OCZ Raises $13 Million in Private Placement

OCZ Technology Group, Inc. has signed definitive agreements with various institutional and accredited investors to raise gross proceeds of approximately $13 million in a private placement of Senior Secured Convertible Debentures and Warrants.

The transaction is subject to customary closing conditions.

The Senior Secured Convertible Debentures are secured by a lien on all of the assets of OCZ and its subsidiaries, and are subordinate to the Hercules Technology Growth Capital, Inc. Loan and Security Agreement. The debentures carry a 9% interest rate per year, payable in cash, and will mature on the one year anniversary of the closing date. The debentures are convertible into shares of OCZ common stock at a conversion price of $1.70 per share.

In connection with the offering of the debentures, warrants will also be issued at closing that provide investors the opportunity to purchase common stock equal to 75% of the number of shares into which the debentures will be convertible, and at a strike price of $0.75 per share. The warrants will have a 5 year term from the closing date. Both the conversion price of the debentures and the exercise price of the warrants are subject to price adjustments in relation to anti-dilution events.

"This new financing provides OCZ with additional capital to continue the transformation of our business as the company continues to focus on delivering high performance, client and enterprise solid state storage solutions," stated Rafael Torres, CFO, OCZ.

In addition, OCZ also announced that it has retained Deutsche Bank Securities Inc. as financial advisor to assist the board of directors in evaluating various strategic alternatives available to the company.

At closing, the company will amend its Loan and Security agreement with Hercules as the company did not meet certain covenants. In connection with the amendment, all of Hercules warrants, or approximately 3.9 million warrants, will be cancelled. This loan will now be payable on June 1, 2014, and will include a loan fee of $6.5 million that will be payable at maturity of the loan and be junior to the Senior Secured Convertible Debentures. Upon the effectiveness of this amendment, Hercules waives any existing defaults.

OCZ will be required to file a resale registration statement within 60 days following the closing that covers the resale by the purchasers of the shares issuable upon conversion of the debentures or exercise of the warrants. The debentures and warrants have not been and will not be registered under the Securities Act of 1933 or the securities laws of any state or juridiction. This press release does not and shall not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities, nor shall there be any sale of securities in any state or juridiction in which such offer, solicitation or sale would be unlawful prior to registration under the securities laws of any state or juridiction.