THIS
INSTRUMENT AND THE INDEBTEDNESS, RIGHTS AND OBLIGATIONS EVIDENCED
HEREBY AND ANY LIENS OR OTHER SECURITY INTERESTS SECURING SUCH
RIGHTS AND OBLIGATIONS ARE SUBORDINATE IN THE MANNER AND TO THE
EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (AS
AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME, THE
“SUBORDINATION AGREEMENT”) DATED AS OF SEPTEMBER 2,
2009, BY AND AMONG THE SUBORDINATED CREDITORS IDENTIFIED THEREIN
AND GENERAL ELECTRIC CAPITAL CORPORATION (“GECC”) IN
ITS CAPACITY AS AGENT FOR CERTAIN LENDERS (TOGETHER WITH ITS
SUCCESSORS AND ASSIGNS, “SENIOR CREDITOR AGENT”), TO
CERTAIN INDEBTEDNESS, RIGHTS, AND OBLIGATIONS OF PEPLIN LIMITED
(ACN 090 819 275), PEPLIN, INC. AND THE GUARANTORS PARTY THERETO,
TO SENIOR CREDITOR AGENT AND SENIOR CREDITOR (AS DEFINED THEREIN)
AND LIENS AND SECURITY INTERESTS OF SENIOR CREDITOR AGENT SECURING
THE SAME ALL AS DESCRIBED IN THE SUBORDINATION AGREEMENT; AND EACH
HOLDER AND TRANSFEREE OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
This
Loan Agreement
(this “ Agreement ”) is made and entered
into as of September 2, 2009 (the “ Effective
Date ”), by and between Peplin, Inc. , a Delaware
corporation (“ Borrower ”), and
Leo Pharma A/S
(“ Lender ”).
WHEREAS,
concurrently with the execution of this Agreement, Lender, a wholly
owned subsidiary of Lender (“ Merger Sub
”) and Borrower have entered into an Agreement and Plan of
Merger (the “ Merger Agreement ”) whereby
Borrower will acquire Lender pursuant to the merger (the “
Merger ”) of Merger Sub with and into Borrower
according to the terms set forth therein.
WHEREAS, as a
material inducement to enter into the Merger Agreement, Borrower
desires Lender to make available, and Lender is willing to make
available, a revolving credit facility to Borrower of up to an
aggregate principal amount of $24,000,000 (the “
Aggregate Amount ”).
NOW, THEREFORE,
the parties agree as follows:
1.1 Defined Terms . As used in this Agreement, the
following terms have the meanings specified below:
“
Advance ” means advances made from time to time
to Borrower pursuant to this Agreement.
“
Acquisition ” means any of the following
transactions (other than the Merger): (a) any acquisition or
purchase by any person of more than a 40% interest in the total
outstanding voting securities of Borrower or consummation of any
tender offer or exchange offer that results in any person or group
beneficially owning securities representing 40% or more of the
total outstanding voting power of Borrower, or any merger,
consolidation, business combination, share exchange or similar
transaction involving Borrower pursuant to which the
Borrower’s stockholders immediately preceding such
transaction hold securities representing less than 60% of the total
outstanding voting power of the surviving or resulting entity of
such transaction (or parent entity of such surviving or resulting
entity); or (b) any sale, exchange, transfer, exclusive
license, or disposition of any business or businesses or assets
that constitute or account representing 40% or more of the
aggregate fair market value of the consolidated assets of Borrower
and its subsidiaries taken as a whole..
“
Applicable Margin ” means 200 basis points;
provided that from and after the Termination Date the Applicable
Margin shall be 900 basis points.
“
Business Day ” means a weekday on which
commercial banks are open for business in San Francisco,
California.
“
Consummation Date ” means the effective date of
the Merger pursuant to the terms of the Merger
Agreement.
“
Debtor Relief Laws ” means the Bankruptcy Code
of the United States, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights
of creditors generally.
“
Default ” or “ default
” means any of the events specified in Section 6.1,
whether or not any requirement in such Section for the giving of
notice or the lapse of time or the happening of any further
condition, event or act shall have been satisfied.
“
Default Rate ” means the rate of interest per
annum specified in the Note to be payable when a Default has
occurred and is continuing.
“
GECC Facility ” means the Loan Agreement, dated
as of December 28, 2007, among Borrower, the guarantors party
thereto, General Electric Capital Corporation as agent for the
lenders party thereto, General Electric Capital Corporation as
security trustee and General Electric Capital Corporation and
Oxford Finance Corporation as lenders, as such agreement may be
amended, supplemented or otherwise modified from time to
time.
“
Lender Expenses ” means all expenses
(including, without limitation, audit fees and expenses and
attorney’s fees and costs) incurred by Lender in connection
with (i) the enforcement of any of its rights or remedies
(including, without limitation, the assertion or protection of such
rights or remedies in connection with advancing or protecting its
interests or position in any proceeding of Borrower or any of its
Subsidiaries under any Debtor Relief Laws,
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such as, by way
of example, a motion for relief from the automatic stay and/or
adequate protection) under any of the Loan Documents, or
(ii) from and after the Termination Date, the negotiation or
documentation of any amendments, modification, restatement, consent
or waiver of any provision of the Loan Documents.
“
Loan ” means an Advance under this
Agreement.
“
Loan Documents ” means this Agreement, the
Notes and the Advance Requests.
“
Maturity Date ” means that date which is the
earlier to occur of: (a) April 1, 2011; (b) the date
that is seven (7) days after the Consummation Date,
(c) the date that is seven (7) days after the
consummation of an Acquisition, and (d) the date that is six
(6) months after the termination of the GECC
Facility.
“
Maximum Permissible Advance Amount ” means, as
of the date of any Advance Request, (1) sum of (A) the
expenditures set forth in the line titled “Net Cash
Flow” in the Operating Budget for the calendar month in which
such Advance Request shall be delivered to Lender plus (B) the
out of pocket costs and expenses of Borrower relating to the
Merger, and the other actions contemplated by the Merger Agreement,
incurred in such calendar month, minus (2) the amount
(if any) borrowed hereunder by Borrower pursuant to any Advance
Request previously delivered in such calendar month.
“
Obligations ” means all obligations and
liabilities of Borrower to Lender in connection with the Loans and
the Loan Documents, including, without limitation, amounts owed or
to be owed under the terms of the Loan Documents, or arising out of
the transactions described therein, including, without limitation,
the Loans, together with all interest accruing thereon (including
any interest accrued after the commencement of any proceedings of
Borrower or any of its Subsidiaries under Debtor Relief Laws), and
any Lender Expenses.
“
Operating Budget ” means the operating budget
consisting of the projected cash flow position of Borrower and its
Subsidiaries attached hereto as Exhibit A.
“
Program Budget ” means, with respect to any
existing clinical study, the program budget for such study, as
approved by the Company Board and disclosed to Lender prior to the
date hereof.
“
Termination Date ” means the effective date of
any termination of the Merger Agreement.
1.2 Capitalized terms used herein and not otherwise defined
shall have the meanings set forth therefor in the Merger
Agreement.
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2.1 Commitment; Availability Period . Subject to the
terms of this Agreement, the Lender hereby agrees and commits to
make Advances to Borrower as set forth in Section 2.2 from the
Effective Date until the earlier of (a) the Consummation Date
and (b) the Termination Date.
2.2 Advances. Lender shall make each Advance to
Borrower pursuant to the wire instructions set forth on
Exhibit A no later than two Business Days following the
date of each Advance Request (as defined below) pursuant to
Section 2.3; provided , that , (a) no more
than one Advance shall be made in any 15-day period, (b) in no
event shall the principal amount of any one Advance exceed the
lesser of (i) $2.0 million and (ii) the Maximum
Permissible Advance Amount, and (c) in no event shall the
aggregate principal amount of all outstanding Advances exceed the
Aggregate Amount.
2.3 Advance Requests . To obtain an Advance, Borrower
shall submit a borrowing request (the “ Advance
Request ”) to Lender by facsimile as set forth in
Section 5.3.
2.4 Promissory Note . Each Advance shall be evidenced
by the unsecured promissory note, in the form attached hereto as
Exhibit B , dated the date of this Agreement from
Borrower to Lender (as amended, modified, supplemented, restated or
renewed from time to time, the “ Note ”)
and shall be repayable in accordance with the terms of the Note and
this Agreement.
2.5 Interest; Repayment of Advances .
(a) Each
Advance shall accrue interest on the outstanding principal balance
of such Advance at a rate per annum equal to the sum of
(i) applicable one-month London Inter-Bank Offering Rate
(LIBOR) for the U.S. dollar as reported in The Wall Street
Journal on the date of the applicable Advance Request plus
(ii) the Applicable Margin, from the date of such Advance
until such Advance has been paid in full; provided that from and
after an Event of Default interest shall accrue at the Default
Rate.
(b) Each
Advance shall mature, and the principal amount thereof and all
interest and other amounts payable under the Loan Documents shall
be due and payable, on the Maturity Date.
(c) Borrower
unconditionally promises to make the required payment of principal
of and interest on the Loans in lawful money of the United States
by wire transfer in immediately available funds to an account
designated in writing by Lender on or before the Maturity Date or
any interest payment date.
2.6 Overdue Amounts . Any payments required pursuant
to any Loan Document not made as and when due shall bear interest
from the date due until paid to Lender at the Default Rate, in
Lender’s sole discretion.
2.7 Calculation of Interest . All interest under the
Notes or hereunder shall be calculated on the basis of a 365-day
year for the actual days during which such amounts are
outstanding.
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2.8 Term . This Agreement shall be effective as of
the Effective Date and shall continue in full force and effect so
long as any Obligation is outstanding. Notwithstanding the
foregoing, Lender shall have the right to terminate this Agreement
immediately upon the occurrence of a Default.
3. CONDITIONS TO ADVANCES
3.1 Condition to Initial Advance . Lender’s
shall not be obligated to make the initial Advance until Borrower
shall have provided to Lender evidence that the aggregate amount of
cash and cash equivalents and short term investments of Borrower
and its Subsidiaries is less than $3.0 million (which may be
evidenced by a certification from the Chief Financial Officer of
Borrower).
3.2 Conditions to all Advances . Lender’s
obligations to make each Advance, including the initial Advance, is
subject to the following:
(a) timely
receipt of an Advance Request;
(b) the
representations and warranties in Section 4 below shall be
true and accurate in all material respects on the date of the
Advance Request; and
(c) no
Default or Event of Default shall have occurred and be continuing
or shall result from such Advance.
4. REPRESENTATIONS AND WARRANTIES
Borrower
represents and warrants as follows:
4.1 Existence, Qualification and Power . Borrower
(a) is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, (b) has all
requisite power and authority and all requisite governmental
licenses, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents, and
(c) is duly qualified and is licensed and, as applicable, in
good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its
business requires such qualification or license.
4.2 Authorization; No Contravention . The execution,
delivery and performance by Borrower of each Loan Document have
been duly authorized by all necessary corporate action, and do not
and will not (a) contravene the terms of any of
Borrower’s certificate of incorporation or by-laws;
(b) conflict with or result in any breach or contravention of,
or the creation of any Encumbrance under, or require any payment to
be made under any Company Contract or (ii) any Order to which
Borrower or its property is subject; or (c) violate any Legal
Requirement.
4.3 Governmental Authorization; Other Consents . No
approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Body or any other
Person is necessary or required in connection with the execution,
delivery or
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performance by,
or enforcement against, Borrower of any Loan Document, other than
any filings and actions required in connection with the judicial
enforcement of this Agreement.
4.4 Binding Effect . This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been,
duly authorized, executed and delivered by Borrower that is party
thereto. This Agreement constitutes, and each other Loan Document
when so delivered will constitute, a legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as enforceability may be limited by Debtor
Relief Laws or by general equitable principles (whether enforcement
is sought by proceedings in law or in equity).
4.5 Margin Regulations; Investment Company Act
.
(a) Borrower
is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the
FRB), or extending credit for the purpose of purchasing or carrying
margin stock. None of the proceeds of any Advance is being used,
directly or indirectly for the purpose of purchasing or carrying
margin stock.
(b) Borrower
is not, and is not required to be registered as, an
“investment company” under the Investment Company Act
of 1940.
4.6 Use of Proceeds . The proceeds of each Advance
shall not be used for personal, family or household purposes and
shall be used solely as permitted under
Section 5.4.
So long as Lender
has any commitment to make Advances hereunder, or any Advance or
other Obligation hereunder shall remain unpaid or unsatisfied
(other than solely indemnification obligations), Borrower
shall:
5.1 Financial Statements and Information . From and
after the Termination Date, deliver to Lender the same financial
statements, compliance certificates and other information as
Borrower is required to deliver to the agent and the lenders under
the GECC Facility (as in effect on the date hereof), such financial
statements to be and information to be delivered within the same
time frames as set forth in the GECC Facility and irrespective of
whether the GECC Facility remains in effect at such
time.
5.2 Notices . Promptly notify Lender:
(a) of
the occurrence of any Default; and
(b) from
and after the Termination Date, of any matter that has r
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