Item 1.01. Entry into a Material Definitive Agreement.
On January 21, 2022, Aziyo Biologics, Inc. (the "Company") entered into (i) a
second amendment (the "Term Loan Amendment") to its Amended and Restated Credit
and Security Agreement (Term Loan), dated as of July 15, 2019, by and among the
Company, Aziyo Med, LLC (together with the Company, the "Borrowers"), MidCap
Financial Trust and the other financial institutions or entities from time to
time party thereto, as amended (the "Term Loan Credit Agreement") and (ii) a
second amendment (the "Revolving Loan Amendment" and, together with the Term
Loan Amendment, the "Amendments") to its Amended and Restated Credit and
Security Agreement (Revolving Loan), dated as of July 15, 2019, by and among the
Borrowers, MidCap Funding IV Trust (the "Revolving Agent") and the other
financial institutions or entities from time to time party thereto (together
with the Revolving Agent, the "Revolving Lenders"), as amended (the "Revolving
Loan Credit Agreement" and, together with the Term Loan Credit Agreement, the
"Credit Agreements").
Under the terms of the Term Loan Amendment, the provision governing prepayment
fees under the Term Loan Credit Agreement was amended such that any prepayment
by the Company would require the payment by the Company of a prepayment fee
equal to the amount prepaid (or required to be prepaid, if such amount is
greater) multiplied by, in the case of each of Term Loan Tranche 1, Term Loan
Tranche 2, Term Loan Tranche 3, Term Loan Tranche 4 and Term Loan Tranche 5
(each as defined in the Term Loan Credit Agreement), 3.0% until January 21, 2023
and 2.0% thereafter.
Under the terms of the Revolving Loan Amendment, the provision governing
deferred revolving loan origination fees under the Revolving Loan Credit
Agreement was amended such that any termination or permanent reduction in the
Revolving Lenders' funding obligations in respect of the Revolving Loan
Commitment (as defined in the Revolving Loan Credit Agreement) prior to the
Maturity Date (as defined in the Revolving Loan Credit Agreement), would require
the payment by the Company of deferred revolving loan origination fee equal to
the amount of the Revolving Loan Commitment so terminated or permanently reduced
multiplied by 3.0% until January 21, 2023 and 2.0% thereafter.
In consideration for each of the foregoing, under the terms of each of the
Amendments, the financial covenant contained in each of the Credit Agreements
requiring the Company to achieve a specified Minimum Net Product Revenue Amount
(as defined in the applicable Credit Agreement), tested on a monthly basis, for
the 12-month period preceding each defined period end date, was adjusted through
an amendment and restatement of the schedule setting forth the Minimum Net
Product Revenue Amount as to each defined period end date. In certain cases, the
amended and restated schedule reduced the specified Minimum Net Product Revenue
Amounts required to be achieved for compliance with the financial covenant under
the applicable Credit Agreement.
As previously announced on December 8, 2021, the Company sold an aggregate of
(i) 2,122,637 shares of its Class A common stock, par value $0.001 per share and
(ii) 1,179,244 shares of its Class B common stock, par value $0.001 per share,
to certain of investors, in each case, at a purchase price equal to $4.24 per
share, for aggregate gross proceeds of approximately $14.0 million, before
deducting offering expenses. Additionally, as noted above, the Company has
amended its Minimum Net Product Revenue Amount financial covenant included in
its Credit Agreements. The Company believes that with such amendment it will be
able to comply with such covenant going forward. With the equity raise and
covenant amendment, the Company believes that its existing cash on hand, cash
available under its Revolving Loan Credit Agreement and cash generated from
expected future sales will be sufficient to meet the Company's anticipated
operating needs through twelve months from January 21, 2022, and as a result,
the uncertainty regarding the Company's ability to continue as a going concern,
as previously discussed in Note 2 to the condensed consolidated financial
statements for the quarter ended September 30, 2021, within one year after
January 21, 2022 has been alleviated.
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