EXHIBIT 10.7

FIRST AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT

This FIRST AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT (this “Agreement”),
dated October 2, 2012, effective as of September 1, 2012, is entered into by and
between TENGION, INC., a Delaware corporation (“Borrower”), and HORIZON CREDIT
II LLC (“Lender”), a Delaware limited liability company, as assignee of HORIZON
TECHNOLOGY FINANCE CORPORATION (“HRZN”), a Delaware corporation.
 
RECITALS
 
A. Borrower and HRZN entered into a certain Venture Loan and Security Agreement
dated as of March 14, 2011 (the “Loan Agreement”) pursuant to which HRZN, among
other things, (i) made a certain loan to Borrower in the original principal
amount of Five Million and 00/100 Dollars ($5,000,000) (the “Loan”), which Loan
is evidenced by a certain Secured Promissory Note dated as of March 14, 2011 and
was executed by Borrower in favor of HRZN (the “Note”),  and (ii) was granted a
security interest in all assets of Borrower, excluding Intellectual Property (as
defined in the Loan Agreement).
 
B. On or about July 12, 2011, HRZN assigned all right, title and interest to the
Loan, Note and Loan Agreement to Lender.
 
C. Pursuant to a Forbearance Agreement dated as of September 1, 2012 by and
between the Borrower and Lender, Lender agreed to refrain from exercising
certain rights or remedies it may have had under the Loan Agreement subject to
certain conditions.
 
D. Borrower has now requested that Lender (1) amend certain provisions of the
Loan Agreement and the Note to, among other things, provide for additional
interest only payments, (2) consent to (i) the sale of certain convertible notes
and warrants and the making of new loans (the “New Loans”) to the Borrower by
certain new lenders to the Borrower (the “New Lenders”) upon terms and
conditions substantially similar to those disclosed to Lender by Borrower in
writing, (ii) the granting of a security interest to the New Lenders in the
Borrower’s assets, including Intellectual Property, to secure such New Loans
(the “New Security Interest”), (3) enter into an intercreditor agreement with
the New Lenders to share its security interest in Borrower’s assets pari passu
with the New Lenders, and (4) refrain from exercising its rights and remedies
under the Loan Documents (as defined in the Loan Agreement) subject to certain
terms and conditions.
 
E. Lender is willing to grant such request, but only to the extent, and in
accordance with the terms, and subject to the conditions, set forth herein and
in any intercreditor agreement executed by and among the Lender and New Lenders.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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1. Definitions; Interpretation.  Unless otherwise defined herein, all
capitalized terms used herein and defined in the Loan Agreement shall have the
respective meanings given to those terms in the Loan Agreement.  Other rules of
construction set forth in the Loan Agreement, to the extent not inconsistent
with this Agreement, apply to this Agreement and are hereby incorporated by
reference.
 
2. Confirmation.  Borrower hereby acknowledges and agrees that: (i) the Loan
Agreement sets forth the legal, valid, binding and continuing obligations of
Borrower to Lender, (ii) the Obligations to Lender under the Loan Agreement are
secured by validly perfected security interests in all assets of Borrower,
excluding Intellectual Property and with respect to Third Party Equipment,
consistent with the provisions of Section 4.8 of the Loan Agreement, and (iii)
Borrower has no cause of action, claim, defense or set-off against the Lender in
any way regarding or relating to the Loan Agreement or Lender’s actions
thereunder and to the extent any such cause of action, claim, defense or set-off
ever existed, it is waived and Lender is released from any claims of Borrower.
Borrower represents and warrants that no Default or Event of Default has
occurred under the Loan Agreement, which Borrower has not previously disclosed
in writing to Lender.
 
3. Amendments to Loan Agreement.
 
(a) Conditional Amendments. Borrower and Lender hereby agree that, if, and only
if, on or before October 3, 2012 the Borrower provides Lender with evidence
reasonably satisfactory to Lender that Borrower has received gross cash proceeds
of not less than Fifteen Million Dollars ($15,000,000.00) from the sale by
Borrower of convertible notes and warrants (the “Financing Condition”):
 
(i) The definition of “Maturity Date” in Section 1.1 of the Loan Agreement shall
be deleted and replaced with the following:
 
““Maturity Date” means May 1, 2014, or, in any case, if earlier, the date of
acceleration of the Loan following an Event of Default or the date of
prepayment, whichever is applicable.”
 
Section 2.2(a) of the Loan Agreement shall be deleted in its entirety and
replaced with the following:
 
“(a) Scheduled Payments.  Borrower shall make payments of (1) accrued interest
only on the outstanding principal amount of the Loan in the amount of
Forty-Eight Thousand Nine Hundred Fifty-Eight and 33/100 Dollars ($48,958.33) on
the first date of each calendar month commencing May 1, 2011 through and
including January 1, 2012,  (2) commencing February 1, 2012 through and
including August 1, 2012, equal payments of principal plus accrued interest on
the outstanding principal amount of the Loan in the amount of Two Hundred
Thirty-Four Thousand Seven Hundred Eighty-Four and 04/100 Dollars ($234,784.04),
(3) accrued interest only on the outstanding principal amount of the Loan in the
amount of Thirty-Nine Thousand Six Hundred Fifty-Four and 12/100 Dollars
($39,654.12) on the first date of each calendar month commencing September 1,
2012, through and including June 1, 2013, and (4) commencing July 1, 2013
through and including May 1, 2014, Borrower shall make equal payments of
principal plus accrued interest on the outstanding principal amount of the Loan
in an amount of Three Hundred Fifty-Four Thousand Seven Hundred and Seventy-Nine
and 67/100 Dollars ($354,779.67) (collectively, the “Scheduled Payments”).
Borrower shall make such Scheduled Payments commencing on the date set forth in
the Note applicable to such Loan and continuing thereafter on the first Business
Day of each calendar month (each a “Payment Date”) through the Maturity Date. On
or before the Funding Date of each Loan, Lender shall provide Borrower with an
amortization and payment schedule for such Loan. In any event, all unpaid
principal and accrued interest shall be due and payable in full on the Maturity
Date.”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(b) Effective Amendments. Borrower and Lender hereby agree that, as of the date
of this First Amendment:
 
(1) Section 4.1 of the Loan Agreement is hereby amended and restated in its
entirety, to read as follows:
 
“4.1 Grant of Security Interest.  Borrower grants to Lender a valid, first
priority (except for Permitted Liens that may have priority), continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt, full and complete payment of any and all
Obligations and in order to secure prompt, full and complete performance by
Borrower of each of its covenants and duties under each of the Loan Documents
(other than the Warrant). The “Collateral” shall mean and include all right,
title, interest, claims and demands of Borrower in and to all personal property
of Borrower, including without limitation, all of the following:
 
(a) All goods (and embedded computer programs and supporting information
included within the definition of “goods” under the Code) and equipment now
owned or hereafter acquired, including, without limitation, all laboratory
equipment, computer equipment, office equipment, machinery, fixtures, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located;
 
(b) All inventory now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower’s books relating to any of the foregoing;
 
(c) All contract rights and general intangibles (including Intellectual
Property), now owned or hereafter acquired, including, without limitation,
goodwill, license agreements, franchise agreements, blueprints, drawings,
purchase orders, customer lists, route lists, infringements, claims, software,
computer programs, computer disks, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payment intangibles, commercial
tort claims, payments of insurance and rights to payment of any kind;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(d) All now existing and hereafter arising accounts, contract rights, royalties,
license rights, license fees and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower (subject, in each case, to the
contractual rights of third parties to require funds received by Borrower to be
expended in a particular manner), whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower’s books
relating to any of the foregoing;
 
(e) All documents, cash, deposit accounts, letters of credit (whether or not the
letter of credit is evidenced by a writing), certificates of deposit,
instruments, promissory notes, chattel paper (whether tangible or electronic)
and investment property, including, without limitation, all securities, whether
certificated or uncertificated, security entitlements, securities accounts,
commodity contracts and commodity accounts, and all financial assets held in any
securities account or otherwise, wherever located, now owned or hereafter
acquired and Borrower’s books relating to the foregoing; and
 
(f) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof, including,
without limitation, insurance, condemnation, requisition or similar payments and
proceeds of the sale or licensing of Intellectual Property.”
 
(2) The definition of “Loan Rate” in Section 1.1 of the Loan Agreement is hereby
deleted and replaced with the following:
 
““Loan Rate” means (i) from the date hereof through August 31, 2012, the per
annum rate of interest (based on a year of twelve 30-day months) equal to 11.75%
and (ii) from September 1, 2012 through the repayment in full of all
Obligations, the per annum rate of interest (based on a year of twelve 30-day
months) equal to 13.0%.”
 
(3) The following is hereby inserted after Section 2.6 of the Loan Agreement:
 
“2.7 Additional Fee. Borrower agrees, on no later than October 4, 2012, to pay
to Lender a fee in the amount of Fifty Thousand and 00/100 Dollars
($50,000.00).”
 
4. Amendment to Note.  If the Financing Condition is satisfied, the Note is
hereby amended and restated in its entirety as set forth in Exhibit A attached
hereto and made a part hereof (“Amended and Restated Note”).
 
5. Agreement to Forbear. Lender hereby agrees to refrain from exercising any
rights or remedies it may have under the Loan Agreement until the earlier of (i)
October 3, 2012, or (ii) the date on which the New Lenders or the Borrower
inform the Lender that the New Lenders are unable or unwilling to meet the
Financing Condition.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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6. Consent to New Loans and New Security Interest. Lender hereby consents to the
making of the New Loans and the granting of the New Security Interest.
 
7. Conditions to Effectiveness. Lender’s consent and agreement herein is
expressly conditioned on all of the following:
 
(a)  
Borrower executing and delivering an executed copy of this Agreement;

 
(b)  
Borrower executing and delivering to the Lender the Amended and Restated Note;

 
(c)  
Borrower providing a Secretary’s Certificate in form and substance satisfactory
similar to Secretary’s Certificate provided by Borrower in connection with the
closing of the Loan Agreement;

 
(d)  
Borrower provides Lender with (i) evidence reasonably satisfactory to Lender
that Borrower has received gross proceeds of not less than Fifteen Million and
00/100 Dollars ($15,000,000.00) from the sale of its convertible notes and
warrants and (ii) a copy of the fully executed documents evidencing such sale;

 
(e)  
Borrower shall pay Lender a fee of Fifty Thousand and 00/100 Dollars ($50,000)
in consideration of Lender entering into this Agreement.

 
(f)  
Borrower shall reimburse Lender for its outside legal expenses incurred to date
of One Thousand Fifty-Six and 25/100 ($1,056.25).

 
(g)  
Lender and New Lenders entering into an intercreditor agreement upon terms and
conditions satisfactory to Lender in its sole discretion; and

 
(h)  
Borrower executing and delivering to Lender or its designees a Warrant to
purchase shares of Borrower’s Common Stock in the form attached hereto as
Exhibit B.

 
8. Effect of Agreement.  On and after the date hereof, each reference to the
Loan Agreement in the Loan Agreement or in any other document shall mean the
Loan Agreement as amended by this Agreement.  Except as expressly provided
hereunder, the execution, delivery and effectiveness of this Agreement shall not
operate as a waiver of any right, power, or remedy of Lender, nor constitute a
waiver of any provision of the Loan Agreement.  Except to the limited extent
expressly provided herein, nothing contained herein shall, or shall be construed
to (nor shall the Borrower ever argue to the contrary) (i) modify the Loan
Agreement or any other Loan Document (ii) modify, waive, impair, or affect any
of the covenants, agreements, terms, and conditions thereof, or (iii) waive the
due keeping, observance and/or performance thereof, each of which is hereby
ratified and confirmed by the Borrower.  Except as amended above, the Loan
Agreement remains in full force and effect.
 
9. Headings.  Headings in this Agreement are for convenience of reference only
and are not part of the substance hereof.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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10. Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut without reference to
conflicts of law rules.
 
11. Counterparts.  This Agreement may be executed in any number of counterparts,
including by electronic or facsimile transmission, each of which when so
delivered shall be deemed an original, but all such counterparts taken together
shall constitute but one and the same instrument.
 
12. Integration.  This Agreement and the Loan Documents constitute and contain
the entire agreement of Borrower and Lender with respect to their respective
subject matters, and supercede any and all prior agreements, correspondence and
communications.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed as of the day and year first above written.

TENGION, INC.
 
 
 
 
HORIZON CREDIT II LLC, assignee of
HORIZON TECHNOLOGY FINANCE
CORPORATION
 
 
By:  /s/ A. Brian Davis
Name: A. Brian Davis
       Title:   CFO and VP Finance
By:  /s/ Robert D. Pomeroy, Jr.
Name: Robert D. Pomeroy, Jr.
Title:  Chief Executive Officer
 

[Signature Page to First Amendment to Venture Loan and Security Agreement]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT A

AMENDED AND RESTATED SECURED PROMISSORY NOTE

$ 5,000,000.00
Dated as of March 14, 2011
 
Amended and Restated effective September 1, 2012

FOR VALUE RECEIVED, the undersigned, TENGION, INC., a Delaware corporation
(“Borrower”), HEREBY PROMISES TO PAY to the order of HORIZON CREDIT II LLC , a
Delaware limited liability company (“Lender”) the principal amount of Five
Million and 00/100 Dollars ($5,000,000.00) or such lesser amount as shall equal
the outstanding principal balance of the Loan made to Borrower by Horizon
Technology Finance Corporation (“HRZN”) pursuant to the Loan Agreement (as
defined below), which loan was assigned to the Lender, and to pay all other
amounts due with respect to the Loan on the dates and in the amounts set forth
in the Loan Agreement.
 
Interest on the principal amount of this Note from the date of this Note shall
accrue at the Loan Rate or, if applicable, the Default Rate.  If the Funding
Date is not the first day of the month, interim interest accruing from the
Funding Date through the last day of that month shall be paid on the first
calendar day of the next calendar month.  Borrower shall make payments of
principal and accrued interest on the first day of each month (“Payment Date”)
in such amounts and on such dates as set forth in the Loan Agreement. If not
sooner paid, all outstanding amounts hereunder and under the Loan Agreement
shall become due and payable on January 1, 2014.
 
Principal, interest and all other amounts due with respect to the Loan, are
payable in lawful money of the United States of America to Lender as set forth
in the Loan Agreement.  The principal amount of this Note and the interest rate
applicable thereto, and all payments made with respect thereto, shall be
recorded by Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Note.
 
This Note is referred to in, and is entitled to the benefits of, the Venture
Loan and Security Agreement dated on or about the date hereof by and between
Borrower and Lender, as assignee of HRZN (the “Loan Agreement”).  The Loan
Agreement, among other things, (a) provides for the making of a secured Loan to
Borrower, and (b) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events.
 
This Note may not be prepaid except as set forth in Section 2.3 of the Loan
Agreement.
 
This Note and the obligation of Borrower to repay the unpaid principal amount of
the Loan, interest on the Loan and all other amounts due Lender under the Loan
Agreement is secured under the Loan Agreement.
 
Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.
 
Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.  This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Connecticut.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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This Amended and Restated Secured Promissory Note amends and restates in its
entirety a certain Secured Promissory Note executed by Borrower in favor of HRZN
and assigned to Lender, dated as of March 14, 2011 (the “Original Note”) and
nothing contained herein shall constitute a repayment or novation of the
Original Note.

 
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.
 
 

 
BORROWER:
 
TENGION, INC.
     
By: __________________________
 
Name: ________________________
 
Title: _________________________

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EXHIBIT B

 
[FORM OF WARRANT]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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