Array BioPharma Inc. (NASDAQ:ARRY) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive
Agreement
On December22, 2016 (the Effective Date), Array
entered into a Loan and Security Agreement (the Loan
Agreement) with Silicon Valley Bank
(SVB) providing for a term loan in the original
principal amount of $15,000,000 (the Term Loan
Amount) and a revolving line of credit of up to
$5,000,000 (Revolving Line). Array may request
advances under the revolving line of credit, which may be repaid
and reborrowed, or utilize the line of credit for the issuance of
letters of credit, foreign exchange contracts or other cash
management services. Array intends to utilize a portion of the
proceeds from the term loan to repay in full its outstanding
obligations to Comerica Bank under the Loan and Security
Agreement dated June28, 2005, as amended (the Comerica
Loan Agreement). The entire Term Loan Amount was loaned
on the Effective Date, and Array has requested the issuance of a
letter of credit in the amount of $2,800,000 to secure Arrays
obligations under its lease agreement for its Boulder, Colorado
facilities.
The outstanding principal amount under the term loan bears
interest at a floating per annum rate equal to the Prime Rate
minus 2.00% (but not less than 0.00%) and the principal amount of
any advances outstanding under the revolving line bear interest
at a floating per annum rate equal to the prime rate. Array must
make monthly payments of interest under the term loan commencing
with the first month after the Effective Date until maturity and,
commencing on January1, 2019 and monthly thereafter, Array must
make payments of principal under the term loan based on a
36-month amortization schedule. Payments of accrued interest on
any advances outstanding under the revolving line of credit are
payable monthly. A final payment of accrued interest and
principal due on the term loan and on any outstanding advances is
due on the maturity date of December1, 2021.
The Loan Agreement provides for a revolving line commitment fee
of $50,000, payable in five equal installments from the Effective
Date and an unusued revolving line facility fee equal to 0.20%
per annum of the average unused portion of the Revolving Line.
Upon repayment or acceleration of the term loan, a final payment
fee equal to 8.00% of the Term Loan Amount is payable. If the
term loan is prepaid or accelerated prior to the maturity date,
Array must also pay a fee equal to (i)2.00% of the Term Loan
Amount if such prepayment or acceleration occurs on or prior to
the first anniversary of the Effective Date, or (ii)1.00% of the
Term Loan Amount if such prepayment or acceleration occurs after
the first anniversary of the Effective Date. If the revolving
line is terminated prior to the maturity date for any reason,
Array must pay a termination fee equal to (i)2.00% of the
Revolving Line if such termination occurs on or prior to the
first anniversary of the Effective Date, or (ii)1.00% of the
Revolving Line if such termination occurs after the first
anniversary of the Effective Date.
Array granted SVB a first priority security interest in all
assets of Array other than its intellectual property, provided
that accounts and proceeds of Arrays intellectual property
constitutes collateral and Array has agreed not to encumber its
intellectual property without SVBs consent. The Loan Agreement
contains customary covenants, including restrictions on changes
in control of Array, the incurrence of additional indebtedness,
future encumbrances on Arrays assets, the payment of dividends or
distributions on Arrays common stock and the sale, lease,
transfer or disposition of Binimetinib and Encorafenib outside of
certain markets if Arrays cash and cash equivalents maintained
with SVB fall below certain levels. In addition, Array must
maintain a liquidity ratio, defined as (i)Arrays unrestricted
cash and cash equivalents maintained at SVB or its affiliates
plus eligible accounts divided by (ii)all outstanding obligations
owed to SVB, of at least 2.00 to 1.00, measured monthly.
Upon an event of default under the Loan Agreement, SVB is
entitled to accelerate and demand payment of all amounts
outstanding under the Loan Agreement, including payment of all
applicable termination and prepayment fees, demand that Array
deposit at least 105% of the face amount of any letters of credit
remaining undrawn to secure all obligations thereunder, and to
exercise other remedies available to SVB under the Loan Agreement
and at law or in equity.
Item 1.02 Termination
of a Material Definitive Agreement
In connection with entering into the Loan Agreement described
above, Array repaid all outstanding obligations to Comerica
Bank and terminated the Comerica Loan Agreement on December22,
2016. Upon payment of such obligations, all liens held by
Comerica Bank on Arrays assets terminated and were released.
Item 2.03 Creation of a Direct
Financial Obligation or an Obligation Under an Off-Balance
Sheet Arrangement of a Registrant.
The information required by this Item2.03 relating to the Loan
Agreement is contained in Item1.01 above and is incorporated
herein by reference.
Item9.01 Financial Statements and
Exhibits.
(d)Exhibits
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Exhibit No. |
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Description |
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10.1 |
Loan and Security Agreement dated December22, 2016 |
About Array BioPharma Inc. (NASDAQ:ARRY)