Item 1.01. Entry into a Material Definitive Agreement.
Effective as of
Frequency is continuing to invest in our physical capabilities in order to drive our hearing regeneration and remyelination programs. Accordingly, we plan on investing in substantial capital expenditures and equipment as part of our relocation to our new facility in Lexington in 2021. Given the favorable interest rates, the Term Loan Facility supports Frequency's planned capital expansion and is capitally efficient. This enables Frequency to utilize its existing resources to effectively drive forward its lead hearing program, pipeline, and begin preparing for potential pivotal trials in hearing.
For the advance made under the Term Loan Facility, the Company will make monthly
interest only payments through
The Company may prepay the advance made under the Term Loan Facility, in whole, at any time subject to a prepayment premium equal to: (a) 2.0% of the then-outstanding principal amount of the advance, if such prepayment occurs on or prior to the first anniversary of the Closing Date; (b) 1.0% of the then-outstanding principal amount of the advance, if such prepayment occurs after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date; and (c) 0.0% of the then-outstanding principal amount of the advance, if such prepayment occurs after the second anniversary of the Closing Date. The prepayment premium is waived if the Term Loan Facility is refinanced by the Bank (in its sole and absolute discretion) on or prior to the Loan Maturity Date.
The Company will pay a final payment of
The Loan Agreement also includes customary affirmative and negative covenants
and events of default for a facility of a type similar to the Term Loan
Facility. Upon the occurrence and continuance of an event of default the Bank
may demand immediate repayment of all principal and unpaid interest under the
Loan Agreement, and exercise remedies against the Company and the collateral
securing the Loan Agreement. These events of default include, among other
things: (i) insolvency, liquidation, bankruptcy or similar events; (ii) failure
to pay any debts due under the Loan Agreement or other loan documents on a
timely basis; (iii) failure to observe any covenant or secured obligation under
the Loan Agreement, which failure, in most cases, is not cured within 10 days;
(iv) occurrence of a material adverse change; (v) material misrepresentations;
(vi) occurrence of any default under any other agreement resulting in
acceleration of the maturity of indebtedness in excess of
The foregoing description of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, which has been filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 10.1 Loan and Security Agreement, datedDecember 11, 2020 , by and betweenFrequency Therapeutics, Inc. andSilicon Valley Bank .
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