Item 1.01 – Entry Into A Material
Definitive Agreement.
Loan and Security
Agreement
On
December 30, 2016 (the “Closing Date”), Ekso Bionics Holdings, Inc. (the “Company”) and Ekso Bionics,
Inc., the Company’s wholly-owned subsidiary (“Ekso Bionics”, and together with the Company, the
“Borrower”), entered into a Loan and Security Agreement (the “Loan Agreement”) with Western Alliance
Bank (the “Lender”), pursuant to which the Lender agreed to loan up to an aggregate of $10 million to the
Borrower in two tranches of $7 million (the “Term A Loan”) and $3 million (the “Term B Loan”, and
together with the Term A Loan, the “Term Loans”), respectively. The Term A Loan was disbursed to the Borrower on
the Closing Date. If the Company receives net cash proceeds of at least $15 million in connection with the sale or issuance
of its equity securities, including in connection with the exercise of warrants, prior to December 31, 2017, the Company may
request on or prior to December 31, 2017, and the Lender agrees to make, the Term B Loan so long as no event of default has
occurred.
Pursuant
to the Loan Agreement, the proceeds from the Term Loans may only be used for working capital purposes and to fund general business
requirements. The Term Loans will bear interest, on the outstanding daily balance thereof, at a floating per annum rate equal to
the 30 day U.S. LIBOR rate plus 5.41%.
The
Borrower is required to pay accrued interest on the Term Loans on the first day of each month through and including January 1,
2018, if the Term B Loan is not made (or July 1, 2018, if the Term B Loan is made). Commencing on February 1, 2018, if the Term
B Loan is not made (or August 1, 2018, if the Term B Loan is made), the Borrower shall make equal monthly payments of principal,
together with accrued and unpaid interest. The principal balance of the Term Loans amortizes ratably over 36 months, if the Term
B Loan is not made (or 30 months, if the Term B Loan is made). The maturity of the Term Loans is January 1, 2021, at which time
all unpaid principal and accrued and unpaid interest shall be due and payable in full.
The
Borrower was required to pay a non-refundable loan fee of $35,000 as of the Closing Date and will be required to pay an additional
non-refundable loan fee of $15,000 if the Lender advances the Term B Loan. The Borrower may elect to prepay a Term Loan at any
time, in whole but not in part. If the Borrower prepays a Term Loan prior to the first anniversary of the funding date of the Term
Loan, it will owe a prepayment fee to the Lender equal to 1.0% of the principal amount of such Term Loan prepaid. The prepayment
fee is also payable in connection with any acceleration of a Term Loan by the Lender prior to the first anniversary of the funding
date of the Term Loan following a default by the Borrower. In addition, the Borrower is required to pay a fee in an amount equal
to 3.50% of each Term Loan upon the earlier to occur of (a) acceleration of such Term Loan by the Lender following a default by
the Borrower, (b) voluntary prepayment of such Term Loan by the Borrower and (c) the maturity of such Term Loan.
The
Loan Agreement includes funding conditions, representations and warranties and covenants customary to similar credit facilities.
The covenants include, among others, restrictions on the ability of the Borrower and its subsidiaries to dispose of assets, enter
into mergers or acquisitions, incur indebtedness, incur liens, pay dividends or make distributions on the Company’s capital
stock, make investments or loans, enter into certain affiliate transactions, license or pledge its intellectual property, make
any capital expenditure in excess of $150,000 over projected amounts, permit a Change of Control (as defined in the Loan Agreement)
to occur, or permit a foreign subsidiary to maintain certain excess cash deposits or other assets, in each case subject to exceptions
customary to similar credit facilities. The Borrower and its domestic subsidiaries are also required to maintain substantially
all of their cash and cash equivalents in accounts at the Lender. In addition, the Company agreed to a liquidity covenant requiring
that it maintain unrestricted cash and cash equivalents in accounts at Lender or subject to control agreements in favor of Lender
in an amount equal to at least three months of “Monthly Cash Burn,” which is the Company’s average monthly net
income (loss) for the trailing six-month period plus certain expenses and plus the average monthly principal due and payable on
interest-bearing liabilities in the immediately succeeding three-month period.
The
Loan Agreement creates a first priority security interest in favor of the Lender with respect to substantially all assets of the
Borrower and its domestic subsidiaries, including proceeds of intellectual property, but expressly excluding intellectual property
itself. The Borrower was also required to pledge 100% of the stock of each of its domestic subsidiaries and 65% of the stock of
each of its foreign subsidiaries.
Events
of default which may cause repayment of the Term Loans to be accelerated include, among other customary events of default, (1)
non-payment of any obligation when due, (2) the Borrower’s failure to comply with its affirmative and negative covenants,
(3) the Borrower’s failure to perform any other obligation required under the Loan Agreement and to cure such default within
a 30 days after becoming aware of such failure, (4) the occurrence of a Material Adverse Effect (as defined in the Loan Agreement),
(5) the attachment or seizure of a material portion of the Borrower’s assets if such attachment or seizure is not released,
discharged or rescinded within 10 days, (6) bankruptcy or insolvency of the Borrower, (7) default by the Borrower under any agreement
(i) resulting in a right by a third party to accelerate indebtedness in an amount in excess of $250,000 or (ii) that would reasonably
be expected to have a Material Adverse Effect, (8) entry of a final, uninsured judgment or judgments against the Borrower for the
payment of money in an amount, individually or in the aggregate, of at least $250,000, or (9) any material misrepresentation or
material misstatement with respect to any warranty or representation set forth in the Loan Agreement.
The
foregoing description of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the
copy of the Loan Agreement attached hereto as Exhibit 10.1, which is incorporated herein by reference.
Success
Fee Agreement
In
connection with the Loan Agreement, the Borrower simultaneously entered into a Success Fee Agreement (the “Success Fee Agreement”)
with the Lender. Pursuant to the Success Fee Agreement, the Borrower shall pay to the Lender a success fee of $250,000 (the “Success
Fee”) upon the first to occur of any of the following events: (a) a sale or other disposition by the Borrower of all or substantially
all of its assets; (b) a merger or consolidation of the Borrower into or with another person or entity, where the holders of the
Borrower’s outstanding voting equity securities immediately prior to such merger or consolidation hold less than a majority
of the issued and outstanding voting equity securities of the successor or surviving person or entity immediately following the
consummation of such merger or consolidation; or (c) the closing price per share for the Company’s common stock being $8.00
or more for five successive business days. The Success Fee Agreement will terminate on December 30, 2026 if the Success Fee has
not been paid by such date.
The
Success Fee is payable, at the option of the Company, in cash or in shares of the Company’s common stock to the extent such
shares may be sold without volume limitations pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”) or are registered for resale under the Securities Act.
The
foregoing description of the Success Fee Agreement does not purport to be complete and is qualified in its entirety by reference
to the copy of the Success Fee Agreement attached hereto as Exhibit 10.2, which is incorporated herein by reference.