Item 1.01. Entry into a Material Definitive
Agreement.
ENDRA
Life Sciences Inc. (the “Company”) previously submitted
an application to First Republic Bank (the
“Lender”) under the Small Business Administration (the
“SBA”) Paycheck Protection Program (the
“PPP”) promulgated under the Coronavirus Aid, Relief
and Economic Security Act of 2020 (the “CARES Act”).
The application was subsequently approved and, on April 21, 2020,
the Company issued a U.S. Small Business Administration Paycheck
Protection Program Note (the “Note”) to the Lender for
a loan in the principal amount of $308,600.00 (the
“Loan”). The Company received the full amount of the
Loan on April 22, 2020.
The
advance under the Loan bears interest at a rate per annum of 1.00%.
The term of the Loan is two years, ending April 22, 2022 (the
“Maturity Date”). No payments are due on the Loan until
seven months from the date of first disbursement of the Loan (the
“Deferment Period”), but interest will accrue during
the Deferment Period. Following the Deferment Period, the Company
must pay monthly principal and interest payments on the outstanding
principal balance of the Loan amortized over the term of the Loan
(the “Loan Payments”), unless forgiven in whole or in
part in accordance with the PPP regulations.
The
Company may apply to the Lender for the Loan be forgiven partially
or fully if the funding received is used during the 8-week period
following disbursement for payroll costs, covered rent, and covered
utilities, provided that at least 75% of the forgiven amount has
been used for payroll costs. Forgiveness is based on the
Company’s maintaining, or quickly rehiring employees and
maintaining applicable salary levels. Forgiveness will be reduced
if full-time headcount declines, or if salaries and wages decrease.
No assurance is provided that the Company will obtain forgiveness
of the Loan in full or in part.
The
Company may prepay the principal of the Loan at any time without
incurring any prepayment charges. The Company may prepay 20% or
less of the unpaid principal balance at any time without notice. If
the Company prepays more than 20% and the Loan has been sold on the
secondary market, the Company must provide the Lender with written
notice, pay all accrued interest and comply with the other
requirements described in the Note for such repayment.
The
Company did not provide any collateral or personal guarantees for
the Loan, nor did the Company pay any facility charge to the
government or to the Lender.
The
Note also provides for customary events of default, including,
among others, events of default relating to failure to make payment
or comply with the covenants contained in the Note and related loan
documents, defaults on any other loan with the Lender, defaults on
any loan or agreement with another creditor (if the Lender believes
the default may materially affect the Company’s ability pay
the Note), failure to pay any taxes when due, bankruptcy, breaches
of representations, judgment, reorganization, merger, consolidation
or other changes in ownership or business structure without the
Lender’s prior written consent, and material adverse changes
in financial condition or business operation. Upon an event of
default the Lender may require immediate payment of all amounts
owing under the Note, collect all amounts owing from the Company,
or file suit and obtain judgment.
The
foregoing summary of the Note does not purport to be complete and
is qualified in its entirety by reference to the Note, which will
be filed as an exhibit to the Company’s next Quarterly Report
on Form 10-Q and is incorporated herein by reference.