Item 1.01 Entry into a Material Definitive Agreement.
Hercules Loan and Security Agreement
On June 30, 2014 the Company and its subsidiary entered into a Loan and Security Agreement (the "Loan and Security Agreement") with Hercules Technology Growth Capital, Inc. (the "Agent"), as administrative and collateral agent for the lenders thereunder and as lender, and Hercules Technology III, LP, as lender. The Loan and Security Agreement provides for a $20 million term loan with a maturity date of January 1, 2018 and is secured by substantially all of the assets of the Company and its subsidiary. Proceeds of the loan will be used to repay in full and terminate the Company's prior credit facility with General Electric Capital Corporation and for general corporate purposes.
The loan bears interest at the rate of the greater of either (i) the prime rate plus 7.7\%, and (ii) 10.95\%. Interest accrues from the date of the Loan and Security Agreement but interest payments are not required to be made until commencing on July 1, 2014. Principal payments are required commencing August 1, 2015 and are to be made in thirty equal installments, with the remainder due at maturity; provided, that in the event that the Company meets certain conditions set forth in the Loan and Security Agreement it may extend the interest only period through February 1, 2016, reducing the number of required principal payments to twenty-four. Additionally, under certain circumstances the Company may, or the Agent may require that the Company, repay a portion of the principal in the form of the Company's common stock. The conversion price used for the calculation of the amount of shares to be delivered in such instance is $5.72.
The Loan and Security Agreement contains representations and warranties, affirmative, negative and financial covenants, and events of default customary for financings of this type, including, among other things, limitations on certain other indebtedness, loans and investments, liens, mergers, asset sales and transactions with affiliates.
In addition, the Company has issued a warrant to the Agent (the "Hercules Warrant") to purchase the number of shares of Common Stock determined by dividing $2,400,000 by the warrant price of $4.65 per share, subject to adjustment as set forth in the Hercules Warrant; provided, that such $2,400,000 may be increased to $2,900,000 in the event that the Company does not meet certain conditions set forth in the Hercules Warrant.
The foregoing descriptions of the Loan and Security Agreement and the Hercules Warrant do not purport to be complete, and are qualified in their entirety by reference to each such document (or form thereof, as applicable), filed as Exhibits attached hereto and incorporated herein by reference.
Private Placement of Senior Convertible Notes to Magna
On June 30, 2014, Amedica Corporation (the "Company") entered into a securities purchase agreement (the "Purchase Agreement"), with MG Partners II Ltd., an affiliate of Magna (the "Investor"). Pursuant to the Purchase Agreement, the Company sold the Investor an initial unsecured senior convertible note with an original principal amount of $2.9 million (the "Initial Convertible Note"), for a purchase price of $2.5 million. Additionally, the Investor is irrevocably bound to purchase, no later than ten (10) calendar days after the effective date of the Registration Statement (as defined below), an additional unsecured senior convertible note with an original principal amount of $3.5 million (the "Additional Convertible Note" and, with the Initial Convertible Note, referred to herein collectively as, the "Convertible Notes"), for a fixed purchase price of $3.5 million, subject only to conditions outside of the Investor's control or that the Investor cannot cause not to be satisfied, none of which are related to the market price of the Company's common stock, $0.01 par value per share (the "Common Stock").
With respect to the Initial Convertible Note, $150,000 of the outstanding principal amount (together with any accrued and unpaid interest with respect to such portion of the principal amount) will be automatically extinguished (without any cash payment by the Company) if (1) the Company has properly filed a registration statement (a "Registration Statement") with the United States Securities and Exchange Commission (the "SEC") on or prior to August 14, 2014 and (2) no event of default, or an event that with the passage of time or giving of notice would constitute an event of default, has occurred on or prior to such date. In addition, $250,000 of the outstanding principal amount of the Initial Convertible Note (together with any accrued and unpaid interest with respect to such portion of the principal amount) will be automatically extinguished (without any cash payment by the Company) if (1) its Registration Statement is declared effective by the SEC on or prior to the earlier of (i) October 13, 2014 and (ii) the fifth trading day after the SEC has notified the Company that its Registration Statement is not subject to further review, and the prospectus contained therein is available for use by the Investor and (2) no event of default, or an event that with the passage of time or giving of notice would constitute an event of default, has occurred on or prior to such date.
The Convertible Notes mature on June 30, 2016 (subject to extension as provided in the Initial Convertible Note) and accrue interest at an annual rate of 6.0\%. The Convertible Notes are convertible at any time after issuance, in whole or in part, at the Investor's option, into shares of Common Stock at an initial fixed conversion price equal to $3.75 per share (the "Initial Fixed Price"). If, . . .
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth in Item 1.01 is incorporated herein by reference.
Item 8.01 Other Events.
On June 30, 2014, the Company issued a press release announcing the transactions described in Item 1.01. The Company's press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. 4.1 Form of Magna Senior Convertible Note 4.2 Magna Warrant to Purchase Common Stock 4.3 Hercules Warrant to Purchase Common Stock 10.1 Securities Purchase Agreement, dated June 30, 2014, by and between the Company and MG Partners II Ltd. 10.2 Registration Rights Agreement, dated June 30, 2014, by and between the Company and MG Partners II Ltd. 10.3 Loan and Security Agreement, dated June 30, 2014, by and among the Company, its subsidiary, Hercules Technology Growth Capital, Inc., and Hercules Technology III, LP. 99.1 Press Release, dated July 1, 2014.
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