On September 25, 2020, Exicure, Inc. and Exicure Operating Company, Exicure’s wholly owned subsidiary (collectively with Exicure, the "Company") reported that it entered into a Credit and Security Agreement (the "Credit Agreement"), with MidCap Financial Trust ("MidCap"), as agent, and the lenders party thereto from time to time (Filing, 8-K, Exicure, SEP 25, 2020, View Source [SID1234567870]).

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The Credit Agreement provides for a secured term loan facility in an aggregate principal amount of up to $25.0 million (the "Credit Facility"). The Company borrowed the first advance of $17.5 million ("Tranche 1") on September 25, 2020 (the "Closing Date"). Under the terms of the Credit Agreement, the second advance of $7.5 million ("Tranche 2") will be available to the Company from April 1, 2021 to September 30, 2021, subject to the Company’s satisfaction of certain conditions described in the Credit Agreement. The proceeds from the Credit Facility are expected to be used for working capital and general corporate purposes.

Tranche 1, and if borrowed Tranche 2, each bear interest at a floating rate equal to 6.25% per annum, plus the greater of (i) 1.50% or (ii) one-month LIBOR. Interest on each loan advance is due and payable monthly in arrears. Principal on each loan advance is payable in 36 equal monthly installments beginning October 1, 2022 until paid in full on October 1, 2025. Prepayments of the loans under the Credit Agreement, in whole or in part, will be subject to early termination fees in an amount equal to 3.0% of principal prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date and 1.0% of principal prepaid if prepayment occurs after the first anniversary of the Closing Date and prior to the maturity date. In connection with execution of the Credit Agreement, the Company paid MidCap a $125,000 origination fee.

Upon termination of the Credit Agreement, the Company is required to pay an exit fee equal to 3.75% of the principal amount of all loans advanced to the Company under the Credit Agreement.

The Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of its assets, excluding intellectual property (which is subject to a negative pledge). Additionally, the Company’s future subsidiaries, if any, may be required to become co-borrowers or guarantors under the Credit Agreement.

The Credit Agreement contains customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.

The Credit Agreement also contains customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, delisting of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties. Upon an event of default, the agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement. During the existence of an event of default, interest on the obligations could be increased by 2.0%.

The above description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.