Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Facility Agreement
On May 6, 2020, Neos Therapeutics, Inc. (the “Company”), the guarantor parties thereto, Deerfield Private Design Fund III, L.P. and Deerfield Partners, L.P. (together, the “Lenders”) and Deerfield Mgmt, L.P., as collateral agent, entered into a Fifth Amendment to Facility Agreement (the “Amendment”) to the Company’s existing Facility Agreement, (as amended, the “Agreement”) with the Lenders.
Pursuant to the terms of the Amendment, the Company deferred $5.0 million of principal (“Deferred Principal”) otherwise due on May 11, 2020. The Company is required to pay the Deferred Principal in eight equal monthly installments beginning on September 11, 2020 through April 11, 2021 (the “Installment Period”). Any monthly payment of the Deerfield Principal otherwise due during the Installment Period will be deferred to May 11, 2021 if, during the 30 days immediately preceding the trading day prior to the date such installment is otherwise due, the volume weighted average price for the Company’s common stock is above $1.50 for 10 consecutive days. In addition, to the extent the Lenders convert principal pursuant to the Convertible Notes, the amount of principal so converted will be applied to reduced amortization payments in the order in which they are due, beginning with principal amounts payable during the Installment Period. A $250,000 incremental exit fee will be due in cash when the facility is paid in full, or upon certain events such as acceleration of the facility, bankruptcy or insolvency of the Company or a change of control of the Company.
In addition, the parties further amended and restated the Senior Secured Convertible Notes (as amended and restated, the “Convertible Notes”) to provide for the conversion of up to $10.0 million of the remaining principal due under the facility into the Company’s common stock at a conversion price of $1.50 per share (the “Fixed Price Conversion”). The ability to issue shares upon a Fixed Price Conversion is also subject to customary beneficial ownership caps as described in the Convertible Notes. The Convertible Notes retained the variable price conversion price (“Variable Price Conversion”) for any additional conversions, which remain subject to customary beneficial ownership caps and exchange caps as described therein. The shares of common stock issuable upon the Fixed Price Conversion and the Variable Price Conversion are referred to herein as the “Conversion Shares”.
The foregoing descriptions of the material terms of the Convertible Notes and the Amendment do not purport to be complete and are subject to, and are qualified in their entirety by, reference to the form of Convertible Note and the Amendment, copies of which are attached to this Current Report on Form 8-K as Exhibit 4.1 and Exhibit 10.1, respectively.