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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.
Exhibit 10.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of February 28, 2024 (the “Second Amendment Effective Date”), is entered into by and among AKERO THERAPEUTICS, INC., a Delaware corporation, and each of its Subsidiaries joined hereafter from time to time (hereinafter collectively referred to as “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Loan 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 (together with its successors and assigns, in such capacity, the “Agent”).
“Equity Condition Milestone Date” means the date on which Agent receives evidence reasonably satisfactory to Agent that Borrower has received Qualified Equity Issuance Net Proceeds of no less than One Hundred Fifty Million Dollars ($150,000,000) in aggregate at any time from (and including) February 8, 2024 until (and including) June 15, 2024, in each case, subject to verification by Agent of Borrower’s receipt of such Qualified Equity Issuance Net Proceeds (including supporting documents as reasonably requested by Agent).
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“Second Amendment Effective Date” means February 28, 2024.
“Interest Only Extension Conditions”, “Tranche II Milestone Date”, “Tranche III Milestone Date”
“Amortization Date” means January 1, 2026.
“Permitted Convertible Debt Financing” means issuance by Akero Therapeutics of convertible notes in an aggregate principal amount of not more than Two Hundred Fifty Million Dollars ($250,000,000) or such greater amount as the Agent shall have consented to in writing in its sole discretion; 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 (e) 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.
“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) occurring on or after February 1, 2024, which constitutes a Permitted Convertible Debt Financing that
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matures on or after the date that is six (6) months after the Term Loan Maturity Date and, (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.
“Term Loan Advance” means each Tranche I Advance, Tranche II Advance, Tranche III Advance, Tranche IV Advance, Tranche V Advance and any other Term Loan funds advanced under this Agreement.
“Term Loan Maturity Date” means March 1, 2027; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day.
“(xiii) Investments made in connection with [***], provided that such Investments under this clause (xiii) do not exceed Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate at any time; and”
Tranche V Advances | 2.1(a) |
“(a) Term Commitment.
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“7.7 Distributions. Borrower shall not, and shall not allow any Subsidiary to, (a) except as otherwise permitted hereunder, repurchase or redeem any class of stock or other Equity Interest other than pursuant to employee, officer, director or consultant repurchase plans, stock option plans or agreements, restricted stock agreements or other similar agreements, provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest, or (b) declare or pay any cash dividend or make any other cash distribution on any class of stock or other Equity Interest, except that a Subsidiary may pay dividends or make other distributions to Borrower or any Subsidiary of Borrower, (c) except for Permitted Investments, lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate or (d) the conversion of any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, or (e) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate.
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 not otherwise prohibited by this Agreement.”
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“7.19 Minimum Cash. Beginning on the earlier of (i) date on which the outstanding principal amount of the Term Loan Advances first exceeds Seventy Million Dollars ($70,000,000) and (ii) January 1, 2026, and at all times thereafter, Borrower shall maintain Qualified Cash in an amount greater than or equal to (x) the outstanding principal amount of the Term Loan Advances, multiplied by (y) sixty percent (60%).”
“7.22 Permitted Convertible Debt Financing. (a) Make or permit any payment on Permitted Convertible Debt Financing except (i) interest payments to the extent not otherwise prohibited by this Agreement and (ii) the Borrower’s delivery of conversion consideration in connection with 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 delivery of common stock and Cash in lieu of fractional shares of Common Stock to induce the conversion of Permitted Convertible Notes; provided that the conversion consideration (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 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 (b) redeem or repurchase any Permitted Convertible Debt Financing (other than the repurchase of Permitted Convertible Debt Financing in exchange for Common Stock and Cash in lieu of fractional shares of Common Stock); provided that the repurchase consideration paid to the holders of Permitted Convertible Debt Financing 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 repurchase thereof shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate in any fiscal year of the Borrower). In no event shall the foregoing permit Borrower to pay holders of Permitted Convertible Debt Financing Cash in connection with mandatory repurchase rights granted to such holders upon the occurrence of a “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term.”
“7.24 Post-Closing Obligation.
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“HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Cristy Barnes, Himani Bhalla and Briana Gironda
1 North B ST, Suite 2000
San Mateo, CA. 94401
email: [***]
Telephone: [***]
If to the Lenders:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer, Cristy Barnes, Himani Bhalla and Briana Gironda
1 North B ST, Suite 2000
San Mateo, CA. 94401
email: [***]
Telephone: [***]
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of the date first above written.
BORROWER:
AKERO THERAPEUTICS, INC.
Signature: /s/ Jonathan Young_______
Print Name: Jonathan Young_______
Title: Chief Operating Officer and Secretary
[SIGNATURES CONTINUE ON THE NEXT PAGE]
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AGENT:
HERCULES CAPITAL, INC.
Signature: /s/ Seth H Meyer ________
Print Name: Seth Meyer
Title: Chief Financial Officer
LENDERS:
HERCULES CAPITAL, INC.
Signature: /s/ Seth H 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 H Meyer ________
Print Name: Seth Meyer
Title: Chief Financial Officer
HERCULES PRIVATE CREDIT FUND 1 L.P.
By: Hercules Adviser LLC, its Investment Adviser
Signature: /s/ Seth H Meyer ________
Print Name: Seth Meyer
Title: Authorized Signatory
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EXHIBIT A
ADVANCE REQUEST
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EXHIBIT E
COMPLIANCE CERTIFICATE
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SCHEDULE 1.1
COMMITMENTS
LENDERS | TRANCHE I COMMITMENT | TRANCHE II COMMITMENT | TRANCHE III COMMITMENT | TRANCHE IV COMMITMENT | TRANCHE V COMMITMENT | TOTAL COMMITMENT |
Hercules Capital, Inc. | $10,000,000 | $7,500,000 | $15,000,000 | $17,500,000 | $25,000,000 | $75,000,000 |
Hercules Private Global Venture Growth Fund I L.P. | $5,000,000 | $3,750,000 | $7,500,000 | $8,750,000 | $12,500,000 | $37,500,000 |
Hercules Private Credit Fund 1 L.P. | $5,000,000 | $3,750,000 | $7,500,000 | $8,750,000 | $12,500,000 | $37,500,000 |
TOTAL COMMITMENTS | $20,000,000 | $15,000,000 | $30,000,000 | $35,000,000 | $50,000,000 | $150,000,000 |
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