Omega Therapeutics Receives Default Notice From Banc Of California; Disputes Alleged Breach Of Loan Terms, Bank Sets Off $14.67M Deposits; Maintains Compliance Claims, Seeks Resolution

On January 13, 2025, Omega Therapeutics, Inc. (the "Company") received a notice of default (the "Notice of Default") under the Loan and Security Agreement, dated as of March 9, 2018 (the "Loan Agreement"), by and between the Company and Banc of California ("BOC"), from BOC.

The Notice of Default specified that, in BOC's view, one or more events of default had occurred based on alleged material adverse changes in the Company's cash runway, financing opportunities, solvency, pre-clinical programs, stock price and corporate governance, pursuant to Sections 6.2, 8.3 and 8.5 of the Loan Agreement.

Based on its assertion of the alleged events of default, BOC declared all outstanding obligations under the Loan Agreement immediately due and payable purportedly in accordance with Section 9.1(g) of the Loan Agreement. BOC also set off and applied to the balance of the Company's obligations under the Loan Agreement $14,666,666.72 of deposits of the Company held by BOC.

The Company has responded by letter to the Notice of Default, advising BOC that no events of default under the Loan Agreement have occurred or are continuing. Prior to receiving the Notice of Default, the Company had maintained the required minimum cash balances, and has timely paid BOC its indebtedness and other obligations as they become due. In addition, the bases for an event of default asserted in the Notice of Default, including with respect to the Company's stock price and corporate governance, do not align with the covenants in the Loan Agreement. The Company believes it is not in default under the Loan Agreement, and that BOC did not have the right to accelerate the indebtedness or otherwise pursue remedies thereunder, and has attempted to resolve this matter with BOC consensually, while reserving all of its rights to legal or regulatory action.