Exhibit 10.19.3


 


CONSENT, ASSUMPTION AND SECOND LOAN
MODIFICATION AGREEMENT


 


This Consent,
Assumption and Second Loan Modification Agreement (this “Loan Modification
Agreement”) is entered into as of March 31, 2009, by and among SILICON VALLEY BANK, a California corporation, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California
95054 and with a loan production office located at 8020 Tower Crescent Drive, Suite 475,
Vienna, Virginia 22182 (“SVB”), as agent (“Agent”), and the Lenders, SVB and OXFORD FINANCE CORPORATION (“Oxford”), and PHARMATHENE, INC. (“New Borrower”) (successor by merger with
Pharmathene U.S. Corporation, a Delaware corporation, the “Existing Borrower”),
a Delaware corporation with its chief executive office located at One Park
Place, Suite #450, Annapolis, MD 21401.


 


1.             DESCRIPTION OF EXISTING
INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations
which may be owing by Existing Borrower to Lenders, Existing Borrower is
indebted to Lenders pursuant to a loan arrangement dated as of March 30,
2007, evidenced by, among other documents, a certain Loan and Security
Agreement dated as of March 30, 2007, between Existing Borrower and
Lenders, as amended by a certain Consent and First Loan Modification Agreement
dated as of March 20, 2008, between Existing Borrower and Lenders (the “First
Consent”) (as amended, the “Loan Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
same meaning as in the Loan Agreement. Currently SVB and Oxford are the only
Lenders.


 


2.             ASSUMPTION.  New Borrower has merged with Existing
Borrower and is the surviving legal entity of such merger.  New Borrower hereby joins the Loan Agreement
and each of the Loan Documents and all other documents and instruments in
connection with the Loan Agreement, and agrees to comply with and be bound by
all of the terms, conditions and covenants of the Loan Agreement and Loan
Documents, as if it were originally named a “Borrower” therein. Without
limiting the generality of the preceding sentence, New Borrower hereby assumes
and agrees to pay and perform when due all present and future indebtedness,
liabilities and obligations of Existing Borrower under the Loan Agreement and
the Loan Documents, including, without limitation, the Obligations.  All present and future obligations of
Existing Borrower shall be deemed to refer to all present and future
obligations of New Borrower.  New
Borrower acknowledges that the Obligations are due and owing to Lenders from
Existing Borrower, without any defense, offset or counterclaim of any kind or
nature whatsoever as of the date hereof. 
All references in the Loan Documents, and this Loan Modification
Agreement, to “Borrower” shall be deemed to refer to New Borrower.


 


3.             GRANT OF SECURITY INTEREST.  To secure the prompt payment and performance
of all of the Obligations, New Borrower hereby grants the Collateral Agent, for
the benefit of the Lenders to secure the payment and performance in full of all
of the Obligations, a continuing security interest in, and pledges to the
Collateral Agent, for the benefit of the Lenders, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof.  New Borrower
represents, warrants, and covenants that the security interest granted herein
is and shall at all times continue to be a first priority perfected security
interest in the Collateral (subject only to Permitted Liens that may have
superior priority to Lenders’ Lien under this Agreement).  New Borrower further covenants and agrees
that by its execution hereof it shall provide all such information, complete
all such forms, and take all such actions, and enter into all such agreements,
in form and substance reasonably satisfactory to Lenders and Agent that are
reasonably deemed necessary by Lenders and Agent in order to grant a valid,
perfected security interest to Lenders in the Collateral.  New Borrower hereby authorizes Lenders and
Agent to file financing statements, without notice to New Borrower, with all
appropriate jurisdictions in order to perfect or protect Lenders’ interest or
rights hereunder, including a notice that any disposition of the Collateral, by
either the New Borrower or any other Person, shall be deemed to violate the rights
of the Lenders under the Code.


 


4.             REPRESENTATIONS AND WARRANTIES.  New Borrower hereby represents and warrants
to Lenders that all representations and warranties in the Loan Documents made
on the part of Existing Borrower are true and correct on the date hereof with
respect to New Borrower, with the same force and effect as if New Borrower were
named as “Borrower” in the Loan Documents in addition to Existing Borrower.


 


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5.                                       RATIFICATION
OF EXISTING DOCUMENTS.  New Borrower ratifies, confirms and
reaffirms, all and singular, the terms and conditions of the Loan Documents,
including without limitation the Loan Agreement, and acknowledges, confirms and
agrees that, except as stated in this Loan Modification Agreement, the Loan
Documents shall remain in full force and effect.


 


6.                                       DELIVERY
OF DOCUMENTS.  New Borrower hereby
agrees that the following documents shall be delivered to Lenders
contemporaneously with delivery of this Loan Modification Agreement, each in
form and substance satisfactory to Lenders:


 


A.                                   a
certificate of the Secretary of New Borrower with respect to certificate of
incorporation, by-laws, incumbency and resolutions authorizing the execution
and delivery of this Loan Modification Agreement;


 


B.                                     consent
of the shareholders of New Borrower authorizing the execution and delivery of
this Loan Modification Agreement and the other transaction documents (if
required by New Borrower’s corporate documents);


 


C.                                     a
long form certificate of the Secretary of State of Delaware certified within
the past thirty (30) days as to New Borrower’s existence and good standing;


 


D.                                    Certificates
of Good Standing/Foreign Qualification, from each state in which New Borrower
is authorized to do business;


 


E.                                      a
Perfection Certificate for New Borrower;


 


F.                                      a
Securities Account Control Agreement (SVB Securities);


 


G.                                     Amendment
to that certain Deposit Account Control Agreement among Agent, Manufacturers
and Traders Trust Company, and Existing Borrower;


 


H.                                    a
certified copy of the Certificate of Compliance, as amended, for Pharmathene
Canada, Inc., a Canadian company and Guarantor pursuant to that certain Unlimited Guaranty dated March 30, 2007
(“Pharmathene Canada”);


 


I.                                         a
Certificat d’ Attestation (Quebec) for Pharmathene Canada;


 


J.                                        Supplemental
Deed concerning the Charge Over Shares by New Borrower in connection with
pledge of stock in Pharmathene UK Limited (“Pharmathene UK”);


 


K.                                    the
results of UCC searches with respect to the Collateral for New Borrower
indicating no Liens other than Permitted Liens and otherwise in form and
substance satisfactory to Lenders;


 


L.                                      a
legal opinion of New Borrower’s counsel (authority and enforceability), in form
and substance acceptable to Lenders;


 


M.                                 insurance
certificates (Acord 25 and Acord 28 forms) for New Borrower;


 


N.                                    certificates
pursuant to the existing Warrants setting forth adjustments, if any; and


 


O.                                    such
other documents as Lenders may reasonably request.


 


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7.                                       DESCRIPTION
OF COLLATERAL.  Repayment of the
Obligations is secured by the Collateral as described in the Loan Agreement
(together with any other collateral security granted to Agent, for the ratable
benefit of the Lenders, the “Security Documents”).


 


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


 


8.                                       DESCRIPTION
OF CHANGE IN TERMS.


 


A.                                   Modifications
to Loan Agreement.


 


1                                          The
Loan Agreement shall be amended by deleting the following provision appearing
as Section 6.2(i):


 


“(i) as soon as
available, but no later than thirty (30) days after the last day of each month,
a company prepared consolidated balance sheet and income statement covering
Borrower’s consolidated operations for such month certified by a Responsible
Officer and in a form acceptable to Agent;”


 


and inserting in lieu
thereof the following:


 


“(i) as soon as
available, but no later than thirty (30) days after the last day of each month,
a company prepared consolidated and consolidating balance sheet and income
statement covering Borrower’s and each of its Subsidiary’s operations for such
month certified by a Responsible Officer and in a form acceptable to Agent;”


 


2                                          The
Loan Agreement shall be amended by deleting the following provision appearing
as Section 6.11 thereof entitled “Minimum Cash at SVB”:


 


“6.11                  Minimum Cash at SVB. Borrower shall maintain, at all times,
at a segregated account at either SVB or SVB Securities, unrestricted and
unencumbered cash or Cash Equivalents in the amount of at least one and
one-quarter (1.25) times all Obligations of Borrower to the Lenders.”


 


and inserting in lieu
thereof the following:


 


“6.11                  Minimum Cash at SVB. Borrower shall maintain, at all times,
at a segregated account at either SVB or SVB Securities, unrestricted and
unencumbered cash or Cash Equivalents in an amount equal to at least one (1.0)
times all Obligations of Borrower to Lenders. 
Notwithstanding the foregoing, commencing as of January 1, 2009,
the amount required in such account shall be reduced to an amount equal to at
least one-half (0.50) times all Obligations of Borrower to Lenders.”


 


3                                          The
Loan Agreement shall be amended by inserting the following new definitions to
appear alphabetically in Section 13.1 thereof:


 


“                                          “Reduction Item” means the novation of certain agreements
between the National Institutes of Health, Avecia Biologics Limited and Avecia
Biologics Inc. to substitute Pharmathene UK instead of Avecia Biologics Limited
and Avecia Biologics Inc. (prior owners of the vaccines business) and
satisfaction of all conditions to Pharmathene UK receiving back payments and
future payments, and the actual receipt of all past due contractual payments.”


 


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“Pharmathene UK” means Pharmathene UK Limited, a business
entity formed under the laws of the United Kingdom and a wholly owned
Subsidiary of Borrower.”


 


“Subordination Agreements” means collectively those certain
Subordination Agreements dated as of the Effective Date between Agent and
certain creditors of Borrower.”


 


4                                          The
Loan Agreement shall be amended by deleting the following definition of “Permitted
Investment” appearing in Section 13.1 thereof:


 


“Permitted
Investments” are:


 


(a)                                  Investments
shown on the Perfection Certificate and existing on the Effective Date;


 


(b)                                 Permitted
Acquisitions;


 


(c)                                  Permitted
Joint Ventures; and


 


(d)                                 Cash
Equivalents.”


 


and
inserting in lieu thereof the following:


 


“Permitted
Investments” are:


 


(a)                                  Investments
shown on the Perfection Certificate and existing on the Effective Date;


 


(b)                                 Permitted
Acquisitions;


 


(c)                                  Permitted
Joint Ventures;


 


(d)                                 Cash
Equivalents; and


 


(e)                                  (i) Investments
of Subsidiaries in or to other Subsidiaries or Borrower and (ii) Investments
by Borrower in Pharmathene UK not to exceed Four Hundred Thousand Dollars
($400,000) in the aggregate per calendar month.”


 


B.                                     Consent.


 


1                                          Notwithstanding
the terms of the First Consent, Lenders hereby acknowledge, confirm, and agree
that Pharmathene UK is not required to become a co-borrower or a secured
guarantor under the Loan Agreement, nor will Lenders obtain a first perfected
lien in all of Pharmathene UK’s assets, provided that Borrower shall; (i) execute
and deliver a pledge agreement, in form and substance acceptable Lenders,
granting a first perfected security interest (fixed charge) in sixty-five
percent (65%) of Borrower’s stock of Pharmathene UK contemporaneously with the
execution of this Loan Modification Agreement, and (ii) comply with the Loan
Agreement as amended by this Loan Modification Agreement.


 


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C.                                     Waiver
and Borrower’s Representations.


 


1                                          Lenders
hereby waive Borrower’s existing defaults under the Loan Agreement by virtue of
Borrower’s failure to timely comply with the negative covenant set forth in Section 7.7
of the Loan Agreement (Distributions; Investments), as of the months ending August 31,
2008, through and including December 31, 2008.  Lenders’ waiver of Borrower’s compliance of
said negative covenant shall apply only to the foregoing specific time
periods.  Lenders hereby consent to the
merger of New Borrower with Existing Borrower (with new Borrower as successor
by said merger), which merger was consummated on February 27, 2009.


 


In consideration for the forgoing waiver and in order
to induce Lenders to provide such waiver, Borrower represents that (i) Borrower
made the following Investments in Pharmathene UK; (a) One Million Four
Hundred Twenty Nine Thousand Three Hundred Sixteen Dollars ($1,429,316) during
the month ended August 31, 2008, (b) Three Hundred Thirty Seven
Thousand Six Dollars ($337,006) during the month ended September 30, 2008,
(c) Seven Hundred Forty Nine Thousand Ninety Five Dollars ($749,095)
during the month ended October 31, 2008, (d) Nine Hundred Fifty Four
Thousand One Hundred Eighty One Dollars ($954,181) during the month ended November 30, 2008,
and (e) Two Hundred Ninety Five Thousand Five Hundred Five Dollars
($295,505) during the month ended December 31, 2008 (such amounts are
not cumulative); and (ii) the Reduction Item occurred on December 31,
2008 in the amount of Two Million Twenty Five Thousand Twenty Six Dollars
($2,025,026) and such funds were deposited and maintained in the Borrower’s
name in an account with SVB or an affiliate of SVB.


 


9.                                       POST
CLOSING.  The failure of New Borrower
to furnish Lenders with the following documents to the full satisfaction of
Lenders on or before ten (10) business days from the date hereof, unless
otherwise noted, shall constitute an immediate Event of Default under the Loan
Agreement, for which there shall be no grace or cure period:


 


A.                                   New
Borrower shall deliver to Lenders
on or before April 30, 2009, a Landlord’s Consent concerning New Borrower’s
One Park Place, Suite #450, Annapolis, MD 21401 location, in form and substance acceptable to
Lenders, in their sole and absolute discretion.


 


B.                                     New
Borrower shall deliver to Lenders
ratifications of the Subordination Agreements from all Subordinated Creditors
of New Borrower who executed such an agreement with Lenders.


 


10.                                 FEES.  New Borrower shall pay to Lenders a
modification fee equal to Ten Thousand Dollars ($10,000) to be shared between
the Lenders pursuant to their respective Commitment Percentages, which fee shall
be due on the date hereof and shall be deemed fully earned as of the date
hereof.  Borrower shall also reimburse
Lenders for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.


 


11.                                 CONSISTENT
CHANGES.  The Existing Loan Documents
are hereby amended wherever necessary to reflect the changes described above.


 


12.                                 NO
DEFENSES OF BORROWER.  New Borrower
hereby acknowledges and agrees that New Borrower has no offsets, defenses,
claims, or counterclaims against Lenders with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets,
defenses, claims, or counterclaims against Lenders, whether known or unknown,
at law or in equity, all of them are hereby expressly WAIVED and New Borrower
hereby RELEASES Lenders from any liability thereunder.


 


13.                                 CONTINUING
VALIDITY.  New Borrower understands
and agrees that in modifying the existing Obligations, Lenders are 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 


 


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of the Existing
Loan Documents remain unchanged and in full force and effect.  Lenders’ agreement to modifications to the
existing Obligations pursuant to this Loan Modification Agreement in no way
shall obligate Lenders 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 Lenders and New
Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Lenders in writing.  No maker will be released by virtue of this
Loan Modification Agreement.


 


14.                                 COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by New Borrower and Lenders.


 


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intentionally left blank]


 


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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:

  	
   

  	
  AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PHARMATHENE,
  INC.

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Christopher C.
  Camut

  	
   

  	
  By:

  	
  /s/ Patrice Pratt

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Christopher C. Camut

  	
   

  	
  Name:

  	
  Patrice Pratt

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  VP, Chief Financial
  Officer

  	
   

  	
  Title:

  	
  Relationship Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OXFORD
  FINANCE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy A. Lax

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy A. Lax

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  COO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Patrice Pratt

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Patrice Pratt

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Relationship Manager

  



 


The undersigned Pharmathene Canada ratifies, confirms and reaffirms, all
and singular, the terms and conditions of (i) that certain Unconditional
Guaranty by Pharmathene Canada in favor of Lenders dated March 30, 2007
(the “Guaranty”), and (ii) that certain Hypothecation of Movables between
Pharmathene Canada and Lenders dated March 30, 2007 (the “Hypothecation”),
and acknowledges, confirms and agrees that all references in each of the
Guaranty and the Hypothecation to “Borrower” shall mean New Borrower, and each
of the Guaranty and the Hypothecation 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.


 


	
   

  	
   

  	
  PHARMATHENE
  CANADA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Christopher C.
  Camut

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christopher C. Camut

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  



 


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