Item 8.01. Other Events. Loan Agreement
As previously disclosed in our Current Report on Form 8-K, dated
In connection with the Debt Commitment Letter, Holdings and Borrower have
negotiated the terms of a Term Loan, Guarantee and Security Agreement (the "Term
Loan Agreement") setting forth the terms of the Term Loan. Pursuant to the terms
of the Term Loan Agreement, the Term Loan will be advanced in one tranche on the
Closing Date. The Term Loan will amortize in the amount of 5% per annum
beginning 24 months after closing and mature on the fourth anniversary of the
Closing Date ("Maturity Date"). The Term Loan will accrue interest (i) until
The Company may elect to prepay all or any portion of the amounts owed prior to the Maturity Date, provided that the Company provides notice to the Administrative Agent and the amount is accompanied by the applicable prepayment premium, if any. Prepayments of the Term Loan will be required to be accompanied by a premium of 5% of the principal amount so prepaid if made prior to the 1st anniversary of the Closing Date, 3% if made on and after the 1st anniversary but prior to the 2nd anniversary of the Closing Date, 1% if made after the 2ndanniversary of the Closing Date but prior to the 3rd anniversary of the Closing Date, and 0% if made on or after the 3rdanniversary of the Closing Date. If the Term Loan is accelerated following the occurrence of an event of default, the Borrower will be required to immediately pay to lenders the sum of all obligations for principal, accrued interest, and the applicable prepayment premium.
In addition to the foregoing, Borrower will be required to prepay the Term Loan
with the net cash proceeds of certain asset sales and casualty events (subject
to certain customary exceptions), with the net cash proceeds of the issuance of
indebtedness that is not otherwise permitted to be incurred under the Term Loan
Agreement, upon the receipt of net cash proceeds from an equity issuance in an
amount equal to 25% of such net cash proceeds, and commencing with the fiscal
year ending
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Pursuant to the Term Loan Agreement, the obligations of Borrower will be
guaranteed by Holdings and Borrower's subsidiaries that are party thereto from
time to time as guarantors. Pursuant to the Term Loan Agreement, each of
Holdings, Borrower and its subsidiaries party thereto from time to time will
grant
The Term Loan Agreement contains affirmative and restrictive covenants and
representations and warranties. The Company and its subsidiaries will be bound
by certain affirmative covenants setting forth actions that are required during
the term of the Term Loan Agreement, including, without limitation, certain
information delivery requirements, obligations to maintain certain insurance,
and certain notice requirements. Additionally, Holdings, Borrower and each of
its subsidiaries that are guarantors from time to time will be bound by certain
restrictive covenants setting forth actions that are not permitted to be taken
during the term of the Term Loan Agreement without prior written consent,
including, without limitation, incurring certain additional indebtedness,
consummating certain mergers, acquisitions or other business combination
transactions, and incurring any non-permitted lien or other encumbrance on
assets. The Term Loan Agreement will also contain other customary provisions,
such as confidentiality obligations and indemnification rights for the benefit
of the administrative agent and lenders. The Term Loan Agreement will contain
financial covenants requiring the credit parties to (a) maintain minimum
liquidity (generally, the balance of unrestricted cash and cash equivalents in
the Company's account that is subject to a control agreement in favor of the
Administrative Agent) of at least
Warrant Agreements
In connection with the entry into the Term Loan Agreement, and as a required
term and condition thereof, Holdings shall enter into (i) the Penny Warrant to
issue penny warrants to the Initial Term Loan Lenders under the Term Loan
exercisable to purchase an aggregate number of shares equal to 5.6% of Holding's
common stock on a fully diluted basis (the "Penny Warrants") and (ii) the
The Penny Warrants will have an exercise period of 10 years from the date of issuance. In addition, the calculation of ownership of common stock "on a fully diluted basis" will include (i) all outstanding common stock, (ii) shares of common stock issuable upon conversion of outstanding convertible bonds, preferred stock and other securities convertible to common stock on an as-converted to common stock basis, and (iii) all shares of common stock subject to outstanding options.
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The
The Warrants will have specified weighted average anti-dilution protection
against subsequent equity sales or distributions, subject to customary
exclusions including for issuances upon conversion exercise or exchange of
securities outstanding as of the Closing Date, issuances pursuant to agreements
in effect as of the Closing Date (provided such issuances are taken into account
in the calculation of "on a fully diluted basis" as provided above), issuances
pursuant to employee benefit plans and similar arrangements, issuances in joint
ventures, strategic arrangements or other non-financing type transactions,
issuances in debt financings as equity kickers, issuances in public offerings
and similar transactions. In addition, no anti-dilution adjustment will be made
with respect to issuances of Holdings common stock pursuant to Holdings' planned
The foregoing description of the Penny Warrants and
4 Forward-Looking Statements
This Current Report on Form 8-K contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, including certain financial forecasts and projections. All statements other than statements of historical fact contained in this Current Report on Form 8-K, including statements as to the transactions contemplated by the business combination and related agreements, future results of operations and financial position, revenue and other metrics, planned products and services, business strategy and plans, objectives of management for future operations of Dragonfly, market size and growth opportunities, competitive position and technological and market trends, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," "plan," "targets," "projects," "could," "would," "continue," "forecast" or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors (some of which are beyond the control of Dragonfly or CNTQ) which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 4.1 Form of Penny Warrants 4.2 Form of$10 Warrants 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 6
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