Exhibit 10.1

SIXTH LOAN MODIFICATION AGREEMENT

This Sixth Loan Modification Agreement (this “Loan Modification Agreement’) is
entered into as of October 9, 2006, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 (“Bank”) and COLLAGENEX PHARMACEUTICALS,
INC., a Delaware corporation with its chief executive office located at 41
University Drive, Newtown, Pennsylvania 18940 (“Borrower”).

1.                                       DESCRIPTION OF EXISTING INDEBTEDNESS
AND OBLIGATIONS. AMONG OTHER INDEBTEDNESS AND OBLIGATIONS WHICH MAY BE OWING BY
BORROWER TO BANK, BORROWER IS INDEBTED TO BANK PURSUANT TO A LOAN ARRANGEMENT
DATED AS OF MARCH 19, 2001, EVIDENCED BY, AMONG OTHER DOCUMENTS, A CERTAIN LOAN
AND SECURITY AGREEMENT DATED AS OF MARCH 19, 2001, BETWEEN BORROWER AND BANK, AS
AMENDED (AS AMENDED, THE “LOAN AGREEMENT”).  CAPITALIZED TERMS USED BUT NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE SAME MEANING AS IN THE LOAN AGREEMENT.

Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be
referred to as the “Obligations”.

2.                                       DESCRIPTION OF COLLATERAL.  REPAYMENT
OF THE OBLIGATIONS IS SECURED BY THE COLLATERAL AS DESCRIBED IN THE LOAN
AGREEMENT AND THE INTELLECTUAL PROPERTY COLLATERAL, AS DESCRIBED IN THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT DATED AS OF MARCH 19, 2001, BETWEEN THE
BORROWER AND THE BANK (TOGETHER WITH ANY OTHER COLLATERAL SECURITY GRANTED TO
BANK, THE “SECURITY DOCUMENTS”).

Hereinafter, the Security Documents, together with all other documents
evidencing, securing or otherwise executed in connection with the Obligations
shall be referred to as the “Existing Loan Documents”.

3.                                       DESCRIPTION OF CHANGE IN TERMS.

Modifications to Loan Agreement.  From and after the execution of this Loan
Modification Agreement, the Loan Agreement shall be amended as follows:

I.                                          BY DELETING SECTION 1 OF THE
SCHEDULE TO THE LOAN AGREEMENT IN ITS ENTIRETY AND INSERTING THE FOLLOWING IN
LIEU THEREOF:

“1            Credit Limit

(Section 1.1):         An amount not to exceed the lesser of (A) or (B), below:

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(A)                              (i)            $10,000,000.00  (the “Maximum
Credit Limit”); minus

(ii)           the aggregate amounts then undrawn on all outstanding letters of
credit, foreign exchange contracts, or any other accommodations issued or
incurred, or caused to be issued or incurred by Silicon for the account and/or
benefit of the Borrower.

(B)                                (i)            80% of the amount of the
Borrower’s Eligible Receivables; plus

(ii)                                  (a) from October 9, 2006 through June 30,
2007, $5,000,000, (b) from July 1, 2007 through December 31, 2007, $2,500,000,
and (c) from January 1, 2008 and thereafter, $0.00; minus

(iii)                               the aggregate amounts then undrawn on all
outstanding letters of credit, foreign exchange contracts, or any other
accommodations issued or incurred, or caused to be issued or incurred by Silicon
for the account and/or benefit of the Borrower.

Letter of Credit/Foreign Exchange Contract/Cash Management Services Sublimit

(Sections 1.5, 1.6 and 1.7):  $2,000,000.00”

II.                                       BY DELETING THE “MATURITY DATE” SET
FORTH IN SECTION 4 OF THE SCHEDULE TO THE LOAN AGREEMENT IN ITS ENTIRETY AND
INSERTING THE FOLLOWING IN LIEU THEREOF:

“October 9, 2008.”

III.                                    BY DELETING THE MINIMUM TANGIBLE NET
WORTH COVENANT IN SECTION 5A. OF THE SCHEDULE TO THE LOAN AGREEMENT IN ITS
ENTIRETY AND INSERTING THE FOLLOWING IN LIEU THEREOF:

“a. Minimum Tangible Net Worth:

Borrower shall at all times maintain a Tangible Net Worth, tested quarterly, of
not less than the sum of (i) plus (ii) plus (iii) below:

(i)            (a) as of September 30, 2006, $13,000,000;

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(b) as of December 31, 2006 and each quarter end thereafter, $8,000,000;

PLUS

(II)  50% OF BORROWER’S QUARTERLY NET INCOME (IF POSITIVE) IN FISCAL YEAR 2007;

plus

(III) 50% OF ALL CONSIDERATION RECEIVED AFTER THE DATE HEREOF FROM PROCEEDS FROM
THE ISSUANCE OF ANY EQUITY SECURITIES OF THE BORROWER AND/OR SUBORDINATED DEBT
INCURRED BY THE BORROWER.

TANGIBLE NET WORTH SHALL EXCLUDE DEFERRED LICENSING FEES AND CAPITALIZED PRODUCT
DEVELOPMENT FEES.  IN NO EVENT SHALL THE REQUIRED AMOUNT OF THIS MINIMUM
TANGIBLE NET WORTH COVENANT BE DECREASED.”

IV.                                   BY ADDING THE FOLLOWING SECTION 5B. AFTER
SECTION 5A. OF THE SCHEDULE TO LOAN AGREEMENT:

“B.           MINIMUM LIQUIDITY:

AT ALL TIMES, TESTED QUARTERLY, THE SUM OF (I) THE BORROWER’S UNRESTRICTED CASH
MAINTAINED AT BANK PLUS (II) 80% OF THE BORROWER’S ELIGIBLE RECEIVABLES
OUTSTANDING LESS THAN NINETY (90) DAYS FROM INVOICE DATE BASE MINUS (III) ALL
OUTSTANDING LOANS, LETTERS OF CREDIT AND OTHER OBLIGATIONS OUTSTANDING UNDER
THIS AGREEMENT OF NOT LESS THAN $10,000,000.”

V.                                      BY DELETING EXHIBIT B THERETO IN ITS
ENTIRETY AND INSERTING IN LIEU THEREOF EXHIBIT B ATTACHED HERETO.

4.                                       RATIFICATION OF INTELLECTUAL PROPERTY
SECURITY AGREEMENT.  BORROWER HEREBY RATIFIES, CONFIRMS AND REAFFIRMS, ALL AND
SINGULAR, THE TERMS AND CONDITIONS OF A CERTAIN INTELLECTUAL PROPERTY SECURITY
AGREEMENT DATED AS OF MARCH 19, 2001 BETWEEN BORROWER AND BANK, AND
ACKNOWLEDGES, CONFIRMS AND AGREES THAT, EXCEPT AS PREVIOUSLY DISCLOSED IN
WRITING TO BANK AND EXCEPT AS SET FORTH IN SCHEDULE A ANNEXED HERETO, SAID
INTELLECTUAL PROPERTY SECURITY AGREEMENT CONTAINS AN ACCURATE AND COMPLETE
LISTING OF ALL INTELLECTUAL PROPERTY COLLATERAL (AS DEFINED IN SAID INTELLECTUAL
PROPERTY SECURITY AGREEMENT) AND SHALL REMAIN IN FULL FORCE AND EFFECT.

5.                                       RATIFICATION OF PERFECTION
CERTIFICATE.  BORROWER HEREBY RATIFIES, CONFIRMS, AND REAFFIRMS, ALL AND
SINGULAR, THE TERMS AND DISCLOSURES CONTAINED IN A CERTAIN

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PERFECTION CERTIFICATE DELIVERED TO THE BANK ON OR ABOUT JUNE 7, 2004, AND
ACKNOWLEDGES, CONFIRMS AND AGREES THE DISCLOSURES AND INFORMATION PROVIDED
THEREIN HAS NOT CHANGED, AS OF THE DATE HEREOF.

6.                                       CONSISTENT CHANGES.  THE EXISTING LOAN
DOCUMENTS ARE HEREBY AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED
ABOVE.

7.                                       RATIFICATION OF LOAN DOCUMENTS. 
BORROWER HEREBY RATIFIES, CONFIRMS, AND REAFFIRMS ALL TERMS AND CONDITIONS OF
THE EXISTING LOAN DOCUMENTS AND ALL SECURITY OR OTHER COLLATERAL GRANTED TO THE
BANK, AND CONFIRMS THAT THE INDEBTEDNESS SECURED THEREBY INCLUDES, WITHOUT
LIMITATION, THE OBLIGATIONS.

8.                                       NO DEFENSES OF BORROWER.  THE BORROWER
HEREBY ACKNOWLEDGES AND AGREES THAT THE BORROWER HAS NO OFFSETS, DEFENSES,
CLAIMS, OR COUNTERCLAIMS AGAINST THE BANK OR THE BANK’S OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, REPRESENTATIVES, PREDECESSORS, AFFILIATES, SUBSIDIARIES,
PARENTS, SUCCESSORS, AND ASSIGNS WITH RESPECT TO THE OBLIGATIONS, AND/OR THE
EXISTING LOAN DOCUMENTS, AND THAT IF THE BORROWER NOW HAS, OR EVER DID HAVE, ANY
OFFSETS, DEFENSES, CLAIMS, OR COUNTERCLAIMS AGAINST THE BANK OR THE BANK’S
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, REPRESENTATIVES, PREDECESSORS,
AFFILIATES, SUBSIDIARIES, PARENTS, SUCCESSORS, AND ASSIGNS, WHETHER KNOWN OR
UNKNOWN, AT LAW OR IN EQUITY, FROM THE BEGINNING OF THE WORLD THROUGH THIS DATE
AND THROUGH THE TIME OF EXECUTION OF THIS LOAN MODIFICATION AGREEMENT, WITH
RESPECT TO THE OBLIGATIONS AND/OR THE EXISTING LOAN DOCUMENTS, ALL OF THEM ARE
HEREBY EXPRESSLY WAIVED, AND THE BORROWER HEREBY RELEASES THE BANK AND THE
BANK’S OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, REPRESENTATIVES, PREDECESSORS,
SUCCESSORS, AND ASSIGNS FROM ANY LIABILITY THEREFOR.

9.                                       FEES.  BORROWER SHALL PAY TO BANK A
MODIFICATION FEE IN THE AMOUNT OF $12,500.00, WHICH FEE SHALL BE (I) DEEMED
FULLY EARNED AS OF THE DATE HEREOF, (II) PAYABLE ON THE DATE WHICH IS ONE YEAR
FROM THE DATE OF THIS LOAN MODIFICATION AGREEMENT, AND (III) RETAINED BY BANK
AND NOT APPLIED IN REDUCTION OF THE OBLIGATIONS.  IN ADDITION, THE BORROWER
SHALL REIMBURSE BANK FOR ALL LEGAL FEES AND EXPENSES INCURRED IN CONNECTION WITH
THIS AMENDMENT TO THE EXISTING LOAN DOCUMENTS.

10.                                 CONTINUING VALIDITY.  BORROWER UNDERSTANDS
AND AGREES THAT IN MODIFYING THE EXISTING OBLIGATIONS, BANK IS RELYING UPON
BORROWER’S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THE
EXISTING LOAN DOCUMENTS.  EXCEPT AS EXPRESSLY MODIFIED PURSUANT TO THIS LOAN
MODIFICATION AGREEMENT, THE TERMS OF THE EXISTING LOAN DOCUMENTS REMAIN
UNCHANGED AND IN FULL FORCE AND EFFECT.  BANK’S AGREEMENT TO MODIFY THE EXISTING
OBLIGATIONS PURSUANT TO THIS LOAN MODIFICATION AGREEMENT IN NO WAY SHALL
OBLIGATE BANK TO MAKE ANY FUTURE MODIFICATIONS TO THE OBLIGATIONS.  NOTHING IN
THIS LOAN MODIFICATION AGREEMENT SHALL CONSTITUTE A SATISFACTION OF THE
OBLIGATIONS.  IT IS THE INTENTION OF BANK AND BORROWER TO RETAIN AS LIABLE
PARTIES ALL MAKERS OF EXISTING LOAN DOCUMENTS, UNLESS THE PARTY IS EXPRESSLY
RELEASED BY BANK IN WRITING.  NO MAKER WILL BE RELEASED BY VIRTUE OF THIS LOAN
MODIFICATION AGREEMENT.

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11.                                 JURISDICTION/VENUE.  BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND
AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS LOAN MODIFICATION AGREEMENT;
PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS, THEN VENUE SHALL LIE IN SANTA CLARA
COUNTY, CALIFORNIA.  NOTWITHSTANDING THE FOREGOING,  THE BANK SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE
BANK’S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.

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This Loan Modification Agreement is executed as a sealed instrument under the
laws of the Commonwealth of Massachusetts as of the date first written above.

BORROWER:

 

BANK:

 

 

 

COLLAGENEX PHARMACEUTICALS, INC.

 

SILICON VALLEY BANK

 

 

 

By:

/s/ Nancy C. Broadbent

 

 

By:

/s/ Thomas F. Gordon

 

 

 

 

Name:

Nancy C. Broadbent

 

 

Name:

Thomas F. Gordon

 

 

 

 

Title:

SVP & CFO

 

 

Title:

Vice President

 

 

 

The undersigned ratifies, confirms and reaffirms, all and singular, the terms
and conditions of a certain Unconditional Guaranty dated March 19, 2001 (the
“Guaranty”) and a certain Security Agreement dated March 19, 2001 (the “Security
Agreement”) and acknowledges, confirms and agrees that the Guaranty and the
Security Agreement shall remain in full force and effect and shall in no way be
limited by the execution of this Loan Modification Agreement, or any other
documents, instruments and/or agreements executed and/or delivered in connection
herewith

MMP, INC.

By:

/s/ Frank Ruffo

 

 

Name:

Frank Ruffo

 

 

Title:

Corporate Secretary & Treasurer

 

 

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EXHIBIT B

COMPLIANCE CERTIFICATE

TO:         SILICON VALLEY BANK

FROM:   COLLAGENEX PHARMACEUTICALS, INC.

The undersigned authorized officer of CollaGenex Pharmaceuticals, Inc. certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for
the period ending                               with all required covenants
except as noted below and (ii) all representations and warranties in the
Agreement are true and correct in all material respects on this date.  Attached
are the required documents supporting the certification.  The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes.  The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Interim financial statements with CC

 

Monthly within 30 days

 

Yes  No

Quarterly and Annual financial statements (CPA Audited)

 

Within 5 days of filing with SEC

 

Yes  No

BBC A/R Agings, and deferred revenue schedule

 

Monthly within 30 days

 

Yes  No

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

 

 

Maintain:

 

 

 

 

 

 

 

 Minimum Quarterly Tangible Net Worth

 

$

 

*

$

 

 

Yes No

 

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*Tangible Net Worth requirement will be increased by (i) 50% of Borrower’s net
income (if positive) for fiscal year 2007 and, (ii) 50% of all consideration
received from the proceeds of the issuance of any equity securities of Borrower
and/or subordinated debt incurred by Borrower.

Minimum Liquidity

 

$

10,000,000

 

$

 

 

Yes No

 

 

(a) Cash at Bank:

 

$

;

plus

(b) 80% of Eligible Receivables:

 

$

;

minus

(c) Outstanding Obligations:

 

$

 

=

Liquidity (a)+(b)-(c)

 

$

 

.

 

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BANK USE ONLY

Comments Regarding Exceptions: See Attached.

 

Received by:

 

 

Sincerely,

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

 

SIGNATURE

 

Date:

 

 

 

 

 

 

 

 

 

 

 

TITLE

 

Verified:

 

 

 

 

 

AUTHORIZED SIGNER

 

 

 

 

 

DATE

 

Date:

 

 

 

 

 

 

 

Compliance Status:           Yes   No

 

 

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