18-Oct-2010
ALIM
Entry into a Material Definitive Agreement, Creation of a Direct Financial O
Item 1.01. Entry into a Definitive Material Agreement.
Term Loan Agreement
On October 14, 2010 (the "Effective Date"), Alimera Sciences, Inc. (the "Company") entered into a Loan and Security Agreement with
Silicon Valley Bank and MidCap Funding III, LLC (the "Lenders")
under which the Company borrowed up to $12.5 million (the "Term Loan Agreement").
The Company received $6.25 million of the amount borrowed on the Effective Date (the "Initial Tranche")
and may receive another $6.25 million
if the United States Food and Drug Administration approves the Company's Iluvien product prior to July 31, 2011 (the "Second Tranche").
To secure the repayment of any amounts borrowed under the Term Loan Agreement, the Company granted to the Lenders a first priority security interest in all of its assets,
other than its intellectual property (provided that in the event the Company fails to meet certain financial conditions, a curable lien will be imposed on the Company's intellectual property).
The Company also agreed not to pledge or otherwise encumber its intellectual property assets.
The Company is required to maintain its primary operating and other deposit accounts and securities accounts with Silicon Valley Bank, which accounts must represent at least 50% of the dollar value of the Company's accounts at all financial institutions.
The Company will be required to pay interest on borrowings under the Term Loan Agreement at a rate of 11.5% on a monthly basis through July 31, 2011.
Thereafter, the Company will be required to repay the principal, plus interest at such rate if the Second Tranche is advanced to the Company prior to February 28, 2011 (and plus interest at a rate of 12% if the Second Tranche is advanced to the Company after February 28, 2011), in 27 equal monthly installments.
The Company paid to the Lenders an upfront fee of $62,500, and will pay to the Lenders an additional final payment of 3% of the total principal amount.
In addition, if the Company repays the loan prior to maturity, it will pay to the Lenders a prepayment penalty of 5% of the total principal amount if the prepayment occurs within one year after the funding date, 3% of the total principal amount if the prepayment occurs between one and two years after the funding date and 1% of the total principal amount of the prepayment occurs thereafter (each a "Prepayment Penalty"), provided in each case that such Prepayment Penalty will be reduced by 50% in the event of an acquisition of the Company.
The Company also agreed to customary affirmative and negative covenants and events of default in connection with this arrangement.
The occurrence of an event of default could result in the acceleration of the Company's obligations under the Term Loan Agreement and an increase to the applicable interest rate, and would permit the Lenders to exercise remedies with respect to the collateral under the Term Loan Agreement.
In connection with entering into this agreement, the Company issued to Silicon Valley Bank, a warrant to purchase up to 31,818 shares of the Company's common stock and to MidCap Funding III, LLC, a warrant to purchase up to 47,728 shares of the Company's common stock (together, the "Lender Warrants").
Each of the Lender Warrants is exercisable immediately, has a per-share exercise price of $11.00 and has a term of 10 years. In addition, the Lenders will have certain registration rights with respect to the shares of common stock issuable upon exercise of the Lender Warrants.
The Term Loan Agreement and the Lender Warrants, which are filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this report on Form 8-K, are incorporated herein by reference. The foregoing description of the Term Loan Agreement and the Lender Warrants is qualified in its entirety by reference to such exhibits.
Revolving Loan Agreement
On October 14, 2010, the Company and Silicon Valley Bank entered into a Loan and Security Agreement (the "Revolving Loan Agreement"), pursuant to which the Company obtained a secured revolving line of credit from Silicon Valley Bank with borrowing availability up to $20,000,000.
The Revolving Loan Agreement provides for a working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $20.0 million, or (ii) 85% of eligible domestic
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