Item
1.01 Entry into a Material Definitive Agreement.
Indenture and Notes
On December 21, 2021,
Danimer Scientific, Inc. (the “Company”) issued $240,000,000 principal amount of its 3.250% Convertible Senior Notes due 2026
(the “Notes”). The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as
of December 21, 2021, between the Company and U.S. Bank National Association, as trustee (the “Trustee”). Pursuant to the
purchase agreement between the Company and the initial purchasers of the Notes, the Company granted the initial purchasers an option to
purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $40,000,000
principal amount of Notes. The Notes issued on December 21, 2021 include $40,000,000 principal amount of Notes issued pursuant to the
full exercise by the initial purchasers of such option.
The Notes will be the
Company’s senior, unsecured obligations and will be (i) equal in right of payment with the Company’s existing and future senior,
unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated
to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value
of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities,
including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.
The Notes will
accrue interest at a rate of 3.250% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning
on June 15, 2022. The Notes will mature on December 15, 2026, unless earlier repurchased, redeemed or converted. Before June 15,
2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after June 15,
2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading
day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares
of its Class A common stock (the “common stock”) or a combination of cash and shares of its common stock, at the
Company’s election. The initial conversion rate is 92.7085 shares of common stock per $1,000 principal amount of Notes, which
represents an initial conversion price of approximately $10.79 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 Notes will be redeemable,
in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time,
on or after December 20, 2024, and on or before the 40th scheduled trading day immediately before the maturity date, but only if certain
liquidity conditions are satisfied and the last reported sale price per share of the Company’s common stock exceeds 130% of the
conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on,
and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately
before the date the Company sends such notice. However, the Company may not redeem less than all of the outstanding notes unless at least
$100.0 million aggregate principal amount of notes are outstanding and not called for redemption as of theime the Company sends the
related redemption notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus
accrued and unpaid interest, if any, 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, among other things, certain business combination transactions involving the Company
and certain de-listing events with respect to the Company’s common stock.
The Notes will have 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, will be subject to a 30-day
cure period); (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 subsidiaries with respect to indebtedness
for money borrowed of at least $35,000,000; (vii) the rendering of certain judgments against the Company or any of its significant subsidiaries
for the payment of at least $35,000,000, where such judgments are not discharged or stayed within 60 days after the date on which the
right to appeal has expired or on which all rights to appeal have been extinguished and (viii) 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 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 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 180 days at a specified
rate per annum not exceeding 1.00% 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 the certificate representing
the Notes 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.
Capped Call Transactions
On December 16, 2021,
in connection with the pricing of the offering of Notes, the Company entered into privately negotiated capped call transactions (the “Base
Capped Call Transactions”) with Jefferies International Limited, Royal Bank of Canada, and the Bank of Montreal (collectively,
the “Option Counterparties”). In addition, on December 17, 2021, in connection with the initial purchasers’ exercise
of their option to purchase additional Notes, the Company entered into additional capped call transactions (the “Additional Capped
Call Transactions,” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with each
of the Option Counterparties. The Capped Call Transactions cover, subject to customary anti-dilution adjustments, the aggregate number
of shares of the Company’s common stock that initially underlie the Notes, and are expected generally to reduce potential dilution
to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess
of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price
of the Capped Call Transactions. The cap price of the Capped Call Transactions is initially $16.92, which represents a premium of 100%
over the last reported sale price of the Company’s common stock on December 16, 2021. The cost of the Capped Call Transactions was
approximately $35.0 million.
The Capped Call Transactions
are separate transactions, each between the Company and the applicable Option Counterparty, and are not part of the terms of the Notes
and will not affect any holder’s rights under the Notes or the Indenture. Holders of the Notes will not have any rights with respect
to the Capped Call Transactions.
The above description
of the Capped Call Transactions is a summary and is not complete. A form of the confirmations for the Capped Call Transactions is filed
as exhibit 10.1 to this Current Report on Form 8-K, and the above summary is qualified by reference to the terms of the confirmations
set forth in such exhibits.