Exhibit 10.2

 

EXECUTION COPY

 

AMENDMENT TO SECOND AMENDED AND RESTATED FACILITY AGREEMENT

 

AMENDMENT TO SECOND AMENDED AND RESTATED FACILITY AGREEMENT (this “Amendment”),
dated as of October 3, 2016, by and among ARALEZ PHARMACEUTICALS, INC.
(“Parent”), POZEN, INC., TRIBUTE PHARMACEUTICALS CANADA, INC. (“Credit
Parties”), DEERFIELD PRIVATE DESIGN FUND III, L.P., DEERFIELD INTERNATIONAL
MASTER FUND, L.P., and DEERFIELD PARTNERS, L.P. (collectively referred to as the
“Lenders” and together with the Credit Parties, the “Parties”).

 

RECITALS:

 

A.                                    Credit Parties and Lenders have entered
into that certain Second Amended and Restated Facility Agreement dated as of
December 7, 2015 (as the same has been and may hereinafter be amended, modified,
restated or otherwise supplemented from time to time, including, but not limited
to, by those certain Limited Consents between Lenders and Credit Parties dated
as of September 6, 2016 and October 3, 2016, respectively, the “Facility
Agreement”).

 

B.                                    Credit Parties desire to enter into this
Amendment to modify certain provisions thereof.

 

C.                                    The Lenders party hereto, constituting the
Required Lenders, are willing to amend the Facility Agreement on the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the
Parties agree as follows:

 

1.                                      Defined Terms.  Capitalized terms used
herein which are defined in the Facility Agreement or other Loan Documents,
unless otherwise defined herein, shall have the meanings ascribed to them in the
Facility Agreement and the other Loan Documents.  The Recitals to this Amendment
are incorporated herein in their entirety by this reference thereto.

 

2.                                      Amendments to Facility Agreement.  Upon
the satisfaction of the conditions set forth in Section 3 of this Amendment (the
“First Amendment Effective Date”) the Facility Agreement is hereby amended as
follows:

 

a.                                      Section 1.1 of the Facility Agreement is
hereby amended to add the following new defined terms:

 

“Limited Consents” means the Limited Consents between Credit Parties and Lenders
dated as of September 6, 2016 and October 3, 2016, respectively.

 

“Permitted Acquisition Loans” shall have the meaning ascribed to it in the
Limited Consents.

 

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b.                                      The Facility Agreement is hereby amended
to provide that, notwithstanding anything contained in the Facility Agreement or
any other Loan Document to the contrary, if the Lenders have made Permitted
Acquisition Loans:

 

(i) Credit Parties shall, no earlier than fifteen (15) days, and no later than
ten (10) days, prior to Parent’s filing with the SEC of any periodic report on
Form 10-Q or Form 10-K that first contains Parent’s financial results for any
fiscal quarter (the “Filing Date”), commencing with the second full fiscal
quarter ending after the funding of the Permitted Acquisition Loans (the quarter
ending June 30, 2017), deliver to Lenders a certificate, executed by the Chief
Financial Officer of Parent (each, a “Parent Certificate”), certifying on a
confidential basis (A) that Parent has calculated the Specified Revenue and
(commencing with the fiscal quarter ending September 30, 2018) Post-Acquisition
EBITDA (each in accordance with the respective definitions thereof as set forth
below) for the six-month period ending on the last day of such fiscal quarter,
based on and appropriately derived from preliminary financial statements for the
applicable fiscal quarters, prepared in accordance with GAAP consistent with
past practice, and the Specified Revenue and (if applicable) Post-Acquisition
EBITDA are appropriately derived therefrom; (B) as to whether there has been a
Post-Acquisition Condition Failure (as defined below) for such six-month period
and (C) the anticipated Filing Date.  Parent shall promptly notify the Lenders
if any subsequent change to such preliminary financial statements or the
information derived therefrom would result in a Post-Acquisition Condition
Failure. Upon the request of any of the Required Lenders, Parent shall promptly
furnish to the Lenders such information (including, without limitation, Parent’s
calculations of the Specified Revenue and (if applicable) Post-Acquisition
EBITDA, along with support therefor, for the applicable six-month period) as the
Required Lenders may reasonably request for the purpose of verifying the
accuracy (or determining the inaccuracy) of Parent’s determination as to whether
there has been a Post-Acquisition Condition Failure as set forth in the Parent
Certificate.  For purposes hereof, (x) “Post-Acquisition EBITDA” for any
six-month period ending on a fiscal quarter end shall mean Adjusted EBITDA (as
defined in the Facility Agreement, but calculated without giving effect to
clause (D) of such definition) for such six-month period; provided that, for
purposes hereof, all references to Test Period in the definition shall be deemed
to mean such six-month period; and (y) “Specified Revenue” for any six-month
period ending on a fiscal quarter end shall mean the Net Sales (as defined in
the Asset Purchase Agreement, dated as of October 3, 2016, by and among
AstraZeneca AB, Aralez Pharmaceuticals Trading DAC and Parent (the “AZ Purchase
Agreement”), but including only the Net Sales of the Credit Parties), as derived
from the applicable Net Sales Statements delivered pursuant to the AZ Purchase
Agreement, together with any license fees, royalty amounts or similar payments
that are received by the Credit Parties from any AG Selling Entities and Selling
Entities that are not Credit Parties and are directly attributable to the
license thereto of the Product and/or the Authorized Generic Product for
distribution thereby, during the fiscal quarters included in such six-month
period, as contained in Parent’s periodic reports filed with the SEC.   Each
Lender agrees to maintain the confidentiality of any information that is
contained in any Parent Certificate and which has not been publicly disclosed,
provided that the Company timely files its periodic reports with the SEC and
complies with its disclosure obligations set forth below.

 

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(ii)  In the event that (A) (x) as of the end of the second full fiscal quarter
of Parent ending after the funding of Permitted Acquisition Loans (i.e., the
quarter ending June 30, 2017) or as of the end of any fiscal quarter thereafter,
Specified Revenue with respect to such six-month period is less than $17,500,000
and (y) commencing with the seventh full fiscal quarter of Parent ending after
the funding of Permitted Acquisition Loans (i.e., the quarter ending
September 30, 2018), as of the end of such fiscal quarter or as of the end of
any fiscal quarter thereafter, the Post-Acquisition EBITDA of Parent with
respect to the six-month period ending as of such fiscal quarter end is less
$12,500,000 for any six-month period ending on or prior to June 30, 2019, or
$25,000,000 for any six-month period ending after June 30, 2019 (the occurrence
of part (x) of this clause (A) as of the end of any fiscal quarter ending prior
to September 30, 2018,  or both part (x) and part (y) of this clause (A) as of
the end of any fiscal quarter ending on or after September 30, 2018, being
referred to as a “Post-Acquisition Condition Failure”), or (B) Parent fails to
timely deliver a Parent Certificate or otherwise comply in any material respect
with any obligation set forth in Section 2(b)(i) above and, in the case of this
clause (B), such failure is not remedied by Parent or waived by the Lenders
within two (2) Business Days after the receipt by Parent of notice from the
Lenders of such failure, the Required Lenders, in their sole discretion, may,
upon written notice to Credit Parties within four (4) Business Days of the
latest of (I) the receipt of the Parent Certificate, (II) the date Parent
notifies the Lenders that a subsequent change to preliminary financial
statements or the information derived therefrom would result in a
Post-Acquisition Condition Failure or (III) the expiration of any applicable
cure period pursuant to clause (B) above (but in no event earlier than four
(4) Business Days prior to the anticipated Filing Date as set forth in the
Parent Certificate), elect to have the then outstanding principal balance of the
Acquisition Loans amortize quarterly, in equal quarterly installments (in each
case together with accrued interest thereon), payable on the first day of each
January, April, July and October thereafter, in an amount necessary to repay the
then outstanding principal amount of the Acquisition Loans in full over the
number of full calendar quarters then remaining prior to the sixth anniversary
of the funding of the Permitted Acquisition Loans.  Upon such election,
(X) Credit Parties shall make such payments to the Lenders in accordance with
the terms hereof and the Facility Agreement (as amended hereby), and (Y) Parent
shall disclose that the Lenders have made such election in the periodic report
on Form 10-Q or Form 10-K for the fiscal quarter or year, as applicable (or if
not disclosed therein, in a Form 8-K filed no later than four (4) Business Days
after Lenders make such election).  In the event of any failure of Credit
Parties to make any such payment, the Lenders shall be entitled to exercise all
rights and remedies under the Facility Agreement.  For the avoidance of doubt,
the failure of the Required Lenders to make such election with respect to any
six-month period shall not affect the Required Lenders’ right to make such an
election with respect to any subsequent six-month period, to the extent the
Required Lenders would be entitled to do so as provided herein.

 

3.                                      Conditions Precedent.  The effectiveness
of this Amendment is subject to the following conditions precedent:

 

a.                                      Amendment.  The Credit Parties shall
each have executed and delivered counterparts to this Amendment to the Lenders.

 

b.                                      AZ Purchase Agreement.  The Closing (as
defined in the AZ Purchase Agreement) shall have occurred.

 

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4.                                      Legal Fees and Expenses.  The Credit
Parties agree to promptly reimburse Lenders for all reasonable and documented
out-of-pocket costs, fees and expenses, including reasonable and documented
out-of-pocket legal fees and expenses, incurred in connection with the
negotiation, drafting and closing of this Amendment, any related Loan Documents
and the Limited Consents.

 

5.                                      Representations and Warranties.  Each
Credit Party hereby represents and warrants to Lenders:

 

a.                                      As of the date hereof, except as
expressly modified by the amendments in Section 2 above, the representations and
warranties of Credit Parties contained in the Loan Documents are (i) in the case
of representations and warranties qualified by “materiality,” “Material Adverse
Effect” or similar language, true and correct in all respects and (ii) in the
case of all other representations and warranties, true and correct in all
material respects, in each case on and as of the date hereof as if made as of
the date of this Amendment, except to the extent that any such representation or
warranty relates to a specific date, in which case such representation and
warranty shall be true and correct in all respects or all material respects, as
applicable, as of such earlier date;

 

b.                                      No Default or Event of Default exists;
and

 

c.                                       Each Credit Party has the requisite
organizational power and authority to enter into and to consummate the
transactions contemplated by this Amendment and each of the other Loan Documents
(including as amended hereby) to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.  Each Credit Party’s execution and
delivery of each of this Amendment and the other Loan Documents (including as
amended hereby) to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary organizational action on the part of such Credit Party, and no further
action is required by any Credit Party, its board of directors, stockholders or
other applicable governing body or equity owners in connection therewith other
than in connection with the Required Approvals (as defined below).  Each of the
Amendment and the other Loan Documents (including as amended hereby) to which it
is a party has been (or upon delivery will have been) duly executed by each
Credit Party which is a party thereto and is, or when delivered in accordance
with the terms hereof, will constitute the legal, valid and binding obligation
of such Credit Party enforceable against it in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.  The execution, delivery and
performance of this Amendment and the other Loan Documents (including as amended
hereby) by each Credit Party which is a party thereto and the consummation of
the transactions therein contemplated will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than
Permitted Liens) upon any assets of such Credit Party pursuant to, any material
agreement to which such Credit Party is a party or by which such Credit Party is
bound or to which any of the assets of such Credit Party is subject, (ii) result
in any violation of or conflict with the provisions of the Organizational
Documents, (iii) result in the violation of any material Applicable Laws in any
material respect

 

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or (iv) result in the violation of any judgment, order, rule, regulation or
decree of any Governmental Authority.  No consent, approval, authorization or
order of, or registration or filing with any Governmental Authority is required
for the execution, delivery and performance of any of this Amendment and the
other Loan Documents, or for the consummation by the Credit Parties of the
transactions contemplated thereby, except for those that have been made or
obtained prior to the date of this Agreement (the “Required Approvals”).

 

6.                                      No Further Amendments; Ratification of
Liability.  Except as amended hereby, the Facility Agreement and each of the
other Loan Documents shall remain unchanged and in full force and effect in
accordance with their respective terms.  Each Credit Party as a debtor, grantor,
pledgor, guarantor or assignor, or in any similar capacity in which it has
granted Liens or acted as an accommodation party or guarantor, as the case may
be, hereby ratifies, confirms and reaffirms its liabilities, its payment and
performance obligations (contingent or otherwise) and its agreements under the
Facility Agreement and the other Loan Documents, all as amended by this
Amendment, and the liens and security interests granted, created and perfected
thereby.  The Lenders’ agreement to the terms of this Amendment or any other
amendment of the Facility Agreement or any other Loan Document shall not be
deemed to establish or create a custom or course of dealing among Credit Parties
and Lenders.  This Amendment, together with the other Loan Documents, contains
the entire agreement among the Credit Parties and Lenders contemplated by this
Amendment.

 

7.                                      Incorporation by Reference.  The
provisions of Article 6 of the Facility Agreement are incorporated herein by
reference mutatis mutandis.

 

[Remainder of Page Intentionally Left Blank, signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date set
forth above.

 

 

CREDIT PARTIES:

 

 

 

ARALEZ PHARMECEUTICALS, INC.

 

 

 

 

By:

/s/ Adrian Adams

 

Name:

Adrian Adams

 

Title:

Chief Executive Officer

 

 

 

 

POZEN INC.

 

 

 

 

By:

/s/ Scott J. Charles

 

Name:

Scott J. Charles

 

Title:

Treasurer

 

 

 

 

TRIBUTE PHARMACEUTICALS CANADA, INC.

 

 

 

 

By:

/s/ James L. Hall

 

Name:

James L. Hall

 

Title:

General Manager

 

 

 

 

LENDERS:

 

 

 

 

DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

 

 

 

By:

Deerfield Mgmt III., L.P., its General Partner

 

By:

J.E. Flynn Capital III, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

DEERFIELD INTERNATIONAL MASTER FUND, L.P.

 

 

 

 

By:

Deerfield Mgmt., L.P., its General Partner

 

By:

J.E. Flynn Capital, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

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DEERFIELD PARTNERS, L.P.

 

 

 

 

By:

Deerfield Mgmt., L.P., its General Partner

 

By:

J.E. Flynn Capital, LLC, its General Partner

 

 

 

 

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

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