FIRST AMENDMENT TO LOAN AGREEMENT
Exhibit 10.29
EXECUTION
VERSION
This FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is dated and
entered into as of July 5, 2006, by and between SIRION THERAPEUTICS, INC. a North
Carolina corporation (“Borrower”), and PHARMABIO DEVELOPMENT INC., a North Carolina
corporation, doing business as NovaQuest (“Lender”).
RECITALS
WHEREAS, Borrower and Lender are parties to that certain Loan Agreement, dated as of February
14, 2006 (the “Loan Agreement”), pursuant to which Lender agreed to make certain credit
facilities available to Borrower, subject to and upon the terms and conditions of the Loan
Agreement;
WHEREAS, contemporaneously with the execution of this Amendment, Borrower is acquiring Sytera,
Inc., a Delaware corporation (“Sytera”),
through a merger (the “First Merger”) of
Sytera with and into Borrower with Borrower continuing as the surviving corporation in the First
Merger, consummated pursuant to that certain Agreement and Plan of Merger and Reorganization among
Sirion, Sytera, Sytera II, Inc. and Xxxxxxx X. Xxxxxx, M.D., as Stockholders’ Representative for
the holders of Sytera capital stock, and Xxxxx Xxxxxx, as Stockholders’ Representative for the
holders of Sirion capital stock; and
WHEREAS, in connection with the First Merger, Borrower and Lender desire to amend the Loan
Agreement pursuant to Section 8.1 thereof as described herein.
AGREEMENT
NOW THEREFORE, the parties agree as follows:
1. Defined Terms. All initially capitalized terms used but not defined in
this
Amendment shall have the meanings assigned to them in the Loan Agreement.
2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:
a. Section 2.1 (a)(iii) of the Loan Agreement is deleted in its entirely and
replaced with the following new Section 2.1(a)(iii):
“(iii) Upon the occurrence of Milestone Two following the occurrence of
Milestone One, an additional Two Million Five Hundred Thousand Dollars ($2,500,000)
shall be available, at which point the Commitment shall equal an aggregate principal
amount of Five Million Dollars ($5,000,000), subject to the terms and conditions of
this Agreement. “Milestone Two” shall mean the earlier to occur of (A) the
consummation by Borrower of two or more Licensing Transactions that collectively
provide for the payment by Borrower of aggregate up-front
consideration in excess of Two Million Dollars ($2,000,000), (B) the consummation
by Borrower of at least four Licensing Transactions, without regard to the amount
of up-front consideration, or (C) the closing of the First Merger.”
b. Section 2.6 of the Loan Agreement is deleted in its entirety and replaced with the
following new Section 2.6:
“2.6 Automatic Conversion.
(a) Unless otherwise determined by Borrower’s Board of Directors (including the
affirmative vote of any director designated by Lender), all outstanding principal
amounts of Advances and any accrued but unpaid interest amounts thereon will
automatically be converted into shares of Borrower’s capital stock upon the earlier of
(i) immediately before the closing of the Second Merger (as defined below) prior to
October 31, 2006 in accordance with Section 2.6(b)(i) below or (ii) the first closing
of a Qualified Financing in accordance with Section 2.6(b)(ii) below, and in each such
case Lender’s obligation to make Advances hereunder shall be terminated.
(b) The number of shares of Borrower’s capital stock into which such principal and
interest shall be converted shall be determined as follows:
(i) If, on or before October 31, 2006, Borrower is
acquired, directly or indirectly, by a publicly traded “shell” company (or any wholly
owned subsidiary of such company) whose securities are registered under the Securities
Act of 1933, as amended “Pubco”), whether through a reorganization, transfer
of assets, consolidation, merger, issue or sale of securities or any other voluntary
action (the “Second Merger”), then, immediately before the closing of the
Second Merger, the aggregate outstanding principal of, and all accrued but unpaid
interest on, all Advances shall be converted into one hundred thousand (100,000)
shares of Borrower’s Series A-l Preferred Stock.
(ii) Upon the first closing of a Qualified Financing, the aggregate
outstanding principal of, and all accrued but unpaid interest on, all Advances shall
be converted into that number of shares of New Securities issued in the Qualified
Financing that on an as-converted to Common Stock basis (i.e., as if the New
Securities were converted to Common Stock based on the conversion rate of the New
Securities) when added to the aggregate Fully-Diluted Common Stock immediately before
the first closing of such Qualified Financing (such sum, the “Pre-Money
Fully-Diluted Common Stock”) would be equal to twenty-five percent (25%) of the
Pre-Money Fully-Diluted Common Stock (excluding, if applicable, any shares issued or
issuable to Xxxxx Xxxxxx or Xxxxx Xxxxx in exchange for their respective membership
interests in Rx Development Resources. LLC).
(c) Borrower will not, by amendment of its Articles of Incorporation or Bylaws, or
through any reorganization, recapitalization, reclassification, merger, consolidation,
transfer of assets, dissolution, issue or sale of securities, or any other action,
avoid or seek to avoid the observance or performance
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of any of the terms of this Section 2.6, but will at all times in good faith assist in
carrying out all the provisions of this Section 2.6 and in taking all such action as be
necessary or appropriate in order to protect the rights of Lender against impairment.
(d) In the event of any conversion of the Advances pursuant to this Section
2.6: (i) Lender shall surrender all promissory notes or other instruments evidencing
the Advances for conversion and cancellation at the offices of Borrower and shall
execute all reasonably necessary documents in connection with the conversion such
Advances; (ii) Borrower shall promptly issue to Lender a certificate representing the
appropriate number of shares of Borrower capital stock to be issued to Lender in
connection with such conversion; and (iii) if applicable, Borrower shall pay to Lender
cash in an amount equal to any portion of the Advances that would otherwise convert
into fractional shares of Borrower’s capital stock.”
c. Section 3.2(a) of the Loan Agreement is deleted in its entirety and replaced with the
following new Section 3.2(a):
“(a) except as set forth in any schedule of exceptions delivered to Lender
on the date of any such Advance (which schedule of exceptions shall be acceptable to
Lender in its sole discretion), the representations and warranties contained in
ARTICLE IV shall be true and correct in all material respects on and as of the date of
such Advance (except that those representations and warranties which are qualified as
to material, materiality, Material Adverse Effect or similar expressions, or are
subject to the same or similar type exceptions, shall be true and correct in all
respects), before and after giving effect to such Advance, as though made on and as of
such date;”
d. The introductory language to Article V of the Loan Agreement is deleted in its entirety and
replaced with the following new introductory language:
“Except as otherwise expressly required by the terms of any binding agreements
relating to, or entered into by Borrower in connection with, the transactions
contemplated by the First Merger or the Second Merger, so long as any of the Advances
or other obligations of Borrower shall remain unpaid or outstanding or Lender shall
have any Commitment hereunder, Borrower shall comply with the following covenants:”
e. Exhibit A to the Loan Agreement is hereby amended to add the following new definition:
“First Merger” shall mean a merger of Sytera, Inc., a Delaware corporation, with
and into Borrower with Borrower continuing as the surviving corporation, consummated
pursuant to that certain Agreement and Plan of Merger and Reorganization among
Borrower, Sytera, Inc., Sytera II, Inc. and Xxxxxxx X. Xxxxxx, M.D., as Stockholders’
Representative for the holders of Sytera capital stock, and Xxxxx Xxxxxx, as
Stockholders’ Representative for the holders of Sirion capital stock.
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f. The definition of “Qualified Financing” in Exhibit A to the Loan Agreement
is deleted in its entirety and replaced with the following new definition:
“Qualified Financing” shall mean Borrower’s sale to venture capital, private
equity, institutional or similar investors (other than Lender or Lender’s Affiliates),
one or more of which did not previously hold shares of capital stock of Borrower, of
New Securities, in a single transaction, or in a series of related transactions, in
which (i) the consideration paid to Borrower by such venture capital, private equity,
institutional or similar investors (other than Lender or Lender’s Affiliates) in such
transaction(s) is at least Twenty-Five Million Dollars ($25,000,000), and (ii) the
pre-money valuation of Borrower is at least Thirty-Five Million Dollars ($35,000,000).”
3. No Other Amendments. The Loan Agreement, as amended by this Amendment, is and shall
continue to be in full force and effect and is hereby in all respects ratified and confirmed.
4. Headings. The section headings herein are for convenience of reference only and
shall not affect the interpretation of this Amendment. All paragraph references herein are to
sections of this Amendment unless specified otherwise.
5. Governing
Law. This Amendment, and the rights and obligations of the parties
arising hereunder or in connection herewith, including, without limitation, the interpretation,
performance, enforcement, breach or termination thereof and any remedies relating thereto, shall be
governed by and construed in accordance with the Laws of the State of North Carolina, as applied to
agreements executed and performed entirely in the State of North Carolina, without regard to its
conflicts of law rules.
[signature page follows]
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[Signature Page to First Amendment to Loan Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
BORROWER: SIRION THERAPEUTICS, INC. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | ||||
| Title: | ||||
| LENDER: PHARMABIO DEVELOPMENT INC. (D/B/A NOVAQUEST) |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to First Amendment to Loan Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
| BORROWER: | |||||
| SIRION THERAPEUTICS, INC. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| LENDER: | |||||
| PHARMABIO DEVELOPMENT INC. (D/B/A NOVAOUEST) |
|||||
| By: | /s/ Xxxxx X. Xxxx | ||||
| Name: Xxxxx X. Xxxx | |||||
| Title: Vice President | |||||
