Section 1.01 Entering into a Material Definitive Agreement.
On November 2, 2022, 908 devices inc. (the “Company”) has entered into a loan and guarantee agreement (the “Loan Agreement”), by and between, the Company, as borrower, and Bank of Silicon Valley, as lender (the “Lender”). The loan agreement provides for a revolving line of credit of up to $35.0 million.
The loan agreement replaced the company’s previous agreement $25.0 million revolving line of credit (the “Preliminary Loan Agreement”), concluded on March 11, 2021, by and between the Company, as borrower, and Signature Bank, as lender. The Company’s obligations under the prior loan agreement have been fully satisfied and the prior loan agreement has been terminated in connection with entering into the loan agreement.
The unpaid principal amount of any advance will bear interest at a variable annual rate equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period less one-half percent (0.50%). The Company’s obligations under the Loan Agreement are secured by substantially all of the Company’s assets, excluding its intellectual property, which is negatively pledged. The revolving line of credit under the loan agreement terminates on
November 2, 2025. From November 2, 2022no amount was outstanding under the loan agreement.
The loan agreement also contains certain financial covenants, including a requirement that the amount of unrestricted and unencumbered cash less advances under the loan agreement, be not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash consumption. The Loan Agreement contains customary representations and warranties, as well as certain non-financial covenants, including limitations on, among other things, the Company’s ability to change the primary nature of its business, to divest the business or property of the company, engage in any change of control, merge or consolidate with any other entity or acquire all or substantially all of the share capital or property of another entity, incur additional debts or liens, pay dividends or make other distributions on the capital stock, redeem the capital stock of the Company, engage in transactions with affiliated companies or otherwise encumber the intellectual property of the Company, in each case, subject to the exceptions usual.
The foregoing description of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, which is attached hereto as Schedule 10.1 and incorporated by reference herein.
Section 1.02 Termination of a Material Definitive Agreement.
On November 2, 2022, the Company has voluntarily terminated the Preliminary Loan Agreement. The Company has not incurred any early termination penalty in connection with the termination of the Preliminary Loan Agreement.
The prior loan agreement provided for a revolving line of credit of up to
$25.0 million. Borrowings under the Prior Loan Agreement bore interest at an annual rate equal to the greater of (i) one-half percent (0.50%) above prime or (ii) four percent (4 .00%), and were secured by substantially all of the Company’s assets, excluding its intellectual property, which was negatively pledged. Upon termination of the Prior Loan Agreement, all security interests granted to the Secured Parties thereunder were terminated and released. The prior loan agreement also contained certain financial covenants, including an unrestricted minimum cash level of $10.0 million. From November 2, 2022no amounts were outstanding under the prior loan agreement.
The information set forth in Section 1.01 of this Form 8-K above regarding the Prior Loan Agreement is incorporated by reference in response to this Section 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Section 1.01 of this Form 8-K above regarding the Loan Agreement is incorporated by reference in response to this Section 2.03.
Item 9.01 Financial statements and supporting documents.
10.1 Loan and Security Agreement, dated as of November 2, 2022, by and
between 908 Devices Inc. and Silicon Valley Bank
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