AZIYO BIOLOGICS, INC. : Entering into a Material Definitive Agreement (Form 8-K)

Item 1.01. Conclusion of a significant definitive agreement.

At January 21, 2022, Aziyo Biologics, Inc. (the “Company”) has entered into (i) a second amendment (the “Term Loan Amendment”) to its Amended and Restated Credit and Security Agreement (Term Loan), dated July 15, 2019, by and between the Company, Aziyo Med, LLC (together with the Company, the “Borrowers”), Mid-Cap Financial Trust and other financial institutions or entities party thereto from time to time, as amended (the “Term Credit Agreement”) and (ii) a second amendment (the “Revolving Loan Amendment” and, together with the Amendment Term Loan Agreement, the “Amendments”) to its Amended and Restated Credit and Security Agreement (Revolving Loan), dated July 15, 2019, by and among the Borrowers, MidCap IV Funding Trust (the “Revolving Agent”) and other financial institutions or entities party thereto from time to time (together with the Revolving Agent, the “Revolving Lenders”), as amended (the “Revolving Loan Credit Agreement” and, together with the Loan Agreement Term, the “Credit Agreements”).

Pursuant to the Term Loan Amendment, the provision governing prepayment charges under the Term Loan Agreement has been amended such that any prepayment by the Company would require payment by the Company of a prepayment charge equal to the amount prepaid (or to be prepaid, if greater) multiplied by, in the case of each of Term Loan Tranche 1, Term Loan Tranche 2, Term Loan Tranche 3, Term Loan Tranche Term Loan 4 and Term Loan Tranche 5 (each as defined in the Term Loan Tranche Agreement), 3.0% up to January 21, 2023
and 2.0% thereafter.

Under the terms of the Revolving Loan Amendment, the provision governing the Deferred Revolving Loan Origination Fee under the Revolving Loan Credit Agreement has been amended such that any permanent termination or reduction of the lenders’ funding obligations in respect of the Revolving Loan Commitment (as defined in the Revolving Loan Credit Agreement) prior to the Maturity Date (as defined in the Revolving Loan Credit Agreement), would require payment by the company a deferred revolving loan origination fee equal to the amount of the revolving loan commitment so terminated or permanently reduced multiplied by 3.0% up to January 21, 2023 and 2.0% thereafter.

In consideration for each of the foregoing, under each of the Amendments, the financial covenant contained in each of the Credit Agreements requiring the Company to achieve a specified minimum net income amount (as defined in the applicable Credit Agreement ), tested on a monthly basis, for the 12-month period preceding each defined period end date, has been adjusted by means of an amendment and restatement of the schedule setting out the minimum amount of net income from the product for each end date of defined period. In some cases, the amended and updated schedule has reduced the Minimum Amounts of Specified Product Net Revenues that must be achieved to comply with the financial covenant under the applicable Credit Agreement.

As previously announced the December 8, 2021, the Company sold a total of (i) 2,122,637 Class A common shares, par value $0.001 per share and (ii) 1,179,244 Class B common shares, par value $0.001 per share, to certain investors, in each case, at a purchase price equal to $4.24 per share, for aggregate gross proceeds of approximately $14.0 million, before deduction of offering costs. In addition, as noted above, the Company amended its financial covenant relating to the minimum amount of net income from the product included in its credit agreements. The Company believes that with such modification, it will be able to comply with this covenant in the future. With the capital increase and covenant modification, the Company believes that its existing cash, the cash available under its revolving credit agreement and the cash generated from expected future sales will be sufficient to meet the needs planned operating activities of the Company for twelve months from January 21, 2022, and therefore the uncertainty of the Company’s ability to continue as a going concern, as previously discussed in note 2 to the condensed consolidated financial statements for the quarter ended September 30, 2021, within one year after
January 21, 2022 has been lightened.

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