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SCIO > SEC Filings for SCIO > Form 8-K on 27-Jun-2013All Recent SEC Filings

Show all filings for SCIO DIAMOND TECHNOLOGY CORP | Request a Trial to NEW EDGAR Online Pro

Form 8-K for SCIO DIAMOND TECHNOLOGY CORP


27-Jun-2013

Entry into a Material Definitive Agreement, Creation of a Direct Fin


Item 1.01 Entry into a Material Definitive Agreement.

On June 21, 2013, Scio Diamond Technology Corporation (the "Company") entered into a Loan Agreement (the "Loan Agreement") and Security Agreement (the "Security Agreement"), each dated as of June 21, 2013, with Platinum Capital Partners, LP ("Platinum") providing for a $1 million secured revolving line of credit (the "Loan") that the Company may draw on to fund working capital and other corporate purposes. The Loan, which is represented by a Promissory Note dated June 21, 2013 (the "Note"), matures on June 20, 2014. On June 21, 2013, $910,000 was drawn on the Loan, $20,000 of which was retained by Platinum to cover applicable fees.

The Company plans to utilize funds drawn on the Loan to fund its ongoing operations. Borrowings accrue interest at the rate of 18% per annum, payable monthly on or before the last calendar day of each month, and a service charge of 3% applies to late payments. The loan agreement also provides for payment of an accommodation fee of up to 10% of the commitment amount as provided in the Loan Agreement, and payment of a monthly collateral monitoring fee of $2,000 per month for the first six months and $1,000 per month for the last six months of the term of the Loan Agreement. The Loan Agreement contains a number of restrictions on the Company's business, including restrictions on its ability to merge, sell assets, create or incur liens on assets, make distributions to its shareholders and sell, purchase or lease real or personal property or other assets or equipment. The Loan Agreement also contains affirmative covenants and events of default, including an event of default in the event the Company fails to maintain a book net worth of at least $7.5 million at all times. The Company's obligations under the Loan Agreement are not guaranteed by any other party. The Company may prepay borrowings without premium or penalty upon notice to Platinum as provided in the Loan Agreement. The Loan Agreement requires the Company enter the Security Agreement and provide the Note.

Under the Security Agreement, which is filed as Exhibit 4.2 to this Form 8-K, the Company grants Platinum a first priority security interest in the Company's inventory, equipment, accounts and other rights to payments and intangibles as security for the Loan. The Note, which is filed as Exhibit 4.3, provides for monthly interest payments commencing July 2013 and for repayment of all amounts drawn, together with accrued interest, on June 20, 2014.

The descriptions of the terms of the Loan Agreement, the Security Agreement and the Note in this Item 1.01 are qualified in their entirety by reference to Exhibits 4.1, 4.2 and 4.3 to this Form 8-K.



Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information contained in Item 1.01 above is incorporated herein by reference. On June 21, 2013, $910,000 was drawn on the Loan, $20,000 of which was retained by Platinum to cover applicable fees.




Item 9.01 Financial Statement and Exhibits

(d) Exhibits

4.1 Loan Agreement dated as of June 21, 2013 between Scio Diamond Technology Corporation and Platinum Capital Partners, LP.

4.2 Security Agreement dated as of June 21, 2013 between Scio Diamond Technology Corporation and Platinum Capital Partners, LP.

4.3 Promissory Note dated as of June 21, 2013 made by Scio Diamond Technology Corporation in favor of Platinum Capital Partners, LP.


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