EXHIBIT D
Project Phosphate
Term Sheet
TERM LOAN
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ISSUER: Phos ("Phos" or the "Company").
LENDER: Phate ("Phate" or the "Lender").
ISSUE: $15 million delayed draw term loan (the "Term Loan").
USE OF PROCEEDS: General corporate purposes.
MATURITY: 5 years from the date of initial drawdown.
DRAWDOWN: The Term Loan can be drawn upon during the first week
of each period noted as follows:
Period Maximum Draw Amount
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1Q '99 $3.75 million
2Q '99 $3.75 million
3Q '99 $3.75 million
4Q '99 $3.75 million
INTEREST RATE: The portion of the Term Loan that has been drawn down
will bear interest at the prevailing Prime Rate.
REPAYMENT: The Term Loan shall be repayable by the Borrower at
maturity in cash or in common stock, at the sole option
of Phos. If Phos chooses to repay the Term Loan in
common stock, the price will be based upon the average
closing bid price of Phos's common stock for the 10
trading days preceding the date of the conversion.
Strategic Plan: Prior to entering into the term loan agreement, the
Company shall present to Lender a detailed three year
plan (the "Strategic Plan") that contains items to be
agreed upon by Phos and Phate, to include, but not
limited to, a financial budget, staffing requirements,
research and development plans and timelines. Actions
and decisions by the Company shall remain in accordance
with the Strategic Plan.
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OPTIONAL PREPAYMENTS: The Company may prepay the Term Loan at any time in
cash, in whole or in part, without premium, with
minimum payments of $3 million.
MANDATORY PREPAYMENTS: The following amounts shall be paid to Phate to reduce
the balance and the commitment of the Term Loan:
i. 50% of the net proceeds of debt or equity
offerings, private or public;
ii. 100% of the net proceeds of asset sales; or
iii. 75% of cash flows in excess of $5 million per
year.
COLLATERAL: The Term Loan will be secured through a security
interest in substantially all of Phos's tangible and
intangible property, including intellectual property
rights.
Comprehensive representations and warranties, including
(without limitation):
REPRESENTATIONS
AND WARRANTIES:
i. Corporate existence and power;
ii. Corporate authority to execute the Term Loan,
validity, no conflict with charter documents, laws
or agreements and no governmental approvals;
iii. Financial information;
iv. No material adverse change in the financial
condition, or business of the Borrower and its
subsidiaries taken as a whole, from the date of
the most recent audited financial statements prior
to the execution of the credit agreement;
v. No material undisclosed litigation;
vi. Filing and payment of all material taxes (subject
to customary appeal and protest rights);
vii. Compliance with ERISA and environmental laws and
margin regulations;
viii.Compliance with FDA and related regulations.
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CONDITIONS PRECEDENT: Conditions precedent to the execution of the definitive
Term Loan agreement (the "Definitive Agreement") will
be those that are customary for facilities of this
type, including (without limitation):
i. All documents and agreements signed and delivered;
ii. Satisfactory completion of due diligence with
respect to the corporate, tax and legal structure
of the Borrower and its subsidiaries;
iii. Reduction to a valid and binding written agreement
of the current agreements with the hedge funds;
iv. Compliance with all covenants.
Conditions precedent to each drawdown will be those
that are customary for facilities of this type,
including (without limitation):
i. True and correct representations and warranties;
ii. No default;
iii. Satisfactory review of any legal issues;
iv. Usual evidence of corporate power and authority
and good standing, including board resolutions and
legal opinions;
v. No material default under the Strategic Plan.
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AFFIRMATIVE COVENANTS: High yield covenants, including, but not limited to:
delivery of financial statements, reports, accountants'
letters, officers' certificates and other information
requested by Lender; payment of other obligations;
continuation of business and maintenance of existence
and material rights and privileges; compliance with
laws and material contractual obligations; maintenance
of property and insurance; maintenance of books and
records; right of the Lender to inspect property and
books and records; notices of defaults, litigation and
other material events; and agreement to grant security
interests in after-acquired property.
NEGATIVE COVENANTS: High yield covenants, including, but not limited to
limitations on: indebtedness; liens; guarantees;
mergers, acquisitions, consolidations, liquidation and
dissolutions; dividends and other payments in respect
of capital stock; investments, loans and advances
modifications of debt instruments; capital
expenditures, transactions with affiliates;
dispositions of assets and leasebacks; changes in
fiscal year; negative pledge clauses; and changes in
line of business.
EVENTS OF DEFAULT: Material breach of the Strategic Plan; material
inaccuracy of representations and warranties; violation
of covenants; cross-default; cross-acceleration;
bankruptcy; and a change of control.
ASSIGNMENTS: The Lender will be permitted to assign and participate
the Term Loan without restriction.
EXPENSES: Xxxxxx's expenses shall be paid by the Issuer.
DOCUMENTATION: To be acceptable to Phate.
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WARRANTS
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TERM: 5 years from the time the Warrant is issued.
EXERCISE PRICE: At a 40% premium to the average closing bid price of
Phos's common stock for the 10 trading days preceding
the date of the issue of the Warrant.
COVERAGE: The Company shall issue to Phate upon each drawdown of
the Term Loan a warrant to purchase 60,000 common
shares of Phos (the "Warrant").
EQUITY
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CONVERSION OF Concurrent with the signing of the Definitive
COMMITTED ONCOLOGY Agreement, the $[Confidential Treatment Requested] of
R&D FUNDING AND Phate's committed research and development funding for
AMD MILESTONE Phos's oncology program and the $[Confidential
PAYMENTS: Treatment Requested] in potential milestones for the
AMD program to be paid by Phate in accordance with the
current licensing agreement shall be converted into an
equity investment in Phos. The conversions into equity
will be based on the average of the closing bid prices
for Phos's common stock for the ten days preceding when
the amounts become payable. Proceeds are to be used for
general corporate purposes.
AMENDMENTS TO CURRENT AGREEMENTS
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[Confidential Treatment Requested]
OPHTHALMIC MARKETING
RIGHTS: The Agreement will be modified to grant Phate worldwide
marketing rights to the Product for all current and
future indications in the ophthalmic field.
CLINICAL/REGULATORY: Phate will assume control of all clinical and
regulatory aspects of the joint ophthalmic programs.
MANUFACTURING RIGHTS: The Agreement will be amended to extend the license to
Phate to include manufacturing rights to the Product;
current supply agreements between parties will be
amended to allow Phate to assume control of bulk
manufacturing and finishing of the Product.
CONTROL OF DEVICE
SUPPLY CONTRACT: Phate will enter into a contract with Iridex for supply
of the PhotoPoint light delivery device in place of the
current PhotoPoint supply agreement.
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