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Item 1.01
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Entry into a Material Definitive Agreement.
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On December 28, 2017 (the “Closing Date”),
AVEO Pharmaceuticals, Inc. (the “Company”) entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Hercules Funding III, LLC (the “Lender”) and Hercules Capital, Inc., as agent (the
“Agent”), amending and restating that certain Loan and Security Agreement dated as of May 28, 2010, by and among the Company, the Agent, Hercules Technology III, L.P. and the several banks and financial institutions from time to time
parties thereto, as amended to date (the “Existing Loan Agreement”).
Pursuant to the Loan Agreement, the Company refinanced its outstanding
principal and interest of approximately $20.0 million under the Existing Loan Agreement and converted such obligations into a new term loan in the aggregate principal amount of $20.0 million (the “New Term Loan”) on the Closing
Date.
The New Term Loan bears per annum interest at a floating rate equal to the greater of (i) 9.45% and (ii) an amount equal to 9.45% plus
the prime rate of interest as reported in the
Wall Street Journal
minus 4.75%; provided that the per annum interest rate shall not exceed 15.0% unless a default has occurred.
Pursuant to the Loan Agreement, interest payments on the New Term Loan are due beginning on the first business day of the month following the Closing Date.
The Company is not required to pay principal on the New Term Loan during the period from the Closing Date until February 1, 2019 (the “Interest-Only Period”). In accordance with the Loan Agreement, provided that no event of default
shall have occurred and continue, the Company may extend the Interest-Only Period at its election until August 1, 2019, if, on or prior to September 30, 2018, the Company has received positive data with respect to the Company’s Phase
3 clinical trial of tivozanib for the treatment of renal cell carcinoma for patients in the third-line setting, which positive data supports the filing by the Company of a new drug application with the U.S. Food and Drug Administration. The Loan
Agreement also contains a second optional interest-only period through February 1, 2020, if specified additional conditions related to tivozanib development are met by June 28, 2019.
After the Interest-Only Period, the Company must repay the aggregate principal balance of the New Term Loan in equal monthly installments of principal and
interest. The entire principal balance and all accrued but unpaid interest thereunder will be due and payable on July 1, 2021 (the “Maturity Date”). At its option, upon at least seven days’ prior notice to the Lender, the Company
may prepay the entire outstanding principal and accrued and unpaid interest under the New Term Loan, as well as any unpaid fees or
out-of-pocket
expenses of the Lender
accrued thereunder, subject to a prepayment charge determined in accordance with the Loan Agreement.
In accordance with the Loan Agreement,
end-of-term
payments allocable to amounts borrowed under the Existing Loan Agreement will be due in the amount of approximately (i) $540,000 on January 1, 2018, or
on such earlier date as the New Term Loan is prepaid or obligations thereunder become due, and (ii) $300,000 on December 1, 2019, or on such earlier date as the New Term Loan is prepaid or obligations thereunder become due. An additional
end-of-term
payment allocable to amounts borrowed under the New Term Loan in the amount of approximately $790,000 will be due on the Maturity Date, or on such earlier date as
the New Term Loan is prepaid or obligations thereunder become due.
Pursuant to the Loan Agreement, the Company granted the Lender a security interest in
all of the Company’s personal property owned as of, or acquired after, the date of the Loan Agreement except for the Company’s intellectual property and certain other excluded assets. The Loan Agreement contains provisions related to the
indemnification of the Lenders by the Company and representations and warranties of the Company. The Loan Agreement also includes affirmative and negative covenants applicable to the Company including covenants to deliver certain financial
reports; to maintain insurance coverage; and to refrain from transferring assets, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, and
suffering a change in control, in each case subject to certain exceptions.
The Loan Agreement provides that certain events shall constitute a default by
the Company, including failure by the Company to pay amounts under the Loan Agreement when due; breach or default in the performance of any covenant under the Loan Agreement by the Company; insolvency of the Company and certain other bankruptcy
proceedings involving the Company; default by the Company of obligations involving indebtedness in excess of $500,000; and the occurrence of an event or circumstance that would have a material
adverse effect upon the business of the Company, as defined in the Loan Agreement. Upon the occurrence of any such event of default by the Company, the Lender may, at its option, accelerate payment by the Company of its obligations under the Loan
Agreement, together with a prepayment charge, determined in accordance with the Loan Agreement. In addition, the outstanding principal and accrued and unpaid interest under the New Term Loan, as well as any unpaid fees or
out-of-pocket
expenses of the Lender accrued thereunder, will become immediately due and payable at the Lender’s option upon a change in control of the Company, as
described in the Loan Agreement.
The foregoing summary of the Loan Agreement is qualified in its entirety by the full text of the Loan Agreement, which
is attached hereto as Exhibit 10.1 and is hereby incorporated by reference into this Item 1.01.