Exhibit 10.01


 


SECOND AMENDMENT


 


THIS SECOND AMENDMENT
(the “Second Amendment”) to Loan and Security Agreement, dated as of October 28, 2014 (the “Effective
Date”), is hereby entered into by and between Hercules Technology III, L.P. (“Lender”), and Neuralstem, Inc.,
a Delaware corporation (the “Borrower”). Either of the parties named above may be referred to herein as a (“Party”)
and collectively, as the (“Parties.”) Any terms not specifically defined herein shall have the definition ascribed
to them in the Loan Agreement and Warrant, as defined below.


 


RECITALS


 


A.          Whereas,
Lender and Borrower have entered into that certain Loan and Security Agreement dated March 22, 2013 (as amended by that certain
Acknowledgment, Waiver and Modification Agreement dated June 18, 2013, collectively, the “Loan Agreement”);


 


B.           Whereas
the Parties desire to refinance the Term Loan described in the Loan Agreement; and


 


C.           Whereas,
the Parties desire to amend the Loan Agreement in accordance with the terms of this Second Amendment. Capitalized terms used and
not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.


 


AGREEMENT


 


NOW, THEREFORE, the
Parties agree as follows:


 


		1.	Definitions and Schedules.



 


(a)          New
Definitions. The following definitions are hereby inserted alphabetically into Section 1.1, as follows:


 


“Amortization
Date” means October 1, 2015.


 


“Modified
Interest-Only Period” means the period beginning on January 1, 2015 and expiring on the Amortization Date.


 


“Modified
Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) 10.00% plus the
prime rate as reported in The Wall Street Journal minus 3.25%, or (ii) 10.0%.


 


“Modified
Term Loan Maturity Date” means April 1, 2017.


 


“Original
Warrant” shall mean the Warrant issued by Borrower to Lender on the Closing Date to purchase shares of Borrower’s Common
Stock for an aggregate price of $700,000.


 




    	 



    	 



    

 


“Second
Amendment Commitment Fee” means $15,000, which fee is due to Lender on or prior to the Effective Date, and shall be deemed
fully earned on such date regardless of the early termination of the Loan Agreement, as amended by this Second Amendment.


 


“Second
Amendment Non-Renewable Facility Charge” means $100,000, representing one percent (1.0%) of the Maximum Term Loan Amount.


 


“Second
Amendment Warrant” shall mean the Warrant issued by Borrower to Lender on the Effective Date to purchase shares of Borrower’s
Common Stock for an aggregate price of $200,000.


 


(b)          Amended
Definitions. The following definitions are hereby amended and restated in their entirety as follows:


 


“Interest-Only
Period” means the period beginning on the Closing Date and expiring on December 1, 2013.


 


“NYSE
MKT” means the NYSE MKT or any other national securities exchange.


 


“Warrant”
shall mean both the Original Warrant and the Second Amendment Warrant.


 


(c)          Schedules.
The schedules previously provided to Lender as of the Closing Date are hereby updated and amended, if applicable, as of the Effective
Date by the schedules attached to this Second Amendment (“Amended Schedules”).


 


2.            Section
2.1(a) of the Loan Agreement is hereby amended in its entirety to read as follows:


 


(a)          Advances.
(i) On March 22, 2013, the Borrower drew and the Lender advanced a Term Loan in a principal amount equal to $8,000,000 pursuant
to this Agreement, and (ii) subject to the terms and conditions of this Agreement, on the Effective Date, Lender will make, and
Borrower agrees to draw, a Term Loan Advance in the principal amount of $10,000,000, a portion of the proceeds of which will refinance
the principal amount outstanding under clause (i) above.


 


3.            Section
2.1(b) of the Loan Agreement is hereby amended in its entirety to read as follows:


 


(b)          Advance
Conditions. As a condition to requesting the Term Loan Advance described in Section 2.1(a)(ii) above, (i) all of the representations
and warranties set forth in Section 5 shall be true in all material respects, and (ii) no Event of Default shall have occurred
and be continuing.


 




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4.            Section
2.1(d) of the Loan Agreement is hereby amended in its entirety to read as follows:


 


(d)          Interest.
The principal balance of a Term Loan Advance shall bear interest thereon from such Advance Date until the Effective Date at the
Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days
elapsed. The principal balance of each Term Loan Advance shall bear interest thereon from the Effective Date at the Modified Term
Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed.
The Term Loan Interest Rate and the Modified Term Loan Interest Rate will float and change on the day the Prime Rate changes from
time to time.


 


5.            Section
2.1(e) of the Loan Agreement is hereby amended in its entirety to read as follows:


 


(e)         Payment.


 


(i)          From
the Closing Date until the Effective Date. Borrower will pay interest at the Term Loan Interest Rate on each Term Loan Advance
on the first day of each month, beginning the month after the Advance Date and continuing during the Interest-Only Period. Beginning
on the first day of the month following the expiration of the Interest-Only Period, Borrower shall repay the aggregate Term Loan
principal balance that is outstanding on such date in equal monthly installments of principal and interest (mortgage style) amortized
over a 30-month schedule.


 


(ii)         From
the Effective Date through the Modified Term Loan Maturity Date. On November 1, 2014 Borrower shall repay the aggregate Term Loan
principal balance that is outstanding on such date in a principal installment of $253,357.27 plus interest at the Modified Term
Loan Interest Rate, and on December 1, 2014 Borrower shall repay the aggregate Term Loan principal balance that is outstanding
on such date in a principal installment of $257,385.11 plus interest at the Modified Term Loan Interest Rate. Beginning on January
1, 2015 and continuing during the Modified Interest-Only Period, Borrower will pay interest on each Term Loan Advance on the first
day of each month at the Modified Term Loan Interest Rate. Beginning on the Amortization Date, Borrower shall repay the aggregate
Term Loan principal balance that is outstanding on such date in equal monthly installments of principal and interest (mortgage
style) amortized over a 24-month schedule at the Modified Term Loan Interest Rate. The entire Term Loan principal balance, including
a balloon payment, and all accrued but unpaid interest shall be due and payable on the Modified Term Loan Maturity Date.


 


(iii)        No
Setoff; ACH Authorization to Debit Payments. Borrower shall make all payments under this Agreement without setoff, recoupment or
deduction and regardless of any counterclaim or defense. Lender will initiate debit entries to Borrower’s account as authorized
on the ACH Authorization on each payment date of all periodic obligations payable under this Agreement or the Term Note, as applicable.


 




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6.            Section
2.1(f)(i) of the Loan Agreement is hereby amended such that the term “Warrant” shall refer to the Original Warrant
for the purpose of determining the Fixed Conversion Price for Lender’s Conversion Option set forth in Section 2.1(f)(iii),
but for the purpose of determining the Fixed Conversion Price for Borrower’s Conversion Option set forth in Section 2.1(f)(i),
the term “Warrant” shall refer to either the Original Warrant or the Second Amendment Warrant, at Borrower’s
option. For purposes of clarity, the provisions set forth in Section 2.1(f) shall not be expanded or refreshed in connection with
this Second Amendment; over the full term of the Term Loan, the aggregate amount of Borrower’s Conversion Option is limited
to $1,000,000, and the aggregate amount of Lender’s Conversion Option is $1,000,000.


 


7.            Section
2.4 of the Loan Agreement is hereby amended in its entirety to read as follows:


 


2.4           Prepayment.
At its option upon at least 7 business days prior notice to Lender, Borrower may prepay all, but not less than all, of the outstanding
Advances by paying the entire principal balance, all accrued and unpaid interest, together with a prepayment charge equal to the
following percentage of the Advance amount being prepaid: if such Advance amounts are prepaid in any of the first twelve (12) months
following the Effective Date, 2.50%; after twelve (12) months but prior to twenty four (24) months, 1.50%; and thereafter, 0.50%
(each, a “Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation of Lender’s
lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of
the Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and
the Prepayment Charge upon the occurrence of a Change in Control. Notwithstanding the foregoing, Lender agrees to waive any Prepayment
Charge with regard to any prepayment that results from the refinancing of any Secured Obligation by Lender or an amendment to this
Agreement.


 


8.            Section
2.5 of the Loan Agreement is hereby amended in its entirety to read as follows:


 


2.5          End
of Term Charges.


 


(a)          On
the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured Obligations,
or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender a charge of $350,000.00. Notwithstanding
the required payment date of such charge, it shall be deemed earned by Lender as of the Closing Date. For purposes of clarity,
no interest shall be payable upon such amount until the occurrence of a condition contained in sections 2.5(a)(i), (ii) or (iii).


 




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(b)          On
the earliest to occur of (i) the Modified Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured
Obligations, or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender a charge of $250,000.00.
Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of the Effective Date. For purposes
of clarity, no interest shall be payable upon such amount until the occurrence of a condition contained in sections 2.5(b)(i),
(ii) or (iii).


 


9.            Section
11.2 of the Loan Agreement is hereby amended to designate Borrower’s address for notices as: 20271 Goldenrod Lane, 2nd
Floor, Germantown, MD 20876.


 


10.          Effect
of this Second Amendment. The provisions of this Second Amendment shall be effective for all parties effective as of the Effective
Date. Except as necessary to carry out the intent of this Second Amendment and as specifically modified pursuant hereto, no other
changes or modifications to the Loan Agreement are intended or implied and in all other respects such documents shall continue
to be and shall remain unchanged and in full force and effect in accordance with their respective terms, and are hereby specifically
ratified, reaffirmed and confirmed by all parties hereto as of the effective date hereof.


 


11.          Except
as provided for in the Amended Schedules, Borrower represents and warrants that the representations and warranties contained in
the Loan Agreement are true and correct in all material respects as of the date of this Second Amendment (except to the extent
such representations and warranties contained in the Loan Agreement speak as of an earlier date in which case such representations
and warranties are true and correct in all material respects as of such earlier date).


 


12.          This
Second Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one instrument.


 


13.          Conditions
Precedent. As a condition to the effectiveness of this Second Amendment, Lender shall have received, in form and substance satisfactory
to Lender, the following:


 


(a)          this
Second Amendment fully executed by the Parties;


 


(b)          an
amount equal to all Lender’s expenses incurred through the Effective Date;


 


(c)          the
Second Amendment Non-Renewable Facility Charge, which shall be deemed earned as of the Effective Date;


 


(d)          the
Second Amendment Commitment Fee;


 


(e)          the
Second Amendment Warrant to purchase shares of Borrower’s stock with a Warrant Coverage (as such term is defined therein)
of $200,000; and


 


(f)           such
other documents, and completion of such other matters, as Lender may reasonably deem necessary or appropriate.


 


[Signature page follows]


 




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IN WITNESS WHEREOF, the Parties have executed this Second Amendment
on the date first written above.


 


	 	NEURALSTEM, INC.
	 	 	 
	 	By:	 
	 	 	Name: I. Richard Garr
	 	 	Title: President and CEO
	 	 	 
	 	HERCULES TECHNOLOGY III, L.P.
	 	 	 
	 	By: Hercules Technology SBIC Management, LLC, its general partner
	 	 	 
	 	By: Hercules Technology Growth Capital, Inc., its manager
	 	 	 
	 	By:	 
	 	 	Name: Ben Bang
	 	 	Title: Associate General Counsel