EXHIBIT 10.2
CERTAIN INFORMATION IN THIS DOCUMENT, MARKED BY [***], HAS BEEN EXCLUDED PURSUANT TO REGULATION S-K, ITEM 601(b)(10)(iv). SUCH EXCLUDED INFORMATION IS NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made and dated as of June 15, 2022 and is entered into by and among AKERO THERAPEUTICS, INC., a Delaware corporation, and each of its Subsidiaries from time to time party hereto as borrower (individually and collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as the “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).
RECITALS
A. Borrower has requested the Lenders make available to Borrower up to four tranches of term loans in an aggregate principal amount of up to One Hundred Million Dollars ($100,000,000) (the “Term Loans”); and
B. The Lenders are willing to make the Term Loans on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, Borrower, Agent and the Lenders agree as follows:
“Account Control Agreement(s)” means any agreement entered into by and among the Agent, Borrower and a third-party bank or other institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s first priority security interest in the subject account or accounts.
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.
“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business, line of business or division or other unit of operation of a Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving a merger, consolidation or similar transaction with such other Person, or otherwise causing any Person to become a Subsidiary of Borrower, or (c) the acquisition of, or the right to use, develop or sell (in each case, including through licensing (other than “off-the-shelf” licenses)), any product, product line or intellectual property of or from any other Person.
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“Advance(s)” means a Term Loan Advance.
“Advance Date” means the funding date of any Advance.
“Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.
“Affiliate” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, (b) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of another Person, (c) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by another Person with power to vote such securities, or (d) any Person related by blood or marriage to any Person described in subsection (a), (b) or (c) of this paragraph. As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Agreement” means this Loan and Security Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Akero Therapeutics” means Akero Therapeutics, Inc., a Delaware corporation.
“Amgen License” means that certain License Agreement dated June 7, 2018 by and between Amgen Inc. and Akero Therapeutics, as amended, restated, supplemented or otherwise modified from time to time.
“Amortization Date” means July 1, 2024; provided however, if the Interest Only Extension Conditions are satisfied, then July 1, 2025.
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Anti‑Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.
“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.
“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by Borrower or which Borrower intends to sell,
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license, or distribute in the future including any products or service offerings under development, collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed or distributed by Borrower since its formation.
“Borrower’s Books” means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.
“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
“Cash” means all cash, cash equivalents and liquid funds.
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“Change in Control” means any (x) reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Akero Therapeutics, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Akero Therapeutics in which the holders of Akero Therapeutics’ outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Akero Therapeutics is the surviving entity or (y) “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term under and as defined in any indenture governing any Permitted Convertible Debt Financing has occurred.
“Closing Date” means the date of this Agreement.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the Common Stock of Akero Therapeutics.
“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease (excluding operating leases of real property), dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed, without duplication of the primary obligation, to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
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“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.
“Default” means any event, circumstance or condition that has occurred or exists, that would, with the passage of time or the requirement that notice be given or both, become an Event of Default.
“Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
“Disqualified Equity Interests” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) mature or are mandatorily redeemable (other than solely for Qualified Equity Interests) pursuant to a sinking fund obligation or otherwise on or prior to one hundred eighty (180) days following the Term Loan Maturity Date at the time such Equity Interests are issued (it being understood that if any such redemption is in part, only such part coming into effect prior to one hundred eighty (180) days following the Term Loan Maturity Date shall constitute Disqualified Equity Interests) (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Secured Obligations), (b) are redeemable at the option (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Secured Obligations) of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, on or prior to one hundred eighty (180) days following the Term Loan Maturity Date at the time such Equity Interests are issued, (c) provide for scheduled payments of dividends in cash or cash equivalents on or prior to one hundred eighty (180) days following the Term Loan Maturity Date at the time such Equity Interests are issued, or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is one hundred eighty (180) days after the Term Loan Maturity Date.
“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any other jurisdiction within the United States of America.
“Due Diligence Fee” means Fifty Thousand Dollars ($50,000), which fee has been paid to the Agent prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.
“EFX Trial” means the randomized, double-blind, placebo-controlled HARMONY clinical trial sponsored by Borrower to evaluate the safety and effectiveness of efruxifermin in non-cirrhotic subjects with non-alcoholic steatohepatitis (NASH).
“Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
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“Excluded Accounts” means (a) Deposit Accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s employees holding an aggregate amount across all such accounts of not more than amounts needed for the then-next two (2) payroll cycles and (b) any accounts held by MSC Subsidiary.
“Facility Charge” means 0.50% of the principal amount of any Advance (other than a Tranche I Advance), which is payable to the Lenders in accordance with Section 4.2(d).
“FDA” means the U.S. Food and Drug Administration or any successor thereto.
“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.
“FSHCO” means any Domestic Subsidiary (including any disregarded entity for U.S. federal income tax purposes), substantially all of the assets of which consist of, directly or indirectly, Equity Interests in (or Equity Interests in and indebtedness of) one or more “controlled foreign corporation” within the meaning of Section 957 of the Code.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.
“Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within ninety (90) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, (d) all equity securities of any Person subject to repurchase or redemption other than at the sole option of such Person, (e) “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase and sale contracts, (f) obligations arising under bonus, deferred compensation, incentive compensation or similar arrangements (other than those arising in the ordinary course of business), (g) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (h) all Contingent Obligations.
“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.
“Interest Only Extension Conditions” shall mean satisfaction of each of the following events: (a) no Default or Event of Default shall have occurred and is continuing; and (b) the Tranche III Milestone Date has occurred.
“Investment” means (a) any beneficial ownership (including stock, partnership, interests, limited liability company interests, or other securities) of or in any Person, (b) any loan, advance or capital contribution to any Person, (c) any Acquisition or (d) other transfers on behalf of or in connection with any equity ownership or similar transfers.
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“IRS” means the United States Internal Revenue Service.
“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.
“License” means any Copyright License, Patent License, Trademark License or other Intellectual Property license of rights or interests.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.
“Loan” means the Advances made under this Agreement.
“Loan Documents” means this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, any Joinder Agreements, all UCC Financing Statements, the Warrant and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.
“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrower and its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or the Lenders to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
“Material Agreement” means (a) the Amgen License, (b) the Master Services Agreement between Akero Therapeutics and Labcrop Drug Development Inc. f/k/a Covance, Inc. (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), (c) the Master Services Agreement between Akero Therapeutics and Medpace, Inc. (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), (d) the Master Services Agreement between Akero Therapeutics and Vetter Pharma International GmbH (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), (e) the Technology Transfer and Clinical Supply Agreement between Akero Therapeutics and Boehringer Ingelheim Biopharmaceutical GmbH (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), and (f) any license, agreement or other contractual arrangement involving the receipt or payment of amounts in the aggregate exceeding Five Hundred Thousand Dollars ($500,000) per fiscal year.
“Maximum Term Loan Amount” means One Hundred Million Dollars ($100,000,000).
“MSC Investment Conditions” means that Borrower maintains Qualified Cash in an amount equal to or greater than the lesser of (i) one hundred and ten percent (110%) of the aggregate outstanding Secured Obligations (inclusive of any Prepayment Charge and End of Term Charge that would be due and owing if the outstanding Loans were prepaid at the time of measurement) or (ii) one hundred percent (100%) of the consolidated Cash of Borrower and its Subsidiaries, unless compliance with the foregoing conditions are waived in writing from time to time by Agent (in its sole discretion) with respect to specified periods.
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“MSC Subsidiary” means Akero Securities Corporation, a wholly-owned Subsidiary incorporated in the Commonwealth of Massachusetts or the State of Delaware for the purpose of holding Investments as a Massachusetts security corporation under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified or replaced from time to time).
“Non-Core Intellectual Property” means any Intellectual Property not material to Borrower’s business upon prior consultation with Agent.
“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and between Agent and Borrower dated as of March 31, 2022.
“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control.
“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.
“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.
“Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.
“Perfection Certificate” means a completed certificate entitled “Perfection Certificate” delivered by Borrower to Agent and the Lenders, signed by Borrower.
“Permitted Convertible Debt Financing” means issuance by Akero Therapeutics of convertible notes in an aggregate principal amount of not more than Two Hundred Million Dollars ($200,000,000); provided that such convertible notes shall (a) both immediately prior to and immediately after giving effect (including pro forma effect) thereto, no Default or Event of Default shall exist or result therefrom, (b) have no scheduled amortization or principal payments, mandatory redemptions or other required payments of principal prior to the date that is one hundred eighty (180) days after the Term Loan Maturity Date, other than customary payments upon a “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term (it being understood that a holder’s option to convert any such Indebtedness into Common Stock (and Cash in lieu of fractional shares) shall not be considered a required mandatory redemption or payment of principal), (c) be unsecured, (d) not be guaranteed by any Subsidiary of Akero Therapeutics that is not a Borrower, (e) contain usual and customary subordination terms for underwritten offerings of senior subordinated convertible notes as reasonably determined in good faith by Borrower’s Board of Directors or a committee thereof, (f) shall be Indebtedness of Akero Therapeutics and not of any Subsidiary thereof, and (g) shall specifically designate this Agreement and all Secured Obligations as “designated senior indebtedness” or similar term so that the subordination terms referred to in clause (d) of this definition specifically refer to such notes as being subordinated to the Secured Obligations pursuant to such subordination terms. For the avoidance of doubt, Permitted Convertible Debt Financing shall not constitute Subordinated Indebtedness.
“Permitted Indebtedness” means:
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“Permitted Investment” means:
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“Permitted Liens” means:
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“Permitted Royalty Transaction” means any royalty or revenue interest financing whereby Borrower receives upfront unrestricted (including, not subject to any redemption, clawback, escrow or similar encumbrance or restriction) net cash proceeds of no less than [***] in exchange for rights to receive future payments based on net sales or revenue, as applicable, in an amount not to exceed, in the aggregate for all such Permitted Royalty Transactions, [***] of worldwide net sales or revenue, as applicable, in any calendar year, provided that such royalty or revenue interest financing shall be on terms and conditions, and with a purchaser, in each case consented to in writing by Agent. Notwithstanding anything herein to the contrary, subject to such consent in writing by Agent, a Permitted Royalty Transaction may be structured on a non-recourse basis (other than customary securitization undertakings and/or a pledge of special purpose entity stock) with a special purpose entity that is a wholly owned Subsidiary of Borrower, and in
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such case Agent and Lenders shall enter into further amendments to the Loan Documents as are reasonably requested by Borrower to give effect to such Permitted Royalty Transactions.
“Permitted Transfers” means:
“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.
“Pfizer Financing” means the strategic financing arrangement entered into between Pfizer Inc. or its Affiliate (“Pfizer Counterparty”) and Akero Therapeutics after the Closing Date pursuant to which the Pfizer Counterparty shall provide funds to Akero Therapeutics in exchange for a private sale or issuance of Qualified Equity Interests in Akero Therapeutics to the Pfizer Counterparty.
“Qualified Cash” means an amount equal to (a) the amount of Borrower’s Cash held in accounts subject to an Account Control Agreement in favor of Agent, minus (b) the Qualified Cash A/P Amount.
“Qualified Cash A/P Amount” means the amount of Borrower’s accounts payable under GAAP not paid after the 90th day following the invoice for such account payable.
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“Qualified Equity Interests” means any Equity Interests that are not Disqualified Equity Interests.
“Qualified Equity Issuance Net Proceeds” means the net proceeds in Cash (excluding any conversion of existing notes, share repurchases, or other holdbacks or discounts) received by Akero Therapeutics as consideration for any (a) public or private sale or issuance of any Qualified Equity Interests of Akero Therapeutics, (b) contribution to the equity capital of Akero Therapeutics (other than in exchange for Disqualified Equity Interests), (c) sale or issuance of Indebtedness of Akero Therapeutics (other than intercompany Indebtedness) that has been converted into or exchanged for Qualified Equity Interests of Akero Therapeutics and which constitutes a Permitted Convertible Debt Financing, (d) interest, returns, profits, dividends, distributions and similar amounts received in connection with a Permitted Royalty Transaction, (d) sale or issuance of Subordinated Indebtedness, or (e) entry into a development and commercialization agreement relating to a product candidate of Borrower; provided that the amount of Cash received by Akero Therapeutics is, (i) in the case of clauses (a) and (b) above, measured at the time made and without adjustment for subsequent changes in value, payable for the fair market value of sale, issuance or contribution and any other property received in connection with such sale, issuance or contribution, and paid by any Person that is not Borrower or its Subsidiary, and (ii) in the case of clause (c) above, the aggregate principal amount of Indebtedness so converted or exchanged.
“Qualified Pfizer Net Proceeds” means the net proceeds in Cash (excluding any conversion of existing notes, share repurchases, or other holdbacks or discounts) received by Akero Therapeutics from, or at the direction of, the Pfizer Counterparty as consideration for the Pfizer Financing, as measured at the time made and without adjustment for subsequent changes in value, payable for the fair market value of sale or issuance and any other property received in connection with such sale or issuance.
“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
“Register” has the meaning specified in Section 11.7.
“Required Lenders” means at any time, the holders of more than fifty percent (50%) of the sum of the aggregate unpaid principal amount of the Term Loan Advances then outstanding.
“Restricted License” means any material License or other material agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such License or agreement or any other property, or (b) for which a default under or termination of could interfere with the Agent’s right to sell any Collateral. For the avoidance of doubt, “Restricted License” does not include any commercially available or open-source software.
“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
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“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
“SBA Funding Date” means each date on which a Lender which is an SBIC funds any portion of the Term Loans.
“Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation to pay any amount now owing or later arising.
“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its sole discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion.
“Subsequent Financing” means the closing of any Borrower financing that is broadly marketed to multiple investors after the Closing Date.
“Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or controls, either directly or indirectly, fifty percent (50%) or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrower in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.
“Term Loan Advance” means each Tranche I Advance, Tranche II Advance, Tranche III Advance, Tranche IV Advance and any other Term Loan funds advanced under this Agreement.
“Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) (x) the prime rate as reported in The Wall Street Journal plus (y) three and thirteen-twentieths of one percent (3.65%), and (ii) seven and thirteen-twentieths of one percent (7.65%).
“Term Loan Maturity Date” means January 1, 2027; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day.
“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.
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“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“Warrant” means any warrant entered into in connection with the Loan, as may be amended, restated or modified from time to time.
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Defined Term | Section |
Agent | Preamble |
Assignee | 11.14 |
Borrower | Preamble |
Claims | 11.11(a) |
Collateral | 3.1 |
Confidential Information | 11.13 |
End of Term Charge | 2.5 |
Event of Default | 9 |
Financial Statements | 7.1 |
Indemnified Person | 6.3 |
Lenders | Preamble |
Liabilities | 6.3 |
Maximum Rate | 2.2 |
Participant Register | 11.8 |
Pfizer Counterparty | 1.1 |
Prepayment Charge | 2.4 |
Publicity Materials | 11.19 |
Register | 11.7 |
Rights to Payment | 3.1 |
SBA | 7.16 |
SBIC | 7.16 |
SBIC Act | 7.16 |
Tranche I Advances | 2.1(a) |
Tranche II Advances | 2.1(a) |
Tranche III Advances | 2.1(a) |
Tranche IV Advances | 2.1(a) |
Transfer | 7.8 |
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The obligations of the Lenders to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:
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Borrower represents and warrants that:
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Notwithstanding anything to the contrary contained in this Section 6.1, so long as no Event of Default has occurred and is continuing, Borrower may elect to use up to Two Million Dollars ($2,000,000) in the aggregate in any fiscal year of the proceeds of any casualty policy with respect to any losses (i) within one hundred eighty (180) days of the receipt of such proceeds, toward the repair or replacement of the property that was subject to the casualty, or (ii) as a prepayment of the outstanding amount of all principal of and accrued interest on loan amounts outstanding under this Agreement.
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Borrower agrees as follows:
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Borrower shall not make any change in its (a) accounting policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31.
The executed Compliance Certificate and all Financial Statements required to be delivered hereunder shall be sent via e-mail to financialstatements@htgc.com with a copy to legal@htgc.com, cbarnes@htgc.com, hbhalla@htgc.com and bgironda@htgc.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent at: (650) 473-9194, attention Account Manager: Akero Therapeutics, Inc.
Notwithstanding the foregoing, documents required to be delivered under Sections 7.1(a), (b), (c) or (f) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower emails a link thereto to Agent; provided that Borrower shall directly provide Agent all Financial Statements required to be delivered pursuant to Section 7.1(b) and (c) hereunder.
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Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit (i) the conversion by holders of any Permitted Convertible Debt Financing in accordance with the terms of the indenture governing such Permitted Convertible Debt Financing or the Borrower’s delivery of the conversion consideration in connection therewith or the delivery of Common Stock and Cash in lieu of fractional shares of Common Stock in exchange for, or to induce the conversion of, Permitted Convertible Debt Financing; provided that the conversion consideration (or exchange or inducement consideration) paid to such holders is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the conversion or exchange thereof, or the inducement to convert Permitted Convertible Debt Financing, shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year of the Borrower), or (ii) the making of any interest payments with respect to any Permitted Convertible Debt Financing to the extent otherwise permitted under this Agreement.
Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.8 shall not prohibit (i) the conversion by holders of any Permitted Convertible Debt Financing in accordance with the terms of the indenture governing such Permitted Convertible Debt Financing or the Borrower’s delivery of the conversion consideration in connection therewith or the delivery of
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Common Stock, and Cash in lieu of fractional shares of Common Stock in exchange for, or to induce conversions of, Permitted Convertible Debt Financing; provided that the conversion consideration (or exchange or inducement consideration) paid to such holders is limited to (A) Common Stock and (B) Cash in lieu of fractional shares of Common Stock (provided further that the amount of Cash in lieu of fractional shares of Common Stock paid to holders of Permitted Convertible Debt Financing in connection with the conversion or exchange thereof, or the inducement to convert Permitted Convertible Debt Financing, shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year of the Borrower).
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The occurrence of any one or more of the following events shall be an Event of Default:
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First, to Agent and the Lenders in an amount sufficient to pay in full Agent’s and the Lenders’ reasonable and documented out-of-pocket costs and professionals’ and advisors’ fees and expenses as described in Section 11.12;
Second, to the Lenders, ratably, in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest, if required under this Agreement), in such order and priority as Agent may choose in its sole discretion; and
Finally, after the full and final payment in Cash of all of the Secured Obligations (other than inchoate obligations), to any creditor holding a junior Lien on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.
Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.
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HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Cristy Barnes, Himani Bhalla and Briana Gironda
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: [***]
Telephone: [***]
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Cristy Barnes, Himani Bhalla and Briana Gironda
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: [***]
Telephone: [***]
AKERO THERAPEUTICS, INC.
Attention: Jonathan M. Young, Chief Operating Officer; William White, Chief Financial Officer
601 Gateway Blvd, Suite 350
South San Francisco, CA 94080
email: [***]
Telephone: [***]
or to such other address as each party may designate for itself by like notice.
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(SIGNATURES TO FOLLOW)
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IN WITNESS WHEREOF, Borrower, Agent and the Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.
BORROWER:
AKERO THERAPEUTICS, INC.
Signature: /s/ Andrew Cheng__________
Print Name: Andrew Cheng
Title: President and Chief Executive Officer
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Accepted in Palo Alto, California:
AGENT:
HERCULES CAPITAL, INC.
Signature: /s/ Seth Meyer ______________
Print Name: Seth Meyer
Title: Chief Financial Officer
LENDERS:
HERCULES CAPITAL, INC.
Signature: /s/ Seth Meyer_____________
Print Name: Seth Meyer
Title: Chief Financial Officer
HERCULES PRIVATE GLOBAL VENTURE GROWTH FUND I L.P.
By: Hercules Adviser LLC, its Investment Adviser
Signature: /s/ Seth Meyer_____________
Print Name: Seth Meyer
Title: Authorized Signatory
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Table of Addenda, Exhibits and Schedules
Addendum 1: Taxes; Increased Costs
Addendum 2: SBA Provisions
Addendum 3: Agent and Lender Terms
Addendum 4: Multiple Borrower Terms
Exhibit A: Advance Request
Attachment to Advance Request
Exhibit B: Name, Locations, and Other Information for Borrower
Exhibit C: Borrower’s Patents, Trademarks, Copyrights and Licenses
Exhibit D: Borrower’s Deposit Accounts and Investment Accounts
Exhibit E: Compliance Certificate
Exhibit F: Joinder Agreement
Exhibit G: [Reserved.]
Exhibit H: ACH Debit Authorization Agreement
Exhibit I: [Reserved.]
Exhibit J-1: Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-2: Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-3: Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-4: Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Schedule 1.1 Commitments
Schedule 1 Subsidiaries
Schedule 1A Existing Permitted Indebtedness
Schedule 1B Existing Permitted Investments
Schedule 1C Existing Permitted Liens
Schedule 5.3 Consents, Etc.
Schedule 5.8 Tax Matters
Schedule 5.9 Intellectual Property Claims
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Schedule 5.10 Intellectual Property
Schedule 5.11 Borrower Products
Schedule 5.13 Employee Loans
Schedule 5.14 Capitalization
Schedule 7.20 Affiliate Transactions
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ADDENDUM 1 to LOAN AND SECURITY AGREEMENT
TAXES; INCREASED COSTS
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ADDENDUM 2 to LOAN AND SECURITY AGREEMENT
SBIC
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ADDENDUM 3 to LOAN AND SECURITY AGREEMENT
Agent and Lender Terms
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ADDENDUM 4 to LOAN AND SECURITY AGREEMENT
Multiple Borrower Terms
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