UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 25, 2016
(Date of earliest event reported)
VBI VACCINES INC.
(Exact name of registrant as specified in its charter)
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Delaware |
0-18188 |
93-0589534 |
| (State or other jurisdiction | (Commission File | (IRS Employer |
| of incorporation) | Number) | Identification Number) |
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222 3rd Street, Suite 2241 |
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| Cambridge, Massachusetts | 02142 | |
| (Address of principal executive offices) | (Zip Code) |
(617) 830-3031
(Registrant’s telephone number, including area code)
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 |
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
As previously reported, VBI Vaccines Inc. (the “Company”) entered into that certain Credit Agreement and Guaranty, dated as of July 25, 2014, as amended on September 30, 2014 and March 19, 2015 (as amended, the “Credit Agreement”), together with its wholly-owned subsidiaries, Variation Biotechnologies, Inc. (together with the Company, the “Guarantors”) and Variation Biotechnologies (US), Inc. (the “Borrower”), and Perceptive Credit Opportunities Fund, LP (as assignee of PCOF 1, LLC, the “Lender”).
As contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on February 26, 2016, the report of the Company’s independent registered public accounting firm, Peterson Sullivan LLP, contains a going-concern opinion, which qualifies as an Impermissible Qualification (as defined in the Credit Agreement) under the Credit Agreement.
On February 25, 2016, the Borrower and the Guarantors entered into a Waiver Agreement (the “Waiver Agreement”), pursuant to which the Lender agreed that so long as at the time of delivery of the Company’s 2015 audited financial statements to the Lender, no other event of default shall have occurred and be continuing or, with the passage of time, the giving of notice or both, would occur, the Lender will be deemed to have waived, for all purposes of Sections 9.1.4 and 11.1 of the Credit Agreement, the default that would otherwise occur as a result of the Impermissible Qualification.
The above description of the Waiver Agreement is qualified in its entirety by the complete text of the Waiver Agreement, which is attached to this Current Report on Form 8-K as exhibit 10.1 and incorporated herein by reference.
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ITEM 9.01 |
FINANCIAL STATEMENTS AND EXHIBITS |
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(d) |
Exhibits |
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Exhibit No. |
Description |
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10.1 |
Waiver Agreement dated as of February 25, 2016 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 2, 2016
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VBI VACCINES INC. |
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By: |
/s/ Jeff Baxter |
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Jeff Baxter |
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Chief Executive Officer |
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EXHIBIT INDEX
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Exhibit No. |
Description |
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10.1 |
Waiver Agreement dated as of February 25, 2016 |
Exhibit 10.1
WAIVER AGREEMENT
THIS WAIVER AGREEMENT (this “Agreement”), dated as of February 25, 2016, is entered into by and among VARIATION BIOTECHNOLOGIES (US), INC., a Delaware corporation (the “Borrower”); VBI Vaccines Inc., a Delaware corporation (“Holdco”); Variation Biotechnologies, Inc., a corporation incorporated under the Canada Business Corporations Act (“Canadian Sub” and together with Holdco, the “Guarantors”); and Perceptive Credit Opportunities Fund, LP (as assigned from PCOF 1, LLC, the “Lender”). Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement defined below.
RECITALS
WHEREAS, the Lender, the Borrower and the Guarantors entered into that certain Credit Agreement and Guaranty dated as of July 25, 2014, as amended from time to time (the “Credit Agreement”), pursuant to which the Lender has made certain loans and financial accommodations available to Borrower;
WHEREAS, pursuant to Section 7.1(c) of the Credit Agreement the Borrower is required, among other things, to deliver to the Lender consolidated financial statements of Holdco for each Fiscal Year, which financial statements are to be audited without any Impermissible Qualification;
WHEREAS, Peterson Sullivan LLP, the independent public accounting firm (the “Auditor”) retained to audit Holdco’s consolidated financial statements for the Fiscal Year ended December 31, 2015 (the “2015 Audited Financial Statements”), has informed Holdco and the Borrower that its audit opinion letter with respect to such audit will contain an Impermissible Qualification;
WHEREAS, a true and correct copy of the Auditor’s draft audit opinion for the 2015 Audited Financial Statements containing the Impermissible Qualification is attached hereto as Annex A (the “Proposed Audit Opinion”);
WHEREAS, the Borrower and the Guarantors have requested that the Lender waive the Default that will occur as a result of the Borrower’s delivery of the 2015 Audited Financial Statements being subject to the Impermissible Qualification contained in the Proposed Audit Opinion (the “Impermissible Qualification Default”), which the Lender has agreed to do subject to the terms and provisions hereof.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Lender, the Borrower and the Guarantors hereby agree as follows.
1. Waiver. Subject to the terms and conditions set forth herein, and so long as (i) the 2015 Audited Financial Statements are delivered to the Lender on a timely basis as required pursuant to Section 7.1(c) of the Credit Agreement, (ii) the Proposed Audit Opinion, in substantially the form as attached as Annex A , is delivered along with the 2015 Audited Financial Statements (without any material change or modification thereto) and (iii) at the time of delivery of such 2015 Audited Financial Statements and Proposed Audit Opinion, no other Event of Default shall have occurred and be continuing or, with passage of time, the giving of notice or both, would occur, the Lender will be deemed to have waived, for all purposes of Sections 9.1.4 and 11.1 of the Credit Agreement, the Impermissible Qualification Default, all without need of further action or notice of any kind.
2. Effect of this Agreement.
a. Except as otherwise expressly provided herein, nothing contained herein shall prejudice, waive or alter, or be deemed to prejudice, waive or alter, any of the Lender’s rights and remedies under the Credit Agreement or any of the other Loan Documents against the Borrower or the Guarantors or any assets of the Guarantors.
b. No changes or modifications to the Credit Agreement or the other Loan Documents are intended or implied, and, in all respects, the Credit Agreement and the other Loan Documents shall continue to remain in full force and effect in accordance with their terms as of the date hereof. Except as specifically set forth herein, nothing contained herein shall evidence (nor is there any intent to evidence) a waiver by the Lender of any other provision of the Credit Agreement or any of the other Loan Documents nor shall anything contained herein be construed as a consent by the Lender to any transaction other than those specifically consented to herein.
3. Successors and Assigns. The terms and provisions of this Agreement shall be for the benefit of the parties hereto and their respective successors and assigns; no other person, firm, entity or corporation shall have any right, benefit or interest under this Agreement.
4. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original and all of which taken together constitute one and the same document. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart signed by the party to be charged. This Agreement may be executed and delivered via facsimile or other means of electronic communication with the same force and effect as if it were a manually executed and delivered counterpart.
5. Choice of Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the internal laws of the State of New York (without giving effect to principles of conflicts of laws).
6. Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties with respect to the matters set forth herein. This Agreement cannot be changed, modified, amended or terminated except in a writing executed by the party to be charged.
[Signature page follows]
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first above written.
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PERCEPTIVE CREDIT OPPORTUNITIES FUND, LP, |
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By: |
Perceptive Credit Opportunities Fund, LP, |
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its general partner |
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By: |
/s/ Sandeep Dixit |
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Name: |
Sandeep Dixit |
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Title: |
Chief Credit Officer |
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By: |
/s/ James Mannix |
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Name: |
James Mannix |
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Title: |
Chief Operating Officer |
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ACKNOWLEDGED AND ACCEPTED: |
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VARIATION BIOTECHNOLOGIES (US), INC., |
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| as the Borrower | ||
| By: |
/s/ Jeff Baxter |
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| Name: |
Jeff Baxter |
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| Title: |
Chief Executive Officer |
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VBI VACCINES INC., |
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| as Guarantor | ||
| By: |
/s/ Jeff Baxter |
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| Name: |
Jeff Baxter |
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| Title: |
Chief Executive Officer |
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VARIATION BIOTECHNOLOGIES, INC., |
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| as Guarantor | ||
| By: |
/s/ Jeff Baxter |
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| Name: |
Jeff Baxter |
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| Title: | Chief Executive Officer | |
[VBIV - sIGNATURE PAGE TO PERCEPTIVE WAIVER]
ANNEX A
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
VBI Vaccines Inc.
Cambridge, Massachusetts
We have audited the accompanying consolidated balance sheets of VBI Vaccines Inc. and subsidiaries ("the Company") as of December 31, and 2014, and the related consolidated statements of comprehensive loss, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of VBI Vaccines Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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