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Item 1.01.
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Entry
Into a Material Definitive Agreement.
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Loan
and Security Agreement
On
December 15, 2020 (the “Closing Date”), Soligenix, Inc. (the “Company”) and its subsidiaries, Soligenix
UK Limited, Enteron Pharmaceuticals, Inc., Soligenix BioPharma Canada Incorporated and Soligenix NE B.V., as borrowers (collectively
referred to as the “Borrower”) entered into a Loan and Security Agreement (the “Loan and Security Agreement”)
with Pontifax Medison Finance (Israel) L.P. and Pontifax Medison Finance (Cayman) L.P. (each a “Lender” and collectively,
the “Lenders”) and Pontifax Medison Finance GP, L.P., in its capacity as administrative agent and collateral agent
for itself and Lenders (in such capacity, “Agent”).
Amount.
The Loan and Security Agreement provides for a term loan or loans in an aggregate principal amount of up to $20.0 million (the
“Term Loan”) subject to funding in the three tranches as follows: (a) within two (2) business days after the Closing
Date, a loan in the aggregate principal amount of $10.0 million (the “Initial Loan”), (b) during the 12 month period
after the Closing Date, a credit line in the aggregate principal amount of $5.0 million (the “Credit Line”), and (c)
a loan in the aggregate principal amount of $5.0 million (the “Third Installment Loan”) shall be made available for
withdrawal in full by the Borrower upon the filing of a new Drug Application with the U.S. Food and Drug Administration (the “FDA”)
for the Company’s product candidate for the treatment of cutaneous T-cell lymphoma, SGX301, which shall be deemed to occur
on the date of initial filing with the FDA.
Maturity.
The Term Loan matures 54 months following the Closing Date (the “Maturity Date”). All amounts outstanding under the
Term Loan will be due and payable upon the earlier of the maturity date or the acceleration of the loans and commitments upon
an event of default.
Interest
Rate, Fees. The principal balance of the Term Loan bears interest at 8.47% rate per annum based on a year consisting of 365
days. Interest is payable on a quarterly basis based on the principal amount outstanding during the preceding quarter. In addition,
the Borrower is required to pay to the Lender an unused line fee of 1.0% per annum payable quarterly on the amount not withdrawn
under the Credit Line and, upon withdrawal of the Third Installment Loan, the Borrower is required to pay a fee of 1.0% of the
Third Installment Loan to Lenders.
Amortization.
Commencing on the last business day of the calendar quarter prior to the lapse of 24 months following the Closing Date and continuing
on the first business day of each quarter thereafter until the Maturity Date, the Initial Loan, Credit Line and Third Installment
Loan shall amortize in ten equal quarterly installments.
Prepayment
Premium. Following 18 months from the Closing Date, the Borrower may, at its option upon at least 14 business days’
written notice to the Agent, prepay an amount of not less than $500,000 or all of the then outstanding principal balance and all
accrued and unpaid interest on the Term Loan, together with a prepayment charge equal to one percent (1.0%) of the principal amount
being prepaid.
Conversion
by Lender. The Lender may, at its option and at any time, elect to convert the then outstanding Term Loan amount and
all accrued and unpaid interest thereon into shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), at a conversion price of $4.10 (the “Conversion Price”).
Conversion
by the Company. The Company shall have the right to convert, at any time, any outstanding portion of the Term Loan and all
accrued and unpaid interest thereon into shares of Common Stock at the Conversion Price, subject to fulfilment of all of the following
conditions: (i) the shares of Common Stock issuable upon conversion are unrestricted and freely tradable securities if held by
a person that is not an affiliate (and has not been affiliate at any time during the three months preceding any such sale) of
the Company pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) or under an effective
registration statement under the Securities Act, (ii) during a period of 30 consecutive trading days prior to the date on which
the Company gives notice of the exercise of its conversion right, the closing price of the Company’s shares of common stock
was higher than $4.92 on at least 10 trading days, which trading days need not be consecutive, including on the trading day preceding
the date on which the Company gives notice of the exercise of its conversion right, and (iii) the number of shares of Common Stock
issuable upon conversion by the Company shall not exceed the average weekly number of traded shares on the stock market during
the four weeks immediately preceding the date on which the Company gives notice of the exercise of its conversion rights. The
Company may only effect a conversion once every four weeks.
Number
of Shares. If the entire $20,000,000 maximum principal amount is drawn on the Term Loan (without including shares issued in
respect of conversion of accrued but unpaid interest), the conversion of this amount into Conversion Shares would result in the
issuance of 4,878,049 shares of Common Stock.
Security.
The Borrower’s obligations are secured by a security interest, senior to any current and future debts and to any security
interest, in all of Borrower’s right, title, and interest in, to and under all of the following personal property of Borrower
whether now owned or hereafter acquired (collectively, the “Collateral”): (a) receivables; (b) equipment; (c) fixtures;
(d) general intangibles (other than Intellectual Property); (e) inventory; (f) investments; (g) deposit accounts; (h) cash; (i)
goods; (j) licenses; (k) franchise agreements, (l) commercial tort claims; and all other tangible and intangible personal property
of Borrower whether now or hereafter owned or existing; and, to the extent not otherwise included, all proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing,
subject to limited exceptions including the Borrower’s intellectual property.
Covenants;
Representations and Warranties; Other Provisions. The Loan and Security Agreement contains customary representations,
warranties and covenants, including covenants by the Borrower limiting additional indebtedness, liens, including on intellectual
property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions
with affiliates and fundamental changes.
Default
Provisions. The Loan and Security Agreement provides for events of default customary for term loans of this type, including
but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, bankruptcy and the
occurrence of a material adverse effect on the Borrower. After the occurrence of an event of default Agent may (i) accelerate
payment of all obligations and terminate the Lender’s commitments under the Loan and Security Agreement, (ii) sign and file
in Borrower’s name any notices, assignment or agreements necessary to perfect payment, (iii) notify any of Borrower’s
account debtors to make payment directly to Agent, and (iv) exercise its security interests in the Collateral.
The foregoing
description of the Loan and Security Agreement does not purport to be complete and is qualified in its entirety
by reference to the Loan and Security Agreement, which is filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference. The representations, warranties and covenants contained in Loan
and Security Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of
the parties to the Loan and Security Agreement, and may be subject to limitations agreed upon by the contracting parties. Accordingly,
the Loan and Security Agreement is incorporated herein by reference only to provide investors with information regarding the terms
of the Loan and Security Agreement, and not to provide investors with any other factual information regarding the Company or its
business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with
the U.S. Securities and Exchange Commission (the “SEC”).
Registration
Rights Agreement
In
connection with the Loan and Security Agreement, the Company entered into a Registration Rights Agreement (the “Registration
Rights Agreement”) with the Lender, pursuant to which the Company will be obligated, among other things, to use its commercially
reasonable efforts to (i) file a registration statement with the SEC within 60 days following the Closing Date for purposes
of registering the shares of Common Stock issuable upon the conversion of the Term Loan (the “Conversion Shares”)
and any other securities issued or issuable with respect to or in exchange for such Conversion Shares, whether by merger, charter
amendment or otherwise (ii) make the registration statement declared effective as soon as practicable after filing, and in
any event no later than 120 days after the Closing Date, and (iii) maintain the registration until all registrable securities
may be sold pursuant to Rule 144 under the Securities Act, without manner, sale or volume restrictions. If the registration statement
is not timely filed or declared effective, the Company will be required to pay a ticking fee of 0.5% of the aggregate outstanding
balance of the Term Loan at the time of such failure and each 30 days thereafter until cured. The Registration Rights Agreement
contains customary terms and conditions for a transaction of this type.
The
foregoing descriptions of the Registration Rights Agreement do not purport to be complete and are qualified in their entirety
by reference to the Registration Rights Agreement which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated
herein by reference. The representations, warranties and covenants contained in Registration Rights Agreement were made only for
purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Registration Rights Agreement,
and may be subject to limitations agreed upon by the contracting parties. Accordingly, the Registration Rights Agreement is incorporated
herein by reference only to provide investors with information regarding the terms of the Registration Rights Agreement, and not
to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction
with the disclosures in the Company’s periodic reports and other filings with the SEC.