THIRD AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT
Exhibit 10.4
EXECUTION VERSION
THIRD AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT
This THIRD AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of September 30, 2020 (the “Third Amendment Date”), is by and among METUCHEN PHARMACEUTICALS LLC, a Delaware limited liability company (“Metuchen”), Pos-T-Vac, LLC, a Delaware limited liability company (“PTV”), and Xxxx Medical Technologies, Inc., a Delaware corporation (“Xxxx”, and together with Metuchen and PTV, collectively, jointly and severally, the “Borrower”), the several banks and other financial institutions or entities party hereto as lenders (collectively, referred to as “Lender”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and Lender (in such capacity, the “Agent”).
WHEREAS, in accordance with Section 11.3 of the Loan Agreement, Borrower, Lender and the Agent desire to amend the Loan Agreement as provided herein;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of May 17, 2020 (the “Merger Agreement”), among Borrower, Petros Pharmaceuticals, Inc. (“Parent”), PM Xxxxxx Xxx 0, XXX (“Xxxxxx Xxx 0”), XX Merger Sub 2, Inc. (“Merger Sub 2”) and Neurotrope, Inc. (“Neurotrope”), Neurotrope and Borrower have formed, directly or indirectly, (a) Parent, (b) Merger Sub 1 and (c) Merger Sub 2, and each of the parties to the Merger Agreement shall effect the following mergers upon the terms and conditions set forth therein: (i) Merger Sub 1 shall be merged with and into Borrower (the “Metuchen Merger”), with Borrower surviving as a direct wholly owned subsidiary of Parent and (ii) simultaneous with the Metuchen Merger, Merger Sub 2 shall be merged with and into Neurotrope (the “Neurotrope Merger” and, together with the Metuchen Merger, the “Mergers”), with Neurotrope surviving as a direct wholly owned subsidiary of Parent. For purposes of this Amendment, the Mergers and the transactions contemplated by the Merger Agreement shall be referred to as the “Merger Transactions”); and
WHEREAS, Borrower requests that the Agent and Lender consent to the Merger Transactions and the Agent and Lender hereby consent to the Merger Transactions, as set forth in Section 3 of this Amendment and on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual agreements contained in the Loan Agreement and herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
(a) The Loan Agreement shall be amended by inserting the following new definitions to appear alphabetically in Section 1.1 thereof:
“Amortization Date III” means November 1, 2020; provided that, in the event that, as of as of said date (i) Borrower has not achieved Financing Milestone II and (ii) no Event of Default has occurred and is continuing, the Amortization Date III shall be extended to December 1, 2020; and provided further that in the event that, as of said date (x) Borrower has not achieved Financing Milestone II and (y) no Event of Default has occurred and is continuing, the Amortization Date III shall be extended to January 1, 2021.
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“Catch Up Payment” means $509,935.78; provided that, in the event that Amortization Date III is extended to December 1, 2020, the Catch Up Payment shall be increased to $1,022,303.43; and provided further that, in the event that Amortization Date III is extended to January 1, 2021, the Catch Up Payment shall be increased to $1,542,036.28.
“Third Amendment” means that Third Amendment and Consent to Loan and Security Agreement dated the Third Amendment Date by and among Borrower, Lender and Agent.
“Third Amendment Date” means September 30, 2020.
(b) The Loan Agreement shall be amended by amending and restating the following definitions in Section 1.1 thereof to read as follows:
“Escrow Agreement” means the Escrow Agreement dated September 30, 2020 by and among Agent, Juggernaut Capital Partners III, L.P., a Cayman Islands limited partnership (“Juggernaut”), and Xxxxx Fargo, N.A., as the same may from time to time be amended, modified, supplemented or restated.
“Financing Milestone II” means (i) no default or Event of Default shall have occurred and be continuing and (ii) Borrower shall have received, after March 31, 2020 and on or prior to December 21, 2020, unrestricted (including not subject to any clawback, redemption, escrow or similar contractual restriction) net cash proceeds in an aggregate amount of at least $25,000,000, which proceeds shall be immediately deposited in a Deposit Account or Investment Account of Borrower subject to an Account Control Agreement in favor of Agent, from (A) the sale of equity interests of Metuchen and/or Subordinated Indebtedness (inclusive of amounts raised to satisfy Financing Milestone I) and (B) a merger, acquisition or similar transaction involving Borrower.
“Loan Documents” means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, the Collateral Assignment of Contracts, the Collateral Assignment of Intellectual Property, all UCC Financing Statements, the Guaranty, the Escrow Agreement and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated
“Term Loan Maturity Date” means April 1, 2021, provided that, if Borrower shall have achieved Financing Milestone II, then the Term Loan Maturity Date shall be extended to December 1, 2021.
(c) The Loan Agreement shall be amended by amending and restating Section 2.2(d) in its entirety, and inserting in lieu thereof the following:
(d) The Loan Agreement shall be amended by amending and restating Section 8.2 to read as follows:
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“SECTION 8. FINANCIAL COVENANTS.
Test Period | Minimum Net Revenue | Minimum EBITDA | Minimum Cash Covenant Period | |||||||
Six-month period ended September 30, 2020 | $ | 6,000,000 | $ | (4,194,000 | ) | November 1, 2020 through January 31, 2020 | ||||
Six-month period ended December 31, 2020 | $ | 7,170,000 | $ | (3,661,000 | ) | February 1, 2021 through April 30, 2021 | ||||
Six-month period ended March 31, 2021 | $ | 10,098,000 | $ | (1,599,000 | ) | May 1,2021 through July 31, 2021 | ||||
Six-month period ended June 30, 2021 | $ | 11,259,000 | $ | (867,000 | ) | August 1, 2021 through December 1, 2021 |
Borrower shall provide Agent evidence of compliance with the financial covenant under this Section 8.2 upon request in form and substance reasonably acceptable to Agent and supporting documentation requested by Agent.
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(a) The Agent and Lender shall have received a fully-executed counterpart of this Amendment signed by Borrower;
(b) The Borrower, Agent, Juggernaut and Xxxxx Fargo, N.A. shall have entered into an Escrow Agreement in form and substance satisfactory to Agent on or prior to the Third Amendment Date;
(c) Juggernaut or Xxxxx Fargo, N.A. shall have provided to Agent written evidence in form and substance satisfactory to Agent that Juggernaut shall have delivered to Xxxxx Fargo, N.A. in cash and in immediately available funds an amount not less than $1,542,036.28 pursuant to Section 1.1 of the Escrow Agreement on or prior to the Third Amendment Date and such amount shall have been deposited into the applicable escrow account established in connection therewith; and
(d) The Agent shall have received payment for all reasonable and documented fees and expenses incurred by Lender and the Agent in connection with this Amendment, including, but not limited to, all legal fees and expenses, payable pursuant to Section 11.11 of the Loan Agreement.
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7. Release. In consideration of the agreements of Agent and each Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby fully, absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender, and its successors and assigns, and its present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, Lenders and all such other persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower, or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, for or on account of, or in relation to, or in any way in connection with the Loan and Security Agreement, or any of the other Loan Documents or transactions thereunder or related thereto. Borrower understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release. Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
(a) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES).
(b) The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof.
(c) This Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof.
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(d) Any determination that any provision of this Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality or enforceability of any other provisions of this Amendment.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, Borrower, Lender and the Agent have duly executed and delivered this Amendment as of the day and year first above written.
BORROWER: | ||
METUCHEN PHARMACEUTICALS LLC | ||
Signature: | /s/ Xxxxx X. Xxxxx | |
Print Name: | Xxxxx X. Xxxxx | |
Title: | CFO | |
POS-T-VAC, LLC | ||
Signature: | /s/ Xxxxx X. Xxxxx | |
Print Name: | Xxxxx X. Xxxxx | |
Title: | CFO | |
XXXX MEDICAL TECHNOLOGIES, INC. | ||
Signature: | /s/ Xxxxx X. Xxxxx | |
Print Name: | Xxxxx X. Xxxxx | |
Title: | CFO |
[Signature Page to Third LSA Amendment]
Accepted in Palo Alto, California: | ||
AGENT: | ||
HERCULES CAPITAL, INC. | ||
Signature: | /s/ Xxxxxxxx Xxxx | |
Print Name: | Xxxxxxxx Xxxx | |
Title: | Associate General Counsel | |
LENDER: | ||
HERCULES FUNDING II, LLC | ||
Signature: | /s/ Xxxxxxxx Xxxx | |
Print Name: | Xxxxxxxx Xxxx | |
Title: | Associate General Counsel |
[Signature Page to Third LSA Amendment]