| Item 1.01 | Entry into a Material Definitive Agreement. |
Loan Agreement
On March 30, 2021 (the “Closing
Date”), Trevena, Inc. (the “Company”), through its indirect wholly-owned subsidiary Trevena SPV2 LLC, a Delaware limited
liability company (the “Subsidiary Borrower”), entered into a royalty-based loan agreement (the “Loan Agreement”)
with R-Bridge Investment Four Pte. Ltd., an affiliate of CBC Group (the “Lender”), pursuant to which the Lender agreed
to make term loans to the Subsidiary Borrower in an aggregate principal amount of up to $40,000,000 (the “Term Loans”). Pursuant
to the terms of the Loan Agreement, the Term Loans are secured by, and repaid with proceeds from, (i) royalties from the Company’s
license agreement with Jiangsu Nhwa Pharmaceutical Co. Ltd. (the “License Agreement”, and such royalties, the “Royalty
Interest”) and (ii) a revenue interest based on the Company’s United States net sales of OLINVYK in an initial amount of four
percent (4.0%) of such net sales (the “Revenue Interest”). This Revenue Interest will be capped at $10 million if Chinese
approval of OLINVYK occurs by year-end 2023. In the event Chinese approval does not occur by that time, the Revenue Interest will increase
to 7% and will continue until certain combined totals of Revenue Interests and Royalty Interests are paid.
Under the Loan Agreement,
the Term Loans will be advanced in three tranches. The first tranche (the “First Tranche Loan”) is expected to be advanced
in the amount of $15,000,000 within fifteen (15) days following the Closing Date, subject to customary bring down conditions and deliverables.
The second tranche (the “Second Tranche Loan”) of $10,000,000 will become available to the Subsidiary Borrower upon achievement
of either a commercial or financing milestone as set forth in the Loan Agreement, subject to customary bring down conditions and deliverables.
The third tranche (the “Third Tranche Loan”) of $15,000,000 will become available to the Subsidiary Borrower upon the first
commercial sale of OLINVYK in the People’s Republic of China, subject to customary bring down conditions and deliverables.
The Term Loans bear interest
at a rate per annum equal to 7.00% (the “Interest Rate”). Payments of the obligations outstanding under the Loan Agreement
will be made quarterly, beginning with the payment due in respect of the quarter ending June 30, 2022, out of the Royalty Interest payments
and Revenue Interest payments received by the Subsidiary Borrower during such quarter (the “Collection Amount”). On each payment
date, after payment of certain expenses, the Collection Amount will be applied, after payment of nominal servicing fees to the Company,
first to accrued and unpaid interest, with any excess applied to repay principal until the balance is fully repaid. The Subsidiary Borrower
will create a reserve account of $2,000,000 from which it can service the interest on the loan to the extent there are not sufficient
Royalty Interest payments and Revenue Interest Payments.
The Term Loans will mature
on the earlier of (i) the fifteen (15) year anniversary of the Closing Date and (ii) the date on which the License Agreement expires,
at which time the outstanding principal amount of the loan, together with any accrued and unpaid interest, and all other obligations then
outstanding, will be due and payable in cash by the Subsidiary Borrower. The obligation related to the payment of Royalty Interest will
continue until the date on which the License Agreement expires.
The Loan Agreement contains
certain customary affirmative covenants, including those relating to: use of proceeds; maintenance of books and records; financial
reporting and notification; compliance with laws; and protection of Company intellectual property. The Loan Agreement also contains
certain customary negative covenants, barring the Subsidiary Borrower from: certain fundamental transactions; issuing dividends and
distributions (other than certain exceptions, including distributing the loan proceeds to the Company); incurring additional indebtedness
outside of the ordinary course of business; engaging in any business activity other than related to the License Agreement; and
permitting any additional liens on the collateral provided to the Lender under the Loan Agreement.
The Loan Agreement contains
customary defined events of default, upon which any outstanding principal and unpaid interest shall be immediately due and payable by
the Subsidiary Borrower. These include: failure to pay any principal or interest when due; any uncured breach of a representation,
warranty or covenant; any uncured failure to perform or observe covenants; any uncured cross default under a material contract;
any uncured breach of the Company’s representations, warranties or covenants under its Contribution and Servicing Agreement with
the Subsidiary Borrower; any termination of the License Agreement; and certain bankruptcy or insolvency events.
The net proceeds of the First
Tranche Loan were used by the Subsidiary Borrower to purchase from the Company the Revenue Interest and the Royalty Interest pursuant
to the terms of the Revenue Interest Purchase Agreement and the Contribution and Servicing Agreement, respectively.
Subsidiary Formation, Guarantees and Security
Interests
In connection with the Loan
Agreement, the Company formed Trevena SPV1 LLC, a Delaware limited liability company, and the Subsidiary Borrower. Pursuant to a Revenue
Interest Purchase Agreement and a Contribution and Servicing Agreement entered into with Subsidiary Borrower, contributed and sold to
the Subsidiary Borrower the License Agreement, the Chinese IP related to OLINVYK, the Royalty Interest and the Revenue Interest and accounts
established to hold amounts received on account of the Royalty Interest and Revenue Interest. The Subsidiary Borrower holds no other
assets.
The Company has entered into
a Guarantee in favor of the Lender pursuant to which it has guaranteed the payment of all obligations of the Subsidiary Borrower under
the Loan Agreement and agreed to a negative pledge in respect of all of its assets. The Guarantee, including the negative pledge,
continues until the Chinese approval of OLINVYK.
Trevena SPV1 LLC, owner of
the Subsidiary Borrower’s capital stock, has entered into a Guarantee in favor of the Lender pursuant to which it has guaranteed
the payment of all obligations of the Subsidiary Borrower under the Loan Agreement and agreed to a negative pledge in respect of all of
its assets. Trevena SPV1 LLC has also entered into a Pledge and Security Agreement in favor of the Lender, pursuant to which the
payment of the Subsidiary Borrower’s obligations under the Loan Agreement is secured by Trevena SPV1 LLC’s pledge of all of
the Subsidiary Borrower’s capital stock.
Trevena SPV1 LLC has entered
a Pledge and Security Agreement in favor of the Lender pursuant, to which the payment of the Subsidiary Borrower’s obligations under
the Loan Agreement is secured by a pledge of all of the Subsidiary Borrower’s equity.
The Subsidiary Borrower has
entered a Security Agreement in favor of the Lender pursuant, to which the payment of the Subsidiary Borrower’s obligations under
the Loan Agreement is secured by a pledge of substantially all of the Subsidiary Borrower’s assets, including the License Agreement,
the Chinese IP related to OLINVYK, the Royalty Interest and the Revenue Interest and deposit accounts established to hold amounts received
on account of the Royalty Interest and Revenue Interest, as well as Subsidiary Borrower’s operating account.
The Revenue Interest Purchase
Agreement contains negative covenants applicable to the Company Borrower, including restrictions on the sale or transfer of the assets
of the Company related to OLINVYK and giving rise to the Revenue Interest, each subject to the exceptions set forth therein.
Warrant
In connection with the entry
into the Loan Agreement, the Company issued a warrant (the “Warrant”) to R-Bridge Investment Four Pte. Ltd. (“R-Bridge”).
The Warrant provides for R-Bridge to purchase 5,000,000 shares of the Company’s common stock, par value $0.001 per share (“Common
Stock”). The Warrant will be exercisable for a period of three (3) years from the date of issuance at a per-share exercise price
equal to $0.82.
The issuance of the Warrant
by the Company to R-Bridge was made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act
of 1933, as amended.
The foregoing description
of the material terms of the Loan Agreement, the Revenue Interest Purchase Agreement, the Contribution and Servicing Agreement and the
Warrant does not purport to be complete and is qualified in its entirety by reference to the complete text of each such agreement, copies
of which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the calendar quarter ending March 31, 2022.