Item 1.01. Entry into a Material Definitive Agreement.
On April 22, 2020, Alimera Sciences, Inc. (“Alimera”) received approximately $1.8 million in support (the “PPP Loan”) from the U.S. federal government under the Paycheck Protection Program established as part of the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. The PPP Loan is unsecured and is evidenced by a note in favor of HSBC Bank USA, National Association (“HSBC”) as the lender (the “Note”), and is governed by a Loan Agreement with HSBC (the “Loan Agreement”), which are filed as Exhibit 10.16 and Exhibit 10.17, respectively, to this current report on Form 8-K and incorporated by reference herein.
The interest rate on the Note is 1.0% per annum. Payments of principal and interest are deferred for 180 days from the date of the Note (the deferral period). The Paycheck Protection Program provides a mechanism for forgiveness of up to the full amount borrowed as long as Alimera uses the loan proceeds during the eight-week period after the loan origination for eligible purposes, including U.S. payroll costs, certain benefits costs, rent and utilities costs, and maintains its employment and compensation levels, subject to certain other requirements and limitations. The amount of loan forgiveness is subject to reduction, among other reasons, if Alimera terminates employees or reduces salaries or wages during the eight-week period. Any unforgiven portion of the PPP Loan is payable over a two-year term, with payments deferred during the deferral period. Alimera is permitted to prepay the Note at any time without payment of any premium. The Note contains customary events of default, including, among others, those relating to failure to make a payment, bankruptcy, material defaults on other indebtedness, breaches of representations, and material adverse changes.
Also as of April 21, 2020, in connection with the PPP Loan, Alimera entered into a Consent to Loan and Security Agreement (the “Consent”) under its December 31, 2019 $45 million Loan and Security Agreement (the “Solar Loan Agreement”) with Solar Capital Ltd. (“Solar Capital”), as Collateral Agent, and the parties signing the Solar Loan Agreement from time to time as Lenders, including Solar Capital in its capacity as a Lender (each a “Lender” and collectively, the “Lenders”). Pursuant to the Consent, Solar Capital consented as Collateral Agent and a Lender, and the other Lenders consented as Lenders, to the indebtedness incurred under the PPP Loan, subject to certain conditions, including Alimera’s covenant to comply with specified provisions of the CARES Act, Alimera’s confirmation of the accuracy of its representations and warranties in the Solar Loan Agreement and related documents and a release in favor of the Collateral Agent and the Lenders. The Consent is filed as Exhibit 10.14.D to this current report on Form 8-K and incorporated by reference herein.
The description above is only a summary of the material provisions of the PPP Loan, the Note, the Loan Agreement and the Consent and is qualified in its entirety by reference to copies of each of the Note, the Loan Agreement and the Consent, which are filed as Exhibits 10.16, 10.17 and 10.14.D, respectively, to this current report on Form 8-K and incorporated by reference herein.