| Item 1.01. | Entry into a Material Definitive Agreement. |
Amended and Restated Credit and Security Agreement
On May 10, 2022, Alpha Teknova, Inc. (the “Company”) entered into the Amended and Restated Credit and Security Agreement (Term Loan) (the “Amended Term Loan Credit Agreement”) as borrower, with MidCap Financial Trust (“MidCap”) as agent and lender, and the additional lenders from time to time party thereto and the Amended and Restated Credit and Security Agreement (Revolving Loan) as borrower, with MidCap as agent and lender, and the additional lenders from time to time party thereto (the “Amended Revolving Loan Credit Agreement”, together with the Term Loan Credit Agreement, the “Amended Credit Agreement”). The Amended Credit Agreement amends and restates that certain Credit and Security Agreement (Term Loan), dated as of March 26, 2021, by and among the Company and MidCap, as agent and lender, and the additional lenders from time to time party thereto, and that certain Credit and Security Agreement (Revolving Loan), dated as of March 26, 2021, by and among the Company and MidCap, as agent and lender, and the additional lenders from time to time party thereto (collectively, the “Credit Agreement”). The Amended Credit Agreement refinances the credit facility established under the Credit Agreement (the “Facility”) and provides ongoing working capital for the Company. The Amended Credit Agreement increases the $27.0 million Facility, consisting of a $22.0 million senior secured term loan and a $5.0 million working capital facility, to a $57.135 million credit facility (the “Amended Credit Facility”), consisting of a $52.135 million senior secured term loan (the “Amended Term Loan”) and a $5.0 million working capital facility (the “Amended Revolver”).
The Amended Term Loan consists of the $12.0 million balance that was made available under the Credit Agreement in 2021 and an additional $40.0 million, staged such that the Company, subject to certain exceptions, (i) will borrow $5.135 million immediately upon entry into the Amended Credit Agreement; (ii) will borrow an additional $5.0 million on October 31, 2022; (iii) may borrow an additional $10.0 million, which will become available commencing on January 1, 2023; (iv) may borrow an additional $10.0 million which will become available commencing on July 1, 2023 and (v) may borrow an additional $10.0 million which will become available on January 1, 2024. The borrowings under clauses (iv) and (v), above, are contingent upon the Company achieving trailing twelve months of revenue attributable to the Company’s “Clinical Solutions” product category of $15.0 million and $19.0 million, respectively, and liquidity requirements (as defined in the Amended Credit Agreement) of $10.0 million and $15.0 million, respectively.
The Company’s obligations under the Amended Credit Agreement may be guaranteed by any person or entity that in the future executes or delivers any Guarantee (as defined in the Amended Credit Agreement) of any portion of the Company’s obligations. The Company’s obligations under the Amended Credit Agreement are secured by first priority security interests in all assets of the Company other than certain excluded property.
Interest on the Amended Term Loan is based on the annual rate of one-month LIBOR plus 6.45%, subject to a LIBOR floor of 1.00%. If any advance under the Amended Term Loan is prepaid at any time, the prepayment fee is based on the amount being prepaid and an applicable percentage amount, such as 3%, 2%, or 1%, based on the date the prepayment is made after the closing date of the Amended Term Loan.
The maximum loan amount under the Amended Revolver is $5.0 million, and the Company may request the Lenders to increase such amount to up to $15.0 million. The amount available to the Company under the Amended Revolver at any one time is based upon an amount equal to: (i) 85% of the net collectable value of the Company’s domestic accounts receivable; plus (ii) 50% of domestic eligible finished goods inventory that does not exceed $1.0 million. Additionally, availability from finished goods inventory cannot exceed 25% of the total borrowing base availability. Interest on the outstanding balance of the Amended Revolver will be payable monthly in arrears at an annual rate of one-month LIBOR plus 3.75%, subject to a LIBOR floor of 1.00%.
The Amended Credit Agreement contains certain covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, and investments, and places limits on various other payments. The Amended Credit Agreement also contains a financial covenant based upon a trailing twelve months of net revenue, including a requirement of $42.5 million in the twelve months ending December 31, 2022.
