PharmChem, Inc. and Irwin Family Limited Partnership Subordinated Promissory Note Repayment and Warrant Reissuance Agreement

Summary

PharmChem, Inc. and the Irwin Family Limited Partnership have agreed to settle a $375,000 loan made in 2001. PharmChem will repay $187,500 as full principal payment, plus $25,312.50 in interest, contingent on new financing with Silicon Valley Bank. Upon payment, the Irwin Family Limited Partnership will mark the note as paid and return it. PharmChem will also reissue a stock warrant with a new exercise price, provided the original warrant is returned. This agreement finalizes the loan repayment and updates the warrant terms between the parties.

EX-10.38 3 f92129exv10w38.txt EXHIBIT 10.38 EXHIBIT 10.38 [PHARMCHEM INC. LETTERHEAD] June 30, 2003 VIA FEDERAL EXPRESS Mr. Richard D. Irwin Irwin Family Limited Partnership 23 Wild Duck Road Wilton, CT 06897 Re: Repayment of Subordinated Promissory Note Dear Mr. Irwin: PharmChem, Inc. (the "Company") borrowed $375,000.00 (the "Loan") from you pursuant to an Unsecured Subordinated Note and Warrant Purchase Agreement dated September 19, 2001 and as evidenced by that certain Unsecured Subordinated Promissory Note for $375,000.00 dated September 21, 2001 (the "Note"). In connection with the Loan, the Company issued to you a warrant for 37,500 shares of the Company's common stock (the "Original Warrant") at an exercise price of $3.00 per share. The Company has agreed to repay the Loan prior to the original maturity date and you have agreed to accept $187,500.00 (the "Repayment Amount") as payment in full for the original principal amount of the Note, and unpaid interest thereon of $25,312.50. Upon receipt of the Repayment Amount, you will mark the Note "paid in full" and promptly return the Note to the Company. It is understood that the repayment of the Loan as described above is contingent upon the Company successfully completing the new financing with Silicon Valley Bank In connection with the Company's repayment of the Loan, the Company has further agreed to reissue the Original Warrant with a new per share exercise price of $_____, i.e., the average closing price of a share of the Company's common stock for the thirty day period ending June 26, 2003 (the "New Warrant"). As a condition to our issuance of the New Warrant, you will need to return to the Company the Original Warrant in the postage-paid, preaddressed envelope provided herewith for that purpose and, upon our receipt of the Original Warrant, we will issue to you the New Warrant. Repayment of Subordinated Promissory Note Irwin Family Limited Partnership June 30, 2003 Page 2 BY YOUR SIGNING BELOW AND RETURNING THIS LETTER TO ME, FIRST, BY FAX AT ###-###-#### AND, SECOND, BY OVERNIGHT MAIL USING THE ENCLOSED ENVELOPE, INDICATING YOUR AGREEMENT TO AND APPROVAL OF THE ABOVE, PHARMCHEM WILL THEN OVERNIGHT A CHECK TO YOU IN THE AMOUNT OF $212,812.50. Sincerely, PharmChem, Inc. /s/ David A. Lattanzio --------------------------- David A. Lattanzio Vice President, Chief Financial Officer and Secretary AGREED AND APPROVED: ________________________________ Irwin Family Limited Partnership By: /s/ Richard D. Irwin ----------------------------------- Name: Richard D. Irwin Title: General Partner Dated: June 26, 2003