Document:

ex_261906.htm

Exhibit 10.2

 

 

 

SUPPLEMENT 

to the 

Loan and Security Agreement 

dated as of April 26, 2021 

between 

CYTOCOM, INC. (“Borrower”) 

and 

Avenue Venture Opportunities Fund, L.P. (“Lender”)

 

 

 

This is a Supplement identified in the document entitled Loan and Security Agreement, dated as of April 26, 2021 (as amended, restated, supplemented and modified from time to time, the “Loan and Security Agreement”), by and between Borrower and Lender. All capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 10 of the Loan and Security Agreement, which is incorporated in its entirety into this Supplement. In the event of any inconsistency between the provisions of the Loan and Security Agreement and this Supplement, this Supplement is controlling.

 

In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:

 

Part 1 - Additional Definitions:

 

“Amortization Period” means the period commencing on the first day of the first full calendar month following the Interest-only Period and continuing until the Maturity Date.

 

“Assignment and Assumption” means that certain Assignment and Assumption substantially in the form attached hereto as Exhibit D.

 

“Blocked Account” is defined in Part 2, Section 1(b) hereof.

 

“Commitment” means, subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, Lender’s commitment to make Growth Capital Loans to Borrower in the aggregate original principal amount of Fifteen Million Dollars ($15,000,000.00).

 

“Designated Rate” means, for each Growth Capital Loan, a variable rate of interest per annum equal to the sum of (i) the greater of (A) the Prime Rate and (B) three and one-quarters percent (3.25%), plus (ii) seven and seventy-four one-hundredths percent (7.74%). Changes to the Designated Rate based on changes to the Prime Rate shall be effective as of the next scheduled interest payment date immediately following such change.

 

“Final Payment” means a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) equal to four and one-quarter percent (4.25%) of the original Commitment amount of Fifteen Million Dollars ($15,000,000.00).

 

“Growth Capital Loan” means any Loan requested by Borrower and funded by Lender under its Commitment for general corporate purposes of Borrower.

 

“Interest-only Period” means the period commencing on the Closing Date and continuing until the 12-month anniversary of the Closing Date; provided, however, that such period shall be extended for twelve (12) months if, on or before December 31, 2021, Borrower has received no less than Twenty Million Dollars ($20,000,000.00) in net new follow-on Subordinated Debt or equity financing proceeds after the consummation of the Merger; provided, further, however, that the Interest-only Period shall not exceed twenty-four (24) months.

 

 

 

 

 

“Loan” or “Loans” mean, as the context may require, individually a Growth Capital Loan, and collectively, the Growth Capital Loans.

 

“Loan Commencement Date” means, with respect to each Growth Capital Loan: (a) the first day of the first full calendar month following the Borrowing Date of such Loan if such Borrowing Date is not the first day of a month; or (b) the same day as the Borrowing Date if the Borrowing Date is the first day of a month.

 

“Maturity Date” means May 1, 2024.

 

“Merger” means the consummation of all of the transactions included in the Merger and Related Transactions.

 

“Merger and Related Transactions” means all of the following (1) the merger of ImQuest Lifesciences, Inc. with and into pre-merger Cytocom, Inc. (“Old Cyto”), pursuant to that certain Agreement and Plan of Merger dated as of July 17, 2020 by and between Old Cyto and ImQuest Lifesciences, Inc.; (2) the wind-up and/or dissolution of ImQuest Pharmaceuticals, Inc.; (3) the merger of High Street Acquisition Corporation, a Delaware corporation (“Merger Sub”) and wholly-owned Subsidiary of Cleveland BioLabs, Inc., a Delaware corporation (“CBLI”) with and into Old Cyto, pursuant to that certain Agreement and Plan of Merger dated as of October 16, 2020 by and among CBLI, Merger Sub and Old Cyto; (4) the wind-up and/or dissolution of Merger Sub; (5) the name change from “Cleveland BioLabs, Inc.” to “Cytocom, Inc.” (“New Cyto”) (6) the ticker-symbol change from “CBLI” to “CYTO;” and (7) the execution, delivery and performance of all agreements, instruments and other documents, and the taking of all actions by the relevant parties thereto, necessary to effect the same.

 

“Prepayment Fee” means, with respect to any prepayment of the Loans:

 

(i)         if the prepayment occurs during the period commencing on the Closing Date and ending on (but including) the one-year anniversary of the Closing Date, an amount equal to the principal amount of the Loans prepaid multiplied by three percent (3.00%);

 

(ii)         if the prepayment occurs during the period commencing on the day immediately following the one-year anniversary of the Closing Date and ending on (but including) the two-year anniversary of the Closing Date, an amount equal to the principal amount of the Loans prepaid multiplied by two percent (2.00%); and

 

(iii)         if the prepayment occurs following the two-year anniversary of the Closing Date, an amount equal to the principal amount of the Loans prepaid multiplied by one percent (1.00%).

 

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Supplement; and provided further that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Lender, the “Prime Rate” shall mean the rate of interest per annum announced by Silicon Valley Bank as its prime rate in effect at its principal office in the State of California (such announced Prime Rate not being intended to be the lowest rate of interest charged by such institution in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Supplement.

 

“Termination Date” means the earliest of: (i) thirty (30) days from the Closing Date, if the Merger has not been fully-consummated and become effective as of such date; (ii) the date Lender may otherwise terminate making Growth Capital Loans or extending other credit pursuant to the rights of Lender under Article 7 of the Loan and Security Agreement; and (iii) December 31, 2021.

 

“Threshold Amount” means Five Hundred Thousand Dollars ($500,000.00).

 

“Tranche 1” is defined in Part 2, Section 1(b) hereof.

 

“Warrant” is defined in Part 2, Section 3(a) hereof.

 

2

 

 

Part 2 - Additional Covenants and Conditions:

 

1.         Growth Capital Loan Facility.

 

(a)         Additional Condition(s) Precedent Regarding Growth Capital Loan Commitments. In addition to the satisfaction of all of the other applicable conditions precedent specified in Sections 4.1 and 4.2 of the Loan and Security Agreement and this Supplement, Lender shall fund the aggregate Commitment amount of Growth Capital Loans on the Closing Date into a blocked account subject to a control agreement in form and content reasonably acceptable to, and in favor of, Lender (the “Blocked Account”).

 

(b)         Borrower may transfer up to Ten Million Dollars ($10,000,000.00) (“Tranche 1”) from the Blocked Account to Borrower’s general operating account, which shall be subject to a control agreement in form and content reasonably acceptable to, and in favor of, Lender, upon receipt by Lender of evidence that the following conditions precedent have been satisfied, as determined by Lender in its sole discretion:

 

(i)           Consummation and effectiveness of the Merger;

 

(ii)          Receipt by Lender of the fully executed Assignment and Assumption; and

 

(iii)         New Cyto has a market capitalization of at least One Hundred Fifty Million Dollars ($150,000,000.00).

 

(c)         Borrower may transfer up to the remaining Five Million Dollars ($5,000,000.00) (“Tranche 2”) from the Blocked Account to Borrower’s general operating account, which shall be subject to a control agreement in form and content reasonably acceptable to, and in favor of, Lender, during the period between July 1, 2021 and December 31, 2021, upon receipt by Lender of evidence that, as determined by Lender in its sole discretion, Borrower has received no less than Twenty Million Dollars ($20,000,000.00) of net new capital in the form of convertible Subordinated Debt or equity from a follow-on financing entered into after the effective date of the Merger (the “Equity Financing”).

 

(d)         Borrower shall maintain the full amount, and shall not transfer or otherwise dispose of any part, of the Tranche 1 and Tranche 2 loan proceeds in the Blocked Account unless and until the Merger is fully-consummated and effective; in the event the Merger is not fully-consummated and effective within thirty (30) days of the Closing Date, Borrower hereby acknowledges and agrees that Lender may immediately exercise control over the Blocked Account and apply so much of the amount in such Blocked Account as is necessary to satisfy in full the Obligations as of such date. In the event Borrower achieves the conditions to transfer Tranche 1 from the Blocked Account, but does not achieve (or timely achieve) the Equity Financing, Borrower hereby acknowledges and agrees that Lender may immediately exercise control over the Blocked Account and apply so much of the amount in such Blocked Account as is necessary to satisfy in full the Obligations owing on account of Tranche 2 as of such date.

 

(e)         Repayment of Growth Capital Loans. Principal of, and interest on, each Growth Capital Loan shall be payable as set forth in a Note evidencing such Growth Capital Loan (substantially in the form attached hereto as Exhibit “A”), which Note shall provide substantially as follows: principal shall be fully amortized over the Amortization Period in equal, monthly principal installments plus, in each case, unpaid interest thereon at the Designated Rate, commencing after the end of the Interest-only Period of interest-only installments at the Designated Rate. In particular, on the Borrowing Date applicable to such Growth Capital Loan, Borrower shall pay to Lender (i) if the Borrowing Date is earlier than the Loan Commencement Date, interest only at the Designated Rate, in advance, on the outstanding principal balance of the Growth Capital Loan for the period from the Borrowing Date through the last day of the calendar month in which such Borrowing Date occurs, and (ii) the first (1st) interest-only installment at the Designated Rate, in advance, on the outstanding principal balance of the Note evidencing such Loan for the ensuing month. Commencing on the first day of the second full month after the Borrowing Date and continuing on the first day of each month during the Interest-only Period thereafter, Borrower shall pay to Lender interest only at the Designated Rate, in advance, on the outstanding principal balance of the Loan evidenced by such Note for the ensuing month. Commencing on the first day of the first full month after the end of the Interest-only Period, and continuing on the first day of each consecutive calendar month thereafter, Borrower shall pay to Lender equal consecutive monthly principal installments in advance in an amount sufficient to fully amortize the Loan evidenced by such Note over the Amortization Period, plus interest at the Designated Rate for such month. On the Maturity Date, all principal and accrued interest then remaining unpaid and the Final Payment shall be due and payable.

 

3

 

 

2.         Prepayment. The Growth Capital Loans may be prepaid as provided in this Section 2 only. Borrower may prepay all, but not less than all, outstanding Growth Capital Loans in whole, but not in part, at any time upon no less than five (5) Business Days’ prior written notice to the Lender, by tendering to Lender a cash payment in respect of such Loans in an amount determined by Lender equal to the sum of: (i) the aggregate outstanding principal amount of such Loans; (ii) the accrued and unpaid interest on such Loans as of the date of prepayment; (iii) the Prepayment Fee; and (iv) the Final Payment.

 

3.         Issuance of Warrant; Right to Invest; Conversion Right.

 

(a)         Warrant. As additional consideration for the making of its Commitment, Lender has earned and is entitled to receive immediately upon the effectiveness of the Merger, a warrant instrument issued by New Cyto (the “Warrant”).

 

(b)         Warrant General. The Warrant shall be in substantially the form attached hereto as Exhibit “E”.

 

(c)         Right to Invest. Lender shall have the right, in its discretion, but not the obligation, to invest up to One Million Dollars ($1,000,000.00) in the aggregate in equity securities of New Cyto on the same terms, conditions, and pricing offered by New Cyto to any investor existing at such time, in connection with any equity and/or Subordinated Debt financing from and after the Closing Date through the date eighteen (18) months after the Closing Date; provided, however, such terms shall exclude a seat on New Cyto’s Board of Directors, which may be offered to other investors at New Cyto’s discretion. This right shall survive the repayment of Indebtedness under the Loan and Security Agreement and shall otherwise survive the expiration or other termination of the Loan and Security Agreement.

 

(d)         Conversion Right. Lender shall have the right, in its discretion, but not the obligation, at any time and from time to time, while the Loan is outstanding, to convert an amount of up to Three Million Dollars ($3,000,000.00) of the principal amount of the outstanding Growth Capital Loans (the “Conversion Option”) into New Cyto’s unrestricted, freely tradeable common stock (the “Common Stock”) at a price per share equal to one hundred twenty percent (120.00%) of the Closing Price set forth (and defined) in the Warrant (the “Conversion Price;” the exercise of such Conversion Option, a “Conversion”); provided that the Conversion Option is subject to (i) the closing price of the shares of Common Stock as reported by Bloomberg, L.P. on the Nasdaq Stock Market for each of the seven (7) consecutive trading days immediately preceding the Conversion being greater than or equal to the Conversion Price; and (ii) the Common Stock issued in connection with any such Conversion not exceeding twenty percent (20%) of the total trading volume of the Common Stock for the twenty-two (22) consecutive trading days immediately prior to and including the effective date of such Conversion. The Conversion Option will be exercised by Lender delivering a written, signed conversion notice to New Cyto in accordance with this Section 3(d) which will include (I) the date of which the Conversion notice is given, (II) a statement to the effect that the Lender is exercising the Conversion Option, (III) the amount in respect of which the Conversion Option is being exercised and the number of shares of Common Stock to be issued to Lender and (IV) a date on which the allotment and issuance of the shares of Common Stock is to take place.

 

4.         Minimum Cash. Borrower shall at all times during the term hereof maintain minimum unrestricted cash and cash equivalents in one (1) or more accounts subject to control agreements in form and content reasonably acceptable to, and in favor of Lender, of at least Five Million Dollars ($5,000,000.00); provided that, in the event Borrower achieves (and for so long as Borrower achieves) trailing three (3) month revenues of at least Five Million Dollars ($5,000,000.00), Borrower shall not be required to comply with this covenant; provided further that, in the event that, after Borrower achieves trailing three (3) month revenues of at least Five Million Dollars ($5,000,000.00), Borrower’s trailing three (3) month revenues drops below such amount, Borrower shall at all times thereafter be required to maintain minimum unrestricted cash and cash equivalents in one (1) or more accounts subject to control agreements in form and content reasonably acceptable to, and in favor of Lender, of at least Five Million Dollars ($5,000,000.00).

 

4

 

 

5.         Commitment Fee. Borrower shall pay to Lender a commitment fee in the amount of one percent (1.00%) of the Fifteen Million Dollars ($15,000,000.00) Commitment, due and payable on the Closing Date, of which Thirty-Five Thousand Dollars ($35,000.00) has been paid by Borrower to Lender as an advance deposit prior to the date hereof. As an additional condition precedent under Section 4.1 of the Loan and Security Agreement, Lender shall have completed to its satisfaction its due diligence review of Borrower’s business and financial condition and prospects, and Lender’s Commitment shall have been approved. If this condition is not satisfied, the Thirty-Five Thousand Dollars ($35,000.00) advance deposit previously paid by Borrower shall be refunded. Except as set forth in this Section 4, the Commitment Fee is not refundable.

 

6.         Documentation Fee Payment. On the Closing Date, Borrower shall reimburse Lender pursuant to Section 9.8(a) of the Loan and Security Agreement for (i) its reasonable attorneys’ fees, costs and expenses incurred in connection with the preparation and negotiation of the Loan Documents and (ii) such Lender’s costs and filing fees related to perfection of its Liens in the Collateral in any jurisdiction in which the same is located, recording a copy of the Intellectual Property Security Agreement with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and confirming the priority of such Liens.

 

7.         Borrower’s Primary Operating Account and Wire Transfer Instructions:1

 

	
			Institution Name:

				
			[***]

			
	
			Address:

				
			[***]

			
	
			ABA No.:

				
			[***]

			
	
			Contact Name:

				
			[***]

			
	
			Phone No.:

				
			[***]

			
	
			E-mail:

				
			[***]

			
	
			Account Title:

				
			[***]

			
	
			Account No.:

				
			[***]

			

 

8.         Debits to Account for ACH Transfers. For purposes of Sections 2.2 and 5.10 of the Loan and Security Agreement, the Primary Operating Account shall be the bank account set forth in Section 7 above, unless and until such account is changed in accordance with Section 5.10 of the Loan and Security Agreement. Borrower hereby agrees that the Growth Capital Loans will be advanced to the account specified above and regularly scheduled payments of principal, interest and fees will be automatically debited from the same account. Borrower hereby confirms that the bank at which the Primary Operating Account is maintained uses that same ABA Number for incoming wires transfers to the Primary Operating Account and outgoing ACH transfers from the Primary Operating Account.

 

Part 3 - Tax. Lender shall provide to Borrower on or about the date on which it becomes Lender under the Loan and Security Agreement (and from time to time thereafter upon the reasonable request of Borrower) executed copies of IRS Form W-9.

 

Part 4 - Additional Representations:2

 

Borrower represents and warrants that as of the Closing Date and, subject to any written updates of the information set forth below by Borrower to Lender, each Borrowing Date:

 

a)         Its chief executive office is located at: 2537 Research Blvd. Suite 201, Fort Collins, CO 80526

 

b)         Its Equipment is located at: 2537 Research Blvd. Suite 201, Fort Collins, CO 80526

 

c)         Its Inventory is located at: n/a

 

 

 

1 Company: Please complete.

2 Company: Please complete.

 

 

5

 

 

d)         Its Records are located at: 2537 Research Blvd. Suite 201, Fort Collins, CO 80526

 

e)         In addition to its chief executive office, Borrower maintains offices or operates its business at the following locations: n/a

 

f)         Other than its full corporate name, Borrower has conducted business using the following trade names or fictitious business names: n/a

 

g)         Its state corporation identification number is: DE file 5444312

 

h)         Its U.S. federal tax identification number is: 47-3409221

 

i)         Including Borrower’s Primary Operating Account identified in Section 6 above, Borrower maintains the following Accounts at [***]:

 

[***]

 

[***]

 

 

Part 5 - Additional Loan Documents:

 

	Form of Promissory Note	Exhibit “A”
	Form of Borrowing Request 	Exhibit “B”
	Form of Compliance Certificate	Exhibit “C”
	Form of Assignment and Assumption Agreement	Exhibit “D”
	Form of Warrant	Exhibit “E”

        

 

[Remainder of this page intentionally left blank; signature page follows]

 

6

 

 

[Signature page to Supplement to Loan and Security Agreement]

 

IN WITNESS WHEREOF, the parties have executed this Supplement as of the date first above written.

 

 

	 	
			BORROWER:

			 

			CYTOCOM, INC.

			 

			By: s/ Michael Handley

			Name: Michael Handley

			Title: Chief Executive Officer

			
	 	 
	Address for Notices:  	
			2537 Research Boulevard, Suite 201

			Fort Collins, CO 80526

			Attn: Michael Handley, CEO

			Email: Mike.Handley@cytocom.com

			Phone #

			 

			LENDER:

			 

			AVENUE VENTURE OPPORTUNITIES FUND, L.P.

			 

			By:         Avenue Venture Opportunities Partners, LLC

			Its:         General Partner

			 

			By: /s/ Sonia Gardner

			Name: Sonia Gardner

			Title: Authorized Signatory

			
	 	 
	Address for Notices:	
			11 West 42nd Street, 9th Floor

			New York, New York 10036

			Attn: Todd Greenbarg, Senior Managing Director

			Email: tgreenbarg@avenuecapital.com

			Phone # 212-878-3523

			

 

 

 

 

 

EXHIBIT “A”

 

FORM OF PROMISSORY NOTE

 

[Note No. X-XXX]

 

	$ ____________________         	April 26, 2021

 

The undersigned (“Borrower”) promises to pay to the order of AVENUE VENTURE OPPORTUNITIES FUND, L.P., a Delaware limited partnership (“Lender”), at such place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of __________________________ Dollars ($_______), with interest thereon from the date hereof until maturity, whether scheduled or accelerated, at a variable rate per annum equal to the sum of (i) the greater of (A) the Prime Rate and (B) three and one-quarters percent (3.25%), plus (ii) seven and seventy-four one-hundredths percent (7.74%) (the “Designated Rate”), according to the payment schedule described herein, except as otherwise provided herein. In addition, on the Maturity Date, the Borrower promises to pay to the order of Lender (i) all principal and accrued interest then remaining unpaid and (ii) the Final Payment (as defined in the Loan Agreement (as defined herein)).

 

This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan and Security Agreement, dated as of April 26, 2021, between Borrower and Lender (as the same has been and may be amended, restated or supplemented from time to time, the “Loan Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in the Loan Agreement. The Loan Agreement contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events.

 

Principal of and interest on this Note shall be payable as provided under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

This Note may be prepaid only as permitted under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

Any unpaid payments of principal or interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default Rate, compounded monthly. Borrower shall pay such interest on demand.

 

Interest, charges and fees shall be calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year were used. In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess of the highest rate permitted by applicable law from time to time in effect.

 

If Borrower is late in making any scheduled payment under this Note by more than five (5) days, Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less than fifty dollars ($50) for any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the circumstances existing on the date of this Note and represents a fair and reasonable estimate of the costs that will be sustained by Lender due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to declare a default under this Note or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

 

1

 

 

[Signature page to Promissory Note]

 

This Note shall be governed by, and construed in accordance with, the laws of the State of California, excluding those laws that direct the application of the laws of another jurisdiction.

 

CYTOCOM, INC.

 

By:          ________________________

Name:     ________________________

Its:          ________________________

 

 

2

 

 

EXHIBIT “B”

 

FORM OF BORROWING REQUEST

April 26, 2021

 

Avenue Venture Opportunities Fund, L.P.

11 West 42nd Street, 9th Floor

New York, New York 10036

 

Re:         CYTOCOM, INC. 

 

Ladies and Gentlemen:

 

Reference is made to the Loan and Security Agreement, dated as of April 26, 2021 (as amended, restated or supplemented from time to time, the “Loan Agreement”; the capitalized terms used herein as defined therein), between Avenue Venture Opportunities Fund, L.P. (“Lender”) and CYTOCOM, INC. (“Borrower”).

 

The undersigned is the _________________________ of Borrower and hereby requests on behalf of Borrower a Loan under

 

the Loan Agreement, and in that connection certifies as follows:

 

1.         The amount of the proposed Loan is ____________________ Dollars ($______________). The Borrowing Date of the proposed Loan is ____________________ (the “Borrowing Date”).

 

(a)         On the Borrowing Date, the Lender will wire $[_____] less fees and expenses to be deducted on the Borrowing Date of $[_____] for net proceeds of $[_______] to Borrower pursuant to the following wire instructions.

 

	
			Institution Name:

				 
	
			Address:

				 
	
			ABA No.:

				 
	
			Contact Name:

				 
	
			Phone No.:

				 
	
			E-mail:

				 
	
			Account Title:

				 
	
			Account No.:

				 

 

 

(c)         On the Borrowing Date, the Lender will wire $[_____] to [_____] for fees and expenses pursuant to the following wire instructions.3

 

 

3 To be included in the Borrowing Request on the Closing Date. The executed Borrowing Request must be delivered 2 Business Days prior to the Closing Date.

 

 

1

 

 

2.         As of this date, no Default or Event of Default has occurred and is continuing, or will result from the making of the proposed Loan, the representations and warranties of Borrower contained in Article 3 of the Loan Agreement and Part 3 of the Supplement are true and correct in all material respects other than those representations and warranties expressly referring to a specific date which are true and correct in all material respects as of such date, and the conditions precedent described in Sections 4.1 and/or 4.2 of the Loan Agreement and Part 2 of the Supplement, as applicable, have been met.

 

3.         No event has occurred that has had or could reasonably be expected to have a Material Adverse Effect.

 

4.         Borrower’s most recent financial statements, financial projections or business plan dated ___________, as reviewed by Borrower’s Board of Directors, are enclosed herewith in the event such financial statements, financial projections or business plan have not been previously provided to Lender.

 

 

Remainder of this page intentionally left blank; signature page follows

 

 

 

 

[Signature page to Borrowing Request]

 

Borrower shall notify you promptly before the funding of the Loan if any of the matters to which I have certified above shall not be true and correct on the Borrowing Date.

 

Very truly yours,

 

CYTOCOM, INC.

 

By:                                                                                    

Name:                                                                               

Title:*                                                                                

 

 

 

 

 

 

 

 

 

 

 

 

* Must be executed by Borrower’s Chief Financial Officer or other executive officer.

 

2

 

 

EXHIBIT “C”

 

FORM OF

COMPLIANCE CERTIFICATE

 

 

Avenue Venture Opportunities Fund, L.P.

11 West 42nd Street, 9th Floor

New York, New York 10036

 

Re:         CYTOCOM, INC. 

 

Ladies and Gentlemen:

 

Reference is made to the Loan and Security Agreement, dated as of April 26, 2021 (as the same has been and may be supplemented, amended and modified from time to time, the “Loan Agreement,” the capitalized terms used herein as defined therein), between Avenue Venture Opportunities Fund, L.P. (“Lender”) and CYTOCOM, INC. (“Borrower”).

 

The undersigned authorized representative of Borrower hereby certifies in such capacity that in accordance with the terms and conditions of the Loan Agreement, (i) no Default or Event of Default has occurred and is continuing, except as noted below, and (ii) Borrower is in compliance for the financial reporting period ending ___________________________ with all required financial reporting under the Loan Agreement, except as noted below. Attached herewith are the required documents supporting the foregoing certification. The undersigned authorized representative of Borrower further certifies in such capacity that: (a) the accompanying financial statements have been prepared in accordance with Borrower’s past practices applied on a consistent basis, or in such manner as otherwise disclosed in writing to Lender, throughout the periods indicated; and (b) the financial statements fairly present in all material respects the financial condition and operating results of Borrower and its Subsidiaries, if any, as of the dates, and for the periods, indicated therein, subject to the absence of footnotes and normal year-end audit adjustments (in the case of interim monthly financial statements), except as explained below.

 

Please provide the following requested information and

indicate compliance status by circling (or otherwise indicating) Yes/No under “Included/Complies”:

 

	
			REPORTING REQUIREMENT

				
			REQUIRED

				
			INCLUDED/COMPLIES

			
	
			Balance Sheet, Income Statement &

				
			Monthly, within 30 days

				
			YES

				
			/

				
			NO

				
			/

				
			N/A

			
	
			Cash Flow Statement

				
			 

				
			 

				
			 

				
			 

				
			 

				
			 

			
	
			Operating Budgets, 409(A) Valuations &

				
			 

				
			 

				
			 

				
			 

				
			 

				
			 

			
	
			Updated Capitalization Tables

				
			As modified

				
			YES

				
			/

				
			NO

				
			/

				
			N/A

			
	
			Annual Financial Statements

				
			Annually, within 90 day of FYE

				
			YES

				
			/

				
			NO

				
			/

				
			N/A

			
	
			Board Packages

				
			As modified

				
			YES

				
			/

				
			NO

				
			/

				
			N/A

			
	
			Date of most recent Board-approved budget/plan _______________

				
			 

				
			 

				
			 

				
			 

				
			 

				
			 

			
	 	 	 	 	 	 	 
	Any change in budget/plan since version most recently	 	 	 	 	 	 
	delivered to Lender	 	YES	/	NO	/	N/A
	If Yes, please attach	 	 	 	 	 	 
	 	 	 	 	 	 	 
	FINANCIAL COVENANT	 	 	 	 	 	 
	Minimum unrestricted	$5,000,000	 	 	YES	/	NO

 

 

1

 

 

ACCOUNT CONTROL AGREEMENTS

 

Pursuant to Section 6.11 of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, it maintains only those deposit and investment accounts set forth below; and (ii) to the extent required by Section 6.11 of the Loan Agreement, a control agreement has been executed and delivered to Lender with respect to each such account [Note: If Borrower has established any new account(s) since the date of the last compliance certificate, please so indicate].

 

Deposit Accounts4

 

	
			Name of Institution

				
			Account Number

				
			Control Agt. In place?

				
			Complies

				
			New 

			Account

			
	
			1.) [_______]

				
			[_______]

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			2.) _____________________

				
			_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	 	 	 	 	 

Investment Accounts

 

	
			Name of Institution

				
			Account Number

				
			Control Agt. In place?

				
			Complies

				
			New 

			Account

			
	
			1.) None

				
			_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			2.) _____________________

				
			_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			3.) _____________________

				
			_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			4.) _____________________

				
			_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			

 

AGREEMENTS WITH PERSONS IN POSSESSION OF TANGIBLE COLLATERAL 

 

Pursuant to Section 5.9(e) of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, tangible Collateral is located at the addresses set forth below; and (ii) to the extent required by Section 5.9(e) of the Loan Agreement, a Waiver has been executed and delivered to Lender, or such Waiver has been waived by Lender, [Note: If Borrower has located Collateral at any new location since the date of the last compliance certificate, please so indicate].

 

	
			Location of Collateral

				
			Value of Collateral at such Locations

				
			Waiver

			In place?

				
			Complies

				
			New 

			Location?

			
	
			1.) _____________________

				
			$_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			2.) _____________________

				
			$_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			3.) _____________________

				
			$_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			4.) _____________________

				
			$_____________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			

 

 

 

 

4 Company: Please complete with existing accounts.

 

 

2

 

 

SUBSIDIARIES AND OTHER PERSONS

 

Pursuant to Section 6.14(a) of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, it has directly or indirectly acquired or created, or it intends to directly or indirectly acquire or create, each Subsidiary or other Person described below; and (ii) such Subsidiary or Person has been made a co-borrower under the Loan Agreement or a guarantor of the Obligations [Note: If Borrower has acquired or created any Subsidiary since the date of the last compliance certificate, please so indicate].

 

	
			Name:

				
			Jurisdiction of

			formation or organization:5

				
			Co-borrower 

			or guarantor?

				
			Complies

				
			New 

			Subsidiary 

			or Person?

			
	
			1.) _____________________

				
			______________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			2.) _____________________

				
			______________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			3.) _____________________

				
			______________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			
	
			4.) _____________________

				
			______________________

				
			YES / NO

				
			YES / NO

				
			YES / NO

			

 

 

EXPLANATIONS

 

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

 

 

[Remainder of this page intentionally left blank; signature page follows]

 

 

 

5 Under the “Explanations” heading (see below) please include a description of such Subsidiary’s or Person’s fully diluted capitalization and Borrower’s purpose for its acquisition or creation of such Subsidiary if such information has not been previously furnished to Lender.

 

 

3

 

 

[Signature page to Compliance Certificate]

 

Very truly yours,

 

CYTOCOM, INC.

 

By:                                                                                  

Name:                                                                             

Title:*                                                                             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Must be executed by Borrower’s Chief Financial Officer or other executive officer.

 

 

 

 

 

EXHIBIT “D”

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between CYTOCOM, INC., a privately-held Delaware corporation (the “Assignor”) and CYTOCOM, INC., a publicly-traded Delaware corporation (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Loan and Security Agreement identified below (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably transfers and assigns to the Assignee, and the Assignee hereby irrevocably assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement and the other Loan Documents (as defined therein, including but not limited to the Supplement to Loan and Security Agreement), as of the Effective Date, all of the Assignor’s rights and obligations in its capacity as a “Borrower” under the Loan Agreement and any other Loan Documents (the rights and obligations transferred and assigned above being referred to herein collectively as the “Assigned Interest”).

 

	
			1.

				
			Assignor:

				
			CYTOCOM, INC., a privately-held Delaware corporation

			
	
			2.

				
			Assignee:

				
			CYTOCOM, INC., a publicly-traded Delaware corporation

			
	
			3.

				
			Loan Agreement:

				
			The Loan and Security Agreement dated as of April 26, 2021 between CYTOCOM, INC., a privately-held Delaware corporation, as Borrower, AVENUE VENTURE OPPORTUNITIES FUND, L.P., as Lender, and the other parties thereto

			
	
			4.

				
			Effective Date:

				
			__, 20[_____] 

			

 

 

 

 

 

[Remainder of this page intentionally left blank; signature page follows]

 

 

 

 

[Signature page to Assignment and Assumption]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR 

 

CYTOCOM, INC., a privately-held Delaware corporation

 

By:                                                                                  

Name:                                                                             

Title:*                                                                             

 

ASSIGNEE

 

CYTOCOM, INC., a publicly-traded Delaware corporation

 

By:                                                                                  

Name:                                                                             

Title:*                                                                             

         

 

 

 

Consented to and Accepted:

 

AVENUE VENTURE OPPORTUNITIES FUND, L.P.,

as Lender

 

By:        Avenue Venture Opportunities Partners, LLC

Its:         General Partner

 

By:         ______________________________

Name    Sonia Gardner

Title:     President and Managing Partner

 

 

 

 

ANNEX 1 to

ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.             Representations and Warranties.

 

1.1         Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim (or than in favor of Lender) and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) no default or event which, with the passage of time or the giving of notice or both, could reasonably be expected to result in an Event of Default, has occurred or is continuing under the Loan Agreement or any other Loan Document (as defined therein).

 

1.2.         Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Borrower under the Loan Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement, mutatis mutandis, as a Borrower thereunder and, shall have the obligations of a Borrower thereunder, (iii) from and after the Effective Date, all references in the Loan Documents to “Borrower” shall mean and refer to Assignee; (iv) it has received a copy of the Loan Agreement and the other Loan Documents and such other information as it has deemed appropriate to make its own credit decision to enter into this Assignment and Assumption and to assume the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Lender, the Assignor or any other Person; (b) it makes and shall be bound by all of the representations and warranties, and all affirmative and negative covenants of the Loan Documents, as if it were a Borrower from the Closing Date thereof, mutatis mutandis; and (c) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Borrower.

 

2.         Payments. From and after the Effective Date, Assignee shall make all payments in respect of the Obligations (including payments of principal, interest, fees and other amounts) to the Lender as and when due under, and in accordance with the terms and conditions of, the Loan Documents.

 

3.         General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of California. Sections 9.11 and 9.12 of the Loan Agreement are incorporated herein by this reference as though set forth in full.

 

 

 

 

EXHIBIT “E”

 

FORM OF WARRANTex_261907.htm

Exhibit 10.3

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF (A) SUCH REGISTRATION, (B) AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (C) CYTOCOM, INC. OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS COMPLIANT WITH SUCH LAWS.

 

Date of Issuance: April __, 2021

 

WARRANT TO PURCHASE

 

SHARES OF COMMON STOCK OF

 

CYTOCOM, INC.

 

(Void after April 30, 2026)

 

This certifies that AVENUE VENTURE OPPORTUNITIES FUND, LP, a Delaware limited partnership, or permitted assigns (“Holder”), for value received, is entitled to purchase from CYTOCOM, INC., a Delaware corporation (“Company”), the Applicable Number (hereinafter defined) of fully paid and non-assessable shares of the Company’s Common Stock (the “Common Stock”), for cash, at a purchase price per share equal to the Stock Purchase Price (hereinafter defined). Holder may also exercise this Warrant on a cashless or “net issuance” basis as described in Section 1(b) below, and this Warrant shall be deemed to have been exercised in full on such basis on the Expiration Date (hereinafter defined), to the extent not fully exercised prior to such date. This Warrant is issued in connection with that certain Loan and Security Agreement and Supplement thereto, both of even date herewith (as amended, restated and supplemented from time to time, the “Loan Agreement” and the “Supplement”, respectively), between Company, as borrower, and Holder, as lender (“Lender”). Capitalized terms used herein and not otherwise defined in this Warrant shall have the meaning(s) ascribed to them in the Loan Agreement and the Supplement, unless the context would otherwise require.

 

“Applicable Number” means 150,000

 

“Closing Price” means 4.82

 

“Stock Purchase Price” means $0.01.         

 

Subject to Section 4.3, this Warrant may be exercised at any time or from time to time up to and including 5:00 p.m. (Pacific time) on April 30, 2026 (the “Expiration Date”), upon surrender to Company at its principal office at 2537 Research Boulevard, Suite 201, Fort Collins, CO 80526 (or at such other location as Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly completed and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares purchasable hereunder are subject to further adjustment as provided in Section 4 of this Warrant.

 

 

 

 

This Warrant is subject to the following terms and conditions:

 

1.         Exercise; Issuance of Certificates; Payment for Shares.

 

(a)         Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of Holder, at any time or from time to time, on or before the Expiration Date for all or any portion of the shares of Common Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased. Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to Holder as the record owner of such shares as of the close of business on the date on which the form of subscription shall have been delivered and payment made for such shares. Subject to the provisions of Section 2, certificates for the shares of Common Stock so purchased, shall be delivered to Holder by Company at Company’s expense within a reasonable time after the rights represented by this Warrant have been so exercised, unless the Common Stock is then uncertificated, in which case the shares of Common Stock shall be registered in book-entry form in the name of the Holder. Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under this Warrant surrendered upon such purchase to Holder within a reasonable time. Each stock certificate so delivered shall be in such denominations of Common Stock as may be requested by Holder and shall be registered in the name of such Holder or such other name as shall be designated by such Holder, subject to the limitations contained in Section 2.

 

(b)         Holder, in lieu of exercising this Warrant by the cash payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to surrender this Warrant and receive that number of shares of Common Stock computed using the following formula:

 

 

Where:          X         =          the number of shares of Common Stock to be issued to Holder.

 

Y         =         the number of shares of Common Stock that Holder would otherwise have been entitled to purchase hereunder pursuant to Section 1(a) (or such lesser number of shares as Holder may designate in the case of a partial exercise of this Warrant).

 

A          =          the Closing Price.

 

B          =          the Stock Purchase Price then in effect.

 

Election to exercise under this Section 1(b) may be made by delivering a signed form of subscription to Company via facsimile, to be followed by delivery of this Warrant. Notwithstanding anything to the contrary contained in this Warrant, if as of the close of business on the last business day preceding the Expiration Date this Warrant remains unexercised as to all or a portion of the shares of Common Stock purchasable hereunder, then effective as 9:00 a.m. (Pacific time) on the Expiration Date, Holder shall be deemed, automatically and without need for notice to Company, to have elected to exercise this Warrant in full pursuant to the provisions of this Section 1(b), and upon surrender of this Warrant shall be entitled to receive that number of shares of Common Stock computed using the above formula, provided that the application of such formula as of the Expiration Date yields a positive number for “X”.

 

 

 

 

2.         Limitation on Transfer.

 

(a)         This Warrant and the Common Stock issuable hereunder shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to ensure compliance with the provisions of the Securities Act of 1933, as amended (the “Securities Act”). Each holder of this Warrant or the Common Stock issuable hereunder will cause any proposed transferee of the Warrant or Common Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2. Notwithstanding the foregoing and any other provision of this Section 2 but subject to the last sentence of Section 2(c), and subject to compliance with applicable federal and state securities laws, Holder may freely 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) at any time to any affiliate of Lender under the Loan Agreement, by giving 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 Company for reissuance to the transferees(s) (and Holder, if applicable).

 

(b)         (i) Each certificate representing this Warrant and (ii) each certificate or book entry, as applicable, representing the Common Stock issued upon exercise of this Warrant or upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold pursuant to Rule 144 under the Securities Act) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

 

THE SECURITIES REPRESENTED [HERE]BY [THIS CERTIFICATE] HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF (A) SUCH REGISTRATION, (B) AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (C) CYTOCOM, INC. OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS COMPLIANT WITH SUCH LAWS.

 

(c)         Holder of this Warrant and each person to whom this Warrant is subsequently transferred represents and warrants to Company and agrees (by acceptance of such transfer) that it will not transfer this Warrant (or securities issuable upon exercise hereof unless a registration statement under the Securities Act was in effect with respect to such securities at the time of issuance thereof) unless (i) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction, (ii) pursuant to Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), (iii) Company receives an opinion of counsel, reasonably satisfactory to Company, that an exemption from such registration is available or (iv) the Company otherwise satisfies itself that such transaction is exempt from registration. Notwithstanding the foregoing or any other provision of this Section 2, Holder shall not transfer this Warrant (or securities issuable upon exercise hereof, or securities issuable, directly or indirectly, upon conversion of such securities, if any) to any competitor of Company, as determined in good faith by the Board of Directors of Company (the “Board”), without the prior written consent of Company.

 

(d)         As a condition to the exercise of this Warrant and the issuance of Common Stock, if requested by the Company by reasonable notice to Holder, Holder shall agree in writing to be fully bound by any investors rights, shareholder or similar agreements applicable to holders of Common Stock (“Investor Agreements”), provided that Holder shall not be required to agree to any terms of such agreements that are inconsistent with the terms of this Warrant.

 

 

 

 

3.         Shares to be Fully Paid; Reservation of Shares. Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all taxes, liens and charges with respect to the issue thereof. Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, when and as required to provide for the exercise of the rights represented by this Warrant. Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock may be listed. Company will not take any action which would result in any adjustment of the Stock Purchase Price (as described in Section 4 hereof) (i) if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock then authorized by Company’s Certificate of Incorporation, as amended and restated from time to time (the “Charter”) or (ii) if the par value per share of the Common Stock would exceed the Stock Purchase Price.

 

4.         Adjustment of Stock Purchase Price and Number of Shares. The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4. Upon each adjustment of the Stock Purchase Price, Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment.

 

4.1         Subdivision or Combination of Stock. In case Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased.

 

4.2         Dividends. If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive,

 

(a)         Common Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,

 

(b)         any cash paid or payable including as a cash dividend, or

 

(c)         Common Stock or other or additional stock or other securities or property (including cash) by way of spin off, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Common Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above),

 

then and in each such case, Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had it been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares and/or all other additional stock and other securities and property.

 

 

 

 

4.3         Change of Control. In the event of a Change of Control (as hereinafter defined) that occurs after the date this Warrant is issued, this Warrant shall be automatically exchanged for a number of shares of Company’s securities, such number of shares being equal to the maximum number of shares issuable pursuant to the terms hereof (after taking into account all adjustments described herein) had Holder elected to exercise this Warrant immediately prior to the closing of such Change of Control and purchased all such shares pursuant to the cash exercise provision set forth in Section 1(a) hereof (as opposed to the cashless exercise provision set forth in Section 1(b)).  Company acknowledges and agrees that Holder shall not be required to make any payment (cash or otherwise) for such shares as further consideration for their issuance pursuant to the terms of the preceding sentence. “Change of Control” shall mean any sale, license, or other disposition of all or substantially all of the assets of Company, any reorganization, consolidation, merger or other transaction involving Company where the holders of Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction; provided that an issuance of equity securities for the primary purpose of raising capital shall not be considered a Change of Control under this Warrant. This Warrant shall terminate upon Holder’s receipt of the number of shares of Company’s equity securities described in this Section 4.3.

 

4.4         “Pay-to-Play” Exemption.

 

(a)         The other antidilution rights applicable to the shares of Common Stock purchasable hereunder, if any, are set forth in Company’s Charter. Such antidilution rights shall not be restated, amended, modified or waived in any manner without Holder’s prior written consent if the effect of such restatement, amendment, modification or waiver on Holder would be more adverse to Holder with respect to the shares of Common Stock issuable upon the exercise of this Warrant than, and substantially dissimilar to, its effect on the other holders of the same class or series of Company’s Common Stock. Company shall promptly provide Holder with any restatement, amendment, modification or waiver of the Charter with respect to any such antidilution rights promptly after the same has been made.

 

(b)         In the event that Company’s Charter provides, or is amended to so provide, for the amendment or modification of the rights, preferences or privileges of the shares of Common Stock issuable upon the exercise of this Warrant, or the reclassification, conversion or exchange of the outstanding shares of such Common Stock, in the event that a holder of shares thereof fails to participate in an equity financing or debt financing transaction (as applicable, a “Pay-to-Play Provision”), and in the event that such Pay-to-Play Provision becomes operative in a transaction occurring after the date hereof, this Warrant shall automatically and without any action required become exercisable for that type of shares of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the shares of Common Stock issuable hereunder had this Warrant been exercised in full prior to such event (and for that number of shares of equity securities as would have been issued or exchanged, or would have remained outstanding, in respect of the shares of Common Stock issuable hereunder had this Warrant been exercised in full prior to such event, if applicable), and had Holder participated in the equity or debt financing to the maximum extent permitted.

 

4.5         Notice of Adjustment. Upon any adjustment of the Stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant, Company shall give written notice thereof to Holder pursuant to Section 12. The notice, which may be substantially in the form of Exhibit “A” attached hereto, shall be signed by Company’s chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

4.6         Other Notices. If at any time:

 

 

 

 

(a)         Company shall declare any cash dividend upon its Common Stock;

 

(b)         Company shall declare any dividend upon its Common Stock payable in stock or make any special dividend or other distribution to the holders of its Common Stock;

 

(c)         Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights;

 

(d)         there shall be any capital reorganization or reclassification of the capital stock of Company, or consolidation or merger of Company with, or sale of all or substantially all of its assets to, another entity;

 

(e)         there shall be a voluntary or involuntary dissolution, liquidation or winding-up of Company; or

 

(f)         Company shall take or propose to take any other action, notice of which is actually provided to holders of the Common Stock;

 

then, in any one or more of said cases, Company shall give Holder, pursuant to Section 12, (i) prior written notice of the date on which the books of Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 10 days’ prior written notice of the date when the same shall take place. Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto. Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be.

 

4.7         Certain Events. If any change in the outstanding Common Stock of Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly effect the adjustments to this Warrant in accordance with the essential intent and principles of such provisions, then the Board shall make in good faith an adjustment in the number and class of shares issuable under this Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give Holder of this Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as Holder would have owned had this Warrant been exercised prior to the event and had Holder continued to hold such shares until after the event requiring adjustment.

 

5.         Issue Tax. The issuance of certificates for shares of Common Stock upon the exercise of this Warrant, if any, shall be made without charge to Holder of this Warrant for any issue tax in respect thereof; provided, however, that Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of this Warrant being exercised.

 

6.         Closing of Books. Company will at no time close its transfer books against the transfer of this Warrant or of any shares of Common Stock issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.

 

 

 

 

7.         No Rights as a Stockholder; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon Holder hereof the right to vote or to consent as a stockholder in respect of meetings of stockholders for the election of directors of Company or any other matters or any rights whatsoever as a stockholder of Company. No dividends or interest shall be payable in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised; provided, however, that if any dividends are due or paid at any time on the underlying securities for which this Warrant is exercisable, then upon exercise, the securities issued to Holder shall be deemed to have accrued dividends and be paid identical dividends from the same time as the outstanding shares for which this Warrant is exercisable were first issued (or, if later, the date of this Warrant). No provisions hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a stockholder of Company, whether such liability is asserted by Company or by its creditors.

 

8.         Amendment of Charter. Unless Holder consents thereto in writing, Company shall not amend its Charter prior to the exercise of this Warrant if the Common Stock would be adversely affected by such amendment in a manner that would be more adverse to Holder with respect to the shares of Common Stock issuable upon the exercise of this Warrant than, and substantially dissimilar to, such amendment’s effect on the other holders of the same class or series of Common Stock.

 

9.          Reserved.

 

10.         Rights and Obligations Survive Exercise of Warrant. The rights and obligations of Company, of Holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, contained in Sections 6, 8 and 19 shall survive the exercise of this Warrant.

 

11.         Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by each of the parties hereto.

 

12.         Notices. Any notice, request or other document required or permitted to be given or delivered to Holder or Company shall be deemed to have been given (i) upon receipt if delivered personally or by courier (ii) upon transmission, if by facsimile, electronic mail or telecopy or (iii) three business days after deposit in the US mail, with postage prepaid and certified or registered, to each such Holder at its address as shown on the books of Company or to Company at the address indicated therefor in the opening paragraphs of this Warrant (or at such other location as Company may advise Holder in writing).

 

13.         Survival of Certain Obligations. All of the obligations of Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of Company shall inure to the benefit of and be binding upon the successors and permitted assigns of Holder. Company will, at the time of the exercise of this Warrant, in part but not in whole, upon request of Holder but at Company’s expense, acknowledge in writing its continuing obligation to Holder in respect of any rights (including, without limitation, any right to registration of the shares of Common Stock) to which Holder shall continue to be entitled after such exercise in accordance with this Warrant; provided, that the failure of Holder to make any such request shall not affect the continuing obligation of Company to Holder in respect of such rights.

 

14.         Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware.

 

15.         Lost Warrants or Stock Certificates. Company agrees that upon receipt of evidence reasonably satisfactory to Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

 

 

 

16.         Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant. Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price.

 

17.         Representations of Holder. With respect to this Warrant, Holder represents and warrants to Company as follows:

 

17.1         Experience. It is experienced in evaluating and investing in companies engaged in businesses similar to that of Company; it understands that investment in this Warrant involves substantial risks; it has made detailed inquiries concerning Company, its business and services, its officers and its personnel; the officers of Company have made available to Holder any and all written information it has requested; the officers of Company have answered to Holder’s satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in Company and it is able to bear the economic risk of that investment.

 

17.2         Investment. It is acquiring this Warrant for investment for its own account and not with a view to or present intention of, or for resale in connection with, any distribution thereof. It understands that this Warrant and the shares of Common Stock issuable upon exercise of this Warrant, have not been registered under the Securities Act, nor qualified under applicable state securities laws. It understands that Company’s reliance on exemption from such registration is predicated on the representations set forth in this Section 17.

 

17.3         Rule 144. It acknowledges that this Warrant and the shares of Common Stock issuable upon exercise of this Warrant must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act.

 

17.4         Access to Data. It has had an opportunity to discuss Company’s business, management and financial affairs with Company’s management and has had the opportunity to inspect Company’s facilities.

 

17.5         Accredited Investor. It is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.

 

17.6         No Short Sales. It has not at any time on or prior to the Date of Issuance engaged in any short sales or equivalent transactions in the Common Stock. It agrees that at all times from and after the Date of Issuance and on or before the Expiration Date or earlier exercise in whole or other termination of this Warrant, it shall not engage in any short sales or equivalent transactions in the Common Stock.

 

18.         Additional Representations and Covenants of Company. Company hereby represents, warrants and agrees as follows:

 

18.1         Corporate Power. Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder.

 

18.2         Authorization. All corporate action on the part of Company, its directors and stockholders necessary for the authorization, execution, delivery and performance by Company of this Warrant has been taken. This Warrant is a valid and binding obligation of Company, enforceable in accordance with its terms.

 

 

 

 

18.3         Offering. Subject in part to the truth and accuracy of Holder’s representations set forth in Section 17 hereof, the offer, issuance and sale of this Warrant is, and the shares of Common Stock issuable upon exercise of this Warrant, will be exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

 

18.4         Listing; Stock Issuance. Company shall secure and maintain the listing of the Common Stock or other securities issuable upon exercise of this Warrant, upon each securities exchange or over-the-counter market upon which securities of the same class or series issued by Company are listed, if any. Upon exercise of this Warrant, Company will use commercially reasonable efforts to cause stock certificates or book entries, as applicable, representing the shares of Common Stock purchased pursuant to the exercise to be issued in the names of Holder, its nominees or assignees, as appropriate at the time of such exercise.

 

18.5         Charter Documents. Company has provided Holder with true and complete copies of Company’s Charter, By-Laws, and each Certificate of Designation or other charter document setting, forth any rights, preferences and privileges of Company’s capital stock, each as amended and in effect on the date of issuance of this Warrant.

 

18.6         Financial and Other Reports. Until the earlier of (a) the Expiration Date, and (b) the termination of this Warrant pursuant to Section 4.3, Company shall furnish to Holder (i) within ninety (90) days after the close of each fiscal year of Company, a balance sheet, together with an income statement, a cash flow statement and a statement of changes in equity, for such fiscal year, in substantially the same form as such annual financial statements are furnished to the Board; (ii) within forty-five (45) days after the close of each fiscal quarter of Company, an unaudited balance sheet, income statement and cash flow statement, each at and as of the end of such quarter (it being understood that any such financial statements that are filed pursuant to and are accessible through the Securities and Exchange Commission’s EDGAR system will be deemed to have been provided in accordance with clause 18.6(a)(i) or 18.6(a)(ii), as applicable). In addition, Company agrees to provide Holder at any time and from time to time with such information as Holder may reasonably request for purposes of Holder’s compliance (as determined by Holder in its reasonable discretion) with regulatory, accounting and reporting requirements applicable to Holder (e.g., Fair Value Accounting Standard 157), including any 409A valuation reports (or equivalent reports) and budgets, as well as information with respect to whether the securities issuable upon the exercise hereof constitute “qualified small business stock” for purposes of Section 1202(c) of the Internal Revenue Code and Section 18152.5 of the California Revenue and Taxation Code. Notwithstanding the foregoing, Company shall not be required to furnish to Holder the financial information described in this Section 18.6 in the event such financial information has been previously delivered to Lender pursuant to the Loan Agreement.

 

19.         Counterparts; Facsimile. Holder’s execution and delivery of Holder’s counterpart signature page to this Warrant via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall constitute Holder’s effective execution and delivery of this Warrant and agreement to and acceptance of the terms hereof for all purposes.

 

[Remainder of this page intentionally left blank; signature page follows]

 

 

 

 

 

[Signature Page to Warrant]

 

 

IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed by its officer, thereunto duly authorized as of the date of issuance set forth on the first page hereof.

 

 

CYTOCOM, INC.

 

By:         _____________________________

Name:    _____________________________

Title:      _____________________________

 

 

AGREED AND ACCEPTED:

 

HOLDER:

 

AVENUE VENTURE OPPORTUNITIES FUND, LP

 

By:          Avenue Venture Opportunities Partners, LLC

Its:         General Partner

 

 

By:         _____________________________

Name:    _____________________________

Title:      _____________________________

 

 

 

 

FORM OF SUBSCRIPTION

 

(To be signed only upon exercise of Warrant)

 

To:         _____________________________

 

 

	
			☐

				
			The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, (1) ________________ (_____) shares1 (the “Shares”) of Stock of __________ and herewith makes payment of _____________ Dollars ($________) therefor.

			

 

	
			☐

				
			The undersigned hereby elects to convert ______ percent (__%) of the value of the Warrant pursuant to the provisions of Section 1(b) of the Warrant.

			

 

	
			☐

				
			The undersigned requests that certificates for such shares be issued in the name of, and delivered to, _________, whose address is ___________.

			

 

The undersigned acknowledges that it has reviewed the representations and warranties contained in Section 17 of this Warrant and by its signature below hereby makes such representations and warranties to Company.

 

 

Dated      ______________________

 

Holder:   ______________________

 

By:         ______________________

 

Its:         ______________________

 

 

(Address)

 

__________________________

 

__________________________

 

 

 

1 Insert here the number of shares called for on the face of the Warrant (or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised), in either case without making any adjustment for additional Common Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the Warrant, may be issuable upon exercise.

 

 

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant, hereby sells, assigns and transfers all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock covered thereby set forth herein below, unto:

 

 

 

	Name of Assignee	Address	No. of Shares

                 

 

 

 

 

 

 

 

 

 

 

 

Dated      ______________________

 

Holder:   ______________________

 

By:         ______________________

 

Its:         ______________________

 

 

 

 

 

EXHIBIT “A”

 

[On letterhead of Company]

 

 

Reference is hereby made to that certain Warrant dated April __, 2021 issued by CYTOCOM, INC., a Delaware corporation (the “Company”), to AVENUE VENTURE OPPORTUNITIES FUND, LP, a Delaware limited partnership (the “Holder”).

 

[IF APPLICABLE] The Warrant provides that the actual number and type of shares of Company's capital stock issuable upon exercise of the Warrant and the initial exercise price per share are to be determined by reference to one or more events or conditions subsequent to the issuance of the Warrant. Such events or conditions have now occurred or lapsed, and Company wishes to confirm the actual number of shares issuable and the initial exercise price. The provisions of this Supplement to Warrant are incorporated into the Warrant by this reference, and shall control the interpretation and exercise of the Warrant.

 

[IF APPLICABLE] Notice is hereby given pursuant to Section 4.5 of the Warrant that the following adjustment(s) have been made to the Warrant: [describe adjustments, setting forth details regarding method of calculation and facts upon which calculation is based].

 

This certifies that Holder is entitled to purchase from Company __________________________, at the Holder’s option, either (i) (____________) fully paid and nonassessable shares of Company’s _________ Stock at a price of _________________________ Dollars ($__________) per share or (ii) (____________) fully paid and nonassessable shares of Company’s _________ Stock at a price of _________________________ Dollars ($__________) per share. The applicable Stock Purchase Price and the number of shares purchasable under the Warrant remain subject to adjustment as provided in Section 4 of the Warrant.

 

 

Executed this ___ day of ________________, 20___.

 

 

 

CYTOCOM, INC.

 

 

By:          ________________________________

 

Name:     ________________________________

 

Title:       ________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00331-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00331-of-00352.parquet"}]]