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Item 1.01. |
Entry Into or Amendment of a Material Definitive Agreement. |
On May 4, 2023, Zynex, Inc. (the “Company”)
priced a private offering of $52,500,000 in aggregate principal amount of its 5.00% Convertible Senior Notes due 2026 (the “Notes”)
and entered into a purchase agreement (the “Purchase Agreement”) with the initial purchaser of the Notes, pursuant to which
the Company granted the initial purchaser an option to purchase up to an additional $7,500,000 principal amount of Notes. On May 8, 2023,
the initial purchaser exercised its option to purchase additional Notes in full, bringing the total aggregate principal amount of the
Notes to $60,000,000. The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of
May 9, 2023, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The Notes are the Company’s senior, unsecured
obligations and accrue interest payable semiannually in arrears on May 15 and November 15 each year, beginning on November 15, 2023, at
a rate of 5.00% per year. The Notes will mature on May 15, 2026, unless earlier converted, redeemed or repurchased.
Prior to February 15, 2026, the Notes will be
convertible at the option of the noteholders only if specific conditions are met. On or after February 15, 2026 until the close of business
on the second scheduled trading day immediately preceding the maturity date, the Notes will be convertible at the option of the noteholders
at any time regardless of these conditions. The Company will settle conversions by paying or delivering, as applicable, cash, shares of
its common stock or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate
is 92.8031 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately
$10.78 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence
of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined
in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.
The Company may redeem for cash all, but not less
than all, of the Notes, at the Company’s option, on or after May 20, 2025 and before the 41st scheduled trading day immediately
preceding the maturity date, if the last reported sale price per share of the Company’s common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period
(including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the
Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued
and unpaid interest to, but excluding, the redemption date. In addition, calling any Note for redemption will constitute a Make-Whole
Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased
in certain circumstances if it is converted after it is called for redemption.
If certain corporate events that constitute a
“Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders
may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased,
plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change
includes certain business combination transactions involving the Company, the approval by the Company’s stockholders of any plan
or proposal for the liquidation or dissolution of the Company and certain de-listing events with respect to the Company’s common
stock.
The Indenture has customary provisions relating
to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment
defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, requires a default for 30 consecutive
days); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s
failure to convert a Note upon the exercise of the conversion right with respect to such Note, subject to a three business day cure period;
(iv) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate
with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially
all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (v) a default by the Company in its other
obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given
in accordance with the Indenture; (vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness
for money borrowed or judgments for the payment of at least $2,500,000 (or its foreign currency equivalent) or more (excluding any amounts
covered by insurance); and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its
significant subsidiaries.
If an Event of Default involving bankruptcy, insolvency
or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs,
then 100% of the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become
due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the
Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice
to the Company and the Trustee, may declare 100% of the principal amount of, and all accrued and unpaid interest on, all of the Notes
then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option,
that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in
the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 365 days at a specified
rate per annum not exceeding 0.50% on the principal amount of the Notes.
The above description of the Indenture and the
Notes is a summary and is not complete. A copy of the Indenture and the form of Note are filed as exhibits 4.1 and 4.2, respectively,
to this Current Report on Form 8-K, and the above summary is qualified by reference to the terms of the Indenture and the Notes set forth
in such exhibits.