Exhibit 10.6

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE TERMS OF THIS WARRANT AND
APPLICABLE LAW.

WARRANT TO PURCHASE STOCK

 

Corporation:    ADICET BIO, INC. Number of Shares:    See below. Class of Stock:
   Common Stock Initial Exercise Price:    $11.32 per share Issue Date:   
September 15, 2020 Expiration Date:    April 28, 2027

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of
which is hereby acknowledged, PACWEST BANCORP or its assignee or transferee
(“Holder”) is entitled to purchase the number of fully paid and nonassessable
shares of the class of securities (the “Shares”) of the corporation (the
“Company”) at the initial exercise price per Share (the “Warrant Price”) all as
set forth above and as adjusted pursuant to Article 2 of this warrant, subject
to the provisions and upon the terms and conditions set forth in this warrant.
This warrant shall be exercisable for 5,301 Shares on the Issue Date and shall
be exercisable for an additional number of Shares equal to (a) 1.00% of the
aggregate original principal amount of all Term Loans made pursuant to the Loan
and Security Agreement (the “Loan Agreement”), dated as of April 28, 2020,
between Adicet Therapeutics, Inc. (f/k/a Adicet Bio, Inc.) and Pacific Western
Bank, as may be amended from time to time, divided by (b) the Warrant Price
(subject to appropriate adjustment in the event of a stock dividend, stock split
or other similar event affecting the Shares). For the avoidance of doubt, in no
event shall this warrant be exercisable for more than 15,904 Shares (subject to
appropriate adjustment in the event of a stock dividend, stock split or other
similar event affecting the Shares).

ARTICLE 1

EXERCISE

1.1 Method of Exercise. Holder may exercise this warrant by delivering this
warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check, a wire transfer (to an account designated by the
Company) or other form of payment acceptable to the Company for the aggregate
Warrant Price for the Shares being purchased.

1.2 Conversion Right. In lieu of exercising this warrant as specified in
Section 1.1, Holder may from time to time convert this warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.3.

 

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1.3 Fair Market Value. If the Shares are traded regularly in a public market,
the fair market value of the Shares shall be the closing price of the Shares
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not regularly traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment.

1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this warrant, the Company shall (a)(x) provided that the Company’s
transfer agent is then participating in the Depository Trust Company (“DTC”)
Deposit Withdrawal Agent Commission (“DWAC”) system, cause the Company’s
transfer agent to credit the number of Shares acquired to Holder’s account with
DTC or (y) if the Company’s transfer agent is not then participating in the DTC
DWAC system, deliver to Holder certificates for the Shares acquired and (b) if
this warrant has not been fully exercised or converted and has not expired, a
new warrant representing the Shares not so acquired.

1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this warrant, the Company at its
expense shall execute and deliver, in lieu of this warrant, a new warrant of
like tenor.

1.6 Treatment of Warrant Upon Acquisition of the Company.

1.6.1 “Acquisition.” For the purpose of this warrant, “Acquisition” means
(a) any sale, license, or other disposition of all or substantially all of the
assets (including intellectual property) of the Company, (b) any reorganization,
consolidation, merger or sale of the voting securities of the Company or any
other transaction where the holders of the Company’s securities before the
transaction beneficially own less than 50% of the outstanding voting securities
of (1) the Company; (2) the surviving or resulting entity; or (3) if the
surviving entity is a wholly owned subsidiary of another entity immediately
following such transaction, the parent entity of such surviving or resulting
entity (other than a bona fide equity financing principally for capital raising
purposes in which the Company sells and issues equity securities to investors).

1.6.2 Exercise Upon Acquisition. Upon the closing of any Acquisition, if the
fair market value of the consideration per Share to be received by the Company’s
stockholders consists of cash, marketable securities, or a combination of both
cash and marketable securities (as determined pursuant to Section 1.3) and is
greater than the Warrant Price, this warrant shall be deemed to have been
automatically converted pursuant to Section 1.2, without any further action by
the Holder, even if this warrant is not surrendered and without the issuance of
any certificate for Shares hereunder, and thereafter Holder shall participate in
the Acquisition on the same terms as other holders of the same class of
securities of the Company; provided, however, that if the fair market value of
the Shares, as determined pursuant to Section 1.3, in connection with such
Acquisition is less than the aggregate Warrant Price, then this warrant shall
terminate without exercise or conversion immediately prior, and subject, to the
closing of such Acquisition.

 

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1.6.3 Assumption of Warrant. Upon the closing of any Acquisition not referred to
in Section 1.6.2, the successor entity shall assume the obligations of this
warrant, and this warrant shall thereafter be exercisable for the same
securities and/or other property as would have been paid for the Shares issuable
upon exercise of the unexercised portion of this warrant as if such Shares were
outstanding on and as of the closing of such Acquisition, subject to further
adjustment from time to time in accordance with the provisions of this warrant.

1.7 Rule 144. With a view to making available to Holder the benefits of Rule 144
(or its successor rule) (“Rule 144”) promulgated under the Securities Act of
1933, as amended (the “Securities Act”) to sell Shares delivered to Holder upon
exercise of this warrant, the Company agrees, at the Company’s sole expense, to:

(a) use its commercially reasonable efforts to file with the SEC in a timely
manner (or obtain extensions in respect thereof and file within the applicable
grace period) all reports and other documents (other than Current Reports on
Form 8-K) required of the Company under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, (the “Exchange Act”) so long as (1) the
Company remains subject to such requirements under Section 13 or 15(d) of the
Exchange Act, (2) the filing of such reports and other documents is required to
satisfy the current public information requirements of Rule 144(c)(1) and
(3) and it is necessary for the Company to satisfy the current public
information requirements of Rule 144(c)(1) for the Holder to offer, sell or
otherwise transfer such Shares pursuant to Rule 144 (assuming the Holder is not
an “affiliate” (as defined in Rule 144) of the Company’s, and that has not been
an “affiliate” (as defined in Rule 144) of the Company’s during the immediately
preceding three months);

(b) promptly upon request of the Holder furnish to Holder, (i) a written
statement by the Company that it has complied in all material respects with the
requirements of Rule 144(c)(1)(i) and (ii), and (ii) such other information, if
any, as may be reasonably requested to permit Holder to sell such securities
pursuant to Rule 144 without registration, in each case, so long as (1) Holder
owns such Shares, (2) the Company is required to file with the SEC reports and
other documents under Section 13 or 15(d) of the Exchange Act, (3) the filing of
such reports and other documents is required to satisfy the current public
information requirements of Rule 144(c)(1) and (4) and it is necessary for the
Company to satisfy the current public information requirements of Rule 144(c)(1)
for the Holder to offer, sell or otherwise transfer such Shares pursuant to Rule
144 (assuming the Holder is not an “affiliate” (as defined in Rule 144) of the
Company’s, and that has not been an “affiliate” (as defined in Rule 144) of the
Company’s during the immediately preceding three months); and

(c) take such additional action as is reasonably requested by Holder to enable
Holder to sell the Shares pursuant to Rule 144, including, without limitation,
delivering all such legal opinions consents, certificates, resolutions and
instructions to the Company’s transfer agent as may be reasonably requested from
time to time by Holder.

 

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ARTICLE 2

ADJUSTMENTS TO THE SHARES

2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on
its common stock payable in common stock, or other securities, or subdivides the
outstanding common stock into a greater amount of common stock, then upon
exercise of this warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend or subdivision occurred.

2.2 Reclassification, Exchange or Substitution. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
warrant (including, without limitation, in any Permitted Transaction (as defined
in the Loan Agreement)), Holder shall be entitled to receive, upon exercise or
conversion of this warrant, the number and kind of securities and property that
Holder would have received for the Shares if this warrant had been exercised
immediately before such reclassification, exchange, substitution, or other
event. The Company, its parent entity or its successor shall promptly issue to
Holder a new warrant for such new securities or other property. The new warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price and to the number of securities or
property issuable upon exercise of the new warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events as described in this Section 2.2.

2.3 Adjustments for Combinations, Etc. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Price shall be proportionately increased. If the outstanding Shares
are combined or consolidated, by reclassification or otherwise, into a greater
number of shares, the Warrant Price shall be proportionately decreased.

2.4 Certificate as to Adjustments. Upon each adjustment of the Warrant Price,
the Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based. The Company shall,
upon written request, furnish Holder a certificate setting forth the Warrant
Price in effect upon the date thereof and the series of adjustments leading to
such Warrant Price.

2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of the warrant and the Number of Shares to be issued shall be rounded
down to the nearest whole Share. If a fractional share interest arises upon any
exercise or conversion of the warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share.

 

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ARTICLE 3

REPRESENTATIONS AND COVENANTS OF THE COMPANY

3.1 Representations and Warranties. The Company hereby represents and warrants
to the Holder as follows:

(a) All Shares which may be issued upon the exercise of the purchase right
represented by this warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.

3.2 Notice of Certain Events. The Company shall provide Holder with not less
than 10 days prior written notice of, including a description of the material
facts surrounding, any of the following events: (a) declaration of any dividend
or distribution upon its common stock, whether in cash, property, stock, or
other securities and whether or not a regular cash dividend; (b) offering for
subscription pro rata to the holders of any class or series of its stock any
additional shares of stock of any class or series or other rights; (c) effecting
any reclassification or recapitalization of common stock; or (d) the merger or
consolidation with or into any other corporation, or sale, lease, license, or
conveyance of all or substantially all of its assets, or liquidation,
dissolution or winding up.

ARTICLE 4

REPRESENTATIONS AND COVENANTS OF HOLDER

Holder hereby represents, warrants and covenants to the Company:

4.1 Purchase for Own Account. Holder is acquiring this warrant and all equity
securities issuable, directly or indirectly, upon exercise of the warrant
(collectively, the “Securities”) for Holder’s own account not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that Holder has no present intention of selling, granting any participation
in, or otherwise distributing the same.

4.2 Disclosure of Information. Holder further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company. With respect to
any projections of its future operations provided to Holder by the Company,
Holder acknowledges that the Company makes no representations or warranties.

4.3 Investment Experience. Holder has experience as an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities. Holder acknowledges that
any investment in the Securities involves a high degree of risk, and represents
that it is able, without materially impairing its financial condition, to hold
the Securities for an indefinite period of time and to suffer a complete loss of
its investment.

 

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4.4 Accredited Investor. Holder is an “accredited investor” within the meaning
of SEC Rule 501 of Regulation D, as presently in effect.

4.5 Restricted Securities. Holder understands that the Securities are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, Holder represents that it
is familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. Holder understands that
the Securities have not been and will not be registered under the Securities Act
and have not been and will not be registered or qualified in any state in which
they are offered, and thus Holder will not be able to resell or otherwise
transfer his, her or its Securities unless they are registered under the
Securities Act and registered or qualified under applicable state securities
laws, or an exemption from such registration or qualification is available.

4.6 Residence. If Holder is a partnership, corporation, limited liability
company or other entity, then the office or offices of Holder in which its
principal place of business is identified in the address or addresses of Holder
set forth in Section 5.5 hereof.

ARTICLE 5

MISCELLANEOUS

5.1 Term: Exercise Upon Expiration. Subject to Section 1.6, this warrant is
exercisable in whole or in part, at any time and from time to time on or before
the Expiration Date set forth above. If this warrant has not been exercised
prior to the Expiration Date, this warrant shall be deemed to have been
automatically exercised on the Expiration Date by “cashless” conversion pursuant
to Section 1.2.

5.2 Legends. This warrant and the Shares shall be imprinted with such legends as
deemed required by the Company for applicable securities laws, the Company’s
organizational documents, and any other agreements the Securities are subject
to, including the following:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THIS WARRANT AND APPLICABLE LAW.

5.3 Compliance with Securities Laws on Transfer. This warrant and the Shares
issuable upon exercise of this warrant (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee. The Company shall
not require Holder to provide an opinion of counsel if there is no material
question as to the availability of current information as referenced in Rule
144(c), Holder

 

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represents that it has complied with Rule 144 (d) and (e) in reasonable detail,
the selling broker represents that it has complied with Rule 144(f), and the
Company is provided with a copy of Holder’s notice of proposed sale. Any
subsequent transferee shall be bound by all of the terms and conditions of this
warrant and make to the Company each of the representations, warranties and
covenants set forth in Article 4 of this warrant as of the date of such
transfer.

5.4 Transfer Procedure. Subject to the provisions of Section 5.3, Holder may
transfer all or part of this warrant or the Shares issuable upon exercise of
this warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this warrant to the
Company for reissuance to the transferee(s) (and Holder, if applicable);
provided, however, that Holder shall not transfer all or part of this warrant or
the Shares issuable upon exercise of this warrant (or the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) to any Person who
is a direct competitor of the Company, whether as an operating company or direct
or indirect parent with voting control over such operating company. No surrender
or reissuance shall be required for a transfer to any other affiliate of Holder

5.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally, emailed or mailed by first-class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company or
the Holder, as the case may be, in writing by the Company or such Holder from
time to time. All notices to the Holder shall be addressed as follows:

PacWest Bancorp

Attn: Warrant Administrator

406 Blackwell Street, Suite 240

Durham, NC 27701

Email: warrants@pacwest.com

All notices to the Company shall be addressed as follows:

Adicet Bio, Inc.

Attention: Chen Schor, CEO

500 Boylston Street, 13th Floor

Boston, Massachusetts

Email: __________________

5.6 Amendments. This warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.

5.7 Attorneys’ Fees. In the event of any dispute between the parties concerning
the terms and provisions of this warrant, the party prevailing in such dispute
shall be entitled to collect from the other party all costs incurred in such
dispute, including reasonable attorneys’ fees.

 

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5.8 No Stockholder Rights. Holder, as a Holder of this warrant, will not have
any rights as a stockholder of the Company until the exercise of this warrant.

5.9 Governing Law. This warrant shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to its principles
regarding conflicts of law.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Stock
as of the date set forth above.

 

ADICET BIO, INC. By:  

/s/ Chen Schor

Name:  

Chen Schor

Title:  

Chief Executive Officer

Accepted and agreed: PACWEST BANCORP By:  

/s/ Jeff Krumpoch

Name:  

Jeff Krumpoch

Title:  

Senior Corporate Controller

[Signature Page to Warrant to Purchase Stock]

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APPENDIX 1

NOTICE OF EXERCISE

1. The undersigned hereby elects to purchase ______________ shares of the
______________ stock of ADICET BIO, INC. pursuant to the terms of the attached
warrant, and tenders herewith payment of the purchase price of such shares in
full.

1. The undersigned hereby elects to convert the attached warrant into shares in
the manner specified in the warrant. This conversion is exercised with respect
to ______________ of the shares covered by the warrant.

[Strike paragraph that does not apply.]

2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name as is specified below:

 

 

(Holder’s Name)

 

 

(Address)

3. The undersigned hereby confirms that the representations and warranties set
forth in Section 4 of the warrant are true and correct in all respects as of the
date hereof.

 

PACWEST BANCORP or Registered Assignee

 

(Signature)

 

(Date)