Item 1.01. Entry into a Material Definitive Agreement.
Loan and Security Agreement
On February 4, 2022 (the “Closing Date”), Lucira Health, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), in its capacity as administrative agent and collateral agent (in such capacity, the “Agent”), and Hercules and Silicon Valley Bank (“SVB”) as lenders (collectively, the “Lenders”).
Amount. The Loan Agreement provides for term loans in an aggregate principal amount of up to $80.0 million (the “Term Loans”) available in four tranches. The tranches consist of (i) a first tranche consisting of term loans in an aggregate principal amount of $30.0 million, all of which was funded to the Company on the Closing Date (the “First Advance”), (ii) a second tranche consisting of up to an additional $20.0 million, which will become available to the Company upon request if specified conditions set forth in the Loan Agreement are met beginning on September 1, 2022 and on or prior to March 31, 2023, (iii) a third tranche consisting of an additional $15.0 million, which will become available to the Company upon request if specified conditions set forth in the Loan Agreement are met on or prior to June 15, 2023, and (iv) a fourth tranche consisting of up to an additional $15.0 million, which will be available to the Company upon request and Lender approval on or prior to March 15, 2024. The Company intends to use the proceeds of the Term Loans for working capital and general corporate purposes.
Interest Rate and Repayment. The Term Loans will mature on February 1, 2026 (the “Maturity Date”). The Term Loans bear interest at a per annum rate equal to the greater of (i) (a) 5.50% plus (b) the prime rate (as reported in the Wall Street Journal) and (ii) 8.75% (the “Interest Rate”). The Term Loans are interest only through September 1, 2024, which may be extended to February 28, 2025 if specified conditions set forth in the Loan Agreement have been met. After the interest-only period, the principal balance and related interest will be required to be repaid in equal monthly installments through the Maturity Date. The Term Loans may be prepaid in whole or in part through February 4, 2023 with payment of a 3.00% prepayment premium, thereafter through February 4, 2024 with a 2.00% prepayment premium, thereafter through February 4, 2025 with a 1.00% prepayment premium and thereafter with no prepayment premium. An additional end of term charge of 5.25% of the Term Loans advanced will be due upon prepayment or repayment.
Covenants, Representations and Warranties; Other Provisions. The Loan Agreement contains customary events of default, representations and warranties and covenants, including financial covenants requiring the Company to maintain certain minimum cash and revenue levels upon the occurrence of specified events as more fully set forth in the Loan Agreement. Lenders have participation and notice rights in an amount up to $5.0 million for the future sale and issuance of the Company’s capital stock that is broadly marketed to multiple investors.
Security. As collateral for the obligations, the Company has granted to the Agent a senior security interest in all of Company’s right, title, and interest in, to and under substantially all of Company’s personal property and other assets, excluding intellectual property.
The foregoing description of the material terms of the Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Loan Agreement, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Warrants
In connection with the entry into the Loan Agreement, the Company issued a warrant to Hercules (the “Hercules Warrant”) and to SVB (the “SVB Warrant” and together with the Hercules Warrant, the “Warrants”).
The Hercules Warrant provides for Hercules to purchase a number of shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) equal to the quotient derived by dividing (i) the amount equal to (a) 1.00% times (b) the aggregate principal amount of Term Loan advances made and funded under the Loan Agreement by (ii) the exercise price. On the Closing Date, the Company issued the Hercules Warrant for 59,642 shares of Common Stock. The Hercules Warrant will be exercisable for a period of seven years from the date of issuance at a per-share exercise price equal to $5.03.
