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Note 13 - Subsequent Events
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Subsequent Events [Text Block]

13.

Subsequent Events

 

Litigation Settlement

 

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs and Biostage’s products liability insurance carriers (the “Settlement”), which resolves  with prejudice all claims relating to the litigation, including outstanding lawsuits with the plaintiffs and one of the insurance carriers. The Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company or Biostage. The Company has accrued $5.2 million of costs related to the legal fees and the Settlement as of   March 31, 2022. Biostage is required to indemnify the Company for all losses and expenses, including legal expenses, the Company incurs in connection with the litigation and the Settlement. The Company and Biostage have agreed in principle that, in satisfaction of $4.0 million of its total indemnification obligations, Biostage will issue senior convertible preferred stock to the Company. The issuance of such preferred stock, and the terms thereof, are subject to the negotiation and execution of definitive documents. Due to Biostage’s current financial condition, there is uncertainty as to whether Biostage’s indemnification obligation together with the value, if any, of such preferred stock will offset the amounts the Company has incurred in connection with the litigation and Settlement, if at all. Accordingly, as of March 31, 2022, the Company has fully reserved any receivables from Biostage and the financial results only reflect expected losses to be paid by the Company.

 

Credit Agreement Amendment

 

On April 28, 2022, the Company entered into an amendment to the Credit Agreement and Pledge and Security Agreement (the “Amendment”), among the Company, the Lenders, and Citizens Bank, N.A., as the administrative agent (the “Administrative Agent”). Pursuant to the Amendment, the Lenders and the Administrative Agent have agreed, among other things, (i) to modify the financial covenant relating to the consolidated net leverage ratio and (ii) to consent to the Settlement described above. In consideration for the Amendment, the Company paid a fee of $0.2 million to the Lenders and the Administrative Agent.