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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 12, 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 of incorporation) (IRS Employer 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.
As disclosed in a Current Report on Form 8-K filed on October 12, 2005 by ATS
Medical, Inc. (the "Company") with the Securities and Exchange Commission , on
October 7, 2005 the Company sold $19,000,000 aggregate principal amount of its
6% Convertible Senior Notes due 2025 (the "Initial Notes") and warrants (the
"Initial 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 purchasers of the Initial Notes and the Initial Warrants
(the "Initial 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.
On October 14, 2005, the Company sold an additional $3,400,000 aggregate
principal amount of its 6% Convertible Senior Notes due 2025 (the "Additional
Notes") and warrants to purchase 204,000 shares of Common Stock (the "Additional
Warrants") in a private placement. In addition, each of the purchasers of the
Additional Notes and the Additional Warrants were granted a 120-day option to
purchase its pro-rata portion of an additional $850,000 of notes and related
warrants to purchase 51,000 shares of Common Stock. The terms and conditions of
the Additional Notes and the Additional Warrants are identical to the terms and
conditions of the Initial Notes and the Initial Warrants. The Company intends to
use the net proceeds from the private placement of the Additional Notes and the
Additional Warrants for general corporate purposes, working capital, capital
expenditures and potential acquisitions of complementary companies or
technologies.
Copies of the definitive agreements from the initial closing - the Securities
Purchase Agreement, the Registration Rights Agreement, the Indenture and the
Warrant Agent Agreement - were attached as exhibits to the Current Report on
Form 8-K filed by the Company with the Securities Exchange Commission on October
12, 2005. Attached hereto as exhibits are copies of Amendment No. 1, dated
October 12, 2005, to the Securities Purchase Agreement, Amendment No. 1, dated
as of October 13, 2005, to the Registration Rights Agreement, and the First
Supplemental Indenture, dated October 13, 2005, to the Indenture.
Amendment No. 1 to the Securities Purchase Agreement
On October 12, 2005, the Company entered into Amendment No. 1 to the Securities
Purchase Agreement (the "SPA Amendment"), by and among the Company, the Initial
Investors and the buyers listed on Exhibit A1 thereto (the "Additional
Investors"). Pursuant to the SPA Amendment, the Company agreed to issue and sell
the Additional Notes and the Additional Warrants to the Additional Investors for
cash equal to the aggregate principal amount of the Additional Notes, plus
interest from October 7 through October 14. In addition, the Company granted
each of the Additional Investors a 120-day option (from October 7, 2005) to
purchase its pro-rata portion of an additional $850,000 of notes and related
warrants to purchase 51,000 shares of Common Stock.
The Additional Notes and the Supplemental Indenture
On October 14, 2005, the Company and Wells Fargo Bank, National Association, as
Trustee ("Wells Fargo") executed a Global Note to be used in connection with the
Additional Notes. The Additional 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 Additional Notes are convertible into Common Stock at
any time at a fixed conversion price of $4.20 per share.
If fully converted, the Additional Notes would convert into approximately
810,000 shares of Common Stock based on a conversion price of $4.20 per share.
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 Additional
Notes are converted under certain circumstances prior to October 15, 2008, the
Company will pay the Additional Investors the interest they would have received
on the Additional Notes through that date. The Company has the right to redeem
the Additional Notes at par plus accrued interest at any time after October 20,
2008, and the Additional Investors have the right to require the Company to
repurchase the Additional Notes at par plus accrued interest on October 15 in
2010, 2015 and 2020.
The Additional Notes were issued pursuant to the First Supplemental Indenture,
dated October 13, 2005, to the Indenture (the "Supplemental Indenture"). The
Supplemental Indenture contains certain covenants applicable to the Company,
including a covenant restricting the amount of indebtedness that the Company may
incur.
The Additional Warrants
Pursuant to the SPA Amendment, the Company also issued to the Additional
Investors the Additional Warrants to purchase an aggregate of 204,000 shares of
Common Stock at the rate of 60 warrants per $1,000 of principal amount of the
Additional Notes purchased. The Additional Warrants are exercisable at $4.40 per
share and expire in 2010.
Amendment No. 1 to the Registration Rights Agreement
On October 13, 2005, the Company entered into Amendment No. 1 to the
Registration Rights Agreement, by and among the Company, the Initial Investors
and the Additional Investors (the "Amended Registration Rights Agreement"),
pursuant to which the Company agreed to include the Additional Notes, the
Additional Warrants and the shares of Common Stock issuable upon conversion of
the Additional Notes and exercise of the Additional Warrants in the registration
statement to be filed within 30 days of the first issuance date of the Initial
Notes and the Initial Warrants. Pursuant to the Amended 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 Initial Notes and the Initial Warrants, or
within 120 days after the first date of the original issuance of the Initial
Notes and Initial 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
Pursuant to the terms of the Warrant Agent Agreement, dated October 7, 2005,
between the Company and Wells Fargo, as Warrant Agent, Wells Fargo agreed to act
as agent for the Company in connection with the Additional Warrants in
accordance with the instructions set forth therein.
The descriptions set forth above regarding the SPA Amendment, the Amended
Registration Rights Agreement, the Supplemental Indenture, the Form of Note 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.
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 Additional Notes are convertible into Common Stock at any time at a fixed
conversion price of $4.20 per share. If fully converted, the Additional Notes
would convert into approximately 810,000 shares of the Company's Common Stock.
The Additional Warrants to purchase an aggregate of 204,000 shares of Common
Stock were issued by the Company at the rate of 60 warrants per $1,000 of
principal amount of the Additional Notes purchased. The Additional Warrants are
exercisable at $4.40 per share and expire in 2010.
The issuance of the Additional Notes and the Additional Warrants was exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), as the Additional Notes and the Additional 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 the
Additional Notes issued by the Company.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are being filed with this report:
4.1 Form of 6% Convertible Senior Notes due 2025.
4.2 Form of Warrant.
4.3 First Supplemental Indenture, dated October 13, 2005, to the
Indenture dated as of October 7, 2005, by and between ATS
Medical, Inc. and Wells Fargo Bank, National Association, as
Trustee.
10.1 Amendment No. 1, dated as of October 12, 2005, to the Securities
Purchase Agreement by and among ATS Medical, Inc. and the Buyers
listed therein, dated as of October 6, 2005.
10.2 Amendment No. 1, dated as of October 13, 2005, to the
Registration Rights Agreement by and among ATS Medical, Inc. and
the Buyers listed therein, dated as of October 7, 2005.
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 17, 2005
EXHIBIT INDEX
4.1 Form of 6% Convertible Senior Notes due 2025.
4.2 Form of Warrant.
4.3 First Supplemental Indenture, dated October 13, 2005, to the Indenture
dated as of October 7, 2005, by and between ATS Medical, Inc. and
Wells Fargo Bank, National Association, as Trustee.
10.1 Amendment No. 1, dated as of October 12, 2005, to the Securities
Purchase Agreement by and among ATS Medical, Inc. and the Buyers listed
therein, dated as of October 6, 2005.
10.2 Amendment No. 1, dated as of October 13, 2005, to the Registration
Rights Agreement by and among ATS Medical, Inc. and the Buyers listed
therein, dated as of October 7, 2005.