On February 22, 2022 (the "Closing Date"), Poseida Therapeutics, Inc., its wholly-owned subsidiary (collectively, the "Company"), and Oxford Finance LLC ("Oxford") reported that it entered into a loan and security agreement (the "Loan Agreement"), pursuant to which Oxford provided the Company with a term loan in the aggregate principal amount of $60.0 million (the "Term Loan") on the Closing Date (Filing, 8-K, Poseida Therapeutics, FEB 22, 2022, View Source [SID1234608810]). Also on the Closing Date, the Company used a portion of the proceeds from the Term Loan to repay in full all indebtedness, liabilities and other obligations under, and terminated that certain loan and security agreement, dated July 25, 2017, as amended, restated, supplemented or otherwise modified from time to time, by and between the Company and Oxford (the "2017 Loan Agreement"). The Company currently anticipates the remaining net proceeds of approximately $28.3 million from the Term Loan will be used for working capital and to fund its general business requirements.
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The Term Loan will mature on February 1, 2027 (the "Maturity Date") and will have interest-only payments through April 1, 2025, followed by 23 equal monthly payments of principal and unpaid accrued interest. Upon the satisfaction of certain conditions set forth in the Loan Agreement, the interest only period may be extended through April 1, 2026, followed by 11 equal monthly payments of principal and unpaid accrued interest. The Term Loan will bear interest at a floating per annum rate equal to the greater of: (i) 7.94%, and (ii) the sum of (a) the 30-day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue plus (b) 7.83%.
The Company will be required to make a final payment of 7.5% of the original principal balance of the Term Loan, payable on the earlier of: (i) the Maturity Date, (ii) acceleration of the Term Loan, or (iii) the prepayment of the Term Loan. The Loan Agreement provides for an option to prepay all or in increments of $5.0 million, of the borrowed amounts, provided that the Company will be obligated to pay a prepayment fee equal to 1.0% of the outstanding principal balance of the Term Loan if prepayment is made after the funding date through and including the second anniversary of the funding date, after which no prepayment penalty would be applied.
The Company’s obligations under the Loan Agreement are secured by a first priority security interest in substantially all of the Company’s current and future assets, other than its intellectual property. In addition, the Company has agreed not to encumber its intellectual property, except as permitted by the Loan Agreement. Prior to termination of the Loan Agreement, the Company is subject to a number of affirmative and restrictive covenants, generally consistent with the 2017 Loan Agreement, including covenants regarding dispositions of property, business combinations or acquisitions, restrictions on dividends and distributions, restrictions on indebtedness, liens and investments among other customary covenants, in each case subject to limited exceptions.
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 will be filed as an exhibit with the Securities and Exchange Commission to Poseida Therapeutics, Inc.’s Annual Report on Form 10-K for the year ending December 31, 2021.