|
Item 2.03
|
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
|
On December 29, 2017, the Company and its
subsidiaries entered into a five-year senior secured credit facility (the "Credit Agreement") with Citizens Bank, N.A.
as a lender and as administrative agent. The Credit Agreement is comprised of a $75 million five-year term loan and a $50 million
senior secured revolving credit facility. The Credit Agreement is secured by the assets of the Company.
On December 29, 2017, the Company drew down the $75 million
term loan, the proceeds of which were used to (i) finance the Company's acquisition of the four NDAs acquired from the Sellers
for $46.5 million in cash as described in Item 1.01 above, and (ii) refinance existing indebtedness of $25 million that was outstanding
against the Company's now retired asset-based revolving credit facility with Citizens Business Capital, a division of Citizens
Asset Finance, Inc., dated May 12, 2016. No other amount was drawn under the Credit Agreement.
The Company may repay borrowings under the
term loan and revolving credit facility without any premium or penalty, but must repay all borrowing thereunder by August 30, 2019
unless it meets certain conditions relating to its repayment or refinance of its outstanding 3.0% Senior Convertible Notes due
2019 as set forth in the Credit Agreement, and in no event later than December 29, 2022.
Term loans under the Credit Agreement bear
interest at a rate per annum of, at the Company’s option, either (i) the Alternative Base Rate, as defined in the Credit
Agreement, plus an applicable Base Rate Margin, which varies within a range of 0.50% to 1.25% depending on the Company’s
total leverage ratio (as determined under the Credit Agreement), or (ii) the LIBOR Rate, as defined in the Credit Agreement, plus
an applicable LIBOR Margin and L/C Fee, which varies within a range of 1.50% to 2.25% depending on the Company’s total leverage
ratio (as determined under the Credit Agreement). The Company is required to pay a Commitment Fee at a rate per annum that varies
within a range of 0.25% to 0.35% depending on the Company’s total leverage ratio (as determined under the Credit Agreement).
The Company must comply with various customary
financial and non-financial covenants under the Credit Agreement. The primary financial covenants under the Credit Agreement consist
of a maximum total leverage ratio, which initially shall be no greater than 3.75 to 1.00, a maximum senior secured leverage ratio,
which initially shall be no greater than 2.50 to 1.00, and a minimum fixed charge coverage ratio which shall be greater than or
equal to 1.25 to 1.00. The primary non-financial covenants under the Credit Agreement limit, subject to various exceptions, the
Company’s ability to incur future indebtedness, to place liens on assets, to pay dividends or make other distributions on
the Company’s capital stock, to repurchase the Company’s capital stock, to conduct acquisitions, to alter its capital
structure and to dispose of assets.
The lenders under the Credit Agreement are
entitled to accelerate repayment of the loans under the Credit Agreement upon the occurrence of any of various customary events
of default, which include, among other events, failure to pay when due any principal, interest, fees or other amounts in respect
of the loans (subject to a grace period for non-principal amounts), breach of certain covenants (subject, in some cases, to certain
grace periods) or representations under the loan documents, default under any of the Company's or any certain of its subsidiaries'
indebtedness agreements above a threshold principal amount, a bankruptcy or insolvency event with respect to the Company or certain
of its subsidiaries, an unsatisfied judgment against the Company or certain of its subsidiaries above a threshold amount, or a
change of control (as defined in the Credit Agreement).