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Item 1.01.
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Entry Into a Material Definitive Agreement.
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On February 10, 2020 (the “Closing
Date”), Agile Therapeutics, Inc. (the “Company”) entered into a Credit Agreement and Guaranty (the “Credit
Agreement”) among the Company, the guarantors from time to time party thereto (the “ Guarantors”), the lenders
from time to time party thereto (the “Lenders”) and Perceptive Credit Holdings III, LP, as a Lender and as Administrative
Agent for the Lenders (“Perceptive”). Pursuant to the Credit Agreement, the Lenders will provide a senior secured delayed
draw term loan facility (the “Facility”) to the Company in an aggregate principal amount of up to $35,000,000 in three
separate tranches. The first tranche of $5,000,000 (the “Tranche A Loan”) was funded on the Closing Date. The second
tranche of $15,000,000 (the “Tranche B Loan”) may be drawn at the Company’s option on or before March 31, 2020
subject to the Company receiving approval from the U.S. Food and Drug Administration (“FDA”) for its “AG200-15”
product candidate (“Twirla”). The third tranche of $15,000,000 (the “Tranche C Loan” and collectively with
the Tranche A Loan and any Tranche B Loan, the “Loans”) may be drawn at the Company’s option on or before December
31, 2021 (the “Drawing Date”) provided that product revenue related to sales of Twirla for the twelve consecutive calendar
months most recently ended prior to the Drawing Date shall not be less than $20,000,000. Proceeds of the Facility will be used
to provide additional working capital and for general corporate purposes.
On the Closing Date, the Company paid to the Lenders a fee
equal to 1.0% of the aggregate principal amount of all Loans available under the Facility.
The Facility will mature on the fourth anniversary
of the Closing Date. The outstanding principal amount of the Loans will be due and payable on the maturity date. The outstanding
principal amount of the Loans will accrue interest at an annual rate equal to the London Interbank Offered Rate for one-month deposits
(“LIBOR”) plus 10.25% (the “Applicable Margin”), provided that LIBOR shall not be less than 1.5%. The Credit
Agreement provides for interest-only payments until the third anniversary of the Closing Date. Thereafter, the Company will make
monthly amortization payments in an amount equal to 1.5% of the principal amount of the Loans drawn under the Facility. At the
end of the term of the Loans (whether at maturity, by prepayment in full or otherwise), the Company shall make a final payment
to Perceptive in the amount of the entire unpaid balance of the Loans.
The Company may prepay the Loans in whole
or in part. Any such prepayment of the Loans is subject to a prepayment fee of 10.0% if such prepayment occurs on or prior to the
first anniversary of the Closing Date; 8.0% if such prepayment occurs after the first anniversary of the Closing Date and on or
prior to the second anniversary of the Closing Date; 4.0% if such prepayment occurs after the second anniversary of the Closing
Date and on or prior to the third anniversary of the Closing Date; and 2.0% if such prepayment occurs after the third anniversary
of the Closing Date and prior to the fourth anniversary of the Closing Date. Upon the occurrence and during the continuance of
any Event of Default (as defined in the Credit Agreement), the Applicable Margin on the principal amount of the Loans outstanding
shall automatically increase by 3.0% per annum.
The obligations under the Credit Agreement
are secured by a first priority security interest on all of the existing and after acquired tangible and intangible assets of the
Company.
The Credit Agreement contains certain representations
and warranties, affirmative covenants, negative covenants, financial covenants, and conditions that are customary for similar financings.
The affirmative covenants, among other things, require the Company and the Guarantors to undertake various reporting and notice
requirements, maintain insurance and all regulatory approvals, material agreements, material intellectual property and other rights,
interests or assets (whether tangible or intangible) reasonably necessary for the operations of the Company’s and the Guarantors’
business. The negative covenants restrict or limit the ability of the Company and the Guarantors to, among other things and subject
to certain exceptions contained in the Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental
corporate changes, such as mergers or acquisitions, or changes to the Company’s or the Guarantors’ business activities;
make certain investments or restricted payments; change its fiscal year; pay dividends; repay other certain indebtedness; engage
in certain affiliate transactions; or enter into, amend or terminate any other agreements that has the impact of restricting the
Company’s ability to make loan repayments under the Credit Agreement. The Credit Agreement also contains certain financial
covenants in respect of maintaining a minimum cash balance of $3,000,000 and receiving minimum net revenue for the trailing 12-month
period in amounts set forth in the Credit Agreement.
The Credit Agreement contains Events of
Default, which include, among others, non-payment of principal, violation of covenants, inaccuracy of representations and warranties,
bankruptcy and insolvency events, material judgments, certain regulatory-related events and events constituting a change of control.
The occurrence of an Event of Default could result in, among other things, the declaration that all outstanding principal and interest
under the Loans are immediately due and payable in whole or in part.
In connection with the Credit Agreement,
the Company issued to Perceptive two warrants to purchase a total of 1,400,000 shares of the Company’s common stock, $0.0001
par value per share (the “Common Stock”). The first warrant is exercisable for 700,000 shares of Common Stock at an
exercise price of $3.74 per share (the “First Warrant”). The second warrant is exercisable for 700,000 shares of Common
Stock at an exercise price of $4.67 per share (the “Second Warrant”, and together with the First Warrant, the “Warrants”).
The Warrants are exercisable until the seventh anniversary of the Closing Date and contain anti-dilution provisions and other warrant
holder protections.
Perceptive Life Sciences Master Fund, Ltd.,
an affiliate of Perceptive Credit Holdings III, LP, is a significant stockholder of the Company.
The foregoing descriptions of the Credit
Agreement and the Warrants do not purport to be complete and are qualified in their entirety by reference to the Credit Agreement
and Warrants, copies of which are filed as Exhibits 10.1, and 4.1 and 4.2, respectively, to this Form 8-K and are incorporated
herein by reference.