Item 1.01. Entry into a Material Definitive Agreement.
On July 14, 2017 (the “
First Amendment Effective Date
”), Fate Therapeutics, Inc. (the “
Company
”), a Delaware corporation, entered into the First
Amendment (the “
SVB Loan Amendment
”)
to the Amended and Restated Loan and Security Agreement between the Company and Silicon Valley Bank (the “
Bank
”). The SVB Loan Amendment amends that certain Amended and Restated Loan and Security Agreement between the Company and the Bank, dated as of July 30, 2014 (the “
Restated LSA
”).
Pursuant to the SVB Loan Amendment, the Bank extended an additional term loan to the Company on July 14, 2017 in the principal amount of $15,000,000 (the “
Term Loan
”), a portion of which was applied to repay in full the Company’s existing outstanding debt with the Bank under the Restated LSA. Following such repayment in full of the Company’s existing outstanding debt with the Bank under the Restated LSA, cash proceeds to the Company from the remaining portion of the Term Loan were approximately $7.5 million.
The Term Loan matures on January 1, 2022 (the “
Term Loan Maturity Date
”). The Term Loan bears interest at a floating per annum rate equal to the greater of (i) 3.50% above the Prime Rate (as defined in the SVB Loan Amendment) or (ii) 7.25%, provided that in no event shall such interest rate exceed 8.25%. Interest is payable on a monthly basis on the first day of each month, beginning on August 1, 2017.
From August 1, 2017 through January 1, 2019 (the “
Interest-only Period
”), the Company is required to make monthly payments of interest only. Thereafter, the Company is required to repay the principal, plus monthly payments of accrued interest, in 36 equal monthly installments based on a 36-month amortization schedule. Notwithstanding the foregoing, subject to the achievement of a product development milestone by the Company before the expiration of the above-described Interest-only Period, (i) the Interest-only Period shall be extended from January 1, 2019 through and including to July 1, 2019 and (ii) the Company shall thereafter repay the principal, plus monthly payments of accrued interest, in 30 equal monthly installments based on a 30-month amortization schedule. The Company’s final payment, due on the Term Loan Maturity Date, shall include all outstanding principal and accrued and unpaid interest under the Term Loan.
Subject to certain conditions, including the payment of a prepayment fee in the amount of (x) 3% of the principal amount of the Term Loan for any prepayment made through July 14, 2018 or (y) 1% of the principal amount of the Term Loan for any prepayment made after July 14, 2018 and on or before July 14, 2019, the Company may voluntarily prepay all, but not less than all, of the Term Loan.
The foregoing is only a brief description of the SVB Loan Amendment, does not purport to be a complete description of the rights and obligations of the parties, and is qualified in its entirety by reference to the full text of the Restated LSA and the SVB Loan Amendment, a copy of which the Company will file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.
In connection with the SVB Loan Amendment, the Company issued to the Bank on the First Amendment Effective Date a warrant to purchase up to an aggregate of 91,463 shares of the Company’s common stock, subject to adjustment, at an exercise price equal to $3.28 per share (the “
Warrant
”). The foregoing description of the Warrant is not intended to be complete and is qualified in its entirety by reference to the full text of the Warrant, a copy of which the Company will file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.