Armata Pharmaceuticals(ARMP) - 2025 Q2 - Quarterly Results

Credit and Security Agreement Overview This agreement is between Armata Pharmaceuticals (Borrower), its subsidiaries (Guarantors), and Innoviva Strategic Opportunities (Lender) Parties to the Agreement This section identifies Armata Pharmaceuticals, Inc. as the Borrower, its subsidiaries as Guarantors, and Innoviva Strategic Opportunities LLC as the Lender - Borrower: Armata Pharmaceuticals, Inc., a Washington corporation[1][7] - Guarantors: Each subsidiary of the Borrower party to the agreement[1][7] - Lender: Innoviva Strategic Opportunities LLC, a Delaware limited liability company[1][7] ARTICLE I: DEFINITIONS; CERTAIN TERMS This article defines key financial, legal, and operational terms, and establishes general rules for interpretation and accounting principles Definitions This section provides comprehensive definitions for key financial, legal, and operational terms used throughout the credit agreement Key Defined Terms | Term | Definition Summary | | :--- | :--- | | Commitment | The Lender's commitment to make a Closing Date Term Loan of $15,000,000. | | Collateral | All assets of the Borrower and Guarantors, including real, personal, tangible, and intangible property, securing the obligations. | | Maturity Date | The date the loan is due and payable, which is January 11, 2029. | | Permitted Indebtedness | Specifies the types of debt the Borrower is allowed to incur, including purchase money debt, intercompany investments, and up to $100,000 under the FNBO credit card program. | | Event of Default | An event that, if it occurs, would constitute a default under the loan agreement. | Terms Generally This section outlines general rules for interpreting agreement terms, including singular/plural forms and the meaning of 'include' - The agreement specifies rules for interpretation, such as definitions applying to both singular and plural forms and pronouns including all genders[116] Accounting and Other Terms This section specifies GAAP as the accounting standard, with exceptions for lease accounting, and references the New York UCC for undefined terms - Accounting terms are to be interpreted under GAAP as of the Effective Date, particularly for lease accounting (FASB ASC 840)[118] - Terms not defined in the agreement but defined in Article 8 or 9 of the New York Uniform Commercial Code (UCC) will adopt the UCC's meaning[119] Time References This section clarifies that all time references within the agreement are based on Eastern Time in New York City - All time references in the agreement are based on the time in New York City (Eastern Time)[120] ARTICLE II: THE LOAN This article details the loan commitment, repayment terms, interest rates, prepayment conditions, and tax obligations Commitment The Lender commits to a Closing Date Term Loan up to a specified amount, which cannot be reborrowed once repaid Loan Commitment | Item | Details | | :--- | :--- | | Loan Type | Closing Date Term Loan | | Commitment Amount | Up to $15,000,000 | | Reborrowing | Not permitted | Repayment of Loan; Evidence of Debt The outstanding principal is due on the Maturity Date of January 11, 2029, with Lender records serving as prima facie evidence of debt - The entire outstanding principal amount of the loan is due on the Maturity Date, January 11, 2029[70][126] Interest The loan bears a fixed interest rate of 14.00% per annum, with a higher Post-Default Rate applying upon an event of default Interest Rates | Rate Type | Rate (per annum) | | :--- | :--- | | Standard Interest Rate | 14.00% | | Default Interest Rate | Post-Default Rate (Standard Rate + 3.0%) | Reduction of Commitment; Prepayment of Loan The Borrower may voluntarily prepay the loan with notice, while mandatory prepayment is required from 100% of Net Proceeds from certain events - The Borrower may voluntarily prepay the loan with 10 business days' prior written notice[136] - Mandatory prepayment of 100% of Net Proceeds is required upon certain 'Prepayment Events,' including asset dispositions generating over $250,000 or incurrence of unpermitted debt[96][139] - The Borrower may reinvest Net Proceeds from asset sales or casualty events within 270 days to avoid mandatory prepayment, provided no Event of Default has occurred[139] Taxes Loan Parties must make tax-free payments, or pay additional amounts to cover deducted Indemnified Taxes, and indemnify the Lender for such taxes - Loan Parties must make payments without deducting for Taxes, except as required by law[142] - If Indemnified Taxes are deducted, the Loan Party must pay an 'Additional Amount' to gross-up the payment, ensuring the Lender receives the full intended amount[142] ARTICLE III: APPLICATION OF PAYMENTS This article specifies the order in which payments are applied to outstanding obligations, particularly after an Event of Default Apportionment of Payments Following an Event of Default, payments are applied first to fees and expenses, then interest, then principal, and finally other obligations - Following an Event of Default, payments and collateral proceeds are applied in a specific order: 1) fees and expenses, 2) interest, 3) principal, and 4) all other obligations[149] ARTICLE IV: CONDITIONS TO THE LOAN This article details the conditions that must be met for the credit agreement to become effective and for the loan to be disbursed Conditions Precedent to Effectiveness The agreement's effectiveness is contingent upon payment of fees, delivery of legal documents, and the absence of a Material Adverse Effect - The agreement's effectiveness is conditional upon the Borrower paying all initial fees and expenses[153] - The Borrower must deliver numerous documents, including UCC-1 financing statements, certificates of good standing, corporate resolutions authorizing the debt, and a legal opinion from its counsel[154][156] - No event that could reasonably be expected to have a Material Adverse Effect must have occurred since December 31, 2024[157] Conditions Precedent to the Loan Loan disbursement requires all representations and warranties to be true, no existing Default, and compliance with the Operating Budget - Before the loan is made, all representations and warranties must be true and correct[157] - No Default or Event of Default can have occurred or be continuing[157] ARTICLE V: REPRESENTATIONS AND WARRANTIES This article outlines the Loan Parties' affirmations regarding their legal and financial standing, compliance with laws, and accuracy of information Representations and Warranties Loan Parties affirm their organization, authority, legal compliance, financial statement accuracy, intellectual property ownership, and absence of material litigation - The Loan Parties confirm they are duly organized, in good standing, and have the authority to enter into the loan agreement[159] - The agreement is affirmed as a legal, valid, and binding obligation[162] - The Loan Parties represent that they are in compliance with all applicable laws, including Anti-Corruption Laws and Sanctions, and that loan proceeds will not be used in violation of these laws[165][175] - The Borrower confirms that the proceeds of the loan will be used in accordance with Section 6.01(i), which specifies Permitted Borrower Expenses[169] ARTICLE VI: COVENANTS OF THE LOAN PARTIES This article details the ongoing affirmative and negative obligations of the Loan Parties, including reporting, compliance, and restrictions on financial actions Affirmative Covenants Loan Parties must report defaults, add new subsidiaries as guarantors, comply with laws, maintain corporate existence, and submit annual operating budgets - Loan Parties must promptly report any Event of Default or Material Adverse Effect[179] - New subsidiaries (that are not Excluded Subsidiaries) must join the agreement as Guarantors within 30 days of formation or acquisition[180] - The Borrower must use the loan proceeds to pay for Permitted Borrower Expenses in accordance with the approved Operating Budget[191] - The Borrower is required to deliver an annual Operating Budget to the Lender for written approval no later than 60 days after the end of each Fiscal Year[192] Negative Covenants Loan Parties are prohibited from creating unpermitted liens or debt, undergoing fundamental changes, making unpermitted dispositions, or exceeding capital expenditure limits - Prohibits creating, incurring, or assuming any Lien on properties, other than Permitted Liens[203] - Restricts incurring any Indebtedness other than Permitted Indebtedness[204] - Forbids fundamental changes such as mergers, liquidations, or dissolutions, with specific exceptions for transactions between Loan Parties[205] - Limits capital expenditures to a maximum of $3,000,000 in any Fiscal Year, unless provided for in the Operating Budget[208] ARTICLE VII: EVENTS OF DEFAULT This article defines circumstances constituting an 'Event of Default', triggering the Lender's right to accelerate the loan Events of Default Defaults include failure to pay, incorrect representations, covenant breaches, cross-defaults on debt over $500,000, and bankruptcy proceedings - Failure to pay any principal when due, or interest/fees within three Business Days of the due date, constitutes an Event of Default[220] - A breach of any representation or warranty in any material respect is an Event of Default[221] - A default on other Indebtedness with a principal amount over $500,000 that permits acceleration is considered a cross-default[221] - Initiating bankruptcy or insolvency proceedings results in an immediate and automatic acceleration of the loan without notice[221][223] ARTICLE VIII: GUARANTY This article establishes the unconditional and irrevocable joint and several guarantee provided by the Guarantors for the Borrower's obligations Guaranty Each Guarantor provides an unconditional, irrevocable, joint, and several guarantee for all of the Borrower's obligations under the loan documents - Guarantors jointly and severally guarantee all obligations of the Borrower, ensuring payment of principal, interest, and fees[225] Guaranty Absolute The guaranty is one of payment, not collection, making Guarantors' obligations absolute and unconditional, with waivers of various defenses - The guaranty is a 'guaranty of payment when due and not of collection,' allowing the Lender to demand payment directly from Guarantors[226] - Guarantors waive defenses related to the invalidity of loan documents, changes in payment terms, or the release of collateral[226][227] ARTICLE IX: SECURITY This article details the grant of security interest by Loan Parties to the Lender over all Collateral and the Lender's remedies upon default Grant of Security Interest Each Loan Party grants the Lender a security interest and continuing lien on all its right, title, and interest in the Collateral - Each Loan Party grants the Lender a security interest in all of its assets, defined as the Collateral, to secure all Obligations[234] Authorization to File UCC Statements Loan Parties authorize the Lender to file UCC financing statements and other documents to perfect its security interest in the Collateral - The Lender is authorized to file financing statements describing the Collateral as 'all assets' or 'all personal property' to perfect its security interest[238] Remedies Upon default, the Lender gains UCC secured party rights, including immediate possession and sale of Collateral, and a license to use intellectual property - Upon default, the Lender may take immediate possession of and sell the Collateral[243] - A 10-day prior notification is deemed reasonable for any public or private sale of the Collateral[243] - Loan Parties grant the Lender an irrevocable, nonexclusive license to use their Intellectual Property to liquidate assets upon default[244] ARTICLE X: [RESERVED] This article is intentionally reserved for future use or content, indicating no provisions are currently defined within this section ARTICLE XI: MISCELLANEOUS This article covers general provisions including expenses, governing law, jurisdiction, waiver of jury trial, and indemnification Expenses; Taxes; Attorneys' Fees The Borrower agrees to pay all reasonable, documented out-of-pocket costs incurred by the Lender for the agreement's administration and enforcement - The Borrower is responsible for reimbursing the Lender for all reasonable out-of-pocket costs, including legal fees, related to the agreement[259] Governing Law The agreement and all loan documents are governed by and construed in accordance with the laws of the State of New York - The governing law for the agreement is the law of the State of New York[268] Consent to Jurisdiction and Venue Loan Parties irrevocably consent to the jurisdiction of New York state and federal courts for any legal actions related to the agreement - All parties consent to the jurisdiction of the courts of the State of New York in the County of New York or the U.S. District Court for the Southern District of New York[269] Waiver of Jury Trial All parties to the agreement explicitly waive their right to a trial by jury in any action or proceeding related to the loan documents - Both the Loan Parties and the Lender waive any right to a jury trial in disputes arising from the agreement[272] Indemnification and Limitation of Liability Loan Parties indemnify the Lender against losses and waive claims for special, indirect, consequential, or punitive damages - Loan Parties must indemnify the Lender against a wide range of potential losses and liabilities related to the financing, except those caused by the Lender's own gross negligence or willful misconduct[276] - Loan Parties waive the right to sue for punitive, special, indirect, or consequential damages[279] Schedules This section lists various schedules providing detailed supporting information for the agreement's representations and covenants List of Schedules The agreement includes schedules detailing existing indebtedness, intellectual property, material contracts, and post-closing requirements - The schedules provide detailed lists supporting the representations and covenants in the agreement, including: - Schedule 1.01(a): Existing Indebtedness - Schedule 5.01(m): Intellectual Property - Schedule 5.01(n): Material Contracts - Schedule 6.01(j): Post-Closing Requirements[6] Signatories This section confirms the execution of the agreement by the authorized officers of the Borrower, Guarantors, and the Lender's managing member Execution of Agreement The agreement is formally executed by the Chief Executive Officers of Armata Pharmaceuticals, its subsidiaries, and Innoviva Strategic Opportunities LLC - The agreement is signed and made effective by the Chief Executive Officers of the Borrower, Guarantors, and the Lender's managing member[289][290]