Exhibit 10.3

AMENDMENT NO. 5

TO

LOAN AND SECURITY AGREEMENT

 

This Amendment No. 5 to Loan and Security Agreement (this “Amendment”) is dated
as of August 1, 2018 and is entered into by and among (a) (i) PARATEK
PHARMACEUTICALS, INC. (“Inc.”), a Delaware corporation, and (ii) PARATEK PHARMA,
LLC, a Delaware limited liability company (“LLC”; and, together with Inc. and
any of their respective subsidiaries, hereinafter collectively referred to as
the “Borrower”), (b) (i) HERCULES TECHNOLOGY II, L.P., a Delaware limited
partnership, (ii) HERCULES TECHNOLOGY III, L.P., a Delaware limited partnership,
(iii) HERCULES CAPITAL, INC., a Maryland corporation, and (iv) the several banks
and other financial institutions or entities from time to time parties to the
Loan Agreement (collectively, referred to as “Lender”) and (c) HERCULES CAPITAL,
INC., a Maryland corporation, in its capacity as administrative agent for itself
and the Lender (in such capacity, the “Agent”).  Capitalized terms used herein
without definition shall have the same meanings given them in the Loan Agreement
(as defined below).

 

Recitals

A.  Borrower, Agent and Lender have entered into that certain Loan and Security
Agreement dated as of September 30, 2015, as amended by that certain Amendment
No. 1 to Loan and Security Agreement dated as of November 10, 2015, among
Borrower, Agent and Lender, as amended by that certain Amendment No. 2 to Loan
and Security Agreement dated as of December 12, 2016, among Borrower, Agent and
Lender, as amended by that certain Amendment No. 3 to Loan and Security
Agreement dated as of June 27, 2017, among Borrower, Agent and Lender, and as
further amended by that certain Amendment No. 4 to Loan and Security Agreement
dated as of April 17, 2018, among Borrower, Agent and Lender (as amended, and as
may be further amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”), pursuant to which
Lender has agreed to extend and make available to Borrower certain advances of
money.

B.  Borrower and Lender have agreed to amend the Loan Agreement upon the terms
and conditions more fully set forth herein.

Agreement

NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be
legally bound, the parties hereto agree as follows:

1.  Amendments.

1.1  The Loan Agreement shall be amended by (i) deleting the “.” appearing at
the end of Recital B and inserting in lieu thereof “;”, and (iii) inserting the
following new provisions to appear as Recitals C and D thereof:

“C.  Borrower has requested Lender to make available to Borrower 2018 Term Loan
Advances in an aggregate principal amount of up to Thirty Million Dollars
($30,000,000) (the “2018 Maximum Term Loan Amount”); and

  D.  Lender is willing to make the 2018 Term Loan Advances on the terms and
conditions set forth in this Agreement.”

 

 

--------------------------------------------------------------------------------

 

1.2  The Loan Agreement shall be amended by inserting the following new
definitions to appear in proper alphabetical order in Section 1.1 thereof
(Definitions and Rules of Construction):

“2015 End of Term Charge” shall have the meaning assigned to such term in
Section 2.5.

“2016 End of Term Charge” shall have the meaning assigned to such term in
Section 2.5.

“2017 End of Term Charge” shall have the meaning assigned to such term in
Section 2.5.

“2018 Amortization Date” means September 1, 2020; provided, however, that if
Milestone Event No. 1 occurs prior to [August 31, 2020], the 2018 Amortization
Date shall mean March 1, 2021; provided however, that if Milestone Event No. 2
occurs prior to February 28, 2021, the 2018 Amortization Date shall mean
September 1, 2021.

“2018 End of Term Charge” shall have the meaning assigned to such term in
Section 2.5.

“2018 Maximum Term Loan Amount” shall have the meaning assigned to such term in
the preamble to this Agreement.

“2018 Term A Loan Advance” shall have the meaning assigned to such term in
Section 2.1.1(a).

“2018 Term B Loan Advance” shall have the meaning assigned to such term in
Section 2.1.1(a).

“2018 Term C Loan Advance” shall have the meaning assigned to such term in
Section 2.1.1(a).

“2018 Term Loan Advance” and “2018 Term Loan Advances” shall have the meaning
assigned to such terms in Section 2.1.1(a).

“2018 Term Loan Interest Rate” means for any day, a floating per annum rate
equal to the greater of either (a) 7.85%, or (b) the sum of (i) 7.85%, plus (ii)
the Prime Rate minus five and three quarters of one percent (5.75%).  

“2018 Term Loan Maturity Date” means August 1, 2022.

“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to Borrower or any of its Affiliates from time to time
concerning or relating to bribery or corruption, including without limitation
the United States Foreign Corrupt Practices Act of 1977, as amended, the UK
Bribery Act 2010 and other similar legislation in any other jurisdictions.

“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order No.
13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising
or implementing the Bank Secrecy Act, and the laws administered by OFAC.

 

 

--------------------------------------------------------------------------------

 

“Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“Draw Period B” means the period of time commencing upon the occurrence of the
Funding Condition and continuing through the earliest to occur of (a) June 30,
2020, or (b) an Event of Default.

“Draw Period C” means the period of time commencing upon the occurrence of the
Funding Condition and continuing through the earliest to occur of (a) June 30,
2021 or (b) an Event of Default.

“Established Prepayment Date” means (i) with respect to the Term Loan Advances,
January 1, 2019; provided, however, that if the Borrower achieves the Interest
Only Period Extension Event, the Prepayment Date shall mean January 1, 2020, and
(ii) with respect to the 2018 Term Loan Advances, January 1, 2020.

“Fifth Amendment Closing Date” means August 1, 2018.

“Fifth Amendment Facility Charge” means Fifty Thousand Dollars ($50,000.00).

“Forecast” means the projections for Borrower and its consolidated Subsidiaries,
as delivered and accepted by Agent on June 1, 2018; provided that Borrower may
from time to time update such projections, pursuant to Section 7.1(g) hereof or
otherwise, with projections prepared in good faith by management if Borrower and
Agent shall mutually agree in their respective sole discretion.

“Funding Condition” means the occurrence of all of the following: (a) Borrower
has requested a 2018 Term Loan Advance, (b) Lender has received all necessary
internal and credit approvals for such 2018 Term Loan Advance (based upon
amongst other things, commercial traction, additional clinical, fundraising,
and/or business development milestones), (c) Borrower has delivered financial
and other information required by Lender, which shall be satisfactory to Lender
in its sole discretion, (d) no Event of Default exists at the time the requested
increase is to go into effect or would exist as a result of such 2018 Term Loan
Advance, and (e) Lender has provided written approval in its sole discretion
that such 2018 Term Loan Advance shall be made.  For clarity, upon satisfaction
of each of the conditions in (a) through (d), the determination of whether to
provide any such 2018 Term Loan Advance shall be in Lender’s sole discretion and
shall in no event occur automatically.

“Milestone Event No. 1” means confirmation by Agent that, on or prior to August
15, 2020, Borrower has delivered to Agent, evidence reasonably satisfactory to
Agent, that Borrower has achieved trailing six (6) month net revenue (determined
in accordance with GAAP) from the sale of its Omadacycline product of no less
than eighty-five percent

 

 

--------------------------------------------------------------------------------

 

(85.0%) of the projected Omadacycline product net revenues measured as of June
30, 2020, as set forth in the Forecast.

“Milestone Event No. 2” means confirmation by Agent that, on or prior to
February 15, 2021, Borrower has delivered to Agent, evidence reasonably
satisfactory to Agent, that Borrower has achieved trailing twelve (12) month net
revenue (determined in accordance with GAAP) from the sale of its Omadacycline
product of no less than eighty-five percent (85.0%) of the projected
Omadacycline product net revenues measured as of December 31, 2020, as set forth
in the Forecast.

“Sanctioned Country” shall mean, at any time, a country or territory which is
the subject or target of any Sanctions.

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, the European Union or any EU
member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.

“Sanctions” shall mean economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

1.3  The Loan Agreement shall be amended by deleting the following definitions
appearing in Section 1.1 thereof (Definitions and Rules of Construction) and
inserting in lieu thereof the following:

“Advance(s)” means a Term Loan Advance or a 2018 Term Loan Advance.

“Amortization Date” means January 1, 2019; provided, however, that if the
Borrower achieves the Interest Only Period Extension Event prior to December 31,
2018, the Amortization Date shall mean January 1, 2021.

“Ineligible Subsidiary” means any Domestic Subsidiary or Foreign Subsidiary
which has assets not in excess of five percent of the aggregate amount of the
assets of Borrower and its Subsidiaries on a consolidated basis for each of the
preceding three consecutive months; provided that at no time shall the aggregate
amount of Cash held at Ineligible Subsidiaries, taken as a whole, exceed
$5,000,000; provided however, if the aggregate amount of Cash held at Ineligible
Subsidiaries, taken as a whole, exceeds the foregoing limitation as a result of
their (or its) receipt of Cash otherwise received in the ordinary course from an
unaffiliated party, it will not be deemed a breach of the foregoing limitation
so long as the applicable Ineligible Subsidiaries make necessary dividends,
distributions, or transfers to Borrower within 30 days after the date on which
such Cash was received.

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person, or the acquisition of all or
substantially all of the assets of, a

 

 

--------------------------------------------------------------------------------

 

commercial-stage product or clinical-stage product candidate of, or a line of
business, division or operating group of, another Person.

“Prepayment Fee Percentage” is (a) with respect to the First Term Loan Advance
and each Second Term Loan Advance, two percent (2.0%), (b) with respect to the
Third Term Loan Advance and the Fourth Term Loan Advance, one percent (1.0%),
and (c) with respect to the 2018 Term Loan Advances, two and one-half of one
percent (2.5%).

“Required Lenders” means at any time, the holders of more than fifty percent
(50%) of the aggregate unpaid principal amount of the Advances then outstanding.

“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document (other than the Warrants), including any obligation to pay any
amount now owing or later arising (including, without limitation, the End of
Term Charge, the 2018 End of Term Charge, and the Prepayment Charge).

“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance and/or a 2018 Term Loan Advance to Borrower in a
principal amount not to exceed the amount set forth under the heading “Term
Commitment” opposite such Lender’s name on Schedule 1.1.  

“Term Loan Maturity Date” means September 1, 2020; provided, however, that if
the Borrower achieves the Interest Only Period Extension Event prior to December
31, 2018, the Term Loan Maturity Date shall mean September 1, 2021.

“Warrants” means (i) the Warrant Agreement dated as of even date hereof by and
between Hercules Technology II, L.P. and Inc., (ii) the Warrant Agreement dated
as of even date hereof by and between Hercules Technology III, L.P. and Inc.,
(iii) the Warrant Agreement dated as of the Second Amendment Closing Date by and
between Hercules Technology II, L.P. and Inc., (iv) the Warrant Agreement dated
as of the Second Amendment Closing Date by and between Hercules Technology III,
L.P. and Inc., (v) the Additional Warrants, if any, and (v) the Warrant
Agreement dated as of the Fifth Amendment Closing Date by and between Hercules
Capital, Inc. and Inc., in each case, as may be amended, restated or modified
from time to time.

1.4  The Loan Agreement is amended by deleting the definition of “End of Term
Charge Percentage” appearing in Section 1.1 thereof (Definitions and Rules of
Construction) in its entirety.

1.5  The Loan Agreement shall be amended by deleting Section 2.1(d) thereof
(Payment) in its entirety and inserting in lieu thereof the following:

“(d)  Borrower will pay interest on each Term Loan Advance on the first (1st)
Business Day of each month, beginning the month after the Advance
Date.  Commencing on the Amortization Date, and continuing on the first (1st)
Business Day of each month thereafter, until the Secured Obligations are repaid,
Borrower shall repay the aggregate principal balance of Term Loan Advances that
are outstanding on the day immediately preceding the Amortization Date in equal
monthly installments of principal and interest (mortgage style).  The entire
principal balance of the Term Loan Advances and all accrued but unpaid interest
hereunder, and all other Secured Obligations with respect to the Term Loan
Advances, shall be due and payable on Term Loan Maturity Date.  Borrower shall
make all payments

 

 

--------------------------------------------------------------------------------

 

under this Agreement without setoff, recoupment or deduction and regardless of
any counterclaim or defense. Lender will initiate debit entries to the
Borrower’s account as authorized on the ACH Authorization (i) on each payment
date of all periodic obligations payable to Lender under each Term Loan Advance
and (ii) out-of-pocket legal fees and costs incurred by Agent or Lender in
connection with Section 11.11 of this Agreement; provided that, with respect to
clause (i) above, in the event that Lender or Agent informs Borrower that Lender
will not initiate a debit entry to Borrower’s account for a certain amount of
the periodic obligations due on a specific payment date, Borrower shall pay to
Lender such amount of periodic obligations in full in immediately available
funds on such payment date; provided, further, that, with respect to clause (i)
above, if Lender or Agent informs Borrower that Lender will not initiate a debit
entry as described above later than the date that is three (3) Business Days
prior to such payment date, Borrower shall pay to Lender such amount of periodic
obligations in full in immediately available funds on the date that is three (3)
Business Days after the date on which Lender or Agent notifies Borrower of such;
provided, further, that, with respect to clause (ii) above, in the event that
Lender or Agent informs Borrower that Lender will not initiate a debit entry to
Borrower’s account for certain amount of such out-of-pocket legal fees and costs
incurred by Agent or Lender, Borrower shall pay to Lender such amount in full in
immediately available funds within three (3) Business Days.”

1.6  The Loan Agreement shall be amended by inserting the following new
provision to appear as Section 2.1.1:

“2.1.1  2018 Term Loan.

(a)  2018 Term Advances.  Subject to the terms and conditions of this Agreement,
Lender will severally (and not jointly) make, in an amount not to exceed its
respective 2018 Term Commitment, and Borrower agrees to draw, one (1) 2018 Term
Loan Advance in an aggregate principal amount of Ten Million Dollars
($10,000,000) on the Fifth Amendment Closing Date (the “2018 Term A Loan
Advance”).  Subject to the terms and conditions of this Agreement, during the
Draw Period B, upon Borrower’s written request in accordance with this Agreement
and Borrower’s payment to Lender of a fully-earned non-refundable commitment fee
equal to Fifty Thousand Dollars ($50,000.00), Lender will severally (and not
jointly) make in an amount not to exceed its respective 2018 Term Commitment,
one (1) 2018 Term Loan Advance in a principal amount of Ten Million Dollars
($10,000,000) (the “2018 Term B Loan Advance”).  Subject to the terms and
conditions of this Agreement, during the Draw Period C, upon Borrower’s written
request in accordance with this Agreement and Borrower’s payment to Lender of a
fully-earned non-refundable commitment fee equal to Fifty Thousand Dollars
($50,000.00), Lender will severally (and not jointly) make in an amount not to
exceed its respective 2018 Term Commitment, one (1) 2018 Term Loan Advance in a
principal amount of Ten Million Dollars ($10,000,000) (the “2018 Term C Loan
Advance”).  The 2018 Term A Loan Advance, the 2018 Term B Loan Advance, and the
2018 Term C Loan Advance are hereinafter referred to singly as the “2018 Term
Loan Advance” and collectively as the “2018 Term Loan Advances.”  The aggregate
outstanding 2018 Term Loan Advances shall not exceed the 2018 Maximum Term Loan
Amount.  Proceeds of any 2018 Term Loan Advance shall be deposited into an
account that is subject to a first priority perfected security interest in favor
of Agent perfected by an Account Control Agreement.

(b)  Advance Request.  To obtain a 2018 Term Loan Advance, Borrower shall
complete, sign and deliver to Agent an Advance Request (at least three (3)
Business Days

 

 

--------------------------------------------------------------------------------

 

before the Advance Date other than the Fifth Amendment Closing Date, which shall
be at least one (1) Business Day).  Lender shall fund each 2018 Term Loan
Advance in the manner requested by the Advance Request provided that each of the
conditions precedent to such 2018 Term Loan Advance is satisfied as of the
requested Advance Date.

(c)  Interest.  The principal balance of each 2018 Term Loan Advance shall bear
interest thereon from such Advance Date at the 2018 Term Loan Interest Rate
based on a year consisting of 360 days, with interest computed daily based on
the actual number of days elapsed.  The 2018 Term Loan Interest Rate will float
and change on the day the Prime Rate changes from time to time.

(d)  Payment.  Borrower will pay interest on each 2018 Term Loan Advance on the
first (1st) Business Day of each month, beginning the month after the Advance
Date.  Borrower shall repay the aggregate 2018 Term Loan Advances principal
balance that is outstanding on the day immediately preceding the 2018
Amortization Date, in equal monthly installments of principal and interest
(mortgage style) beginning on the 2018 Amortization Date and continuing on the
first Business Day of each month thereafter until the Secured Obligations (other
than inchoate indemnity obligations) are repaid.  The entire 2018 Term Loan
Advances principal balance and all accrued but unpaid interest hereunder, shall
be due and payable on the 2018 Term Loan Maturity Date. Borrower shall make all
payments under this Agreement without setoff, recoupment or deduction and
regardless of any counterclaim or defense. Lender will initiate debit entries to
the Borrower’s account as authorized on the ACH Authorization (i) on each
payment date of all periodic obligations payable to Lender under each Term
Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or Lender
in connection with Section 11.11 of this Agreement; provided that, with respect
to clause (i) above, in the event that Lender or Agent informs Borrower that
Lender will not initiate a debit entry to Borrower’s account for a certain
amount of the periodic obligations due on a specific payment date, Borrower
shall pay to Lender such amount of periodic obligations in full in immediately
available funds on such payment date; provided, further, that, with respect to
clause (i) above, if Lender or Agent informs Borrower that Lender will not
initiate a debit entry as described above later than the date that is three (3)
Business Days prior to such payment date, Borrower shall pay to Lender such
amount of periodic obligations in full in immediately available funds on the
date that is three (3) Business Days after the date on which Lender or Agent
notifies Borrower of such; provided, further, that, with respect to clause (ii)
above, in the event that Lender or Agent informs Borrower that Lender will not
initiate a debit entry to Borrower’s account for certain amount of such
out-of-pocket legal fees and costs incurred by Agent or Lender, Borrower shall
pay to Lender such amount in full in immediately available funds within three
(3) Business Days.”

1.7  The Loan Agreement shall be amended by deleting the second sentence
appearing in Section 2.2 thereof in its entirety and inserting in lieu thereof
the following:

“If a court of competent jurisdiction shall finally determine that Borrower has
actually paid to Lender an amount of interest in excess of the amount that would
have been payable if all of the Secured Obligations had at all times borne
interest at the Maximum Rate, then such excess interest actually paid by
Borrower shall be applied as follows:  first, to the payment of the Secured
Obligations consisting of the outstanding principal amount of the Term Loan
Advances and the 2018 Term Loan Advances; second, after all principal is repaid,
to the payment of Lender’s accrued interest, costs, expenses, professional fees
and

 

 

--------------------------------------------------------------------------------

 

any other Secured Obligations; and third, after all Secured Obligations are
repaid, the excess (if any) shall be refunded to Borrower.”

1.8  The Loan Agreement shall be amended by deleting Section 2.4 thereof
(Prepayment) in its entirety and inserting in lieu thereof the following:

“At its option, Borrower may at any time prepay all or a portion of the
outstanding Advances by paying the entire principal balance (or such portion
thereof), all accrued and unpaid interest with respect to the principal balance
being prepaid, together with a prepayment charge equal to the following
percentage of the Advance amount being repaid: subject to the second succeeding
sentence, if such Advance amounts are prepaid prior to the Prepayment Date, the
applicable Prepayment Fee Percentage of the then outstanding principal amount of
each Advance being prepaid; and on or after the Established Prepayment Date,
zero percent (0.0%) of the then outstanding amount of the Advances being prepaid
(each, a “Prepayment Charge”). For the avoidance of doubt, any Advance amounts
which are prepaid shall be applied to the outstanding principal amount of the
Advances as directed by Borrower.  Borrower agrees that the Prepayment Charge is
a reasonable calculation of Lender’s lost profits in view of the difficulties
and impracticality of determining actual damages resulting from an early
repayment of the Advances.  Borrower shall prepay the outstanding amount of all
principal and accrued interest through the prepayment date and the Prepayment
Charge upon the occurrence of a Change in Control. Notwithstanding the
foregoing, Agent and Lender agree to waive the Prepayment Charge if Agent and
Lender (in its sole and absolute discretion) agree in writing to refinance the
Advances prior to the Term Loan Maturity Date and/or 2018 Term Loan Maturity
Date, as applicable.”

1.9  The Loan Agreement shall be amended by deleting Section 2.5 thereof (End of
Term Charge) in its entirety and inserting in lieu thereof the following:

“On the earliest to occur of (i) September 1, 2020, (ii) the date that Borrower
prepays the outstanding Secured Obligations (other than any inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) in full, or (iii) the date that the Secured
Obligations become due and payable, Borrower shall pay Lender, with respect to
each Term Loan Advance, charges equal to the sum of (a) One Million Eight
Hundred Thousand Dollars ($1,800,000) (the “2015 End of Term Charge”), (b) Four
Hundred Fifty Thousand Dollars ($450,000) (the “2016 End of Term Charge”), and
(c) Two Hundred Twenty-Five Thousand Dollars ($225,000) (the “2017 End of Term
Charge” and, together with the 2015 End of Term Charge and 2016 End of Term
Charge, collectively, the “End of Term Charge”). On the earliest to occur of (i)
the 2018 Term Loan Maturity Date, (ii) the date that Borrower prepays the
outstanding Secured Obligations (other than any inchoate indemnity obligations
and any other obligations which, by their terms, are to survive the termination
of this Agreement) in full, or (iii) the date that the Secured Obligations
become due and payable, Borrower shall pay Lender, with respect to each 2018
Term Loan Advance, a charge equal to 6.95%, multiplied by the original principal
amount of such 2018 Term Loan Advance extended by Lender (the “2018 End of Term
Charge”). Notwithstanding the required payment date of such charge, the 2015 End
of Term Charge shall be deemed earned by Lender as of the Closing Date, the 2016
End of Term Charge shall be deemed earned by Lender as of the Second Amendment
Closing Date, the 2017 End of Term Charge shall be deemed earned by Lender as of
the Third Amendment Closing Date and the 2018 End of Term Charge shall be deemed
earned by Lender as of the Fifth Amendment Closing Date.”

 

 

--------------------------------------------------------------------------------

 

1.10  The Loan Agreement shall be amended by deleting Section 2.7 thereof (Pro
Rata Treatment) in its entirety and inserting in lieu thereof the following:

“Each payment (including prepayment) on account of any fee and any reduction of
the Advances shall be made pro rata according to the Term Commitments and 2018
Term Commitments of the relevant Lender.”

 

1.11  The Loan Agreement shall be amended by inserting the following new
paragraphs to appear at the end of Section 5.6 (Laws) thereof:

“Neither Borrower nor any of its Subsidiaries is an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended.  Neither Borrower nor any of its Subsidiaries is engaged as
one of its important activities in extending credit for margin stock (under
Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower and
each of its Subsidiaries has complied in all material respects with the Federal
Fair Labor Standards Act.  Neither Borrower nor any of its Subsidiaries is a
“holding company” or an “affiliate” of a “holding company” or a “subsidiary
company” of a “holding company” as each term is defined and used in the Public
Utility Holding Company Act of 2005.  Neither Borrower’s nor any of its
Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary
or, to Borrower’s Knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than in
material compliance with applicable laws.  Borrower and each of its Subsidiaries
has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all Governmental
Authorities that are necessary to continue their respective businesses as
currently conducted, except where the failure to obtain such consent, approval
or authorization, or make such declaration or filing or give such notice would
not reasonably be expected to have a Material Adverse Effect.

 

None of Borrower, any of its Subsidiaries, or any of Borrower’s or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person.  None of
Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of
their Affiliates or agents, acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise
engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or
other Anti-Terrorism Law.  None of the funds to be provided under this Agreement
will be used, directly or indirectly, (a) for any activities in violation of any
applicable anti-money laundering, economic sanctions and anti-bribery laws and
regulations laws and regulations or (b) for any payment to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.”

 

 

 

--------------------------------------------------------------------------------

 

1.12  The Loan Agreement shall be amended by inserting the following new
provision to appear as Section 5.15 thereof:

“5.15  Foreign Subsidiary Voting Rights. No decision or action in any governing
document of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary)
requires a vote of greater than 50.1% of the Equity Interests or voting rights
of such Foreign Subsidiary.”

1.13  The Loan Agreement shall be amended by inserting the following sentence to
appear at the end of Section 6.2 thereof:

“Borrower shall provide Agent with copies of each insurance policy, and upon
entering or amending any insurance policy required hereunder, Borrower shall
provide Agent with copies of such policies and shall deliver to Agent updated
insurance certificates with respect to such policies within 30 days of such
updates.”

1.14  The Loan Agreement shall be amended by inserting the following sentence to
appear at the end of Section 6.3 thereof:

“This Section 6.3 shall survive the repayment of the Secured Obligations under,
and otherwise shall survive the expiration or other termination of, the Loan
Agreement.”

1.15  The Loan Agreement shall be amended by deleting the following number
appearing in Section 7.1(g): “60” and inserting in lieu thereof the following:
“90”.

1.16  The Loan Agreement shall be amended by deleting Section 7.13 thereof
(Subsidiary) in its entirety and inserting in lieu thereof the following:

“7.13  Subsidiary.  Borrower shall notify Agent of each Subsidiary formed
subsequent to the Closing Date and, within 30 days of formation, shall cause any
such Qualified Subsidiary to execute and deliver to Agent a Joinder
Agreement.  In addition, Borrower shall cause any Ineligible Subsidiary that
ceases to qualify as an Ineligible Subsidiary to execute and deliver to Agent a
Joinder Agreement and grant and pledge to Agent a perfected security interest in
the shares of such former Ineligible Subsidiary and execute and deliver any and
all documents necessary in connection with such grant and pledge, each in form
and substance acceptable to Agent.”

1.17  The Loan Agreement shall be amended by inserting the following new
provisions to appear as Section 7.18, 7.19, 7.20 and 7.21 thereof:

“7.18  Financial Covenant - Minimum Cash/Net Revenue.  Prior to the occurrence
of the Interest Only Period Extension Event, tested at all times, Borrower shall
maintain unrestricted and unencumbered Cash in amount of at least Twenty-Five
Million Dollars ($25,000,000.00) in an account that is subject to an Account
Control Agreement in favor of Agent (“Minimum Cash Covenant”).  Upon the
occurrence of the Interest Only Period Extension Event, Borrower shall either:
(i) comply with the Minimum Cash Covenant, or (ii) achieve, calculated on a
trailing six (6) month basis and tested as of the last day of each calendar
quarter, net revenue (determined in accordance with GAAP) from the sale of its
Omadacycline product of no less than eighty-five percent (85.0%) of the
projected net revenues set forth in the Forecast.

 

 

--------------------------------------------------------------------------------

 

7.19  Foreign Subsidiary Voting Rights. Borrower shall not, and shall not permit
any Subsidiary, to amend or modify any governing document of any Foreign
Subsidiary of Borrower (other than an Eligible Foreign Subsidiary) the effect of
which is to require a vote of greater than 50.1% of the Equity Interests or
voting rights of such entity for any decision or action of such entity.

7.20  Use of Proceeds.  Borrower agrees that the proceeds of the Advances shall
be used solely to pay related fees and expenses in connection with this
Agreement and for working capital and general corporate purposes.  The proceeds
of the Advances will not be used in violation of Anti-Corruption Laws or
applicable Sanctions.”

7.21  Compliance with Laws.

Borrower shall maintain, and shall cause its Subsidiaries to maintain,
compliance in all material respect with all applicable laws, rules or
regulations (including any law, rule or regulation with respect to the making or
brokering of loans or financial accommodations), and shall, or cause its
Subsidiaries to, obtain and maintain all required material governmental
authorizations, approvals, licenses, franchises, permits or registrations
reasonably necessary in connection with the conduct of Borrower’s business.

Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly
enter into any documents, instruments, agreements or contracts with any Person
listed on the OFAC Lists.  Neither Borrower nor any of its Subsidiaries shall,
nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly
or indirectly, (i) conduct any business or engage in any transaction or dealing
with any Blocked Person, including, without limitation, the making or receiving
of any contribution of funds, goods or services to or for the benefit of any
Blocked Person, (ii) deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to Executive Order
No. 13224 or any similar executive order or other Anti‑Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or other Anti‑Terrorism Law.

Borrower shall implement and maintain policies and procedures designed to ensure
compliance by the Borrower, its Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions, and Borrower, its Subsidiaries and their respective officers and
employees and to the knowledge of Borrower its directors and agents, shall be in
compliance with Anti-Corruption Laws and applicable Sanctions in all material
respects.

Borrower shall ensure that none of Borrower, any of its Subsidiaries or any of
their respective directors, officers or employees, or to the knowledge of
Borrower, any agent for Borrower or its Subsidiaries that will act in any
capacity in connection with or benefit from the credit facility established
hereby, is a Sanctioned Person.”

1.18  The Loan Agreement shall be amended by deleting Section 9.2 in its
entirety and inserting in lieu thereof the following:

“9.2  Covenants.  Borrower breaches or defaults in the performance of any
covenant or Secured Obligation under this Agreement, or any of the other Loan
Documents or any other

 

 

--------------------------------------------------------------------------------

 

agreement among Borrower, Agent and Lender, and (a) with respect to a default
under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5,
7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19, 7.20 and 7.21), any
other Loan Document or any other agreement among Borrower, Agent and Lender,
such default continues for more than ten (10) days after the earlier of the date
on which (i) Agent or Lender has given notice of such default to Borrower and
(ii) Borrower has actual knowledge of such default or (b) with respect to a
default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16,
7.17, 7.18, 7.19, 7.20 and 7.21 the occurrence of such default; or”

1.19  The Loan Agreement shall be amended by deleting Section 11.19 in its
entirety and inserting in lieu thereof the following:

“11.19  Multiple Borrowers.

(a)  Borrower’s Agent.  Each of the Borrowers hereby irrevocably appoints Inc.
as its agent, attorney-in-fact and legal representative for all purposes,
including requesting disbursement of the Term Loan and receiving account
statements and other notices and communications to Borrowers (or any of them)
from the Agent or any Lender.  The Agent may rely, and shall be fully protected
in relying, on any request for the Term Loan, disbursement instruction, report,
information or any other notice or communication made or given by Inc., whether
in its own name or on behalf of one or more of the other Borrowers, and the
Agent shall not have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect on
it of any such request, instruction, report, information, other notice or
communication, nor shall the joint and several character of the Borrowers’
obligations hereunder be affected thereby.

(b)  Waivers.  Each Borrower hereby waives:  (i) any right to require the Agent
to institute suit against, or to exhaust its rights and remedies against, any
other Borrower or any other person, or to proceed against any property of any
kind which secures all or any part of the Secured Obligations, or to exercise
any right of offset or other right with respect to any reserves, credits or
deposit accounts held by or maintained with the Agent or any Indebtedness of the
Agent or any Lender to any other Borrower, or to exercise any other right or
power, or pursue any other remedy the Agent or any Lender may have; (ii) any
defense arising by reason of any disability or other defense of any other
Borrower or any guarantor or any endorser, co-maker or other person, or by
reason of the cessation from any cause whatsoever of any liability of any other
Borrower or any guarantor or any endorser, co-maker or other person, with
respect to all or any part of the Secured Obligations, or by reason of any act
or omission of the Agent or others which directly or indirectly results in the
discharge or release of any other Borrower or any guarantor or any other person
or any Secured Obligations or any security therefor, whether by operation of law
or otherwise; (iii) any defense arising by reason of any failure of the Agent to
obtain, perfect, maintain or keep in force any Lien on, any property of any
Borrower or any other person; (iv) any defense based upon or arising out of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any other Borrower
or any guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Secured
Obligations (including without limitation any interest thereon), in or as a
result of any such proceeding.  Until all of the Secured Obligations have been
paid, performed, and discharged in full, nothing shall discharge or satisfy the
liability of any Borrower hereunder except the full performance and payment of
all of the Secured Obligations.  If any claim is ever made upon the Agent for
repayment or recovery of any

 

 

--------------------------------------------------------------------------------

 

amount or amounts received by the Agent in payment of or on account of any of
the Secured Obligations, because of any claim that any such payment constituted
a preferential transfer or fraudulent conveyance, or for any other reason
whatsoever, and the Agent repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over the Agent or any of its property, or by reason of any
settlement or compromise of any such claim effected by the Agent with any such
claimant (including without limitation the any other Borrower), then and in any
such event, each Borrower agrees that any such judgment, decree, order,
settlement and compromise shall be binding upon such Borrower, notwithstanding
any revocation or release of this Agreement or the cancellation of any note or
other instrument evidencing any of the Secured Obligations, or any release of
any of the Secured Obligations, and each Borrower shall be and remain liable to
the Agent and the Lenders under this Agreement for the amount so repaid or
recovered, to the same extent as if such amount had never originally been
received by the Agent or any Lender, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Agreement.  Each Borrower hereby expressly and unconditionally waives all
rights of subrogation, reimbursement and indemnity of every kind against any
other Borrower, and all rights of recourse to any assets or property of any
other Borrower, and all rights to any collateral or security held for the
payment and performance of any Secured Obligations, including (but not limited
to) any of the foregoing rights which Borrower may have under any present or
future document or agreement with any other Borrower or other person, and
including (but not limited to) any of the foregoing rights which any Borrower
may have under any equitable doctrine of subrogation, implied contract, or
unjust enrichment, or any other equitable or legal doctrine.

(c)  Consents.  Each Borrower hereby consents and agrees that, without notice to
or by Borrower and without affecting or impairing in any way the obligations or
liability of Borrower hereunder, the Agent may, from time to time before or
after revocation of this Agreement, do any one or more of the following in its
sole and absolute discretion:  (i) accept partial payments of, compromise or
settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the Secured
Obligations; (ii) grant any other indulgence to any Borrower or any other Person
in respect of any or all of the Secured Obligations or any other matter; (iii)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Secured Obligations or any guaranty of any
or all of the Secured Obligations, or on which the Agent at any time may have a
Lien, or refuse to enforce its rights or make any compromise or settlement or
agreement therefor in respect of any or all of such property; (iv) substitute or
add, or take any action or omit to take any action which results in the release
of, any one or more other Borrowers or any endorsers or guarantors of all or any
part of the Secured Obligations, including, without limitation one or more
parties to this Agreement, regardless of any destruction or impairment of any
right of contribution or other right of Borrower; (v) apply any sums received
from any other Borrower, any guarantor, endorser, or co-signer, or from the
disposition of any Collateral or security, to any Indebtedness whatsoever owing
from such person or secured by such Collateral or security, in such manner and
order as the Agent determines in its sole discretion, and regardless of whether
such Indebtedness is part of the Secured Obligations, is secured, or is due and
payable.  Each Borrower consents and agrees that the Agent shall be under no
obligation to marshal any assets in favor of Borrower, or against or in payment
of any or all of the Secured Obligations.  Each Borrower further consents and
agrees that the Agent shall have no duties or responsibilities whatsoever with
respect to any property securing

 

 

--------------------------------------------------------------------------------

 

any or all of the Secured Obligations.  Without limiting the generality of the
foregoing, the Agent shall have no obligation to monitor, verify, audit,
examine, or obtain or maintain any insurance with respect to, any property
securing any or all of the Secured Obligations.

(d)  Independent Liability.  Each Borrower hereby agrees that one or more
successive or concurrent actions may be brought hereon against such Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Agent. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and such Borrower is not relying in any manner upon any
representation or statement of the Agent or any Lender with respect
thereto.  Each Borrower represents and warrants that it is in a position to
obtain, and each Borrower hereby assumes full responsibility for obtaining, any
additional information concerning any other Borrower’s financial condition and
any other matter pertinent hereto as such Borrower may desire, and such Borrower
is not relying upon or expecting the Agent to furnish to it any information now
or hereafter in the Agent’s possession concerning the same or any other matter.

(e)  Subordination.  All Indebtedness of a Borrower now or hereafter arising
held by another Borrower is subordinated to the Secured Obligations and the
Borrower holding the Indebtedness shall take all actions reasonably requested by
Agent to effect, to enforce and to give notice of such subordination.”

1.20  Exhibit F (Compliance Certificate) is hereby amended and restated in its
entirety with the Exhibit F appearing as Schedule 1 hereto.

1.21  Schedule 1.1 is hereby amended and restated in its entirety with the
Schedule 1.1 appearing as Schedule 2 hereto.

2.  Borrower’s Representations And Warranties.  Borrower represents and warrants
that:

2.1  Immediately upon giving effect to this Amendment (i) the representations
and warranties contained in the Loan Documents are true, accurate and complete
except to the extent such representations and warranties relate to an earlier
date, in which case they are true and correct as of such date, after giving
effect in all cases to any standard(s) of materiality contained in the Loan
Agreement as to such representations and warranties and (ii) no Event of Default
has occurred and is continuing with respect to which Borrower has not been
notified in writing by Agent or Lender.

2.2  Borrower has the corporate power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment.

2.3  The certificate of incorporation, bylaws and other organizational documents
of Borrower delivered to Agent and/or Lender on the Fifth Amendment Closing Date
are true, accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect.

 

 

--------------------------------------------------------------------------------

 

2.4  The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized by all necessary corporate action
on the part of Borrower.

2.5  This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’ rights.

2.6  As of the date hereof, it has no defenses against the obligations to pay
any amounts under the Secured Obligations.  

Borrower acknowledges that each of Agent and Lender has acted in good faith and
has conducted in a commercially reasonable manner its relationships with
Borrower in connection with this Amendment and in connection with the Loan
Documents.  Borrower understands and acknowledges that each of Agent and Lender
is entering into this Amendment in reliance upon, and in partial consideration
for, the above representations and warranties, and agrees that such reliance is
reasonable and appropriate.

3.  Limitation.  The amendments set forth in this Amendment shall be limited
precisely as written and shall not be deemed (a) to be a waiver or modification
of any other term or condition of the Loan Agreement or of any other instrument
or agreement referred to therein or to prejudice any right or remedy which Agent
and/or Lender may now have or may have in the future under or in connection with
the Loan Agreement (as amended hereby) or any instrument or agreement referred
to therein; or (b) to be a consent to any future amendment or modification or
waiver to any instrument or agreement the execution and delivery of which is
consented to hereby, or to any waiver of any of the provisions thereof.  Except
as expressly amended hereby, the Loan Agreement shall continue in full force and
effect.

4.  Effectiveness.  This Amendment shall become effective upon the satisfaction
of all the following conditions precedent:

4.1  Amendment.  Borrower, Agent and Lender shall have duly executed and
delivered this Amendment to Lender and such other documents as Agent may
reasonably request.

4.2  Warrant.  Each Lender shall have received the Warrant.

4.3  Borrowing Resolutions.  A certified copy of resolutions of Borrower’s Board
evidencing approval of (i) this Amendment and other transactions evidenced by
the Loan Documents; and (ii) the Warrant.

4.4  Certificates of Good Standing.  A certificate of good standing for each
Borrower from its state of incorporation and similar certificates from all other
jurisdictions in which such Borrower does business and where the failure to be
qualified would have a Material Adverse Effect.

4.5  Fifth Amendment Facility Charge.  Borrower shall have paid to Agent the
Fifth Amendment Facility Charge.

4.6  Payment of Lender Expenses.  Borrower shall have paid all reasonable and
invoiced Lender expenses (including all reasonable attorneys' fees and
reasonable expenses) incurred through the date of this Amendment.

 

 

--------------------------------------------------------------------------------

 

5.  POST-CLOSING DELIVERABLES.  Borrower shall deliver to Agent, on or before
thirty (30) days after the Fifth Amendment Closing Date (the “Post-Closing
Delivery Date”), (i) certificates of insurance on the Acord 25 and Acord 28,
(ii) endorsements to the Borrower’s property and liability policies, which
endorsements shall name Agent as lender loss payee and additional insured, and
(iii) copies of all insurance policies.

6.  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, both at
law and in equity, which Borrower, or any of its successors, assigns, or other
legal representatives may have actual knowledge of or be reasonably expected to
know that they 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 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 Borrower has actual knowledge of or would
reasonably be expected to know could now be asserted or shall affect in any
manner the final, absolute and unconditional nature of the release set forth
above.

7.  Counterparts.  This Amendment may be signed in any number of counterparts,
and by different parties hereto in separate counterparts, with the same effect
as if the signatures to each such counterpart were upon a single
instrument.  All counterparts shall be deemed an original of this Amendment.
This Amendment may be executed by facsimile, portable document format (.pdf) or
similar technology signature, and such signature shall constitute an original
for all purposes.

8.  Incorporation By Reference.  The provisions of Section 11 of the Loan
Agreement, as amended hereby, shall be deemed incorporated herein by reference,
mutatis mutandis.

 

              [Signature Page Follows]

 

 

 

--------------------------------------------------------------------------------

 

In Witness Whereof, the parties have duly authorized and caused this Amendment
to be executed as of the date first written above.

BORROWER:

PARATEK PHARMACEUTICALS, INC.

BORROWER:

 

PARATEK PHARMACEUTICALS, INC.

Signature:     /s/ Douglas W. Pagán

Print Name:   Douglas W. Pagán

Title:              Chief Financial Officer

 

PARATEK PHARMA, LLC.

Signature:     /s/ Douglas W. Pagán

Print Name:   Douglas W. Pagán

Title:              Chief Financial Officer

 

 

Accepted in Palo Alto, California:

 

AGENT:

HERCULES CAPITAL, INC.

Signature:     /s/ Jennifer Choe

Print Name:   Jennifer Choe

Title:              Assistant General Counsel

 

LENDER:

 

HERCULES TECHNOLOGY II, L.P.,

a Delaware limited partnership

 

By: Hercules Technology SBIC Management, LLC,

its General Partner

 

By: HERCULES CAPITAL, INC.,

its Manager

 

 

--------------------------------------------------------------------------------

 

 

Signature:     /s/ Jennifer Choe

Print Name:   Jennifer Choe

Title:              Assistant General Counsel

 

HERCULES TECHNOLOGY III, L.P.,

a Delaware limited partnership

 

By: Hercules Technology SBIC Management, LLC,

its General Partner

By: HERCULES CAPITAL, INC.,

its Manager

 

Signature:     /s/ Jennifer Choe

Print Name:   Jennifer Choe

Title:              Assistant General Counsel

 

HERCULES CAPITAL, INC.

 

Signature:     /s/ Jennifer Choe    

Print Name:   Jennifer Choe

Title:              Assistant General Counsel

 

 

--------------------------------------------------------------------------------

 

Schedule 1

 

EXHIBIT F

COMPLIANCE CERTIFICATE

Hercules Capital, Inc.
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated September
30, 2015 and the Loan Documents (as defined therein) entered into in connection
with such Loan and Security Agreement all as may be amended from time to time
(hereinafter referred to collectively as the “Loan Agreement”) by and among
Hercules Capital, Inc., the several banks and other financial institutions or
entities from time to time party thereto (collectively, the “Lender”) and
Hercules Capital, Inc., as agent for the Lender (the “Agent”) and Paratek
Pharmaceuticals, Inc. and Paratek Pharma, LLC (individually and collectively,
jointly and severally, the “Borrower”) as Borrower. All capitalized terms not
defined herein shall have the same meaning as defined in the Loan Agreement.

The undersigned is an Officer of Borrower, knowledgeable of all Borrower
financial matters, and is authorized to provide certification of information
regarding Borrower; hereby certifies, in such capacity, that in accordance with
the terms and conditions of the Loan Agreement, except as set forth below, (i)
Borrower is in compliance for the period ending ___________ of all covenants,
conditions and terms and (ii) hereby reaffirms that all representations and
warranties contained therein are true and correct on and as of the date of this
Compliance Certificate with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date, after giving effect in all cases to any standard(s) of
materiality contained in the Loan Agreement as to such representations and
warranties.  Attached are the required documents supporting the above
certification.  The undersigned further certifies that these are prepared in
accordance with GAAP (except for the absence of footnotes with respect to
unaudited financial statement and subject to normal year end adjustments) and
are consistent from one period to the next except as explained below.

EXCEPTION(S):______________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

 

 

 

--------------------------------------------------------------------------------

 

REPORTING REQUIREMENT

REQUIRED

CHECK IF ATTACHED

Interim Financial Statements

Monthly within 30 days

 

Interim Financial Statements

Quarterly within 45 days

 

Audited Financial Statements

FYE within 90 days

 

 

 

 

FINANCIAL COVENANT

REQUIRED

ACTUAL

Liquidity

Lesser of (i) one (1) times the outstanding Secured Obligations of Borrower to
Lender or (ii) one hundred percent (100%) of all cash of Borrower and its
Subsidiaries (other than cash held in (a) Excluded Accounts or (b) other
accounts in an aggregate amount not in excess of One Hundred Thousand Dollars
($100,000.00)).

 

 

Minimum Cash (prior the occurrence of the Interest Only Period Extension Event)

($25,000,000) in an account subject to an Account Control Agreement in favor of
Agent, tested at all times

 

Minimum Cash/Net Revenue (after the occurrence of the Interest Only Period
Extension Event)

 

Either (i) ($25,000,000) in an account subject to an Account Control Agreement
in favor of Agent, tested at all times, or (ii) achieve, calculated on a
trailing six (6) month basis and tested as of the last day of each calendar
quarter, net revenue (determined in accordance with GAAP) from the sale of its
Omadacycline product of no less than eighty-five percent (85.0%) of the
projected net revenues set forth in the Forecast.

 

 

 

 

INELIGIBLE SUBSIDIARIES

 

 

Name of Ineligible Subsidiary

Value of Assets

Annual Revenue

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

Depository AC #

Financial Institution

Account Type (Depository / Securities)

Last Month Ending Account Balance

Purpose of Account

BORROWER Name/Address:

 

 

1

 

 

 

 

 

2

 

 

 

 

 

3

 

 

 

 

 

4

 

 

 

 

 

5

 

 

 

 

 

6

 

 

 

 

 

7

 

 

 

 

 

 

BORROWER SUSIDIARY / AFFILIATE COMPANY Name/Address

 

 

1

 

 

 

 

 

2

 

 

 

 

 

3

 

 

 

 

 

4

 

 

 

 

 

5

 

 

 

 

 

6

 

 

 

 

 

7

 

 

 

 

 

 

 

 

Very Truly Yours,

 

PARATEK PHARMACEUTICALS, INC.

By:   _______________________________

Name:   _____________________________

Title:   ______________________________

 

PARATEK PHARMA, LLC

By:   _______________________________

Name:   _____________________________

Title:   ______________________________

 

 

 

--------------------------------------------------------------------------------

 

 

 

Schedule 2

SCHEDULE 1.1

COMMITMENTS

 

TERM LOAN ADVANCES

 

LENDER

TERM COMMITMENT

HERCULES TECHNOLOGY II, L.P.

$10,000,000

HERCULES TECHNOLOGY III, L.P.

$20,000,000

HERCULES CAPITAL, INC.

$30,000,000

TOTAL COMMITMENTS

$60,000,000

 

2018 TERM LOAN ADVANCES

 

LENDER

TRANCHE

TERM COMMITMENT

HERCULES CAPITAL, INC.

2018 Term A Loan

$10,000,000

HERCULES CAPITAL, INC.

2018 Term B Loan

$10,000,000*

HERCULES CAPITAL, INC.

2018 Term C Loan

$10,000,000*

TOTAL COMMITMENTS

 

$30,000,000

 

*Funding of the 2018 Term B Loan Advance and Term C Loan Advance is in Lender’s
sole discretion.  

 

(27955.50)

2346924.6\27955.00050