSM a rolling quarterly forecast that consists of four (4) calendar quarters for any Product, which notice shall indicate the Product and the desired volume and completion date, together with any other information reasonably necessary for DSM to carry out such production. DSM shall carry out the Services in accordance with each such notice by Amyris (i) so long as the forecast (i) does not exceed the capacity of the Facility; (ii) change is provided more than ninety (90) days in advance and; (iii) subject to DSM’s obligations to honor the terms of the Vitamin E Contract. Furthermore, DSM will use reasonable efforts to deliver on any changes to the production forecast that are provided by Amyris less than ninety (90) days in advance. It is agreed by the Parties, however, that (i) where DSM is not reasonably able to decrease production with less than ninety (90) days’ prior notice, Amyris will be bound to purchase the original amount it projected for such period, and (ii) where DSM is not reasonably able to increase production with less than ninety (90) days’ prior notice, it shall not be required to provide to Amyris more than the original amount of Product(s) Amyris projected for such period. It is further agreed that Amyris shall be required to purchase all quantities of Non-Farnesene Products that DSM may produce for Amyris in response to a Product Forecast from Amyris. Amyris shall provide DSM with Product Strain(s) in amounts reasonably required to carry out such Services, as well as the then-current version of applicable Amyris Protocols.”
Confidential
| c. | Section 8.1(a) of the Agreement is hereby amended and restated (solely to remove the reference therein to the “Novvi Contract”) and shall read in its entirety as follows: |
“with respect to Non-Farnesene Products, until the date Amyris determines that the Amyris’s Brotas 2 facility is fully operational and meets its production targets, but in any event (i) no later than December 31, 2021, and (ii) subject to DSM’s obligations to honor the terms of the Vitamin E Contract; and”
| d. | Annex 4 of the Agreement is hereby amended and restated to read in its entirety as set forth in Amended and Restated Annex 4 attached hereto. |
| 2. | Effective Date. This Amendment shall become effective as of the date that Amyris receives the Cash Payment in accordance with that certain letter agreement dated April 16, 2019 between DSM and Amyris regarding the Assignment of Value Sharing Agreement. |
| 3. | No Other Amendments. Except as expressly amended hereby, the terms and conditions of the Agreement shall remain unchanged and in full force and effect, and the execution of this Amendment is not a waiver by either Party of any of the terms or provisions of the Agreement. In the event of any conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall govern. Capitalized terms used in this Amendment that are not otherwise defined herein shall have the same meanings as such terms are given in the Agreement. For clarity, any cross-references to Agreement Sections refer to those Agreement Sections as amended by this Amendment. |
| 4. | Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed and original, but all of which together shall constitute one and the same document. |
[Remainder of Page Intentionally Left Blank.]
Confidential
IN WITNESS WHEREOF, DSM and Amyris have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized.
DSM NUTRITIONAL PRODUCTS AG
| By: | /s/ Benedikt Suter Name: Benedikt Suter Function: General Counsel |
| By: | /s/ Bruno Mueller Name: Bruno Mueller Function: Vice-President |
AMYRIS, INC.
| By: | /s/ John Melo Name: John Melo Title: President & CEO |
Confidential
Amended and Restated Annex 4
Manufacturing Fee
[*]
[*] Certain portions denoted with an asterisk have been omitted.
Exhibit 10.02
LEASE AGREEMENT
1. PRELIMINARY
| 1.1. | RAÍZEN ENERGIA S/A (“Raízen”), organized and existing under the laws of Brazil, with its headquarters at Avenida Brigadeiro Faria Lima, 4100, 11th floor – Itaim Bibi, CEP 04538-132, in the City of São Paulo, State of São Paulo, enrolled with the tax payroll CNPJ No. 08.070.508/0001-78, and AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA. (“Amyris”), a limited liability company organized and existing under the laws of Brazil, with its headquarters at Rodovia SP-197 Brotas/Torrinhas, south-west area, part 1, km 7,5, Fazenda Paraíso, CEP 17.380-000, Municipality of Brotas, State of São Paulo, Brazil, enrolled with the Brazilian Taxpayer Secretariat under CNPJ 30.832.226/0001-10, agree to enter into this Lease Agreement (“Agreement”), which shall be subject to the following terms and conditions. |
WHEREAS, on the present date, Amyris and Raízen entered into a Joint Venture Agreement (“JV Agreement”) whereby they established the general terms and conditions regarding (a) a commercial relationship by which Raízen would supply utilities, energy, sugar and land to Amyris for the construction and operation of Amyris Industrial Site (as defined below) pursuant to the terms and conditions of the JV Agreement and of the Operational Agreements (as defined below); and (b) the possibility of the formation of a JV Company for the production and sale of REBM sweetener through the construction and operation of certain manufacturing plants;
WHEREAS, on the present date and pursuant to the JV Agreement, the Parties have decided to enter into this Agreement and the other Operational Agreements;
| 2. | DEFINITIONS |
1.2. In addition to the other meanings defined and contemplated herein, the terms and expressions defined below with their initials in capitals, when used herein, shall have the meanings attributed to them below:
“Affiliate” in relation to a Party, means a company, partnership or other legal entity which Controls (as defined below), or which is Controlled by, or which is under common Control with, that Party, provided that, (i) Raízen Energia S.A. (“RESA”) and Raízen Combustíveis S.A. (“RCSA”) shall be deemed the ultimate parent entities of the group of companies to which they belong; (ii) exclusively for the purposes of this Agreement, to the exclusion of any other purposes RESA and RCSA shall be deemed Affiliates of each other and their respective shareholders shall not be deemed Affiliates of either of them; and (iii) any information concerning any aspect of this Agreement that is disclosed to representatives of either RESA´s and/or RCSA´s shareholders shall not be deemed disclosed to an Affiliate but rather to such representatives in their capacity as either board members and/or advisers of RESA and RCSA and shall be used solely for the purposes of assisting RESA, RCSA or any of their Affiliates in their decision making process in respect of any aspect of this Agreement.
“Price” means the monthly rent amount due by Amyris to Raízen for the lease of the Site.
“Site” means the Raízen’s real property located at city of Barra Bonita, State of São Paulo, Brazil, at the Fazenda Pau D´Alho, filed at the real property register office of Barra Bonita, State of São Paulo, under # 2.206, in accordance with the descriptive memorandum (Schedule A). The Parties agree that the Site of 180,000m² (one hundred and eighty thousand square meters), duly identified in Schedule A, shall be leased for the first three (3) years counted as from the execution of this Agreement. As from the third year, the Site shall be of 165.000m² (one hundred and sixty five thousand square meters). The Parties also agree that part of the Site shall be vacated by Amyris upon the execution of the lease agreement by the JV Company.
“Operational Agreements” means, collectively, the following agreements for the construction and operation by Amyris of the Amyris’ Industrial Site: (i) this Agreement, (ii) the F&F Sugar Supply Agreement (as defined in the JV Agreement), (iii) F&F Utilities Supply Agreement (as defined in the JV Agreement), and (iv) F&F Energy Supply Agreement (as defined in the JV Agreement).
“Control” means the ownership, or beneficial ownership, directly or indirectly through a series of legal entities, of fifty percent (50%) or more of common shares (or its equivalent) bearing voting rights in a company, partnership or other legal entity sufficient to permanently allow the controlling entity to appoint the majority of
the directors (or equivalent) of the controlled entity, and “Controlling Party” shall be interpreted in the same manner. For the purposes of this Agreement the Parties agree that Cosan or its Affiliates and Shell or each Affiliates shall each deem to jointly control Raízen, and that for the purposes of change of control herein, either Shell or Cosan acquiring the shares of the other at Raízen shall not be deemed as a change of control of Raízen.
“Business Day” or “Business Days” means a day on which commercial banks are generally open for business in São Paulo and California.
"Applicable Law" means all laws, rules, statutes, decrees, regulations, ordinances or orders valid and enforceable in Brazil, including all applicable public, environmental and competition laws and regulations; and any administrative decision, judgment and other pronouncement enacted, issued, promulgated, enforced or entered into by any governmental authority.
“Amyris Industrial Site” means the Amyris’s industrial site that will be installed at the Site for the production of flavors and fragrances.
“Party” means Raízen or Amyris, when referred individually.
“Parties” means Raízen and Amyris, when referred together.
“Term” means the validity term of this Agreement.
| 3. | PURPOSE |
3.1. Raízen, as lessor, shall lease the Site to Amyris, as lessee, for the Lease Period and Price.
3.1.1. The lease established above is ruled by the article 565 et seq. of Brazilian Civil Code.
3.1.2. The improvements, buildings, structures and facilities made/built in the Site are included in the purpose of this Agreement, with the exception of any equipment and movable property that may be installed by Amyris in the Amyris Industrial Site, which may be removed by Amyris at any time during the Term or within six (6) months after the expiration of its term.
3.2. Raízen represents to be currently negotiating the acquisition of the Site with the current owner of the Site. Immediately upon the formalization of a real estate sale and purchase agreement for the acquisition of the, Raízen will be the legit and rightful owner of the Site, and that this real estate shall be leased free and clear of any liens, debts, disposals, sale and purchase commitments, promises, restrictions, overdue taxes, out-of-court or judicial mortgages, fiduciary alienation, pledges, foreclosure, seizure, constriction, ongoing lawsuits or any other encumbrances and liabilities which may affect Amyris’ rights and responsibilities arising out of this agreement.
3.2.1. This Agreement shall only become effective as of the date in which Raízen executes the sale and purchase agreement with the current owner of the Site.
3.3. The Site shall be used exclusively by Amyris and for the purpose of building and operating the Amyris Industrial Site in
accordance with the terms and conditions of the JV Agreement.
| 3.4. | Amyris will pay to Raízen the Price for leasing the Site, as established at clauses 8 and 9. |
| 4. | RAÍZEN’S OBLIGATIONS |
4.1. Without prejudice to other obligations set forth under this Agreement, Raízen hereby undertakes to:
a Deliver the Site to Amyris.
b Supply Amyris with Site’s topography, sketches and other documents necessary to Amyris comply with Brazilian government’s requirements
c Provide electric power and water necessary for the construction of the Amyris Industrial Site in accordance with the terms and conditions of the F&F Energy Supply Agreement and the F&F Utilities Supply Agreement executed by the Parties on the present date.
| 5. | AMYRIS’S OBLIGATIONS |
5.1. Without prejudice to other obligations set forth under this Agreement, Amyris hereby undertakes to:
a Present an appraisal on the Area including, but not limited to, the topography of the Site and its conservation status, at its expenses, within ninety (90) days as of the execution of this Agreement (“Appraisal Report”).
b Explore the Site exclusively for building and operating Amyris Industrial Site.
c Upon the termination of the Term or termination of this Agreement, return the Site to Raízen in the same conditions as received pursuant to the Appraisal Report.
d Build Amyris Industrial Site at its own expenses.
e Be fully liable for any damages suffered by third parties or by Raízen due to the operation of Amyris Industrial Site.
f Obtain all required licenses and permits for building and operating the Amyris Industrial Site and present them upon Raízen’s request.
g Bear all expenses, taxes, insurances and fees applicable to the Site.
h At any time, ensure Raizen’s free access to the Site for periodic inspections and/or verifications, which shall be performed by representatives or companies appointed by Raízen, provided that Raízen communicates it to Amyris at least three (3) days in advance
5.2. Amyris shall present, up to 30 (thirty) days prior to the use of the Site, a bail guarantee or a financial guarantee covering for the amount of three (3) times the Price, to be contracted with an insurance company or a financial entity appointed by Raízen. The Guarantee shall be valid until the end of the Term, guaranteeing not only the payment of the Price, but also debts of any nature arising from the obligations assumed under this Agreement, with express provision for
waiving the benefit of the order and term of execution of 72 (seventy-two) hours.
| 6. | ENVIRONMENTAL RESPONSIBILITIES |
6.1. Amyris shall comply with all legal requirements related to pollution and environmental compliance, and shall be the sole responsible for any acts of its representatives, employees and subcontractors, and shall take full responsibility for any and all damages arising out of its operation impacting the environment, Raízen and third-parties. I.e. Amyris hereby undertakes to indemnify all damages caused against the environment, Raízen and third-parties. This clause shall survive the termination of this Agreement.
6.1.1 Amyris hereby undertakes to indemnify Raízen for any and all judicial action, appeal, claim or motion related to any arbitration, audit, inspection, assessment or dispute of any kind, including, but not limited to indemnification, compensation, penalties, fines and other losses which Raízen may incur in due to the building and operation of the Amyris Industrial Site.
7. IMPROVEMENTS, BUILDINGS, STRUCTURES AND FACILITIES
7.1. Amyris shall build the Amyris’ Industrial Site in the Site, at Amyris expenses, exclusively for the production of flavor and fragrances.
7.2. Amyris shall obtain all licenses and permits required for the construction of the Amyris Industrial Site and shall also comply
with all requirements and technical standards required by the Applicable Law.
7.3. Raízen assess and decide (approve or not approve) all improvements, buildings, structures and facilities which are not related to the construction of the Amyris Industrial Site.
7.4. Amyris is responsible for Amyris Industrial Site’s maintenance, at its own expenses.
7.5. Upon return of the Site, Raízen shall not be bound to indemnify Amyris for the construction of the Amyris Industrial Site and/or any improvements and/or facilities built and installed by Amyris, as per clause 3.1.2.
7.6. Without prejudice to other obligations set forth under this Agreement, Raízen is entitled to make any improvements and/or build any necessary or useful facilities for the maintenance of the Site or Amyris Industrial Site, provided that Amyris refuses to carry out the aforementioned improvements and/or buildings even after being notified.
7.7. Amyris shall reimburse Raízen from any improvements, buildings, structures and facilities made by Raízen, within forty five (45) days, as from the date these improvements, buildings, structures and/or facilities are duly reported (the payment receipts shall also be presented).
| 8. | PRICE |
8.1 The monthly Price shall be of R$ 44.000,00 (forty four thousand Reais) for the first three years of this agreement, and R$ 40.000,00 (forty thousand Reais) as
from the third anniversary of this agreement, which shall be due up to the twentieth (20th) day of each month, during the Term.
8.2. Every 12 (twelve) months the Price will suffer readjusted by the positive fluctuation of the IGPM/FGV (or any index that comes to replace it).
8.3. The Price shall also be adjusted proportionally to the occupied area when the Site is vacated by Amyris upon the execution of the lease agreement of the JV Company pursuant to the terms of this Agreement.
| 9. | PAYMENT |
9.1. The Price due to Raízen by Amyris shall be paid through bank slip, to be issued by Raízen, being considered the payment receipt as regular discharge by Amyris of its obligations.
9.2. In case of late payment, Amyris shall pay Raízen a 2% (two per cent) late payment penalty over the overdue amount. Without prejudice to the late payment penalty, the overdue amount shall be adjusted as per the positive variation of IGPM/FGV (or any superseding index) plus 1% (one per cent)default interest per month (pro rata).
| 10. | TERM |
10.1 This Agreement shall be valid for twenty (20) years (“Term”), extendable for an additional 20-year period, pursuant to mutual consent of the Parties, or until all obligations set forth under this Agreement are duly fulfilled by the Parties, which on occurs first.
| 11. | ACT OF GOD AND/OR FORCE MAJEURE EVENT |
11.1. If any Party becomes unable to perform its obligation due to an Act of God and/or a Force Majeure Event (the “Event”), this Agreement will remain in force, however the obligations prevented will be suspended as long as the Event remains.
11.2. The Party affected by an Event shall notify the other Party within 48 (forty eight) hours counted from the beginning of the Event. The notification must contain a detailed description of the Event, indicating the nature of the Event, the effects of the Event on the performance of the obligations set forth in this Agreement and an estimation of the period each obligation will be suspended. The suspensions of any obligation will not exempt the Party effected by the Event for previous obligation or not effected, inclusively the payments related to obligations previous of the Event, even though the due date of that obligation is set for during the period of the Event.
11.3. The Party that claimed to be affected by an Event shall strive to remedy the Event and/or to minimize the effects of the Event over the other Party and shall take all necessaries actions to prevent or reduce the risk of new Events or the significance of their effects.
11.4. Any Electric Energy rationing and/or governmental restrictions that may prevent the fulfilment of this Agreement shall be considered as an Event.
11.5 Under no circumstance the following situations shall be considered as an Event:
a financial problems and/or difficulties of any Party;
b any governmental act that the affect Party could avoid if it had complied with the Applicable Law;
c strike and/or labor interruptions or measures having a similar effect, of employees and contractors of any of the Parties and/or of any subcontractors.
| 12. | EVENTS OF TERMINATION |
12.1. The Agreement may be terminated independently of any formality, at non-defaulting Party’s sole discretion, in the following hypothesis:
a) any event of default of the Agreement, as long as the defaulting Party had failed to cured it within 120 (one hundred and twenty) days, counted from receiving date of non-defaulting Party’s notification;
b) bankruptcy or judicial reorganization ordered or approved of any of the Parties;
c) if case of an Event prevent the Agreement fulfillment and lasts for a period exceeding one hundred and eighty (180) consecutive days;
d) After 60 (sixty) days of delayed payment rightful to Raízen;
a) In the hypothesis set forth in Clauses 5.4 or 5.9 of the JV Agreement
12.2. The Party that fails to comply with any clause and condition of this Agreement and fails to remedy the failure within thirty (30) days from the receipt of the notification sent by the innocent Party shall pay to the other Party a penalty of merely punitive character of R$ 5.000.000,00 (five million reais), without prejudice to the innocent Party being able, at its discretion, to terminate this Agreement as well as to claim compensation for the direct damages resulting from such default. The fine in question will be monetarily restated based on the positive variation of the IGPM / FGV (or substitute index) and plus interest of 2% (two) percent per month. Both charges (monetary restatement and interest) will be due from your verification until your actual payment.
| 13. | ASSIGNMENT |
13.1. Neither Party may assign, either wholly or in any part, the Agreement or any of its rights and obligations without the prior written consent of the other Party. Nonetheless, the Parties consent that both Parties can assign the Agreement to its own Affiliates regardless of any formality.
13.2. Every assignment realized in disagreement with the clause above will not be valid.
14. RIGHT OF FIRST REFUSAL
14.1. In the event that Raízen receives from third parties a binding offer for the purchase of the Site, but not less than the entire Site, Amyris will be granted the right of first refusal for acquisition of the Site for
the same overall value of the best offer Raízen receives, provided that the offer presented by Raízen is for the acquisition of the entire Site. For the avoidance of doubt, Amyris will not have right of first refusal if the Site is transferred to one of Raízen's Affiliates.
14.2. If Amyris does not exercise the right of first refusal set forth in clause 14.1, for any reason, it is expressly agreed between the Parties that Raízen and/or Raízen´s Affiliates shall notify the eventual buyer of the Site of all obligations of this Agreement, the terms and conditions of this Agreement, including the obligation to respect its term, thus establishing a validity clause against third parties, pursuant to article 576, caput and §1 of the Brazilian Civil Code.
15. COMPLIANCE
15.1. The Parties hereby agree to comply with all laws, rules, regulations and conventions applicable to this Agreement and to their own activities, in particular with the anti-trust, anti-money laundering and anti-corruption legislations, such as Laws No. 12,529/2011, 9,613/1998, 12,846/2013, the US Foreing Corrupt Practices Act (FCPA) and the UK Bribery Act, and to act with honesty, loyalty, integrity and good faith, avoiding conflicts of interest under this Agreement.
15.2. Additionally, the Parties declare that they have Codes of Conduct, or any other similar policies, applicable to their own business, that include without
limitation, the need to take ethical and sustainable actions when conducting their business, the prohibition of any form of forced or child labor, the preservation of the environment, compliance with health and safety standards as well as respect for customers, employees, contractors and the communities established in places where the Parties carry out their activities.
15.3. Without prejudice to the Applicable Law, the Parties undertake not to give or receive, offer or ask for, directly or indirectly, to anyone, any payment or benefit that constitutes undue or illegal advantage.
15.4. For purposes hereof “undue advantage” means any personal or corporate benefits whose purpose is to provide undue or inappropriate results, which would not occur if not for the undue advantage.
15.5. Any violations of any applicable law and/or of the Raízen’s Code of Conduct should be reported to Raízen’s Ethics Line at (0800-7-724936) or by email (canaldeetica@raizen.com).
15.6. The Agreement may be terminated immediately, regardless of prior notice in the event of breach of any of the provisions of this Section.
16. NOTIFICATION
16.1. All notifications and other communications related to the Agreement shall be made in writing, and delivered by e-mail, post or handed to the person indicated below. The communications shall
only be considered valid upon written confirmation of the receipt.
a For Raízen:
b For Amyris:
16.2. Any and all changes related to the persons and/or contact information indicated above shall only become valid upon five (5) Business Days, as of the receipt of the written notice delivered by the other Party.
17. GENERAL PROVISIONS
17.1. Amyris shall not use any logo, name or trademark of Raízen or its Affiliates in any type of advertisement or public announcement without the prior authorization of Raízen in writing.
17.2. The Agreement constitutes an extrajudicial enforceable instrument according to article 784, item III of the Brazilian Civil Procedure Code, even for the purpose of recovery of any sum related to the Agreement.
17.3. Any information, document, material and any other data disclosed by one Party to the other Party shall be deemed as confidential information and
shall not be disclosed to third parties under no circumstances and for no reason, except if the disclosing party expressly authorizes (the “Confidential Information”).
17.1.1. Confidential Information excludes, and the obligations of confidentiality and limitations on use will not apply to information and/or data which:
a) The receiving party can reasonably prove to be of its knowledge as of the date of disclosure hereunder, except with respect to its knowledge regarding the Parties’ intention to enter into this Agreement, which information shall be considered Confidential Information for the purposes hereof;
b) Is already in possession of the public as of the date of disclosure hereunder or becomes available to the public after such disclosure other than through the act or omission of the receiving party;
c) Is required to be disclosed under applicable law, under the applicable rules or regulations of any stock exchange where the Parties may have their shares listed, or by a governmental and/or court order, decree, regulation or rule (provided that the receiving party shall, to the extent legally permitted, give written notice to the disclosing party prior to such disclosure and shall exercise its best endeavors in order to make any such persons or entities to whom Confidential Information is disclosed aware of the confidential nature of any such information); and/or
d) Is acquired independently from a third party that represents that it has the right to disseminate such information at the time it is acquired by the receiving party.
17.4. Failure by either Party to take action towards the other in case of the other Party’s non-compliance with obligations or conditions set forth under the Agreement shall not be deemed to be a waiver to take action for a subsequent non-compliance of the same or other obligations or conditions.
17.5. If any term or condition of the Agreement is, fully or partially, by law or judicial decision, considered null or impossible to be fulfilled, this shall the considered as not written, and the other terms and conditions shall remain in full force and effect.
17.6. Any amendments to the Agreement shall be made by an Instrument of Amendment.
17.7. This Agreement shall be governed by and construed in accordance with the Brazilian Law.
17.8. In the event of any conflict between the English version and the Portuguese version, the Portuguese version shall prevail over the English version.
17.9. Arbitration. Prior to submitting any Dispute (as defined below) to the procedures of this Clause 17.9, the Parties commit to act in good faith to settle the matter amicably by referral to the members of the relevant Parties´ senior executive teams, who shall seek to settle the matter within thirty (30) days of the Dispute being so referred. Any dispute, controversy or claim regarding the existence, construction, validity, interpretation, enforceability or breach of this Agreement (a “Dispute”) shall be subject to the following provisions.
17.9.1. Any Dispute that is not resolved amicably by the Parties in accordance with Clause 17.9 shall be settled finally and exclusively by arbitration in accordance with the Arbitration rules of the International Chamber of Commerce (the “ICC” or “Court”), which shall administer the arbitration.
17.9.2. The arbitration shall be heard, conducted and decided by an arbitral tribunal composed of three (3) arbitrators. The arbitral tribunal shall be constituted in accordance with the Rules of Arbitration, except that the president of the arbitral tribunal shall be jointly appointed by the two (2) co-arbitrators appointed by the parties to the arbitration. If the Party-appointed arbitrators cannot reach agreement on a presiding arbitrator of the tribunal and/or one Party refuses to appoint its arbitrator within said thirty (30) Business Day period, the appointing authority for the implementation of any such procedures shall be the chairperson (or its equivalent) of the Court, who shall
appoint independent arbitrators who do not have any financial or other interest in the dispute, controversy or claim. All decisions and awards by the arbitration tribunal shall be made by majority vote.
17.9.3. Unless otherwise expressly agreed in writing by the Parties to the arbitration proceedings:
a) the arbitration proceedings shall be held in in the City of São Paulo, SP, Brazil where the arbitral award shall be rendered;
b) the arbitration proceedings shall be conducted in the English language and the arbitrator(s) shall be fluent in the English language;
c) the arbitrator(s) shall be and remain at all times wholly independent and impartial;
d) the arbitration proceedings shall be conducted under the Arbitration Rules of the ICC in effect on the date of execution of this Agreement by the Parties;
e) the costs of the arbitration proceedings (including attorneys' fees and costs) shall be borne in the manner determined by the arbitrator(s), considering the liability of each party to the arbitration for its payment, in proportion to its success in the arbitral proceedings. The arbitral tribunal shall not have jurisdiction to impose non-prevailing party’s attorney fees (honorários de sucumbência);
f) the arbitral award shall be in writing; be final and binding without the right of appeal; be the sole and exclusive remedy regarding any claims, counterclaims, issues or accountings presented to the
arbitrators; be made and promptly paid, free of any deduction or offset; and any costs or fees incident to enforcing the award, shall to the maximum extent permitted by law be charged against the Party resisting such enforcement;
g) the award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at the maximum rate permitted by law;
h) judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the Party owing the judgment, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be; and
i) the arbitration shall proceed in the absence of a Party who, after due notice, fails to answer or appear. An award shall not be made solely on the default of a Party to answer or appear, but the arbitrator(s) shall require the Party who is present to submit such evidence as the arbitrator(s) may determine is reasonably required to make an award.
In witness whereof, the Parties sign this Agreement in two (2) original counterparts of equal content and form, in the presence of two (2) witnesses who also sign it below, such that it may produce its due and legal effects.
São Paulo, 10 de maio de 2019 / May 10, 2019.
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_/s/ Antonio Simões _________ RAÍZEN ENERGIA S.A. Nome/Name: Antonio Simões Cargo/Title:
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_/s/ Raphaela Gomes _________ RAÍZEN ENERGIA S.A. Nome/Name: Raphaela Gomes Cargo/Title:
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_/s/ Eduardo L. Silveira ________ AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA Nome/Name:Eduardo L. Silveira Cargo/Title: V.P. Amyris Brasil
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_/s/ Giani Ming Valent __________ AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA Nome/Name: Giani Ming Valent Cargo/Title: Diretor Engenharia
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Testemunhas/Witnesses:
_/s/ Gustavo Bezerra Tenorio _______ |
_/s/ Diogo Simoes ____________ | |
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Nome/Name: Gustavo Bezerra Tenorio RG: CPF:
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Nome/Name: Diogo Simoes RG: CPF: |
Exhibit 10.03
EXECUTION COPY
AMENDMENT NO 4 TO LOAN AGREEMENT
April 4, 2019
EFFECTIVE DATE: April 4, 2019
| PARTIES: Borrower: | Amyris, Inc., a Delaware corporation (“Parent”), Amyris Fuels, LLC, a Delaware limited liability company, Amyris Clean Beauty LLC, a Delaware limited liability company, and AB Technologies LLC, a Delaware limited liability company | |
| Lender: | GACP Finance Co., LLC., a Delaware limited liability company |
RECITALS
A. Lender has extended credit (the “Loan”) to Borrower in the original principal amount of Thirty-Six Million Dollars ($36,000,000.00) pursuant to that certain Loan and Security Agreement, dated as of June 29, 2018, as modified by that certain First Modification Agreement, effective as of June 29, 2018 and as amended pursuant to that certain Amendment No 1 to Loan Agreement, effective as of August 24, 2018, that certain Amendment No 2 to Loan Agreement, effective as of September 30, 2018 and that certain Amendment No 3 to Loan Agreement, effective as of December 14, 2018 (the “Loan Agreement”), each by and among Parent, each “Subsidiary Guarantor” party thereto, the several banks and other financial institutions or entities from time to time parties thereto (collectively, referred to as “Lender”) and GACP Finance Co., LLC., a Delaware limited liability company, in its capacity as administrative agent for itself and the Lender (in such capacity, the “Agent”).
B. Borrower and Lender desire to make amendments to the definitions of “Eligible Accounts Receivable”, “Excluded Intellectual Property”, “Term Loan Maturity Date” and Sections 2.1, 2.6(b)(i), 7.4, 7.16, 9.1, 9.2, 9.5 and 9.7 of the Loan Agreement.
C. The term “Loan Documents” and each other capitalized term used but not defined herein has the meaning given to such term in the Loan Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:
1. Amendment to Loan Agreement. The Loan Agreement is modified as follows:
1.1 Effective as of the Effective Date hereof, Section 1.1 of the Loan Agreement is hereby amended by deleting the definitions of “Eligible Accounts Receivables” and “Excluded Intellectual Property” in their entirety and replacing them with the following:
“Eligible Accounts Receivable” means a receivable owing to the Borrower which:
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(i) is denominated and payable in U.S. Dollars; (ii) is payable by an obligor (A) that is organized under the laws of any state within the United States or the District of Columbia and that is not an Affiliate of Borrower or (B) that has been approved as eligible from time to time by Agent in its sole and absolute discretion and that is organized under the laws of any country other than the United States and for which Borrower has obtained foreign credit insurance in form and substance acceptable to agent in its sole discretion; (iii) is not more than 60 days past due or 90 days past the original invoice date of such receivable; (iv) arises under a duly authorized contract for the sale and delivery of goods and services in the ordinary course of Borrower’s business that (a) is in full force and effect and that is a valid, binding and enforceable obligation of the related obligor, (b) conforms in all material respects with all applicable laws, rulings and regulations in effect, (c) that is not the subject of any asserted dispute, offset, hold back, defense, adverse claim or other claim, and (d) in which Borrower has good and marketable title, and that is freely assignable by Borrower (including without any consent of the related obligor unless such consent has already been obtained); (v) constitutes an “account” or “general intangible” (each, as defined in the UCC), and that is not evidenced by “instruments” or “chattel paper” (each, defined in the UCC); (vi) represents amounts earned and payable by the obligor that are not subject to any condition or subsequent deliverables; and (vii) is not otherwise deemed ineligible as a result of risks determined by Lender in its sole discretion based on the field exam pursuant to Section 7.18 hereof and updates thereof and subsequent field exams thereafter.
“Excluded Intellectual Property” means all Intellectual Property that (i) constitutes “AMYRIS Licensed IP” as defined in that certain License Agreement regarding Diesel Fuel in the EU, dated as of March 21, 2016, as amended, by and among the Parent and Total Raffinage Chimie S.A., as assignee of Total Energies Nouvelles Activités USA, but solely to the extent of the field of use granted in such agreement, (ii) constitutes “AMYRIS Licensed IP” as defined in that certain Amended & Restated Jet Fuel License Agreement, dated as of March 21, 2016, as amended, by and among the Parent and Total Amyris BioSolutions B.V., but solely to the extent of the field of use granted in such agreement, (iii) is subject to that certain Farnesene Intellectual Property License, dated as of November 14, 2017, by and between DSM Nutritional Products Ltd. and Parent, but solely to the extent of the field of use granted in such license, (iv) is subject to that certain Health and Nutrition License Agreement, dated as of May 11, 2017, by and between Parent and DSM International B.V., but solely to the extent of the field of use granted in such license, (v) is subject to that certain Vitamin A License Agreement, dated as of May 11, 2017, by and between Parent and DSM International B.V., but solely to the extent of the field of use granted in such license, or (vi) constitutes Foreground IP (and, for clarity, not “Amyris Background IP” (as defined in the CBD Agreement)) pursuant to that certain Research, Collaboration and License Agreement, dated March 18, 2019 (the “CBD Agreement”) by and between Parent and the other party thereto in connection with (and pursuant to) such CBD Agreement, but solely to the extent of the intellectual property and field of use set forth therein, and in each case of clauses (i) and (ii), as such agreements were in effect as of June 29, 2018, in each case of clauses (iii), (iv) and (v), as such agreements existed as of December 14, 2018, and in the case of clause (vi), as such agreement existed as of March 18, 2019 and, in each case, only for as long as such agreement or license is not terminated either (x) with the prior written consent of the party thereto (other than Parent (or any successor to Parent)) or (y) by Parent (or any successor to Parent) in accordance with the terms of such agreement or
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license, unless (and only for so long as) such termination is being disputed in good faith by the other party thereto or, in the case of clause (vi) is not subject to any unfulfilled conditions to effectiveness or closing. Notwithstanding the foregoing “Excluded Intellectual Property” shall not include any products, substitutions or replacements of Intellectual Property outside of the fields of use granted in the foregoing agreements and licenses or any proceeds of such Intellectual Property (unless, in each case, such proceeds, products, substitutions or replacements would otherwise constitute Excluded Intellectual Property).
1.1 Effective as of December 31, 2018, Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Term Loan Maturity Date” in its entirety and replacing it with the following:
“Term Loan Maturity Date” means July 1, 2021.
1.2 Effective as of the Effective Date hereof, Section 2.1 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“2.1 Facility Increase. Prior to January 1, 2019, Borrower may, by written notice to Agent, elect to request the establishment of a new loan commitment by an aggregate amount not in excess of $35,000,000.00 (the “Incremental Term Loan Commitment”). Lender may elect to accept or decline Borrower’s request for the Incremental Term Loan Commitment (in whole or in part) in its sole and absolute discretion. Any Incremental Term Loan Commitment shall become effective and shall be an Advance subject to the conditions, requirements and limitations set forth in Section 2.2(b) as of date advanced.”
1.3 Effective as of the Effective Date hereof, Section 2.6(b)(i) of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“(i) Asset Sales. Borrower shall prepay the Advances no later than the fifth Business Day following receipt of Net Cash Proceeds, in excess of $500,000 in any calendar year, required to be prepaid pursuant to the provisions hereof in an amount equal to one hundred percent (100%) of the Net Cash Proceeds received from any Asset Sale by Parent or any of its consolidated Subsidiaries.”
1.4 Effective as of the Effective Date hereof, Section 7.4 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“7.4 Indebtedness; Amendments to Indebtedness. Borrower shall not and shall not permit any Subsidiary to: (a) create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, other than Permitted Indebtedness; (b) prepay any Indebtedness except for (i) by the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion, or (ii) a refinancing of the entire amount of such Indebtedness which does not impose materially more burdensome terms upon Borrower or its Subsidiary than exist in such Indebtedness prior to such refinancing, but with a maturity date which is later than the Term Loan Maturity Date; and (c) pay any principal or interest on any Indebtedness (other than the Secured Obligations) while the Secured Obligations are outstanding without the written consent of Agent; and (d) amend or modify any documents or notes
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evidencing any Indebtedness in any manner which imposes materially more burdensome terms upon Borrower or its Subsidiary than exist in such Indebtedness prior to such amendment or modification without the prior written consent of Agent.”
1.5 Effective as of the Effective Date hereof, Section 7.16 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it with the following:
“7.16 Minimum Liquidity. Borrower shall have, on a consolidated basis, liquidity calculated as unrestricted, unencumbered Cash and Cash Equivalents denominated in U.S. Dollars in one or more Deposit Accounts located in the United States which are subject to an Account Control Agreement in favor of Agent (provided that no Account Control Agreement shall be required to be in place until the seventh day after the Closing Date) as of:
(a) the last day of the month for each of June, July, August and September of 2018 and at all times during the period beginning on October 1, 2018 and ending on November 12, 2018, in a minimum amount equal to $10,000,000.00; provided, that for the first two months of each fiscal quarter beginning on or after the Closing Date, such amount shall be reduced to $5,000,000.00 in the event liquidity calculated as the sum of (i) unrestricted, unencumbered Cash and Cash Equivalents in one or more Deposit Accounts located in the United States which are subject to an Account Control Agreement in favor of Agent, provided that no Account Control Agreement shall be required to be in place until the seventh day after the Closing Date and (ii) the outstanding principal amount of all Eligible Accounts Receivable not required to meet the covenant set forth in Section 7.17 equals minimum amount of $10,000,000.00;
(b) at all times on and after November 13, 2018 and ending on April 2, 2019, in a minimum amount equal to $15,000,000.00; provided, that for the first two months of each fiscal quarter beginning on or after the Closing Date, such amount shall be reduced to $10,000,000.00 in the event liquidity calculated as the sum of (i) unrestricted, unencumbered Cash and Cash Equivalents in one or more Deposit Accounts located in the United States which are subject to an Account Control Agreement in favor of Agent, provided that no Account Control Agreement shall be required to be in place until the seventh day after the Closing Date and (ii) the outstanding principal amount of all Eligible Accounts Receivable not required to meet the covenant set forth in Section 7.17 equals minimum amount of $15,000,000.00; and
(c) at all times on and after April 3, 2019, in a minimum amount equal to $15,000,000.00.”
1.6 Effective as of the Effective Date hereof, Section 9.1 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“9.1 Payments. Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on its payment date whether scheduled, upon acceleration or otherwise; or”
1.7 Effective as of the Effective Date hereof, Section 9.2 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
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“9.2 Covenants. Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other Loan Documents or any other agreement among Borrower and Agent or Lender; or”
1.8 Effective as of the Effective Date hereof, Section 9.5 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
9.5 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease operations of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower its directors or majority shareholders shall take any action initiating any of the foregoing actions described in clauses (i) through (vi); or (B) either (i) the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or”
1.9 Effective as of the Effective Date hereof, Section 9.7 of the Loan Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:
“9.7 Other Obligations. The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness in excess of $250,000, or receipt of written notice of the occurrence of any default under any other agreement or obligation of Borrower with annual payments or receipts in excess of $250,000.”
1.10 Each reference in the Loan Documents to the Loan Agreement or the Loan Documents is a reference to such document or documents as modified herein and in any Loan Documents executed concurrently herewith.
2. Representations and Warranties. Borrower represents and warrants to Lender:
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2.1 There has been no material adverse change in the financial condition of Borrower or any other person whose financial statement has been delivered to Lender in connection with the Loan from the most recent financial statement received by Lender.
2.2 The Loan Documents as modified herein and in each of the Loan Documents executed concurrently herewith are the legal, valid, and binding obligation of Borrower, enforceable against Borrower in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, or similar laws or by equitable principals of general application.
3. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
3.1 Agent shall have received, in form and substance satisfactory to Lender, in Lender’s sole and absolute discretion, fully executed, and if requested by Lender, acknowledged originals of this Amendment.
4. Miscellaneous.
4.1 The Loan Documents are ratified and affirmed by Borrower and remain in full force and effect as modified herein and in each of the Loan Documents executed concurrently herewith. Any property or rights to or interests in property granted as security in the Loan Documents remain as security for the Loan and the obligations of Borrower in the Loan Documents as modified herein and in each of the Loan Documents executed concurrently herewith.
4.2 The Loan Documents as modified herein and in each of the Loan Documents executed concurrently herewith contain the entire understanding and agreement of Borrower and Lender in respect of the Loan and supersede all prior representations, warranties, agreements, arrangements, and understandings with respect thereto. No provision of the Loan Documents as modified herein and in each of the Loan Documents executed concurrently herewith may be changed, discharged, supplemented, terminated, or waived except in a writing signed by Lender and Borrower.
4.3 Except as specifically provided in this Amendment, no implied consent involving any of the matters set forth in this Amendment or otherwise shall be inferred or implied by Lender’s execution of this Amendment or any other action of Lender. Lender’s execution of this Amendment shall not constitute a waiver, either express or implied, of the requirement that any further waiver with respect to or modification of the Loan or of the Loan Documents shall require the express written approval of Lender, as further set forth in the Loan Documents. Lender’s execution of this Amendment shall not constitute a waiver of any of the rights and remedies that Lender may have against Borrower, or of any of Lender’s rights and remedies arising out of the Loan Documents as modified herein and such rights and remedies are hereby expressly reserved.
4.4 In consideration of the agreements of Lender set forth in this Amendment, Borrower, and all of their respective heirs, personal representatives, predecessors, successors and assigns (individually and collectively, the “Releasors”), hereby fully, finally, and forever release
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and discharge Lender and its successors, assigns, directors, officers, employees, agents, and representatives from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits of whatever kind or nature, in law or equity, the Releasors or any of them have, whether known or unknown, in respect of the Loan Documents arising from events occurring prior to the date hereof.
4.5 This Amendment shall be governed by the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
4.6 The Loan Documents as modified herein are binding upon, and inure to the benefit of, Borrower and Lender and their respective successors and assigns.
4.7 This Amendment may be executed in one or more counterparts, each of which is deemed an original and all of which together constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Amendment to physically form one document.
[SIGNATURE PAGE FOLLOWS]
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DATED as of the date first above stated.
“Borrower”
Amyris, Inc., a Delaware corporation
By:/s/ Kathleen Valiasek
Name: Kathleen Valiasek
Title: CFO
Amyris Fuels, LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name: Kathleen Valiasek
Title: CFO
Amyris Clean Beauty LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name: Kathleen Valiasek
Title: CFO
AB TECHNOLOGIES LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name: Kathleen Valiasek
Title: Vice President
“Lender”
GACP Finance Co., LLC, a Delaware limited liability company
By:/s/ John Ahn
Name: John Ahn
Title: CEO
[Signature Page to Amendment No 4 to Loan Agreement]
8
Exhibit 10.04
EXECUTION VERSION
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of April 8, 2019 (as amended, modified or supplemented from time to time, this “Agreement”), is entered into by and between AMYRIS, INC., a Delaware corporation (the “Company”), and Foris Ventures, LLC, a Delaware limited liability company (the “Lender”).
RECITALS
A. Subject to the terms and conditions hereof, the Lender has agreed to purchase from the Company, and the Company has agreed to sell to the Lender, an unsecured promissory note (the “Note”) having an aggregate principal amount of Eight Million Dollars ($8,000,000).
AGREEMENT
NOW THEREFORE, in consideration of the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Purchase and Sale of the Note.
| (a) | Purchase and Sale. The sale and purchase of the Note shall take place at such place and time as the Company and the Lender may determine, but in no event later than April 12, 2019 (the “Closing”). At the Closing, the Company will deliver to the Lender the Note, against receipt by the Company of Eight Million Dollars ($8,000,000) in immediately available funds. The Note will be registered in the Lender’s name in the Company’s records. |
| (b) | Subordination. The Note shall be subordinated in right of payment to that certain Tranche II Senior Convertible Note issued on January 15, 2014 by the Company to Wolverine Flagship Fund Trading Limited (the “Senior Debt”). For the avoidance of doubt, the Lender will not demand or receive from the Company (and the Company will not pay to the Lender) all or any part of the Note, by way of payment, prepayment, setoff, lawsuit or otherwise, nor will the Lender commence, or cause to commence, prosecute or participate in any administrative, legal or equitable action against the Company, for so long as any portion of the Senior Debt (other than any contingent obligations for which no claim has been asserted) remains outstanding; provided, however, that if a proceeding has been commenced by or against the Company, the Lender may file a claim or statement of interest with respect to the Note, the Lender may file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding, or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Lender, vote on any plan of reorganization and make any filings and motions that are, in each case, not in contravention of the provisions of this Agreement, with respect to the Note, and the Lender may exercise any rights or remedies as unsecured creditors against the Company so long as doing so is not, directly or indirectly, inconsistent with, or in violation of, the terms of this provision. |
2. Representations and Warranties of the Company. The Company represents and warrants to the Lender as of the date hereof and as of the Closing that:
| (a) | Due Incorporation, Qualification, etc. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of Delaware; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect. |
| (b) | Authority. The execution, delivery and performance by the Company of this Agreement and the Note and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate actions on the part of the Company. |
| (c) | Enforceability. This Agreement and the Note have been duly executed and delivered by the Company and constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, except in each case as may be limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. |
| (d) | Non-Contravention. The execution and delivery by the Company of this Agreement and the Note and the performance and consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) violate the certificate of incorporation or bylaws of the Company or any judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound except to the extent such violation, breach or acceleration could not reasonably be expected to result in a Material Adverse Effect; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties except to the extent such suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect. The Company is not in breach of any mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound except to the extent such violation, breach or acceleration could not reasonably be expected to result in a Material Adverse Effect. |
| (e) | Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person is required in connection with the execution and delivery by the Company of this Agreement and the Note and the performance and consummation by the Company of the transactions contemplated hereby and thereby, except for those already obtained or those that will be obtained prior to the Closing. |
| (f) | Tax Returns and Payments. The Company has timely filed all required tax returns and reports, and the Company has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by the Company except to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. |
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| (g) | Litigation. There are no actions or proceedings pending or threatened in writing by or against the Company except for such actions or proceedings that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. |
| (h) | Full Disclosure. No written representation, warranty or other statement of the Company in any certificate or written statement given to Lender by the Company in connection with this Agreement or the Note, as of the date such representation, warranty, or other statement was made, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or written statements not misleading in light of the circumstances under which they were made. |
3. Representations and Warranties of the Lender. The Lender represents and warrants to the Company as of the date hereof and as of the Closing that:
| (a) | Due Incorporation, Qualification, etc. The Lender (i) is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware; and (ii) has all requisite power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement. |
| (b) | Authority. The execution, delivery and performance by the Lender of this Agreement and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate actions on the part of the Lender. |
| (c) | Enforceability. The Lender has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement is a valid and binding obligation of the Lender, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. |
| (d) | Securities Law Compliance. The Lender is purchasing the Note for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Lender has received or has had full access to all of the information necessary and appropriate to make an informed investment decision. The Lender is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act. The Lender acknowledges that it can bear the economic risk of the investment the Note. |
| (e) | Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person is required in connection with the execution and delivery by the Lender of this Agreement and the performance and consummation by the Lender of the transactions contemplated hereby and thereby, except for those already obtained. |
| (f) | Non-Contravention. The execution and delivery by the Lender of this Agreement and the performance and consummation by the Lender of the transactions contemplated hereby do not and will not (i) violate the organizational documents of the Lender or any judgment, order, writ, decree, statute, rule or regulation applicable to the Lender; or (ii) violate any agreement to which the Company is a party or by which it is bound. |
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4. Conditions to Obligations of the Lender. The Lender’s obligations hereunder are subject to the fulfillment, on or prior to the Closing, of all of the following conditions, any of which may be waived in whole or in part by the Lender:
| (a) | Representations and Warranties. The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct as of the Closing. |
| (b) | Governmental Approvals and Filings. The Company shall have obtained all governmental approvals required in connection with the sale and issuance of the Note. |
| (c) | Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Lender, of the Note shall be legally permitted by all laws and regulations to which the Lender or the Company is subject. |
| (d) | Transaction Documents. The Company shall have duly executed and delivered to the Lender this Agreement and the Note. |
5. Conditions to Obligations of the Company. The Company’s obligations hereunder are subject to the fulfillment, on or prior to the Closing, of all of the following conditions, any of which may be waived in whole or in part by the Company:
| (a) | Representations and Warranties. The representations and warranties made by the Lender in Section 3 hereof shall be true and correct when made, and shall be true and correct as of the Closing. |
| (b) | Governmental Approvals and Filings. The Lender shall have obtained all governmental approvals required in connection with the sale and issuance of the Note. |
| (c) | Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Lender, of the Note shall be legally permitted by all laws and regulations to which the Lender or the Company are subject. |
| (d) | Purchase Price. The Lender shall have delivered to the Company eight million dollars ($8,000,000) in immediately available funds. |
6. Definitions. As used in this Agreement, the following capitalized terms have the following meanings:
“Material Adverse Effect” means a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Agreement.
“Obligations” means all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Company to the Lender under the Note of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of the Note, including all principal, interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Company thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.
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“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
7. Miscellaneous.
| (a) | Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and the Lender. |
| (b) | Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California. |
| (c) | Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement. |
| (d) | Successors and Assigns. Subject to the restrictions on transfer described in Sections 7(e) below, the rights and obligations of the Company and the Lender hereunder and under the Notes shall be binding upon and inure to the benefit of the successors, assigns, heirs, administrators and transferees of the parties. |
| (e) | Assignment by the Company; Assignment by the Lender. Neither this Agreement nor the Note nor any of the rights, interests or obligations hereunder or thereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Lender. The Lender will not assign, by operation of law or otherwise, this Agreement or the Note or any of its rights, interests or obligations hereunder or thereunder without the prior written consent of the Company. |
| (f) | Entire Agreement. This Agreement and with the Note constitute the full and entire understanding and agreement between the parties relating to the subject matter hereof and thereof and supersede any previous written or verbal agreements between the parties with regard to the subject matter hereof and thereof. |
| (g) | Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice): |
If to the Company, to:
Amyris, Inc.
5885 Hollis St., Ste. 100
Emeryville, CA 94608
Attention: General Counsel
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If to the Lender, to:
Foris Ventures, LLC
Attention:
JEMA Management LLC
751 Laurel St. #717
San Carlos, CA 94070-3113
| (h) | Severability of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. |
| (i) | Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument. |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
|
COMPANY: | ||||
AMYRIS, INC. | ||||
By: |
/s/ Kathleen Valiasek ____ | |||
| Name: | Kathleen Valiasek | |||
| Title: | Chief Financial Officer | |||
LENDER: | ||||
| FORIS VENTURES, LLC | ||||
By: |
/s/ Barbara Hager___________ | |||
| Name: | Barbara Hager_____________ | |||
| Title: | Manager__________________ | |||
Exhibit 10.05
LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement (“Agreement”), dated as of April 15, 2019 (the “Effective Date”), between GACP Finance Co., LLC., a Delaware limited liability company (the “Seller”), Foris Ventures, LLC, a Delaware limited liability company (the “Purchaser”) and Borrower (as defined below), solely for purposes of Sections 3.03 and 4.03.
RECITALS
A. The Seller has extended credit (the “Loan”) to Borrower in the original principal amount of Thirty-Six Million Dollars ($36,000,000.00) pursuant to that certain Loan and Security Agreement, dated as of June 29, 2018, as modified by that certain First Modification Agreement, effective as of June 29, 2018 and as amended pursuant to that certain Amendment No 1 to Loan Agreement, effective as of August 24, 2018, that certain Amendment No 2 to Loan Agreement, effective as of September 30, 2018, that certain Amendment No 3 to Loan Agreement, effective as of December 14, 2018 and that certain Amendment No 4 to Loan Agreement (“Amendment No 4”), effective as of April 4, 2019 (the “Loan Agreement”), each by and among by Amyris, Inc., a Delaware corporation (“Parent”), each “Subsidiary Guarantor” party thereto (together with Parent, “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (collectively, referred to as “Lender”) and Seller, in its capacity as administrative agent for itself and the Lender (in such capacity, the “Agent”) and evidenced by that certain Secured Term Promissory Note, dated as of June 29, 2018, by Borrower in favor of Seller (the Note, and together with the Loan Agreement and the following documents, the “Loan Documents”):
(i) Joinder Agreement, dated June 29, 2018, by and between Amyris Fuels, LLC, a Delaware limited liability company (“Fuels”), and Seller;
(ii) Joinder Agreement, dated October 2, 2018, by and between Amyris Clean Beauty LLC, a Delaware limited liability company (“Clean Beauty”), and Seller;
(iii) Joinder Agreement, dated February 8, 2019, by and between AB Technologies LLC, a Delaware limited liability company (“AB Tech”), and Seller;
(iv) Amended and Restated Fee Letter, dated November 14, 2018, by and between Borrower and Seller;
(v) Grant of Patent Security Interest, dated June 29, 2018, by Parent in favor of and Seller;
(vi) Grant of Patent Security Interest, dated June 29, 2018, by Fuels in favor of and Seller;
(vii) Grant of Trademark Security Interest, dated June 29, 2018, by Parent in favor of and Seller;
(xviii) Grant of Trademark Security Interest, dated June 29, 2018, by Fuels in favor of and Seller;
(ix) Grant of Copyright Security Interest, dated June 29, 2018, by Parent in favor of and Seller;
(x) Grant of Copyright Security Interest, dated June 29, 2018, by Fuels in favor of and Seller;
(xi) Pledge Agreement, dated June 29, 2018, by and between Borrower and Seller, as amended by Amendment No. 1 to Pledge Agreement dated October 2, 2018,
(xii) Joinder Agreement to Pledge Agreement, dated February 8, 2019, by and between Clean Beauty and Seller;
(xiii) Joinder Agreement to Pledge Agreement, dated February 8, 2019, by and between AB Tech and Seller;
(xiv) Notice of Pledge Agreement by Parent, dated June 29, 2018, in respect of AB Tech;
(xv) Notice of Pledge Agreement by Parent, dated June 29, 2018, in respect of Amyris Bio Products Portugal, Unipessoal, LDA;
(xxii) Notice of Pledge Agreement by Parent, dated June 29, 2018, in respect of Fuels;
(xvi) Notice of Pledge Agreement by Parent, dated June 29, 2018, in respect of SMA Industria Quimica LTDA;
(xvii) Notice of Pledge Agreement by Parent, dated October 2, 2018, in respect of Clean Beauty;
(xviii) Notice of Pledge Agreement by Parent, dated February 8, 2019, in respect of Amyris Brotas Fermentacao de Performance Ltda.
(xix) Notice of Pledge Agreement by AB Tech, dated February 8, 2019, in respect of Amyris Brotas Fermentacao de Performance Ltda.
(xx) Notice of Pledge Agreement by Clean Beauty, dated February 8, 2019, in respect of Amyris Biossance do Brasil Comercio de Cosmeticos Ltda.
(xxi) Notice of Pledge Agreement by AB Tech, dated February 8, 2019, in respect of Amyris Biossance do Brasil Comercio de Cosmeticos Ltda.
(xxii) Notice of Pledge Agreement by AB Tech, dated February 8, 2019, in respect of Amyris Biotechnologia do Brasil Ltda.
(xxiii) Irrevocable Proxy Coupled with Interest, dated June 29, 2018, by Parent in respect of AB Tech;
(xxiv) Irrevocable Proxy Coupled with Interest, dated June 29, 2018, by Parent in respect of Amyris Bio Products Portugal, Unipessoal, LDA;
(xxv) Irrevocable Proxy Coupled with Interest, dated June 29, 2018, by Parent in respect of Fuels;
(xxvi) Irrevocable Proxy Coupled with Interest, dated June 29, 2018, by Parent in respect of SMA Industria Quimica LTDA;
(xxvii) Irrevocable Proxy Coupled with Interest, dated October 2, 2018, by Parent in respect of Clean Beauty;
(xxviii)Irrevocable Proxy Coupled with Interest, dated February 8, 2019, by Clean Beauty in respect of Amyris Biossance do Brasil Comercio de Cosmeticos Ltda;
(xxxix) Irrevocable Proxy Coupled with Interest, dated February 8, 2019, by AB Tech in respect of Amyris Biossance do Brasil Comercio de Cosmeticos Ltda;
(xl) Irrevocable Proxy Couple with Interest, dated February 8, 2019, by AB Tech in respect of Amyris Biotechnologia do Brasil Ltda;
(xli) Irrevocable Proxy Couple with Interest, dated February 8, 2019, by AB Tech in respect of Amyris Brotas Fermentacao de Performance Ltda.
(xlii) Irrevocable Proxy Couple with Interest, dated February 8, 2019, by Parent in respect of Amyris Brotas Fermentacao de Performance Ltda.
(xliii) UCC 1 Financing Statement naming Amyris, Inc. as Debtor and Assignor as Secured Party, filed with the Delaware Secretary of State, file number 2018 4480998, file date June 29, 2018, as amended by UCC 3 Financing Statement naming Amyris, Inc. as Debtor and Assignor as Secured Party, filed with the Delaware Secretary of State, file number 2018 8186262, file date December 17, 2018;
(xliv) UCC 1 Financing Statement naming Amyris Fuels, LLC as Debtor and Assignor as Secured Party, filed with the Delaware Secretary of State, file number 2018 4481145, file date June 29, 2018;
(xlv) UCC 1 Financing Statement naming Amyris Clean Beauty LLC as Debtor and Assignor as Secured Party, filed with the Delaware Secretary of State, file number 2018 6821769, file date October 3, 2018;
(xlvi) UCC 1 Financing Statement naming AB Technologies LLC as Debtor and Assignor as Secured Party, filed with the Delaware Secretary of State, file number 2019 1279475, file date February 22, 2019;
(xlvii) Deposit Account Control Agreement effective as July 6, 2018, between Seller, Parent and Bank of the West (“Parent Control Agreement”);
(xlviii) Deposit Account Control Agreement effective as July 8, 2018, between Seller, Fuels and Bank of the West (“Fuels Control Agreement” and together with the Parent Control Agreement, the (“Control Agreements”); and
(xlix) all other notices, certificates, agreements, instruments or other documents entered into in connection with the Note, the Loan Agreement or any of the foregoing.
B. The Purchaser has agreed to purchase from the Seller, and the Seller has agreed to sell to Purchaser, the Loan and all documents and assets related thereto, on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Purchaser and the Seller hereby agree as follows:
ARTICLE I -TERMS OF PURCHASE AND SALE
Section 1.01 Agreement to Purchase. Subject to the terms and conditions set forth in this Agreement, on the Closing Date (defined below), the Purchaser hereby agrees to purchase, and the Seller hereby agrees to irrevocably sell, all right, title and interest of the Seller in (a) the Loan, (b) the Loan Documents, (c) all existing collateral for the Loan, including the Collateral (as defined in the Loan Agreement), (d) all of the Seller’s rights and obligations as the “Agent” and a “Lender” (or similar defined term) under the Loan Agreement and the other Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to, (e) to the extent permitted by applicable law, all suits, claims, causes of action and any other right of the Seller against any Person, whether known or unknown, arising under or with respect to the Loan Agreement, any other Loan Document, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or otherwise based on or related to any of the foregoing, including, but not limited to, contract claims, statutory claims, tort claims, malpractice claims and all other claims at law or in equity with respect to the rights and obligations sold and assigned pursuant to this Agreement and (f) all future claims against Borrower or other persons liable for the repayment of the Loan or the performance of the Borrower’s obligations under the Loan, including, without limitation, any guarantor. In addition, any and all tax and insurance escrows or reserves held by the Seller on account of the Loan as of the Closing Date shall be transferred to the Purchaser as of the Closing Date.
Section 1.02 Purchase Price. The total purchase price which Purchaser agrees to pay for the Loan and related assets set forth in Section 1.01 hereof is $38,841,416.67 (the “Purchase Price”), payable as follows:
(a) No later than 5:00 p.m. (Pacific Standard Time) on the Closing Date, Purchaser shall deliver $38,445,500.00, in respect of the following:
| Principal: | $36,000,000.00 |
| Accrued and unpaid interest: | $292,500.00 |
| Make-Whole payment: | $1,073,000.00 |
| Prepayment fee: | $1,080,000.00 |
to the Seller by wire transfer of immediately available funds to the account set forth below:
City National Bank
555 South Flower Street
Los Angeles, CA 90071
ABA
Acct #
Acct Name
(b) No later than 5:00 p.m. (Pacific Standard Time) on the Closing Date, Purchaser shall deliver $65,000.00 in respect of outstanding invoices and fees related to the Loan Documents by wire transfer of immediately available funds to the account set forth below:
JPMorgan Chase Bank N.A.
201 N. Central Avenue
Phoenix, AZ 85004
ABA
Acct #
Acct Name
Reference
(c) No later than 5:00 p.m. (Pacific Standard Time) on the Closing Date, Purchaser shall deliver $30,500.00 in respect of outstanding invoices for intellectual property appraisal work completed through March 18, 2019 by wire transfer of immediately available funds to the account set forth below:
Wells Fargo Bank, N.A.
21255 Burbank Blvd.
Woodland Hills, CA 91367
ABA
Acct #
Acct Name
Reference
Section 1.03 Closing. The closing of the purchase contemplated by this Agreement will be conducted either (i) by telephone, confirmed by letter, facsimile or wire as the
parties may agree, or (ii) conducted in person, at such place as the parties agree at 10:00 a.m. Pacific Standard Time on April 15, 2019, or such earlier date as may be mutually acceptable to the Seller and the Purchaser (the “Closing Date”).
Section 1.04 Sale of Loan. Simultaneously with the payment of the Purchase Price by the Purchaser on the Closing Date, Seller will irrevocably sell, assign, transfer and convey to the Purchaser on the Closing Date, and the Purchaser will purchase, assume and accept on the Closing Date, all rights, title, interests and obligations of the Seller, as of the Closing Date, in, to and under the Loan, the Loan Documents, all existing collateral for the Loan, including the Collateral (as defined by the Loan Agreement, all of the Seller’s rights and obligations as the “Agent” and a “Lender” (or similar defined term) under the Loan Agreement and the other Loan Documents and any other documents or instruments delivered pursuant thereto to the extent related to, to the extent permitted by applicable law, all suits, claims, causes of action and any other right of the Seller against any Person, whether known or unknown, arising under or with respect to the Loan Agreement, any other Loan Document, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or otherwise based on or related to any of the foregoing, including, but not limited to, contract claims, statutory claims, tort claims, malpractice claims and all other claims at law or in equity with respect to the rights and obligations sold and assigned pursuant to this Agreement and all future claims against any Borrower or other persons liable for the repayment of the Loan or the performance of the Borrower’s obligations under the Loan, including, without limitation, any guarantor, and in connection therewith, the Seller shall execute and deliver to the Purchaser such documents as may be required to transfer all of Seller’s interest in the Loan to Purchaser, including, without limitation, the Closing Documents listed in Section 2.02 below. It is understood and agreed that Purchaser is not assuming, and will not be liable for, any liabilities or obligations or actions or inactions of Seller with respect to any Loan or Loan Document with respect to any period of time prior to the Closing Date.
ARTICLE II -CLOSING
Section 2.01 Closing Conditions. The obligation of the Purchaser to purchase the Loan shall be subject to satisfaction of the following conditions on or before the Closing Date, any of which may be waived by the Purchaser in its sole and absolute discretion:
(a) the Purchaser shall have received, or the Purchaser’s attorneys shall have received in escrow, all Closing Documents as specified in Section 2.02 hereof, in such forms as are required under this Agreement, duly executed by all signatories, and all other terms, covenants and conditions of this Agreement shall have been satisfied; and
(b) each of the representations and warranties of the Seller contained in this Agreement shall be true, complete and correct as of the Effective Date and as of the Closing Date.
Section 2.02 Closing Documents.
(a) The closing documents for the Loan to be purchased on the Closing Date shall consist of fully executed originals (unless otherwise indicated) of the following documents (the “Closing Documents”):
(i) the Note and all intervening allonges and assignments necessary to evidence a complete chain of title to the Note;
(ii) an Allonge in the form attached as Exhibit A for the Note;
(iii) an Assignment of Note and Ancillary Security Documents in the form attached as Exhibit B for the Loan; and
(iv) the Loan Documents.
(b) The parties hereto agree that each shall, at its own expense, at any time and from time to time after the Closing Date, upon the other’s request, do, execute, acknowledge, and deliver all such further acts and assignments as may be reasonably requested to carry out the purchase and sale of the Loan and assignment of rights and obligations thereunder as contemplated by this Agreement. Seller agrees and consents to the Purchaser filing, on Seller’s behalf, appropriate documentation, including any UCC-3 filings, to properly amend or assign all outstanding UCC financing statements related to the Loan.
(c) Seller hereby covenants and agrees, and Purchaser hereby authorizes and directs Seller, at any time and from time to time after the Closing Date, to (i) release any dominion and/or control it has noticed under the terms of either of the Control Agreements prior to the Closing Date and (ii) prior to such release becoming effective under such Control Agreements, provide prompt instructions to Bank (as defined in the applicable Control Agreement) concerning the Account (as defined in the applicable Control Agreement) in accordance with written instructions provided by Purchaser to Seller, which written instructions may be delivered by email pursuant to Section 5.04 of this Agreement.
(d) Seller hereby covenants and agrees that if an original copy of the Note should ever come into the Seller’s possession, custody or power, the Seller will promptly, and without consideration, deliver such original copy of the Note to Purchaser, together with an Allonge in the form attached as Exhibit A for such Note.
ARTICLE III -DUE DILIGENCE/ PURCHASER’S ACKNOWLEDGMENT
Section 3.01 Representations and Warranties of Seller. The Seller represents, warrants and covenants to the Purchaser, as of the Effective Date and the Closing Date, as follows:
(a) Due Organization. The Seller is a Delaware Limited liability company, validly existing and in good standing under the laws of the State of Delaware.
(b) Authority. The Seller has the full right and authority to sell, assign and transfer the Loan and Loan Documents to the Purchaser, and that the Seller has the full authority to execute, deliver and perform this Agreement and all of the transactions contemplated hereby. The Seller has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement, and, assuming due authorization, execution and delivery by the Purchaser, this Agreement constitutes a legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms except to the extent that (i) the enforceability thereof may be limited by federal or state bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefore may be brought. No notice to or consent of any third party is required by Seller in connection with the sale of Loan or the Loan Documents by Seller to Purchaser hereunder, except as those that have already been obtained.
(c) No Conflicts. Neither the execution and delivery of this Agreement by the Seller nor the Seller’s performance of and compliance with the terms of this Agreement will conflict with the Seller’s governing documents or constitute a default under, or result in a breach or acceleration of, any of the Loan Documents or any other material contract, agreement or other instrument to which the Seller is a party or which may be applicable to the Seller or its assets or result in the violation of any law, rule or regulation to which the Seller or any of its properties are subject.
(d) No Violation of Court Order. The Seller is not in violation of, and the execution and delivery of this Agreement by the Seller and its performance and compliance with the terms of this Agreement will not constitute a violation with respect to, any order, judgment, injunction or decree of any court or any order or regulation of any federal, state, municipal or governmental agency or regulatory authority having jurisdiction over the Seller or its assets, which violation might have consequences that would materially and adversely affect the financial condition or the operation of the Seller or its assets or might have consequences that would materially and adversely affect the performance of its obligations and duties hereunder.
(e) No Consent. No consent, approval, authorization or order of, or filing or registration with, any state or federal court or governmental or regulatory agency or body is required for the consummation by the Seller of the transactions contemplated herein other than those consents, approvals, authorizations or orders already obtained by Seller and copies of which have been provided to the Purchaser.
(f) Ownership. Seller represents and warrants to the Purchaser that the Seller is the legal and beneficial owner of the Loan and Loan Documents, that the Seller has not transferred, assigned or hypothecated its interest in the Loan or Loan Documents, that the Seller is the sole owner of the Loan and Loan Documents free and clear of any ownership, security or participation interest in the Loan in favor of any other person. Upon the payment of the Purchase Price by the Purchaser, the Purchaser will own the Loan and the Loan Documents free and clear of any lien, encumbrance, security interest,
pledge, charge or claim. The Loan does not constitute all or substantially all of the assets of the Seller.
(g) No Release. The liens on the Loan have not been satisfied, canceled, subordinated or rescinded, in whole or in part, and all collateral with respect to the Loan has not been released from the lien, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, cancellation, subordination, rescission or release.
(h) Bankruptcy. Seller (i) is not currently insolvent, nor will Seller be rendered insolvent by virtue of making the payments required hereunder, (ii) has no present intent to file any voluntary petition in bankruptcy under any Chapter of the Bankruptcy Code, (iii) has no present intent to seek relief, protection, reorganization, liquidation, dissolution or similar relief for debtors under any federal, state or local law or in equity, and (iv) has no present intent to cause the Loan or the Loan Documents to be the subject of or attached in connection with any bankruptcy or insolvency proceedings or the property of any bankruptcy or insolvency estate.
(i) Obligations. The present unpaid balance of the Obligations as of April 15, 2019 is as set forth in Section 1.02(a) above.
(j) Loan Documents. Seller has provided true and correct copies of all principal or material Loan Documents to Purchaser.
(k) Security Interest. Seller has not released the Borrower from the security interest granted under the Loan Documents in the Collateral (as defined in the Loan Agreement). Seller has not terminated or released any financing statements filed
against the Borrower or any other instruments or perfection. To the Seller’s knowledge,
the Loan is secured by and the security interest granted under the Loan Documents is a first priority perfected security interest in the Collateral (as defined in the Loan Agreement) to the extent such first priority security interest can be perfected by the filing of a financing statement in the appropriate office or jurisdiction. To the Seller’s knowledge, all financing statements and other instruments of perfection have been duly recorded or filed in the appropriate office or jurisdiction and remain in full force and effect and have not expired or been terminated, amended (as to an amendment, other than pursuant to an amendment that has disclosed to Purchaser by Seller), or assigned or transferred to a third party.
(l) Note. To the knowledge of Seller, there does not currently exist, and Seller is not in possession of, an original “wet ink” copy of the Note.
Section 3.02 Representations and Warranties of Purchaser. The Purchaser represents, warrants and covenants to the Seller as follows:
(a) Due Organization. The Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) Authority. The Purchaser has the full authority to execute, deliver and perform this Agreement and all of the transactions contemplated hereby. The Purchaser has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement, and, assuming due authorization, execution and delivery by the Seller, this Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms except to the extent that (i) the enforceability thereof may be limited by federal or state bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefore may be brought.
(c) No Conflicts. Neither the execution and delivery of this Agreement by the Purchaser nor the Purchaser's performance of and compliance with the terms of this Agreement will conflict with the Purchaser’s governing documents or constitute a default under, or result in a breach or acceleration of any material contract, agreement or other instrument to which the Purchaser is a party or which may be applicable to the Purchaser or its assets or result in the violation of any law, rule or regulation to which the Purchaser or any of its properties are subject.
(d) No Violation of Court Order. The Purchaser is not in violation of, and the execution and delivery of this Agreement by the Purchaser and its performance and compliance with the terms of this Agreement will not constitute a violation with respect to, any order, judgment, injunction or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction over the Purchaser or its assets, which violation might have consequences that would materially and adversely affect the financial condition or the operation of the Purchaser or its assets or might have consequences that would materially and adversely affect the performance of its obligations and duties hereunder.
Section 3.03 Representations and Warranties of Borrower. Borrower represents, warrants and covenants to the Purchaser as follows:
(a) At Borrower’s request, the Purchaser has agreed to purchase the Loan and pay the amounts set forth in Section 1.02 above in connection with the purchase of the Loan, all of which Borrower would be required to pay upon acceleration of the Loan and enforcement of the Loan Documents by the Seller, and Borrower represents and hereby agrees to repay the Purchaser the amount of the Purchase Price (as defined above) in excess of $36,000,000.
(b) The debt evidenced by the Loan Agreement and Loan Documents is fully enforceable against the Borrower and each Subsidiary Guarantor and is not subject to any defenses, claims, counterclaims or setoffs and is not subject to any claims for recharacterization or equitable subordination or other similar equitable remedies or any lender liability claims.
ARTICLE IV -INDEMNIFICATION
Section 4.01 Indemnification of Purchaser. Seller will indemnify, hold harmless and defend Purchaser and each of Purchaser’s directors, officers, subsidiaries, successors and assigns, and affiliates (collectively, the “Purchaser’s Indemnified Parties”) from and against any and all damage, loss, liability, cost, claim, or expense (including reasonable legal fees and expenses) incurred or suffered by Purchaser’s Indemnified Parties (i) arising out of or resulting from the breach or inaccuracy of any representation or warranty made by the Seller in this Agreement, (ii) failure to comply with any covenant made by the Seller in this Agreement, or
(iii) arising out of or resulting from Seller’s ownership of the Loan and the Loan Documents before the Closing Date or any action or inaction thereon.
Section 4.02 Indemnification of Seller. Purchaser will indemnify, hold harmless and defend Seller and Seller’s directors, officers, subsidiaries, successors and assigns, and affiliates (collectively the “Seller’s Indemnified Parties”) from and against any and all damage, loss, liability, cost, claim, or expense (including reasonable legal fees and expenses) incurred or suffered by Seller's Indemnified Parties (i) arising out of or resulting from the breach or inaccuracy of or failure to comply with any representation, warranty or covenant made by Purchaser in this Agreement, (ii) arising out of or resulting from Purchaser’s ownership of the Loan and the Loan Documents on or after the Closing Date, or (iii) arising out of or resulting from Purchaser’s directions pursuant to Section 2.02(c).
Section 4.03 Indemnification by Borrower. Borrower will indemnify, hold harmless and defend Purchaser and each of the Purchaser’s Indemnified Parties from and against any and all damage, loss, liability, cost, claim, or expense (including reasonable legal fees and expenses) incurred or suffered by Purchaser’s Indemnified Parties (i) arising out of or resulting from the breach or inaccuracy of any representation or warranty made by Borrower in this Agreement, (ii) failure to comply with any covenant made by Borrower in this Agreement or (iii) arising out of or resulting from Purchaser's directions pursuant to Section 2.02(c) made at the request of Borrower.
ARTICLE V -MISCELLANEOUS
Section 5.01 Entire Agreement; Amendments. This Agreement, the other Closing Documents and that certain Promissory Note, dated as of the date hereof, by Borrower in favor of Seller contain the entire agreement between the parties hereto and supersedes any prior agreements relating to the subject matter hereof. This Agreement may be amended only by written agreement signed by the parties.
Section 5.02 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its choice of law provisions and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.
Section 5.03 Waiver of Trial by Jury. Each of the parties hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
Section 5.04 Notices. Unless otherwise expressly set forth herein, all demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, or sent by reputable overnight courier electronic mail or facsimile transmission (provided that, in the case of facsimile transmission, a confirmation copy of the notice shall be delivered by hand or sent by reputable overnight courier within two (2) days of transmission) as follows (until notice of a change thereof is given as provided in this Section 5.04, and actually received by the other party hereto):
(a) If to the Seller, to:
GACP FINANCE CO., LLC
Attention:
Email:
Attention:
Email:
Copy to:
SNELL & WILMER, L.L.P.
Attention:
Email:
(b) If to the Purchaser, to:
FORIS VENTURES, LLC
Attention:
Email:
Copy to:
GOODWIN PROCTER LLP
Attention:
Email:
All notices given in accordance with this Section 5.04, are effective if delivered by hand or mailed by reputable overnight courier, at the time of delivery, and, if communicated by facsimile, at the time of transmission.
Section 5.05 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held invalid for any reason whatsoever, then to the extent permitted by law such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. Furthermore, the parties shall in good faith endeavor to replace any provision held to be invalid or unenforceable with a valid and enforceable provision that most closely resembles the provision held to be invalid or unenforceable.
Section 5.06 No Partnership. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between the parties hereto. Nothing herein contained shall be deemed or construed as creating an agency relationship between the Purchaser and the Seller and neither party shall take any action that could reasonably lead a third party to assume that it has the authority to bind the other party or make commitments on such party’s behalf.
Section 5.07 Fees and Expenses. Each party will pay the costs of its own counsel in connection with the execution of this Agreement and the consummation of the transactions contemplated hereby.
Section 5.08 Confidentiality. Purchaser and Seller will cooperate with each other in the development and distribution of all news releases and other public disclosures concerning this Agreement and the transaction contemplated herein and will not issue any news release or make any other public disclosure without the prior consent of the other party, unless such is required by law or is in response to published newspaper or other mass media reports regarding the transaction contemplated hereby, in which latter event the parties will consult with each other regarding such responsive public disclosure.
Section 5.09 Counterparts. This Agreement may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original, and such counterparts, together, shall constitute one and the same agreement.
Section 5.10 Headings. The Section headings are for convenience only and shall not affect the construction hereof.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the Seller, the Purchaser and Borrower have caused their names to be signed by their respective officers thereunto duly authorized as of the date first above written.
| SELLER: | GACP Finance Co., LLC, a Delaware limited liability company |
By:/s/ John Ahn
Name: John Ahn
Title: CEO
| PURCHASER: | FORIS VENTURES, LLC, a Delaware limited liability company |
By:/s/ Barbara Haeger
Name: Barbara Haeger
Title: CEO
BORROWER, SOLELY FOR PURPOSES
OF SECTION 3.03 AND 4.03:
Amyris, Inc., a Delaware corporation
By:/s/ Kathleen Valiasek
Name:______________
Title:______________
Amyris Fuels, LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name: ______________
Title: ______________
Amyris Clean Beauty LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name:______________
Title:______________
AB TECHNOLOGIES LLC, a Delaware limited liability company
By:/s/ Kathleen Valiasek
Name:______________
Title:______________
Exhibit 10.06
Confidentia
Execution Version
IN ACCORDANCE WITH ITEM 601(b)(10)(iv) OF REGULATION S-K, CERTAIN CONFIDENTIAL INFORMATION HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. THE CONFIDENTIAL INFORMATION IS DENOTED HEREIN BY [*].
Amyris, Inc.
5885 Hollis Street
Emeryville, CA 94608
April 16, 2019
DSM Nutritional Products AG (“DSM”)
DSM Nutritional Products Europe Ltd (the “Assuming Party”)
Wurmisweg 576, CH–4303
Kaiseraugst, Switzerland
Re: Assignment of Value Sharing Agreement
Reference is made to (i) that certain Value Sharing Agreement, by and among Amyris, Inc. (“Amyris”) and DSM, dated December 28, 2017, as amended by that certain Amendment No. 1, dated March 31, 2018, Amendment No. 2, dated June 29, 2018, Amendment No. 3, dated June 29, 2018 and Amendment No. 4, dated November 19, 2018 (as amended, the “Value Sharing Agreement”) and (ii) that certain Supply Agreement dated as of December 28, 2017, by and between Amyris and DSM, as amended by that certain Amendment No. 1 to the Supply Agreement, dated November 19, 2018, and Amendment No. 2 to the Supply Agreement, dated as of the date hereof (as amended, the “Supply Agreement”).
WHEREAS, Amyris desires to assign all of its rights and delegate all of its obligations under the Value Sharing Agreement to the Assuming Party in exchange for the consideration provided herein.
NOW, THEREFORE, in consideration of the foregoing, the covenants, agreements and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by DSM, the Assuming Party and Amyris, and intending to be legally bound hereby, DSM, the Assuming Party and Amyris, on behalf of themselves and their respective successors and assigns, hereby agree as follows:
1. In consideration for the assignment of the Value Sharing Agreement by Amyris to the Assuming Party pursuant to the Assignment and Assumption Agreement attached hereto as Exhibit A, DSM agrees to pay Amyris total consideration of US$ 57,000,000, which shall be payable as follows:
| a. | US$7,400,000 (the “Prepayment Amount”) was prepaid by DSM to Amyris on March 29, 2019; |
| b. | DSM shall pay to Amyris an amount equal to US$21,699,143 in cash (the “Cash Payment”) on or before April 16, 2019 in accordance with wire instructions provided by Amyris to DSM prior to the date hereof; and |
| c. | US$27,900,857 (the “Amyris Credit Amount”) shall be offset by DSM and the Assuming Party against existing obligations of Amyris as follows: |
Confidential
| i. | US$1,635,520 (thereof US$62,500 interest due) of the Amyris Credit Amount shall be used to satisfy in full all amounts owing by Amyris to the Assuming Party in respect of [*] shipments by the Assuming Party to Amyris prior to the date hereof; |
| ii. | US$7,748,000 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to pay US$7,250,000 plus interest to DSM (US$498,000), which was due prior to March 29, 2019 pursuant to Section 2(ii) of Amendment No. 1 to the Supply Agreement; and |
| iii. | US$3,797,619 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to pay the Additional Payment (as such term is defined in the Supply Agreement) to DSM, which was due prior to March 29, 2019 pursuant to Section 2(ii) of Amendment No. 1 to the Supply Agreement. |
| iv. | US$6,893,000 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to pay the portion of the Reservation Fee (as such term is defined in the Supply Agreement) due to DSM prior to July 1, 2019 pursuant to Section 1(a) of Amendment No. 1 to the Supply Agreement when such amount becomes payable; |
| v. | US$625,000 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to pay the interest currently due and payable under the outstanding US$25,000,000 Note payable from Amyris to DSM Finance BV, dated December 28, 2017; |
| vi. | US$902,895 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to compensate DSM for the tax loss incurred due to the wrong invoicing in Brazil; |
| vii. | US$290,330 of the Amyris Credit Amount shall be used to satisfy in full Amyris’ obligation to compensate DSM for the interests due to the late payment in Brazil; and |
| viii. | Brazilian Reais 23,054,588 of the Amyris credit amount shall be used to satisfy in full all amounts owing by Amyris to DSM PRODUTOS NUTRICIONAIS BRASIL S.A.,Rodovia Brotas / Torrinhas, S/N Km 7,5 Sala A,Fazenda Paraíso - Brotas/SP with company number CEP: 17380-000 (“DNP Brazil”) in respect of [*] shipments by DNP Brazil to Amyris prior to the date hereof. |
| 2. | Amyris shall use the Cash Payment as follows: |
| a. | a portion of the Cash Payment equal to US$6,893,000 shall be used by Amyris to satisfy Amyris’ obligation to pay the portion of the Reservation |
[*] Certain portions denoted with an asterisk have been omitted.
Confidential
Fee due to DSM prior to December 15, 2019 pursuant to Section 1(a) of Amendment No. 1 to the Supply Agreement when such amount becomes payable; and
| b. | The remainder of the Cash Payment, together with the Prepayment Amount, shall be used by Amyris without restriction. |
Amyris shall have no obligation to segregate or hold separate the portion of the Cash Payment referenced in Sections 2a and 2b.
3. Value Share Prepayments.
The [*] value share credit from the prepayment done in 2018 for 2019 will be repaid by Amyris to DSM to the extent the cumulative amount of value share payments Amyris would have been entitled to receive by the end of 2021 had the Value Sharing Agreement not been assigned hereunder falls short of [*] (e.g. if the value share payments DSM would have been required to pay Amyris under the Value Sharing Agreement (and before any off-set via the value share prepayment credit) is [*] by end of 2021, Amyris will pay DSM then [*]).
4. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of this Agreement by email or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York, without regard to the conflicts of law provisions thereof. Any dispute arising out of this Agreement shall be submitted exclusively to any state or federal court located in New York County, New York, without restricting any rights of appeal.
[Signature page follows.]
[*] Certain portions denoted with an asterisk have been omitted.
Confidential
Please confirm your agreement and acknowledgement of the matters set forth in this Agreement by signing in the space provided below.
Sincerely,
Amyris, Inc.
_/s/ John Melo_________________
By: John Melo
Title: Chief Executive Officer
Accepted and agreed as of the date first written above:
DSM Nutritional Products AG
By: __/s/ Benedikt Suter _______________
Name: Benedikt Suter
Title: General Counsel
By: __/s/ Bruno Mueller________________
Name: Bruno Mueller
Title: Vice-President
DSM Nutritional Products Europe Ltd
By: __/s/ Benedikt Suter _______________
Name: Benedikt Suter
Title: General Counsel
By: _/s/ Peter Fisher__________________
Name: Peter Fisher
Title:
Confidential
Exhibit A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of April 16, 2019 (this “Agreement”), is entered into by and between Amyris, Inc., a Delaware corporation (“Assigning Party”), and DSM Nutritional Products Europe Ltd, a Swiss corporation (“Assuming Party”).
WHEREAS, Assigning Party desires to assign to Assuming Party all of its rights and delegate to Assuming Party all of its obligation under that certain Value Sharing Agreement, dated December 28, 2017, by and between Assigning Party and DSM Nutritional Products AG, as amended by that certain Amendment No. 1, dated March 31, 2018, Amendment No. 2, dated June 29, 2018, Amendment No. 3, dated June 29, 2018 and Amendment No. 4, dated November 19, 2018 (as amended, the “Assigned Agreement”); and
WHEREAS, Assuming Party desires to accept such assignment of rights and delegation of obligations under the Assigned Agreement;
NOW, THEREFORE, in consideration of the foregoing, and agreements contained herein, and intending to be legally bound hereby, Assigning Party and Assuming Party hereby agree as follows:
| 1. | Assignment. Effective as of the Assignment Effective Date (as defined below), Assigning Party irrevocably sells, assigns, grants, conveys, and transfers to Assuming Party all of Assigning Party’s right, title and interest in and to, and all of Assigning Party’s or its affiliates claims related to, the Assigned Agreement. |
| 2. | Assumption. Effective as of the Assignment Effective Date, Assuming Party unconditionally accepts such assignment and assumes all of Assigning Party’s duties, liabilities and obligations under the Assigned Agreement, and agrees to pay, perform and discharge, as and when due, all of the obligations of Assigned Party under the Assigned Agreement, whether accruing on, prior to or after the date hereof. |
| 3. | Effectiveness. This Agreement shall become effective upon the receipt of the Cash Payment by the Assigning Party or any of its affiliates from DSM Nutritional Products AG in accordance with the Assignment of Value Sharing Agreement letter agreement, dated April 16, 2019 (the “Assignment Effective Date”). |
[Remainder of Page Intentionally Left Blank.]
Confidential
IN WITNESS WHEREOF, Assigning Party and Assuming Party have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
ASSIGNING PARTY:
AMYRIS, INC.
By: /s/ John Melo
Name: John Melo
Title: President and Chief Executive Officer
ASSUMING PARTY:
DSM Nutritional Products Europe Ltd
By: __/s/ Benedikt Suter _______________
Name: Benedikt Suter
Title: General Counsel
By: _/s/ Peter Fisher__________________
Name: Peter Fisher
Title:
Exhibit 10.07
IN ACCORDANCE WITH ITEM 601(b)(10)(iv) OF REGULATION S-K, CERTAIN CONFIDENTIAL INFORMATION HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. THE CONFIDENTIAL INFORMATION IS DENOTED HEREIN BY [*].
JOINT VENTURE AGREEMENT
by and between
AMYRIS, INC
AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA.
and
RAÍZEN ENERGIA S.A.
São Paulo/SP May 10, 2019.
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the “Agreement”) is entered into on May 10, 2019 (the “Execution Date”), by and between
| (1) | AMYRIS, INC, an entity incorporated in accordance with the laws of the State of California, United States of America, with its headquarters at 5885 Hollis Street, Suite 100, Emeryville, CA 94002, registered with the Brazilian Taxpayer Secretariat under number CNPJ 09.345.642/0001-05 (“Amyris”); |
| (2) | AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA., a limited liability company organized and existing under the laws of Brazil, with its headquarters at Rodovia SP-197 Brotas/Torrinhas, south-west area, part 1, km 7,5, Fazenda Paraíso, CEP 17.380-000, Municipality of Brotas, State of São Paulo, Brazil, enrolled with the Brazilian Taxpayer Secretariat under CNPJ 30.832.226/0001-10 (“F&F Company”); and |
| (3) | RAÍZEN ENERGIA S/A, a corporation organized and existing under the laws of Brazil having its principal place of business at Avenida Brigadeiro Faria Lima, 4100, 11th floor, Itaim Bibi, Municipality of São Paulo, State of São Paulo, Brazil, enrolled with the Brazilian Taxpayer Secretariat under number CNPJ 08.070.508/0001-78 (“Raízen”), |
(each a “Party” and together the “Parties”).
WHEREAS,
| (A) | Amyris and Raízen entered into a non-binding Memorandum of Understanding (“MOU”), effective as of December 3rd, 2018 whereby they established the general terms and conditions regarding to (a) a potential commercial relationship by which Raízen would supply utilities, energy, sugar and land to Amyris or to its Affiliates for the construction and operation of the F&F Plant (as defined below) pursuant to the terms and conditions of this Agreement and of the F&F Operational Agreements (as defined below); and (ii) the possibility of the formation of the JV Company (as defined below) for the production and sale, of REBM through the construction and operation of certain manufacturing plants, including the REBM Plant (as defined below); |
| (B) | The F&F Company shall be used by Amyris to run and operate the F&F Plant (as defined below), and shall have one hundred percent (100%) of its corporate capital held by Amyris and/or its Affiliates on the Execution Date; |
| (C) | Upon satisfaction of the Conditions set forth in Section 5.1 of this Agreement (and without prejudice to Raízen’s right set forth in Section 5.8 of this Agreement), Amyris and Raízen have agreed to incorporate the JV Company, and execute the Shareholders’ Agreement and the JV Company Operational Agreements; |
| (D) | Amyris and Raízen will each own 50% (fifty per cent) of the issued and outstanding common Shares of the JV Company; |
| (E) | At Closing Amyris will own one hundred per cent (100%) of the issued preferred shares of the JV Company; and |
| (F) | Amyris and Raízen, having ascertained their mutual interest to cooperate in the pursuit of the objectives set forth in item “A” above have executed this Agreement in order to govern their relationship. |
NOW, THEREFORE, the Parties agree, subject to the terms and conditions hereinafter set forth, as follows:
SECTION 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
| 1.1 | For the purposes of this Agreement, the following capitalized terms shall have the meanings ascribed to them below: |
| 2 |
Affiliate, in relation to a Party, means a company, partnership or other legal entity which Controls (as defined below), or which is Controlled by, or which is under common Control with, that Party, provided that, (i) the JV Company shall be deemed an Affiliate of Amyris and Raízen for the purposes of this Agreement, irrespective of the shared control that Amyris and Raízen have, directly or indirectly, over it; (ii) Raízen Energia S.A. ("RESA") and Raízen Combustíveis S.A. ("RCSA") shall be deemed the ultimate parent entities of the group of companies to which they belong; (iii) exclusively for the purposes of this Agreement, to the exclusion of any other purposes RESA and RCSA shall be deemed Affiliates of each other and their respective shareholders shall not be deemed Affiliates of either of them; and (iv) any information concerning any aspect of this Agreement that is disclosed to representatives of either RESA´s and/or RCSA´s shareholders shall not be deemed disclosed to an Affiliate but rather to such representatives in their capacity as either board members and/or advisers of RESA and RCSA and shall be used solely for the purposes of assisting RESA, RCSA or any of their Affiliates in their decision making process in respect of any aspect of this Agreement.
Agreement means this Agreement and its Schedules.
Amyris has the meaning ascribed to it in the preamble of this Agreement.
Amyris Biotecnologia means Amyris Biotecnologia do Brasil Ltda., a limited liability company organized and existing under the laws of Brazil, with its headquarters at the Municipality of Pradópolis, State of São Paulo, Fazenda São Martinho, Zona Rural, ZIP Code 14.850-000, Brazil, enrolled with the Brazilian Taxpayer Secretariat under CNPJ 12.065.083/0001-86.
Amyris’ Indemnified Parties has the meaning given to it in Section 10.2.
Amyris Technology means all know how, methods, processes, pathway, technology, inventions, expertise, trade secrets, techniques, specifications, formulations, formulae, combinations of components, and tangible and intangible information that Amyris has developed or otherwise owns or holds related to the conversion of sugars into RebM, using biotechnological routes, as described in Schedule 1 of this Agreement. For the sake of clarity, Amyris Technology includes RebM Strains and any future improvements to RebM Strains as well as the know-how necessary to use such RebM Strains to produce RebM, including but not limited to the fermentation method for processing the RebM, but shall not include any improvement specifically made by the JV Company on the RebM manufacturing process that does not directly or indirectly involve any aspect of the actual RebM Strains.
Antitrust Law has the meaning given to it in Section 5.1.1.
Applicable Law means any and all laws, rules, statutes, decrees, regulations, ordinances or orders valid and enforceable in Brazil, including all applicable public, environmental and competition laws and regulations; and any administrative decision, judgment and other pronouncement enacted, issued, promulgated, enforced or entered into by any Governmental Authority.
Board of Directors means the board of directors of the JV Company, appointed by Amyris and Raízen in accordance with the Shareholders’ Agreement.
Book Value per Quota means the F&F Company’s net asset value divided by the number of issued and outstanding quotas of the F&F Company.
Business means the production, sale and commercialization of REBM worldwide, except for the direct sale of REBM to Final Consumers, which shall be performed directly by Amyris in accordance with this Agreement.
Business Day means a day on which commercial banks are generally open for business in São Paulo and California.
Business Plan means the annual operating and financial plan of the JV Company, which shall be agreed between Amyris and Raízen preferably prior to the Closing Date for the period between the Closing Date up to and including the last day of the first Fiscal Year and which shall be drafted pursuant to the terms of this Agreement.
| 3 |
By-Laws means the by-laws of the JV Company to be enacted at the general meeting of incorporation of the JV Company held on or prior to the Closing Date substantially in the form of the draft attached as Schedule 2.
CADE means the Administrative Council of Economic Defense.
Closing has the meaning given to it in Section 6.1.
Closing Date has the meaning given to it in Section 6.1.
Code of Conduct means the code of conduct of the JV Company which shall be agreed between Amyris and Raízen preferably prior to the Closing Date and which shall cover the same content as included in Raízen’s Code of Conduct attached herein as Schedule 3.
COGS means all total direct and indirect manufacturing costs of the JV Company including depreciation and amortization of production assets, it being agreed that (i) direct costs typically include, but are not limited to, (a) raw materials, feedstock, yeast, vitamins, nutrients, ingredients and chemicals, packaging and consumable materials (b) utilities such as electricity, steam, water, waste treatment, process and instrument air, refrigeration (c) cost of storage, management and disposal of all CMM Vinasse and all other waste and by-products; and (ii) indirect costs typically include, but are not limited to, (a) all labor and salary costs, including taxes and benefits, associated with the manufacturing and testing of products (b) all plant overhead costs, including but not limited to, administrative expenses, maintenance costs, laboratory supplies, safety expenses, rental fees, IT and telecom costs, and insurance. For the avoidance of doubt agency fees and commissions and supply costs to the port of shipment – when using FOB contracts, shall not be included in the calculation of COGS. A pro-forma calculation of COGS is included herein in Schedule 4.
Conditions has the meaning given to it in Section 5.1.
Confidential Information means:
| (a) | the existence, contents, terms and conditions of the Transaction Documents; and |
| (b) | any information regarding JV Company and/or the F&F Company that is brought to the Parties´ attention in their capacity as shareholders of the JV Company; and |
| (c) | any data and/or information provided by a Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) either orally, in writing, electronically, in maps and/or drawings and/or any other format and/or information carried in media concerning the activities to be carried out by the Parties under the Transaction Documents, including any such data and/or information originating from or related to either JV Company, a Party´s Affiliate and/or, as applicable, their respective shareholders, service providers, third parties, or otherwise, either of a technical, marketing, commercial, contractual, financial/tax, legal and/or any other nature; and |
| (d) | any data and/or information, in any form and of any nature as provided for in (c) above, concerning any of the Parties, their Affiliates, and/or any entity in which a Party, directly or through its Affiliates, has an interest, of any nature and in any capacity. |
Control means the ownership, or beneficial ownership, directly or indirectly through a series of legal entities, of fifty percent (50%) or more of common shares (or its equivalent) bearing voting rights in a company, partnership or other legal entity sufficient to permanently allow the controlling entity to appoint the majority of the directors (or equivalent) of the controlled entity, and “Controlling Party” shall be interpreted in the same manner. For the purposes of this Agreement the Parties agree that Cosan or its Affiliates and Shell or each Affiliates shall each deem to jointly control Raízen, and that for the purposes of change of control herein, either Shell or Cosan acquiring the shares of the other at Raízen shall not be deemed as a change of control of Raízen.
| 4 |
Cosan means Cosan S.A. Indústria e Comércio or any other Affiliate of Cosan who holds the shares of Raízen Energia S.A. and/or Raízen Combustíveis S.A.
Defaulting Party has the meaning given to it in Section 11.3.
Defense Costs has the meaning given to it in Section 10.4(b).
Direct Claim has the meaning given to it in Section 10.4(a).
Director means a member of the Board of Directors.
Disclosing Party has the meaning given to it in the definition of Confidential Information in Section 1.1.
Dispute has the meaning given to it in Section 13.9.
Encumbrance means any charge, pledge, mortgage, encumbrance, option, deposit, usufruct, reservation of title, preemptive right, preferential right, fiduciary transfer or other third-party rights affecting the property, asset or right in question, or security interest of any kind, or promise, agreement or obligation to provide any of the above-listed items.
Event of Default means a breach by a Party of this Agreement and/or of the F&F Operational Agreements that has not been cured or remedied as provided for herein, including but not limited to provisions the breach of which this Agreement expressly provides as constituting an Event of Default, and which causes a Material adverse impact to the JV Company, to the Business, or to the other Party.
Event Subject to Indemnification has the meaning given to it in Section 10.4.
Execution Date means the date first indicated in the preamble of this Agreement.
Executive Committee means the board of officers of the JV Company.
FCPA has the meaning given to it in Section 7.2.
F&F Company has the meaning ascribed to it in the preamble of this Agreement.
F&F Energy Supply Agreement means the energy supply agreement to be entered into by Raízen or its Affiliates and the F&F Company on the present date substantially in the form of the draft attached to this Agreement as Schedule 5.
F&F Lease Agreement means the lease agreement to be entered into by Raízen and/or its Affiliates and the F&F Company on the present date substantially in the form of the draft attached to this Agreement as Schedule 6.
F&F Offer has the meaning given to it in Section 8.1.
F&F Operational Agreements means, collectively, the following agreements for the construction and operation by the F&F Company of the F&F Plant: (i) F&F Utilities Supply Agreement, (ii) F&F Lease Agreement, (iii) F&F Sugar Supply Agreement, and (iv) F&F Energy Supply Agreement.
F&F Plant means the flavors and fragrances plant co-located at Raízen’s Mill, which shall be built by Amyris and/or its Affiliates pursuant to the terms of this Agreement and to the specifications detailed in Schedule 7.
F&F Sugar Supply Agreement means the sugar supply agreement to be entered into by Raízen and the F&F Company on the present date substantially in the form of the draft attached to this Agreement as Schedule 8.
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F&F Utilities Supply Agreement means the utilities supply agreement to be entered into by Raízen and or its Affiliates and the F&F Company on the present date substantially in the form of the draft attached to this Agreement as Schedule 9.
Final Consumers means the end consumer of REBM and shall not include any Person who buys REBM to resell or use it as raw material, resource or input to any other businesses or commercial activities.
Fiscal Year means the period commencing on April 1 of any given year and ending on March 31 of the subsequent year
Governmental Authority means any court, whether tribunal or administrative, governmental or regulatory body, agency, commission, division, department, autarchy, organization, public body, State, municipality or other governmental authority (including the Brazilian judicial, legislative and executive branches) having jurisdiction over the Parties and/or the matters which are subject to this Agreement.
Gross Margin means Total Revenue minus COGs calculated monthly. A pro-forma calculation of which is included in Schedule 4.
Gross Margin Percentage means Gross Margin divided by Total Revenue. A pro-forma calculation of which is included in Schedule 4.
High Intensity Sweetener means substitutes or replacements for sugar with few or no calories regardless of their source (chemical, natural, fermentation or any other), but excluding (i) the existing commercial partnerships of Amyris and their related products listed in Schedule 10, in regards to [*] and (ii) [*] in other markets that are not competing with the JV REBM product or its derivatives.
HSSE Policy means the health, safety, security, and environment policy of the JV Company, which shall be agreed between the Parties preferably prior to the Closing Date.
ICC or Court has the meaning given to it in Section 13.9.1.
Indemnified Parties has the meaning given to it in Section 10.2.
Indemnifying Party has the meaning given to it in Section 10.4.
Insolvency Event means any of the following events, in respect of, and as such may be Material to, a Party
| (a) | by reason of actual or anticipated financial difficulties; (i) is unable or admits inability to pay its debts as they fall due; (ii) suspends making payments on any of its debts; or (iii) commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness in an amount equal to or higher than USD$ 5,000.000.00 (five million US dollars), individually or in the aggregate; |
| (b) | any corporate action, legal proceedings or other procedure or step is taken by such Party or notice of which is given to the other Party, in relation to: |
| (i) | the suspension of payments, a moratorium of any indebtedness, winding-up (except for any winding-up petition that is vexatious or frivolous and is discharged, stayed or dismissed within fourteen (14) Business Days of commencement), dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of, or the appointment of an administrator to the relevant Party; or |
| (ii) | a composition, assignment or arrangement with any creditors of the relevant Party is not related to such Party´s business; or |
[*] Certain portions denoted with an asterisk have been omitted.
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| (iii) | the appointment of a provisional liquidator, a liquidator, receiver, receiver or manager, administrative receiver, administrator, compulsory or interim manager or other similar officer in respect of a Party or any of its assets; or |
| (c) | any analogous procedure or step is taken in any jurisdiction with respect to Party; |
Intellectual Property Policy means the intellectual property policy of the JV Company which shall be agreed between Amyris and Raízen preferably prior to the Closing Date.
Intellectual Property Rights means any and all of the following, arising in any jurisdiction in the world registered or unregistered: (i) patents; (ii) industrial design; (iii) trademarks, service marks, trade names and trade dress; (iv) trade secrets, know-how and invention rights; (v) copyrights; (vi) software; (vii) plant variety protection; (viii) domain names, (ix) foreign equivalents of any of the foregoing; (x) any other intellectual property rights; (xi) registrations of, and applications for, any of the foregoing; and (xii) licenses and any goodwill to any of the foregoing.
JV Company means the corporation which Raízen and Amyris agree to incorporate, or cause to be incorporated, as provided for in Section 4.1 of this Agreement to explore the Business pursuant to the terms and conditions of this Agreement, the By-laws and the Shareholders’ Agreement.
JV Company Brand License Agreement means an agreement to be executed between Raízen and the JV Company, by means of which the JV Company shall be authorized to use Raízen’s brand which shall be agreed between Amyris and Raízen until the Closing Date.
JV Company Energy Supply Agreement means the energy supply agreement to be entered into by Raízen and/or its Affiliates and the JV Company on the Closing Date, it being agreed that (i) the commercial conditions of such agreement shall be agreed between Amyris and Raízen until the Closing Date; and (ii) the general terms and conditions of such agreement shall follow the draft of the F&F Energy Supply Agreement, duly adjusted to reflect the JV Company Business and the provisions of this Agreement.
JV Company Lease Agreement means the lease agreement to be entered into by Raízen and/or its Affiliates and the JV Company on the Closing Date it being agreed that (i) the commercial conditions of such agreement shall be agreed between Amyris and Raízen until the Closing Date; and (ii) the general terms and conditions of such agreement shall follow the draft of the F&F Lease Agreement, duly adjusted to reflect the JV Company Business and the provisions of this Agreement.
JV Company Operational Agreements means, collectively, the following agreements for the construction and operation by JV Company of the REBM Plant: (i) JV Company Utilities Supply Agreement, (ii) JV Company Lease Agreement, (iii) JV Company Sugar Supply Agreement, (iv) JV Company Energy Supply Agreement, (v) Shared Services Agreement, (vi) Offtake Agreement; and (vii) JV Company Brand License Agreement.
JV Company Sugar Supply Agreement means the sugar supply agreement to be entered into by Raízen and the JV Company at Closing Date it being agreed that (i) the commercial conditions of such agreement shall be agreed between Amyris and Raízen until the Closing Date; and (ii) the general terms and conditions of such agreement shall follow the draft of the F&F Sugar Supply Agreement, duly adjusted to reflect the JV Company Business and the provisions of this Agreement.
JV Company Utilities Supply Agreement means the utilities supply agreement to be entered into by Raízen and/or its Affiliates and the JV Company on the Closing Date it being agreed that (i) the commercial conditions of such agreement shall be agreed between Amyris and Raízen until the Closing Date; and (ii) the general terms and conditions of such agreement shall follow the draft of the F&F Utilities Supply Agreement, duly adjusted to reflect the JV Company Business and the provisions of this Agreement.
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JV Transaction means the actual incorporation of the JV Company on the Closing Date by Amyris and Raízen to operate the Business pursuant to the terms and conditions of this Agreement.
License means any licenses, permits, authorizations, consents or other approvals required by Applicable Law (especially any environmental laws) or by any Governmental Authority.
Long Stop Date means (including) December 31, 2019.
Losses means any and all damages, losses, amounts paid pursuant to judicial, administrative or arbitration decisions, costs and expenses, tax assessments, interest, fines and charges of any nature, including attorneys’ fees and deposits due to judicial and administrative proceedings, it being agreed that neither Party shall be liable in an action initiated by one against the other for special, indirect or consequential damages resulting from or arising out of, without limitation, loss of profit or business opportunities, and/or business interruptions.
Manual of Authority means the manual of authority of the JV Company which shall be agreed between Amyris and Raízen preferably prior to the Closing Date.
Marketing Policy means the marketing policy of the JV Company which shall be agreed between Amyris and Raízen preferably prior to the Closing Date.
Material means any amount, individually or in the aggregate, equal to or higher than five million Dollars (US$ 5,000,000.00).
MOU has the meaning given to it in Whereas (A).
Non-Compete Obligation has the meaning given to it in Section 12.1.
Non-defaulting Party has the meaning given to it in Section 11.3.
Notice has the meaning ascribed to it in Section 13.1.
Notice of Default has the meaning given to it in Section 11.3.
Offer Closing has the meaning given to it in Section 8.1.3.
Offer Notice has the meaning given to it in Section 8.1.1.
Offer Price has the meaning given to it in Section 8.1.2.
Offer Quotas has the meaning given to it in Section 8.1.1.
Officer means a member of the Executive Committee of the JV Company.
Offtake Agreement means an agreement between the JV Company and Amyris, by means of which the JV Company shall supply and Amyris shall purchase REBM to supply the Final Consumers or the REBM Contracts that Raízen determined that would not be contributed to the corporate capital of the JV Company in accordance with Section 6.4. The Offtake Agreement shall be executed substantially in the form of the draft attached to this Agreement as Schedule 11.
Party has the meaning ascribed to it in the preamble.
Person means any natural person, legal entity, firm, partnership, association, business or non-business company, corporation, joint venture, limited liability company, association, trust, unincorporated organization, pension fund, trust, Governmental Authority, investment fund or other entity, as well as any syndicate or group of two or more of such Persons acting as a syndicate or group for purposes of acquiring, holding or disposing of securities or other interests in any such Person.
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Policy has the meaning given to it in Section 7.3.
Potential Purchaser has the meaning given to it in Section 8.2.
Production Facility means the plant currently owned, directly or indirectly by Royal DSM N.V. and collocated with Raízen Paraíso mill at Brotas.
Raízen’ has the meaning given to it in the preamble of this Agreement.
Raízen Mill means the mill owned by Raízen in Barra Bonita, at Fazenda Pau d'Alho, Barra Bonita - SP, 17340-000 or any other mill that the Parties may agree to.
Raízen´s Indemnified Parties has the meaning given to it in Section 10.1.
REBM means Rebaudioside M (S. rebaudiana Bertoni) or any other stevia glycosides, including but not limited RebA, RebB, RebC, RebD.
RebM Strains means the strains molecules and pathways to produce RebM molecules (or any other stevia glycosides, including but not limited to RebA, RebB, RebC, RebD) from sugar, including future modifications.
REBM Contracts means the REBM sales contracts entered it by Amyris and/or its Affiliates up until the date of their contribution to the JV Company; except for the ones by which Amyris supplies REBM to Final Consumers entered into by Amyris or its Affiliates and which shall be contributed to the corporate capital of the JV Company pursuant to the terms of this Agreement.
REBM Plant means the plant co-located at Raízen’s Mill, which shall be built by the JV Company, or by Amyris and/or its Affiliates, in case of Section 5.8(ii), pursuant to the terms of this Agreement and to the specifications detailed in Schedule 7.
Receiving party has the meaning given to the definition of Confidential Information in this Section 1.1.
RCSA has the meaning ascribed to it in the definition of Affiliate.
Risk Policy means the Policy setting out the principles, terms and conditions for risk exposure and limits applicable for the JV Company in the conduct of the Business, to be agreed between Amyris and Raízen preferably prior to the Closing Date.
ROFR Offer Conditions has the meaning given to it in Section 8.2.1.
ROFR Offer has the meaning given to it in Section 8.2.
São Martinho Assets means the assets listed in Schedule 12 currently owned by Amyris Biotecnologia, located at the Municipality of Pradópolis, State of São Paulo, Fazenda São Martinho, Zona Rural, Zip Code 14.850-000, Brazil.
Selling Quotaholder has the meaning given to it in Section 8.2.1.
Shared Services Agreement means the shared services agreement to be entered into by Raízen and the JV Company on the Closing Date in a form to be agreed by the Parties.
Shareholders’ Agreement means the shareholders’ agreement of the JV Company to be entered into by Amyris and Raízen on the Closing Date substantially in the form of the draft attached to this Agreement as Schedule 13.
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Shares mean the issued and outstanding common and preferred shares of the capital stock of the JV Company.
Shell means Shell Brazil Holdings BV or any other Affiliate of Shell who holds the shares of Raízen Energia and/or Raízen Combustíveis S.A.
Technology License Agreement means the technology license agreement to be entered into by Amyris and the JV Company on the Closing Date related to the ownership and use of the intellectual property rights to be transferred to and/or developed by JV Company substantially in the form of the draft attached to this Agreement as Schedule 14.
Third-Party Claim has the meaning given to it in Section 10.4 (b).
Total Revenue means the net proceeds of the JV Company calculated as follows: [*]
Transaction means the transactions set forth in this Agreement, including the building and operation of the F&F Plant and the JV Transaction.
Transaction Documents means this Agreement, the Shareholders’ Agreement, the F&F Operational Agreements, the JV Company Operational Agreements and the Technology License Agreement, as well as any exhibits and attachments thereto.
Transaction Technology Yield means the (i) conversion rate of sugars to REBM in the fermentation process with a yield that is equal to or superior to [*] (ii) using Amyris Technology.
INTERPRETATION
| 1.2 | All references to Sections, Recitals, and Schedules are, unless otherwise expressly stated, references to sections of, and Recitals and Schedules to, this Agreement. |
| 1.3 | The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement. |
| 1.4 | Any reference to any statute, statutory instrument or contract, agreement or other similar arrangement in this Agreement shall be a reference to the same as amended, supplemented, re-enacted or replaced from time to time. |
| 1.5 | References to “include” or “including” are to be construed without limitation. |
| 1.6 | Unless the context otherwise requires, reference to the singular shall include a reference to the plural and vice-versa; and reference to any gender shall include a reference to all genders. |
| 1.7 | The Schedules form part of this Agreement. In the event of any conflict between the provisions of this Agreement and the Schedules, the provisions of this Agreement shall prevail. |
SECTION 2
SCOPE OF THIS AGREEMENT
| 2.1 | The purpose of this Agreement is to set forth the rights and obligations of each Party among themselves and before the JV Company and the F&F Company in relation to (i) the commercial relationship between the Parties regarding the F&F Operational Agreements and the construction and operation of the F&F Plant by Amyris, the F&F Company and/or its Affiliates; and (ii) the implementation of the Transaction, incorporation of the JV Company and development and |
[*] Certain portions denoted with an asterisk have been omitted.
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development and operation of the Business by the JV Company, and the commercial relationship between the Parties regarding the JV Company Operational Agreements and the Technology License Agreement.
| 2.2 | By entering into this Agreement, the Parties unconditionally and irrevocably agree, subject to Applicable Laws: |
| 2.2.1 | that the provisions of SECTION 3 shall become effective immediately after the Execution Date and that Amyris and/or the F&F Company shall (i) run the construction and operation of the F&F Plant in accordance with the industry’s best practices and in compliance with all Applicable Laws, this Agreement, the F&F Operational Agreements and in accordance with the terms and conditions of any applicable Licenses, agreements or contracts to which Amyris, and/or its Affiliates, is a party; |
| 2.2.2 | that Raízen and its Affiliates shall cooperate in good faith with Amyris and its Affiliates to fully comply with Section 2.2.1 above, especially, but not limited to the performance of the F&F Operational Agreements; |
| 2.2.3 | as of the Closing Date the Parties´ relationship as shareholders of the JV Company shall be governed by the provisions of this Agreement, the By-laws and the Shareholders’ Agreement in respect of all matters requiring shareholders, Board of Directors, and/or Executive Committee approval and which are relevant for the carrying out of the JV Company’s Business and the pursuit of its objectives; and |
| 2.2.4 | that it is of the essence of this Agreement that, in their capacity as shareholders, they shall endeavor to generate value for the JV Company and the Business by their mutual cooperation and contribution in their respective areas of expertise within the scope of the Business, including but not limited to the JV Company Operational Agreements and the Technology License Agreement. |
SECTION 3
F&F PLANT AND F&F COMPANY
| 3.1 | F&F Plant. The Parties agree that, as from the present date, Amyris and/or the F&F Company shall be fully and exclusively responsible to build, construct and operate the F&F Plant co-located at Raízen Mill. As from the present date and as provided in this Agreement, Amyris, the F&F Company and/or its Affiliates shall be responsible to, in the most expeditious and efficient manner, comply with the terms and conditions of the Licenses and the laws and regulation applicable to F&F Plant. |
| F&F Operational Agreements. The F&F Company and Raízen shall also execute on the present date the F&F Operational Agreements and Raízen shall allow the construction and operation of the F&F Plant co-located at Raízen Mill pursuant to the terms of this Agreement and the F&F Operational Agreements. The Parties agree that all such F&F Operational Agreements shall be performed and shall be effective pursuant to its terms and conditions without prejudice to Sections 5.4, 5.8 and 5.9. |
SECTION 4
THE JV COMPANY
| 4.1. | JV Company |
| 4.1.1. | JV Company shall be a corporation incorporated in Brazil governed by Law N. 6.404/76, the By-laws and the Shareholders’ Agreement. |
| 4.1.2. | The corporate name of the JV Company shall be R & A Adoçantes S.A. and the JV Company’s headquarters shall be located at São Paulo State. |
| 4.1.3. | As of the Closing Date, JV Company shall have an issued share capital of R$5.000.000,00 (five million Brazilian reais) represented by 5.000.000 (five million) common Shares of R$ 1.00 (one Brazilian Real) each held as follows: |
| (a) | 2.500.000 (two million and five hundred thousand) common Shares held by Raízen; |
| (b) | 2.500.000 (two million and five hundred thousand) common Shares held by Amyris. |
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| 4.1.4. | Preferred Shares: On or prior to June 30, 2020, the JV Company shall issue 1000 (one thousand) preferred Shares pursuant to the terms and conditions of the Shareholders’ Agreement, which shall all be held by Amyris. |
| 4.1.5. | Capitalization. The common shares shall be paid-in by Amyris and Raízen in cash pursuant to the terms of the Shareholders’ Agreement and the Business Plan, in Brazilian Reais, and the preferred shares shall be paid-in by Amyris and or/its Affiliates by means of the contribution of the REBM Contracts pursuant to Section 6.4 and to the terms of the Shareholders’ Agreement, which REBM Contracts are hereby acknowledged by both Amyris and Raízen as intangible assets that may be evaluated in monetary terms and thus be contributed to the corporate capital of the JV Company, in accordance with Applicable Law. |
| 4.1.6. | The business of the JV Company is as described in SECTION 7 and in further detail in its By-laws. |
| 4.1.7. | The JV Company shall be entitled to use Amyris Technology as per the terms and conditions of the Technology License Agreement. |
| 4.1.8. | The JV Company shall be entitled to use Raízen brand in its operations, in accordance with the terms and conditions of the Brand License Agreement. |
SECTION 5
CONDITIONS TO THE JV TRANSACTION
| 5.1 | The closing of the JV Transaction shall be subject to the following conditions precedent (“Conditions”): |
| 5.1.1 | CADE’s approval of the JV Transaction, which shall be considered obtained (a) if CADE’s General Superintendence decision of unconditional approval under the terms of Article 57, item I, of Law nº 12.529/11 (“Antitrust Law”) is not challenged by third parties nor called back by CADE’s Administrative Tribunal until 15 days after being published in the official gazette pursuant to Article 65, items I and II, of the Antitrust Law and Article 162 of CADE’s Internal Rules or (b) when CADE’s Administrative Tribunal definitely decides to approve the JV Transaction without conditions under the terms of Article 61, caput, of the Antitrust Law and its final decision is published in the official gazette, it being agreed that such antitrust approval shall be carried out pursuant to the provisions of Section 5.10 below; |
| 5.1.2 | the REBM production and sales verified at the Production Facility achieves a Gross Margin Percentage of a minimum of [*] and the Transaction Technology Yield is verified in a monthly average for a period of at least two consecutive months of REBM production, with a minimum volume per month of [*] of REBM. |
| 5.1.3 | the representations and warranties provided by the Parties below shall be true, legitimate, accurate, correct and complete in all aspects on the Closing Date, as reflected in a certificate to be issued by the Parties on the Closing Date; |
| 5.1.4 | the Parties shall not have violated any provision of this Agreement or any of the provisions of the F&F Operational Agreements which causes a Material adverse impact to the JV Company, to the Business, or to the other Party or its Affiliates; and |
| 5.1.5 | inexistence of any temporary restraining order, preliminary or permanent injunction or other order in effect issued by a Governmental Authority prohibiting or preventing the consummation of the JV Transaction. |
| 5.2 | The Parties agree that the Condition set forth in Section 5.1.2 above shall inure to the benefit of Raízen only, who shall waive or not such Condition at its sole discretion and that Amyris shall not claim such Condition in order to not proceed with the Closing of the JV Transaction. |
| 5.3 | Waiver or Fulfillment of Conditions The Parties may, but shall not be obliged to, to the fullest extent permitted by |
[*] Certain portions denoted with an asterisk have been omitted.
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Applicable Law, waive one or more of their respective Conditions for the Closing of the JV Transaction at its sole discretion. Upon fulfillment of all Conditions (or waiver by the Party entitled to, as the case may be), the Closing of the JV Transaction shall take place as agreed upon in Section 6.1.
| 5.4 | Long Stop Date. In case any of the Conditions is not fulfilled or waived until the Long Stop Date, the JV Transaction shall be deemed immediately and automatically terminated and cancelled (without prejudice to any of the F&F Operational Agreements, which shall remain in full force and effect in accordance with their terms), for all legal purposes, except if the Parties mutually agree in written to extend the term for fulfillment of the pending Condition(s) Precedent. |
| 5.4.1 | Notwithstanding the above, in case the Conditions of Sections 5.1.2 and 5.1.4 are not satisfied due to willful misconduct or gross negligence of Amyris (to be determined according to Section 13.9), the Parties agree that (i) all F&F Operational Agreements may be terminated by Raízen at its sole discretion; (ii) Amyris shall not have the right to build and operate the REBM Plant; and (iii) Raízen shall be entitled to receive a non-compensatory fine in the amount equivalent to US$ 5.000.000,00 (five million dollars). |
| 5.5 | Verification of the Conditions. The Parties shall keep each other informed as to the progress towards the satisfaction of the Conditions and shall disclose in writing to the other Party anything which shall or may prevent the Conditions from being satisfied on or before the Long Stop Date, as soon as reasonably practicable upon such matter coming to the notice of such Party. The Parties shall each notify the other promptly upon becoming aware that any of the Conditions have been fulfilled and deliver evidence of the same. |
| 5.6 | The Parties also agree that Raízen shall have the right to conduct, by itself or by a third party contractor, a technical due diligence on Amyris’ Technology in order to verify the fulfillment of the Condition mentioned in Section 5.1.2 above and Amyris shall cooperate with Raízen for this purpose by providing all documents, information, measures, books and records to be agreed between the Parties, necessary for such verification, as well as, to the extent permitted by Royal DSM, providing access to the Production Facility and its personnel. |
| 5.7 | Notice for Closing. Upon fulfillment of all Conditions (except as regards such condition(s) precedent waived by the Party entitled to, as the case may be), and provided that Raízen has not exercised its right pursuant to Section 5.8 below, Raízen shall notify Amyris to proceed with the Closing pursuant to Section 6 below. |
| 5.8 | Raízen’s right not to proceed with the Closing if all the Conditions are met. The Parties agree that Raízen may choose, at its sole and exclusive discretion, not to carry out the JV Transaction and not to proceed with the Closing even if all the Conditions are duly and timely met, in which case the Parties agree that the following provisions shall apply. |
| (i) | all the F&F Operational Agreements executed shall be maintained valid and effective for their respective terms. |
| (ii) | Amyris and/or its Affiliates shall be entitled to build and operate the REBM Plant at Raízen Mill and Raízen and/or its Affiliates shall guarantee the execution of the JV Company Operational Agreements (except for the Offtake Agreement and the JV Company Brand License Agreement) to Amyris and/or its Affiliates for the term of 20 (twenty) years (renewable for equal period pursuant to mutual consent) as from the date Raízen notifies its intention not to proceed with the Closing. For the avoidance of doubt, in this case, Amyris and/or its Affiliates shall be fully and exclusively responsible to build, construct and operate the REBM Plant at Raízen Mill and shall comply with the same provisions of Section 3.1 for the REBM Plant. |
| 5.8.1 | Amyris hereby acknowledge that Raízen’s right to withdraw from the Closing pursuant to this Section has been extensively negotiated between the Parties and represent fair and equitable commitment of the Parties in relation to this matter and that the provisions of this Section 5.8 represent fair compensation for the withdrawal from Raízen of the Closing. |
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| 5.9 | Amyris Refusal to Close. If Amyris refuses to perform the Closing of the JV Transaction after completion (or waiver by Raízen) of the applicable Conditions, the Parties agree that it shall be deemed a breach of this Agreement (such breach to be determined in accordance with Section 13.9) and in addition to any other penalties that may be applicable under law and this Agreement: (i) all F&F Operational Agreements may be terminated by Raízen at its sole discretion; (ii) Amyris shall not have the right to build and operate the REBM Plant; and (iii) Amyris shall pay to Raízen a non-compensatory fine in the amount of 5.000.000,00 (five million dollars). |
| 5.10 | Antitrust Approval. In order to complete the Condition set forth in Section 5.1.1 above, as promptly as practicable but no later than sixty (60) calendar days from the date of this Agreement, and as may thereafter be required, the Parties shall cooperate with one another and file all notifications, applications, and registrations required under the Antitrust Law, including but not limited to filing the properly completed form according to Cade’s Resolution No. 2 as of May 29th, 2012 with CADE. Raízen will be responsible for the preparation of the antitrust filing, coordinating necessary action, conducting the case and monitoring the respective antitrust proceeding. The Parties will negotiate in good faith the fulfilment of any requirements made by CADE to obtain Antitrust Approval. Amyris shall have full access to antitrust filing documentation and the right to review and approve it before filing with CADE. |
| 5.10.1 | Each Party shall bear the costs of their respective external legal counsels representing them before CADE. Costs related to the filing fee and potential economic consulting and/or economic studies or opinions shall be shared equally among the Parties. The Party that gives cause to any incidental fine applied by CADE during the proceeding shall be liable for that fine. |
| 5.11 | Neither Party will be held liable for any Losses arising out of the decision by CADE rejecting the JV Transaction, except in case of willful non-fulfillment of CADE´s requirements. |
SECTION 6
CLOSING OF THE JV TRANSACTION AND POST-CLOSING MEASURES
| 6.1 | Closing. The closing of the JV Transaction shall take place at Raízen’s head offices located at Avenida Brigadeiro Faria Lima, 4100, 11th floor, Itaim Bibi, Municipality of São Paulo, State of São Paulo, Brazil, at 10 am five (5) Business Days after receipt of the notice sent pursuant to Section 5.7 above (“Closing Date”) unless another place and time is agreed upon in writing between the Parties, when the Parties shall carry out and/or execute and/or deliver the following actions and documents, which shall all be deemed to have occurred simultaneously for the purposes hereunder (“Closing”): |
| 6.1.1 | Confirmation of Representations and Warranties and Conditions. The Parties shall deliver to each other a written statement confirming that (a) the representations and warranties granted to each other hereby remain true, legitimate, accurate, correct and complete on the Closing Date; and (b) all Conditions that each of the Parties should have completed until the Closing Date have been fulfilled (or waived, as the case may be); |
| 6.1.2 | Incorporation of the JV Company. Execution by Amyris and Raízen of minutes of a general meeting of shareholders in the form substantially equal to the draft attached hereto as Schedule 2 providing for the (a) incorporation of the JV Company; (b) adoption of the By-laws; (c) subscription of the Shares by Amyris and Raízen; and (d) election of the members of the Board of Directors of the JV Company, all pursuant to this Agreement, the By-laws and to the Shareholders’ Agreement; |
| 6.1.3 | Registration of Shares in the Book of Registry of Shares. The Shares shall be registered in the Book of Registry of Shares of the JV Company on the name of Amyris and Raízen; |
| 6.1.4 | Election of the Officers. Execution of the minutes of Board of Directors for (i) the election of the Officers of the JV Company; (ii) approval of the Business Plan of the JV Company; and (iii) approval of the Policies to be adopted by the JV Company all pursuant to this Agreement, the By-laws and to the Shareholders’ Agreement; |
| 6.1.5 | JV Company Operational Agreements. Raízen and/or its Affiliates will execute with the JV Company the JV Company Operational Agreements; |
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| 6.1.6 | Technology License Agreement. Amyris and/or its Affiliates will execute with the JV Company the Technology License Agreement. |
| 6.1.7 | Shareholders’ Agreement. Amyris and Raízen will enter into the Shareholders´ Agreement, which shall (i) be registered in the Book of Registry of Shares of the JV Company in relation to the Shares encumbered by it; and (ii) filed at the headquarters of the JV Company for the purposes of Article 118 of Law 6.404/76. |
| 6.2 | Cooperation. The Parties shall cooperate in good faith with each other and the JV Company (or third parties indicated by them) including, but not limited to, by undertaking to execute any document and provide all necessary assistance and information necessary to allow the performance of any obligation under this Agreement for the Closing. |
| 6.3 | Further Measures. The Parties shall carry out the filing of the corporate acts of the JV Company within 15 (fifteen) Business Days as from the Closing Date, as well as make all filings, submissions, and registries before any and all Governmental Authorities as required by Applicable Law. |
| 6.4 | Contribution of REBM Contracts. Within six (6) months as from the Closing Date, Amyris and/or any of its Affiliates shall contribute the REBM Contracts to the JV Company. Such REBM Contracts shall then be performed by the JV Company and its rights and obligations shall be transferred to the JV Company as from their contribution. Before such contribution, Amyris and or its Affiliates shall give Raízen full access to analyze such REBM Contracts and all related documents and information in order to determine if such REBM Contract shall be contributed to the JV Company. If Raízen determines that one or more REBM Contracts shall not be contributed to the JV Company, Amyris and/or its Affiliates will be automatically authorized to continue performing such REBM Contracts outside the scope of the JV Company. |
| 6.5 | Acquisition of São Martinho Assets. Within (sixty) 60 days after the incorporation of the JV Company, Amyris and Raízen shall make a capital increase of the Company, to be subscribed and paid-in in cash proportionally to their equity interest in the Company, in the total amount in Reais equivalent to US$ 9,000,000.00 (nine million dollars) (“Subsequent Capital Contribution). The proceeds of the Subsequent Capital Contribution shall be used by the JV Company to pay for the acquisition from Amyris or its Affiliates of the São Martinho Assets in the total amount of US$ 3,000,000.00 (three million dollars), as well as to pay for the expenses related to the removal and transportation of the São Martinho Assets from Fazenda São Martinho to REBM Plant. The JV Company will bear the costs of the removal and transportation of the São Martinho Assets up to the limit of the Subsequent Capital Contribution and any amount that exceeds such limit will be discussed by the Parties. |
| 6.5.1 | The São Martinho Assets shall be transferred to the JV Company free and clear of any Encumbrances, together with all benefits and rights attaching thereto and with all the corresponding documents related to such assets including operating manuals and handbooks, certificates, guarantees and instructions. The Parties hereby undertake to sign any necessary documents reflecting the assignment and the transfer of the São Martinho Assets to the JV Company and to execute or take all such further acts, assurances, deeds, assignments, transfers, conveyances, and other instruments or do or cause to be done such further acts as may necessary or appropriate to sell, assign, transfer, convey and deliver to the JV Company all of the São Martinho Assets. All such actions shall be at no further cost or expense of the JV Company. |
| 6.5.2 | The Parties agree that all liabilities or obligations directly or indirectly related to the São Martinho Assets, prior to their transfer to the JV Company, (whether absolute, accrued, contingent, known, unknown or otherwise) of any nature whatsoever shall be borne exclusively by Amyris and Amyris shall be responsible and indemnify the JV Company for any and all Losses suffered in relation to the São Martinho Assets. |
SECTION 7
BUSINESS OF THE JV COMPANY, BUSINESS PLANS, PROTOCOLS
Scope of the Business
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| 7.1 | As described in more detail in the By-laws, the main purpose of the JV Company shall be the production, sale and commercialization of REBM worldwide, except for the direct sale to Final Consumers, which shall be performed directly by Amyris in accordance with this Agreement (the “Business”). |
Business Plan
| 7.2 | The Business Plan shall include (a) a strategic and operating plan for the development of the JV Company; (b) a financial business plan including a consolidated profit and loss statement for the previous Fiscal Year, and a cash flow outlook including working capital and investment requirements; (c) a management proposal on the objectives and top priorities for the following year; (d) details of capital expenditure and investment requirements; (e) a detailed annual capital and operational expenditure and investment budget; (f) a balance sheet forecast; (g) a management report giving business objectives for the following year; and (h) a financial report which will include an analysis of the estimated results of the JV Company for the previous Fiscal Year compared with the Business Plan for that year, identifying variations in revenues, costs, and other material items. |
Amyris and Raízen agree to carry on the Business in good faith and in accordance with applicable laws, industry best practice, and international guidelines, including those on corporate governance, anti-corruption, and sustainability. In particular, without limitation, the JV Company will (and Amyris and Raízen will exercise all rights available to them, including voting, to ensure that the JV Company will) comply with the US Foreign Corrupt Practices Act (the “FCPA”), the UK Anti-Bribery Act (the “UKBA”), Brazilian Law 12.846/13, and any other applicable regulations relating to anti-bribery as well as any applicable sanctions or embargoes imposed on any person, company or country by the United States of America and/or the European Union. The Board of Directors of the JV Company will be responsible for adopting and supervising the implementation of appropriate internal Policies to ensure compliance with this Section.
Policies
| 7.3 | The JV Company shall implement written policies setting out the parameters of the decision-making processes of the Board of Directors and the Executive Committee and the protocols to be followed by the JV Company in the conduct of the Business (each a “Policy”). |
| 7.4 | On and from the Closing Date, the JV Company shall have the following Policies: |
| 7.4.1 | the Marketing Policy; |
| 7.4.2 | the Risk Policy; |
| 7.4.3 | the Manual of Authority; |
| 7.4.4 | the HSSE Policy; |
| 7.4.5 | the Code of Conduct; and |
| 7.4.6 | Intellectual Property Policy |
| 7.5 | A Policy may be amended from time to time, or a new Policy implemented, with the approval of the Board of Directors in accordance with the Shareholders’ Agreement. |
SECTION 8
F&F OFFER
| 8.1 | F&F Offer |
| 8.1.1 | Immediately after the Closing of the JV Transaction and for a period of 18 (eighteen) months as from the Closing Date, Raízen may offer to acquire quotas of the F&F Company equivalent to ten percent (10%) of its voting capital at the date of such offer (the “Offer Quotas”) by serving to Amyris a written notice (an “Offer Notice”) stating its willingness to purchase such Offer Quotas (“F&F Offer”); |
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| 8.1.2 | The F&F Offer shall be priced at the Book Value per Quota of each Offer Quota (“Offer Price”); |
| 8.1.3 | If the Parties agree on the related terms and Amyris expressly accepts the F&F Offer within forty-five (45) Business Days of receipt of the Offer Notice, Amyris and Raízen shall implement and carry out the closing of the F&F Offer by paying the Offer Price and executing all necessary documents, corporate books or amendments to articles of association of F&F Company and taking any other necessary measure to carry out and transfer the Offer Quotas to Raízen (“Offer Closing”). |
Within a period mutually agreed by Amyris and Raízen, counted as of receipt of the Offer Notice by Amyris, Raízen shall have the right to conduct, by itself or by a third party contractor, a due diligence on the F&F Company and Amyris and the F&F Company shall cooperate with Raízen for this purpose by providing all necessary documents, information, measures, books and records to be agreed between the Parties.
| 8.1.4 | The Parties shall cooperate with each other to take all such actions as may be required by any Applicable Law, the articles of association of the F&F Company, and this Agreement to give effect to the F&F Offer. Amyris’ acceptance of the F&F Offer shall not be deemed mandatory in any circumstance, nor a condition to the effectiveness of this Agreement, the F&F Operational Agreements or the JV Company Operational Agreements. |
| 8.2 | Right of First Refusal. Amyris shall not dispose of, or in any other way transfer to third parties (“Potential Purchaser”), directly or indirectly (except if otherwise permitted by this Agreement), its quotas of the F&F Company and/or the business or significant assets of the F&F Company, including the F&F Plant, in whole or in part, without first offering them to Raízen (“ROFR Offer”), which shall have the right of first refusal in acquiring them, under equal conditions to those of the Potential Purchaser. For purposes of this Section, Amyris will be permitted to transfer its quotas of the F&F Company or the assets of the F&F Company to any Amyris Affiliate(s), under any type of corporate reorganization, provided that (i) such quotas and/or assets remain under the direct or indirect Control of Amyris; and (ii) Amyris and the assignor remains solely liable before Raízen for all purposes of this Agreement. |
| 8.2.1 | Notice of Existence of Offer. The offer mentioned in Section 8.2 shall be expressed by written notice from Amyris (“Selling Quotaholder”) to Raízen, stating the number of quotas or assets being sold, the price to be paid, the payment term and method, the guarantees to be provided, other conditions of the proposed sale or transfer, the name of the Potential Purchaser and a copy of the transaction documents (“ROFR Offer Conditions”). |
| 8.2.2 | Notice of Exercise. During ten (10) Business Days following the receipt of the notice mentioned in Section 8.2.1 above, Raízen must inform in writing to the Selling Quotaholder whether or not it will exercise its right of first refusal for the acquisition of the ROFR Offer. |
| 8.2.3 | Sale to Third Parties. If Raízen does not exercise its right of first refusal, the Selling Quotaholder shall be free to sell all of the quotas and/or assets detailed in the ROFR Offer to the Potential Purchaser, during the subsequent forty-five (45) Business Days, under the ROFR Offer Conditions. If the period of forty-five (45) Business Days has lapsed without the occurrence of the sale, and the Selling Quotaholder receives another offer to once again sell its quotas and/or the assets of the F&F Company, it must reinitiate the procedure set forth herein. |
SECTION 9
REPRESENTATIONS AND WARRANTIES
| 9.1 | Amyris and the F&F Company hereby jointly and severally on behalf of itself and its Affiliates represents and warrants that the following statements are true, accurate and complete on the date hereof, and shall be true, accurate and complete on the Closing Date and (i) as provided in Section 9.1.5 below on the date of contribution of the REBM Contracts to the JV Company; (ii) as provided in Section 9.1.7 below on the Offer Closing; and (iii) as provided in Section 9.1.8 below on the date of transfer of the São Martinho Assets to the JV Company |
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| 9.1.1 | Authority; Execution; Enforceability. Amyris is validly incorporated, in existence and duly registered under the laws of its jurisdiction of incorporation and has full power to conduct its business as conducted at the date of this Agreement and has full capacity to execute this Agreement, perform its obligations, as well as to consummate the JV Transaction. This Agreement constitutes a legal, valid and binding obligation of Amyris enforceable against it and its successors, according to the terms contained herein. |
| 9.1.2 | No Conflicts; Consents. The execution of the Transaction Documents by Amyris and the F&F Company, as well as the completion of the Transaction (and the performance of all of the Amyris’ and F&F Company’s other obligations provided for therein) does not result in any breach of an obligation or right, or constitute fraud in the execution or against creditors by virtue of (i) any legally binding agreement or other arrangement, verbal or written, to which any of Amyris or the F&F Company is a party to, (ii) any court decision of any nature or instance or (iii) any Applicable Law, decree, ruling or regulation applicable to Amyris or to the F&F Company. The execution of the Transaction Documents, as well as the completion of the Transaction (and the performance of all of the Amyris’ and F&F Company’s other obligations provided for therein) also does not (i) result in any breach or violation of or default under, give rise to a right of termination or acceleration of any obligation under, allow for the amendment of or result in the imposition of any additional obligations or loss of rights under any contract to which any of Amyris or the F&F Company is a party to or whereby any of its properties or assets is bound; nor (ii) violate any Law or license applicable to or held by Amyris or the F&F Company or any properties or assets owned or used by Amyris or the F&F Company; or (iii) result in the creation of any Encumbrance upon any of the quotas held by Amyris in the F&F Company. No consent or approval must be obtained from any third party, competent Government Authority or any court, administrative agency or commission or other Government Authority by Amyris or by the F&F Company regarding the execution of and compliance with this Agreement, as well as regarding the consummation of the Transaction, except for CADE’s approval. |
| 9.1.3 | Intellectual Property. The operations and activities of the F&F Company and the Intellectual Property Rights under the Technology License Agreement, to the best of its knowledge, do not and shall not in the future infringe on, misappropriate or otherwise violate any Intellectual Property Rights of any other Person or shall require the payment of any royalty, fees or other payments to any other Person. Amyris or the F&F Company, as applicable, own all such Intellectual Property Rights. |
| 9.1.4 | Sufficient Capital. Amyris and the F&F Company have sufficient financial resources and capacity to carry out all payments and perform all obligations under the Transaction Documents and to support any and all of its obligations hereunder and will continue to have sufficient financial capacity to carry on its activities after such obligations have been complied with. There is no act or fact, nor, to the best of their knowledge, any threatened action or proceeding affecting Amyris or the entities pertaining to Amyris’ economic group that could be expected to affect the Transaction or the financial condition or operations of Amyris and the F&F Company, including insolvency, winding up, bankruptcy, or similar proceedings. |
| 9.1.5 | REBM Contracts. The REBM Contracts were executed in accordance with Applicable Law and are in full force and effect at this date prior to the assignment of the REBM Contracts to the JV Company, Amyris and/or its Affiliates shall have complied in all respects with the provisions, and have not been notified of any default or received any request for termination, of each such REBM Contracts, to which Amyris and/or its Affiliates had given cause. Neither Amyris or its Affiliates or any other party to any such REBM Contracts shall have breached or defaulted thereunder any of the REBM Contracts and Amyris or its Affiliates shall not have waived any right under any such REBM Contracts, and there shall be no unresolved disputes thereunder. The JV Transaction and/or the contribution of such REBM Contracts to the JV Company shall not give rise to a right of termination or acceleration of any obligation under, allow for the amendment of or result in the imposition of any additional obligations or loss of rights under any such REBM Contracts and Amyris and/or its affiliates have not been notified of any default or received any request for termination of such REBM Contracts. |
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| 9.1.6 | Compliance. Amyris and/or its Affiliates have not (nor, to their knowledge, has any agent, representative or other person acting on their behalf (a) corruptly made, offered or agreed to make or offer any loan, gift or other payment, directly or indirectly, whether in cash or in kind, for the use or benefit of a government official for the purposes of influencing any act or decision of such government official in its official capacity, or inducing such government official to do or omit to do any act in order to obtain or retain business or otherwise to secure any improper advantage such that, if Amyris or any of its Affiliates or any of their respective directors, officers, shareholders, employees, representatives or agents were: (i) United States persons, such action would constitute a violation of the FCPA; or (ii) nationals of the United Kingdom, would constitute an offense under the United Kingdom Bribery Act of 2010, or (iii) nationals of Brazil, would constitute an offense under Brazilian Law 12.846/13, or (b) otherwise breached any other applicable regulations relating to anti-bribery as well as any applicable sanctions or embargoes imposed on any person, company or country. |
| 9.1.7 | F&F’s Authority; Execution; Enforceability. The F&F Company is validly incorporated, in existence and duly registered under the laws of its jurisdiction of incorporation and has full power to conduct its business as conducted at the date of this Agreement and has full capacity to execute this Agreement, perform its obligations, as well as to consummate the Transaction. This Agreement constitutes a legal, valid and binding obligation of the F&F Company, enforceable against it and its successors, according to the terms contained herein. Amyris and/or its Affiliates are the holders and lawful owners of the quotas representing one hundred percent (100%) of the corporate capital of the F&F Company, which are free and clear of any Encumbrances. |
| 9.1.8 | São Martinho Assets. The São Martinho Assets exist and are fully and rightfully owned by Amyris and/or its Affiliates, and have been acquired or produced by Amyris and/or its Affiliates, have been declared and are allocated in the appropriate accounts of Amyris and/or its Affiliates in accordance with the Applicable Law and are free and clear of any Encumbrance as of this date and prior to their assignment to the JV Company. The São Martinho Assets (i) are in good conditions of use; (ii) have been property maintained by Amyris since their respective acquisition; (iii) do not require any sort of special maintenance, other than the ordinary maintenance to keep its good conditions of use and the necessary modifications to adapt them to the JV Company scope; and (iv) do not have any kind of defect that could impair their normal utilization by the JV Company. Amyris have been complying with any and all obligations required by any Applicable Laws, and/or the respective acquisition agreements to have full and unlimited access and use of the warranty rights granted by the respective sellers of the São Martinho Assets. The JV Transaction and/or the contribution of the São Martinho Assets to the JV Company shall not give rise to any claim or request related to or questioning the ownership of those assets, trigger or accelerate any guarantee granted by Amyris and/or its Affiliates and shall not impose any additional obligations or loss of rights of Amyris and/or its Affiliates anyhow related to the São Martinho Assets. Amyris and/or its Affiliates have not been notified of any event or received any request or claim related to the ownership of the São Martinho Assets as of this date and up to the date the São Martinho Assets are assigned to the JV Company. |
| 9.2 | Raízen hereby represents and warrants that the following statements are true, accurate and complete on the date hereof and on the Closing Date and on the Offer Closing: |
| 9.2.1 | Authority; Execution; Enforceability. Raízen is validly incorporated, in existence and duly registered under the laws of its jurisdiction of incorporation and has full power to conduct its business as conducted at the date of this Agreement and has full capacity to execute this Agreement, perform its obligations, as well as to consummate the Transaction. This Agreement constitutes a legal, valid and binding obligation of Raízen, enforceable against it and its successors, according to the terms contained herein. |
| 9.2.2 | No Conflicts; Consents. The execution of the Transaction Documents by Raízen, as well as the completion of the JV Transaction (and the performance of all of Raízen other obligations provided for therein) does not result in any breach of an obligation or right, or constitute fraud in the execution or against creditors by virtue of (i) any legally binding agreement or other arrangement, verbal or written, to which Raízen is a party to, (ii) any court decision of any nature or instance or (iii) any Applicable Law, decree, ruling or regulation applicable to Raízen. The execution of the Transaction Documents, as well as the completion of the JV Transaction (and the performance of all of Raízen’s other obligations provided for therein) also does not (i) result in any breach or violation of or default under, give rise to a right of termination or acceleration of any obligation under, allow for the amendment of or result in the imposition of any additional obligations or loss of rights under any contract to which Raízen is a party to or whereby any of its properties or assets are bound; nor (ii) violate any Law or license applicable to or held by Raízen or any properties or assets owned or used by Raízen. No consent or approval must be obtained from any third party, competent Governmental Authority or any court, administrative agency or commission or other Governmental Authority by Raízen regarding the execution of and compliance with this Agreement, as well as regarding the consummation of the JV Transaction, except for CADE’s approval. |
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| 9.2.3 | Sufficient Capital. Raízen has sufficient financial resources and capacity to carry out all payments and perform all obligations under the Transaction Documents and to support any and all of its obligations hereunder and will continue to have sufficient financial capacity to carry on its activities after such obligations have been complied with. There is no act or fact, nor any threatened action or proceeding affecting Raízen or the entities pertaining to Raízen’ economic group that could be expected to affect the JV Transaction or their financial condition or operations, including insolvency, winding up, bankruptcy, or similar proceedings. |
| 9.2.4 | Compliance. Raízen and/or its Affiliates have not (nor, to their knowledge, has any agent, representative or other person acting on their behalf (a) corruptly made, offered or agreed to make or offer any loan, gift or other payment, directly or indirectly, whether in cash or in kind, for the use or benefit of a government official for the purposes of influencing any act or decision of such government official in its official capacity, or inducing such government official to do or omit to do any act in order to obtain or retain business or otherwise to secure any improper advantage such that, if Raízen or any of its Affiliates or any of their respective directors, officers, shareholders, employees, representatives or agents were: (i) United States persons, such action would constitute a violation of the FCPA; or (ii) nationals of the United Kingdom, would constitute an offense under the United Kingdom Bribery Act of 2010, or (iii) nationals of Brazil, would constitute an offense under Brazilian Law 12.846/13,; or (b) otherwise breached any other applicable regulations relating to anti-bribery as well as any applicable sanctions or embargoes imposed on any person, company or country. |
SECTION 10
INDEMNIFICATION
| 10.1 | Amyris Indemnity Obligation. Amyris and the F&F Company jointly and severally agree to, indemnify, defend and hold Raízen, the JV Company, the F&F Company (in this case only after the F&F Offer Closing) as the case may be, their Affiliates and each of their respective officers, directors, employees, agents and representatives (“Raízen’s Indemnified Parties”) harmless from and against any and all Losses, as set forth in this Agreement and as effectively suffered or incurred by Raízen Indemnified Parties as a result of: |
| (a) | any violation, inaccuracy, misrepresentation, untruthfulness or breach of any representation or warranty made by Amyris and/or the F&F Company in this Agreement; |
| (b) | any breach non-compliance or failure to perform any covenant by Amyris and/or the F&F Company of any obligation contained in this Agreement; |
| (c) | any facts, omissions or actions performed, occurred or related to Amyris and its Affiliates occurred prior to or after the Closing Date and that may affect the JV Company and/or other Raízen’s Indemnified Parties; |
| (d) | any facts, omissions or actions performed, occurred or related to Amyris and its Affiliates or the São Martinho Assets occurred until their transfer to the JV Company, even if the effects thereof materialize only after such transfer; |
| (e) | any facts, omissions or actions performed, occurred or related to Amyris and its Affiliates, the F&F Company and/or the F&F Plant occurred until the Offer Closing, even if the effects thereof materialize only after the Offer Closing; and |
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| (f) | in case the Offer Closing occurs, any eviction which may affect the validity and/or effectiveness of the transfer of the ownership of the Offer Quotas. |
| 10.2 | Raízen Indemnity Obligation. Raízen agrees to indemnify, defend and hold Amyris, the JV Company, as the case may be, their Affiliates and each of their respective officers, directors, employees, agents and representatives (“Amyris’ Indemnified Parties” and together with the Raízen’s Indemnified Parties, the “Indemnified Parties”) harmless from and against any and all Losses, as set forth in this Agreement and as suffered or incurred by Amyris´ Indemnified Parties as a result of: |
| (a) | any violation, inaccuracy, misrepresentation, untruthfulness or breach of any representation or warranty made by Raízen contained in this Agreement; |
| (b) | any breach, non-compliance or failure to perform any covenant by Raízen of any obligation contained in this Agreement; and |
| (c) | any facts, omissions or actions performed, occurred or related to Raízen and its Affiliates occurred prior to or after the Closing Date and that may affect the JV Company and/or other Amyris’ Indemnified Parties. |
| 10.3 | Restrictions to the Parties’ Indemnification Obligations. Without prejudice to any other limitation under this Agreement, the Parties shall be exempt from any indemnification obligation pursuant to this SECTION 10 in relation to any amount of a Loss that has been fully reimbursed, indemnified, or compensated in any other way, including indemnifications received due to insurance coverage or by any other third-parties, but excluding any self-insurance or similar self-coverage. |
| 10.4 | Indemnity Procedures. If any Indemnified Party seeks indemnification of facts which give rise to obligations to indemnify pursuant to Sections 10.1 or 10.2, as applicable (“Event Subject to Indemnification”), the Indemnified Party shall promptly notify the other responsible party for indemnification (the “Indemnifying Party”) of any claim for which indemnification may be payable, specifying in detail the nature of the claim and the amount of the related Loss or an estimate thereof when determinable and attaching all relevant documentation relating thereto, including a copy of the notice document received by any third-parties in case of a Third-Party Claim (the “Indemnification Notice”). In any case the Indemnification Notice shall be sent within the earlier of (i) 15 (fifteen) Business Days from the date on which the Indemnified Party became aware of such claim and/or condition which could give rise to a Loss or; (ii) in case of a Third-Party Claim, one third (1/3) of the term available for presenting defense. Failure by the Indemnified Party to notify the Indemnifying Party within the periods set forth in this Section 10.4 will not release the Indemnifying Party from its obligation to indemnify the Indemnified Party for the Losses related to such Claim, except to the extent that the Indemnifying Party is objectively prejudiced thereby or is not able to file the proper defense to a Third-Party Claim as a result of the lack of time. |
| (a) | If an Event Subject to Indemnification shall arise and such event does not involve any third-party (a “Direct Claim”), the Indemnifying Party shall send a written response to the Indemnified Party in which the Indemnifying Party states its intention to either (i) pay the amount involved or commence any required remedial measures in connection with the Event Subject to Indemnification; (ii) refuse to consider the event as an Event Subject to Indemnification; or (iii) discuss the matter. In case of item (iii), the Indemnifying Party and the Indemnified Party shall discuss the issues involved during a period of thirty (30) Business Days from the receipt of the Indemnification Notice, and if they reach an agreement, any payment required thereby shall be made by the Indemnifying Party to the Indemnified Party as agreed between them and pursuant to Section 10.5. In case of item “ii” above or, if the Parties do not reach an agreement after discussion between them in case of item “iii” above, then the Indemnified Party may commence, at its option, any required action to pursue its rights and remedies. |
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| (b) | If an Event Subject to Indemnification shall arise and such event involves any third party (“Third-Party Claim”), the Indemnifying Party shall have the right to assume the defense (at its own expense) of such claim through counsel of its own choice by so notifying the Indemnified Party. The Indemnifying Party response shall be given within two thirds (2/3) of the term available for presenting defense and shall indicate its intention either to (i) pay the amount involved; (ii) assume the defense of the litigation or proceeding with the counsel of its choice (in which case, the Indemnifying Party shall be responsible for all costs, expenses, legal and court fees, any guaranties which may be required to be paid, advanced or deposited for the respective defense (“Defense Costs”), and the Indemnified Party shall have the right to retain its own counsel at its own expense to monitor the defense); or (iii) not assume the defense of the litigation or proceeding. If the Indemnifying Party does not notify the Indemnified Party of its decision to assume the defense of a Third-Party Claim within the proper time, or if the Indemnifying Party expressly does not assume the defense of the litigation or proceeding and denies the existence of an Event Subject to Indemnification, the Indemnified Party shall carry on the defense of the litigation or proceeding diligently and no settlement or agreement nor any appeal may be waived by the Indemnified Party without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld. The Party that assumes the defense shall be entitled to: (i) the cooperation of the other Party in preparing the defense; (ii) a reimbursement of all Defense Costs in the event the Third-Party Claim effectively becomes a Loss to the Indemnified Party. The indemnified Party agrees to provide the Indemnifying Party with access to all of the Indemnified Party files, information and records concerning said defense and to grant to the attorneys appointed by the Indemnifying Party all necessary powers-of-attorney to allow the defense of the Third-Party Claim assumed by the Indemnifying Party. |
| 10.4.1 | The Parties agree that if the JV Company is a Party and has been duly notified of a Third-Party Claim that may be regarded as an Event Subject to Indemnification, then the Parties agree that the JV Company shall always be the one to take all actions to defend this Third-Party Claim, without prejudice to the obligation of the Indemnifying Party to indemnify the Indemnified Parties as the case may be. In this case the claim shall be conducted in cooperation with the Indemnifying Party, who may appoint (at their own cost) any legal advisor in addition to the one(s) appointed by the JV Company. |
| 10.5 | Obligation to Indemnify. Subject to the other provisions of this SECTION 10, any amount due under the terms of this SECTION 10 related to any Loss effectively incurred (including the corresponding Defense Costs) shall be paid by the Indemnifying Party to the Indemnified Party as follows: (i) if related to a Third-Party Claim, within the fifteen (15) Business Days following the receipt by the Indemnifying Party of a written notice from the Indemnified Party informing about the Loss, it being agreed that any indemnification shall be due only and after final and non-appealable court or arbitral decision in relation to the Third-Party Claim; and (ii) in the event of a Direct Claim, (a) within fifteen (15) Business Days as from the agreement in writing of the Indemnifying Party to be liable for the requested indemnification; or (b) within fifteen (15) Business Days as from the end of the arbitral proceeding provided in this Agreement. Any such indemnifications to be paid by the Indemnifying Party shall be adjusted by the IGPM/FGV variation between the date in which the Losses were incurred and the date of the actual payment to the Indemnified Party. |
| 10.5.1 | When the Loss has been suffered by the JV Company and/or by the F&F Company (after the Offer Closing) the Indemnifying Party shall, at its discretion, indemnify the JV Company or the F&F Company in the full amount of the Loss, or indemnify the other Party, in the proportional amount of equity held by such Party. When the Loss has been suffered directly by the Indemnified Parties that are not the JV Company or the F&F Company, then the Loss shall be fully indemnified to such Indemnified Party. |
| 10.6 | Mitigate Losses. Parties undertake to act in good faith in the event any Loss occurs, as to mitigate in each case, the amount of any Losses to be indemnified by the other Party. In this sense, Parties shall in good faith to (i) avoid performing acts, omissions, and/or letting or making facts or events occur which could cause Losses indemnifiable, (ii) in the event any event triggering Losses occurs, remedy or mitigate the amount of any Losses to be indemnified; and (iii) receive full indemnification under any insurance policy that covers any Loss under this Agreement or seek full indemnification before any responsible third-party for the relevant Loss, undertaking to take all necessary judicial or arbitration measures to receive such indemnification. |
| 10.7 | Payment of Indemnification and Gross Up. Any amounts paid in connection with this Section shall be made to hold the Indemnified Party harmless with respect to the Losses incurred, with the transfer of amounts necessary for reinstating the Indemnified Party to the status quo ante. In that respect, the payments of any indemnification shall be made taking into account any possible deduction of any Taxes imposed on the receipt of such amounts and/or on their transfer to the relevant party, with the gross-up of such amounts when necessary. |
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SECTION 11
TERMINATION
| 11.1 | The Parties agree that this Agreement may only be terminated or rescinded under this Agreement following the date hereof and before the Closing: |
| (a) | by the written agreement of the Parties; |
| (b) | by the non-affected Party, where the other Party suffers an Insolvency Event; |
| (c) | if the Conditions are not satisfied or waived by the Long Stop Date; |
| (d) | by the Non-defaulting Party (as defined in Section 11.3 below) in its sole discretion, where the Defaulting Party commits an Event of Default and fails to rectify it following receipt of a Notice of Default in accordance with Section 11.3 below. |
| 11.1.1 | For the avoidance of doubt Raízen may also terminate this Agreement in accordance with Section 5.8. |
| 11.2 | The JV Company may be terminated and/or wound up pursuant to the terms and provisions set forth in the Shareholders’ Agreement. |
| 11.3 | Where a Party (the “Defaulting Party”) commits an Event of Default, the other Party (the “Non-defaulting Party”) may serve written notice on the Defaulting Party (a “Notice of Default”) requiring the Event of Default to be rectified to the reasonable satisfaction of the Non-defaulting Party within a period of 30 (thirty) Business Days (or such longer period as the Non-defaulting Party may in its sole discretion specify) after the date of the Notice of Default |
| 11.4 | Surviving Terms. The following provisions shall survive the termination of this Agreement, including early termination: |
| a) | the confidentiality provisions of Section 13.10; |
| b) | the F&F Operational Agreements and the JV Company Operational Agreements in the case of Section 5.8; and |
| c) | Indemnification obligations provided for in SECTION 10, which shall remain in full force for 10 years as from the date of this Agreement. |
SECTION 12
NON-COMPETE AND NON SOLICIT
| 12.1 | If the Closing occurs, the Parties undertake that they shall not, and shall procure that their Affiliates shall not, directly or indirectly, either on their own account or through third parties (whether as owner, quotaholder, shareholder, investor, partner, joint venture, consultant, employee, agent, services provider, distributor, licensor or otherwise), conduct activities similar or identical to the Business, as carried out by the JV Company at the corresponding time, other than through the JV Company (the “Non Compete Obligation”). For clarification purposes, (i) the Non-Compete Obligation shall also include the production, sale and commercialization, directly or indirectly, either on their own account or through third parties (whether as owner, quotaholder, shareholder, investor, partner, joint venture, consultant, employee, agent, services provider, distributor, licensor or otherwise) of any High Intensity Sweetener; and (ii) this Section shall not apply to the REBM Contracts not contributed to the corporate capital of the JV Company as per Section 6.4. |
| 12.2 | Notwithstanding the provisions above, Amyris may continue to research and develop any High Intensity Sweeteners, as long as it complies with the provisions of Section 12.1 above. |
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| 12.3 | The Non-Compete Obligation shall be valid [*] and binding on the Parties on and from the Closing Date and shall survive for five (5) years as from the date on which either Party ceases to have any direct or indirect equity in the JV Company. |
| 12.4 | As from the Closing Date and for a period of 5 (five) years following the exit of each Party of the corporate capital of the JV Company, the Parties shall not, directly or indirectly, either on their own account or through third parties (whether as owner, quotaholder, shareholder, investor, partner, joint venture, consultant, employee, agent, services provider, distributor, licensor or otherwise), solicit or entice away from the JV Company, offer employment to, or offer or encourage to conclude any contractual services with, any person who at any time on or after the date of this Agreement is an employee occupying position of manager or above, of the JV Company. This obligation shall not apply in the event the respective person approaches a Party without being personally solicited or encouraged by or on behalf of a Party but in response to a general advertisement for employment in a periodical, journal, website or similar venue, in which case the respective Party may offer to employ such person in accordance with the purpose of such approach or general advertisement. |
SECTION 13
MISCELLANEOUS
| 13.1 | All costs and expenses incurred by each Party in connection with the preparation, execution and delivery of this Agreement and the other agreements referred to herein shall, unless otherwise expressly agreed in writing between the Parties, be borne exclusively by the Party that incurred such costs. |
All notices authorized or required between the Parties by any of the provisions of this Agreement shall be in writing, in English (except for documents and/or information received from third-parties attached that may be attached to such notices), and delivered in person or by courier service or by e-mail provided that the other Party provides confirmation of complete and error free transmission, and addressed to such Parties as designated below (“Notices”). Oral communication does not constitute notice for the purposes of this Agreement and telephone numbers of the Parties are listed below as a matter of convenience only. The originating notice given under any provision of this Agreement shall be deemed delivered only when received by the Party to whom such notice is directed, and the time for such Party to deliver any notice in response to such originating notice shall run from the Business Day following receipt of the originating notice. "Received" for the purposes of this Section shall mean actual delivery of the notice to the address, including electronic address as applicable, of the Party to be notified as specified in this Section. Each Party shall have the right to change its address at any time and/or designate that copies of all such Notices be directed to another Person at another address, by giving at least five (5) Business Days written Notice thereof to all other Parties.
RAÍZEN
Avenida Brigadeiro Faria Lima nº 4100, 11th floor
São Paulo, State of São Paulo, Brazil
Telephone:
For the attention of
Email:
AMYRIS or the F&F Company
5885 Hollis Street, Suite 100
Emeryville, CA 94608.
Telephone:
For the attention of
Email:
| 13.1.1 | Any Notice hereunder shall be deemed sufficiently given and received at the time of receipt, if delivered by hand, sent by registered mail or courier service, or, if delivered by email or fax, on the date the other Party receives transmission thereof, free of any transmission error. |
| 13.1.2 | Each Party shall, immediately upon receipt of any Notice given hereunder, acknowledge receipt thereof by any of the means under this Section 13.1, whenever requested to do so by the sender, provided that the lack |
[*] Certain portions denoted with an asterisk have been omitted.
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of such acknowledgment shall not prejudice the validity of any notice given in accordance with this Section 13.1.
| 13.2 | The waiver of any provision of this Agreement by a Party shall not be valid unless in writing and signed by authorized officers of such Party. The waiver by any Party in any instance of the other Party's noncompliance with any obligation or responsibility herein shall not be deemed a waiver of other instances of noncompliance. |
| 13.3 | Neither this Agreement nor any provision hereof may be amended in any manner except by an instrument in writing which refers to this Agreement and is executed by each one of the Parties. |
| 13.4 | All Schedules referred to in, or relating to, this Agreement are attached hereto and are incorporated herein by reference as if fully set forth herein and shall be an integral part hereof. Unless otherwise expressly provided in the text hereof, all references to this Agreement shall be considered to include this Agreement and its Schedules. |
| 13.5 | The provisions of this Agreement and its Schedules, (i) set forth the entire agreement and understanding of the Parties as to the subject matter hereof; and (ii) supersede all prior agreements, oral or written, and all other communications between the Parties relating to the subject matter hereof, including, but not limited to, the MOU. In the event of any conflict or discrepancy between the provisions of this Agreement and those of the other Transaction Documents (i) first, the provisions of this Agreement shall prevail over the provisions of all other Transaction Documents; (ii) second, the provisions of the Shareholders Agreement shall prevail over the provisions of the other Transaction Documents (except over this Agreement); and (ii) third, the provisions of the Technology License Agreement shall (to the extent permitted by Applicable Law) prevail over the provisions of all other Transaction Document (except over this Agreement and the Shareholders Agreement). |
| 13.6 | This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that no rights, obligations or liabilities hereunder shall be assignable by any Party without the prior written consent of the other Party, except as otherwise specifically provided herein. None of the conditions, clauses, rights and obligations arising under this Agreement, except as otherwise expressly set forth, shall function to bind other companies, divisions, business units or businesses comprising the respective business groups of each Party. |
| 13.7 | Should any provision of this Agreement be held to be definitively unenforceable by a competent court under the applicable law, (i) the Parties hereto shall in good faith adopt such measures as are legally permitted and reasonable, so as to actually effect their intent under such provision; and (ii) in any event, the legality and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. |
| 13.8 | This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the Applicable Law. |
| 13.9 | Prior to submitting any Dispute (as defined below) to the procedures of this Section 13.9, the Parties commit to act in good faith to settle the matter amicably by referral to the members of the relevant Parties´ senior executive teams, who shall seek to settle the matter within thirty (30) days of the Dispute being so referred. Any dispute, controversy or claim regarding the existence, construction, validity, interpretation, enforceability or breach of this Agreement (a “Dispute”) shall be subject to the following provisions. |
| 13.9.1 | Any Dispute that is not resolved amicably by the Parties in accordance with Section 13.9 shall be settled finally and exclusively by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (the “ICC” or the “Court”), which shall administer the arbitration. |
| 13.9.2 | The arbitration shall be heard, conducted and decided by an arbitral tribunal composed of three (3) arbitrators. The arbitral tribunal shall be constituted in accordance with the Rules of Arbitration, except that the president of the arbitral tribunal shall be jointly appointed by the two (2) co-arbitrators appointed by the parties to the arbitration. If the Party-appointed arbitrators cannot reach agreement on a presiding arbitrator of the tribunal and/or one party refuses to appoint its arbitrator within said thirty (30) Business Day period, the appointing authority for the implementation of any such procedures shall be the chairperson (or its equivalent) of the Court, who shall appoint independent arbitrators who do not have any financial or other interest in the dispute, controversy or claim. All decisions and awards issued by the arbitral tribunal shall be made by majority vote. |
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| 13.9.3 | Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings: |
| (a) | the seat of the arbitration shall be the City of São Paulo, SP, Brazil, location where the arbitral award shall be rendered; |
| (b) | the arbitration proceedings shall be conducted in the English language and the arbitrator(s) shall be fluent in the English language; |
| (c) | the arbitrator(s) shall be and remain at all times wholly independent and impartial; |
| (d) | the arbitration proceedings shall be conducted under the Rules of Arbitration of the ICC in effect on the date the arbitration is initiated; |
| (e) | the costs of the arbitration proceedings (including contractual attorneys' fees and costs) shall be borne in the manner determined by the arbitrator(s) considering the liability of each party to the arbitration for its payment, in proportion to its success in the arbitral proceedings; the Arbitral Tribunal shall not have jurisdiction to impose non-prevailing party’s attorney fees (honorários advocatícios de sucumbência); |
| (f) | the arbitral award shall be in writing; be final and binding without the right of appeal; be the sole and exclusive remedy regarding any claims, counterclaims, issues or accountings presented to the arbitrators; be made and promptly paid, free of any deduction or offset; and any costs or fees incident to enforcing the award, shall to the maximum extent permitted by law be charged against the party resisting such enforcement; |
| (g) | the award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at the maximum rate permitted by law; |
| (h) | judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the Party owing the judgment, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be; and |
| (i) | the arbitration shall proceed in the absence of a party who, after due notice, fails to answer or appear. An award shall not be made solely on the default of a party to answer or appear, but the arbitrators shall require the party who is present to submit such evidence as the arbitrators may determine is reasonably required to make an award. |
| 13.10 | In connection with the Parties obligations under this Agreement and their role as shareholders of the JV Company and/or any other related activity to be carried out by the Parties under this Agreement, each Party agrees to disclose to the other Party, subject to the terms and conditions of this Section 13.10, certain Confidential Information which is either proprietary, commercially sensitive or subject to confidentiality obligations with third parties but may be allowed to be disclosed under the confidentiality terms and conditions contained herein. |
| 13.10.1 | For the avoidance of doubt, it is understood and agreed by the Parties that the scope of this Section 13.10 is to preserve the confidentiality and restricted right of use of the Confidential Information by the Parties, their Affiliates and their respective directors, officers, employees, agents, professional consultants, financiers and any other third parties having authorized access to Confidential Information in accordance with the terms and conditions of this Agreement, which under no circumstance shall be divulged, disclosed or discussed by any of the aforementioned persons in any manner whatsoever in view of its confidential and price and commercially sensitive nature to the Parties. |
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| 13.10.2 | In consideration of the disclosure by a Disclosing Party of Confidential Information to a Receiving Party, the Receiving Party agrees that the Confidential Information shall be kept strictly confidential and shall not be sold, traded, published or otherwise disclosed to anyone in any manner whatsoever, including by means of oral disclosures, photocopy or reproduction, without the Disclosing Party’s prior written consent, other than as permitted by this Agreement. |
| 13.10.3 | Confidential Information excludes, and the obligations of confidentiality and limitations on use will not apply to information and/or data which: |
| (a) | the Receiving Party can reasonably prove to be of its knowledge as of the date of disclosure hereunder, except with respect to its knowledge regarding the Parties´ intention to enter into this Agreement, which information shall be considered Confidential Information for the purposes hereof; |
| (b) | is already in possession of the public as of the date of disclosure hereunder or becomes available to the public after such disclosure other than through the act or omission of the Receiving Party; |
| (c) | is required to be disclosed under Applicable Law, under the laws of the jurisdiction under which the JV Company is incorporated, under the applicable rules or regulations of any stock exchange where the Parties may have their shares listed, or by a governmental and/or court order, decree, regulation or rule (provided that the Receiving Party shall, to the extent legally permitted, give written notice to the Disclosing Party prior to such disclosure and shall exercise its best endeavors in order to make any such persons or entities to whom Confidential Information is disclosed aware of the confidential nature of any such information); and/or |
| (d) | is acquired independently from a third party that represents that it has the right to disseminate such information at the time it is acquired by the Receiving Party. |
| 13.10.4 | Subject to confidentiality undertakings no less stringent that the ones in this Agreement being entered into in writing between the Receiving Party and any of the persons listed below, the Receiving Party may disclose Confidential Information to (a) any Receiving Party´s Affiliates, shareholders and/or entities in which the Receiving Party may hold an interest, who have a clear need to know in order to assist the Receiving Party in developing any activity under this Agreement; (b) professional consultants, advisers or agents retained by the Receiving Party for the purpose of evaluating the Confidential Information; and (c) any bank, financial institution or any other entity with whom the Receiving Party may be negotiating financing for its participation in any activity related to this Agreement, provided that, the Parties, as among themselves, expressly accept and agree to bear all consequences and liabilities deriving from any breach of the provisions of this Section 13.10 by any of the persons referred to in items (a) to (c) above as if it was a breach committed by the Party itself. |
| 13.10.5 | The Receiving Party shall be responsible for ensuring that all persons to whom the Confidential Information is disclosed under this Agreement shall keep such information confidential and shall not disclose or divulge the same to any unauthorized person. No Party shall be liable in an action initiated by one against the other for special, indirect or consequential damages resulting from or arising out of the provisions of this Section 13.10, including, without limitation, loss of profit or business opportunities, and/or business interruptions, however same may be caused. |
| 13.10.6 | The Parties shall be entitled to the remedies of injunction, specific performance and any other means of preventive relief, for any threatened or actual breach of the confidentiality obligations under this Agreement, and the Parties further agree that such remedies of preventive relief may be exercised by any Party irrespective of the occurrence of actual or imminent direct damage. |
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| 13.10.7 | The Confidential Information shall remain the property, beneficial title and/or use of the Disclosing Party, and the Disclosing Party may demand the return thereof at any time upon giving written notice to the Receiving Party. Within thirty (30) Business Days of receipt of such notice, the Receiving Party shall return all of the original Confidential Information and shall destroy all copies and reproductions (written, electronic and backup information) in its possession and in the possession of persons to whom it was disclosed pursuant to the terms of this Section 13.10. |
| 13.10.8 | The provisions of this Section 13.10 shall remain effective, in force and binding upon the Parties for a period of 1 (one) year after termination of this Agreement. |
| 13.10.9 | The confidentiality provisions in this Section 13.10 supersede, cancel and replace the confidentiality rights, obligations, terms and conditions entered into by and between the Parties or any Affiliates of the Parties prior to the execution of this Agreement, which shall be deemed terminated except for any breach of any obligation contained therein which may have occurred prior to the execution hereof and under the validity of any such previous confidentiality arrangements. |
| 13.11 | No public release, announcement or other form of publicity concerning the transactions contemplated by this Agreement shall be issued by any Party without the prior consent of the other Party, which consent shall not be unreasonably withheld. |
| 13.12 | This Agreement is not intended, nor should anything herein be construed, to create a relationship of partners, principal and agent, employer and employee, or other fiduciary relationship among the Parties, except as expressly provided herein. Except as expressly provided herein, no Party shall have any authority to represent or to bind the other Party in any manner whatsoever, and each Party shall be solely responsible and liable for its own acts. |
| 13.13 | This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. |
N WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the date first above mentioned.
For and on behalf of
AMYRIS, INC
/s/ John Melo
Authorized signatory
Name:
/s/ Gustavo Bezerra Tenorio
Witness
Name: GUSTAVO BEZERRA TENORIO
For and on behalf of
AMYRIS BROTAS FERMENTAÇÃO DE PERFORMANCE LTDA.
/s/ Eduardo L. Silveira
Authorized signatory
Name: EDUARDO L. SILVEIRA
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/s/ Giani Ming Valent
Witness
Name: GIANI MING VALENT
For and on behalf of
RAÍZEN ENERGIA S.A.
/s/ Antonio Simões_
Authorized signatory
Name: ANTONIO SIMÕES
/s/ Raphaela Gomes
Authorized signatory
Name: RAPHAELA GOMES
/s/ Diogo Simoes
Witness
Name: DIOGO SIMOES
29
Exhibit 10.08
Exchange Agreement
May 10, 2019
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, California 94608
Attention: Kathleen Valiasek
| Re: | Amyris, Inc. Exchange of 6.50% Convertible Senior Notes due 2019 |
Ladies and Gentlemen:
Amyris, Inc., a Delaware corporation (the “Company”), is offering the opportunity for the undersigned existing beneficial owner (the “Investor”) of the Company’s 6.50% Convertible Senior Notes due 2019 (the “6.50% Notes”) to exchange certain of the Investor’s 6.50% Notes (the “Exchange Offer”) for shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and a warrant, in the form attached hereto as Exhibit A (the “Warrant”), to purchase shares of Common Stock (the “Warrant Shares” and, together with the Shares and the Warrant, the “New Securities”) pursuant and subject to the terms and conditions set forth in this Exchange Agreement.
The Investor understands that the Exchange Offer is being made without registration under the Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction, in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act.
1. The Exchange Offer. Subject to the terms and conditions of this Exchange Agreement, the undersigned Investor hereby agrees to exchange the principal amount of 6.50% Notes set forth on the signature page of the Investor hereto (the “Exchanged 6.50% Notes”), together with any accrued and unpaid interest on such Exchanged 6.50% Notes to, but excluding, May 15, 2019, for a number of Shares as set forth on the signature page of the Investor hereto, representing a per Share value of approximately $4.60, and the Warrant, and the Company hereby agrees to issue such number of Shares and the Warrant to the Investor in exchange for such Exchanged 6.50% Notes.
2. The Closing. The closing of the Exchange Offer (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., Pacific Time, on the first business day on which the conditions to the Closing set forth in Section 6 below are satisfied or waived, or at such other time and place as mutually agreed by the Company and the Investor (the “Closing Date”).
3. The Terms of the Exchange Offer; Closing Mechanics.
Subject to the terms and conditions of this Exchange Agreement, the Investor hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in the Exchanged 6.50% Notes as set forth on the signature page of the Investor hereto, waives any and all other rights with respect to such Exchanged 6.50% Notes, and releases and discharges the Company from any and all claims the undersigned may now have, or may have in the future, arising out of, or related to, such Exchanged 6.50% Notes.
At the Closing, the Company shall execute and deliver to the Investor the Warrant. Promptly following the Closing, the Company shall deliver, or cause to be delivered, to the Investor a single stock certificate representing the number of Shares set forth on the signature page of the Investor hereto, pursuant to delivery and/or registration instructions provided by the Investor to the Company in writing at least one (1) business day prior to the Closing.
At or prior to the times set forth in the Investor Exchange Procedures set forth in Annex A hereto (the “Exchange Procedures”), the Investor shall cause the Exchanged 6.50% Notes to be delivered to Wells Fargo Bank, National Association, as trustee (the “Trustee”) under the indenture, dated as of May 29, 2014, between the Company and the Trustee relating to the 6.50% Notes, for cancellation as instructed in the Exchange Procedures.
Promptly after receipt from the Trustee of the interest payment on the Exchanged 6.50% Notes due May 15, 2019, the Investor shall remit such interest payment amount to the Company via wire transfer of immediately available funds pursuant to instructions provided to the Investor by the Company.
4. Representations and Warranties of the Company. The Company represents and warrants to the Investor that, as of the date hereof:
(a) Organization and Standing. The Company is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Exchange Agreement and the Warrant (a “Material Adverse Effect”).
(b) Power. The Company has all requisite power to execute and deliver this Exchange Agreement, to issue and sell the New Securities hereunder, and to carry out and perform its obligations under the terms of this Exchange Agreement and the Warrant.
(c) Authorization. The execution, delivery, and performance of this Exchange Agreement and the Warrant by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Exchange Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “Enforceability Exceptions”).
(d) Consents and Approvals. Except for any Current Report on Form 8-K to be filed by the Company in connection with the transactions contemplated hereby, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transaction contemplated by this Exchange Agreement or the Warrant. Assuming the accuracy of the representations of the Investor in Section 5, no consent, approval, authorization or other order of, or registration, qualification or filing with, any court, regulatory body, administrative agency, self-regulatory organization, stock exchange or market (including The Nasdaq Stock Market), or other governmental body is required for the execution and delivery of this Exchange Agreement or the Warrant, the valid issuance, sale and delivery of the New Securities to be sold pursuant to this Exchange Agreement other than such as have been or will be made or obtained, or for any securities filings required to be made under federal or state securities laws applicable to the offering of the New Securities.
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(e) Non-Contravention. Except as disclosed in Schedule 4(e), the execution and delivery of this Exchange Agreements and the Warrant, the issuance, sale and delivery of the New Securities to be sold by the Company under this Exchange Agreement, the performance by the Company of its obligations under this Exchange Agreement and the Warrant and/or the consummation of the transactions contemplated hereby will not (a) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (ii) the Company’s Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (iii) any statute or law, judgment, decree, rule, regulation, ordinance or order of any court or governmental or regulatory body (including The Nasdaq Stock Market), governmental agency, arbitration panel or authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any if its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject. For purposes of this Section 4(e), the term “material” shall apply to agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound involving obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 in a 12-month period.
(f) Shares. The Shares are duly authorized and when issued pursuant to the terms of this Exchange Agreement will be validly issued, fully paid, and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(g) Authorization of the Warrant. The Warrant has been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
(h) Authorization of the Warrant Shares. The Warrant Shares issuable upon exercise of the Warrant have been duly authorized and reserved for issuance upon exercise by all necessary corporate action and such shares, when issued upon such exercise in accordance of the terms of the Warrant, will be validly issued and will be fully paid and non-assessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Warrant Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement and the Warrant, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Warrant Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
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(i) No Registration. Assuming the accuracy of each of the representations and warranties of the Investor, the issuance by the Company of the New Securities is exempt from registration under the Securities Act.
5. Representations and Warranties of the Investor. The Investor hereby represents and warrants to and covenants with the Company that, as of the date hereof:
(a) Organization and Good Standing. The Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Ownership of Exchanged 6.50% Notes; Due Authorization. The Investor owns the amount of Exchanged 6.50% Notes set forth on the signature page of the Investor hereto free and clear of any liens (other than the obligations pursuant to this Exchange Agreement and applicable securities laws) and has the requisite power and authority to enter into and perform its obligations under this Exchange Agreement and to consummate the Exchange Offer.
(c) No Conflict. Participation in the Exchange Offer will not contravene (1) any law, rule or regulation binding on the Investor or any investment guideline or restriction applicable to the Investor and (2) the charter or bylaw (or equivalent organizational documents) of the Investor.
(d) Compliance with Laws. The Investor will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned acquires or sells New Securities and will obtain any consent, approval or permission required for such purchases, acquisitions or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases, acquisitions or sales, and the Company shall have no responsibility therefor.
(e) Risk of Investment. The Investor understands and accepts that acquiring the New Securities in the Exchange Offer involve risks. The Investor has such knowledge, skill and experience in business, financial and investment matters that the Investor is capable of evaluating the merits and risks of the Exchange Offer and an investment in the New Securities. With the assistance of the Investor’s own professional advisors, to the extent that the Investor has deemed appropriate, the Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the New Securities and the consequences of the Exchange Offer and this Exchange Agreement. The Investor has considered the suitability of the New Securities as an investment in light of its own circumstances and financial condition, and the Investor is able to bear the risks associated with an investment in the New Securities.
(f) Information Non-Reliance.
(i) The Investor represents and warrants that (i) it has carefully reviewed such information as it and its advisers deem necessary to make its decision to invest in the New Securities, (ii) has the ability to make, and has made, an informed decision as to the risks and merits of its investment in the New Securities on the terms set forth in this Exchange Agreement, and (iii) has made its own decision to consummate the transactions contemplated hereunder based exclusively on its own independent review, its financial experience, and consultations with such advisers as it deemed necessary. Without limiting the generality of the foregoing, the Investor acknowledges that neither the Company nor any of its affiliates or representatives is acting as a fiduciary or financial or investment adviser to the Investor, or has given the Investor any investment advice, opinion or other information on whether an investment in the New Securities is prudent. The Investor agrees it is not relying on the Information (as defined below), or any other information other than the express representations set forth in this Exchange Agreement.
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(ii) The Investor acknowledges that the Company and its affiliates and representatives possess material nonpublic information regarding the Company not known to the Investor that may impact the value of the New Securities (the “Information”), that the Information is not disclosed in the Company’s public disclosures or its filings with the Commission, and that the Company is not disclosing the Information to the Investor and that the Company and its affiliates and representatives have not made, and are not making, any representation with respect to any Information. The Investor understands, based on its experience, the disadvantage to which the Investor is subject due to the disparity of information between the Company and the Investor and the fact that the Information is not being disclosed to the Investor. The Investor acknowledges and agrees that, notwithstanding such disparity, it has deemed it appropriate to enter into this Exchange Agreement and to consummate the transactions contemplated hereunder. The Investor acknowledges the possibility that the Information may be material to a determination of a fair value for the New Securities and that value may be substantially different from the price being paid by the Investor for the New Securities hereunder.
(iii) The Investor agrees that neither the Company nor any of its affiliates or representatives shall have any liability to the Investor whatsoever due to or in connection with the non-disclosure of the Information, and the Investor hereby irrevocably waives any claim that it might have based on the failure of the Company to disclose the Information. The Investor hereby irrevocably and unconditionally expressly releases, discharges and waives, to the fullest extent permitted by law, any and all claims, rights, causes of action, suits, obligations, debts, demands, liabilities, controversies, costs, expenses, fees or damages of any kind (including, but not limited to, any and all claims alleging violations of federal or state securities laws, common-law fraud or deceit, breach of fiduciary duty, negligence or otherwise), whether directly, derivatively, representatively or in any other capacity, that it may have or hereafter acquire against the Company, or any of its affiliates and their respective officers, employees, agents and controlling persons, relating to the offer and sale of the New Securities, including the existence or non-existence of any Information, the Investor’s inability to review such Information or any failure to disclose such Information.
(iv) The Investor understands that the Company relies on the accuracy and truth of the foregoing representations, warranties, acknowledgements and agreements in entering into this Exchange Agreement and performing its obligations hereunder, and would not engage in the transactions contemplated by this Exchange Agreement in the absence of such representations, warranties, acknowledgements and agreements, and the Investor hereby consents to such reliance.
(v) Notwithstanding the forgoing, nothing in this Section 5(f) shall be deemed to limit or restrict the Investor’s rights or remedies with respect to any breach or violation by the Company of any of its representations, warranties or covenants contained in this Exchange Agreement, or to constitute an admission by the Company that any information is material or is otherwise required to be disclosed to any person.
(g) Governmental Approval. The Investor understands that no federal, state, local or foreign agency has passed upon the merits or risks of an investment in the New Securities or made any finding or determination concerning the fairness or advisability of such investment.
(h) Investor Qualification. The Investor is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Investor agrees to furnish any additional information reasonably requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange Offer.
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(i) Purchase for Investment Only; No Registration. The Investor is acquiring the New Securities solely for the Investor’s own beneficial account, or for an account with respect to which the Investor exercises sole investment discretion, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the New Securities. The Investor understands that the offer and sale of the New Securities have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof that depend in part upon the accuracy of the representations made by the Investor in this Exchange Agreement.
(j) Company Reliance. The Investor understands that the Company is relying upon the representations and agreements of the Investor contained in this Exchange Agreement (and any supplemental information) for the purpose of determining whether the Investor’s participation in the Exchange Offer meets the requirements for such exemption. In addition, the Investor acknowledges and agrees that any hedging transactions engaged in by the Investor after the Exchange Offer is made public and prior to the Closing in connection with the issuance and sale of the New Securities have been and will be conducted in compliance with the Securities Act and the rules and regulations promulgated thereunder.
(k) Restricted Securities. The Investor acknowledges that the New Securities have not been registered under the Securities Act. As a result, the New Securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to the extent such securities are registered with the Commission and qualified by state authorities, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the Investor hereby agrees that it will not sell the New Securities other than in compliance with such transfer restrictions.
6. Conditions to Obligations of the Investor and the Company. The obligations of the Investor to deliver the Exchanged 6.50% Notes of the Investor and of the Company to deliver the New Securities to the Investor are subject to the satisfaction or waiver at or prior to the Closing of the conditions precedent that (a) the representations and warranties of the Company and the Investor contained in Sections 4 and 5 , respectively, shall be true and correct as of the Closing Date in all material respects with the same effect as though such representations and warranties had been made as of the Closing Date and (b) the Shares and the Warrant Shares shall be approved for listing on The Nasdaq Stock Market, subject to official notice of issuance.
7. Restrictive Legends and Stop-Transfer Orders. The certificate or certificates representing the New Securities shall bear such legends as the Company deems to be required for the purpose of compliance with applicable Federal or state securities laws or as otherwise required by law.
8. Disclosure of the Exchange Offer. At or prior to 9:00 a.m., New York City time, on the second business day after the date hereof, the Company shall file a Current Report on Form 8-K announcing the Exchange Offer, which Current Report on Form 8-K the Company acknowledges and agrees will disclose all material non-public information, if any, with respect to the Exchange Offer.
9. Waiver and Amendment. Neither this Exchange Agreement nor any provisions hereof shall be modified, changed, discharged, waived or terminated except by an instrument in writing signed by the Company and the Investor.
10. Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.
11. Governing Law/Venue. THIS EXCHANGE AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. Each of the Company and the Investor (a) agrees that any legal suit, action or proceeding arising out of or relating to this agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b) waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.
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12. Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Exchange Agreement.
13. Counterparts. This Exchange Agreement may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Exchange Agreement by facsimile or other transmission (e.g. , “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
14. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid overnight courier or registered or certified mail, return receipt requested, postage prepaid to, in the case of the Company, the following address and, in the case of the Investor, the address provided on the signature page of the Investor (or such other address as any party shall have specified by notice in writing to the other):
| If to the Company: |
Amyris, Inc. 5885 Hollis Street, Suite 100 Emeryville, California 94608 Fax: Attention: |
15. Binding Effect. The provisions of this Exchange Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
16. Severability. If any term or provision (in whole or in part) of this Exchange Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
|
AMYRIS, INC.
By: /s/ Kathleen Valiasek Name: Kathleen Valiasek Title: Chief Financial Officer |
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
|
INVESTOR:
FORIS VENTURES, LLC
By: /s/ Barbara Hager Name: Barbara Hager Title: Manager
Address for Notices:
Foris Ventures, LLC Attention: JEMA Management LLC |
Exchanged 6.50% Notes Principal Amount: $5,000,000
Interest: $162,500
Shares: 1,122,460
Address for Delivery of Shares:
Foris Ventures, LLC
Attention:
Exhibit 10.09
Exchange Agreement
May 10, 2019
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, California 94608
Attention: Kathleen Valiasek
| Re: | Amyris, Inc. Exchange of 6.50% Convertible Senior Notes due May 15, 2019, CUSIP: 03236MAC5 |
Ladies and Gentlemen:
Amyris, Inc., a Delaware corporation (the “Company”), is offering the opportunity for the undersigned existing beneficial owners (each, an “Investor” and collectively, the “Investors”) of the Company’s 6.50% Convertible Senior Notes due May 15, 2019, CUSIP 03236MAC5 (the “6.50% Notes”) to exchange certain of such Investor’s 6.50% Notes (the “Exchange Offer”) for shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and a warrant, in the form attached hereto as Exhibit A (each, a “Warrant” and collectively, the “Warrants”), to purchase shares of Common Stock (the “Warrant Shares” and, together with the Shares and the Warrants, the “New Securities”) pursuant and subject to the terms and conditions set forth in this Exchange Agreement.
Each Investor understands that the Exchange Offer is being made without registration under the Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction, in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act.
1. The Exchange Offer. Subject to the terms and conditions of this Exchange Agreement, each undersigned Investor hereby agrees to exchange the principal amount of 6.50% Notes set forth on the signature page of such Investor hereto (the “Exchanged 6.50% Notes”), together with any accrued and unpaid interest on such Exchanged 6.50% Notes to, but excluding, May 15, 2019, for a number of Shares as set forth on the signature page of such Investor hereto, representing a per Share value of $4.00, and a Warrant to purchase a number of shares of Common Stock as set forth on the signature page of such Investor hereto, and the Company hereby agrees to issue such number of Shares and a Warrant to such Investor in exchange for such Exchanged 6.50% Notes.
2. The Closing. The closing of the Exchange Offer (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., Pacific Time, on the first business day on which the conditions to the Closing set forth in Section 6 below are satisfied or waived, or at such other time and place as mutually agreed by the Company and the Investors (the “Closing Date”).
3. The Terms of the Exchange Offer; Closing Mechanics.
Subject to the terms and conditions of this Exchange Agreement, each Investor hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in the Exchanged 6.50% Notes as set forth on the signature page of such Investor hereto, waives any and all other rights with respect to such Exchanged 6.50% Notes, and releases and discharges the Company from any and all claims the undersigned may now have, or may have in the future, arising out of, or related to, such Exchanged 6.50% Notes.
At the Closing, the Company shall execute and deliver to each Investor a Warrant to purchase a number of shares of Common Stock as set forth on the signature page of such Investor hereto. Promptly following the Closing, the Company shall deliver, or cause to be delivered, to each Investor the number of Shares set forth on the signature page of such Investor hereto, pursuant to delivery and/or registration instructions provided by such Investor to the Company in writing at least one (1) business day prior to the Closing.
At or prior to the times set forth in the Investor Exchange Procedures set forth in Annex A hereto (the “Exchange Procedures”), each Investor shall cause the Exchanged 6.50% Notes to be delivered to Wells Fargo Bank, National Association, as trustee (the “Trustee”) under the indenture, dated as of May 29, 2014, between the Company and the Trustee relating to the 6.50% Notes, for cancellation as instructed in the Exchange Procedures.
Promptly after receipt from the Trustee of the interest payment on the Exchanged 6.50% Notes due May 15, 2019, each Investor shall remit such interest payment amount to the Company via wire transfer of immediately available funds pursuant to instructions provided to such Investor by the Company.
4. Representations and Warranties of the Company. The Company represents and warrants to each Investor that, as of the date hereof:
(a) Organization and Standing. The Company is duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Exchange Agreement and the Warrants (a “Material Adverse Effect”).
(b) Power. The Company has all requisite power to execute and deliver this Exchange Agreement, to issue and sell the New Securities hereunder, and to carry out and perform its obligations under the terms of this Exchange Agreement and the Warrants.
(c) Authorization. The execution, delivery, and performance of this Exchange Agreement and the Warrants by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Exchange Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “Enforceability Exceptions”).
(d) Consents and Approvals. Except for any Current Report on Form 8-K to be filed by the Company in connection with the transactions contemplated hereby, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transaction contemplated by this Exchange Agreement or the Warrants. Assuming the accuracy of the representations of the Investors in Section 5, no consent, approval, authorization or other order of, or registration, qualification or filing with, any court, regulatory body, administrative agency, self-regulatory organization, stock exchange or market (including The Nasdaq Stock Market), or other governmental body is required for the execution and delivery of this Exchange Agreement or the Warrants, the valid issuance, sale and delivery of the New Securities to be sold pursuant to this Exchange Agreement other than such as have been or will be made or obtained, or for any securities filings required to be made under federal or state securities laws applicable to the offering of the New Securities.
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(e) Non-Contravention. Except as disclosed in Schedule 4(e), the execution and delivery of this Exchange Agreements and the Warrants, the issuance, sale and delivery of the New Securities to be sold by the Company under this Exchange Agreement, the performance by the Company of its obligations under this Exchange Agreement and the Warrants and/or the consummation of the transactions contemplated hereby will not (a) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (ii) the Company’s Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (iii) any statute or law, judgment, decree, rule, regulation, ordinance or order of any court or governmental or regulatory body (including The Nasdaq Stock Market), governmental agency, arbitration panel or authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any if its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject. For purposes of this Section 4(e), the term “material” shall apply to agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound involving obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 in a 12-month period.
(f) Shares. The Shares are duly authorized and when issued pursuant to the terms of this Exchange Agreement will be validly issued, fully paid, and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(g) Authorization of the Warrants. The Warrants have been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute valid and binding agreements of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
(h) Authorization of the Warrant Shares. The Warrant Shares issuable upon exercise of the Warrants have been duly authorized and reserved for issuance upon exercise by all necessary corporate action and such shares, when issued upon such exercise in accordance of the terms of the Warrants, will be validly issued and will be fully paid and non-assessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Warrant Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement and the Warrants, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Warrant Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
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(i) No Registration. Assuming the accuracy of each of the representations and warranties of the Investors, the issuance by the Company of the New Securities is exempt from registration under the Securities Act.
5. Representations and Warranties of the Investors. Each Investor hereby represents and warrants to and covenants with the Company that, as of the date hereof:
(a) Organization and Good Standing. The Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Ownership of Exchanged 6.50% Notes; Due Authorization. The Investor owns the amount of Exchanged 6.50% Notes set forth on the signature page of the Investor hereto free and clear of any liens (other than the obligations pursuant to this Exchange Agreement and applicable securities laws) and has the requisite power and authority to enter into and perform its obligations under this Exchange Agreement and to consummate the Exchange Offer.
(c) No Conflict. Participation in the Exchange Offer will not contravene (1) any law, rule or regulation binding on the Investor or any investment guideline or restriction applicable to the Investor and (2) the charter or bylaw (or equivalent organizational documents) of the Investor.
(d) Compliance with Laws. The Investor will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned acquires or sells New Securities and will obtain any consent, approval or permission required for such purchases, acquisitions or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases, acquisitions or sales, and the Company shall have no responsibility therefor.
(e) Risk of Investment. The Investor understands and accepts that acquiring the New Securities in the Exchange Offer involve risks. The Investor has such knowledge, skill and experience in business, financial and investment matters that the Investor is capable of evaluating the merits and risks of the Exchange Offer and an investment in the New Securities. With the assistance of the Investor’s own professional advisors, to the extent that the Investor has deemed appropriate, the Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the New Securities and the consequences of the Exchange Offer and this Exchange Agreement. The Investor has considered the suitability of the New Securities as an investment in light of its own circumstances and financial condition, and the Investor is able to bear the risks associated with an investment in the New Securities.
(f) Information Non-Reliance.
(i) The Investor represents and warrants that (i) it has carefully reviewed such information as it and its advisers deem necessary to make its decision to invest in the New Securities, (ii) has the ability to make, and has made, an informed decision as to the risks and merits of its investment in the New Securities on the terms set forth in this Exchange Agreement, and (iii) has made its own decision to consummate the transactions contemplated hereunder based exclusively on its own independent review, its financial experience, and consultations with such advisers as it deemed necessary. Without limiting the generality of the foregoing, the Investor acknowledges that neither the Company nor any of its affiliates or representatives is acting as a fiduciary or financial or investment adviser to the Investor, or has given the Investor any investment advice, opinion or other information on whether an investment in the New Securities is prudent. The Investor agrees it is not relying on the Information (as defined below), or any other information other than the express representations set forth in this Exchange Agreement.
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(ii) The Investor acknowledges that the Company and its affiliates and representatives possess material nonpublic information regarding the Company not known to the Investor that may impact the value of the New Securities (the “Information”), that the Information is not disclosed in the Company’s public disclosures or its filings with the Commission, and that the Company is not disclosing the Information to the Investor and that the Company and its affiliates and representatives have not made, and are not making, any representation with respect to any Information. The Investor understands, based on its experience, the disadvantage to which the Investor is subject due to the disparity of information between the Company and the Investor and the fact that the Information is not being disclosed to the Investor. The Investor acknowledges and agrees that, notwithstanding such disparity, it has deemed it appropriate to enter into this Exchange Agreement and to consummate the transactions contemplated hereunder. The Investor acknowledges the possibility that the Information may be material to a determination of a fair value for the New Securities and that value may be substantially different from the price being paid by the Investor for the New Securities hereunder.
(iii) The Investor agrees that neither the Company nor any of its affiliates or representatives shall have any liability to the Investor whatsoever due to or in connection with the non-disclosure of the Information, and the Investor hereby irrevocably waives any claim that it might have based on the failure of the Company to disclose the Information. The Investor hereby irrevocably and unconditionally expressly releases, discharges and waives, to the fullest extent permitted by law, any and all claims, rights, causes of action, suits, obligations, debts, demands, liabilities, controversies, costs, expenses, fees or damages of any kind (including, but not limited to, any and all claims alleging violations of federal or state securities laws, common-law fraud or deceit, breach of fiduciary duty, negligence or otherwise), whether directly, derivatively, representatively or in any other capacity, that it may have or hereafter acquire against the Company, or any of its affiliates and their respective officers, employees, agents and controlling persons, relating to the offer and sale of the New Securities, including the existence or non-existence of any Information, the Investor’s inability to review such Information or any failure to disclose such Information.
(iv) The Investor understands that the Company relies on the accuracy and truth of the foregoing representations, warranties, acknowledgements and agreements in entering into this Exchange Agreement and performing its obligations hereunder, and would not engage in the transactions contemplated by this Exchange Agreement in the absence of such representations, warranties, acknowledgements and agreements, and the Investor hereby consents to such reliance.
(v) Notwithstanding the forgoing, nothing in this Section 5(f) shall be deemed to limit or restrict the Investor’s rights or remedies with respect to any breach or violation by the Company of any of its representations, warranties or covenants contained in this Exchange Agreement, or to constitute an admission by the Company that any information is material or is otherwise required to be disclosed to any person.
(g) Governmental Approval. The Investor understands that no federal, state, local or foreign agency has passed upon the merits or risks of an investment in the New Securities or made any finding or determination concerning the fairness or advisability of such investment.
(h) Investor Qualification. The Investor is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Investor agrees to furnish any additional information reasonably requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange Offer.
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(i) Purchase for Investment Only; No Registration. The Investor is acquiring the New Securities solely for the Investor’s own beneficial account, or for an account with respect to which the Investor exercises sole investment discretion, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the New Securities. The Investor understands that the offer and sale of the New Securities have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof that depend in part upon the accuracy of the representations made by the Investor in this Exchange Agreement.
(j) Company Reliance. The Investor understands that the Company is relying upon the representations and agreements of the Investor contained in this Exchange Agreement (and any supplemental information) for the purpose of determining whether the Investor’s participation in the Exchange Offer meets the requirements for such exemption. In addition, the Investor acknowledges and agrees that any hedging transactions engaged in by the Investor after the Exchange Offer is made public and prior to the Closing in connection with the issuance and sale of the New Securities have been and will be conducted in compliance with the Securities Act and the rules and regulations promulgated thereunder.
(k) Restricted Securities. The Investor acknowledges that the New Securities have not been registered under the Securities Act. As a result, the New Securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to the extent such securities are registered with the Commission and qualified by state authorities, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the Investor hereby agrees that it will not sell the New Securities other than in compliance with such transfer restrictions.
(l) Affiliate Status. The Investor is not as of the date of this Exchange Agreement, nor has it been within the preceding three (3) months an “affiliate” of the Company as that term is defined in paragraph (a)(1) of Rule 144 of the Securities Act (“Rule 144”).
6. Conditions to Obligations of the Investors and the Company. The obligations of each Investor to deliver the Exchanged 6.50% Notes of such Investor and of the Company to deliver the New Securities to such Investor are subject to the satisfaction or waiver at or prior to the Closing of the conditions precedent that (a) the representations and warranties of the Company and such Investor contained in Sections 4 and 5 , respectively, shall be true and correct as of the Closing Date in all material respects with the same effect as though such representations and warranties had been made as of the Closing Date and (b) the Shares and the Warrant Shares shall be approved for listing on The Nasdaq Stock Market, subject to official notice of issuance.
7. Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Shares may be tacked onto the holding period of the Exchanged 6.50% Notes under Rule 3(a)(9) under the Securities Act and the Shares will have a Rule 144 holding period that will be deemed to have commenced as of May 29, 2014, the date of the original issuance of the Exchanged 6.50% Notes. The Company acknowledges and agrees that, assuming the accuracy of the representations and warranties of the Investors contained in Section 5, (i) upon issuance, the Shares will be eligible to be resold pursuant to Rule 144, (ii) the Company is not aware of any event reasonably likely to occur that would reasonably be expected to result in the Shares becoming ineligible to be resold by the Investors pursuant to Rule 144 and, therefore, (iii) the Shares issued to the Investors shall not bear any restrictive legend and shall be freely tradeable by the Investor pursuant to and in accordance with Rule 144.
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8. Disclosure of the Exchange Offer. At or prior to 9:00 a.m., New York City time, on the second business day after the date hereof, the Company shall file a press release or Current Report on Form 8-K announcing the Exchange Offer, which press release or Current Report on Form 8-K the Company acknowledges and agrees will disclose all material non-public information, if any, with respect to the Exchange Offer.
9. Waiver and Amendment. Neither this Exchange Agreement nor any provisions hereof shall be modified, changed, discharged, waived or terminated except by an instrument in writing signed by the Company and each Investor.
10. Waiver of Jury Trial. EACH OF THE COMPANY AND EACH INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.
11. Governing Law/Venue. THIS EXCHANGE AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. Each of the Company and each Investor (a) agrees that any legal suit, action or proceeding arising out of or relating to this agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b) waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.
12. Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Exchange Agreement.
13. Counterparts. This Exchange Agreement may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Exchange Agreement by facsimile or other transmission (e.g. , “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
14. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid overnight courier or registered or certified mail, return receipt requested, postage prepaid to, in the case of the Company, the following address and, in the case of the Investors, the address provided below or on the signature page of such Investor (or such other address as any party shall have specified by notice in writing to the other):
| If to the Company: |
Amyris, Inc. 5885 Hollis Street, Suite 100 Emeryville, California 94608 Fax: Attention: | |
| If to the Investors: |
Silverback Asset Management, LLC 1414 Raleigh Road Chapel Hill, NC 27517 Email: CC: Attention:
|
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15. Binding Effect. The provisions of this Exchange Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
16. Severability. If any term or provision (in whole or in part) of this Exchange Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[SIGNATURE PAGES FOLLOW]
8
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
|
AMYRIS, INC.
By: /s/ Kathleen Valiasek Name: Kathleen Valiasek Title: Chief Financial Officer |
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
|
INVESTOR:
Silverback Asset Management, LLC, investment manager for Silverback Opportunistic Credit Master Fund Limited
By: /s/ Elliot Bossen Name: Elliot Bossen Title: CEO, Silverback Asset Management, LLC
Address for Notices:
1414 Raleigh Road, Suite 250 Chapel Hill, NC 27517 Attention: |
Exchanged 6.50% Notes Principal Amount: $4,178,000
Interest: $135,785
Shares: 1,078,446
Warrant Shares: 431,378
DTC Participant Number for Delivery of Shares:
DTC Participant Name:
Account number:
DTC Participant Contact:
Name:
Telephone Number:
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
|
INVESTOR:
Silverback Asset Management, LLC, investment manager for LMAP Kappa Limited
By: /s/ Elliot Bossen Name: Elliot Bossen Title: CEO, Silverback Asset Management, LLC
Address for Notices:
1414 Raleigh Road, Suite 250 Chapel Hill, NC 27517 Attention: |
Exchanged 6.50% Notes Principal Amount: $9,300,000
Interest: $302,250
Shares: 2,400,562
Warrant Shares: 960,225
DTC Participant Number for Delivery of Shares:
DTC Participant Name:
Account number:
DTC Participant Contact:
Name:
Telephone Number:
Exhibit 10.10
Exchange Agreement
May 13, 2019
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, California 94608
Attention: Kathleen Valiasek
| Re: | Amyris, Inc. Exchange of 6.50% Convertible Senior Notes due 2019 |
Ladies and Gentlemen:
Amyris, Inc., a Delaware corporation (the “Company”), is offering the opportunity for the undersigned existing holder (the “Investor”) of the Company’s 6.50% Convertible Senior Notes due 2019 (the “6.50% Notes”) to exchange certain of the Investor’s 6.50% Notes (the “Exchange Offer”) for shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) pursuant and subject to the terms and conditions set forth in this agreement (this “Exchange Agreement”).
The Investor understands that the Exchange Offer is being made without registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction, in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9) thereof.
1. The Exchange Offer. Subject to the terms and conditions of this Exchange Agreement, the undersigned Investor hereby agrees to exchange the total principal amount of 6.50% Notes set forth on the signature page of the Investor hereto (the “Exchanged 6.50% Notes”), for a number of Shares as set forth on the signature page of the Investor hereto, representing a per Share value of $4.00, and the Company hereby agrees to issue such number of Shares to the Investor in exchange for such Exchanged 6.50% Notes.
2. The Closing. The closing of the Exchange Offer (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., Pacific Time, on the first Business Day (as defined in the indenture, dated as of May 29, 2014, between the Company and the Trustee relating to the 6.50% Notes (the “Indenture”)) on which the conditions to the Closing set forth in Section 6 below are satisfied or waived, or at such other time and place as mutually agreed by the Company and the Investor (the “Closing Date”).
3. The Terms of the Exchange Offer; Closing Mechanics.
Subject to the terms and conditions of this Exchange Agreement, the Investor hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in the Exchanged 6.50% Notes as set forth on the signature page of the Investor hereto, waives any and all other rights with respect to such Exchanged 6.50% Notes, and releases and discharges the Company from any and all claims the undersigned may now have, or may have in the future, arising out of, or related to, such Exchanged 6.50% Notes.
On the Closing Date, the Company shall deliver, or cause to be delivered, to the Investor the number of Shares set forth on the signature page of the Investor hereto, pursuant to delivery and/or registration
instructions provided by the Investor to the Company in writing at least one (1) Business Day prior to the Closing.
At or prior to the times set forth in the Investor Exchange Procedures set forth in Annex A hereto (the “Exchange Procedures”), the Investor shall cause the Exchanged 6.50% Notes to be delivered to Wells Fargo Bank, National Association, as trustee (the “Trustee”) under the Indenture, for cancellation as instructed in the Exchange Procedures.
Notwithstanding anything to the contrary contained in this Exchange Agreement, provided that that the Investor has sent the Exchanged 6.50% Notes to the Trustee for cancellation on or prior to May 13, 2019, in the event such Exchanged 6.50% Notes and instructions to cancel such Exchanged 6.50% Notes are not received by the Trustee on or before a date on which the Trustee is able to effect the cancellation of the Exchanged 6.50% Notes (as indicated by the Trustee), then this Exchange Agreement shall automatically terminate and become void and there shall be no liability on the part of any of the parties hereto.
4. Representations and Warranties of the Company. The Company represents and warrants to the Investor that, as of the date hereof:
(a) Organization and Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is duly licensed or qualified to do business as a foreign entity and is in good standing (to the extent such concepts are recognized under applicable law) in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Exchange Agreement (a “Material Adverse Effect”).
(b) Power. The Company has all requisite power and authority to execute and deliver this Exchange Agreement, to issue and sell the Shares hereunder, and to carry out and perform its obligations under the terms of this Exchange Agreement and to consummate the Exchange Offer.
(c) Authorization. The execution, delivery, and performance of this Exchange Agreement by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Exchange Agreement has been duly executed and delivered to the Investor and constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “Enforceability Exceptions”).
(d) Consents and Approvals. Except as disclosed in Schedule 4(d), and assuming the accuracy of the representations of the Investor in Section 5, no consent, approval, authorization or other order or declaration of, or registration, qualification or filing with, any federal, national, foreign, supranational, state, provincial, local or other government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, self-regulatory organization, stock exchange or market (including The Nasdaq Stock Market), or other judicial or arbitral body of competent jurisdiction (a “Governmental Authority”) is required for the execution, delivery and performance of this Exchange Agreement, the valid issuance, sale and delivery of the Shares to be sold pursuant to this Exchange Agreement other than such as have been or will be made or obtained.
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(e) Non-Contravention. The execution and delivery of this Exchange Agreement, the issuance, sale and delivery of the Shares to be sold by the Company under this Exchange Agreement, the performance by the Company of its obligations under this Exchange Agreement and/or the consummation of the transactions contemplated hereby do not and will not (i)(A) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, or give to others any rights of termination, acceleration or cancellation of, any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (B) conflict with or result in the breach or violation of, the Company’s Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (C) conflict with or violate in any respect any statute or law, judgment, decree, rule, regulation, code, ordinance, requirement, rule of law or order of any Governmental Authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (A) and (C) for such conflicts, breaches, violations or defaults that would not have, individually or in the aggregate, a Material Adverse Effect, or (ii) materially and adversely affect the ability of the Company to carry out its obligations under, and to consummate the transactions contemplated by, this Exchange Agreement.
(f) Shares. The Shares are duly authorized and when issued pursuant to the terms of this Exchange Agreement will be validly issued, fully paid, and nonassessable, and will be free and clear of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, any liens or encumbrances or any anti-dilution or other similar rights. The issuance, sale and delivery of the Shares will not obligate the Company to issue or sell any shares of Common Stock, or any other equity interest in, the Company to any other person.
(g) No Registration. Assuming the accuracy of the representations and warranties of the Investor contained in Sections 5(h) and 5(k) hereto, the issuance by the Company of the Shares is exempt from registration under the Securities Act and the Exchange Offer is eligible for the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9).
(h) No Material Adverse Effect. Since December 31, 2017, the business of the Company and its subsidiaries has been conducted in the ordinary course and there has not occurred any Material Adverse Effect.
5. Representations and Warranties of the Investor. The Investor hereby represents and warrants to and covenants with the Company that, as of the date hereof:
(a) Organization and Good Standing. The Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing (to the extent such concepts are recognized under applicable law) under the laws of the jurisdiction of its formation.
(b) Ownership of Exchanged 6.50% Notes; Due Authorization. The Investor owns the amount of Exchanged 6.50% Notes set forth on the signature page of the Investor hereto free and clear of any liens (other than the obligations pursuant to this Exchange Agreement and applicable securities laws) and has the requisite power and authority to execute and deliver this Exchange Agreement, perform its obligations under this Exchange Agreement and to consummate the Exchange Offer.
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(c) No Conflict. Participation in the Exchange Offer will not contravene (1) any law, rule or regulation binding on the Investor or any investment guideline or restriction applicable to the Investor and (2) the charter or bylaw (or equivalent organizational documents) of the Investor, except in the case of clause (1) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect
(d) Compliance with Laws. The Investor is in compliance with all applicable laws and regulations in effect in any jurisdiction in which the undersigned will acquire Shares in this Exchange Offer and has obtained any consent, approval or permission required for such acquisition under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such acquisition.
(e) Risk of Investment. The Investor understands and accepts that acquiring the Shares in the Exchange Offer involve risks. The Investor has such knowledge, skill and experience in business, financial and investment matters that the Investor is capable of evaluating the merits and risks of the Exchange Offer and an investment in the Shares. With the assistance of the Investor’s own professional advisors, to the extent that the Investor has deemed appropriate, the Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Shares and the consequences of the Exchange Offer and this Exchange Agreement. The Investor has considered the suitability of the Shares as an investment in light of its own circumstances and financial condition, and the Investor is able to bear the risks associated with an investment in the Shares.
(f) [Reserved.]
(g) Governmental Approval. The Investor understands that no federal, state, local or foreign agency has passed upon the merits or risks of an investment in the Shares or made any finding or determination concerning the fairness or advisability of such investment.
(h) Investor Qualification. The Investor is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Investor agrees to furnish any additional information reasonably requested by the Company or any of its affiliates prior to the Closing Date to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange Offer. The Investor understands that the Company is relying upon this representation of the Investor for the purpose of determining whether the Investor’s participation in the Exchange Offer meets the requirements for exemption from the registration requirements of the Securities Act.
(i) Purchase for Investment Only; No Registration. The Investor is acquiring the Shares solely for the Investor’s own beneficial account, or for an account with respect to which the Investor exercises sole investment discretion, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the Shares. The Investor understands that the offer and sale of the Shares have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof that depend, in part, upon the accuracy of the representations made by the Investor in this Exchange Agreement.
(j) Restricted Securities. The Investor acknowledges that the Shares have not been registered under the Securities Act. As a result, the Investor understands that the Shares may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to the extent such securities are registered with the Commission and qualified by state authorities, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the Investor hereby agrees that it will not sell the Shares other than in compliance with such transfer restrictions.
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(k) Affiliate Status. The Investor is not as of the date of this Exchange Agreement, nor has it been within the preceding three (3) months an “affiliate” of the Company as that term is defined in paragraph (a)(1) of Rule 144 of the Securities Act (“Rule 144”). The Investor understands that the Company is relying upon this representation of the Investor for the purpose of determining whether the Investor’s participation in the Exchange Offer meets the requirements for exemption from the registration requirements of the Securities Act.
6. Conditions to Obligations of the Investor and the Company.
(a) The obligations of the Investor to deliver the Exchanged 6.50% Notes of the Investor are subject to the satisfaction or waiver at or prior to the Closing of the conditions precedent that (i) the representations and warranties of the Company contained in Section 4 shall be true and correct as of the Closing Date in all respects with the same effect as though such representations and warranties had been made as of the Closing Date, (b) all of the agreements and covenants of the Company to be performed prior to the Closing pursuant to this Exchange Agreement shall have been duly performed or complied with in all material respects, (c) no law or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority which would prevent consummation of the Closing, prohibit the consummation of the Exchange Offer or has the effect of making them illegal, (d) the Shares shall be approved for listing on The Nasdaq Stock Market, subject to official notice of issuance, and (e) no Material Adverse Effect has occurred.
(b) The obligations of the Company to deliver the Shares to the Investor are subject to the satisfaction or waiver at or prior to the Closing of the conditions precedent that (a) the representations and warranties of the Investor contained in Sections 5(a) and 5(b) shall be true and correct as of the Closing Date in all respects and the other representations and warranties of the Investor contained in Section 5 shall be true and correct as of the Closing Date in all material respects, in each case with the same effect as though such representations and warranties had been made as of the Closing Date, (b) all of the agreements and covenants of the Investor to be performed prior to the Closing pursuant to this Exchange Agreement shall have been duly performed or complied with in all material respects, (c) no law or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority which would prevent consummation of the Closing, prohibit the consummation of the Exchange Offer or has the effect of making them illegal, and (d) the Shares shall be approved for listing on The Nasdaq Stock Market, subject to official notice of issuance.
7. Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Shares may be tacked onto the holding period of the Exchanged 6.50% Notes under Rule 3(a)(9) under the Securities Act and the Shares will have a Rule 144 holding period that will be deemed to have commenced as of May 29, 2014, the date of the original issuance of the Exchanged 6.50% Notes. The Company acknowledges and agrees that, assuming the accuracy of the representations and warranties of the Investor contained in Section 5, (i) upon issuance, the Shares will be eligible to be resold pursuant to Rule 144, (ii) the Company is not aware of any event reasonably likely to occur that would reasonably be expected to result in the Shares becoming ineligible to be resold by the Investor pursuant to Rule 144 and, therefore, (iii) the Shares issued to the Investor shall not bear any restrictive legend and shall be freely tradeable by the Investor pursuant to and in accordance with Rule 144.
8. Disclosure of the Exchange Offer. At or prior to 9:00 a.m., New York City time, on the second Business Day after the date hereof, the Company shall file a press release or Current Report on Form 8-K announcing the Exchange Offer, which press release or Current Report on Form 8-K the Company acknowledges and agrees will disclose all material non-public information, if any, with respect to the Exchange Offer.
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9. Waiver and Amendment. Neither this Exchange Agreement nor any provisions hereof shall be modified, changed, discharged, waived or terminated except by an instrument in writing signed by the Company and the Investor.
10. Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.
11. Governing Law/Venue. THIS EXCHANGE AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. Each of the Company and the Investor (a) agrees that any legal suit, action or proceeding arising out of or relating to this agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b) waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.
12. Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Exchange Agreement.
13. Counterparts. This Exchange Agreement may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Exchange Agreement by facsimile or other transmission (e.g. , “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
14. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid overnight courier or registered or certified mail, return receipt requested, postage prepaid to, in the case of the Company, the following address and, in the case of the Investor, the address provided on the signature page of the Investor (or such other address as any party shall have specified by notice in writing to the other):
| If to the Company: |
Amyris, Inc. 5885 Hollis Street, Suite 100 Emeryville, California 94608 Fax: Attention: |
15. Binding Effect. The provisions of this Exchange Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
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16. Severability. If any term or provision (in whole or in part) of this Exchange Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
| INVESTOR: | |||
| Maxwell (Mauritius) Pte Ltd. | |||
| By: | /s/ Rohlt Sipahimalani | ||
| Name: Rohlt Sipahimalani | |||
| Title: Authorized Signatory | |||
| Address for Notices: | |||
| Maxwell (Mauritius) Pte Ltd. | |||
Exchanged 6.50% Notes Principal Amount: $10,000,000
Shares: 2,500,000
DTC Participant Number for Delivery of Shares:
DTC Participant Name:
Account number:
DTC Participant Contact:
Name: N.A.
Telephone Number: N.A.
Exhibit 10.11
Exchange Agreement
May 15, 2019
Amyris, Inc.
5885 Hollis Street, Suite 100
Emeryville, California 94608
Attention: Kathleen Valiasek
| Re: | Amyris, Inc. Exchange of 6.50% Convertible Senior Notes due 2019 |
Ladies and Gentlemen:
Amyris, Inc., a Delaware corporation (the “Company”), is offering the opportunity for the undersigned existing beneficial owner (the “Investor”) of the Company’s 6.50% Convertible Senior Notes due 2019 (the “6.50% Notes”) to exchange certain of the Investor’s 6.50% Notes (the “Exchange Offer”) for a senior convertible note, in the form attached hereto as Exhibit A (the “New Note”), which New Note is convertible into shares (the “Conversion Shares”, and, together with the New Note, the “New Securities”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in accordance with the terms of the New Note, pursuant and subject to the terms and conditions set forth in this Exchange Agreement.
The Investor understands that the Exchange Offer is being made without registration under the Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction, in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act.
1. The Exchange Offer. Subject to the terms and conditions of this Exchange Agreement, the undersigned Investor hereby agrees to exchange the principal amount of 6.50% Notes set forth on the signature page of the Investor hereto (the “Exchanged 6.50% Notes”) for the New Note, and the Company hereby agrees to issue the New Note to the Investor in exchange for such Exchanged 6.50% Notes.
2. The Closing. The closing of the Exchange Offer (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., Pacific Time, on the first business day on which the conditions to the Closing set forth in Section 6 below are satisfied or waived, or at such other time and place as mutually agreed by the Company and the Investor (the “Closing Date”).
3. The Terms of the Exchange Offer; Closing Mechanics.
Subject to the terms and conditions of this Exchange Agreement, the Investor hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in the Exchanged 6.50% Notes as set forth on the signature page of the Investor hereto, waives any and all other rights with respect to such Exchanged 6.50% Notes, and releases and discharges the Company from any and all claims the undersigned may now have, or may have in the future, arising out of, or related to, such Exchanged 6.50% Notes.
At the Closing, the Company shall issue to the Investor the New Note.
At or prior to the times set forth in the Investor Exchange Procedures set forth in Annex A hereto (the “Exchange Procedures”), the Investor shall cause the Exchanged 6.50% Notes to be delivered to Wells Fargo Bank, National Association, as trustee (the “Trustee”) under the indenture, dated as of May 29, 2014, between the Company and the Trustee relating to the 6.50% Notes, for cancellation as instructed in the Exchange Procedures.
4. Representations and Warranties of the Company. The Company represents and warrants to the Investor that, as of the date hereof:
(a) Organization and Standing. The Company and each of its Significant Subsidiaries (as defined in Regulation S-X of the Securities Act) is duly incorporated, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization. The Company and each of its Significant Subsidiaries has all requisite power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company and each of its Significant Subsidiaries is qualified to do business as a foreign entity in every jurisdiction in which the failure to be so qualified would have, or would reasonably be expected to have, a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Exchange Agreement or the New Note (a “Material Adverse Effect”).
(b) Power. The Company has all requisite power to execute and deliver this Exchange Agreement, to issue and sell the New Securities hereunder, and to carry out and perform its obligations under the terms of this Exchange Agreement and the New Note.
(c) Authorization. The execution, delivery, and performance of this Exchange Agreement by the Company has been duly authorized by all requisite action on the part of the Company and its officers, directors and stockholders, and this Exchange Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (the “Enforceability Exceptions”).
(d) Consents and Approvals. Except for any Current Report on Form 8-K to be filed by the Company in connection with the transactions contemplated hereby, the Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transaction contemplated by this Exchange Agreement. Assuming the accuracy of the representations of the Investor in Section 5, no consent, approval, authorization or other order of, or registration, qualification or filing with, any court, regulatory body, administrative agency, self-regulatory organization, stock exchange or market (including The Nasdaq Stock Market), or other governmental body is required for the execution and delivery of this Exchange Agreement, the valid issuance, sale and delivery of the New Securities to be sold pursuant to this Exchange Agreement other than such as have been or will be made or obtained, or for any securities filings required to be made under federal or state securities laws applicable to the offering of the New Securities.
(e) Non-Contravention. The execution and delivery of this Exchange Agreements, the issuance, sale and delivery of the New Securities to be sold by the Company under this Exchange Agreement, the performance by the Company of its obligations under this Exchange Agreement and the New Note and/or the consummation of the transactions contemplated hereby will not (a) conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of, or default under, (i) any bond, debenture, note or other evidence of indebtedness, or under any lease, license, franchise, permit, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or its properties may be bound or affected, (ii) the Company’s Restated Certificate of Incorporation, as amended and as in effect on the date hereof, the Company’s Bylaws, as amended and as in effect on the date hereof, or the equivalent document with respect to any subsidiary, as amended and as in effect on the date hereof, or (iii) any statute or law, judgment, decree, rule, regulation, ordinance or order of any court or governmental or regulatory body (including The Nasdaq Stock Market), governmental agency, arbitration panel or authority applicable to the Company, any of its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations or defaults that would not be likely to have, individually or in the aggregate, a Material Adverse Effect, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any if its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject. For purposes of this Section 4(e), the term “material” shall apply to agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound involving obligations (contingent or otherwise) of, or payments to, the Company in excess of $100,000 in a 12-month period.
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(f) Authorization of the New Note. The New Note has been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
(g) Authorization of the Conversion Shares. The Conversion Shares issuable upon conversion of the New Note have been duly authorized and reserved for issuance upon conversion by all necessary corporate action and such shares, when issued upon such conversion in accordance of the terms of the New Note, will be validly issued and will be fully paid and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the Conversion Shares shall be subject to restrictions on transfer under state or federal securities laws as set forth in this Exchange Agreement and the New Note, or as otherwise may be required under state or federal securities laws as set forth in this Exchange Agreement at the time a transfer is proposed. The issuance and delivery of the Conversion Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any other person, or any liens or encumbrances or result in the triggering of any anti-dilution or other similar rights under any outstanding securities of the Company.
(h) No Registration. Assuming the accuracy of each of the representations and warranties of the Investor, the issuance by the Company of the New Securities is exempt from registration under the Securities Act.
(i) Litigation. Other than actions described in the Company’s reports and other documents currently filed by the Company under the Securitas Act and the Securities Exchange Act of 1934 available on the SEC’s EDGAR system, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Significant Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the this Exchange Agreement or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.
(j) Capitalization. The capitalization of the Company, on a fully diluted basis, is as set forth herein as Schedule 4(j), which information is true, complete and accurate. The issuance, sale and delivery of the New Securities will not obligate the Company to issue shares of its common stock or other securities to any person, and will not result in a right of any holder of the Company’s securities to adjust the exercise, conversion, exchange or reset price under any of such securities.
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(k) Regulatory Permits. The Company and its Significant Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(l) Intellectual Property. The Company and its Significant Subsidiaries have, or have rights to use, all material patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing material infringement by another Person of any of the Intellectual Property Rights.
(m) Insurance. The Company and its Significant Subsidiaries are insured against such losses and risks and in such amounts as the Company reasonably believes to be adequate, including, but not limited to, directors and officers insurance coverage. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
(n) Validity of New Note and Waiver of Defenses. The Company acknowledges the validity, priority and enforceability of the New Note as a debt instrument and any of the obligations thereunder and waives (on behalf of itself, and any other person, entity or other party in interest that may claim by, through, or on the Company’s behalf) any right, claim, or defense to the New Note or any of the obligations thereunder on the grounds that they should be recharacterized as or subordinated to the level of equity.
5. Representations and Warranties of the Investor. The Investor hereby represents and warrants to and covenants with the Company that, as of the date hereof:
(a) Organization and Good Standing. The Investor is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Ownership of Exchanged 6.50% Notes; Due Authorization. The Investor owns the amount of Exchanged 6.50% Notes set forth on the signature page of the Investor hereto free and clear of any liens (other than the obligations pursuant to this Exchange Agreement and applicable securities laws) and has the requisite power and authority to enter into and perform its obligations under this Exchange Agreement and to consummate the Exchange Offer.
(c) No Conflict. Participation in the Exchange Offer will not contravene (1) any law, rule or regulation binding on the Investor or any investment guideline or restriction applicable to the Investor and (2) the charter or bylaw (or equivalent organizational documents) of the Investor.
(d) Risk of Investment. The Investor understands and accepts that acquiring the New Securities in the Exchange Offer involve risks. The Investor has such knowledge, skill and experience in business, financial and investment matters that the Investor is capable of evaluating the merits and risks of the Exchange Offer and an investment in the New Securities. With the assistance of the Investor’s own professional advisors, to the extent that the Investor has deemed appropriate, the Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the New Securities and the consequences of the Exchange Offer and this Exchange Agreement. The Investor has considered the suitability of the New Securities as an investment in light of its own circumstances and financial condition, and the Investor is able to bear the risks associated with an investment in the New Securities.
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(e) Information Non-Reliance.
(i) The Investor represents and warrants that (i) it has carefully reviewed such information as it and its advisers deem necessary to make its decision to invest in the New Securities, (ii) has the ability to make, and has made, an informed decision as to the risks and merits of its investment in the New Securities on the terms set forth in this Exchange Agreement, and (iii) has made its own decision to consummate the transactions contemplated hereunder based exclusively on its own independent review, its financial experience, and consultations with such advisers as it deemed necessary. Without limiting the generality of the foregoing, the Investor acknowledges that neither the Company nor any of its affiliates or representatives is acting as a fiduciary or financial or investment adviser to the Investor, or has given the Investor any investment advice, opinion or other information on whether an investment in the New Securities is prudent. The Investor agrees it is not relying on the Information (as defined below), or any other information other than the express representations set forth in this Exchange Agreement.
(ii) The Investor acknowledges that the Company and its affiliates and representatives possess material nonpublic information regarding the Company not known to the Investor that may impact the value of the New Securities (the “Information”), that the Information is not disclosed in the Company’s public disclosures or its filings with the Commission, and that the Company is not disclosing the Information to the Investor and that the Company and its affiliates and representatives have not made, and are not making, any representation with respect to any Information. The Investor understands, based on its experience, the disadvantage to which the Investor is subject due to the disparity of information between the Company and the Investor and the fact that the Information is not being disclosed to the Investor. The Investor acknowledges and agrees that, notwithstanding such disparity, it has deemed it appropriate to enter into this Exchange Agreement and to consummate the transactions contemplated hereunder. The Investor acknowledges the possibility that the Information may be material to a determination of a fair value for the New Securities and that value may be substantially different from the price being paid by the Investor for the New Securities hereunder.
(iii) The Investor agrees that neither the Company nor any of its affiliates or representatives shall have any liability to the Investor whatsoever due to or in connection with the non-disclosure of the Information, and the Investor hereby irrevocably waives any claim that it might have based on the failure of the Company to disclose the Information. The Investor hereby irrevocably and unconditionally expressly releases, discharges and waives, to the fullest extent permitted by law, any and all claims, rights, causes of action, suits, obligations, debts, demands, liabilities, controversies, costs, expenses, fees or damages of any kind (including, but not limited to, any and all claims alleging violations of federal or state securities laws, common-law fraud or deceit, breach of fiduciary duty, negligence or otherwise), whether directly, derivatively, representatively or in any other capacity, that it may have or hereafter acquire against the Company, or any of its affiliates and their respective officers, employees, agents and controlling persons, relating to the existence or non-existence of any Information, the Investor’s inability to review such Information or any failure to disclose such Information.
(iv) The Investor understands that the Company relies on the accuracy and truth of the foregoing representations, warranties, acknowledgements and agreements in entering into this Exchange Agreement and performing its obligations hereunder, and would not engage in the transactions contemplated by this Exchange Agreement in the absence of such representations, warranties, acknowledgements and agreements, and the Investor hereby consents to such reliance.
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(v) Notwithstanding the forgoing, nothing in this Section 5(e) shall be deemed to limit or restrict the Investor’s rights or remedies with respect to any breach or violation by the Company of any of its representations, warranties or covenants contained in this Exchange Agreement, or to constitute an admission by the Company that any information is material or is otherwise required to be disclosed to any person.
(g) Governmental Approval. The Investor understands that no federal, state, local or foreign agency has passed upon the merits or risks of an investment in the New Securities or made any finding or determination concerning the fairness or advisability of such investment.
(h) Investor Qualification. The Investor is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Investor agrees to furnish any additional information reasonably requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange Offer.
(i) Purchase for Investment Only; No Registration. The Investor is acquiring the New Securities solely for the Investor’s own beneficial account, or for an account with respect to which the Investor exercises sole investment discretion, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the New Securities. The Investor understands that the offer and sale of the New Securities have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof that depend in part upon the accuracy of the representations made by the Investor in this Exchange Agreement.
(j) Company Reliance. The Investor understands that the Company is relying upon the representations and agreements of the Investor contained in this Exchange Agreement (and any supplemental information) for the purpose of determining whether the Investor’s participation in the Exchange Offer meets the requirements for such exemption. In addition, the Investor acknowledges and agrees that any hedging transactions engaged in by the Investor after the Exchange Offer is made public and prior to the Closing in connection with the issuance and sale of the New Securities have been and will be conducted in compliance with the Securities Act and the rules and regulations promulgated thereunder.
(k) Restricted Securities. The Investor acknowledges that the New Securities have not been registered under the Securities Act. As a result, the New Securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to the extent such securities are registered with the Commission, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the Investor hereby agrees that it will not sell the New Securities other than in compliance with such transfer restrictions.
6. Conditions to Obligations of the Investor and the Company. The obligations of the Investor to deliver the Exchanged 6.50% Notes of the Investor and of the Company to deliver the New Securities to the Investor are subject to the satisfaction or waiver at or prior to the Closing of the conditions precedent that (a) the representations and warranties of the Company and the Investor contained in Sections 4 and 5 , respectively, shall be true and correct as of the Closing Date in all material respects with the same effect as though such representations and warranties had been made as of the Closing Date, (b) the Shares shall be approved for listing on The Nasdaq Stock Market, subject to official notice of issuance, and (c) the Company has obtained signed agreements from holders of 6.50% Notes indicating their agreement to exchange at least $38 million in aggregate principal amount of the 6.50% Notes for other securities of the Company.
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7. Restrictive Legend. The Conversion Shares shall bear the following restrictive legend:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
8. Disclosure of the Exchange Offer. At or prior to 9:00 a.m., New York City time, on the second business day after the date hereof, the Company shall file a press release or Current Report on Form 8-K announcing the Exchange Offer, which press release or Current Report on Form 8-K the Company acknowledges and agrees will disclose all material non-public information, if any, with respect to the Exchange Offer.
9. Waiver and Amendment. Neither this Exchange Agreement nor any provisions hereof shall be modified, changed, discharged, waived or terminated except by an instrument in writing signed by the Company and the Investor.
10. Waiver of Jury Trial. EACH OF THE COMPANY AND THE INVESTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.
11. Governing Law/Venue. THIS EXCHANGE AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK. Each of the Company and the Investor (a) agrees that any legal suit, action or proceeding arising out of or relating to this agreement or the transactions contemplated hereby shall be instituted exclusively in the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York; (b) waives any objection that it may now or hereafter have to the venue of any such suit, action or proceeding; and (c) irrevocably consents to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.
12. Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Exchange Agreement.
13. Counterparts. This Exchange Agreement may be executed by one or more of the parties hereto in any number of separate counterparts (including by facsimile or other electronic means, including telecopy, email or otherwise), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Exchange Agreement by facsimile or other transmission (e.g. , “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
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14. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid overnight courier or registered or certified mail, return receipt requested, postage prepaid to, in the case of the Company, the following address and, in the case of the Investor, the address provided on the signature page of the Investor (or such other address as any party shall have specified by notice in writing to the other):
| If to the Company: |
Amyris, Inc. 5885 Hollis Street, Suite 100 Emeryville, California 94608 Fax: Attention: |
15. Binding Effect. The provisions of this Exchange Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
16. Severability. If any term or provision (in whole or in part) of this Exchange Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
17. Release. In consideration of the agreements of the Investor set forth in this Exchange Agreement, the Company, its affiliates and subsidiaries, and all of their respective directors, officers, agents, heirs, personal representatives, predecessors, successors and assigns (individually and collectively, the “Releasors”), hereby fully, finally, and forever release and discharge the Investor, its affiliates and subsidiaries, and its any of their successors, assigns, directors, officers, employees, agents, and representatives (including those on the board of Company or any of its subsidiaries or affiliates) from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits of whatever kind or nature, in law or equity, the Releasors or any of them have, whether known or unknown, in respect of, relating to, or concerning this Exchange Agreement, the New Securities, the Exchanged 6.50% Notes, or any other potential agreement or transaction relating to the exchange of the Exchanged 6.50% Notes arising from events occurring prior to the date hereof.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: Kathleen Valiasek | |||
| Title: Chief Financial Officer | |||
IN WITNESS WHEREOF, the undersigned has executed this Exchange Agreement as of the date first written above.
| INVESTOR: | |||
| TOTAL RAFFINAGE CHIMIE S.A. | |||
| By: | /s/ Fredenz Gimenez | ||
| Name: Fredenz Gimenez | |||
| Title: SVP Corporate Affairs | |||
| Address for Notices: | |||
Exchanged 6.50% Notes Principal Amount: $9,705,000
Exhibit 10.13
EXECUTION VERSION
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of June 11, 2019 (as amended, modified or supplemented from time to time, this “Agreement”), is entered into by and between AMYRIS, INC., a Delaware corporation (the “Company”), and Foris Ventures, LLC, a Delaware limited liability company (the “Lender”).
RECITALS
A. Subject to the terms and conditions hereof, the Lender has agreed to purchase from the Company, and the Company has agreed to sell to the Lender, an unsecured promissory note (the “Note”) in the form attached hereto as Exhibit A having an aggregate principal amount of Eight Million Five Hundred Thousand Dollars ($8,500,000).
AGREEMENT
NOW THEREFORE, in consideration of the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Purchase and Sale of the Note. The sale and purchase of the Note shall take place at such place and time as the Company and the Lender may determine, but in no event later than June 12, 2019 (the “Closing”). At the Closing, the Company will deliver to the Lender the Note, against receipt by the Company of Eight Million Five Hundred Thousand Dollars ($8,500,000) in immediately available funds. The Note will be registered in the Lender’s name in the Company’s records.
2. Representations and Warranties of the Company. The Company represents and warrants to the Lender as of the date hereof and as of the Closing that:
| (a) | Due Incorporation, Qualification, etc. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of Delaware; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect. |
| (b) | Authority. The execution, delivery and performance by the Company of this Agreement and the Note and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate actions on the part of the Company. |
| (c) | Enforceability. This Agreement and the Note have been duly executed and delivered by the Company and constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, except in each case as may be limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. |
| (d) | Non-Contravention. The execution and delivery by the Company of this Agreement and the Note and the performance and consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) violate the certificate of incorporation or bylaws of the Company or any judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound except to the extent such violation, breach or acceleration could not reasonably be expected to result in a Material Adverse Effect; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties except to the extent such suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect. The Company is not in breach of any mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound except to the extent such violation, breach or acceleration could not reasonably be expected to result in a Material Adverse Effect. |
| (e) | Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person is required in connection with the execution and delivery by the Company of this Agreement and the Note and the performance and consummation by the Company of the transactions contemplated hereby and thereby, except for those already obtained or those that will be obtained prior to the Closing. |
| (f) | Tax Returns and Payments. The Company has timely filed all required tax returns and reports, and the Company has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by the Company except to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. |
| (g) | Litigation. There are no actions or proceedings pending or threatened in writing by or against the Company except for such actions or proceedings that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. |
| (h) | Full Disclosure. No written representation, warranty or other statement of the Company in any certificate or written statement given to Lender by the Company in connection with this Agreement or the Note, as of the date such representation, warranty, or other statement was made, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or written statements not misleading in light of the circumstances under which they were made. |
3. Representations and Warranties of the Lender. The Lender represents and warrants to the Company as of the date hereof and as of the Closing that:
| (a) | Due Incorporation, Qualification, etc. The Lender (i) is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware; and (ii) has all requisite power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement. |
| (b) | Authority. The execution, delivery and performance by the Lender of this Agreement and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate actions on the part of the Lender. |
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| (c) | Enforceability. The Lender has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement is a valid and binding obligation of the Lender, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. |
| (d) | Securities Law Compliance. The Lender is purchasing the Note for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Lender has received or has had full access to all of the information necessary and appropriate to make an informed investment decision. The Lender is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act. The Lender acknowledges that it can bear the economic risk of the investment the Note. |
| (e) | Approvals. No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person is required in connection with the execution and delivery by the Lender of this Agreement and the performance and consummation by the Lender of the transactions contemplated hereby and thereby, except for those already obtained. |
| (f) | Non-Contravention. The execution and delivery by the Lender of this Agreement and the performance and consummation by the Lender of the transactions contemplated hereby do not and will not (i) violate the organizational documents of the Lender or any judgment, order, writ, decree, statute, rule or regulation applicable to the Lender; or (ii) violate any agreement to which the Company is a party or by which it is bound. |
4. Conditions to Obligations of the Lender. The Lender’s obligations hereunder are subject to the fulfillment, on or prior to the Closing, of all of the following conditions, any of which may be waived in whole or in part by the Lender:
| (a) | Representations and Warranties. The representations and warranties made by the Company in Section 2 hereof shall have been true and correct when made, and shall be true and correct as of the Closing. |
| (b) | Governmental Approvals and Filings. The Company shall have obtained all governmental approvals required in connection with the sale and issuance of the Note. |
| (c) | Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Lender, of the Note shall be legally permitted by all laws and regulations to which the Lender or the Company is subject. |
| (d) | Transaction Documents. The Company shall have duly executed and delivered to the Lender this Agreement and the Note. |
5. Conditions to Obligations of the Company. The Company’s obligations hereunder are subject to the fulfillment, on or prior to the Closing, of all of the following conditions, any of which may be waived in whole or in part by the Company:
| (a) | Representations and Warranties. The representations and warranties made by the Lender in Section 3 hereof shall be true and correct when made, and shall be true and correct as of the Closing. |
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| (b) | Governmental Approvals and Filings. The Lender shall have obtained all governmental approvals required in connection with the sale and issuance of the Note. |
| (c) | Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Lender, of the Note shall be legally permitted by all laws and regulations to which the Lender or the Company are subject. |
| (d) | Purchase Price. The Lender shall have delivered to the Company Eight Million Five Hundred Thousand Dollars ($8,500,000) in immediately available funds. |
6. Definitions. As used in this Agreement, the following capitalized terms have the following meanings:
“Material Adverse Effect” means a material adverse effect, individually or in the aggregate, upon the business, properties, tangible and intangible assets, liabilities, operations, prospects, financial condition or results of operation of the Company or the ability of the Company to perform its obligations under this Agreement.
“Obligations” means all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Company to the Lender under the Note of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), now existing or hereafter arising under or pursuant to the terms of the Note, including all principal, interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Company thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.
“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
7. Miscellaneous.
| (a) | Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and the Lender. |
| (b) | Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions of the State of California. |
| (c) | Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement. |
| (d) | Successors and Assigns. Subject to the restrictions on transfer described in Sections 7(e) below, the rights and obligations of the Company and the Lender hereunder and under the Notes shall be binding upon and inure to the benefit of the successors, assigns, heirs, administrators and transferees of the parties. |
| (e) | Assignment by the Company; Assignment by the Lender. Neither this Agreement nor the Note nor any of the rights, interests or obligations hereunder or thereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Lender. The Lender will not assign, by operation of law or otherwise, this Agreement or the Note or any of its rights, interests or obligations hereunder or thereunder without the prior written consent of the Company. |
| 4 |
| (f) | Entire Agreement. This Agreement and with the Note constitute the full and entire understanding and agreement between the parties relating to the subject matter hereof and thereof and supersede any previous written or verbal agreements between the parties with regard to the subject matter hereof and thereof. |
| (g) | Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice): |
If to the Company, to:
Amyris, Inc.
5885 Hollis St., Ste. 100
Emeryville, CA 94608
Attention:
If to the Lender, to:
Foris Ventures, LLC
Attention:
JEMA Management LLC
751 Laurel St. #717
San Carlos, CA 94070-3113
| (h) | Severability of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. |
| (i) | Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument. |
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| 5 |
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date and year first written above.
| COMPANY: | |||
| AMYRIS, INC. | |||
| By: | /s/ Kathleen Valiasek | ||
| Name: | Kathleen Valiasek | ||
| Title: | Chief Business Officer | ||
| LENDER: | |||
| FORIS VENTURES, LLC | |||
| By: | /s/ Barbara Hager | ||
| Name: | Barbara Hager | ||
| Title: | Manager | ||
Exhibit 10.15
CONFIDENTIAL CONSULTING AGREEMENT
This Confidential Consulting Agreement (the “Agreement”) is executed as of the date shown on the signature page (the “Effective Date”), by and between FLG Partners, LLC, a California limited liability company (“FLG”), and the entity identified on the signature page (“Client”).
RECITALS
WHEREAS, FLG is in the business of providing certain financial services;
WHEREAS, Client wishes to retain FLG to provide and FLG wishes to provide such services to Client on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties hereto agree as follows:
1. Services.
A. Commencing on the Effective Date, FLG will perform those services (the “Services”) described in one or more exhibits attached hereto. Such services shall be performed by the member or members of FLG identified in Exhibit A (collectively, the “FLG Member”).
B. Client acknowledges and agrees that FLG’s success in performing the Services hereunder will depend upon the participation, cooperation and support of Client’s most senior management.
C. Notwithstanding anything in Exhibit A or elsewhere in this Agreement to the contrary, neither FLG nor any of its members shall serve as an employee, an appointed officer, or an elected director of Client. Consistent with the preceding: (i) Client shall not appoint FLG Member as a corporate officer in Client’s corporate minutes; (ii) Client shall not elect FLG Member to its board of directors or equivalent governing body; and (iii) the FLG Member shall have no authority to sign any documents on behalf of Client, including, but not limited to, federal or state securities filings, tax filings, or representations and warranties on behalf of Client except as pursuant to a specific resolution(s) of Client’s board of directors or equivalent governing body granting such authority to FLG Member as a non-employee consultant to Client.
D. The Services provided by FLG and FLG Member hereunder shall not constitute an audit, attestation, review, compilation, or any other type of financial statement reporting engagement (historical or prospective) that is subject to the rules of the California Board of Accountancy, the AICPA, or other similar state or national licensing or professional bodies; for the avoidance of doubt, the Services provided by FLG and/or the FLG Member shall include the materially accurate preparation, review and oversight of the Client’s financial statements according to US GAAP for timely filing in accordance with applicable reporting deadlines (both historical and current) throughout this term of the Agreement. Client agrees that any such services, if required, will be performed separately by its independent public accountants or other qualified consultants.
E. During the term of this Agreement, Client shall not hire or retain the FLG Member as an employee, consultant or independent contractor except pursuant to this Agreement.
2. Compensation; Payment; Deposit; Expenses.
A. As compensation for Services rendered by FLG hereunder, Client shall pay FLG the amounts set forth in Exhibit A for Services performed by FLG hereunder (the “Fees”). The Fees shall be net of any and all taxes, withholdings, duties, customs, social contributions or other reductions imposed by any and all authorities which are required to be withheld or collected by Client or FLG, including ad valorem, sales, gross receipts or similar taxes, but excluding US income taxes based upon FLG’s or FLG Member’s net taxable income.
B. As additional compensation to FLG, Client will pay FLG the incentive bonus or warrants or options, if any, set forth in Exhibit A.
C. Client shall pay FLG all amounts owed to FLG under this Agreement upon Client’s receipt of invoice, with no purchase order required. Any invoices more than thirty sixty (60) days overdue will accrue a late payment fee at the rate of one and 50/100 percent (1.5%) per month. FLG shall be entitled to recover all costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by it in collecting any amounts overdue under this Agreement.
D. Client hereby agrees to pay FLG a deposit as set forth on Exhibit A (the “Deposit”) to be held in its entirety as security for Client’s future payment obligations to FLG under this Agreement. Upon termination of this Agreement, all amounts then owing to FLG under this Agreement shall be charged against the Deposit and the balance thereof, if any, shall be refunded to Client.
E. Within sixty (60) days of Client’s receipt of an expense report from FLG’s personnel performing Services hereunder, Client shall immediately reimburse FLG personnel directly for reasonable travel and out-of-pocket business expenses detailed in such expense report. Any required air travel, overnight accommodation and resulting per diem expenses shall be consistent with Client’s travel & expense policies for Client’s employed executive staff.
3. Relationship of the Parties.
A. FLG’s relationship with Client will be that of an independent contractor and nothing in this Agreement shall be construed to create a partnership, joint venture, or employer-employee relationship. FLG is not the agent of Client and is not authorized to make any presentation, contract, or commitment on behalf of Client unless specifically requested or authorized to do so by Client in writing. FLG agrees that all taxes payable as a result of compensation payable to FLG hereunder shall be FLG’s sole liability. FLG shall defend, indemnify and hold harmless Client, Client’s officers, directors, employees and agents, and the administrators of Client’s benefit plans from and against any claims, liabilities or expenses relating to such taxes or compensation.
4. Term and Termination.
A. The term of this Agreement shall be for the period set forth in Exhibit A.
B. Either party may terminate this Agreement upon thirty (30) calendar days advance written notice to the other party.
C. Either party may terminate this Agreement immediately upon a material breach of this Agreement by the other party and a failure by the other party to cure such breach within thirty (30) days of written notice thereof by the non-breaching party to the breaching party.
D. FLG shall have the right to terminate this Agreement immediately without advance written notice (i) if Client is engaged in, or requests that FLG or the FLG Member undertake or ignore any illegal or unethical activity, or (ii) upon the death or disability of the FLG Member.
E. This Agreement shall be deemed terminated if during any six month period no billable hours occur, with the termination date effective on the date of the last billable hour therein.
F. If at any time during the one (1) year period following termination of this Agreement Client shall hire or retain the FLG Member as an employee, consultant or independent contractor, AND in so doing induce, compel or cause FLG Member to leave FLG as a precondition to commencing or continuing employment or consultancy with Client, Client shall immediately pay to FLG in readily available funds a recruiting fee equal to the annualized amount of Fees payable hereunder, which shall equal either (i) 260 multiplied by the daily rate, if this Agreement provides for Fees payable by daily rate, or (ii) 2,100 multiplied by the hourly rate, if this Agreement provides for Fees payable by hourly rate, multiplied by thirty percent (30%).
5. Disclosures
A. IRS Circular 230. To ensure compliance with requirements imposed by the IRS effective June 20, 2005, FLG hereby informs Client that any tax advice offered during the course of providing, or arising out of, the Services rendered pursuant to this Agreement, unless expressly stated otherwise, is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding taxrelated penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any taxrelated matter(s) said tax advice address(es).
B. Attorney-Client Privilege. Privileged communication disclosed to FLG or FLG Member may waive the privilege through no fault of FLG. FLG strongly recommends that Client consult with legal counsel before disclosing privileged information to FLG or FLG Member. Pursuant to Paragraph 6, neither FLG nor FLG Member will be responsible for damages caused through Client’s waiver of privilege, whether deliberate or inadvertent, by disclosing such information to FLG or FLG Member.
6. DISCLAIMERS AND LIMITATION OF LIABILITY.
EXCEPT AS EXPRESSLY SET FORTH HEREIN, ALL SERVICES TO BE PROVIDED BY FLG AND FLG MEMBER (FOR PURPOSES OF THIS PARAGRAPH 6, COLLECTIVELY “FLG”) HEREUNDER ARE PROVIDED “AS IS” WITHOUT ANY WARRANTY WHATSOEVER. CLIENT RECOGNIZES THAT THE “AS IS” CLAUSE OF THIS AGREEMENT IS AN IMPORTANT PART OF THE BASIS OF THIS AGREEMENT, WITHOUT WHICH FLG WOULD NOT HAVE AGREED TO ENTER INTO THIS AGREEMENT. FLG EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, TERMS OR CONDITIONS, WHETHER EXPRESS, IMPLIED, OR STATUTORY, REGARDING THE PROFESSIONAL SERVICES, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE AND INFRINGEMENT. NO REPRESENTATION OR OTHER AFFIRMATION OF FACT REGARDING THE SERVICES PROVIDED HEREUNDER SHALL BE DEEMED A WARRANTY FOR ANY PURPOSE OR GIVE RISE TO ANY LIABILITY OF FLG WHATSOEVER.
IN NO EVENT SHALL FLG BE LIABLE FOR ANY INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, UNDER ANY CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO:LOST PROFITS; REVENUE OR SAVINGS; WAIVER BY CLIENT, WHETHER INADVERTENT OR INTENTIONAL, OF CLIENT’S ATTORNEY-CLIENT PRIVILEGE THROUGH CLIENT’S DISCLOSURE OF LEGALLY PRIVILEGED INFORMATION TO FLG; OR THE LOSS, THEFT, TRANSMISSION OR USE, AUTHORIZED OR OTHERWISE, OF ANY DATA, EVEN IF CLIENT OR FLG HAVE BEEN ADVISED OF, KNEW, OR SHOULD HAVE KNOWN, OF THE POSSIBILITY THEREOF. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, FLG’S AGGREGATE CUMULATIVE LIABILITY HEREUNDER, WHETHER IN CONTRACT, TORT, NEGLIGENCE, MISREPRESENTATION, STRICT LIABILITY OR OTHERWISE, SHALL NOT EXCEED AN AMOUNT EQUAL TO THE LAST TWO (2) MONTHS OF FEES PAYABLE BY CLIENT UNDER PARAGRAPH 2(A) OF THIS AGREEMENT. CLIENT ACKNOWLEDGES THAT THE COMPENSATION PAID BY IT UNDER THIS AGREEMENT REFLECTS THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND THAT FLG WOULD NOT ENTER INTO THIS AGREEMENT WITHOUT THESE LIMITATIONS ON ITS LIABILITY. THIS PARAGRAPH SHALL NOT APPLY TO EITHER PARTY WITH RESPECT TO A BREACH OF ITS CONFIDENTIALITY OBLIGATIONS.
A. As a condition for recovery of any amount by Client against FLG, Client shall give FLG written notice of the alleged basis for liability within ninety (90) days of discovering the circumstances giving rise thereto, in order that FLG will have the opportunity to investigate in a timely manner and, where possible, correct or rectify the alleged basis for liability; provided that the failure of Client to give such notice will only affect the rights of Client to the extent that FLG is actually prejudiced by such failure. Notwithstanding anything herein to the contrary, Client must assert any claim against FLG by the sooner of: (i) ninety (90) days after discovery; (ii) ninety (90) days after the termination of this Agreement; (iii) ninety (90) days after the last date on which the Services were performed; or, (iv) sixty (60) days after completion of a financial or accounting audit for the period(s) to which a claim pertains.
7. Indemnification.
A. FLG and FLG Member acting in relation to any of the affairs of Client shall, to the fullest extent permitted by law, as now or hereafter in effect, be indemnified and held harmless, and such right to indemnification shall continue to apply to FLG and FLG Member following the term of this Agreement out of the assets and profits of the Client from and against all actions, costs, charges, losses, damages, liabilities and expenses which FLG or FLG Member, or FLG’s or FLG Member’s heirs, executors or administrators, shall or may incur or sustain by or by reason for any act done, concurred in or omitted in or about the execution of FLG’s or FLG Member’s duty or services performed on behalf of Client; and Client shall advance the reasonable attorney’s fees, costs and expenses incurred by FLG or FLG’s Member in connection with litigation related to the foregoing on the same basis as such advancement would be available to the Client’s officers and directors, PROVIDED THAT Client shall not be obligated to make payments to or on behalf of any person (i) in connection with services provided by such person outside the scope of Services contemplated by this Agreement, and not authorized or consented to by Client’s CEO or Board of Directors, or (ii) in respect of any (a) gross negligence or willful misconduct of such person, or (b) negligence of such person, but only to the extent that FLG’s errors and omissions liability insurance would cover such person for such negligence without regard to Client’s obligation to indemnify FLG hereunder.
B. FLG and FLG Member shall have no liability to Client relating to the performance of its duties under this agreement except in the event of FLG’s or FLG Member’s gross negligence or willful misconduct.
C. FLG and FLG Member agree to waive any claim or right of action FLG or FLG Member might have whether individually or by or in the right of Client, against any director, secretary and other officers of Client and the liquidator or trustees (if any) acting in relation to any of the affairs of Client and every one of them on account of any action taken by such director, officer, liquidator or trustee or the failure of such director, officer, liquidator or trustee to take any action in the performance of his duties with or for Client; PROVIDED THAT such waiver shall not extend to any matter in respect of any gross negligence or willful misconduct which may attach to any such persons.
8. Representations and Warranties.
A. Each party represents and warrants to the other that it is authorized to enter into this Agreement and can fulfill all of its obligations hereunder.
B. FLG and FLG Member warrant that they shall perform the Services diligently, with due care, and in accordance with prevailing industry standards for comparable engagements and the requirements of this Agreement. FLG and FLG Member warrant that FLG Member has sufficient professional experience to perform the Services in a timely and competent manner.
C. Each party represents and warrants that it has and will maintain a policy or policies of insurance with reputable insurance companies providing the members, officers and directors, as the case may be, of itself with coverage for losses from wrongful acts. FLG covenants that it has an error and omissions insurance policy in place in the form provided to Client prior to or contemporaneously with the date of execution of this Agreement and will continue to maintain such policy or equivalent policy provided that such policy or equivalent policy shall be available at commercially reasonable rates.
9. Work Product License. The parties do not anticipate that FLG or FLG Member will create any intellectual property for Client in performing the Services pursuant to this Agreement. However, FLG and FLG Member grant to Client a world-wide, perpetual, exclusive, royaltyfree, irrevocable license to use and create derivative works from all tangible and electronic documents, spreadsheets, and financial models (collectively, “Work Product”) produced or authored by FLG Member in the course of performing the Services pursuant to this Agreement. Any patent rights arising out of the Services will be assigned to and owned by Client and not FLG or FLG Member. All other rights, including, but not limited to, the residual memory of any methods, discoveries, developments, improvements, know-how, ideas, insights, analytical concepts and skills directly inherent to, or reasonably required for, the competent execution of FLG Member’s profession as a chief financial officer are reserved in their entirety by FLG and FLG Member.
10. Miscellaneous. A. Any notice required or permitted to be given by either party hereto under this Agreement shall be in writing and shall be personally delivered or sent by a reputable courier mail service (e.g., Federal Express) or by facsimile confirmed by reputable courier mail service, to the other party as set forth in this Paragraph 10(A). Notices will be deemed effective two (2) days after deposit with a reputable courier service or upon confirmation of receipt by the recipient from such courier service or the same day if sent by facsimile and confirmed as set forth above.
If to FLG:
FLG Partners, LLC
P.O. Box 556
7 East Road
Ross, CA 94957-0556
Tel:
Fax:
E-mail:
If to Client: the address, telephone numbers and email address shown below Client’s signature on the signature page.
B. This Agreement will be governed by and construed in accordance with the laws of California without giving effect to any choice of law principles that would require the application of the laws of a different jurisdiction.
C. Any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement (including any other agreement(s) contemplated hereunder), including, without limitation, any action or claim based on tort, contract, or statute (including any claims of breach or violation of statutory or common law protections from discrimination, harassment and hostile working environment), or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement (“Claim”), shall be resolved by final and binding arbitration before a single arbitrator (“Arbitrator”) selected from and administered by the San Francisco office of JAMS (the “Administrator”) in accordance with its then existing commercial arbitration rules and procedures. The arbitration shall be held in San Francisco, California. The Arbitrator shall, within fifteen (15) calendar days after the conclusion of the Arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The Arbitrator also shall be authorized to grant any temporary, preliminary or permanent equitable remedy or relief he or she deems just and equitable and within the scope of this Agreement, including, without limitation, an injunction or order for specific performance. Each party shall bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the Administrator and the Arbitrator; provided, however, the Arbitrator shall be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements, and/or the fees and costs of the Administrator and the Arbitrator. The Arbitrator's award may be enforced in any court of competent jurisdiction. Notwithstanding the foregoing, nothing in this Paragraph 10(C) will restrict either party from applying to any court of competent jurisdiction for injunctive relief.
D. Neither party may assign its rights or delegate its obligations hereunder, either in whole or in part, whether by operation of law or otherwise, without the prior written consent of the other party; provided, however, that FLG may assign its rights and delegate its obligations hereunder to any affiliate of FLG. The rights and liabilities of the parties under this Agreement will bind and inure to the benefit of the parties’ respective successors and permitted assigns.
E. If any provision of this Agreement, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances shall be interpreted so as best to reasonably effect the intent of the parties. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.
F. This Agreement, the Exhibits, and any executed Non-Disclosure Agreements specified herein and thus incorporated by reference constitute the entire understanding and agreement of the parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous agreements or understandings, express or implied, written or oral, between the parties with respect hereto. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
G. Any term or provision of this Agreement may be amended, and the observance of any term of this Agreement may be waived, only by a writing signed by the parties. The waiver by a party of any breach hereof for default in payment of any amount due hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any other default or succeeding breach or default.
H. Subject to Client’s prior approval, which shall not be unreasonably withheld, upon completion of the engagement hereunder FLG may place customary “tombstone” advertisements using Client’s logo and name in publications of FLG’s choice at its own expense, and/or cite the engagement in similar fashion on FLG’s website.
I. If Client discloses FLG Member’s name on Client’s website (such as in an executive biography, for example), press releases, SEC filings and other public documents and media, then Client shall include in the description of FLG Member a sentence substantially the same as “[FLG Member] is also a partner at FLG Partners, a leading CFO services firm in Silicon Valley.”
J. If and to the extent that a party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or any other similar cause beyond the reasonable control of such party (each, a “Force Majeure Event”), and such non-performance, hindrance or delay could not have been prevented by reasonable precautions of the non-performing party, then the non-performing, hindered or delayed party shall be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected by the Force Majeure Event for as long as such Force Majeure Event continues and such party continues to use its best efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other means.
K. This Agreement may be executed in any number of counterparts and by the parties on separate counterparts, each of which when executed and delivered shall constitute an original, but all the counterparts together constitute one and the same instrument.
L. This Agreement may be executed by facsimile signatures (including electronic versions of this document in Adobe Acrobat Portable Document Format form which contain scanned or secure, digitally signed signatures) by any party hereto and such signatures shall be deemed binding for all purposes hereof, without delivery of an original signature being thereafter required.
M. Survivability. The following Paragraphs shall survive the termination of this Agreement: 6 (“Disclaimers and Limitation of Liability”); 7 (“Indemnification”); 8 (“Representations and Warranties”); 9 (“Work Product License”); and 10 (“Miscellaneous”).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.
| CLIENT: | FLG: | |||
| Amyris, Inc. | FLG Partners, LLC, | |||
| a Delaware corporation | a California limited liability company. | |||
| By: | John Melo | By: | Jeffrey S. Kuhn | |
| Signed: | /s/ John Melo | Signed: | /s/ Jeffrey S. Kuhn | |
| Title: | CEO | Title: | Administrative Partner | |
| Address: | 5885 Hollis St, Suite 100 | Effective Date: | May 28, 2019 | |
| Emeryville, CA 94608 | ||||
Tel:
Fax:
Email:
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Exhibit 31.01
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(c) and 15d-(14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
I, John G. Melo, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Amyris, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: October 7, 2019 | /s/ John G. Melo | |
| John G. Melo | ||
| President and Chief Executive Officer |
Exhibit 31.02
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(c) and 15d-(14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
I, Jonathan Wolter, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Amyris, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: October 7, 2019 | /s/ Jonathan Wolter | |
| Jonathan Wolter | ||
| Interim Chief Financial Officer |
Exhibit 32.01
Certification of CEO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Amyris, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, John G. Melo, Chief Executive Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,
(i) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2019 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: October 7, 2019 | /s/ John G. Melo | |
| John G. Melo | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 32.02
Certification of CFO Furnished Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant To
Section 906 of The Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Amyris, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, Jonathan Wolter, Interim Chief Financial Officer of the Company, certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,
(i) the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2019 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: October 7, 2019 | /s/ Jonathan Wolter | |
| Jonathan Wolter | ||
| Interim Chief Financial Officer | ||
| (Principal Financial Officer) |
Note 11 - Stock-based Compensation (Tables) |
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Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |
| Liquidity [Policy Text Block] | Going Concern The Company has incurred significant operating losses since its inception and expects to continue to incur losses and negative cash flows from operations for at least the next 12 months following the issuance of these condensed consolidated financial statements. As of June 30, 2019, the Company had negative working capital of $143.7 million (compared to negative working capital of $119.5 million as of December 31, 2018 ), and an accumulated deficit of $1.6 billion.As of June 30, 2019, the Company's debt (including related party debt), net of debt discount of $13.1 million, totaled $168.7 million, of which $107.6 million is classified as current. Subsequent to June 30, 2019, the Company entered into arrangements with lenders to extend maturities and convert certain debt obligations into common stock; see Note 12, "Subsequent Events" for more information. The Company's debt service obligations through June 30, 2020 are $128.9 million, including $21.3 million of anticipated cash interest payments. The Company's debt agreements contain various covenants, including certain restrictions on the Company's business that could cause the Company to be at risk of defaults, such as restrictions on additional indebtedness and cross-default clauses. A failure to comply with, or cure non-compliance events or obtain waivers for covenant violations, and other provisions of the Company’s debt instruments, including any failure to make a payment when required, would generally result in events of default under such instruments, which could permit acceleration of such indebtedness. If such indebtedness is accelerated, it would generally also constitute an event of default under the Company’s other outstanding indebtedness, permitting acceleration of a substantial portion of the Company's outstanding indebtedness. Subsequent to June 30, 2019, on September 16, 2019, the Company failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note (see Note 12, “Subsequent Events”), when due. Such failure triggered cross-defaults under other debt instruments of the Company with an aggregate principal amount of approximately $143.7 million, which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. The Company subsequently received waivers from holders of $143.7 million principal amount of such debt instruments. The Company does not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for the Company will be reached. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, which could have a material adverse effect on the Company’s financial condition.Cash and cash equivalents of $0.9 million as of June 30, 2019 are not sufficient to fund expected future negative cash flows from operations and cash debt service obligations through June 30, 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's ability to continue as a going concern will depend, in large part, on its ability to raise additional capital through equity offerings or debt financings and extend or refinance existing debt maturities by restructuring a majority of its convertible debt, which is uncertain and outside the control of the Company. Further, the Company's operating plan for the 12 months ending June 30, 2020 contemplates a significant reduction in its net operating cash outflows as compared to the year ended December 31, 2018, resulting from (i) revenue growth from sales of existing and new products with positive gross margins, (ii) significantly increased cash inflows from grants and collaborations, and (iii) reduced production costs as a result of manufacturing and technical developments. If the Company is unable to complete these actions, it expects to be unable to meet its operating cash flow needs and its obligations under its existing debt facilities. This could result in an acceleration of its obligation to repay all amounts outstanding under those facilities, and it may be required to obtain additional equity or debt financing, which may not occur timely or on reasonable terms, if at all, and/or liquidate its assets. In such a scenario, the value the Company receives for its assets in liquidation or dissolution could be significantly lower than the value reflected in these condensed consolidated financial statements.On September 16, 2019, the Company failed to pay an aggregate of $63.6 million of outstanding principal and accrued interest on the Second Exchange Note when due. The failure resulted in an event of default under the Second Exchange Note and also triggered cross-defaults under other debt instruments of the Company which permitted the holders of such indebtedness to accelerate the amounts owing under such instruments. The Company subsequently received waivers from substantially all holders of such other debt instruments to waive the right to accelerate. As a result, the indebtedness with respect to which the Company has obtained such waivers continues to be classified as long-term on the Company’s balance sheet. The indebtedness reflected by the Second Exchange Note continues to be classified as a current liability on the Company’s balance sheet. In addition, as a result of the payment default, the conversion price of the Second Exchange Note is subject to adjustment in accordance with the terms of the Second Exchange Note.The Company does not currently have sufficient funds to repay the amounts outstanding under the Second Exchange Note. To date, negotiations with the holder of the Second Exchange Note have not been successful, and there can be no assurance that a favorable outcome for the Company will be reached. The Company has executed a term sheet with an existing investor for a term loan, the proceeds of which would be used to repay a portion of the Second Exchange Note. However, there can be no assurance that the Company will be able to obtain such financing on its expected timeline, or on acceptable terms, if at all. Even if the Company does obtain such financing, it will not have sufficient funds to repay the Second Exchange Note in full without obtaining additional financing, which the Company is attempting to source. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
| Revenue from Contract with Customer [Policy Text Block] | Revenue Recognition The Company recognizes revenue from the sale of renewable products, licenses of and royalties from intellectual property, and grants and collaborative research and development services. Revenue is measured based on the consideration specified in a contract with a customer and recognized when, or as, the Company satisfies a performance obligation by transferring control over a product or service to a customer. The Company generally does not incur costs to obtain new contracts. The costs to fulfill a contract are expensed as incurred.The Company accounts for a contract when it has approval and commitment to perform from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of the consideration is probable. Changes to contracts are assessed for whether they represent a modification or should be accounted for as a new contract. The Company considers the following indicators among others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If a transaction does not meet the Company's indicators of being a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis.The Company’s significant contracts and contractual terms with its customers are presented in Note 10, "Revenue Recognition" in Part II, Item 8 of the 2018 Form 10 -K/A.The Company recognizes revenue when control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s renewable products are delivered to customers from the Company’s facilities with shipping terms typically specifying F.O.B. shipping point. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company's contracts may contain multiple performance obligations if a promise to transfer the individual goods or services is separately identifiable from other promises in the contracts and, therefore, is considered distinct. For contracts with multiple performance obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction price using the relative selling price basis.The following is a description of the principal goods and services from which the Company generates revenue. Renewable Product Sales Revenues from renewable product sales are recognized as a distinct performance obligation on a gross basis as the Company is acting as a principal in these transactions, with the selling price to the customer recorded net of discounts and allowances. Revenues are recognized at a point in time when control has passed to the customer, which typically is upon the renewable products leaving the Company’s facilities with the first transportation carrier. The Company, on occasion, may recognize revenue under a bill and hold arrangement, whereby the customer requests and agrees to purchase product but requests delivery at a later date. Under these arrangements, control transfers to the customer when the product is ready for delivery, which occurs when the product is identified separately as belonging to the customer, the product is ready for shipment to the customer in its current form, and the Company does not have the ability to direct the product to a different customer. It is at this point that the Company has the right to payment, the customer obtains legal title, and the customer has the significant risks and rewards of ownership. The Company’s renewable product sales do not include rights of return. Returns are accepted only if the product does not meet product specifications and such nonconformity is communicated to the Company within a set number of days of delivery. The Company offers a two -year assurance-type warranty to replace squalane products that do not meet Company-established criteria as set forth in the Company’s trade terms. An estimate of the cost to replace the squalane products sold is made based on a historical rate of experience and recognized as a liability and related expense when the renewable product sale is consummated.Licenses and Royalties Licensing of Intellectual Property: When the Company’s intellectual property licenses are determined to be distinct from the other performance obligations identified in the arrangement, revenue is recognized from non-refundable, up-front fees allocated to the license at a point in time when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For intellectual property licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front-fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognized.Royalties from Licensing of Intellectual Property: The Company earns royalties from the licensing of its intellectual property whereby the licensee uses the intellectual property to produce and sell its products to its customers and the Company shares in the profits.When the Company’s intellectual property license is the only performance obligation, or it is the predominant performance obligation in arrangements with multiple performance obligations, the Company applies the sales-based royalty exception and revenue is estimated and recognized at a point in time when the licensee’s product sales occur. Estimates of sales-based royalty revenues are made using the most likely outcome method, which is the single amount in a range of possible amounts derived from the licensee’s historical sales volumes and sales prices of its products and recent commodity market pricing data and trends. When the Company’s intellectual property license is not the predominant performance obligation in arrangements with multiple performance obligations, the royalty represents variable consideration and is allocated to the transaction price of the predominant performance obligation which generally is the supply of renewable products to the Company's customers. Revenue is estimated and recognized at a point in time when the renewable products are delivered to the customer. Estimates of the amount of variable consideration to include in the transaction price are made using the expected value method, which is the sum of probability-weighted amounts in a range of possible amounts determined based on the cost to produce the renewable product plus a reasonable margin for the profit share. The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Also, the transaction price is reduced for estimates of customer incentive payments payable by the Company for certain customer contracts.Grants and Collaborative Research and Development Services Collaborative Research and Development Services: The Company earns revenues from collaboration agreements with customers to perform research and development services to develop new molecules using the Company’s technology and to scale production of the molecules for commercialization and use in the collaborator’s products. The collaboration agreements generally include providing the Company's collaborators with research and development services and with licenses to the Company’s intellectual property to use the technology underlying the development of the molecules and to sell its products that incorporate the technology. The terms of the Company's collaboration agreements typically include one or more of the following: advance payments for the research and development services that will be performed, nonrefundable upfront license payments, milestone payments to be received upon the achievement of the milestone events defined in the agreements, and royalty payments upon the commercialization of the molecules in which the Company shares in the customer’s profits.Collaboration agreements are evaluated at inception to determine whether the intellectual property licenses represent distinct performance obligations separate from the research and development services. If the licenses are determined to be distinct, the non-refundable upfront license fee is recognized as revenue at a point in time when the license is transferred to the licensee and the licensee is able to use and benefit from the license while the research and development service fees are recognized over time as the performance obligations are satisfied. The research and development service fees represent variable consideration. Estimates of the amount of variable consideration to include in the transaction price are made using the expected value method, which is the sum of probability-weighted amounts in a range of possible amounts. The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Revenue is recognized over time using either an input-based measure of labor hours expended or a time-based measure of progress towards the satisfaction of the performance obligations. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized.Collaboration agreements that include milestone payments are evaluated at inception to determine whether the milestone events are considered probable of achievement and estimates are made of the amount of the milestone payments to include in the transaction price using the most likely amount method which is the single amount in a range of possible amounts. If it is probable that a significant revenue reversal will not occur, the estimated milestone payment amount is included in the transaction price. Each reporting period, the Company re-evaluates the probability of achievement of the milestone events and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative basis, which would affect collaboration revenues in the period of adjustment. Generally, revenue is recognized using an input-based measure of progress towards the satisfaction of the performance obligations, which can be based on labor hours expended or time-based in proportion to the estimated total project effort or total projected time to complete. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized. Certain performance obligations are associated with milestones agreed between the Company and its customer. Revenue generated from the performance of services in accordance with these milestones is recognized upon confirmation from the customer that the milestone has been achieved. In these cases, amounts recognized are constrained to the amount of consideration received upon achievement of the milestone.The Company generally invoices its collaborators on a monthly or quarterly basis, or upon the completion of the effort or achievement of a milestone, based on the terms of each agreement. Contract liability arises from amounts received in advance of performing the research and development activities and is recognized as revenue in future periods as the performance obligations are satisfied. Grants: The Company earns revenues from grants with government agencies to, among other things, provide research and development services to develop molecules using the Company’s technology, and create research and development tools to improve the timeline and predictability for scaling molecules from proof of concept to market by reducing time and costs. Grants typically consist of research and development milestone payments to be received upon the achievement of the milestone events defined in the agreements.The milestone payments are evaluated at inception to determine whether the milestone events are considered probable of achievement and estimates are made of the amount of the milestone payments to include in the transaction price using the most likely amount method which is the single amount in a range of possible amounts. If it is probable that a significant revenue reversal will not occur, the estimated milestone payment amount is included in the transaction price. Each reporting period, the Company re-evaluates the probability of achievement of the milestone events and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative basis, which would affect collaboration revenues in the period of adjustment. Revenue is recognized over time using a time-based measure of progress towards the satisfaction of the performance obligations. The measure of progress is evaluated each reporting period and, if necessary, adjustments are made to the measure of progress and the related revenue recognized. |
| New Accounting Pronouncements, Policy [Policy Text Block] | Accounting Standards or Updates Recently Adopted In the six months ended June 30, 2019, the Company adopted these accounting standards or updates:Leases February 2016, the FASB issued ASU No. 2016 -02, Leases (Topic The standard requires the recognition of lease liabilities and right-of-use (ROU) assets on the balance sheet arising from lease transactions at the lease commencement date and the disclosure of key information about leasing arrangements. In 842 ). July 2018, the FASB issued ASU 2018 -11, Leases (Topic , which provides an additional transition method in which the lease standard is applied at the adoption date and recognized as a cumulative-effect adjustment to retained earnings without adjustment to comparative periods (collectively Topic 842 ) Targeted Improvements842 ). The amendment has the same effective date and transition requirements as the lease standard.The Company adopted this standard on January 1, 2019 using the modified retrospective approach and elected the package of practical expedients permitted under transition guidance, which allowed the Company to carry forward its historical assessments of: (1 ) whether contracts are or contain leases, (2 ) lease classification and (3 ) initial direct costs, where applicable. The Company did not elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date and did not elect the practical expedient pertaining to land easements as this is not applicable to the Company’s current contracts. The Company elected the post-transition practical expedient to not separate lease components from non-lease components for all leases of manufacturing equipment. The Company also elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset.The adoption of this standard had the net effect of increasing both assets and liabilities by $25.7 million, after considering prepaid and other current and noncurrent assets previously recorded on the condensed consolidated balance sheet, but did not have a material impact on the condensed consolidated statements of operations or cash flows. The most significant impact relates to (1 ) the recognition of new ROU assets and lease liabilities on the balance sheet for the Company's operating leases; and (2 ) providing significant new disclosures about the Company's leasing activities.Upon adoption, the Company recognized operating lease liabilities of $33.6 million, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company also recognized ROU assets of $29.7 million, which represents the operating lease liability, adjusted for prepaid expenses and deferred rent. The difference between the operating lease ROU assets and lease liabilities reflects the net of advanced rent payments and deferred rent balances that were derecognized at the time of adoption.Financial Instruments with "Down Round" Features July 2017, the FASB issued ASU 2017 -11, Earnings Per Share (Topic . The amendments of this ASU update the classification analysis of certain equity-linked financial instruments, or embedded features, with down round features, as well as clarify existing disclosure requirements for equity-classified instruments. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature 260 ); Distinguishing Liabilities from Equity (Topic 480 ); Derivatives and Hedging (Topic 815 ): Accounting for Certain Financial Instruments with Down Round Featuresno longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The accounting standard update became effective in the first quarter of fiscal year 2019, and the Company adopted the standard using a modified retrospective approach. Since the adoption of ASU 2017 -11 would have classified the warrants effected as equity at inception, the cumulative-effect adjustment should (i) record the issuance date value of the warrants as if they had been equity classified at the issuance date, (ii) reverse the effects of changes in the fair value of the warrants that had been recorded in the statement of operations of each period, and (iii) eliminate the derivative liabilities from the balance sheet. Upon adoption, the Company (i) recorded an increase of $32.5 million to additional paid-in capital, (ii) recorded a decrease to accumulated deficit of $8.5 million and (iii) decreased the warrant liability by $41.0 million.Recent Accounting Standards or Updates Not Yet EffectiveFair Value Measurement August 2018, the FASB issued ASU 2018 -13, Fair Value Measurement (Topic , which amends ASC 820 ): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement820, Fair Value Measurement . ASU 2018 -13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The accounting standard update will be effective beginning in the first quarter of fiscal 2020, with removed and modified disclosures to be adopted on a retrospective basis, and new disclosures to be adopted on a prospective basis. The Company is in the initial stages of evaluating the impact of the standard on its condensed consolidated financial statements.Collaborative Revenue Arrangements November 2018, the FASB issued ASU 2018 -18, Clarifying the Interaction between Topic , that clarifies the interaction between the guidance for certain collaborative arrangements and Topic 808 and Topic 606 606, the new revenue recognition standard. A collaborative arrangement is a contractual arrangement under which two or more parties actively participate in a joint operating activity and are exposed to significant risks and rewards that depend on the activity’s commercial success. The ASU provides guidance on how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue recognition standard. The accounting standard update will be effective beginning in the first quarter of fiscal year 2020 retroactively. The Company does not believe that the impact of the new standard on its condensed consolidated financial statements will be material.Credit Losses June 2016, the FASB issued ASU 2016 -13, Financial Instruments—Credit Losses (Topic . ASU 326 ), Measurement of Credit Losses on Financial Instruments2016 -13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016 -13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ASU 2016 -13 will become effective for the Company beginning in the first quarter of fiscal year 2020. The Company does not believe that the impact of the new standard on its condensed consolidated financial statements will be material. |
| Use of Estimates, Policy [Policy Text Block] | Use of Estimates and Judgements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. |
Note 6 - Stockholders' Deficit (Tables) |
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| Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] |
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Note 2 - Balance Sheet Details - Other Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
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| Contingent consideration | $ 4,286 | $ 4,286 |
| Deposits | 297 | 2,465 |
| Other | 1,089 | 1,207 |
| Other assets | $ 5,672 | $ 7,958 |
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) |
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Dec. 31, 2018 |
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| Accounts receivable, allowance | $ 112,000 | $ 642,000 |
| Accounts receivable, related party, allowance | 26,000 | 0 |
| Debt, current portion, fair value | $ 72,461 | $ 57,918 |
| Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued (in shares) | 14,656 | 14,656 |
| Preferred stock, shares outstanding (in shares) | 14,656 | 14,656 |
| Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
| Common stock, shares issued (in shares) | 101,186,738 | 76,564,829 |
| Common stock, shares outstanding (in shares) | 101,186,738 | 76,564,829 |