Exhibit 10.1

 

AMENDMENT NO. 2

TO

LOAN AND SECURITY AGREEMENT

 

This Amendment No. 2 to Loan and Security Agreement (this “Amendment”) is dated
as of December 12, 2016 and is entered into by and among (a) (i) PARATEK
PHARMACEUTICALS, INC. (“Inc.”), a Delaware corporation, (ii) PARATEK PHARMA,
LLC, a Delaware limited liability company (“LLC” and, together with Inc.,
hereinafter collectively referred to as the “Borrower”) and (iii) each of its
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, and (iii) the several
banks and other financial institutions or entities from time to time parties to
this 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, and as may be further amended, restated,
amended and restated, supplemented or otherwise modified, 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.

1.1The Loan Agreement shall be amended by deleting the following text appearing
in Recital A: “Forty Million Dollars ($40,000,000)” and inserting in lieu
thereof the following: “Fifty Million Dollars ($50,000,000)”.

1.2The 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):

““Additional Draw Period” means the period commencing upon the Additional Draw
Period Commencement Date and ending on the earlier to occur of (a) September 15,
2017, and (b) an Event of Default.

“Additional Draw Period Commencement Date” is the date that Agent in its
reasonable discretion determines that Borrower has completed a second Phase III
clinical

 

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evaluation of Omadacycline in patients with acute bacterial skin and skin
structure infections or in patients with community acquired bacterial pneumonia
that is supportive of Borrower making a NDA filing with the Food and Drug
Administration.

“Additional Warrants” means those certain Warrant Agreements by and between Inc.
and each Lender in substantially the forms attached as Exhibit A and Exhibit B
hereto, collectively representing the right of such Lenders to purchase a number
of shares of common stock of Inc. equal to (a) one and one quarter of one
percent (1.25%) of the amount of the Third Term Loan Advance, divided by (b) the
arithmetic mean of Inc.’s daily closing price per share for the ten (10) trading
days immediately preceding the funding date of the Third Term Loan Advance, and
exercisable for a period of five (5) years from the date of issuance thereof.

“Second Amendment Closing Date” means December 12, 2016.

“Second Amendment Facility Charge” means Four Hundred Twenty-Five Thousand
Dollars ($425,000.00).

“Third Term Loan Advance” has the meaning given to it in Section 2.1(a).”

1.3The 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:

““Amortization Date” means January 1, 2019.

“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., and (v) the Additional Warrants, if any, in each case, as may be
amended, restated or modified from time to time.”

1.4The Loan Agreement shall be amended by deleting Section 2.1(a) thereof
(Advances) in its entirety and inserting in lieu thereof the following:

“(a)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
Term Commitment, and Borrower agrees to draw, one (1) Term Loan Advance in an
amount of at least Fifteen Million Dollars ($15,000,000) on the Closing Date
(the “First Term Loan Advance”).  Subject to the terms and conditions of this
Agreement, during the Draw Period, Lender will severally (and not jointly) make,
in an amount not to exceed its respective Term Commitment, and Borrower may
request, additional Term Loan Advances in an aggregate amount of up to the
Second Term Loan Advance Amount (each, a “Second Term Loan Advance” and
collectively, the “Second Term Loan Advances”).  Subject to the terms and
conditions of this Agreement, during the Additional Draw Period, and
concurrently with the issuance by Inc. to Lender of the Additional Warrant,
Lender will severally (and not jointly) make, in an amount not to exceed its
respective Term Commitment, and Borrower may request, one (1) additional

 

 

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Term Loan Advance in an aggregate amount equal to Ten Million Dollars
($10,000,000) (the “Third Term Loan Advance”).  The First Term Loan Advance, the
Second Term Loan Advances and the Third Term Loan Advance are hereinafter
referred to singly as the “Term Loan Advance” and collectively as the “Term Loan
Advances.”  Each Term Loan Advance shall be in a minimum amount of at least Ten
Million Dollars ($10,000,000).  The aggregate outstanding Term Loan Advances
shall not exceed the Maximum Term Loan Amount.  Proceeds of any 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.”

1.5The Loan Agreement shall be amended by deleting the first sentence of Section
2.4 thereof (Prepayment) in its entirety and inserting in lieu thereof the
following:

“At its option upon at least seven (7) Business Days prior notice to Agent,
Borrower may prepay all or any portion, of the outstanding Advances (in
increments of Five Million Dollars ($5,000,000)) by paying the entire principal
balance (or 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: subject to the second succeeding
sentence, if such Advance amounts are prepaid prior to January 1, 2019, two
percent (2.0%) of the then outstanding principal amount of the Advances being
prepaid; and on or after January 1, 2019, zero percent (0.0%) of the then
outstanding principal amount of the Advances being prepaid (each, a “Prepayment
Charge”).

1.6The Compliance Certificate appearing as Exhibit F is hereby amended and
restated in its entirety with the Compliance Certificate appearing as Schedule 1
hereto.

1.7Schedule 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:

2.1Immediately 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.

2.2Borrower 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.

2.3The certificate of incorporation, bylaws and other organizational documents
of Borrower delivered to Agent and/or Lender on the Closing Date remain true,

 

 

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accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect.

2.4The 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.

2.5This 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;
and

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

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

4.2Warrant.  Each Lender shall have received the Warrant to which it is a party
that is dated as of the Second Amendment Closing Date.

4.3Borrowing Resolutions.  A certified copy of resolutions of Inc.’s Board
evidencing approval of (i) this Amendment and other transactions evidenced by
the Loan Documents; and (ii) the Warrants issued in connection with this
Amendment and the transactions evidenced thereby.

4.4Certificates 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.

 

 

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

4.6Payment 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 (which
reasonable attorneys’ fees (exclusive of reasonable expenses) for the
documentation and negotiation of this Amendment, as of the date of this
Amendment, shall not exceed Fifteen Thousand Dollars ($15,000.00) to the extent
that there are no more than two (2) turns of this Amendment in the negotiation
process).

5.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.

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

[Signature Page Follows]

 

 

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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.

 

 

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/ Zhuo Huang

 

 

Print Name:

Zhuo Huang

 

 

Title:

Associate 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/ Zhuo Huang

 

 

Print Name:

Zhuo Huang

 

 

Title:

Associate General Counsel

 

 

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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/ Zhuo Huang

 

 

Print Name:

Zhuo Huang

 

 

Title:

Associate General Counsel

 

 

 

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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):

 

 

 

 

 

 

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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)).

 

 

 

 

INELIGIBLE SUBSIDIARIES

 

 

Name of Ineligible Subsidiary

Value of Assets

Annual Revenue

 

 

 

 

 

 

 

 

 

 

 

 

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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:

 

 

 

 

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Schedule 2

 

SCHEDULE 1.1

COMMITMENTS

 

LENDER

TERM COMMITMENT

HERCULES TECHNOLOGY II, L.P.

$25,000,000

HERCULES TECHNOLOGY III, L.P.

$25,000,000

TOTAL COMMITMENTS

$50,000,000