Item 1.01 Entry into a Material Definitive Agreement.
On October 2, 2020, in connection with the completion of the Merger, the Company
and certain of its subsidiaries entered into a Credit Agreement and Guaranty
(the "Credit Agreement") with the lenders party thereto and Perceptive Credit
Holdings III, LP ("Perceptive"), as the Administrative Agent, which provides for
a senior secured term loan facility in an aggregate principal amount of up to
$200.0 million in a single borrowing. On the closing date of the Merger, the
Company borrowed an aggregate principal amount of $135.0 million (the "Term
Loan"). The Term Loan is available (i) to finance, in whole or in part, the
Merger, (ii) to pay fees, costs and expenses related to the Merger, the Credit
Agreement and the other transactions related to the Merger and (iii) for other
working capital and general corporate purposes.
The Term Loan bears interest at an annual rate equal to LIBOR, subject to a
2.00% LIBOR floor, plus a margin of 8.75%, payable quarterly in arears. The Term
Loan will not amortize and all amounts outstanding will mature on (i) June 1,
2024 if at such time the Company's 2.00% convertible senior notes due 2024 (the
"2024 Notes") are outstanding and are due to mature on or prior to September 1,
2024 (provided that if the maturity of at least 80% of the 2024 Notes has been
extended to a date after September 1, 2024 and prior to September 1, 2025, the
Term Loan will mature on the date that is 90 days prior to the extended maturity
date of the 2024 Notes) or (ii) otherwise, on June 1, 2025. If the Term Loan is
prepaid, the Company must pay a prepayment fee of 6% if the prepayment occurs
prior to the third anniversary of the closing date or 4% if the prepayment
occurs after the third anniversary of the closing date and the Company must also
pay a make-whole fee if the prepayment occurs prior to the second anniversary of
the closing date.
The Term Loan is secured by a first priority lien on all assets of the Company
and its subsidiaries, and is guaranteed by the Company's subsidiaries, in each
case, excluding certain subsidiaries. The Credit Agreement contains customary
representations and warranties and covenants, including financial covenants that
require the Company to maintain a minimum cash balance and minimum quarterly
revenue levels.
The Company paid $4.35 million in customary commitment and closing fees to
Perceptive in connection with obtaining the Term Loan. In addition, on the
closing date, the Company issued to Perceptive warrants to purchase 1.0 million
shares of the Company's common stock, $0.0001 par value per share ("Invitae
Common Stock"), at an exercise price of $16.85 per share. Perceptive may
exercise the warrants in accordance with the terms thereof for all or any part
of 1.0 million shares of the Invitae Common Stock until and including October 2,
2027.
Cowen and Company, LLC ("Cowen") served as the Company's exclusive financial
advisor with respect to the debt financing and the Company paid Cowen a fee of
approximately $2.0 million for such services on the closing date.
The foregoing description of the Credit Agreement does not purport to be
complete and is qualified in its entirety by reference to the Credit Agreement,
which is attached as Exhibit 10.3 to this Current Report on Form 8-K, and
incorporated herein by reference.
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Item 2.01 Completion of Acquisition or Disposition of Assets.
ArcherDX Acquisition
The information set forth in the Introductory Note of this Current Report on
Form 8-K is incorporated by reference into this Item 2.01.
The aggregate consideration for the Merger consisted of $325.0 million in cash
(subject to closing-related adjustments based on ArcherDX's cash, debt, net
working capital and other considerations at the closing of the Merger)
and 30.0 million shares of Invitae Common Stock, plus up to an additional
27.0 million shares of Invitae Common Stock payable in connection with the
achievement of certain milestones (the "Earnout Shares"). At the closing of the
Merger, (i) each outstanding share of ArcherDX capital stock converted into the
right to receive the number of shares of Invitae Common Stock and a cash payment
as specified in the Merger Agreement, and, if a milestone is achieved, the
applicable portion of Earnout Shares tied to such milestone, (ii) each
outstanding and unexercised ArcherDX stock option converted into the right to
receive a cash payment and an option to purchase shares of Invitae Common Stock
as specified in the Merger Agreement, and, if a milestone is achieved, the
applicable portion of Earnout Shares tied to such milestone, subject to
continued service at the time of achievement of such milestone in the instance
of such Earnout Shares and (iii) each unexpired, unexercised and outstanding
ArcherDX warrant converted into the right to receive the number of shares of
Invitae Common Stock and cash payment as specified in the Merger Agreement, and,
if a milestone is achieved, the applicable portion of Earnout Shares tied to
such milestone. No fractional shares were issued in connection with the Merger.
Pursuant to the Merger Agreement, shares of Invitae Common Stock issued to
ArcherDX's securityholders in connection with the Merger are subject to a
lock-up restriction which prevents the sale, transfer or other disposition of
such shares for a period of 90 days following the closing of the Merger;
provided, that as a result of a Support Agreement between Invitae and certain
former stockholders of ArcherDX holding approximately 65% of the pre-Merger
outstanding shares of ArcherDX in the aggregate (the "Support Agreement"),
Invitae has waived the last 15 days of such 90-day period such that it shall
apply for a period of only 75 days, and such former stockholders (i) are subject
to certain volume limitations on resales of such shares and other transfer
restrictions for days 76 through 90 following the closing of the Merger and
(ii) may effect certain permitted transfers where transferees are bound by the
Support Agreement.
The foregoing descriptions of the Merger Agreement and the Support Agreement do
not purport to be complete and are qualified in their entirety by reference to
the Merger Agreement and the Support Agreement, which are attached as Exhibits
2.1 and 10.4 to this Current Report on Form 8-K, respectively, and incorporated
herein by reference.
Private Placement
On October 2, 2020, in connection with the completion of the Merger, the
Company, in a private placement (the "Private Placement"), issued and sold to
certain accredited investors (the "Investors") an aggregate of 16,320,476 shares
of Invitae Common Stock at a price of $16.85 per share, for gross proceeds to
the Company of approximately $275.0 million, pursuant to the terms of the
previously announced Securities Purchase Agreement (the "Purchase Agreement"),
dated as of June 21, 2020, by and among the Company and the Investors.
In connection with the Private Placement, on October 2, 2020, the Company
entered into a Registration Rights Agreement (the "Registration Rights
Agreement") with the Investors, pursuant to which the Company agreed to file a
registration statement with the Securities and Exchange Commission (the "SEC")
covering the resale of the shares of Invitae Common Stock sold in the Private
Placement. The Company has agreed to file the registration statement within 60
days of the closing of the Private Placement. The Registration Rights Agreement
includes customary indemnification rights in connection with the registration
statement.
The foregoing descriptions of the Purchase Agreement and the Registration Rights
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information required by Item 2.03 relating to the Credit Agreement is
contained in Item 1.01 of this Current Report on Form 8-K and incorporated
herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information required by Item 3.02 relating to the issuance of warrants to
purchase Invitae Common Stock to Perceptive is contained in Item 1.01 of this
Current Report on Form 8-K and is incorporated herein by reference. The
information required by Item 3.02 relating to the sale of Invitae Common Stock
to the Investors is contained in Item 2.01 of this Current Report on Form 8-K
and is incorporated herein by reference. The issuance of warrants to Perceptive
and the sale of Invitae Common Stock to the Investors have been made in reliance
on the exemption from registration provided by Section 4(a)(2) of the Securities
Act.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Pursuant to the Merger Agreement, on October 2, 2020, the Board of Directors of
the Company (the "Board") increased the authorized number of members of the
Board to seven and appointed Jason W. Myers, Ph.D. to serve as a director.
Dr. Myers was designated a Class III director (with the directors of Class III
standing for re-election at the Company's annual meeting of stockholders in
2022).
Dr. Myers, age 45, is ArcherDX's co-founder and served as President and Chief
Executive Officer and as a member of ArcherDX's board of directors from January
2015 through the completion of the Merger. From August 2013 to January 2015,
prior to ArcherDX's spin-off from Enzymatics, Inc., Dr. Myers served as Chief
Scientific Officer of Enzymatics, Inc. Dr. Myers received his BASc. in
Biochemistry and Molecular Biology from the Colorado State University and his
Ph.D. in Molecular Pharmacology from Stanford University School of Medicine.
In connection with Dr. Myers' appointment to the Board, Dr. Myers entered into
the Company's standard form of indemnification agreement. Dr. Myers became an
employee of the Company upon completion of the Merger and therefore will not
receive compensation for his service as a director.
Dr. Myers has no family relationships with any of the Company's directors or
executive officers. In connection with Dr. Myers' appointment to the Board, the
Company reports the following "transaction with related persons" under Item
404(a) of Regulation S-K: As an executive officer and director of ArcherDX,
Dr. Myers received consideration in excess of $120,000 in connection with the
Merger. In addition, a family member of Dr. Myers was an executive officer of
ArcherDX, became an employee of the Company upon completion of the Merger and
received consideration in excess of $120,000 in connection with the Merger, in
addition to such person's compensation received since the beginning of the
Company's last fiscal year in connection with such person's employment with
ArcherDX.
Item 7.01 Regulation FD Disclosure.
On October 5, 2020, the Company issued a press release announcing the completion
of the Merger. A copy of the press release is furnished as Exhibit 99.1 hereto.
The information in Item 7.01 of this Current Report on Form 8-K, including
Exhibit 99.1, shall not be deemed to be filed for purposes of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to
the liability of that section, and shall not be incorporated by reference into
any registration statement or other document filed under the Securities Act of
1933 or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
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Item 9.01 Financial Statements and Exhibits.
(a) The Company intends to file the financial statements of ArcherDX as part
of an amendment to this Current Report on Form 8-K not later than 71 calendar
days after the date this Current Report on Form 8-K is required to be filed.
(b) The Company intends to file the pro forma financial information of the
Company and ArcherDX as part of an amendment to this Current Report on Form 8-K
not later than 71 calendar days after the date this Current Report on Form 8-K
is required to be filed.
(d) Exhibits.
Exhibit
No. Description
2.1* Agreement and Plan of Merger and Plan of Reorganization, dated as of
June 21, 2020, by and among the Company, Apollo Merger Sub A Inc.,
Apollo Merger Sub B LLC, ArcherDX, Inc. and Kyle Lefkoff, solely in
his capacity as holders' representative (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K filed June 24,
2020).
10.1* Securities Purchase Agreement, dated as of June 21, 2020, by and
among the Company and the investors identified therein (incorporated
by reference to Exhibit 10.1 to the Company's Current Report on Form
8-K filed June 24, 2020).
10.2* Registration Rights Agreement, dated as of October 2, 2020, by and
among the Company and the investors party thereto.
10.3*^ Credit Agreement and Guaranty, dated as of October 2, 2020, by and
among the Company, the subsidiary guarantors from time to time party
thereto, the lenders from time to time party thereto and Perceptive
Credit Holdings III, LP, as the Administrative Agent.
10.4* Support Agreement, dated as of September 23, 2020, by and among the
Company and certain securityholders of ArcherDX, Inc.
99.1 Press release issued by the Company on October 5, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Certain schedules and exhibits to this agreement have been omitted pursuant to
Item 601(b) of Regulation S-K. A copy of any omitted schedule and/or exhibit
will be furnished to the SEC upon request.
^ Portions of this Exhibit have been redacted in accordance with Item 601 of
Regulation S-K.
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