| Item 1.01. | Entry into a Material Definitive Agreement. |
Hercules Amended Loan Agreement
On December 22, 2023 (the “Closing Date”), enGene Holdings Inc. (the “Company”), together with its subsidiaries, enGene Inc. and enGene USA, Inc. (collectively with the Company, on a joint and several basis, the “Borrowers”) entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”), with Hercules Capital, Inc., as agent and lender (“Hercules” or “the Bank”), and the several banks and other financial institutions or entities from time to time parties thereto (with Hercules, the “Lenders”). The Amended Loan Agreement amends and restates in its entirety that certain Loan and Security Agreement with Hercules dated December 30, 2021 (the “Prior Loan Agreement”), by, among other things, adding the Company as a co-borrower thereunder.
The Amended Loan Agreement provides for a term loan facility of up to $50 million available in multiple tranches (the “Term Loan”), as follows: (i) an initial term loan advance (the “Tranche 1 Advance”) that was made on the Closing Date of $22.5 million, approximately $8.6 million of which was applied to refinance in full the term loans outstanding under the Prior Loan Agreement, (ii) subject to the achievement of the specified Interim Milestone (the “Interim Milestone”) and satisfaction of certain other conditions precedent, a right of the Borrower to request that the Lenders make additional term loan advances to us in an aggregate principal amount of up to $7.5 million from the achievement of the Interim Milestone through the earlier of (x) 60 days following the Interim Milestone and (y) March 31, 2025, and (iii) an uncommitted tranche subject to the Lenders’ investment committee approval and satisfaction of certain other conditions precedent (including payment of a 0.75% facility charge on the amount borrowed), pursuant to which the Borrowers may request from time to time up to and including the Amortization Date (defined below) that the Lenders make additional term loan advances to the Borrowers in an aggregate principal amount of up to $20.0 million. The Borrowers are required to pay upon the earlier of the Maturity Date (as defined below) or payment in full of the Term Loans, an end of term fee equal to 5.50% of the aggregate principal amount of the Term Loans. The Borrowers are also required to pay on July 1, 2025 or, if earlier, the date the Borrowers prepay the Term Loans, $698,500 representing the end of term charge under the Prior Loan Agreement.
The Term Loans mature on January 1, 2028, with no option for extension (the “Maturity Date”).
The Term Loan bears cash interest payable monthly at an annual rate equal to the greater of (a) the prime rate of interest as reported in the Wall Street Journal plus 0.75% (capped at 9.75%) and (b) 9.25%. The Term Loan also bears additional payment-in-kind interest at an annual rate of 1.15%, which is added to the outstanding principal balance of the Term Loan on each monthly interest payment date. Borrowings under the Amended Loan Agreement are repayable in monthly interest-only payments through the “Amortization Date”, which is either: (x) July 1, 2025 or (y) if the Interim Milestone is achieved and there has been no default, January 1, 2026, or (z) if the Interim Milestone and certain clinical milestones are achieved and there has been no default, July 1, 2026. After the Amortization Date, the outstanding Term Loans and interest shall be repayable in equal monthly payments of principal and accrued interest until the Maturity Date.
At the Borrowers’ option, the Borrowers may elect to prepay all, but not less than all, of the outstanding Term Loan by paying the entire principal balance and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: (i) 3.0% of the principal amount outstanding if the prepayment occurs in any of the first twelve months following the Closing Date; (ii) 2.0% of the principal amount outstanding if the prepayment occurs after the first twelve months following the Closing Date but on or prior to twenty-four months following the Closing Date; and (iii) 1.0% of the principal amount outstanding if prepayment occurs at any time thereafter but prior to the Maturity Date.
In connection with the Amended Loan Agreement, the Borrowers granted Hercules a security interest senior to any current and future debts and to any security interest in all of the Borrowers’ right, title, and interest in, to and under all of the Borrowers’ property and other assets, subject to limited exceptions including the Borrowers’ intellectual property.
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