|
|
|
|
|
|
Item 1.01
|
Entry into a Material Definitive Agreement
|
On April 17, 2020, Conformis, Inc. (the “Company”) entered into a Promissory Note effective as of April 9, 2020 (the “PPP Note”) with East West Bank as the lender (the “Lender”), pursuant to which the Lender agreed to make a loan to the Company under the Paycheck Protection Program (the "PPP Loan") offered by the U.S. Small Business Administration (the "SBA") to qualified small businesses in a principal amount of $4,719,800.
The interest rate on the PPP Note is a fixed rate of 1% per annum. Interest is calculated by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. The Company is required to make one payment of all outstanding principal plus all accrued unpaid interest on April 9, 2022 (the “Maturity Date”). The Company will pay regular monthly payments in an amount equal to one month’s accrued interest commencing on November 9, 2020, with all subsequent interest payments to be due on the same day of each month after that. All interest which accrues during the initial six months of the loan period will be deferred to and payable on the Maturity Date.
The PPP Loan proceeds are to be used to pay for payroll costs, continuation of group health care benefits during periods of paid sick, medical, or family leave, or insurance premiums; salaries or commissions or similar compensation; rent; utilities; and interest on certain other outstanding debt; however, 75% of the PPP Loan proceeds must be used for payroll purposes.
According to the terms of the Paycheck Protection Program (the “PPP”), all or a portion of loans under the PPP may be forgiven if all employees are kept on the payroll for eight weeks after the date of such loan and the proceeds of such loan are used for payroll, rent, mortgage interest, or utilities. Forgiveness is also based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
At the Company’s option, the Company may prepay all or a portion of the PPP Loan without penalty.
The PPP Note includes events of default, the occurrence and continuation of which would provide the Lender with the right to exercise remedies against the Company including the right to declare the entire unpaid principal balance under the PPP Note and all accrued unpaid interest immediately due.
The foregoing description of the PPP Note does not purport to be complete and is qualified in its entirety by reference to the PPP Note filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.