Exhibit 10.1
LOAN RESTRUCTURING
AGREEMENT
This Loan
Restructuring Agreement (“ Agreement ”) is made
as of the 21 st day of November, 2008 among and
between the following parties:
HERCULES TECHNOLOGY GROWTH
CAPITAL, INC. , a
Maryland corporation (the “ Lender ”);
and
PANACOS PHARMACEUTICALS,
INC. , a Delaware
corporation (the “ Borrower ”).
RECITALS
The Borrower and the Lender have
entered into that certain loan arrangement (the “ Loan
Arrangement ”), evidenced by, among other documents,
instruments, and agreements, the following Loan
Documents:
a. that certain Loan and Security
Agreement dated as of June 28, 2007 (the “ Loan
Agreement ”);
b. that certain Secured Promissory
Note dated June 28, 2007 and that certain Secured Promissory
Note dated September 26, 2007, each made by the Borrower
payable to the Lender (singly and collectively, the “
Note ”);
c. that certain Account Control
Agreement dated as of June, 2007 (the “ Comerica Control
Agreement ”) by and among the Borrower, the Lender, and
Comerica Bank (“ Comerica ”) respecting the
“Account” (as defined in the Comerica Control
Agreement) (the “ Comerica Account ”) in which
the Lender received a pledge and security interest pursuant to the
Loan Agreement;
d. that certain Deposit Account
Control Agreement dated as of June 28, 2007 (the “
SVB Control Agreement ”) by and among the Borrower,
the Lender, and Silicon Valley Bank (“ SVB ”)
respecting the “Deposit Account” (as defined in the SVB
Control Agreement) (the “ SVB Account ”) in
which the Lender received a pledge and security interest pursuant
to the Loan Agreement;
e. that certain Securities Account
Control Agreement dated as of June 28, 2007 (the “
SVBS Control Agreement ”) by and among the Borrower,
the Lender, and SVB Securities (“ SVBS ”)
respecting the “Account” (as defined in the SVBS
Control Agreement) (the “ SVBS Account ”) in
which the Lender received a pledge and security interest pursuant
to the Loan Agreement; and
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f. that certain Warrant dated as of
June 28, 2007 respecting those certain 646,900 shares of
Common Stock of the Borrower (the “ Warrant ”)
given to the Lender in connection with the establishment of the
Loan Arrangement.
On or about November 19, 2008,
the Lender: (i) provided the Borrower with a notice of an
Existing Default (the “ Default Notice ”),
(ii) provided Comerica with a Notice of Exclusive Control
pursuant to the Comerica Control Agreement (the “ Comerica
Notice ”), (iii) provided SVB with a Notice of
Exclusive Control pursuant to the SVB Control Agreement (the
“ SVB Notice ”), and (iv) provided SVBS
with a Notice of Exclusive Control pursuant to the SVBS Control
Agreement (the “ SVBS Notice ”) (the Default
Notice, the Comerica Notice, the SVB Notice, and the SVBS Notice
may be referred to herein sometimes, collectively, as the “
Applicable Notices ”).
The Borrower has asserted that the
“ Existing Default ” (hereinafter, as defined in
the Default Notice) did not occur and the parties have agreed to
restructure the Loan and other Secured Obligations as provided
herein.
For the purposes of this Agreement,
the Lender is willing (i) to be deemed to have accepted the
Borrower’s assertion that no Existing Default has occurred,
(ii) to be deemed to have withdrawn the Default Notice,
retroactively, as of November 19, 2008, and (iii) to
accept the Borrower’s proposal so to restructure the Loan and
other Secured Obligations, all on the terms and conditions provided
herein.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Lender and the Borrower hereby
acknowledge, covenant, and agree as follows:
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1.
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Definitions . All capitalized terms used in this Agreement
and not otherwise defined shall have the meanings ascribed to such
terms in the Loan Agreement.
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2.
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Acknowledgment of Indebtedness
. The Borrower hereby acknowledges
and agrees that, in accordance with the terms and conditions of
this Agreement, the Note, the Loan Agreement, and the other Loan
Documents, the Borrower is liable to the Lender as of
November 24, 2008, and the Secured Obligations include,
without limitation, each and all of the following:
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Loan:
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i.
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Principal:
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$
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17,649,568.60
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ii.
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Interest
(accrued):
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$
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123,474.55
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iii.
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Back End
Fee:
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$
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300,000.00
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3.
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Ratification
of Loan Documents; Further Assurances . The Borrower:
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a. hereby ratifies, confirms, and
reaffirms all and singular the terms and conditions of the Loan
Documents and further acknowledges and agrees that except as
expressly modified or otherwise specified in this Agreement, all
terms and conditions of those documents, instruments, and
agreements shall remain in full force and effect; and
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b. shall cooperate with the Lender
and execute and deliver to the Lender such further instruments and
documents as the Lender reasonably shall request to carry out to
the Lender’s satisfaction the transactions contemplated by
this Agreement and the other Loan Documents.
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4.
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Respecting
Default Notice . In
connection with the execution and delivery of this Agreement, and
upon satisfaction of all conditions precedent set forth in
Section 12 herein, for purposes of this Agreement the Lender:
(i) accepts the Borrower’s assertion that no Existing
Default has occurred and (ii) withdraws fully the Default
Notice, automatically and retroactively, as of November 19,
2008, as if such Default Notice had never been provided by the
Lender to the Borrower.
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5.
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Restructured
Repayment of Secured Obligations . Notwithstanding any existing provision in the
Loan Agreement or in any other Loan Document to the contrary, the
Borrower and the Lender hereby acknowledge and agree as
follows:
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a. No Additional Advances .
The Lender has no additional obligation to make any further Advance
under the Loan Agreement.
b. Modification of Maturity
Date . The Loan Agreement is hereby modified and amended in
Section 1, entitled “DEFINITIONS AND RULES OF
CONTRUCTION”, by striking in its entirety the existing
definition of “Maturity Date” as appearing in the
existing Loan Agreement and by substituting in place thereof the
following:
“Maturity Date” means
November 24, 2008.
The Borrower acknowledges and agrees
that there shall be no extension of the Maturity Date,
notwithstanding the occurrence of any Extension Event as provided
in the existing Loan Agreement or otherwise.
c. Payment of Secured
Obligations . On or before 5:00 p.m. (Eastern Time) on
November 24, 2008 ( with time being of the essence ),
being the revised Maturity Date (as hereby modified), the Borrower
shall pay to the Lender the entire outstanding amount of the
Secured Obligations under the Loan Agreement and the other Loan
Documents (with credit given for the Prepayment Discount as
provided in Section 5.d below) in good and sufficient funds
immediately available to the Lender without condition. Without
limiting the generality of the foregoing (and the Borrower’s
obligation to pay the actual amount of all Secured Obligations
outstanding on the Maturity Date (as hereby modified)), the entire
amount of the Secured Obligations (as of November 24, 2008)
shall be as follows:
(i) The amount of $17,649,568.60,
representing the current outstanding principal balance of the Loan
as of November 24, 2008 (the “ Principal Payment
”), to be applied by the Lender in payment of the outstanding
principal balance of the Loan;
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(ii) The amount of $123,474.55,
representing the total amount of accrued interest as of
November 24, 2008 (the “ Interest Payment
”);
(iii) The amount of $300,000,
representing the End of Term Payment, which the Lender and the
Borrower have determined applicable in accordance with provisions
of Section 2.8(c) of the Loan Agreement (the “ End of
Term Payment ”); and
(iv) Payment of all legal fees and
related expenses incurred by the Lender (the “ Legal Fee
Payment ”) as provided in this Agreement and the other
Loan Documents. It is anticipated that by 3:00p.m. Monday,
November 24, 2008, Lender’s counsel will provide
Borrower with the amount due for such fees through Friday,
November 21, 2008, plus a reasonable good faith estimate of
fees and disbursements subsequent to November 21, 2008, the
aggregate of which shall constitute the Legal Fee
Payment.
The Principal Payment, the Interest
Payment, the End of Term Payment, and the Legal Fee Payment
(together with any remaining Secured Obligations, exclusive of the
Prepayment Charge, which may be due and owing on or after the
Maturity Date (as hereby modified)) shall be referred to herein,
collectively, as the “ Required Secured Obligation
Payment ”.
d. Payment Discount . The
Lender hereby agrees that in the event that the Borrower makes the
Required Secured Obligation Payment on November 24, 2008 as
and when provided in Section 5.c above ( with time being of
the essence ) (but not otherwise), then the Lender shall
provide the Borrower with a payment discount of $125,000 (the
“ Payment Discount ”) which will be applied as a
credit against the amount of the Required Secured Obligation
Payment, as determined solely by the Lender.
e. Late Payment Charge . In
the event that the Borrower fails to make the Required Secured
Obligation Payment in full on November 24, 2008 as and when
provided in Section 5.c above ( with time being of the
essence ) (but not otherwise), then from and after the Maturity
Date (as hereby modified) the Borrower hereby agrees to pay the
Lender a “ Late Payment Charge ” (so referred to
herein) in the amount of $50,000 per diem for each additional day
that the Borrower fails to pay the then entire outstanding amount
of the Required Secured Obligation Payment on or before 5:00 p.m.
(Eastern Time) on each such additional day, as determined solely by
the Lender. The Borrower acknowledges and agrees that payment of
the Late Payment Charge: (i) shall be in addition to the
amounts payable on account of the Required Secured Obligation
Payment, (ii) shall constitute additional Secured Obligations
of the Borrower due and owing to the Bank and secured by the
Collateral, and (iii) represents a fair and reasonable charge,
as liquidated damages that would otherwise be difficult to fairly
ascertain, to compensate the Lender for the failure of the Borrower
to make the
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Required Secured Obligation Payment in full as
and when provided in Section 5.c above. Any applicable Late
Payment Charge shall be immediatel
