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NSPR > SEC Filings for NSPR > Form 8-K on 25-Oct-2013All Recent SEC Filings

Show all filings for INSPIREMD, INC.

Form 8-K for INSPIREMD, INC.


25-Oct-2013

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obliga


Item 1.01. Entry into a Material Definitive Agreement.

Rights Agreement

On October 22, 2013, the Board of Directors (the "Board") of InspireMD, Inc. (the "Company") adopted the Rights Agreement, dated as of October 22, 2013 (the "Rights Agreement") between the Company and Action Stock Transfer Corporation, as Rights Agent, which is incorporated by reference herein by reference to Exhibit 1 of the Company's Form 8-A Registration Statement filed with the Securities and Exchange Commission on October 25, 2013. For a description of the material terms of the Rights Agreement and the rights to be issued pursuant thereto, please refer to "Item 3.03 - Material Modifications to Rights of Security Holders" of this Current Report on Form 8-K, which is incorporated herein by reference.

Security and Loan Agreement

On October 23, 2013, the Company, InspireMD Ltd., the Company's wholly-owned subsidiary ("Subsidiary"), and Hercules Technology Growth Capital, Inc. ("Hercules") entered into a Loan and Security Agreement (the "Loan and Security Agreement"), pursuant to which Hercules made a term loan to the Company and Subsidiary in the aggregate amount of $10 million (the "Loan"). The interest on the Loan is determined on a daily basis at a variable rate equal to the greater of either (i) 10.5%, or (ii) the sum of (A) 10.5%, plus (B) the prime rate minus 5.5%. Payments under the Loan and Security Agreement are interest only for 9 months, followed by 30 monthly payments of principal and interest through the scheduled maturity date on February 1, 2017. The Company and Subsidiary's obligations under the Security and Loan Agreement are secured by a grant of a security interest in all of the Company and Subsidiary's assets (other than their intellectual property) to Hercules, as more fully described below. In addition, in connection with the Loan and Security Agreement, the Company issued Hercules a warrant to purchase 168,351 shares of the Company's common stock, par value $0.0001 per share (the "Common Stock") at a per share exercise price of $2.97.

In the event any payment due under the Loan and Security Agreement is not paid as scheduled, there will be a 3% penalty on the past due amount. In addition, upon the occurrence and during the continuation of an event of default, as described below, all amounts due under the Loan and Security Agreement, including principal, interest, compounded interest and professional fees, will be subject to the applicable interest rate and an additional 5% penalty. Any prepayments of the Loan will be subject to a penalty of (i) 2%, if the prepayment occurs within 12 months of the Loan being requested by the Company and Subsidiary (the "Advance Date"), (ii) 1%, if the prepayment occurs between 12 and 24 months after the Advance Date, and (iii) 0.5%, if the prepayment occurs more than 24 months after the Advance Date. The Company and Subsidiary will also pay Hercules an aggregate end of term charge of $500,000 when the Loan is paid in full or matures.

The Loan and Security Agreement is subject to a number of events of default, including:

failure to make a timely payment due under the Loan and Security Agreement;

breach of covenants under the Loan and Security Agreement, of which default shall occur immediately for certain covenants and after twenty days notice of such breaches for all other covenants;

occurrence of a Material Adverse Effect (as such term is defined in the Loan and Security Agreement);

occurrence of a default under any documents related to the Loan and Security Agreement or any indebtedness of the Company or Subsidiary in excess of $250,000;

initiation of a bankruptcy or insolvency proceeding of the Company or Subsidiary; or

finding of a judgment against the Company or Subsidiary of at least $1 million.

Pursuant to the Loan and Security Agreement, the Company and Subsidiary are . . .



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 - Entry Into a Material Definitive Agreement" is incorporated herein by reference.



Item 3.02. Unregistered Sales of Equity Securities.

The information contained in "Item 1.01 - Entry Into a Material Definitive Agreement" is incorporated herein by reference. The Warrant offered and sold without registration under the Securities Act of 1933, as amended was (the "Act"), or state securities laws, in reliance on the exemptions provided by
Section 4(2) of the Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Hercules was an accredited investor (as defined by Rule 501 under the Act) at the time of the transaction.



Item 3.03. Material Modifications to Rights of Security Holders.

On October 22, 2013, the Board declared a dividend distribution to the Company's stockholders of record at the close of business on November 15, 2013, of one preferred stock purchase right (a "Right") for each outstanding share of Common Stock that will entitle the registered holder to purchase from the Company one one-thousandth (1/1,000) of a share of Series A Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), at a purchase price of $21.00 per one one-thousandth (1/1,000) of a share, subject to adjustment. The description and terms of the Rights are set forth in the Rights Agreement.

Separation and Distribution of Rights; Exercisablility. Initially, the Rights will be attached to all certificates representing shares of Common Stock then outstanding, and no separate Rights certificates will be distributed. The Rights will separate from the Common Stock upon the earlier of:

ten (10) business days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the shares of Common Stock then outstanding (subject to certain exceptions discussed below and as set forth in the Rights Agreement) (such person is referred to as an "Acquiring Person"); or

ten (10) business days (or some later date as determined by the Board) following the commencement of a tender or exchange offer that would result in a person or group beneficially owning 15% or more of the shares of Common Stock then outstanding (subject to exceptions as set forth in the Rights Agreement).

The date the Rights separate from the Common Stock is referred to as the "Distribution Date."

Until the Distribution Date, (i) the Rights will be evidenced by and transferred with, and only with, the Common Stock certificates, (ii) new Common Stock certificates issued after November 15, 2013 will contain a notation incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by those certificates. Pursuant to the Rights Agreement, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued.

The Rights are not exercisable until the Distribution Date and will expire at the close of business on October 22, 2014, unless earlier redeemed by the Company as described below.

As soon as practicable after the Distribution Date, Rights certificates will be mailed to the holders of record of Common Stock as of the close of business on the Distribution Date and, after that, the separate Rights certificates will represent the Rights. Except in connection with shares of Common Stock issued or sold pursuant to the exercise of stock options under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities issued by the Company in the future, or as otherwise determined by the Board, only shares of Common Stock issued prior to the Distribution Date will be issued with Rights.

Flip-in Events. If any person becomes an Acquiring Person (a "Flip-in Event"), each holder of a Right (other than the Acquiring Person and any associate or affiliate thereof) will have the right to receive, upon exercise, Common Stock
(or, in some circumstances, cash, property or other securities of the Company)
having a value equal to two times the purchase price of the Right. All Rights that are, or (under some circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.

For example, at a purchase price of $21.00 per Right, each Right not owned by an Acquiring Person (or by certain related parties or transferees) following a Flip-In Event would entitle its holder to purchase $42.00 worth of Common Stock (or other consideration) for $21.00.

Flip-over events. If any of the following occur, then at any time following a public announcement that a person has become an Acquiring Person, each holder of a Right (except Rights which previously have been voided as described above) will have the right to receive, upon exercise, common stock of an acquiring company having a value equal to two times the purchase price of the Right:

the Company enters into a merger in which the Company is not the surviving corporation;

the Company is the surviving corporation in a merger pursuant to which all or part of the outstanding shares of Common Stock are changed into or exchanged for stock or other securities of any other person or cash or any other property; or

more than 50% of the combined assets, cash flow or earning power of the Company and its subsidiaries is sold or transferred (in each case other than certain consolidations with, mergers with and into, or sales of assets, cash flow or earning power by or to subsidiaries of the Company, as specified in the Rights Agreement).

Flip-in Events and Flip-over Events are referred to collectively as "Triggering Events."

Anti-dilution Adjustments; Fractional Shares. The applicable purchase price payable, the number of shares of Preferred Stock or other securities or property issuable upon the exercise of the Rights, and the number of applicable Rights outstanding are subject to adjustment from time to time to prevent dilution:

in the event of a stock dividend on, or a subdivision, combination or reclassification of, Preferred Stock;

if the holders of Preferred Stock are granted rights, options or warrants to . . .



Item 5.03. Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In connection with the adoption of the Rights Agreement referenced in "Item 1.01
- Entry Into a Material Definitive Agreement" and "Item 3.03 - Material Modifications to Rights of Security Holders" above, the Board of Directors approved a Certificate of Designation, Preferences and Rights of Series A Preferred Stock (the "Certificate of Designation") classifying and designating the Series A Preferred Stock. The Certificate of Designation was filed with the Secretary of State of the State of Delaware, and became effective October 25, 2013. The Certificate of Designation is attached as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information set forth in "Item 3.03 - Material Modifications to Rights of Security Holders" is incorporated herein by reference.



Item 8.01 Other Events.

On October 23, 2013, the Company issued a press release that the representatives of the Company will ring the Opening Bell at the New York Stock Exchange on Thursday, October 24, 2013 at 9:30 a.m. ET. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

On October 24, 2013, the Company issued a press release announcing that the Company has adopted the Rights Agreement and entered into the Loan and Security Agreement. A copy of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein.

In addition, on October 24, 2013, the Company issued a press release announcing that the Company filed a $75 million shelf registration statement on Form S-3 with the Securities and Exchange Commission, that included a prospectus to sell, of the $75 million of securities being registered, up to an aggregate of $40 million of Common Stock through an "at-the-market" offering. A copy of the press release is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated by reference herein.



Item 9.01. Financial Statements and Exhibits.

Exhibit   Description
Number

3.1       Certificate of Designation, Preferences and Rights of Series A
          Preferred Stock.

4.1       Rights Agreement dated as of October 22, 2013 between InspireMD, Inc.
          and Action Stock Transfer Corporation, as Rights Agent, including
          exhibits thereto, filed as an exhibit to the Company's Registration
          Statement on Form 8-A filed on the same date as this Current Report on
          Form 8-K is being filed, which exhibit is incorporated herein by
          reference.

10.1      Loan and Security Agreement, dated October 23, 2013, by and among
          InspireMD, Inc., Inspire M.D Ltd and Hercules Technology Growth
          Capital, Inc.

10.2      Fixed Charge Debenture, dated October 23, 2013, by and among InspireMD,
          Inc., Inspire M.D Ltd and Hercules Technology Growth Capital, Inc.

10.3      Floating Charge Debenture, dated October 23, 2013, by and among
          InspireMD, Inc., Inspire M.D Ltd and Hercules Technology Growth
          Capital, Inc.

10.4      Warrant Agreement, dated October 23, 2013, by and between InspireMD,
          Inc. and Hercules Technology Growth Capital, Inc.

10.5      Deposit Account Control Agreement, dated April 5, 2012, among
          InspireMD, Inc., Hercules Technology Growth Capital, Inc. and Bank
          Leumi USA.

99.1      Press Release dated October 23, 2013.

99.2      Press Release dated October 24, 2013.

99.3      Press Release dated October 24, 2013.

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