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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: OCTOBER 6, 2005
(date of earliest event reported)
ATS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-18602
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MINNESOTA 41-1595629
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
3905 ANNAPOLIS LANE N.
MINNEAPOLIS, MINNESOTA 55447
(Address of principal executive offices, including zip code)
(763) 553-7736
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Effective October 7, 2005, ATS Medical, Inc. (the "Company") sold $19,000,000 of
its 6% Convertible Senior Notes due 2025 and related warrants in a private
placement. The Company intends to use the net proceeds from the private
placement for general corporate purposes, working capital, capital expenditures
and potential acquisitions of complementary companies or technologies. Attached
hereto as exhibits are copies of the related definitive agreements - the
Securities Purchase Agreement, the Registration Rights Agreement, the Indenture,
the Form of Note, the Warrant Agent Agreement and the Form of Warrant. Also
attached are copies of the press release announcing the private placement and
the presentation of the Company's management used in road shows in connection
with the private placement. The descriptions set forth below regarding the
Securities Purchase Agreement, the Registration Rights Agreement, the Indenture,
the Form of Note, the Warrant Agent Agreement and the Form of Warrant are
qualified in their entirety by reference to the attached copies of such
documents, which are incorporated herein by reference.
Securities Purchase Agreement
On October 6, 2005, the Company entered into a Securities Purchase Agreement
(the "Securities Purchase Agreement"), with the Buyers listed on the Schedule of
Buyers attached thereto as Exhibit A (collectively, the "Investors"), pursuant
to which the Company agreed to issue and sell, and the Investors agreed to
purchase, $19,000,000 aggregate principal amount of its 6% Convertible Senior
Notes due 2025 (the "Notes") and warrants (the "Warrants") to purchase 1,140,000
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"). In addition, the Company also granted each of the Investors a 120-day
option to purchase its pro-rata portion of an additional $4,750,000 of notes and
related warrants to purchase 285,000 shares of Common Stock. The aggregate
purchase price for the Notes and the Warrants was $19,000,000. Under the terms
of the Securities Purchase Agreement, the Company has agreed to seek
shareholder approval of an increase in the Company's authorized stock
sufficient to allow for full conversion of the Notes. If the Notes are
converted prior to approval of such increase, the Company has the right to
satisfy such conversion in cash.
The Notes and the Indenture
On October 7, 2005, the Company and Wells Fargo Bank, National Association, as
Trustee ("Wells Fargo") executed a Global Note representing the Notes. The Notes
bear interest of 6% per year payable on April 15 and October 15 of each year
commencing with April 15, 2006, and mature on October 15, 2025. The Notes are
convertible into Common Stock at any time at a fixed conversion price of $4.20
per share. If fully converted, the Notes would convert into approximately
4,524,000 shares of the Company's Common Stock. The conversion price represents
a premium of 12% to the closing price of the Company's Common Stock on October
6, 2005, which was $3.75. If the Notes are converted under certain circumstances
prior to October 15, 2008, the Company will pay the Investors the interest they
would have received on the notes through that date. The Company has the right to
redeem the Notes at par plus accrued interest at any time after October 20,
2008, and the Investors have the right to require the Company to repurchase the
notes at par plus accrued interest on October 15 in 2010, 2015 and 2020.
The Notes were issued pursuant to the Indenture, dated as of October 7, 2005
(the "Indenture"), by and between the Company and Wells Fargo. The Indenture
contains certain covenants applicable to the Company, including a covenant
restricting the amount of indebtedness that the Company may incur. Under the
terms of the Indenture, the Notes may be accelerated upon the occurrence of
certain events of default, including failure to make timely payments on the
Notes or other indebtedness of the Company.
The Warrants
Pursuant to the Securities Purchase Agreement, the Company also issued to the
Investors Warrants to purchase an aggregate of 1,140,000 shares of Common Stock
at the rate of 60 warrants per $1,000 of principal amount of Notes purchased.
The Warrants are exercisable at $4.40 per share and expire in 2010.
Registration Rights Agreement
On October 7, 2005, the Company entered into a Registration Rights Agreement
with the Investors (the "Registration Rights Agreement"), pursuant to which the
Company agreed to file with the Securities and Exchange Commission a
registration statement covering the resale of the Notes, the Warrants and the
shares of Common Stock issuable upon conversion of the Notes and exercise of the
Warrants within 30 days of the first issuance date of the Notes and the
Warrants. Pursuant to the Registration Rights Agreement, the Company also agreed
to use its best efforts to cause the registration statement to become effective
within 90 days after the first date of the original issuance of the Notes
and the Warrants, or within 120 days after the first date of the original
issuance of the Notes and Warrants if the registration statement is reviewed by
the Securities and Exchange Commission. The Company will be required to pay
certain "registration delay payments" if these deadlines are not met or the
registration statement is otherwise unavailable for the resale of these
securities.
Warrant Agent Agreement
On October 7, 2005, the Company entered into a Warrant Agent Agreement (the
"Warrant Agent Agreement") with Wells Fargo, as Warrant Agent, pursuant to which
Wells Fargo agreed to act as agent for the Company in accordance with the
instructions set forth in the Warrant Agent Agreement.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF THE REGISTRANT.
The information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 2.03.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The Notes are convertible into Common Stock at any time at a fixed conversion
price of $4.20 per share. If fully converted, the Notes would convert into
approximately 4,524,000 shares of the Company's Common Stock. Warrants to
purchase an aggregate of 1,140,000 shares of Common Stock were issued by the
Company at the rate of 60 warrants per $1,000 of principal amount of Notes
purchased. The Warrants are exercisable at $4.40 per share and expire in 2010.
The issuance of the Notes and the Warrants was exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act"), as the Notes and
the Warrants were offered solely to accredited investors in reliance on
Regulation D under the Securities Act.
Piper Jaffray & Co., who served as the exclusive placement agent for the
offering, received a fee equal to 6% of the aggregate principal amount of Notes
issued by the Company.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are being filed with this report:
4.1 Indenture, dated as of October 7, 2005, between ATS Medical,
Inc. and Wells Fargo Bank, National Association, as Trustee
(which includes the Form of Note).
10.1 Securities Purchase Agreement, dated as of October 6, 2005,
by and among ATS Medical, Inc. and the Buyers listed on the
Schedule of Buyers attached thereto as Exhibit A.
10.2 Registration Rights Agreement, dated as of October 7, 2005, by
and among ATS Medical, Inc. and the buyers listed on the
Schedule of Buyers attached thereto as Exhibit A.
10.3 Warrant Agent Agreement, dated as of October 7, 2005, between
ATS Medical, Inc. and Wells Fargo Bank, National
Association, as Warrant Agent (which includes the Form of
Warrant).
99.1 Press Release, dated October 7, 2005, of ATS Medical, Inc.
99.2 ATS Medical, Inc. Management Presentation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATS MEDICAL, INC.
By: /s/ John R. Judd
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John R. Judd
Chief Financial Officer
Date: October 11, 2005
EXHIBIT INDEX
4.1 Indenture, dated as of October 7, 2005, between ATS Medical, Inc. and
Wells Fargo Bank, National Association, as Trustee (which includes the
Form of Note).
10.1 Securities Purchase Agreement, dated as of October 6, 2005, by and
among ATS Medical, Inc. and the Buyers listed on the Schedule of
Buyers attached thereto as Exhibit A.
10.2 Registration Rights Agreement, dated as of October 7, 2005, by and
among ATS Medical, Inc. and the buyers listed on the Schedule of
Buyers attached thereto as Exhibit A.
10.3 Warrant Agent Agreement, dated as of October 7, 2005, between ATS
Medical, Inc. and Wells Fargo Bank, National Association, as Warrant
Agent (which includes the Form of Warrant).
99.1 Press Release, dated October 7, 2005, of ATS Medical, Inc.
99.2 ATS Medical, Inc. Management Presentation.