Exhibit 10.5

 

EXECUTION COPY

 

THIRD AMENDMENT TO

LOAN AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated
as of July 1, 2011, by and among SYNTA PHARMACEUTICALS CORP., a Delaware
corporation (“Borrower”), SYNTA SECURITIES CORP., a Massachusetts corporation
(“Guarantor”); Borrower and Guarantor each a “Loan Party” and, collectively, the
“Loan Parties”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
acting in its capacity as agent (“Agent”) for the lenders under the Loan
Agreement (as defined below) (“Lenders”), and the Lenders.

 

W I T N E S S E T H:

 

WHEREAS, the Loan Parties, Lenders and Agent are parties to that certain Loan
and Security Agreement, dated as of September 30, 2010 (as amended, restated,
supplemented or otherwise modified from time to time, the “Loan Agreement”;
capitalized terms used herein have the meanings given to them in the Loan
Agreement except as otherwise expressly defined herein), pursuant to which
Lenders have agreed to provide to Borrower certain loans and other extensions of
credit in accordance with the terms and conditions thereof; and

 

WHEREAS, the Loan Parties, Agent and Lenders desire to amend certain provisions
of the Loan Agreement in accordance with, and subject to, the terms and
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Loan Parties, Lenders and Agent
hereby agree as follows:

 

1.                                      Acknowledgment of Obligations.  Borrower
hereby acknowledges, confirms and agrees that all Term Loans made prior to the
date hereof, together with interest accrued and accruing thereon, and fees,
costs, expenses and other charges owing by Borrower to Agent and Lenders under
the Loan Agreement and the other Debt Documents, are unconditionally owing by
Borrower to Agent and Lenders, without offset, defense or counterclaim of any
kind, nature or description whatsoever except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditor’s rights generally.

 

2.                                      Amendments to Loan Agreement.  Subject
to the terms and conditions of this Amendment, including, without limitation,
the conditions to effectiveness set forth in Section 5 below, the Loan Agreement
is hereby amended as follows:

 

(a)                                  Section 2.3(b), Payments of Principal and
Interest, of the Loan Agreement is hereby amended by deleting clauses (ii) and
(iii) thereof in their entirety and by inserting, in lieu thereof, the
following:

 

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“(ii)                            Principal Payments.

 

(A) If the Interest Only Extension Conditions (as defined below) have not been
satisfied, then Borrower shall repay principal on the Term Loan to the Agent,
for the ratable benefit of the Lenders, in thirty (30) equal consecutive monthly
installments of $500,000.00 on each Scheduled Payment Date, commencing on
February 1, 2012.

 

(B) If the Interest Only Extension Conditions have been satisfied, then Borrower
shall repay principal on the Term Loan to the Agent, for the ratable benefit of
the Lenders, in (x) twenty-six (26) equal consecutive monthly installments of
$555,555.56 on each Scheduled Payment Date, commencing on May 1, 2012 and
(y) one monthly installment of $555,555.44 on July 1, 2014.

 

As used herein, the term “Interest Only Extension Conditions” means evidence
reasonably satisfactory to Agent of Borrower’s receipt, on or before
December 30, 2011, of $30,000,000.00 in net cash proceeds from one or a
combination of the following (i) a collaboration or partnership agreement
consistent with Borrower’s existing business and (ii) the sale of additional
securities of Borrower, which net cash proceeds, in any case, shall be fully
earned (subject to revenue recognition over time in accordance with GAAP) and
non-refundable when received by Borrower.

 

(iii)                               Payments Generally.  Notwithstanding the
foregoing provisions of this Section 2.3(b), all unpaid principal and accrued
interest with respect to the Term Loan is due and payable in full to Agent, for
the ratable benefit of Lenders, on the earlier of (A) July 1, 2014 or (B) the
date that the Term Loan otherwise becomes due and payable hereunder, whether by
acceleration of the Obligations pursuant to Section 8.2 or otherwise (the
earlier of (A) or (B), the “Term Loan Maturity Date”).  Each scheduled payment
of interest or principal hereunder is referred to herein as a “Scheduled
Payment.”  The parties hereto hereby agree that, as of July 1, 2011 (the “Third
Amendment Effective Date”), the aggregate outstanding principal balance of the
Term Loan is $15,000,000.00.  Without limiting the foregoing, all Obligations
shall be due and payable on the Term Loan Maturity Date.”

 

(b)                                 Section 2.4, Prepayments, of the Loan
Agreement is hereby amended by deleting the second sentence thereof in its
entirety and by inserting, in lieu thereof, the following:

 

“Upon the date of (a) any voluntary prepayment of the Term Loan in accordance
with the immediately preceding sentence or (b) any mandatory prepayment of the
Term Loan required under this Agreement (whether by acceleration of the
Obligations pursuant to Section 8.2 or otherwise), Borrower shall pay to Agent,
for the ratable benefit of the Lenders, a sum equal to (i) all outstanding
principal plus accrued interest with respect to the Term Loan, plus (ii) the
Final Payment Fee (as such term is defined in Section 2.7(c)) for the Term Loan,
and plus (iii) a prepayment premium (as yield maintenance for the loss of a
bargain and not as a

 

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penalty) equal to: (i) 4% of the prepayment amount, if such prepayment is made
on or before the one year anniversary of the Third Amendment Effective Date,
(ii) 2% of the prepayment amount, if such prepayment is made after the one year
anniversary of the Third Amendment Effective Date but on or before the two year
anniversary of the Third Amendment Effective Date, and (iii) 1% of the
prepayment amount, if such prepayment is made after the two year anniversary of
the Third Amendment Effective Date but before the Term Loan Maturity Date.”

 

(c)                                  Section 2.7, Lender Fees, of the Loan
Agreement is hereby amended by deleting paragraph (c) thereof in its entirety
and by inserting, in lieu thereof, the following:

 

“(c)                            Final Payment Fee.  On the date upon which the
outstanding principal amount of the Term Loan is repaid in full, or if earlier,
is required to be repaid in full (whether by scheduled payment, voluntary
prepayment, acceleration of the Obligations pursuant to Section 8.2 or
otherwise), Borrower shall pay to Agent, for benefit of the Lenders on such date
in accordance with their Pro Rata Shares, a fee equal to $525,000.00 (the “Final
Payment Fee”), which Final Payment Fee shall be deemed to be fully-earned on the
Third Amendment Effective Date, and which Final Payment Fee shall not be reduced
by the $112,500.00 payment made pursuant to Section 5(e) of that certain Third
Amendment to Loan and Security Agreement dated as of July 1, 2011, which Final
Payment Fee shall be deemed to be fully-earned on the Third Amendment Effective
Date.”

 

3.                                      No Other Amendments.  Except for the
amendments and agreements set forth and referred to in Section 2 above, the Loan
Agreement and the other Debt Documents shall remain unchanged and in full force
and effect.  Nothing in this Amendment is intended, or shall be construed, to
constitute a novation or an accord and satisfaction of any of Borrower’s or
Guarantor’s Obligations or to modify, affect or impair the perfection or
continuity of Agent’s security interests in, security titles to or other liens,
for the benefit of itself and the Lenders, on any Collateral for the
Obligations.

 

4.                                      Representations and Warranties.  To
induce Agent and Lenders to enter into this Amendment, each Loan Party does
hereby warrant, represent and covenant to Agent and Lenders that after giving
effect to this Amendment (i) each representation or warranty of the Loan Parties
set forth in the Loan Agreement is hereby restated and reaffirmed as true and
correct in all material respects on and as of the date hereof as if such
representation or warranty were made on and as of the date hereof (except to the
extent that any such representation or warranty expressly relates to a prior
specific date or period), (ii) no Default or Event of Default has occurred and
is continuing as of the date hereof and (iii) each Loan Party has the power and
is duly authorized to enter into, deliver and perform this Amendment and this
Amendment is the legal, valid and binding obligation of each Loan Party
enforceable against each Loan Party in accordance with its terms.

 

5.                                      Condition Precedent to Effectiveness of
this Amendment.  This Amendment shall become effective as of the date (the
“Amendment Effective Date”) upon which:

 

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(a)                                  Agent shall notify Borrower in writing that
Agent has received one or more counterparts of this Amendment duly executed and
delivered by the Loan Parties, Agent and Lenders, in form and substance
satisfactory to Agent and Lenders;

 

(b)                                 Both before and after giving effect to this
Amendment, no Default or Event of Default shall have occurred and be continuing;

 

(c)                                  Agent shall have received from Borrower a
completed updated Perfection Certificate, duly executed by each Loan Party,
updated to reflect any changed or additional information since the Closing Date,
which updated Perfection Certificate Borrower hereby represents shall be true,
accurate, and complete as of the Amendment Effective Date (provided, no such
updates shall constitute a waiver or consent by Agent or Lenders of any Default
or Event of Default that may have occurred as a result of such new information
being disclosed on such updated Perfection Certificate;

 

(d)                                 Agent shall have received current UCC lien,
judgment, tax and intellectual property lien search results demonstrating that
there are no other security interests or liens on the Collateral, other than
Permitted Liens;

 

(e)                                  Agent shall have received a fee in
immediately available funds in the amount of $112,500.00, for benefit of the
Lenders in accordance with their Pro Rata Shares, which fee shall be fully
earned and non-refundable, and which fee represents a portion of the Final
Payment Fee under the Loan Agreement prior to giving effect to this Amendment
(which, for the avoidance of doubt, shall not offset or reduce in any way the
Final Payment Fee set forth in Section 2.7(c) of the Loan Agreement (as amended
by this Amendment);

 

(f)                                    Agent shall have received an amendment
fee in immediately available funds in the amount of $75,000.00, for benefit of
the Lenders in accordance with their Pro Rata Shares, which fee shall be fully
earned and non-refundable when paid;

 

(g)                                 Agent shall have received from Borrower an
executed Officer’s Certificate in form and substance satisfactory to Agent,
dated as of the date hereof, certifying that (A) after giving effect to this
Amendment, no Default or Event of Default has occurred and is continuing and
(B) all representations and warranties of Borrower or any Loan Party stated in
the Debt Documents (including, without limitation, this Amendment), as amended
by this Amendment, are true and correct in all material respects on and as of
the Amendment Effective Date, except to the extent such representations or
warranties (x) contain materiality qualifiers, in which case such
representations and warranties are true and correct in all respects or
(y) expressly relate to an earlier date, in which case such representations and
warranties were true and correct in all respects on and as of such earlier date;

 

(h)                                 Agent shall have received from Borrower a
supplement to the Intellectual Property Security Agreement, in form and
substance satisfactory to Agent, executed by each Loan Party and Agent, to be
held in escrow in accordance with Section 3.4 of the Loan Agreement;

 

(i)                                     Agent shall have received from Borrower
a certificate executed by the Secretary or Assistant Secretary of each Loan
Party, in form and substance satisfactory to Agent, providing

 

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verification of incumbency and attaching (i) such Loan Party’s board resolutions
approving the transactions contemplated by this Amendment and the other Debt
Documents and (ii) such Loan Party’s governing documents;

 

(j)                                     Agent shall have received from Borrower
a certificate of good standing of each Loan Party from the jurisdiction of such
Loan Party’s organization and a certificate of foreign qualification from each
jurisdiction where such Loan Party’s failure to be so qualified could reasonably
be expected to have a Material Adverse Effect, in each case as of a recent date
acceptable to Agent; and

 

(k)                                  Agent shall have received all other
documents and instruments as Agent or any Lender may reasonably deem necessary
or appropriate to effectuate the intent and purpose of this Amendment.

 

6.                                      Release.

 

(a)                                  In consideration of the agreements of Agent
and Lenders contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each Loan Party, on
behalf of itself and its successors, assigns, and other legal representatives,
hereby absolutely, unconditionally and irrevocably releases, remises and forever
discharges Agent and each Lender and their respective successors and assigns,
and their respective 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
(individually, a “Claim” and collectively, “Claims”) of every name and nature,
known or unknown, suspected or unsuspected, both at law and in equity, which any
Loan Party or any of its respective successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any circumstance,
action, cause or thing whatsoever which arises at any time on or prior to the
Amendment Effective Date, including, without limitation, for or on account of,
or in relation to, or in any way in connection with the Loan Agreement or any of
the other Debt Documents or transactions thereunder or related thereto.

 

(b)                                 Each Loan Party understands, acknowledges
and agrees that its 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.

 

(c)                                  Each Loan Party agrees that no fact, event,
circumstance, evidence or transaction which could now be asserted or which may
hereafter be discovered shall affect in any manner the final, absolute and
unconditional nature of the release set forth above.

 

7.                                      Covenant Not To
Sue.                            Each Loan Party, on behalf of itself and its
respective successors, assigns, and other legal representatives, hereby
absolutely, unconditionally

 

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and irrevocably, covenants and agrees with and in favor of each Releasee that it
will not sue (at law, in equity, in any regulatory proceeding or otherwise) any
Releasee on the basis of any Claim released, remised and discharged by the Loan
Parties pursuant to Section 6 above.  If any Loan Party or any of its respective
successors, assigns or other legal representatives violates the foregoing
covenant, each Loan Party, for itself and its successors, assigns and legal
representatives, jointly and severally agrees to pay, in addition to such other
damages as any Releasee may sustain as a result of such violation, all
attorneys’ fees and costs incurred by any Releasee as a result of such
violation.

 

8.                                      Advice of Counsel.  Each of the parties
represents to each other party hereto that it has discussed this Amendment with
its counsel.

 

9.                                      Severability of Provisions.  In case any
provision of or obligation under this Amendment shall be invalid, illegal or
unenforceable in any applicable jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

10.                               Counterparts.  This Amendment may be executed
in multiple counterparts, each of which shall be deemed to be an original and
all of which when taken together shall constitute one and the same instrument.

 

11.                               GOVERNING LAW.  THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD
TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.

 

12.                               Entire Agreement.  The Loan Agreement as and
when amended through this Amendment embodies the entire agreement between the
parties hereto relating to the subject matter thereof and supersedes all prior
agreements, representations and understandings, if any, relating to the subject
matter thereof.

 

13.                               No Strict Construction, Etc.  The parties
hereto have participated jointly in the negotiation and drafting of this
Amendment.  In the event an ambiguity or question of intent or interpretation
arises, this Amendment shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Amendment.  Time
is of the essence for this Amendment.

 

14.                               Costs and Expenses.  Loan Parties absolutely
and unconditionally agree, jointly and severally, to pay or reimburse upon
demand for all reasonable fees, costs and expenses incurred by Agent and the
Lenders that are Lenders on the Closing Date in connection with the preparation,
negotiation, execution and delivery of this Amendment and any other Debt
Documents or other agreements prepared, negotiated, executed or delivered in
connection with this Amendment or transactions contemplated hereby.

 

 [Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Loan
and Security Agreement to be duly executed and delivered as of the day and year
specified at the beginning hereof.

 

 

BORROWER:

 

 

 

SYNTA PHARMACEUTICALS CORP.

 

 

 

 

 

 

 

By:

/s/ Keith Ehrlich

 

Name:

Keith Ehrlich

 

Title:

CFO

 

 

 

 

 

 

 

GUARANTOR:

 

 

 

SYNTA SECURITIES CORP.

 

 

 

 

 

 

By:

/s/ Keith Ehrlich

 

Name:

Keith Ehrlich

 

Title:

Director

 

SYNTA PHARMACEUTICALS CORP.

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

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AGENT AND LENDER:

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

 

 

 

 

 

 

By:

/s/ Alan Silbert

 

Name:

Alan Silbert

 

Title:

Its Duly Authorized Signatory

 

SYNTA PHARMACEUTICALS CORP.

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

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LENDER:

 

 

 

MIDCAP FUNDING III, LLC

 

 

 

 

 

 

 

By:

/s/ Luis Viera

 

Name:

Luis Viera

 

Title:

Managing Director

 

SYNTA PHARMACEUTICALS CORP.

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

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