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Cell Therapeutics, Inc.(CTIC): $15MM Loan Financing Agreement

Cell Therapeutics, Inc.  (CTIC) announced that it has entered into a Loan and Security Agreement with Hercules Technology Growth Capital, Inc. for a senior secured term loan of up to $15 million. The first $10 million of the term loan was funded on March 27, 2013, and the remaining $5 million is available at the Borrowers’ option at any time from November 30, 2013 through December 15, 2013, subject to the satisfaction of certain conditions. The term loan is repayable over 42 months after closing, including an initial interest-only period of 12 months after closing.

The interest rate on the term loan floats at a rate per annum equal to the greater of (x) 12.25 percent and (y) 12.25 percent plus the amount by which the prime rate exceeds 3.25 percent. The Borrowers may elect to prepay some or all of the loan balance at any time subject to a prepayment fee equal to 3 percent during the first 12 months after such portion of the loan is funded, 2 percent after 12 months but prior to 24 months after such portion of the loan is funded, and 1 percent thereafter. A fee in the amount of $1,275,000 is payable to Lender on the date on which the term loan is paid or becomes due and payable in full.

In connection with the Agreement, CTIC issued the Lender a warrant to purchase shares of common stock of the Company. At any time prior to March 26, 2018, the Warrant shall initially be exercisable for:

  1. 543,232 shares of common stock, which is the quotient obtained by dividing $600,000 (which represents 80 percent of the amount equal to five percent of the total $15,000,000 loan commitment), by the Exercise Price (defined below); plus
  2. from and after such date, if any, as Lender makes a term loan advance to the Company in connection with the Optional Borrowing, such number of additional shares of the Company’s common stock as shall equal (x) $150,000 (which represents 20 percent of the amount equal to five percent of the total $15,000,000 loan commitment), divided by (y) the Exercise Price in effect on and as of such date.

The $1.1045 initial exercise price of the Warrant and number of Warrant Shares are subject to anti-dilution adjustments in certain events, including if within 12 months after closing the Company issues shares of common stock or securities that are exercisable or convertible into shares of common stock in transactions not registered under the Securities Act of 1933, as amended at an effective price per share of common stock that is less than the exercise price, then the exercise price shall automatically be reduced to equal the price per share of common stock in such transaction, and, as a result, the number of shares of common stock issuable upon any exercise of the Warrant shall increase such that the product of the newly adjusted number of shares of common stock and the reduced exercise price per share will equal $600,000 or $150,000, respectively. The number of shares for which the Warrant is exercisable and the associated exercise price are subject to certain additional customary adjustments as set forth in the Warrant.