On January 6, 2023, X4 Pharmaceuticals, Inc. (the “Company”) and its subsidiary, X4 Therapeutics, Inc. (together with the Company, the “Borrowers”), entered into a Second Amended and Restated Loan and Security Agreement (the “Second A&R Loan Agreement”) with Hercules Capital, Inc., as agent and lender, and Hercules Capital Funding IV LLC and Hercules Capital Funding Trust 2022-1, as lenders (collectively, “Hercules”), which provides for a term loan of $32.5 million (the “Term Loan”). The Second A&R Loan Agreement amended and restated that certain Amended and Restated Loan and Security Agreement, dated as of June 27, 2019, as subsequently amended from time to time, by and among the Borrowers, Hercules Capital, Inc. and other parties thereto (the “First A&R Loan Agreement”). The Second A&R Loan Agreement does not require any scheduled amortization payments prior to October 1, 2024; provided however, if certain conditions are met, then amortization payments will not be required until January 1, 2026.

The entire principal balance of the Term Loan and all accrued but unpaid interest shall be due on the maturity date, which is April 1, 2026; provided however, if certain conditions are met, the maturity date of the Term Loan will be extended to July 1, 2027. At the Company's option, the Company may prepay all, but not less than all, of the outstanding borrowings, subject to a prepayment premium of up to 3.0% of the principal amount outstanding as of the date of repayment. Pursuant to the terms of the Second A&R Loan Agreement, the Borrowers paid approximately $1.4 million to Hercules on January 6, 2023, the Closing Date as defined in the Second A&R Loan Agreement, in connection with the term loans previously outstanding under the First A&R Loan Agreement.

In addition, the Second A&R Loan Agreement provides for payments by the Borrowers to Hercules of (i) $763,750 in connection with the term loans previously outstanding under the First A&R Loan Agreement, payable upon the earliest to occur of (a) July 1, 2023, (b) the date that the Borrowers prepay the outstanding secured obligations in full and (c) the date that the secured obligations become due and payable, and (ii) $1.3 million in connection with the Term Loan outstanding under the Second A&R Loan Agreement, payable upon the earliest to occur of (a) the maturity date of the Term Loan, (b) the date that Borrower prepays the outstanding secured obligations in full, and (c) the date that the secured obligations become due and payable. Borrowings under the Term Loan bear interest at a per annum rate equal to the greater of (i) 3.15% plus the Wall Street Journal prime rate or (ii) 10.15%. Interest payments on the Term Loan are due on a monthly basis.

In an event of default and until such event is no longer continuing, the interest rate applicable to borrowings under the Second A&R Loan Agreement would be increased by 4.0%. Borrowings under the Second A&R Loan Agreement are collateralized by substantially all of the Borrowers' personal property and other assets except for their intellectual property (but including rights to payment and proceeds from the sale, licensing or disposition of the intellectual property). Under the Second A&R Loan Agreement, the Borrowers have agreed to affirmative and negative covenants to which the Borrowers will remain subject until maturity or repayment of the Term Loan in full.

Such covenants include maintaining a minimum liquidity amount of cash and cash equivalents in an aggregate amount greater than or equal to $20.0 million or, on and after certain conditions have been met, cash and cash equivalents in an aggregate amount greater than or equal to $10.0 million. The Borrowers' obligations under the Second A&R Loan Agreement are subject to acceleration upon occurrence of specified events of default, including payment default, insolvency and a material adverse change in the Borrowers' business, operations or financial or other condition.