BioCryst Pharmaceuticals, Inc. (the “Company”) together with its consolidated subsidiary, MDCP, LLC, a Delaware limited liability company (“MDCP,” and the Company together with MDCP, collectively, the “Borrowers”), entered into a $23 million secured loan facility (the “Loan Transaction,” and such loan, the “Loan”) with MidCap Financial, a Delaware statutory trust, as administrative agent and lender (“MidCap”), pursuant to the terms and conditions of that certain Credit and Security Agreement, dated as of September 23, 2016 (the “Credit Agreement”), among the Borrowers, MidCap, and the lenders party thereto from time to time. The Company received net Loan proceeds in the aggregate amount of $22.7 million and will use the Loan proceeds for general corporate purposes as permitted under the Credit Agreement.
The Borrowers initially will make interest-only payments through 2017, with principal payments for 40 months commencing on January 1, 2018. The interest rate will be a variable interest rate (initially 8.5%) based on the one-month LIBOR with a LIBOR floor of 0.5%. Upon execution of the Credit Agreement, the Company paid to MidCap an origination fee of 0.5% of the aggregate Loan amount. Upon repayment in full of the Loan, the Company is obligated to pay a final payment fee equal to 5.0% of the aggregate Loan amount, less the amount of any partial exit fees previously paid as described in the last sentence of this paragraph. In addition, the Company may prepay all or any portion of the Loan in $1,000,000 increments at any time, and may be required to prepay the Loan on the occurrence of certain events, including without limitation (and subject to customary exceptions), the Company’s receipt of the proceeds of casualty events and certain other asset dispositions. Both optional and mandatory prepayments may be subject to a prepayment premium of: (i) 3% of the Loan amount prepaid in the first year of the Loan (ii) 2% of the Loan amount prepaid in the second year of the Loan and (iii) 1% of the Loan amount prepaid in the third year of the Loan. In addition, with respect to any voluntary prepayments of the Loan, the Company is obligated to pay a partial exit fee equal to 5% of the aggregate principal amount of the Loan being prepaid at such time.
The obligations of the Borrowers under the Credit Agreement are secured by a first priority lien in favor of MidCap on substantially all of the Company’s and its subsidiaries’ existing and after-acquired assets, excluding certain specified assets of the Borrowers, but including any proceeds thereof. The Borrowers entered into customary pledge and intellectual property security agreements to evidence the security interest in favor of MidCap, as well as other customary ancillary and collateral documents.
Under the Credit Agreement, the Borrowers are subject to affirmative covenants which are customary for financings of this type, including the obligations of the Borrowers to: (i) maintain good standing and governmental authorizations, (ii) provide certain information and notices to MidCap, (iii) deliver monthly and annual financial statements to MidCap, (iv) maintain insurance, (v) discharge all taxes, (vi) protect their intellectual property and regulatory permits and (vii) generally protect the collateral granted to MidCap. The Credit Agreement also contains customary negative covenants that place restrictions on the Borrowers’ ability to, among other things, dispose of or transfer assets, engage in mergers or acquisitions, incur debt, and grant liens, so long as the Loan is outstanding.
Further, the Credit Agreement contains customary events of default, including, without limitation, payment defaults, covenant defaults, breaches of certain representations and warranties, cross defaults to certain material agreements or material indebtedness, certain events of bankruptcy and insolvency, material court orders or judgments, a change of control, and certain adverse regulatory determinations. If an event of default occurs and is not cured within any applicable grace period or is not waived, MidCap and the lenders are entitled to take various actions, including, without limitation, the acceleration of amounts due thereunder, termination of commitments under the Credit Agreement and collection upon the collateral securing the Loan.