On December 22, 2022, Celcuity Inc. (the “Company”) closed on a $20.0 million term loan (the “Term B Loan”) from Innovatus Life Sciences Lending Fund I, L.P., a Delaware limited partnership (“Innovatus”), pursuant to a Loan and Security Agreement, dated April 8, 2021 (the “Loan Agreement”), as amended by that First Amendment to Loan and Security Agreement, dated August 9, 2022 (the “Amendment and collectively with the Loan Agreement, the “Amended Loan Agreement”). The Company became eligible to draw down the Term B Loan upon the closing of the Company’s previously disclosed $100 million private placement on December 9, 2022.

As previously disclosed, the Amended Loan Agreement may provide the Company with up to $75.0 million through funding of up to five term loans. Funding of the first $15.0 million term loan occurred on April 8, 2021 in connection with entering into the original Loan Agreement.

The loans will mature on April 8, 2027, the sixth anniversary of the initial funding date, provided that the lender may accelerate and cause the loans to become immediately due and payable upon the occurrence of customary events of default as described in the Amended Loan Agreement which include, among others, failure to make any payment of principal or interest on its due date and breach of financial and other covenants.

The term loans bear interest at a rate equal to the sum of the greater of (i) the prime rate or (ii) 3.25%, plus 5.70%. The Company has the option to prepay the loans at any time following August 9, 2023, the first anniversary of the Amendment date, with tiered prepayment fees ranging from 0.00 – 1.00% of the prepayment amount based on when the prepayments occur. Upon a change of control or event of default, mandatory prepayment will be required, and if such an event occurs prior to the first anniversary of the Amendment date, an additional prepayment fee of 3.0% applies. The Company is entitled to make interest only payments until May 1, 2025 or, if certain conditions are met, May 1, 2026. The Company has elected to make 4.95% of the interest rate as payable in-kind, which will accrue monthly as additional principal.

The Amended Loan Agreement includes certain other fees, such as a final fee of 4.5% of the funded loan amounts not converted into equity by the lender, which apply if prepayment, an event of default, or change of control occurs prior to August 9, 2025, the third anniversary of the Amendment date. Subject to certain other conditions, no final fee will be payable after August 9, 2025 if the terms loans are not prepaid prior thereto.

Under the Amended Loan Agreement, Innovatus has the right, at its election and until August 9, 2025, the third anniversary of the Amendment date, to convert up to $6.6 million of outstanding principal into Company common stock, assuming all term loans are funded (the “Conversion Rights”). These Conversion Rights include the right to convert up: (i) 20.00% of the outstanding principal amount of the initial term loan that funded April 8, 2021, and (ii) an additional 7.00% of the amount by which the aggregate principal amount of the other term loans that are funded exceed $35 million, provided that the aggregate outstanding principal amount of all term loans funded under the Amended Loan Agreement is at least $35 million. The number of shares of common stock issuable upon exercise of the Conversion Rights will be based upon a price of $10.00 per share.

The Amended Loan Agreement is secured by all assets of the Company. Proceeds will be used for working capital purposes and to fund the Company’s general business requirements. The Amended Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to or based upon liquidity, trailing twelve months revenue and the funded loan amounts.

The description of the Loan Agreement, as amended by the Amendment, contained herein does not purport to be complete and is qualified in its entirety by reference to the complete text of the Loan Agreement, which was included as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2021, and the Amendment, which was included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2022, each of which is incorporated herein by reference.