| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 30, 2019, Arcturus Therapeutics, Inc. (the “Borrower”), a wholly-owned subsidiary of Arcturus Therapeutics Holdings Inc. (the “Company”), and Western Alliance Bank (the “Bank”) entered into a Third Amendment (the “Third Amendment”) to the Loan and Security Agreement dated as of October 12, 2018 (the “Loan Agreement”) by and between the Bank and the Borrower.
Pursuant to the Third Amendment, the Bank agreed to make a term loan to the Borrower on October 30, 2019, in the amount of $15 million (the “Term Loan”), with $10 million of such Term Loan used to repay existing debt of the Borrower owed to the Bank, resulting in a $5 million net increase in the indebtedness of the Borrower. The Term Loan bears interest at a floating rate ranging from 1.25% to 2.75% above the prime rate published by the Western Edition of the Wall Street Journal, based upon the Borrower’s level of qualifying unrestricted cash held in demand deposit accounts and money market accounts at the Bank. The Third Amendment further provides that the Term Loan has a maturity date of October 30, 2023. The Borrower shall make monthly payments of interest only until the interest-only end date of April 1, 2021, which is subject to extension to October 1, 2021 upon the occurrence of an Equity/Expansion Event (as defined in the Third Amendment) and the absence of an Event of Default (as defined in the Loan Agreement), and thereafter shall make monthly payments of principal and interest during a 30 month amortization period.
The Term Loan may be prepaid in full at any time in full, provided that a prepayment fee is required to be paid by the Borrower upon prepayment. The Prepayment Fee (as defined in the Third Amendment) ranges from 0.50% to 2.00% of the prepaid principal amount depending upon the date on which the prepayment is made.
In connection with the Third Amendment, the Company guaranteed the Borrower’s obligations under the Loan Agreement and pledged selected assets as security under the Loan Agreement. The Third Amendment modified the Borrower’s covenants to extend the dates by which a selected investigational new drug application (“IND”) must be submitted and by which the U.S. Food and Drug Administration or equivalent authority must accept the IND, and also required the Borrower to maintain the lesser of (i) all of its total consolidated and unrestricted cash in total deposits with the Bank or (ii) $15 million in total deposits with the Bank. The Borrower further agreed to endeavor to utilize the Bank for selected international banking services and maintain control agreements in favor of the Bank for any accounts outside of the Bank, subject to exceptions for specified accounts.
The foregoing description of the Third Amendment is not a complete description of all terms and is qualified in its entirety by reference to the full text of the Third Amendment, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2019.
| Item 5.07 | Submission of Matters to a Vote of Security Holders. |
On October 25, 2019, the Company held its annual meeting of stockholders (the “Meeting”). The total number of shares entitled to vote at the Meeting was 14,275,293 and there were present at the Meeting, in person or by proxy, 10,825,164 shares, which constituted a quorum for the Meeting.
At the Meeting, the stockholders voted:
(1) for the election of Dr. Peter Farrell, Joseph E. Payne, Andy Sassine, James Barlow, Dr. Edward W. Holmes, Dr. Magda Marquet and Karah Parschauer to the Company’s Board of Directors;
(2) for the approval of the Company’s 2019 Omnibus Equity Incentive Plan and ratification of grants made thereunder;
(3) for, bynon-binding advisory vote, the resolution approving the Company’s named executive officer compensation;
(4) for, bynon-binding advisory vote, three years as the preferred frequency of future nonbinding advisory votes on the Company’s named executive officer compensation; and
(5) for the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2019.
The final results of the stockholder votes at the Meeting are set forth below:
Proposal No. 1
| | | | | | | | | | | | |
| | | For | | | Withhold | | | Broker Non-Votes | |
| Approval of the election of the following individuals as directors of the Company, as provided in Proposal Number 1 of the Proxy Statement: | | | | | | | | | | | | |
(1) Dr. Peter Farrell | | | 8,381,523 | | | | 47,401 | | | | 2,396,240 | |
(2) Joseph E. Payne | | | 8,388,794 | | | | 40,130 | | | | 2,396,240 | |
(3) Andy Sassine | | | 7,983,789 | | | | 445,135 | | | | 2,396,240 | |
(4) James Barlow | | | 8,381,625 | | | | 47,299 | | | | 2,396,240 | |
(5) Dr. Edward W. Holmes | | | 8,388,808 | | | | 40,116 | | | | 2,396,240 | |
(6) Dr. Magda Marquet | | | 8,381,602 | | | | 47,322 | | | | 2,396,240 | |
(7) Karah Parschauer | | | 8,388,908 | | | | 40,016 | | | | 2,396,240 | |
