Eagle Pharmaceuticals,Inc. (NASDAQ:EGRX) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry Into a Material Definitive Agreement.
On August8, 2017, Eagle Pharmaceuticals,Inc., or the Company, entered into an Amended and Restated Credit Agreement, or the Amended Credit Agreement, with JPMorgan Chase Bank, N.A., as administrative agent, or the Agent, and the lenders party thereto, which amended and restated the Company’s existing credit agreement, dated as of January26, 2017.
The Amended Credit Agreement provides for a three-year $50 million revolving credit facility and a three-year $100 million term loan facility (which are collectively referred to as the Credit Facility). At closing, which occurred on August8, 2017, $50 million of the term loan facility was drawn and none of the revolving credit facility was drawn. The Company may make one other draw on the term loan facility on or before February 4, 2018. The Credit Facility includes a $5 million letter of credit subfacility.The Company anticipates that the draw at closing and future draws under the Credit Facility, if any, will be used to finance the New Repurchase Program (as defined below in Item 8.01) and for other corporate purposes.
Loans under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (a)the LIBOR rate, plus an applicable margin ranging from 2.25% to 3.00% per annum, based upon the total net leverage ratio (as defined in the Amended Credit Agreement), or (b)the prime lending rate, plus an applicable margin ranging from 1.25% to 2.00% per annum, based upon the total net leverage ratio. The Company is required to pay a commitment fee on the unused portion of the Credit Facility at a rate ranging from 0.35% to 0.45% per annum based upon the total net leverage ratio.
The obligations of the Company under the Credit Facility are currently guaranteed by the Company’s wholly-owned subsidiary, Eagle Biologics,Inc. (formerly known as Arsia Therapeutics,Inc.) (which together with the Company are collectively referred to as the Loan Parties) and may in the future be guaranteed by certain material domestic subsidiaries of the Company. The obligations of the Loan Parties under the Amended Credit Agreement and other loan documents are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (a)all tangible and intangible assets of the Loan Parties, except for certain excluded assets, and (b)all of the equity interests of the subsidiaries of the Loan Parties held by the Loan Parties (limited, in the case of the voting equity interests of certain foreign subsidiaries and certain domestic subsidiaries that hold no assets other than equity interests of foreign subsidiaries, to 65% of the voting equity interests of such subsidiaries).
The Company is permitted to terminate or reduce the revolving commitments or term commitments of the lenders and to make voluntary prepayments at any time subject to break funding payments. The Company is required to make mandatory prepayments of outstanding indebtedness under the Amended Credit Agreement (a)upon receipt of proceeds from certain sales, transfers or other dispositions, casualty and other condemnation events and the incurrence of certain indebtedness other than indebtedness permitted, subject to customary reinvestment exceptions and (b)in the case that the aggregate amount of all outstanding loans and letters of credit issued under the Credit Facility exceed the aggregate commitment of all lenders under the Credit Facility.
The Amended Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Loan Parties and its consolidated subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. Under the terms of the Amended Credit Agreement, the Company is required to comply with (a)a maximum senior secured net leverage ratio, (b)a maximum total net leverage ratio and (c)a minimum fixed charge coverage ratio.
Events of default under the Amended Credit Agreement include: (a)the failure by the Company to timely make payments due under the Amended Credit Agreement; (b)material misrepresentations or misstatements in any representation or warranty by any Loan Party when made; (c)the failure by any Loan Party to comply with the covenants under the Amended Credit Agreement and other related agreements; (d)certain defaults under a specified amount of other indebtedness of the Company or its subsidiaries; (e)insolvency or bankruptcy-related events with respect to the Company or any of its subsidiaries; (f)certain judgments against either the Company or any of its subsidiaries; (g)certain ERISA-related events reasonably expected to have a material adverse effect on the Company and its subsidiaries taken as a whole; (h)the failure by the collateral documents to create a valid and perfected security interest in any material portion of the collateral purported to be covered thereby; (i)any material provision of any loan document ceasing to be, or being asserted by any Loan Party not to be, valid, binding and enforceable, or a denial in writing by any Loan Party of any further liability under the loan documents; (j)the occurrence of a change in control with respect to the Company and (k)the occurrence of a default under a material exclusive license. If one or more events of default occurs and continues, the Agent may, with the consent of the lenders holding a majority of the loans and commitments under the facilities, or will, at the request of such lenders, terminate the commitments of the lenders to make further loans and declare all of the obligations of the Loan Parties under the Amended
