Item 1.01.
Entry into a Material Definitive Agreement.
On June 14, 2017, Accuray Incorporated (the Company) entered into a credit and security agreement (the Credit Agreement) by and among the Company, as borrower, TomoTherapy Incorporated, a direct, wholly-owned subsidiary of the Company, as borrower (TomoTherapy, and together with the Company, the Borrowers), any additional borrower that may be added thereto, MidCap Financial Trust (MidCap), individually as a lender and as agent (Agent), and the other lenders from time to time parties thereto (together with MidCap as a lender, the Lenders). The Credit Agreement provides for a revolving credit facility in the initial amount of $52 million, which the Company may request be increased by up to $33 million to a new total of $85 million through additional tranches, each with a $1 million minimum (the Facility). Neither Agent nor the Lenders have any obligation to consent to activation of an additional tranche. Availability for borrowings under the Facility is subject to a borrowing base that is calculated as a function of the value of the Borrowers eligible accounts receivable and eligible inventory, and the Borrowers are required to maintain a minimum drawn balance of at least 30% of such availability.
The Facilitys stated maturity date is June 14, 2021, but the Facility may mature earlier than the stated maturity date if certain conditions set forth in the Credit Agreement are not met, including conditions related to the Companys two series of convertible notes maturing February 1, 2018.
The Borrowers obligations under the Credit Agreement are secured by first-priority liens on substantially all the assets of the Borrowers, subject to certain exceptions.
Interest on the borrowings under the Facility is payable monthly in arrears at an annual interest rate of reserve-adjusted, 90-day LIBOR (subject to a 1.00% floor) plus 4.50%. The Credit Agreement requires the Borrowers to pay Agent a collateral management fee of 0.10% per month on the outstanding balance of the Facility. The Credit Agreement also requires the Borrowers to pay the Lenders an unused line fee equal to 0.5% per annum of the average unused portion of the Facility. If all or a portion of the Lenders funding obligations under the Credit Agreement terminate for any reason other than as a result of a refinancing of 100% of the loans made under the Facility by Agent and the Lenders, then the Company will be required to pay a fee equal to 3% of the commitment amount terminated if such termination occurs within the first year, 2% of the commitment amount terminated if such termination occurs within the second year, and 1% of the commitment amount terminated if such termination occurs after the second year.
The Credit Agreement contains restrictions and covenants applicable to the Company and its subsidiaries. Among other requirements, the Company may not permit the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) to be less than a certain specified ratio for each fiscal quarter during the term of the Facility.
The Credit Agreement also contains customary covenants that limit, among other things, the ability of the Company and its subsidiaries to (i) incur indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain indebtedness and (viii) enter into transactions with affiliates, in each case subject to certain exceptions. The Credit Agreement contains customary representations and warranties and events of default.
The foregoing summary of the terms of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, a copy of which will be filed as an exhibit to the Companys Annual Report on Form 10-K for the year ended June 30, 2017.
Item 1.02
Termination of a Material Definitive Agreement.
On June 14, 2017, the Company borrowed $52 million under the Facility and used the proceeds of such loan, together with available cash from the Company, to repay in full the remaining balance under the
Financing Agreement dated as of January 11, 2016 (as amended or otherwise modified, the Financing Agreement), by and among the Company, as co-borrower, TomoTherapy, as co-borrower, Morphormics, Inc., a direct, wholly-owned subsidiary of the Company, as guarantor, the lenders party thereto and Cerberus Business Finance, LLC, as collateral agent and administrative agent. The Financing Agreement was terminated on June 14, 2017. The material terms of the Financing Agreement have been previously reported on the Companys Current Reports on Form 8-K filed with the Securities and Exchange Commission on January 12, 2016, November 4, 2016, and March 10, 2017. The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference.
2