Document:

ex_338175.htm

Exhibit 10.3

 

FORM OF REPLACEMENT WARRANT

 

This Warrant Replacement Notice (this “Replacement Notice”) is issued by Cancer Prevention Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Panbela Therapeutics, Inc., a Delaware corporation formerly known as Canary Merger Holdings, Inc. (“HoldCo”).Capitalized terms used, but not defined herein, have the meanings ascribed to them in the Agreement and Plan of Merger dated as of February 21, 2022 (the “Merger Agreement”) by and among the Company, Panbela Therapeutics, Inc., (“Parent”), HoldCo, Canary Merger Subsidiary I, Inc., Canary Merger Subsidiary II, Inc., (“Merger Sub II”), and Fortis Advisors, LLC, in its capacity as Stockholder Representative.

 

WHEREAS, the Company and [●] or its registered assigns (the “Holder”) are parties to that certain Warrant to Purchase Common Stock of Cancer Prevention Pharmaceuticals, Inc., dated as of [●], (the “Existing Warrant”; capitalized terms used herein but not otherwise defined in this Replacement Notice shall have the meanings ascribed to such terms in the Existing Warrant);

 

WHEREAS, pursuant to the Existing Warrant, the Company issued [●]warrants to the Holder to purchase shares of the Company’s common stock, par value $0.001 per share (“Company Common Stock”), at a purchase price of $5.00 per share;

 

WHEREAS, the Merger Agreement provides, among other things, that Merger Sub II will be merged with and into the Company and Merger Sub II shall cease to exist, and the Company shall continue as the surviving corporation as a subsidiary of Holdco; and that each warrant to acquire shares of Company Common Stock (each, a “Company Warrant”) that is outstanding immediately prior to the consummation of the merger shall be, without any action on the part of the holder thereof be assumed by HoldCo and shall be converted into a warrant to purchase shares of common stock of HoldCo (“HoldCo Common Stock”);

 

WHEREAS, the Merger Agreement also provides that warrant as so assumed and converted shall continue to have, and shall be subject to, the same terms and conditions as applied to the warrant immediately prior to the consummation of the merger, and each assumed and converted warrant shall be a warrant to acquire that number of whole shares of HoldCo Common Stock (rounded down to the nearest whole share) equal to the product of: (i) the number of shares of Company Common Stock subject to each Existing Warrant; and (ii) the Exchange Ratio (as defined in the Merger Agreement), at an exercise price per share of HoldCo Common Stock (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (A) the exercise price per share of Company Common Stock of such Existing Warrant by (B) the Exchange Ratio; and

 

WHEREAS, Section 5(a) of the Existing Warrant provides that the Company and its successor may make appropriate adjustments to the Existing Warrant in the event of a merger involving the Company.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the Existing Warrant is amended and replaced with the following Warrant to Purchase Common Stock of HoldCo, effective as of the date of the consummation of the Merger.

 

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WARRANT TO PURCHASE COMMON STOCK

 

OF

 

PANBELA THERAPEUTICS, INC.

 

	No. [●] 	Amended as of June 15, 2022
	 	Replaces warrant dated as of [ORIGINAL ISSUE DATE]
	 	Void after [EXPIRATION DATE]

       

THIS CERTIFIES THAT, for value received [●] or its registered assigns (the “Holder”) is entitled, subject to the provisions and upon the terms and conditions set forth herein, at any time on or after, February 21, 2022 and prior to or at 5:00 p.m. (New York time) on [EXPIRATION DATE] to purchase from Panbela Therapeutics, Inc., a Delaware corporation (the “Company”)  up to [●] shares of common stock, par value $0.001 per share of the Company, as subject to adjustment hereunder (the “Shares”). The purchase price shall be equal to $[●] per share, subject to further adjustment. The term “Warrant” as used herein shall include this Warrant and any warrants delivered in substitution or exchange therefor as provided herein. This Warrant replaces a warrant originally issued on [ORIGINAL ISSUE DATE] in connection with the transactions described in an Exchange Agreement, dated as of the same date (as amended, modified or supplemented), by and among the Cancer Prevention Pharmaceuticals, Inc. and the Holder (the “Exchange Agreement”) pursuant to which the Holder exchanged a Convertible Promissory Note for securities, including this Warrant.

 

1.            Exercise of the Warrant.

 

(a)    Exercise. The purchase rights represented by this Warrant may be exercised at the election of the Holder, in whole or in part, by:

 

(i)    the tender to the Company at its principal office (or such other office or agency as the Company may designate) of a notice of exercise in the form of Exhibit A (the “Notice of Exercise”), duly completed and executed by or on behalf of the Holder, together with the surrender of this Warrant; and

 

(ii)    the payment to the Company of an amount equal to (x) the Exercise Price multiplied by (y) the number of Shares being purchased, by wire transfer or certified, cashier's or other check acceptable to the Company and payable to the order of the Company.

 

(b)    Stock Certificates. The rights under this Warrant shall be deemed to have been exercised and the Shares issuable upon such exercise shall be deemed to have been issued immediately prior to the close of business on the date this Warrant is exercised in accordance with its terms, and the person entitled to receive the Shares issuable upon such exercise shall be treated for all purposes as the holder of record of such Shares as of the close of business on such date. As promptly as reasonably practicable on or after such date, the Company shall instruct its transfer agent or depository to enter in its book entry settlement system the names of the respective holders thereof for that number of shares issuable upon such exercise. If the transfer agent or depository for the Company ceases to make its book-entry settlement system available for the Shares the Company shall instruct the transfer agent or depository to issue physical certificates for the Shares.

 

(c)    No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the rights under this Warrant. In lieu of such fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

 

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(d)    Reservation of Common Stock. The Company agrees during the term the rights under this Warrant are exercisable to take all reasonable action to reserve and keep available from its authorized and unissued shares of Common Stock for the purpose of effecting the exercise of this Warrant such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of the rights under this Warrant; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient for purposes of the exercise of this Warrant, without limitation of such other remedies as may be available to the Holder, the Company will use all reasonable efforts to take such corporate action as may, in the opinion of counsel, be necessary to increase its authorized and unissued shares of Common Stock to a number of shares as shall be sufficient for such purposes. The Company represents and warrants that all shares that may be issued upon the exercise of this Warrant will, when issued in accordance with the terms hereof, be validly issued, fully paid and nonassessable.

 

2.            Replacement of the Warrant. Subject to the receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at the expense of the Holder shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

 

3.            Transfer of the Warrant.

 

(a)    Warrant Register. The Company shall maintain a register (the “Warrant Register”) containing the name and address of the Holder or Holders. Until this Warrant is transferred on the Warrant Register in accordance herewith, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary. Any Holder of this Warrant (or of any portion of this Warrant) may change its address as shown on the Warrant Register by written notice to the Company requesting a change.

 

(b)    Warrant Agent. The Company may appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 3(a), issuing the Shares or other securities then issuable upon the exercise of the rights under this Warrant, exchanging this Warrant, replacing this Warrant or conducting related activities.

 

(c)    Transferability of the Warrant Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the “Securities Act”), and limitations on assignments and transfers, including without limitation compliance with the restrictions on transfer set forth in Section 4, title to this Warrant may be transferred by endorsement (by the transferor and the transferee executing the assignment form attached as Exhibit B (the “Assignment Form”)) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

 

(d)    Exchange of the Warrant upon a Transfer. On surrender of this Warrant (and a properly endorsed Assignment Form) for exchange, subject to the provisions of this Warrant with respect to compliance with the Securities Act and limitations on assignments and transfers, the Company shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof, and the Company shall register any such transfer upon the Warrant Register. This Warrant (and the securities issuable upon exercise of the rights under this Warrant) must be surrendered to the Company or its warrant or transfer agent, as applicable, as a condition precedent to the sale, pledge, hypothecation or other transfer of any interest in any of the securities represented hereby.

 

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(e)    Taxes. In no event shall the Company be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of any certificate in a name other than that of the Holder, and the Company shall not be required to issue or deliver any such certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or is not payable.

 

4.            Restrictions on Transfer of the Warrant and Shares; Compliance with Securities Laws. By acceptance of this Warrant, the Holder agrees to comply with the following:

 

(a)    Restrictions on Transfers. Any transfer of this Warrant or the Shares must be in compliance with all applicable federal and state securities laws. The Holder agrees not to make any sale, assignment, transfer, pledge or other disposition of all or any portion of the Shares, or any beneficial interest therein, unless and until the transferee thereof has agreed in writing for the benefit of the Company to take and hold such Shares subject to, and to be bound by, the terms and conditions set forth in this Warrant to the same extent as if the transferee were the original Holder hereunder, and

 

(i)    there is then in effect a registration statement under the Securities Act disposition and such disposition is made in accordance with such registration statement or

 

(ii)     (A) such Holder shall have given prior written notice to the Company of such Holder's intention to make such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition, and (C) if requested by the Company, such Holder shall have furnished the Company, at the Holder's expense, with an opinion of counsel, reasonably satisfactory to the Company, to the effect that such disposition will not require registration of such Shares under the Securities Act; or

 

(iii)    a “no action” letter from the Securities and Exchange Commission to the effect that the transfer of such Shares without registration will not result in a recommendation by the staff of the Shares and Exchange Commission that action be taken with respect thereto, whereupon such Holder shall be entitled to transfer such Shares in accordance with the terms of the notice delivered by the Holder to the Company.

 

(b)    Permitted Transfers. Permitted transfers include (i) a transfer not involving a change in beneficial ownership, or (ii) transactions involving the distribution without consideration of Shares by any Holder to (x) a parent, subsidiary or other affiliate of a Holder that is a corporation, (y) any of the Holder's partners, members or other equity owners, or retired partners or members, or to the estate of any of its partners, members or other equity owners or retired partners or members, or (z) a venture capital fund that is controlled by or under common control with one or more general partners or managing members of, or shares the same management company with, the Holder; provided, in each case, that the Holder shall give written notice to the Company of the Holder's intention to effect such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition.

 

(c)    Instructions Regarding Transfer Restrictions. The Holder consents to the Company making a notation on its records and giving instructions to any transfer agent in order to implement the restrictions on transfer established in this Section 4.

 

(d)    Removal of Legend. Any legend referring to federal and state securities laws identified stamped on a certificate evidencing the Shares (and the common stock issuable upon conversion thereof) and the stock transfer instructions and record notations with respect to such securities shall be removed and the Company shall issue a certificate without such legend to the holder of such securities if (i) such securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably acceptable to the Company to the effect that a sale or transfer of such securities may be made without registration or qualification.

 

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5.            Adjustments. Subject to the expiration of this Warrant, the number and kind of Shares purchasable hereunder and the Exercise Price therefor are subject to adjustment from time to time, as follows:

 

(a)    Merger or Reorganization. If at any time there shall be any reorganization, recapitalization, merger or consolidation (a “Reorganization”) involving the Company in which Shares are converted into or exchanged for securities, cash or other property, then, as a part of such Reorganization, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, the kind and amount of securities, cash or other property of the successor corporation resulting from such Reorganization, equivalent in value to that which a holder of the Shares deliverable upon exercise of this Warrant would have been entitled in such Reorganization if the right to purchase the Shares hereunder had been exercised immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the successor corporation) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after such Reorganization to the end that the provisions of this Warrant shall be applicable after the event, as near as reasonably may be, in relation to any shares or other securities deliverable after that event upon the exercise of this Warrant.

 

(b)    Reclassification of Shares. If the Shares issuable upon exercise of this Warrant are changed into the same or a different number of securities of any other class or classes by reclassification, capital reorganization, conversion of all outstanding shares of the relevant class or series or otherwise (other than as otherwise provided for herein) (a “Reclassification”), then, in any such event, in lieu of the number of Shares which the Holder would otherwise have been entitled to receive, the Holder shall have the right thereafter to exercise this Warrant for a number of shares of such other class or classes of stock that a holder of the number of securities deliverable upon exercise of this Warrant immediately before that change would have been entitled to receive in such Reclassification, all subject to further adjustment as provided herein with respect to such other shares.

 

(c)    Subdivisions and Combinations. In the event that the outstanding shares of Common Stock are subdivided (by stock split, by payment of a stock dividend or otherwise) into a greater number of shares of such securities, the number of Shares issuable upon exercise of the rights under this Warrant immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately increased, and the Exercise Price shall be proportionately decreased, and in the event that the outstanding shares of Common Stock are combined (by reclassification or otherwise) into a lesser number of shares of such securities, the number of Shares issuable upon exercise of the rights under this Warrant immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately decreased, and the Exercise Price shall be proportionately increased.

 

(d)    Notice of Adjustments. Upon any adjustment in accordance with this Section 5, the Company shall give notice thereof to the Holder, which notice shall state the event giving rise to the adjustment, the Exercise Price as adjusted and the number of securities or other property purchasable upon the exercise of the rights under this Warrant, setting forth in reasonable detail the method of calculation of each. The Company shall, upon the written request of any Holder, furnish or cause to be furnished to such Holder a certificate setting forth (i) such adjustments, (ii) the Exercise Price at the time in effect and (iii) the number of securities and the amount, if any, of other property that at the time would be received upon exercise of this Warrant.

 

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6.            No Rights as a Stockholder. Nothing contained herein shall entitle the Holder to any rights as a stockholder of the Company or to be deemed the holder of any securities that may at any time be issuable on the exercise of the rights hereunder for any purpose nor shall anything contained herein be construed to confer upon the Holder, as such, any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or any other rights of a stockholder of the Company until the rights under the Warrant shall have been exercised and the Shares purchasable upon exercise of the rights hereunder shall have become deliverable as provided herein.

 

7.            Miscellaneous.

 

(a)    Amendments. Except as expressly provided herein, neither this Warrant nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Warrant and signed by the Company and the Holder.

 

(b)    Waivers. No waiver of any single breach or default shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.

 

(c)    Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to the Holder) or otherwise delivered by hand, messenger or courier service addressed:

 

(i)    if to the Holder, to the Holder at the Holder's address, facsimile number or electronic mail address as shown in the Company's records, as may be updated in accordance with the provisions hereof, or until any such Holder so furnishes an address, facsimile number or electronic mail address to the Company, then to and at the address, facsimile number or electronic mail address of the last holder of this Warrant for which the Company has contact information in its records; or

 

(ii)    if to the Company, to the attention of the President or Chief Financial Officer of the Company at the Company's address as shown on the signature page hereto, or at such other address as the Company shall have furnished to the Holder.

 

Each such notice or other communication shall for all purposes of this Warrant be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered, or (ii) if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent by facsimile, upon confirmation of facsimile transfer or, if sent by electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address. In the event of any conflict between the Company's books and records and this Warrant or any notice delivered hereunder, the Company's books and records will control absent fraud or error.

 

(d)    Governing Law. This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions of the State of Delaware, or of any other state.

 

(e)    Jurisdiction and Venue. Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of any court within Kent County in the State of Delaware in connection with any matter based upon or arising out of this Warrant or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such persons.

 

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(f)    Titles and Subtitles. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.

 

(g)    Severability. If any provision of this Warrant becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Warrant, and such illegal, unenforceable or void provision shall be replaced with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, unenforceable or void provision. The balance of this Warrant shall be enforceable in accordance with its terms.

 

(h)    Waiver of Jury Trial EACH OF THE HOLDER AND THE COMPANY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS WARRANT.

 

(i)    Rights and Obligations Survive Exercise of the Warrant. Except as otherwise provided herein, the rights and obligations of the Company and the Holder under this Warrant shall survive exercise of this Warrant.

 

(j)    Entire Agreement. Except as expressly set forth herein, this Warrant (including the exhibits attached hereto) constitutes the entire agreement and understanding of the Company and the Holder with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof.

 

(signature page follows)

 

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The Company signs this Warrant as of the date stated on the first page.

 

PANBELA THERAPEUTICS, INC.

 

By                                                                         

Name:

Title:

 

 

 

8ex_387149.htm

 

Exhibit 10.4

 

CONVERTIBLE PROMISSORY NOTE

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY OTHER STATE OR JURISDICTION. THEY MAY NOT BE PURCHASED WITH A VIEW FOR DISTRIBUTION OR RESALE, AND MAY ONLY BE OFFERED, SOLD, MORTGAGED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH EITHER AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITY UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES ACT, OR AN OPINION OF COUNSEL FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR THE LAWS OF ANY OTHER JURISDICTION.

 

CANCER PREVENTION PHARMACEUTICALS, INC.

 

	Principal Amount: $5,000,000	Issuance Date: September 6, 2017

         

 

FOR VALUE RECEIVED, Cancer Prevention Pharmaceuticals, Inc., a Delaware corporation (the “Company”), promises to pay to Sucampo AG, a Swiss corporation, or its registered assigns (“Lender”), the principal sum of Five Million Dollars ($5,000,000), or such lesser amount as shall equal the outstanding principal amount hereof (the “Principal”), and to pay simple interest on any outstanding Principal from the date set forth above as the Issuance Date (the “Issuance Date”) of this Convertible Promissory Note (the “Note”) until the same becomes due and payable whether on the Maturity Date or upon acceleration, prepayment or otherwise at a rate equal to 5.0% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid Principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the earlier of (i) September 6, 2020 or September 6, 2021, if the proviso set forth under Section 2 is applicable (the “Maturity Date”), (ii) when, upon the occurrence and during the continuance of an Event of Default, such amounts are declared due and payable by Lender or made automatically due and payable, in each case, in accordance with the terms hereof, or (iii) upon a Sale in the event that the Lender has not elected to convert this Note in accordance with Section 2(b) below.

 

This Note is issued pursuant to that certain Securities Purchase Agreement dated as of January 9, 2016 (the “Purchase Agreement”) by and between the Company and the Lender. Any capitalized term not otherwise defined herein shall have the meaning assigned to it in the Purchase Agreement.

 

The following is a statement of the rights of Lender and the conditions to which this Note is subject, and to which Lender, by the acceptance of this Note, agrees:

 

	 	
			1. 

				
			Form and Application of Payments; Equal Rank.

			

 

(a)    Unless earlier converted into Common Stock as provided in this Note, all payments of Principal and interest under the Note shall be in lawful money of the United States of America. All payments hereunder shall be applied first to any unpaid and accrued interest on and second to the repayment of the unpaid Principal balance of the Note.

 

(b)    This Note shall rank equally and ratably without priority over any other note issued by the Company.

 

(c)    This Note may be prepaid without the written consent of the Lender as described in Section 8.

 

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Exhibit 10.4

 

	 	
			2. 

				
			Conversion.

			

 

(a)    Automatic Conversion – Qualified Financing. If, prior to the Maturity Date, the Company consummates a Qualified Financing (as such term is defined below), all Principal of and accrued and unpaid interest on this Note shall automatically convert without further action by the Lender into fully paid and nonassessable shares of Qualified Financing securities at a conversion price per share (the “Conversion Price”) equal to a twenty percent (20%) discount to the lowest per share purchase price for the Qualified Financing securities paid by the investors in the Qualified Financing. A “Qualified Financing” means the first to occur of (i) a firm commitment underwritten public offering of Common Stock pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock for the account of the Company (“IPO”), or (ii) a private placement in one financing transaction or a series of related financing transactions of debt, equity, preferred or convertible securities, in each case with aggregate gross proceeds (before underwriters’ and/or financial advisory fees and commissions and offering expenses) to the Company (excluding any investment by the Lender in such offering) of at least Ten Million Dollars ($10,000,000). Notwithstanding the foregoing, in no event shall Lender be required to acquire shares of the Company’s capital stock such that Lender’s ownership interest in the Company would exceed 19.9% of the Company’s outstanding capital stock. Accordingly, the maximum amount of Principal and interest that Purchaser can be obligated to convert pursuant to this Section 2(a) is such amount as would result in Purchaser’s ownership being 19.9% of the Company’s outstanding capital stock (or, to the extent permissible under U.S. GAAP for determining whether the Company is an associate company or subsidiary of the Purchaser, the Company’s issued capital stock on a fully diluted basis after taking into account the conversion of all convertible securities) (the “Threshold”). Any remaining Principal and interest will remain outstanding under this Note until repaid in accordance with the terms hereof or converted in accordance with the terms of the next proviso; provided, however that if at any time after the Qualified Financing the Lender shall be able to convert any additional remaining Principal or interest outstanding under this Note without its ownership exceeding the Threshold then it shall be obligated to convert such Principal and interest at such time; and, provided, further that with respect to any Principal or interest which exceeds the Threshold and shall remain outstanding under this Note: (i) the interest rate of this Note will be reduced to three percent (3.0%) and the default interest rate set forth in Section 5 shall be reduced to eight percent (8.0%); (ii) the Maturity Date shall be extended to September 6, 2021; (iii) the Events of Default under Section 4 shall be amended such that Sections 4(b)(e)(f) and (g) shall no longer be Events of Default and the only Events of Default shall be those under Sections 4(a)(c) and (d); and (iv) Section 9 shall be deleted in its entirety.

 

(b)    Optional Conversion Upon Sale of the Company. In the event of the sale of all or substantially all of the assets of the Company or consolidation or merger of the Company other than a reincorporation merger (the “Sale”) that occurs prior to the Maturity Date or a Qualified Financing, then the Principal and accrued interest of this Note outstanding at such time will convert immediately prior to the Sale, at the written election of the Lender (the “Lender Sale Notice”) given within ten (10) days of the Lender’s receipt from the Company of notice of the Sale (the “Company’s Sale Notice”) into fully paid and non-assessable shares of (i) Common Stock at a conversion rate equal to the lowest per share price of the Company’s most recent Common Stock financing or (ii) if the most recent financing was a preferred stock financing, preferred stock at a conversion rate equal to the lowest per share price of the Company’s most recent preferred stock financing (the “Optional Sale Conversion Price”).

 

(c)    Optional Conversion if no Qualified Financing or Sale. If a Qualified Financing or a Sale has not been consummated prior to the Maturity Date, at the written election of the Lender given not less than ten (10) business days prior to the Maturity Date (“Notice of Election to Convert”), the Principal together with all accrued and unpaid interest on the Notes outstanding shall convert into shares of Common Stock on the date set forth in the Notice of Election to Convert at a conversion rate equal to per share price of the Common Stock as set forth in its most recent 409A valuation conducted by a third party appraiser (the “409A Optional Conversion Price”).

 

(d)    Conversion Procedure.

 

(i)    Conversion Pursuant to Automatic Conversion. If this Note is to be automatically converted, written notice shall be delivered to Lender at the address last shown on the records of the Company for Lender or given by Lender to the Company for the purpose of notice (“Notice Address”), notifying Lender of the conversion to be effected, specifying the Conversion Price, the Principal to be converted, together with all accrued and unpaid interest, the date on which such conversion is expected to occur and calling upon Lender to surrender to the Company, in the manner and at the place designated, the Note; provided, however, that upon the consummation of a Qualified Financing, this Note shall be deemed converted and of no further force and effect, whether or not it is delivered for cancellation. The Company shall, as soon as practicable thereafter, at its costs issue and deliver to such Lender a certificate or certificates for the number of shares to which Lender shall be entitled upon such conversion, including a check payable to Lender for any cash amounts payable as described in Section 2(e). Any conversion of this Note pursuant to Section 2(a) shall be deemed to have been made immediately prior to the closing of the Qualified Financing and on and after such date the persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock. Any conversion of this Note pursuant to Section 2(b) shall be deemed to have been made immediately prior to the closing of the Sale and on and after such date the persons entitled to receive the shares of capital stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of capital stock. Any conversion of this Note pursuant to Section 2(c) shall be deemed to have been made on the date set forth in the Notice of Election to Convert and on and after such date the persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock.

 

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Exhibit 10.4

 

(ii)    Conversion Pursuant to Optional Conversion. Upon receipt of an executed Lender Sale Notice or an executed Notice of Election to Convert together with this original Note, the Company shall, as soon as practicable after the Sale or the conversion date set forth in the Notice of Election to Convert, issue and deliver to Lender a certificate or certificates for the number of shares to which such Lender shall be entitled upon such conversion, including a check payable to Lender for any cash amounts payable as described in Section 2(e). The Company shall send the Lender a notice via facsimile or electronic mail confirming receipt of the Lender Sale Notice or Notice of Election to Convert within two (2) days of receipt thereof. If for any reason the Sale does not occur on the date set forth in the Company’s Sale Notice, the Company will return to the Lender this Note and the Lender Sale Notice shall be deemed rescinded.

 

Any certificates representing shares of Common Stock issued pursuant to this Section 2(d) shall bear the following legend:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, TRANSFER, PLEDGE OR HYPOTHECATION OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED HEREBY.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING, AS SET FORTH IN THE NOTE PURSUANT TO WHICH THESE SHARES WERE ISSUED, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

(e)    Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. Upon the conversion of the outstanding principal and unpaid accrued interest under this Note into Common Stock, in lieu of the Company issuing any fractional shares to the Lender, the Company shall pay to the Lender the amount of outstanding principal and accrued interest that is not so converted.

 

(f)    Release. Upon full conversion of this Note and the payment of the amounts specified in this Section 2, the Company shall be forever released from all its obligations and liabilities under this Note.

 

3.            Principal and Interest Repayment. Unless this Note has been converted in accordance with the terms of Section 2 above or has been satisfied in accordance with the terms of this Note, the entire outstanding Principal and all unpaid accrued interest shall become fully due and payable on the Maturity Date, upon the occurrence of an Event of Default or upon a Sale. If the payments to be made by the Company shall be stated to be due on a date which is not a business day, such payment may be made on the next succeeding business day, and the interest payment on each such date shall include the amount thereof which shall accrue during the period of such extension of time.

 

3

 

 

Exhibit 10.4

 

4.            Events of Default. Subject to the proviso set forth in Section 2 of this Note, each of the following shall constitute an Event of Default hereunder:

 

(a)    The Company’s failure to pay to the Lender any amount of Principal, or interest when and as due under this Note after taking into account a thirty (30) day grace period;

 

(b)    The Company shall fail to observe or perform any material covenant, obligation, condition or agreement contained in this Note or the Securities Purchase Agreement and such failure shall continue for thirty (30) days after the Company’s receipt of written notice to the Company of such failure;

 

(c)    The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing;

 

(d)    An involuntary petition is filed against the Company (unless such petition is dismissed or discharged within 120 days) under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of the Company;

 

(e)    Defaults shall exist under any material agreements of the Company with any third party or parties which consists of the failure to pay any indebtedness for borrowed money in excess of Two Hundred and Fifty Thousand Dollars ($250,000) at maturity or which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of such indebtedness for borrowed money in excess of Two Hundred and Fifty Thousand Dollars ($250,000) of the Company; unless the Company is actively controlling such default;

 

(f)    A final judgment or order for the payment of money in excess of Two Hundred and Fifty Thousand Dollars ($250,000) (exclusive of amounts covered by insurance) shall be rendered against the Company and the same shall remain undischarged for a period of 120 days during which execution shall not be effectively stayed, or any judgment, writ, assessment, warrant of attachment, or execution or similar process shall be issued or levied against a substantial part of the property of the Company and such judgment, writ, or similar process shall not be released, stayed, vacated or otherwise dismissed within 90 days after issue or levy; or

 

(g)    Any representation or warranty made by or on behalf of the Company in the Purchase Agreement, this Note or otherwise furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made.

 

5.            Remedies Upon Event of Default. Upon the occurrence of any Event of Default (other than an Event of Default described in Sections 4(c) or 4(d)) and at any time thereafter during the continuance of such Event of Default, Lender may, by written notice to the Company, declare all outstanding amounts and obligations payable by the Company under this Note to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in any other documents to the contrary notwithstanding. Upon the occurrence of any Event of Default described in Sections 4(c) and 4(d), immediately and without notice, all outstanding amounts and obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in any other documents to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence and during the continuance of any Event of Default, Lender may exercise any other right, power or remedy granted to it by the Purchase Agreement, this Note or any other documents, agreements or instruments delivered to Lender in connection with the execution of the Purchase Agreement or otherwise permitted to it by law, either by suit in equity or by action at law, or both. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of a third party for collection after default or if Lender seeks to enforce its rights under this Note, then the Company shall pay, in addition to the Principal and interest payable hereunder, the reasonable attorneys’ fees and reasonable attorneys’ costs incurred by Lender in connection therewith. In addition to all other rights and remedies available to Lender under this Note, applicable law or otherwise, after an Event of Default the rate of interest under this Note shall increase, subject to the proviso set forth in Section 2 of this Note, to ten percent (10.0%) per annum from and after an Event of Default occurs until the date that this Note is paid in full or such Event of Default is cured.

 

4

 

 

Exhibit 10.4

 

6.            Restrictions on Sale. The Lender hereby agrees not to sell or otherwise transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, of any Common Stock (or other securities) of the Company held by the Lender during the 180-day period following the effective date of the registration statement for the Company’s IPO (or such other period as may be requested by the Company or an underwriter solely to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and

 

(ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto)(the “Lock-up Period”), provided, that all officers and directors of the Company and holders of at least 5% of the Company’s voting securities are bound by and have entered into similar agreements. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all holders subject to such agreements, pro rata based on the number of shares subject to such agreements. The obligations described in this Section 6 shall not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions and may stamp each certificate with a legend as substantially set forth in Section 2(c) with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of such 180-day (or other) period. The Lender agrees to execute a market stand-off agreement with the underwriters in the offering in customary form consistent with the provisions of this Section 6.

 

7.            Adjustments. The number of shares of Common Stock to be issued upon each conversion of this Note shall be subject to adjustments as follows:

 

(a)    If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of capital stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Optional Sale Conversion Price and the 409A Optional Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by any reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of capital stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Optional Sale Conversion Price and the 409A Optional Conversion Price in effect immediately prior to such combination will be proportionately increased.

 

(b)    If at any time or from time to time after the date upon which this Note was issued by the Company, the shares of capital stock issuable upon the conversion of this Note shall be changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets or otherwise, then, in any such event, the Lender, unless this Note has been previously converted, shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets, or otherwise by a holder of the number of shares of capital stock into which such shares of this Note could have been converted immediately prior to such recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets, distribution of assets or other change, or with respect to such other securities or property by the terms thereof.

 

5

 

 

Exhibit 10.4

 

(c)    Upon the occurrence of each adjustment or readjustment of the Optional Sale Conversion Price and the 409A Optional Conversion Price as a result of the events described in this Section 7, the Company, at its expense, shall compute such adjustment or readjustment and prepare and furnish to the Lender a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. Failure to give such notice or any defect therein shall not affect the legality or validity of the subject adjustment.

 

8.            Prepayment. At any time after the date hereof, the Company shall have the right to prepay all or part of the Principal and interest outstanding. The portion of this Note subject to prepayment (the “Optional Prepayment Amount”) pursuant to this Section 8 shall be redeemed by the Company in cash at a price (the “Company Optional Prepayment Price”) equal to the Principal Amount and interest being redeemed as of the Company Optional Prepayment Date. The Company may exercise its right to prepay this Note under this Section 8 by delivering a written notice thereof by facsimile or electronic mail or overnight courier to the Lender (the “Company Optional Prepayment Notice” and the date on which such notice is sent or delivered by the Company is referred to as the “Company Optional Prepayment Notice Date”). The Company Optional Prepayment Notice shall (a) state the date on which the Company Optional Prepayment shall occur (the “Company Optional Prepayment Date”), which date shall not be less than five (5) days nor more than twenty (20) days following the Company Optional Prepayment Notice Date, and (b) state the Optional Prepayment Amount and the Company Optional Prepayment Price. All amounts converted by the Lender after the Company Optional Prepayment Notice Date shall reduce the Company Optional Prepayment Amount of this Note to be redeemed on the Company Optional Prepayment Date. Prepayments made pursuant to this Section 8 shall be made in cash on the Company Optional Prepayment Date. Any partial prepayment under this Note shall be in an amount of at least

 

$1,000,000 and increments of $1,000,000.

 

9.           Covenants. Until this Note has been converted, or paid in full (subject to the proviso set forth in Section 2 of this Note), the following covenants shall apply:

 

(a)    All payments under this Note shall rank pari passu with all other notes of the Company.

 

(b)    The Company shall not, directly or indirectly, declare or pay any cash dividend or distribution on any of its capital stock.

 

(c)    The Company shall maintain its corporate existence and good standing in the state of its incorporation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on its business.

 

(d)    The Company shall deliver to Lender: (i) as soon as available, but in any event within 180 days after the end of the Company’s fiscal year, audited consolidated and consolidating financial statements of the Company prepared in accordance with GAAP, consistently applied; (ii) if applicable, copies of all statements, reports and notices sent or made available generally by the Company to its security holders; and (iii) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against the Company that could reasonably be expected to result in damages or costs to the Company of Two Hundred Fifty Thousand Dollars ($250,000) or more. Notwithstanding the foregoing, the Company will be deemed to have furnished the information referred to above in clause (i) to the Lender if the Company has filed Forms 10-K with the Securities and Exchange Commission via the EDGAR filing system and such reports are publicly available.

 

(e)    The Company shall make due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Lender on demand, proof indicating that the Company has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that the Company needs not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by the Company.

 

6

 

 

Exhibit 10.4

 

(h)         The Company, at its expense, shall maintain liability and other insurance, in each case as ordinarily insured against by other owners in businesses similar to the Company’s. Upon Lender’s request, the Company shall deliver to the Lender certified copies of the policies of insurance and evidence of all premium payments.

 

10.          Expenses. In the event of any default hereunder, the Company shall pay all reasonable attorneys’ fees, expenses and court costs incurred by Lender in enforcing and collecting this Note.

 

11.          Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Purchase Agreement, or at such other address or facsimile number as the Company shall have furnished to Lender in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

 

12.          Waiver. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

13.         Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in New York, New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Note, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

14.         Successors and Assigns; Transfer of this Note or Securities Issuable on Conversion Hereof.

 

(a)    Subject to the restrictions on transfer described herein, the rights and obligations of the Company and Lender shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(b)    Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by the Company or the Lender without the prior written consent of the other party.

 

15.         Waiver and Amendment. The provisions of this Note may only be amended, waived or modified upon the written consent of the Company and Lender.

 

7

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first written above.

 

	
			 

				
			CANCER PREVENTION PHARMACEUTICALS, INC.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Jeffrey E. Jacob

				
			 

			
	
			 

				
			Name:

				
			Jeffrey E. Jacob

				
			 

			
	
			 

				
			Title:

				
			Chief Executive Officer

				
			 

			

 

8

 

 

Exhibit 10.4

 

AMENDMENT TO CONVERTIBLE PROMISSORY NOTES

 

 

This AMENDMENT TO CONVERTIBLE PROMISSORY NOTES, dated August 4, 2018 (the “Amendment”), to (i) that certain Convertible Promissory Note dated as of January 9, 2016, made by Cancer Prevention Pharmaceuticals, Inc. (the “Company”) in favor of Sucampo AG (“Lender”), an indirect, wholly owned subsidiary of Mallinckrodt plc, in the original principal amount of $5,000,000 and (ii) that certain Convertible Promissory Note dated as of September 6, 2017, made by the Company in favor of Lender, in the original principal amount of

 

$5,000,000 (the Convertible Promissory Notes in subclauses (i) and (ii) collectively referred to herein as the “Notes”), is entered into by and between the Company and Lender. Capitalized terms used herein and not defined shall have the meanings set forth in the Notes.

 

W I T N E S S E T H :

 

WHEREAS, the Company and Lender desire to amend the Notes as further described in this Amendment and Exhibit B (as such term is defined under the License and Collaboration Agreement dated as of the date hereof between the Company and the Lender (the “License Agreement”)).

 

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend the Notes as follows:

 

1.    Notwithstanding anything in the Notes to the contrary, the Lender agrees that the Company may satisfy its payment obligations under the Notes by either paying cash on hand as required pursuant to the terms of the Notes or, so long as the License Agreement has not expired by its terms or been terminated, through the offset procedures as described in Exhibit B to the License Agreement, such determination of payment method to be in the Company’s sole discretion.

 

2.    Subclause (i) in the first grammatical paragraph of each of the Notes is hereby amended and restated as follows: “(i) January 31, 2023 (the “Maturity Date”),”.

 

3.    The Notes, as amended by this Amendment and the reference to the License Agreement contained herein, contain the entire agreement between the parties hereto regarding the subject matter thereof, and there are no other agreements, warranties or representations which are not set forth therein or herein. This Amendment may not be modified or amended except by an instrument in writing duly signed by or on behalf of the parties hereto. In case of a conflict between the terms of this Amendment and the Notes, the terms of this Amendment control. Except as expressly set forth in this Amendment, the terms of the Notes remain unchanged and in full force and effect.

 

4.    This Amendment shall be governed by and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely within the State, without regard to conflict of laws principles.

 

5.    This Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

6.    The Company hereby reaffirms its obligations under the Notes and confirms that the obligations of the Company thereunder remain in full force and effect without defense, offset, or counterclaim.

 

	CANCER PREVENTION PHARMACEUTICALS, INC.	 	SUCAMPO AG	 
	 	 	 	 	 	 
	By:	/s/ Jeffrey Jacob 	 	By: 	/s/ Stephanie D Miller	 
	Name:	Jeffrey Jacob	 	Name: 	Stephanie D Miller	 
	Title:	Chief Executive Officer	 	Title:	Director	 

 

1

 

 

Exhibit 10.4

 

AGREEMENT TO FURTHER AMEND CONVERTIBLE PROMISSORY NOTES

 

On April 7, 2022, Cancer Prevention Pharmaceuticals, Inc. (the “Company”) and Sucampo GmbH (f/k/a Sucampo AG) (“Lender”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, enter into this AGREEMENT TO FURTHER AMEND CONVERTIBLE PROMISSORY NOTES to be effective on the date and time specified below (this “Amendment Agreement”). Initially capitalized terms used herein and not otherwise defined herein have the meanings given them in the Notes.

 

RECITALS:

 

	
			A.

				
			Company made that certain Convertible Promissory Note dated as of January 9, 2016 in favor of Lender in the original principal amount of $5,000,000, as amended by that Amendment to Convertible Promissory Notes dated August 4, 2018 (the “First Amendment”) between the Company and Lender (as amended and as may be amended, restated, replaced or otherwise modified from time to time, the “2016 Note”).

			

 

	
			B.

				
			Company made that certain Convertible Promissory Note dated as of September 6, 2017 in favor of Lender in the original principal amount of $5,000,000, as amended by the First Amendment (as amended and as may be amended, restated, replaced or otherwise modified from time to time, the “2017 Note” and, together with the 2016 Note, the “Notes”).

			

 

	
			C.

				
			Company, Panbela Therapeutics, Inc., Canary Merger Holdings, Inc. (the “Parent”), and other various special acquisition entities entered into that certain Agreement and Plan of Merger dated as of February 21, 2022, as amended from time to time (the “Sale Agreement”).

			

 

	
			D.

				
			In connection with the Sale Agreement, the Company and Lender desire to further amend the Notes as described in, and subject to the terms and conditions of, this Amendment Agreement.

			

 

AMENDMENTS AND AGREEMENTS:

 

Effective as of immediately before the consummation of the Second Merger (as defined in the Sale Agreement as in effect on the date hereof) (the “Closing”):

 

	
			A.

				
			2016 Note Conversion in Full.

			

 

	
			1.

				
			Notwithstanding anything to the contrary set forth in the 2016 Note, Company and Lender hereby agree that the entirety of the outstanding principal of the 2016 Note and accrued but unpaid interest under the 2016 Note shall be converted, subject to, and conditioned upon the occurrence of, and effective as of immediately prior to, the Closing, into fully paid and non-assessable shares of the Company’s Series A-2 Preferred Stock, par value $0.001 per share, at a price equal to $3.00 per share. Company waives all notice or other requirements under the 2016 Note in connection with the foregoing conversion.

			

 

	
			2.

				
			Notwithstanding the foregoing, in no event will Lender be required to acquire shares of the Company’s capital stock such that, after giving effect to such acquisition and the Closing, Lender’s ownership in the Parent would exceed 9.9% of Parent’s outstanding capital stock (the “Threshold”). Any amount of principal and interest that remains outstanding under the 2016 Note, after conversion of the maximum amount of principal and interest pursuant to Section A.1 without exceeding the Threshold (the “Excess Amount”), will be added to, and included as a part of, the Amended Principal Amount (as defined below) and will remain outstanding until repaid as provided in the 2017 Note, as amended hereby, and the 2016 Note will be deemed amended accordingly. Any shares issuable to the Lender pursuant to the terms of this Agreement in excess of the Threshold shall not be deemed to be beneficially owned by the Lender for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Securities Exchange Act of 1934, as amended

			

 

2

 

 

Exhibit 10.4

 

	
			B.

				
			2017 Note Modification.

			

 

	
			1.

				
			Promptly following (but no later than 5 business days after) the Closing, the Company will issue an amended and restated note in substitution of the 2017 Note to reflect the amendments to the 2017 Note set forth in this Amendment Agreement.

			

 

	
			2.

				
			The stated Principal Amount of the 2017 Note, as indicated on the first page of the 2017 Note, is hereby amended by increasing the Principal Amount to the sum of (x) the outstanding Principal Amount of the 2017 Note as of the date hereof plus (y) the amount of all accrued but unpaid interest thereon, through the date of the Closing (the “Amended Principal Amount”), and by changing the title thereof on the first page of the 2017 Note to read as “Amended Principal Amount.”

			

 

	
			3.

				
			The stated Issuance Date of the 2017 Note, as indicated on the first page of the 2017 Note, is hereby amended by changing it to be the date of the Closing (the “Amended Issuance Date”), and by changing the title thereof on the first page of the 2017 Note to read as “Amended Issuance Date.”

			

 

	
			4.

				
			The “Mandatory Prepayment Amount” (as referenced in Section B.5 below) shall equal the sum of (x) the Excess Amount, if any, and (y) $1,000,000.

			

 

	
			5.

				
			The first paragraph of the 2017 Note, which paragraph begins with the words “FOR VALUE RECEIVED,” is hereby amended by changing it to read in its entirety as follows:

			

 

	
			FOR VALUE RECEIVED, Cancer Prevention Pharmaceuticals, Inc., a Delaware corporation, (the “Company”) promises to pay to Sucampo GmbH, a Swiss company with limited liability, or its permitted assigns (“Lender”) the principal sum of [the Amended Principal Amount – to be written out], or such lesser amount as shall equal the outstanding principal amount hereof (the “Principal”), and to pay simple interest on any outstanding Principal from the date set forth above as the Amended Issuance Date of this Convertible Promissory Note (this “Note”) until the same become due and payable as provided below, or upon acceleration, prepayment, or otherwise at a rate equal to 5.0% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid Principal, together with any then unpaid and accrued interest, as amended, and other amounts payable hereunder are due and payable as follows:

			 

			(i)    One Million Dollars ($1,000,000), plus all interest accrued but unpaid under this Note through the date of payment thereof under this Note, on or before each of January 31, 2023, January 31, 2024, January 31, 2025, and January 31, 2026. If any portion of the outstanding principal of, and accrued but unpaid interest under, that certain Convertible Promissory Note dated as of January 9, 2016 made by Company in favor of Lender in the original principal amount of $5,000,000, as amended, (the “2016 Note”) is not earlier converted into shares of the Company’s Series A-2 Preferred Stock, par value $0.001 per share, (the “2016 Note Remaining Balance”) the Company must pay under the 2016 Note, in complete satisfaction of the 2016 Note, the 2016 Note Remaining Balance concurrently with the January 31, 2023 payment under this Note;

			 

			(ii)    all of the then remaining unpaid balance plus all accrued and unpaid interest thereon, and any other amounts payable hereunder, on or before January 31, 2027; and

			 

			(iii)    all of the then remaining unpaid balance plus all accrued and unpaid interest thereon, and any other amounts payable hereunder, immediately upon the occurrence of the sale of all or substantially all of the assets of the Company or a consolidation or merger of the Company other than a reincorporation merger (a “Sale”), excluding the transactions contemplated pursuant to that certain Agreement and Plan of Merger dated as of February 21, 2022 among the Company, Panbela Therapeutics, Inc., Canary Merger Holdings, Inc. and other various special acquisition entities (as amended) (the “Specified Transaction”).

			

 

3

 

 

Exhibit 10.4

 

	
			In the event the Company or any direct or indirect parent company of the Company (the “Parent”) receives cash proceeds from any issuance or offering of debt, equity, preferred, or convertible securities, on or before January 31, 2023, then the Company shall be required to make a concurrent mandatory prepayment of this Note from such cash proceeds in an amount equal to the lesser of: (i) [the Mandatory Prepayment Amount – to be written out in the amended and restated note], plus all interest accrued but unpaid under this Note through the date of payment thereof under this Note; and (ii) ten percent (10%) of such cash proceeds. The amount payable by the Company to the Lender on January 31, 2023 pursuant to this Note will be reduced on a dollar-for-dollar basis by the amount of such cash proceeds paid by the Company to the Lender

			 

			Upon the occurrence and during the continuance of an Event of Default, all unpaid Principal, together with any then unpaid and accrued interest, as amended, and other amounts payable hereunder may be declared due and payable by the Lender or made automatically due and payable, in each case, in accordance with the terms hereof.

			

 

	
			6.

				
			The first sentence of Section 3 of the 2017 Note is hereby amended by inserting the following phrase “other than the Specified Transaction” immediately following the phrase “or upon a Sale”.

			

 

	
			7.

				
			Each of Sections 2, 6 and 7 of the 2017 Note is hereby amended by deleting such Section entirely and replacing the section heading with “Reserved.”.

			

 

	
			8.

				
			Lender acknowledges and covenants that, to the extent it owns 5% or more of the issuance and outstanding shares of CPP common stock at and as of the Closing, it will execute and deliver the Lock-Up Agreement (as defined in the Sale Agreement) effective as of the Closing.

			

 

	
			C.

				
			Additional Covenants.

			

 

	
			1.

				
			At Closing, any resulting parent (whether direct or indirect) shall execute and deliver a guaranty in favor of Lender with respect to Company’s payment obligations under the 2017 Note, which guaranty shall be in form and substance reasonably satisfactory to Lender. If such parent shall not execute and deliver such a guaranty at or prior to the Closing, Section B of this Amendment Agreement shall become null and void, and all of Lender’s rights and remedies with respect to the 2017 Note (without giving effect to this Amendment Agreement) shall be reinstated. Notwithstanding anything to the contrary in the 2017 Note, that Company hereby agrees that Lender shall be permitted to exercise all remedies contemplated pursuant to Section 5 of the 2017 Note immediately upon the occurrence of the Closing if: (x) such parent shall not have executed and delivered the guaranty contemplated pursuant to this Section C(1); and (y) Company shall not have paid all amounts due pursuant to the 2017 Note at the Closing.

			

 

	
			2.

				
			The Company hereby covenants and agrees that one hundred percent (100%) of any 12T Payments (as defined in the Sale Agreement as in effect on the date hereof) received the Company or any of its subsidiaries, shall be immediately paid over to Lender to be applied to Company’s obligations pursuant to the 2017 Note (whether or not such obligations are then due and payable) until such obligations are paid in full. The Company shall not assign or otherwise encumber its rights to receive the 12T Payments until the Company’s obligations pursuant to the 2017 Note (whether or not such obligations are then due and payable) are paid in full.

			

 

	
			3.

				
			The Company covenants and agrees that it shall not incur or suffer to exist any indebtedness or other obligation having payment priority over the 2017 Note.

			

 

4

 

 

Exhibit 10.4

 

	
			D.

				
			Miscellaneous.

			

 

	
			1.

				
			This Amendment Agreement may not be modified or amended except by an instrument in writing duly signed by or on behalf of the parties hereto. Except as expressly set forth in this Amendment Agreement, the terms of the Notes remain unchanged and in full force and effect and the Company hereby reaffirms its obligations under the Notes and confirms that the obligations of the Company thereunder remain in full force and effect without defense, offset, or counterclaim.

			

 

	
			2.

				
			This Amendment Agreement is governed by and construed and enforced in accordance with the local laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York, and without regard to its conflict of laws principles.

			

 

	
			3.

				
			This Amendment Agreement may be executed simultaneously in any number of counterparts, each of which is deemed an original but all of which together shall constitute one and the same instrument.

			

 

	
			4.

				
			Each of the Company and the Lender has the corporate power and authority, and the legal right, to execute, deliver and perform this Amendment Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Amendment Agreement.

			

 

	
			5.

				
			No consent or authorization of, filing with, notice to or other act by, or in respect of, any governmental authority or any other person is required in connection with this Amendment Agreement, except consents, authorizations, filings and notices which have been obtained or made and are in full force and effect.

			

 

	
			6.

				
			This Amendment Agreement has been duly executed and delivered on behalf of the Company and the Lender. This Amendment Agreement and the 2017 Note will constitute the legal, valid and binding obligations of the Company and the Lender, enforceable against each of them in accordance with their terms except as enforceability may be limited by applicable future bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). Each party shall bear its own costs and expenses incurred in connection with the negotiation and execution of this Amendment Agreement.

			

 

 

	CANCER PREVENTION 

			PHARMACEUTICALS, INC.	 
	 	 	 
	By:	/s/ Jeffrey Jacob	 
	Name: 	Jeffrey Jacob	 
	Title: 	Chief Executive Officer	 
	 	 	 
	 	 	 
	SUCAMPO GMBH	 
	 	 	 
	By:	/s/ Karma Worpa	 
	Name:	Karma Worpa	 
	Title: 	Director	 

         

        

5

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