Item 1.01
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Entry into a Material Definitive Agreement.
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MidCap Credit Facility
On August 6, 2019 (the
Closing Date), MannKind Corporation (MannKind) entered into a Credit and Security Agreement (the MidCap Credit Facility), by and among MannKind, MannKind LLC, MannKinds wholly owned subsidiary
(MannKind LLC, and together with MannKind, collectively, the Company), the lenders party thereto from time to time and MidCap Financial Trust (MidCap), as agent.
The MidCap Credit Facility provides a secured term loan facility in an aggregate principal amount of up to $75.0 million. The Company borrowed the first
advance of $40.0 million (Tranche 1) on August 6, 2019. Under the terms of the MidCap Credit Facility, the second advance of $10.0 million (Tranche 2) will be available to the Company until April 15, 2020,
subject to the Companys satisfaction of certain conditions described in the MidCap Credit Facility, including the Company achieving Afrezza Net Revenue (as defined in the MidCap Credit Facility) of at least $30.0 million on a trailing
twelve month basis. Under the terms of the MidCap Credit Facility, the third advance of $25.0 million (Tranche 3) will be available to the Company until June 30, 2021, subject to the satisfaction of certain milestone conditions
associated with Treprostinil Technosphere.
Tranche 1 and, if borrowed, Tranche 2 and Tranche 3, each accrue interest at an annual rate equal to LIBOR
plus 6.75%, subject to a LIBOR floor of 2.00%. Interest on each term loan advance is due and payable monthly in arrears. Principal on each term loan advance under Tranche 1 and Tranche 2 is payable in 36 equal monthly installments beginning
September 1, 2021, until paid in full on August 1, 2024, and principal on each term loan advance under Tranche 3 is payable beginning on the later of (i) September 1, 2021, and (ii) the first day of the first full calendar
month immediately following such term loan advance, in an amount equal to the outstanding term loan advance in respect of Tranche 3 divided by the number of full calendar months remaining before August 1, 2024. The Company has the option to
prepay the term loans, in whole or in part, subject to early termination fees in an amount equal to 3.00% of principal prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date, 2.00% of principal prepaid if prepayment
occurs after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date, and 1.00% of principal prepaid if prepayment occurs after the second anniversary of the Closing Date and prior to or on the third
anniversary of the Closing Date. In connection with execution of the MidCap Credit Facility, the Company paid MidCap a $375,000 origination fee.
Upon
termination of the MidCap Credit Facility, the Company is required to pay an exit fee equal to 6.00% of the principal amount of all term loans advanced to the Company under the MidCap Credit Facility.
The Companys obligations under the MidCap Credit Facility are secured by a security interest on substantially all of its assets, including intellectual
property. Additionally, the Companys future subsidiaries, if any, may be required to become
co-borrowers
or guarantors under the credit facility.
The MidCap Credit Facility contains customary affirmative covenants and customary negative covenants limiting the Companys ability and the ability of
the Companys subsidiaries to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to
certain exceptions. The Company must also comply with a financial covenant relating to trailing twelve month minimum Afrezza Net Revenue requirements (as defined in the MidCap Credit Facility), tested on a monthly basis, and a minimum cash covenant
of $15.0 million at all times prior to the funding of Tranche 2, and $20.0 million at all times following the funding of Tranche 2 or Tranche 3.
The MidCap Credit Facility also contains customary events of default relating to, among other things, payment defaults, breaches of covenants, a material
adverse change, listing of the Companys common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties. Upon an event of
default, the agent and the lenders may declare all or a portion of the Companys outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the MidCap Credit Facility. During the
existence of an event of default, interest on the term loans could be increased by 2.00%.