Supplement to the Loan and Security Agreement, by and among Abeona Therapeutics, Inc., MacroChem Corporation, Abeona Therapeutics LLC, Avenue Venture Opportunities Fund, L.P., as Agent, and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024
Exhibit 10.2
SUPPLEMENT
to the
Loan and Security Agreement
dated as of January 8, 2024
among
Abeona Therapeutics Inc. (“Company”), MacroChem Corporation and Abeona Therapeutics LLC (together with Company, each, individually, a “Borrower”, and collectively, “Borrower”)
Avenue Venture Opportunities Fund, L.P. II, L.P., a Delaware limited partnership (“Avenue 2”), as a lender
and
Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership (“Avenue” and, in its capacity as a lender, together with Avenue 2, each a “Lender” and collectively, “Lenders,” and in its capacity as administrative agent and collateral agent, “Agent”)
This is a Supplement identified in the document entitled Loan and Security Agreement, dated as of January 8, 2024 (as amended, restated, supplemented and modified from time to time, the “Loan and Security Agreement”), by and among Borrower, Lenders and Agent. All capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 11 of the Loan and Security Agreement, which is incorporated in its entirety into this Supplement. In the event of any inconsistency between the provisions of the Loan and Security Agreement and this Supplement, this Supplement is controlling.
In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:
Part 1 - Additional Definitions:
“Amortization Period” means the period commencing on the first day of the first full calendar month following the Interest-only Period and continuing until the Maturity Date.
“Commitment” means, subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, Lenders’ commitment to make Growth Capital Loans to Borrower up to the aggregate original principal amount of Thirty Million Dollars ($30,000,000). At the request of Borrower, Lenders may make additional Growth Capital Loans to Borrower of up to an additional Twenty Million Dollars ($20,000,000) (the “Discretionary Tranche 3 Additional Availability Amount”), to be funded between March 31, 2025 and March 31, 2026, as Borrower and Lenders may mutually agree, subject to Borrower’s Revenue traction, compliance with the covenants set forth in Part 2, Section 8 below, and approval of Lenders’ Investment Committees, in their sole discretion, provided that, as of the Closing Date, the Discretionary Tranche 3 Additional Availability Amount shall not be considered, and is not, committed hereunder by any Lender and there shall be no fees associated with the Discretionary Tranche 3 Additional Availability Amount until mutually agreed between Borrower and Lender. Notwithstanding the above, as to any Lender, the obligation of such Lender to make Growth Capital Loans subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement shall not exceed the amounts set forth under the headings Tranche 1 Commitment and Tranche 2 Commitment (as applicable), opposite such Lender’s name on Schedule 1 to this Supplement.
“Designated Rate” means, for each Growth Capital Loan, a variable rate of interest per annum equal to the greater of (i) the sum of five percent (5.00%) plus the Prime Rate, and (ii) thirteen and one-half percent (13.50%). Changes to the Designated Rate based on changes to the Prime Rate shall be effective as of the next scheduled interest payment date immediately following such change.
“Final Payment” means a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) equal to five percent (5.00%) of the aggregate Growth Capital Loans funded.
“Growth Capital Loan” means any Loan requested by Borrower and funded by a Lender under its Commitment for general corporate purposes of Borrower.
“Interest-only Milestone A” means Borrower has achieved the Tranche 2 Milestone.
“Interest-only Milestone B” means Borrower has achieved, subsequent to the achievement of Interest-only Milestone A, an aggregate amount of at least Ninety Million Dollars ($90,000,000.00) of cumulative equity and/or non-dilutive capital subsequent to the Closing Date, subject to written evidence of the same, in form and content reasonably acceptable to Lenders.
“Interest-only Period” means the period commencing on the Funding Date and continuing until the fifteenth (15th) month anniversary of the Closing Date; provided, however, that such period shall be extended for nine (9) months if as of the last day of the Interest-only Period then in effect, Borrower has achieved Interest-only Milestone A; provided, further, that such period shall be extended for an additional six (6) months if as of the last day of the Interest-only Period then in effect, Borrower has achieved Interest-only Milestone B; provided, further, however, that the Interest-only Period shall not exceed thirty (30) months.
“Loan” or “Loans” mean, as the context may require, individually a Growth Capital Loan, and collectively, the Growth Capital Loans.
“Loan Commencement Date” means, with respect to each Growth Capital Loan: (a) the first day of the first full calendar month following the Borrowing Date of such Loan if such Borrowing Date is not the first day of a month; or (b) the same day as the Borrowing Date if the Borrowing Date is the first day of a month.
“Maturity Date” means July 1, 2027.
“Prepayment Fee” means, with respect to any prepayment of the Loans:
(i) if the prepayment occurs during the period commencing on the Closing Date and ending on (but including) the first anniversary of the Closing Date, an amount equal to the principal amount of such Loans prepaid multiplied by three percent (3.00%); and
(ii) if the prepayment occurs during the period commencing on the day after the first anniversary of Closing Date and ending on (but including) the second anniversary of the Closing Date, an amount equal to the principal amount of such Loans prepaid multiplied by two percent (2.00%); and
(iii) if the prepayment occurs during the period commencing on the day after the second anniversary of the Closing date and ending on (but excluding) the Maturity Date, an amount equal to the principal amount of the Loans prepaid multiplied by one percent (1.00%).
“Primary Operating Account” shall be the bank account set forth in Section 6 below, unless and until such account is changed in accordance with Section 5.10 of the Loan and Security Agreement.
“Prime Rate” is the rate of interest per annum from time to time published in the Money Rates Section of the print edition of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Supplement; and provided further that if such rate of interest, as set forth from time to time in the Money Rates Section of the print edition of The Wall Street Journal, becomes unavailable for any reason as determined by Agent, the “Prime Rate” shall mean the rate of interest per annum announced by JPMorgan Bank, N.A. as its prime rate in effect at its principal office in the State of New York (such announced Prime Rate not being intended to be the lowest rate of interest charged by such institution in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Supplement.
“Revenue” means revenue, determined in accordance with GAAP.
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“Termination Date” means the earlier of: (i) the date Lenders may terminate making Growth Capital Loans or extending other credit pursuant to the rights of Lenders under Article 7 of the Loan and Security Agreement; and (ii) the last day of the Interest-only Period.
“Threshold Amount” means Two Hundred Fifty Thousand Dollars ($250,000.00).
“Tranche 1 Commitment” means, as to any Lender, subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, the obligation of such Lender, if any, to make Tranche 1 Growth Capital Loans to Borrower on the Funding Date in a principal amount not to exceed the amount set forth under the heading Tranche 1 Commitment opposite such Lender’s name on Schedule 1 hereto.
“Tranche 2” means the Growth Capital Loans funded beginning on the Tranche 2 Start Date and ending on the Tranche 2 End Date in the aggregate amount of up to Ten Million Dollars ($10,000,000).
“Tranche 2 Commitment” means, as to any Lender, subject to completion of the terms and conditions set forth in the Loan and Security Agreement and this Supplement, the obligation of such Lender, if any, to make Tranche 2 Growth Capital Loans to Borrower beginning on the Tranche 2 Start Date to be funded on or before the Tranche 2 End Date, pursuant to Section 1(b) of Part 2 in a principal amount not to exceed the amount set forth under the heading Tranche 2 opposite such Lender’s name on Schedule 1 hereto.
“Tranche 2 End Date” means September 30, 2024.
“Tranche 2 Milestone” means Borrower has obtained FDA approval of pz-cel in recessive dystrophic epidermolysis bullosa, with the issuance of a Priority Review Voucher, subject to written evidence of the same, in form and content reasonably acceptable to Lender.
“Tranche 2 Start Date” means June 30, 2024, but subject to Borrower’s achievement of the Tranche 2 Milestone.
“Warrant” is defined in Part 2, Section 3(a) hereof.
Part 2 - Additional Covenants and Conditions:
1. Growth Capital Loan Facility. Subject to satisfaction of the conditions precedent specified in Sections 4.1 and Section 4.2 of the Loan and Security Agreement and this Supplement, each Lender agrees to make Growth Capital Loans to Borrower under Lenders’ Commitment from time to time from and after the Funding Date up to and including the Termination Date in an aggregate, original principal amount up to, but not exceeding, then then-unfunded portion of Lenders’ Commitment, as follows:
(a) Tranche 1. Each Lender shall fund its pro rata share of the Tranche 1 Commitment in the aggregate amount of Twenty Million Dollars ($20,000,000) on the Funding Date.
(b) Tranche 2. Each Lender shall fund its pro rata share of the Tranche 2 Commitment in the aggregate amount of Ten Million Dollars ($10,000,000) upon Borrower’s request for a Tranche 2 Loan during the period commencing on the Tranche 2 Start Date and ending on the Tranche 2 End Date in an amount up to, but not exceeding, the then-unfunded portion of Lender’s Tranche 2 Commitment
(c) Minimum Funding Amount; Maximum Number of Borrowing Requests. Growth Capital Loans requested by Borrower to be made on a single Business Day shall be for a minimum aggregate, original principal amount of One Million Dollars ($1,000,000.00); provided, however, that the initial Growth Capital Loan shall be funded on the Funding Date in a minimum original principal amount of Twenty Million Dollars ($20,000,000.00). Borrower shall not submit a Borrowing Request more frequently than once per calendar month;
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(d) Repayment of Growth Capital Loans. Principal of, and interest on, each Growth Capital Loan shall be payable as set forth in a Note evidencing such Growth Capital Loan (substantially in the form attached hereto as Exhibit “A”), which Note shall provide substantially as follows: principal shall be fully amortized over the Amortization Period in equal, monthly principal installments plus, in each case, unpaid interest thereon at the Designated Rate, commencing after the Interest-only Period of interest-only installments at the Designated Rate. In particular, on the Borrowing Date applicable to such Growth Capital Loan, Borrower shall pay to Agent (i) if the Borrowing Date is earlier than the Loan Commencement Date, interest only at the Designated Rate, in advance, on the outstanding principal balance of the Growth Capital Loan for the period from the Borrowing Date through the last day of the calendar month in which such Borrowing Date occurs (it being understood that this clause (i) shall not apply in the case the Borrowing Date is on the same date as the Loan Commencement Date), and (ii) the first (1st) interest-only installment at the Designated Rate, in advance, on the outstanding principal balance of the Note evidencing such Loan for the ensuing month. Commencing on the first day of the second full month after the Borrowing Date and continuing on the first day of each month during the Interest-only Period thereafter, Borrower shall pay to Agent interest only at the Designated Rate, in advance, on the outstanding principal balance of the Loan evidenced by such Note for the ensuing month. Commencing on the first day of the first full month after the end of the Interest-only Period, and continuing on the first day of each consecutive calendar month thereafter, Borrower shall pay to Agent equal consecutive monthly principal installments in advance in an amount sufficient to fully amortize the Loan evidenced by such Note over the Amortization Period, plus interest at the Designated Rate for such month. On the Maturity Date, all principal and accrued interest then remaining unpaid and the Final Payment shall be due and payable.
2. Prepayment. The Growth Capital Loans may be prepaid as provided in this Section 2 only. Borrower may prepay all, but not less than all, outstanding Growth Capital Loans in whole, but not in part, at any time upon no less than five (5) Business Days’ prior written notice to Lenders, by tendering to each Lender a cash payment in respect of such Loans in an amount determined by such Lender equal to the sum of: (i) the aggregate outstanding principal amount of such Loans; (ii) the accrued and unpaid interest on such Loans as of the date of prepayment; (iii) the Prepayment Fee; and (iv) the Final Payment; provided that, if a Lender has not yet exercised its rights under Section 3(d) hereof, Borrower shall provide written notice of prepayment at least ten (10) days in advance of the proposed prepayment date and such Lender shall have the option, with respect to the Conversion Option, to exercise its rights pursuant to Section 3(d) hereof by delivering written notice to Borrower at least two (2) Business Days in advance of the proposed prepayment date.
3. Issuance of Warrant; Right to Invest; Conversion Right.
(a) Warrant. As additional consideration for the making of the Commitment, each Lender has earned and is entitled to receive immediately upon the execution of the Loan and Security Agreement and this Supplement, a warrant instrument issued by Borrower (the “Warrant”).
(b) Warrant General. The Warrant shall be in form and substance reasonably satisfactory to the applicable Lender.
(c) Right to Invest. Lenders shall, subject to compliance with applicable securities laws, have the right, in their discretion, but not the obligation, to invest up to an aggregate of One Million Dollars ($1,000,000.00) in equity securities of Borrower on the same terms, conditions, and pricing offered by Borrower to any investor existing at such time, in connection with any offering of Borrower’s equity securities, including in connection with a private placement concurrent with any direct listing of Borrower’s equity securities (at the direct listing price); provided, however, such terms shall exclude a seat on Borrower’s Board of Directors, which may be offered to other investors at Borrower’s discretion. Lenders may allocate the One Million Dollar investment opportunity between themselves in their sole discretion. Notwithstanding the foregoing, each Lender’s right to invest as set forth in this clause (c) shall automatically terminate on the Maturity Date (or such earlier date that the Commitments have terminated and the Obligations are repaid in full (other than inchoate indemnity obligations).
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(d) Conversion Right. Lenders shall have the right, in their discretion, but not the obligation, at any time and from time to time, while the Loan is outstanding, to convert an amount of up to Three Million Dollars ($3,000,000.00) of the principal amount of the outstanding Growth Capital Loans (the “Conversion Option”) into Warrant Stock (as defined in the Warrant) at a price per share equal to one hundred twenty percent (120.00%) of the Exercise Price set forth (and as defined) in the Warrant (the “Conversion Price;” the exercise of such Conversion Option, a “Conversion”). The Conversion Option will be exercised by such Lender delivering a written, signed conversion notice to Borrower in accordance with this Section 3(d), which will include (i) the date of which the conversion notice is given, (ii) a statement to the effect that the applicable Lender is exercising the Conversion Option, (iii) the amount in respect of which the Conversion Option is being exercised and the number of shares issued and (iv) a date on which the allotment and issuance of the shares is to take place. In the event Borrower elect to prepay the Loans in full, Lenders shall have ten (10) days to elect to exercise their Conversion Options prior to such prepayment. Notwithstanding the above, the Conversion Option shall terminate upon payment in full of the Loans.
4. Commitment Fee. Borrower shall pay to each Lender, pro-rata in accordance with each Lender’s respective Commitment, a commitment fee in the amount of one percent (1.00%) of the Thirty Million Dollars ($30,000,000.00) in total Commitment due and payable on the Funding Date, of which One Hundred Fifty Thousand Dollars ($150,000.00) has been paid by Borrower to Agent as an advance deposit prior to the date hereof.
5. Documentation Fee Payment. On the Funding Date, Borrower shall reimburse each Lender and Agent pursuant to Section 9.8(a) of the Loan and Security Agreement for (i) its reasonable attorneys’ fees, costs and expenses incurred in connection with the preparation and negotiation of the Loan Documents (provided that so long as there are not more than two turns of the Loan Documents, such costs shall be capped at $100,000) and (ii) such Lender’s and Agent’s costs and filing fees related to perfection of its Liens in the Collateral in any jurisdiction in which the same is located, recording a copy of the Intellectual Property Security Agreement with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and confirming the priority of such Liens.
6. Borrower’s Primary Operating Account and Wire Transfer Instructions:
| Institution Name: | ||
| Address: | ||
| ABA No.: | ||
| Contact Name: | ||
| Phone No.: | ||
| E-mail: | ||
| Account Title: | ||
| Account No.: |
7. Debits to Account for ACH Transfers. For purposes of Sections 2.2 and 5.10 of the Loan and Security Agreement, the Primary Operating Account shall be the bank account set forth in Section 6 above, unless and until such account is changed in accordance with Section 5.10 of the Loan and Security Agreement. Borrower hereby agrees that the Growth Capital Loans will be advanced to the account specified above and regularly scheduled payments of principal, interest and fees due to each Lender will be automatically debited by each Lender from the same account. Borrower hereby confirms that the bank at which the Primary Operating Account is maintained uses that same ABA Number for incoming wires transfers to the Primary Operating Account and outgoing ACH transfers from the Primary Operating Account.
8. Financial Covenant. Borrower at all times shall comply with the following financial covenant:
(a) Minimum Unrestricted Cash. Commencing on the Closing Date, Borrower shall at all times maintain at least Five Million Dollars ($5,000,000) in unrestricted cash held in Deposit Accounts located in the United Sates as to which an account control agreement has been executed and delivered to Agent, tested monthly.
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9. Post-Closing Covenants. Borrower shall use commercially reasonable efforts to deliver to Agent the following items:
(a) On or before the sixtieth (60th) day after the Closing Date, a Waiver (in accordance with Section 5.9(e) of the Agreement) from the owner, operator, landlord or other Person in possession of tangible Collateral at 6555 Carnegie Avenue, Floor 4, Cleveland, OH 44103.
(b) On or before the Funding Date, the following fully executed account control agreements:
(i) a deposit account control agreement covering its Deposit Accounts held with Wells Fargo Bank;
(ii) a securities account control agreement covering its investment account held with Wells Fargo Bank;
(iii) a securities account control agreement covering its investment accounts held with Merrill Lynch;
(c) On or before the thirtieth (30th) day after the Closing Date, copies of Borrower’s insurance policies and endorsements thereto showing Agent as a loss payee or additional insured.
(d) On or before the thirtieth (30th) day after the Closing Date, evidence of Borrower’s qualification in the State of New York, together with a good standing certificate.
Part 3 - Additional Representations:
Borrower represents and warrants that as of the Closing Date and, subject to any written updates of the information set forth below by Borrower to each Lender and Agent, each Borrowing Date:
| a) | Its chief executive office is located at: |
| Borrower | Address | |
| Abeona Therapeutics Inc. | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| MacroChem Corporation | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| Abeona Therapeutics LLC | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 |
| b) | Its Equipment is located at: |
| Borrower | Address | |
| Abeona Therapeutics Inc. | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| MacroChem Corporation | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| Abeona Therapeutics LLC | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 |
| c) | Its Inventory is located at: |
| Borrower | Address | |
| Abeona Therapeutics Inc. | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| MacroChem Corporation | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| Abeona Therapeutics LLC | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 |
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| d) | Its Records are located at: |
| Borrower | Address | |
| Abeona Therapeutics Inc. | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| MacroChem Corporation | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 | |
| Abeona Therapeutics LLC | 6555 Carnegie Avenue – Floor 4, Cleveland, OH 44103 |
| e) | In addition to its chief executive office, Borrower maintains offices or operates its business at the following locations: |
| Borrower | Address | |
| Abeona Therapeutics Inc. | 1330 Avenue of the Americas, 33Rd Floor, New York, New York 10019 | |
| MacroChem Corporation | 1330 Avenue of the Americas, 33Rd Floor, New York, New York 10019 | |
| Abeona Therapeutics LLC | 1330 Avenue of the Americas, 33Rd Floor, New York, New York 10019 |
| f) | Other than its full corporate name, Borrower has conducted business using the following trade names or fictitious business names: |
| Borrower | Other Names | |
| Abeona Therapeutics Inc. | N/A | |
| MacroChem Corporation | N/A | |
| Abeona Therapeutics LLC | N/A |
| g) | Its state corporation identification number is: |
| Borrower | State Corporation Identification Number | |
| Abeona Therapeutics Inc. | ||
| MacroChem Corporation | ||
| Abeona Therapeutics LLC |
| h) | Its U.S. federal tax identification number is: |
| Borrower | Fed. Employer ID No. | |
| Abeona Therapeutics Inc. | ||
| MacroChem Corporation | ||
| Abeona Therapeutics LLC |
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| i) | Including Borrower’s Primary Operating Account identified in Section 6 above, Borrower maintains the following Deposit Accounts and investment accounts: |
| Borrower | Bank Name | Account Number | Branch Address | Purpose of Account | Average Balance | |||||||||
Part 4 - Additional Loan Documents:
| Form of Promissory Note | Exhibit “A” | |
| Form of Borrowing Request | Exhibit “B” | |
| Form of Compliance Certificate | Exhibit “C” |
[Remainder of this page intentionally left blank; signature page follows]
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[Signature page to Supplement to Loan and Security Agreement]
IN WITNESS WHEREOF, the parties have executed this Supplement as of the date first above written.
| BORROWER: | ||
| ABEONA THERAPEUTICS INC. | ||
| By: | /s/ Joseph Vazzano | |
| Name: | Joseph Vazzano | |
| Title: | Chief Financial Officer | |
| Address for Notices: | 6555 Carnegie Avenue, Floor 4 |
| Cleveland, OH 44103 | |
| Attn: Joseph Vazzano | |
| Email: ***@*** | |
| Phone # 908 ###-###-#### |
| MACROCHEM CORPORATION | ||
| By: | /s/ Joseph Vazzano | |
| Name: | Joseph Vazzano | |
| Title: | Treasurer | |
| Address for Notices: | 6555 Carnegie Avenue, Floor 4 |
| Cleveland, OH 44103 | |
| Attn: Joseph Vazzano | |
| Email: ***@*** | |
| Phone # 908 ###-###-#### |
| ABEONA THERAPEUTICS LLC. | ||
| By: | /s/ Joseph Vazzano | |
| Name: | Joseph Vazzano | |
| Title: | Treasurer | |
| Address for Notices: | 6555 Carnegie Avenue, Floor 4 |
| Cleveland, OH 44103 | |
| Attn: Joseph Vazzano | |
| Email: ***@*** | |
| Phone # 908 ###-###-#### |
[Signature page to Supplement to Loan and Security Agreement—continued]
| AGENT: | ||
| AVENUE VENTURE OPPORTUNITIES FUND, L.P. | ||
| By: | Avenue Venture Opportunities Partners, LLC | |
| Its: | General Partner | |
| By: | /s/ Sonia Gardner | |
| Name: | Sonia Gardner | |
| Title: | Member |
| Address for Notices: | 11 West 42nd Street, 9th Floor |
| New York, New York 10036 | |
| Attn: Todd Greenbarg, Senior Managing Director | |
| Email: ***@*** | |
| Phone: 212 ###-###-#### |
| LENDERS: | ||
| AVENUE VENTURE OPPORTUNITIES FUND, L.P. | ||
| By: | Avenue Venture Opportunities Partners, LLC | |
| Its: | General Partner | |
| By: | /s/ Sonia Gardner | |
| Name: | Sonia Gardner | |
| Title: | Member |
| Address for Notices: | 11 West 42nd Street, 9th Floor |
| New York, New York 10036 | |
| Attn: Todd Greenbarg, Senior Managing Director | |
| Email: ***@*** | |
| Phone: 212 ###-###-#### |
| AVENUE VENTURE OPPORTUNITIES FUND II, L.P. | ||
| By: | Avenue Venture Opportunities Partners II, LLC | |
| Its: | General Partner | |
| By: | /s/ Sonia Gardner | |
| Name: | Sonia Gardner | |
| Title: | Member |
| Address for Notices: | 11 West 42nd Street, 9th Floor |
| New York, New York 10036 | |
| Attn: Todd Greenbarg, Senior Managing Director | |
| Email: ***@*** | |
| Phone: 212 ###-###-#### |
EXHIBIT “A”
FORM OF PROMISSORY NOTE
[Note No. XXXX]
| $____________________ | [________], 20__ |
The undersigned (“Borrower”) promises to pay to the order of ________________ (“Lender”), at such place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of ______________________________ Dollars ($__________), with interest thereon from the date hereof until maturity, whether scheduled or accelerated, at a variable rate per annum equal to the sum of to the greater of (i) the sum of five percent (5.0%) plus the Prime Rate, and (ii) thirteen and one-half percent (13.50%) (the “Designated Rate”), according to the payment schedule described herein, except as otherwise provided herein. In addition, on the Maturity Date, Borrower promises to pay to the order of Lender (i) all principal and accrued interest then remaining unpaid and (ii) the Final Payment (as defined in the Supplement to the Loan Agreement (as defined herein)).
This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan and Security Agreement, dated as of January 8, 2024, among Borrower, Lender, the other lender party thereto and Agent (as the same may be amended, restated or supplemented from time to time, the “Loan Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in the Loan Agreement. The Loan Agreement contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events.
Principal of and interest on this Note shall be payable as provided under Section 1(d) of Part 2 of the Supplement to the Loan Agreement.
This Note may be prepaid only as permitted under Section 2 of Part 2 of the Supplement to the Loan Agreement.
Any unpaid payments of principal or interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default Rate, compounded monthly. Borrower shall pay such interest on demand.
Interest, charges and fees shall be calculated for actual days elapsed on the basis of a 360 -day year, which results in higher interest, charge or fee payments than if a 365-day year were used. In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess of the highest rate permitted by applicable law from time to time in effect.
If Borrower is late in making any scheduled payment under this Note by more than five (5) days, Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less than fifty dollars ($50) for any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the circumstances existing on the date of this Note and represents a fair and reasonable estimate of the costs that will be sustained by Lender due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to declare a default under this Note or any of the other Loan Documents or from exercising any other rights and remedies of Lender.
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[Signature page to Promissory Note]
This Note shall be governed by, and construed in accordance with, the laws of the State of New York, excluding those laws that direct the application of the laws of another jurisdiction.
Borrower’s execution and delivery of this Note via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall constitute effective execution and delivery of this Note and agreement to and acceptance of the terms hereof for all purposes. The fact that this Note is executed, signed, stored or delivered electronically shall not prevent the assignment or transfer by Lender of this Note pursuant to the terms of the Loan Agreement or the enforcement of the terms hereof. Physical possession of the original of this Note or any paper copy thereof shall confer no special status to the bearer thereof. In no event shall an original ink-signed paper copy of this Note be required for any exercise of Lender’s rights hereunder.
| [ABEONA THERAPEUTICS INC.] | ||
| [MACROCHEM CORPORATION] | ||
| [ABEONA THERAPEUTICS LLC] | ||
| By: | ||
| Name: | ||
| Its: | ||
EXHIBIT “B”
FORM OF BORROWING REQUEST
[__], 202__
Avenue Venture Opportunities Fund, L.P.
11 West 42nd Street, 9th Floor
New York, New York 10036
Avenue Venture Opportunities Fund II, L.P.
11 West 42nd Street, 9th Floor
New York, New York 10036
| Re: | ABEONA THERAPEUTICS INC. |
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of January 8, 2024 (as amended, restated or supplemented from time to time, the “Loan Agreement”; the capitalized terms used herein as defined therein), among Avenue Venture Opportunities Fund, L.P. (“Avenue”), as administrative agent and collateral agent (in such capacity, “Agent”), and as a lender, Avenue Venture Opportunities Fund II, L.P. (“Avenue 2” and together with Avenue, in its capacity as a lender, collectively, “Lenders”, and each a “Lender”), and Abeona Therapeutics Inc., MacroChem Corporation and Abeona Therapeutics LLC (each, a “Borrower”, and collectively, “Borrower”). Abeona Therapeutics Inc. is sometimes referred to herein as “Company.”
The undersigned is the ____________________ of Company and hereby requests on behalf of Borrower a Loan under the Loan Agreement, and in that connection certifies as follows:
1. The amount of the proposed Loan is _______________________ Dollars ($_________________). The Borrowing Date of the proposed Loan is ___________________ (the “Borrowing Date”).
| (a) | On the Borrowing Date, |
(i) Avenue will wire $[_________] less fees and expenses to be deducted on the Borrowing Date of (a) [$___] in respect to the Commitment Fee, of which $100,000 has been paid to Avenue prior to the date hereof, (b) $[_________] in respect to the interest fee, and (c) $[_________] in respect to the legal fees for net proceeds of $[___________], and
(ii) Avenue 2 will wire $[_________] less fees and expenses to be deducted on the Borrowing Date of (a) [$___] in respect to the Commitment Fee, of which [$___] has been paid to Avenue 2 prior to the date hereof, (b) $[_________] in respect to the interest fee, and (c) $[_________] in respect to the legal fees for net proceeds of $[___________]
| 1 |
to Borrower pursuant to the following wire instructions: 1
| Institution Name: | |
| Address: | |
| ABA No.: | |
| Contact Name: | |
| Phone No.: | |
| E-mail: | |
| Account Title: | |
| Account No.: |
(b) On the Borrowing Date, (i) Avenue will wire $[__________], and (ii) Avenue 2 will wire $[__________] to GCA Law Partners LLP for fees and expenses pursuant to the following wire instructions:[2]
| Institution Name: | |
| ABA No.: | |
| Account Title: | |
| Account No.: | |
| Reference: | |
| Confirm remittance: |
2. As of this date, no Default or Event of Default has occurred and is continuing, or will result from the making of the proposed Loan, the representations and warranties of Borrower contained in Article 3 of the Loan Agreement and Part 3 of the Supplement are true and correct in all material respects other than those representations and warranties expressly referring to a specific date which are true and correct in all material respects as of such date, and the conditions precedent described in Sections 4.1 and/or 4.2 of the Loan Agreement and Part 2 of the Supplement, as applicable, have been met.
3. No event has occurred that has had or could reasonably be expected to have a Material Adverse Change.
4. Borrower’s most recent financial statements, financial projections or business plan dated ____________, as reviewed by Borrower’s Board of Directors, are enclosed herewith in the event such financial statements, financial projections or business plan have not been previously provided to Agent.
Remainder of this page intentionally left blank; signature page follows
2 To be included in the Borrowing Request on the Funding Date. The executed Borrowing Request must be delivered two (2) Business Days prior to the Funding Date.
| 2 |
[Signature page to Borrowing Request]
Borrower shall notify you promptly before the funding of the Loan if any of the matters to which I have certified above shall not be true and correct on the Borrowing Date.
| Very truly yours, | ||
| [ABEONA THERAPEUTICS INC.] | ||
| [MACROCHEM CORPORATION] | ||
| [ABEONA THERAPEUTICS LLC] | ||
| By: | ||
| Name: | ||
| Title:* | ||
* Must be executed by Borrower’s Chief Financial Officer or other executive officer.
EXHIBIT “C”
FORM OF
COMPLIANCE CERTIFICATE
Avenue Venture Opportunities Fund, L.P.
11 West 42nd Street, 9th Floor
New York, New York 10036
Avenue Venture Opportunities Fund II, L.P.
11 West 42nd Street, 9th Floor
New York, New York 10036
| Re: | ABEONA THERAPEUTICS INC. |
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of January 8, 2024 (as may be supplemented, amended and modified from time to time, the “Loan Agreement,” the capitalized terms used herein as defined therein), among Avenue Venture Opportunities Fund, L.P. (“Avenue”), as administrative agent and collateral agent (in such capacity, “Agent”), and as a lender, Avenue Venture Opportunities Fund II, L.P. (“Avenue 2” and together with Avenue, acting in its capacity as a lender, collectively, “Lenders”, and each a “Lender”), and Abeona Therapeutics Inc., MacroChem Corporation and Abeona Therapeutics LLC (each, a “Borrower”, and collectively, “Borrower”).
The undersigned authorized representative of Borrower hereby certifies in such capacity that in accordance with the terms and conditions of the Loan Agreement, (i) no Default or Event of Default has occurred and is continuing, except as noted below, and (ii) Borrower is in compliance for the financial reporting period ending ____________________________ with all required financial reporting under the Loan Agreement, except as noted below. Attached herewith are the required documents supporting the foregoing certification. The undersigned authorized representative of Borrower further certifies in such capacity that: (a) the accompanying financial statements have been prepared in accordance with Borrower’s past practices applied on a consistent basis, or in such manner as otherwise disclosed in writing to Agent, throughout the periods indicated; and (b) the financial statements fairly present in all material respects the financial condition and operating results of Borrower and its Subsidiaries, if any, as of the dates, and for the periods, indicated therein, subject to the absence of footnotes and normal year-end audit adjustments (in the case of interim monthly financial statements), except as explained below.
Please provide the following requested information and
indicate compliance status by circling (or otherwise indicating) Yes/No under “Included/Complies”:
| REPORTING REQUIREMENT | REQUIRED | INCLUDED/COMPLIES | ||
| Balance Sheet, Income Statement & Cash Flow Statement | Monthly, within 30 days | YES / NO / N/A | ||
| Operating Budgets, 409(A) Valuations & Updated Capitalization Tables | As modified | YES / NO / N/A | ||
| Annual Financial Statements | Annually, within 90 days of fiscal year-end | YES / NO / N/A | ||
| Board Packages | As modified | YES / NO / N/A |
Date of most recent Board-approved
| 1 |
budget/plan ________________
Any change in budget/plan since version most recently
| delivered to Agent | YES / NO / N/A |
If Yes, please attach
Date of most recent capitalization table: ____________________
| Any changes in capitalization table since version most recently delivered to Agent?: | YES / NO / N/A |
If Yes, please attach a copy of latest capitalization table
| FINANCIAL COVENANT | REQUIRED | ACTUAL | INCLUDED/COMPLIES | ||||||||
| Minimum Unrestricted Cash | $ | 5,000,000 | $ | YES / NO / N/A | |||||||
EQUITY & CONVERTIBLE NOTE FINANCINGS
Please provide the following information (if applicable) regarding Borrower’s most-recent equity and/or convertible note financing each time this Certificate is delivered to Agent
Date of Last Round Raised: _____________
| Has there been any new financing since the last Compliance Certificate submitted? | YES / NO |
If “YES” please attach a copy of the Capitalization Table
Date Closed: ______________ Series: _________ Per Share Price: $_________________
Amount Raised: _______________ Post Money Valuation: _____________
| Any stock splits since date of last report? | YES / NO |
If yes, please provide any information on stock splits which would affect valuation:
| Any dividends since date of last report? | YES / NO |
If yes, please provide any information on dividends which would affect valuation:
| Any unusual terms? (i.e., Anti-dilution, multiple preference, etc.) | YES / NO |
If yes, please explain:
ACCOUNT CONTROL AGREEMENTS
Pursuant to Section 6.11 of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, it maintains only those deposit and investment accounts set forth below; and (ii) to the extent required by Section 6.11 of the Loan Agreement, a control agreement has been executed and delivered to Agent with respect to each such account [Note: If Borrower has established any new account(s) since the date of the last compliance certificate, please so indicate].
3 Company: Please complete with existing accounts.
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Deposit Accounts3
| Name of Institution | Account Number | Control Agt. In place? | Complies | New Account | ||||||
| 1.) | [_______] | [_______] | YES / NO | YES / NO | YES / NO | |||||
| 2.) | YES / NO | YES / NO | YES / NO |
Investment Accounts
| Name of Institution | Account Number | Control Agt. In place? | Complies | New Account | ||||||
| 1.) | None | YES / NO | YES / NO | YES / NO | ||||||
| 2.) | YES / NO | YES / NO | YES / NO | |||||||
| 3.) | YES / NO | YES / NO | YES / NO | |||||||
| 4.) | YES / NO | YES / NO | YES / NO |
AGREEMENTS WITH PERSONS IN POSSESSION OF TANGIBLE COLLATERAL
Pursuant to Section 5.9(e) of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, tangible Collateral is located at the addresses set forth below; and (ii) to the extent required by Section 5.9(e) of the Loan Agreement, a Waiver has been executed and delivered to Agent, or such Waiver has been waived by Agent, [Note: If Borrower has located Collateral at any new location since the date of the last compliance certificate, please so indicate].
| Location of Collateral | Value of Collateral at such Locations | Waiver In place? | Complies? | New Location? | |||||||
| 1.) | $ | YES / NO | YES / NO | YES / NO | |||||||
| 2.) | $ | YES / NO | YES / NO | YES / NO | |||||||
| 3.) | $ | YES / NO | YES / NO | YES / NO | |||||||
| 4.) | $ | YES / NO | YES / NO | YES / NO | |||||||
SUBSIDIARIES AND OTHER PERSONS
Pursuant to Section 6.14(a) of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, it has directly or indirectly acquired or created, or it intends to directly or indirectly acquire or create, each Subsidiary or other Person described below; and (ii) such Subsidiary or Person has been made a co-borrower under the Loan Agreement or a guarantor of the Obligations [Note: If Borrower has acquired or created any Subsidiary since the date of the last compliance certificate, please so indicate].
| 3 |
| Name: | Jurisdiction of formation or organization:4 | Co-borrower | Complies? | New Subsidiary | ||||||
| 1.) | YES / NO | YES / NO | YES / NO | |||||||
| 2.) | YES / NO | YES / NO | YES / NO | |||||||
| 3.) | YES / NO | YES / NO | YES / NO | |||||||
| 4.) | YES / NO | YES / NO | YES / NO |
EXPLANATIONS
[Remainder of this page intentionally left blank; signature page follows]
4 Under the “Explanations” heading (see below) please include a description of such Subsidiary’s or Person’s fully diluted capitalization and Borrower’s purpose for its acquisition or creation of such Subsidiary if such information has not been previously furnished to Agent.
| 4 |
[Signature page to Compliance Certificate]
| Very truly yours, | ||
| ABEONA THERAPEUTICS INC. | ||
| MACROCHEM CORPORATION | ||
| ABEONA THERAPEUTICS LLC | ||
| By: | ||
| Name: | ||
| Title:* | ||
* Must be executed by Borrower’s Chief Financial Officer or other executive officer.
SCHEDULE 1
LENDER COMMITMENTS
TRANCHE 1 COMMITMENTS
| Lenders | Tranche 1 Commitment | Tranche 1 Commitment Percentage | ||||||
| Avenue Venture Opportunities Fund, L.P. | $ | 4,000,000 | 20 | % | ||||
| Avenue Venture Opportunities Fund II, L.P. | $ | 16,000,000 | 80 | % | ||||
| TOTAL COMMITMENTS | $ | 20,000,000 | 100 | % | ||||
TRANCHE 2 COMMITMENTS
| Lenders | Tranche 2 Commitment | Tranche 2 Commitment Percentage | ||||||
| Avenue Venture Opportunities Fund, L.P. | $ | 2,000,000 | 20 | % | ||||
| Avenue Venture Opportunities Fund II, L.P. | $ | 8,000,000 | 80 | % | ||||
| TOTAL COMMITMENTS | $ | 10,000,000 | 100 | % | ||||
