Consent, Release, and Second Amendment to Loan and Security Agreement, dated November 21, 2017

This CONSENT, RELEASE, AND SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of November 21, 2017, by and among OXFORD FINANCE LLC (“Oxford”) as collateral agent (in such capacity, “Collateral Agent”), the Lenders listed on Schedule 1.1 of the Loan Agreement or otherwise a party thereto from time to time including, without limitation, Oxford in its capacity as a Lender, and SILICON VALLEY BANK (in such capacity, each a “Lender” and collectively, “Lenders”), and HALOZYME THERAPEUTICS, INC., a Delaware corporation (“Parent”), and HALOZYME, INC., a California corporation (“Halozyme” and together with Parent, individually and collectively, jointly and severally, “Borrower”).

A.Collateral Agent, Lenders and Borrower have entered into that certain Loan and Security Agreement dated as of June 7, 2016 (as amended by that certain Consent, Release, and First Amendment to Loan and Security Agreement, dated as of December 21, 2016, and as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”). Lenders have extended credit to Borrower for the purposes permitted in the Loan Agreement.

B.Borrower intends to form Halozyme Switzerland Holdings GmbH under the laws of Switzerland (the “Swiss Holdco”), which shall initially be wholly-owned by Halozyme (the “Swiss Holdco Formation”).

C.Borrower intends to (i) transfer all of the issued and outstanding capital stock, membership units or other securities owned or held of record by Halozyme in the Bermuda Subsidiary (the “Applicable Bermuda Assets”) to the Swiss Holdco (the “Bermuda Equity Transfer”); (ii) transfer all of the issued and outstanding capital stock, membership units or other securities owned or held of record by Halozyme in the Swiss Subsidiary (the “Applicable Swiss Assets,” and together with the Applicable Bermuda Assets, collectively the “Applicable Assets”) to the Swiss Holdco (the “Swiss Subsidiary Equity Transfer”); and (iii) make Investments in the Swiss Holdco from time to time hereafter.

D.Borrower has requested that Collateral Agent and Lenders (i) consent to the Swiss Holdco Formation, the Bermuda Equity Transfer and the Swiss Subsidiary Equity Transfer, (ii) release Collateral Agent’s Lien on the Applicable Assets, (iii) amend the Loan Agreement to permit periodic Investments in the Swiss Holdco, and (iv) make certain other revisions to the Loan Agreement as more fully set forth herein.

E.Collateral Agent and Lenders have agreed to so consent to the transactions set forth above, release Collateral Agent’s Lien on the Applicable Assets, and amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1.Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2.Consent. Subject to the terms of Section 11 below, and so long as Borrower pledges, assigns and grants a security interest in the Shares of the Swiss Holdco to Collateral Agent pursuant to, and to the extent required by, the terms of the Loan Agreement (as amended by this Amendment) and that certain Quota Pledge Agreement, substantially in the form attached hereto as Exhibit A, Collateral Agent and Lenders hereby consent to (a) the Swiss Holdco Formation, (b) the Bermuda Equity Transfer, (c) the Swiss Subsidiary Equity Transfer, and (d) agree that, as of the date hereof, the Swiss Holdco shall not be required to become a co-Borrower or Guarantor under the Loan Agreement pursuant to Section 6.12 of the Loan Agreement. Collateral Agent and Lenders hereby agree that the transactions described in clauses (a) through (d) above shall not constitute an “Event of Default” under the Loan Agreement.

3.Release. Subject to the terms of Section 11 below and effective only upon the consummation of the Bermuda Equity Transfer and the Swiss Subsidiary Equity Transfer, Collateral Agent hereby releases any security interest it has in the Applicable Assets without delivery of any instrument or any further action by any party; provided, however, that nothing in this Amendment shall constitute a release of any security interest Collateral Agent has in any consideration or other proceeds of the Applicable Assets which are payable to or received by Borrower in connection with the Bermuda Equity Transfer and/or the Swiss Subsidiary Equity Transfer, whether now owned or hereafter acquired. At the request and sole expense of Borrower at any time after the effectiveness of the foregoing release, Collateral Agent shall execute and deliver to Borrower such documents as Borrower may reasonably request to evidence the release of the Applicable Assets. At the request and sole expense of Borrower at any time after the effectiveness of the foregoing release, Collateral Agent shall file, or cause to be filed, a UCC amendment to exclude the Applicable Assets to evidence the release of Collateral Agent’s Lien thereon.

4.Reaffirmation of Security Interest. Except to the extent the Applicable Assets are released pursuant to Section 3 above, Borrower hereby reaffirms its grant to Collateral Agent of a continuing security interest in the Collateral.

Notwithstanding the foregoing, none of Swiss Holdco, Swiss Subsidiary, Bermuda Subsidiary, or LLC shall be required to become a co-Borrower hereunder or guarantee the Obligations of Borrower under the Loan Documents and none of the foregoing entities shall be required to grant any Liens on any of its assets in favor of Collateral Agent or Lenders.

7.15    Swiss Subsidiary Assets. Permit the Swiss Subsidiary to hold (a) any assets in an aggregate amount not to exceed Six Million Dollars ($6,000,000) at any time; or (b) more than twenty percent (20.00%) of the total consolidated cash and Cash Equivalents of Borrower and its Subsidiaries at any time.

7.16    Swiss Holdco Assets. Permit the Swiss Holdco to hold any assets, other than (i) the issued and outstanding capital stock, membership units or other securities of the Bermuda Subsidiary and the Swiss Subsidiary, and (ii) cash in an aggregate amount not to exceed One Hundred Thousand (100,000) Swiss Francs at any time; provided that the Swiss Holdco may also hold, for up to five Business Days, the proceeds of certain (a) Permitted Investments made by Halozyme to the Bermuda Subsidiary and/or the Swiss Subsidiary, and (b) payments, dividends and/or distributions made by the Bermuda Subsidiary and/or the Swiss Subsidiary to the Swiss Holdco, so long as (x) with respect to the foregoing clause (a), such proceeds are invested by the Swiss Holdco in the Swiss Subsidiary or the Bermuda Subsidiary, as applicable, and (y) with respect to the foregoing clause (b), such proceeds are remitted, paid, dividended and/or distributed, as applicable, by the Swiss Holdco to Halozyme, in each case within five (5) Business Days of the Swiss Holdco’s receipt of such proceeds.

“Second Amendment Date” means November 21, 2017.

“Swiss Holdco” is Halozyme Switzerland Holdings GmbH, a wholly-owned Subsidiary of Halozyme formed under the laws of Switzerland.

“Bermuda Subsidiary” is Halozyme Holdings, Ltd., a wholly-owned Subsidiary of the Swiss Holdco formed under the laws of Bermuda.

“Swiss Share Pledge Documents” means that certain Quota Pledge Agreement by Halozyme in favor of Collateral Agent, for the ratable benefit of the Lenders, in form and substance reasonably satisfactory to Collateral Agent and the Lenders, and any other documents, instruments, and undertakings necessary and reasonably required by Collateral Agent and the Lenders to be executed in connection therewith.

“Swiss Subsidiary” is Halozyme Switzerland GmbH, a wholly-owned Subsidiary of Swiss Holdco formed under the laws of Switzerland.

(d)    (i) Investments of Parent in Halozyme, (ii) Investments of Borrower in any domestic Subsidiary which has joined this Agreement as a co-borrower hereunder; provided that Borrower and such Subsidiary shall have complied in all respects with Section 6.12 and taken all action necessary to perfect Collateral Agent’s Lien in the Collateral of such Subsidiary, (iii) so long as no Event of Default has occurred and is continuing, Investments by the Swiss Holdco in the Bermuda Subsidiary, provided that in each case, the proceeds of such Investments shall be used by the Bermuda Subsidiary solely to make payments to Halozyme under the R&D Agreement within ten (10) days of the making of each such Investment, (iv) so long as no Event of Default has occurred and is continuing, Investments by Halozyme in the Swiss Holdco, provided that the proceeds of such Investments shall be invested by the Swiss Holdco in the Bermuda Subsidiary in accordance with clause (iii) of this clause (d) of the definition of Permitted Investments, (v) so long as no Event of Default has occurred and is continuing, Investments in the Swiss Holdco not to exceed Six Million Dollars ($6,000,000.00) in the aggregate in any fiscal quarter (excluding any Investments described in clause (iv) of this clause (d) of the definition of Permitted Investments), provided that the proceeds of such Investments shall be invested by the Swiss Holdco in the Swiss Subsidiary within five (5) Business Days of receipt of such proceeds, and (vi) a one-time Investment by Halozyme in the Bermuda Subsidiary not to exceed Forty Million Dollars ($40,000,000.00) occurring on or about the Second Amendment Date, provided that all of the proceeds of any Investment under this clause (vi) shall be used solely to make payments to Halozyme under the R&D Agreement by no later than April 30, 2018;

(m)    Deposit Accounts and Securities Accounts of (i) the Bermuda Subsidiary, so long as the deposits held in such accounts comply with the terms of Section 7.12, (ii) the Swiss Subsidiary so long as the deposits held in such accounts comply with the terms of Section 7.15 and (iii) the Swiss Holdco, so long as the deposits held in such accounts comply with the terms of Section 7.16.

7.Representations and Warranties. To induce Collateral Agent and Lenders to enter into this Amendment, Borrower hereby represents and warrants to Collateral Agent and Lenders as follows:

8.Integration. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

9.Prior Agreement. Except as expressly provided for in this Amendment, the Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect. This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents. In the event of any conflict or inconsistency between this Amendment and the terms of such documents, the terms of this Amendment shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.

10.Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Amendment.

11.Effectiveness. This Amendment shall be deemed effective upon (a) the due execution and delivery to Collateral Agent and Lenders of this Amendment; and (b)  payment of Collateral Agent’s and Lenders’ legal fees and expenses in connection with the negotiation and preparation of this Amendment.

12.Covenants. Borrower shall duly execute and deliver to Collateral Agent, immediately upon the formation and registration of the Swiss Holdco, the Swiss Share Pledge Documents. Borrower shall deliver to Collateral Agent, within three (3) Business Days of the execution of the same, the original certificates, if any, for the Shares of the Swiss Holdco required to be pledged under the Loan Agreement (as amended by this Amendment), accompanied by an instrument of assignment duly executed in blank by Halozyme for each such certificate, if any. Borrower shall deliver to Collateral Agent on or before February 28, 2018 (or such later date as Collateral Agent and Required Lenders may agree to in their sole discretion), the (i) certified excerpt from the commercial register (Handelsregister) relating to the Swiss Holdco, evidencing that Halozyme is the sole owner of all Quotas, the foregoing to be in form and substance reasonably satisfactory to Lenders’ Swiss counsel; (ii) certified excerpt from the commercial register (Handelsregister) relating to the Swiss Subsidiary, evidencing that the Swiss Holdco is the sole owner of all Quotas, the foregoing to be in form and substance reasonably satisfactory to Lenders’ Swiss counsel; and (iii) the Register of Members relating to the Bermuda Subsidiary, certified by a director of the Bermuda Subsidiary, evidencing that the Swiss Holdco is the sole owner of all shares of stock of the Bermuda Subsidiary, the foregoing to be in form and substance reasonably satisfactory to Lenders’ Bermuda counsel. Notwithstanding anything to the contrary contained in the Loan Documents, any breach of the covenant set forth in this Section 12 shall be an immediate Event of Default and not subject to any cure period, including without limitation the cure period set forth in Section 8.2(b) of the Loan Agreement.

13.Governing Law. This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

Now, therefore, to secure the payment and performance in full of the Secured Obligations (as defined below), the Security Provider desires to grant the Security (as defined below) and the Parties agree as follows:

Unless defined otherwise hereinafter and except to the extent that the context requires otherwise, capitalized terms used in this Agreement shall have the meanings assigned to them in the Credit Agreement.

The Security Provider shall, and shall procure (or in its default the Collateral Agent on its behalf) that the Company will, promptly upon the accrual, offer or issue of any future Quotas, transfer to the Collateral Agent all certificates, if any, issued in relation to such future Quotas relating to the Pledged Quota, if and to the extent such certificates are being issued (i.e. for the avoidance of doubt, 65% of such future Quotas offered or issued by the Company), accompanied with a separate assignment declaration executed by the Security Provider in blank and to execute and/or perform or cause the Company to execute and/or perform any further document, formality or act necessary or advisable for the validity, effectiveness and enforceability of the Security.

 

Notwithstanding the above or anything to the contrary in this Agreement, the Parties agree that in any case and at any time, the Pledged Quota and Related Rights may not exceed 65% of the entire quota capital issued by the Company and undertake to do all acts and things, and to procure that all acts and things be done, that are necessary for observing this restriction.

On the date hereof, the Security Provider shall deliver to the Collateral Agent the following documents:

Agent or the Secured Parties under this Agreement or the realization or the proceeds of enforcement of the Pledged Quota;

 

Except in accordance with the terms of the Credit Agreement, if applicable, and for as long as the Security remains in effect and without the prior written consent of the Collateral Agent, the Security Provider hereby undertakes:

without regard to the formalities provided in, any applicable official enforcement procedure laws, in particular, the DEBA, and applying the proceeds thereof to the discharge of the Secured Obligations.. For this purpose, the Collateral Agent shall be entitled to request the Security Provider to register any acquirer of the Pledged Quota who acquires the Pledged Quota in the course of enforcement in the quota register as owner of the Pledged Quota.

Any proceeds received under this Agreement by the Collateral Agent acting on behalf of the other Secured Parties upon the realization of the Security shall be applied in whatever manner or order the Collateral Agent deems appropriate.

The Security Provider authorises the Collateral Agent to be its attorney and, in its name, on its behalf and as its act and deed, to execute, deliver and perfect all documents (including to transfer Quotas to an acquirer) and to do all things that the Collateral Agent may consider to be requisite for carrying out any obligation imposed on the Collateral Agent under this Agreement or exercising any of the rights conferred on the Collateral Agent or the Secured Parties by this Agreement or by law, in particular in connection with a private realisation (Private Verwertung, including, without limitation, self-sale (Selbsteintritt)) or with the exercise of the Voting Rights on behalf of the Security Provider, it being understood that as long as no Event of Default has occurred and is continuing, the power of attorney granted hereunder shall not be exercisable.

The Parties shall not be entitled to assign or transfer rights, benefits and obligations under this Agreement except in accordance with the provisions of the Credit Agreement, and Section 11 of this Agreement.

If a successor of the Collateral Agent is appointed pursuant to the Credit Agreement, the Collateral Agent may assign and transfer by way of written agreement all of its rights and obligations hereunder (including by way of transfer of agreement (Vertragsübernahme/-übertragung) to his successor as Collateral Agent hereunder without further consent of the Security Provider. The Security Provider herewith irrevocably and unconditionally agrees in advance to such transfer and assignment and to recognise any such successor Collateral Agent as new Collateral Agent in substitution of the retiring Collateral Agent, and to undertake all acts (at its own cost) necessary or useful (acting reasonably) for the successor Collateral Agent to be recognised by third parties as new Collateral Agent hereunder (including countersigning the written agreement of assignment and transfer).

The Collateral Agent shall not be liable for any loss or damage suffered by the Security Provider save in respect of such loss or damage which is suffered as a result of the willful misconduct (Absicht) or negligence (Fahrlässigkeit) of the Collateral Agent.

The Parties acknowledged that all taxes, costs and expenses arising out of or in connection with the perfection, maintenance, protection, enforcement and release of the Security respectively the Security Assets under this Agreement or the exercise of any of the Collateral Agent's rights granted under this Agreement shall be borne by the Security Provider.

All notices or other communications to be given under or in connection with this Agreement shall be made in accordance with the Credit Agreement.

For the purpose of or pending the discharge of any of the Secured Obligations, the Collateral Agent may convert any money received, recovered or realized or subject to application by it under this Agreement from one currency to another, as the Collateral Agent considers appropriate. Any such conversion shall be effected at a rate of exchange for obtaining such other currency with the first currency as reasonably determined by the Collateral Agent.

This Agreement including any documents referred to herein, constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof, and shall supersede all prior oral and written agreements or understandings of the Parties relating hereto.

 

 

Should any part or provision of this Agreement be held to be invalid or unenforceable by any competent arbitral tribunal, court, governmental or administrative authority having jurisdiction, the other provisions of this Agreement shall nonetheless remain valid. In this case, the Parties hereto shall negotiate in good faith a substitute provision that best reflects the economic intentions of the Parties without being unenforceable, and shall execute all agreements and documents required in this connection.

The Security Provider herewith releases the Collateral Agent from any applicable banking secrecy and other confidentiality obligations (other than the confidentiality obligations under the Credit Agreement) with regard to any information directly or indirectly relating to the Security granted pursuant to this Agreement, in particular to the extent as required for the execution, performance and administration of this Agreement and the realization of the Security and/or for due exercise of the respective rights or fulfillment of the respective obligations by the Collateral Agent.

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

This Agreement shall in all respects, including all the rights in rem aspects, be governed by and construed in accordance with the substantive laws of Switzerland (i.e. with the exception of the collision rules of Swiss international private law).

In relation to any dispute in connection with this Agreement, each Party submits to the non-exclusive jurisdiction of the courts of Zurich, venue being Zurich 1, Switzerland, with the right to appeal to the competent Cantonal Court and the Swiss Federal Court (Schweizerisches Bundesgericht) in Lausanne as provided by law. The Collateral Agent reserves the right to bring an action against the Security Provider before any other competent court.

Halozyme, Inc., as Security Provider

By:    _________________________

Name:

Function:

Oxford Finance LLC, in its capacity as Collateral Agent, and acting in the name and on behalf of the Secured Parties as their direct representative (direkter Stellvertreter)

By:    _________________________        By:    _________________________

Name:                        Name:

Function:                    Function: