Item 1.01.
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Entry into a Material Definitive Agreement.
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On May 2, 2019,
Regeneron Pharmaceuticals, Inc. (“
Regeneron
” or the “
Company
”) and/or certain of its subsidiaries
amended and restated (i) the Participation Agreement, dated as of March 3, 2017 (the “
Original Participation Agreement
”
and, as so amended and restated, the “
A&R Participation Agreement
”), with Bank of America, N.A., as administrative
agent, BA Leasing BSC, LLC, as lessor (in such capacity, the “
Lessor
”), and a syndicate of lenders (collectively
with the Lessor, the “
Participants
”)
and (ii) certain other related agreements
that were previously entered into in March 2017 (collectively, the “
Original Agreements
”). The Original Agreements
provided for lease financing in connection with the acquisition by the Lessor of Regeneron’s corporate headquarters and other
rentable area consisting of approximately 170 acres of predominately office buildings and laboratory space located in the towns
of Mount Pleasant and Greenburgh, New York (the “
Facility
”) and the lease of the Facility by Old Saw Mill Holdings
LLC (the “
Lessee
”), a wholly owned subsidiary of Regeneron, from the Lessor for a five-year term.
As described in greater detail below, the
Original Agreements were amended and restated (as so amended and restated, collectively, the “
A&R Agreements
”),
among other things, in order to revise certain covenants, representations and warranties, and events of default to be substantially
similar to those set forth in the Credit Agreement, dated as of December 14, 2018 (the “
Credit Agreement
”),
by and among Regeneron, as a borrower and guarantor, certain subsidiaries of Regeneron party thereto as subsidiary borrowers, JPMorgan
Chase Bank, N.A., as administrative agent, and the lenders party thereto from time to time. The Company’s entry into the
Credit Agreement was previously reported in its Current Report on Form 8-K filed with the United States Securities and Exchange
Commission on December 17, 2018. The A&R Agreements did not change the maturity date of the advances under the A&R Participation
Agreement or the end of the term of the A&R Lease (as defined below). The interest or yield that is payable to the Participants
on their outstanding advances under the A&R Participation Agreement also remains unchanged under the A&R Agreements.
A&R Participation Agreement
On May 2, 2019, the Lessee entered into the
A&R Participation Agreement by and among the Lessee, Bank of America, N.A., as administrative agent, the Lessor, and the other
Participants. The A&R Participation Agreement governs the $720 million lease financing that was previously advanced by the
Participants in March 2017 to finance the purchase price for the Facility and to reimburse the Company for certain payments previously
made by it.
A&R Lease
On May 2, 2019, the Lessee also entered into
an Amended and Restated Lease and Remedies Agreement (the “
A&R Lease
”) with the Lessor, which amends and
restates the lease of the Facility and certain related assets previously entered into in March 2017 by the Lessee and the Lessor.
Pursuant to the A&R Lease, the Lessee continues to grant a security interest in certain of its assets and rights to secure
certain obligations under the A&R Agreements and certain related documents. The A&R Lease continues to be a triple-net
lease requiring the Lessee, among other things, to pay during the term of the A&R Lease all maintenance, insurance, taxes,
and other costs arising out of the use of the Facility (which are offset in part by payments received by the Lessee from third-party
tenants to whom certain parts of the Facility are subleased from the Lessee). The A&R Lease also continues to require that
the Lessee make monthly payments of basic rent during the remaining term of the A&R Lease in an amount equal to the interest
and yield payable to the Participants on their outstanding advances under the A&R Participation Agreement. Such advances accrue
interest or yield, as applicable, at a variable rate per annum based on the one-month London Interbank Offered Rate, plus an applicable
margin that varies with the Company’s debt rating and total leverage ratio.
A&R Guaranty
The Company and its wholly owned subsidiaries
Regeneron Healthcare Solutions, Inc. and Regeneron Genetics Center LLC, on a joint and several basis, continue to guarantee all
of the Lessee’s obligations under the A&R Participation Agreement, the A&R Lease, and certain related documents pursuant
to an Amended and Restated Guaranty, dated as of May 2, 2019 (the “
A&R Guaranty
”), made by the Company and
such subsidiaries, as guarantors.
Financial and Operating Covenants; Other Terms
The A&R Agreements contain financial
and operating covenants, which are substantially similar to the covenants set forth in the Credit Agreement, except for such matters
specifically relating to the Facility or the lease financing nature of the transactions contemplated by the A&R Participation
Agreement. Financial covenants include a maximum total leverage ratio and a minimum interest expense coverage ratio. Operating
covenants include, among other things, limitations on (i) the incurrence of indebtedness by the Company’s subsidiaries, (ii)
liens on assets of the Company and its subsidiaries and liens on the Facility, (iii) certain fundamental changes and the disposition
of assets by the Company and its subsidiaries, (iv) entering into affiliate transactions, and (v) the payment of dividends, distributions,
and certain other restricted payments in respect of the capital stock of the Company and its subsidiaries (the “
Restricted
Payments Covenant
”). Similar to the Credit Agreement, the Restricted Payments Covenant allows the Company, so long as
no event of default exists, to make payments that would otherwise be restricted if at the time of the making of any such payment
and immediately thereafter it meets a specified total leverage ratio requirement. The A&R Agreements contain other customary
covenants, representations and warranties, and events of default. The A&R Lease also continues to include certain early termination
events relating to the occurrence of certain material events of loss or material environmental events relating to the Facility.
Maturity Date; Extension Option; Termination
March 3, 2022 continues to be the
maturity date for the advances under the A&R Participation Agreement and the end of the term of the A&R Lease, at
which time all amounts outstanding under the A&R Agreements will become due and payable in full. The A&R
Participation Agreement and the A&R Lease continue to include an option for the Lessee to elect to extend the maturity
date of the A&R Participation Agreement and the term of the A&R Lease for an additional five-year period, subject to
the consent of all the Participants and certain other conditions. The Lessee also continues to have the option prior to the
end of the term of the A&R Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal
amount of the Participants’ advances under the A&R Participation Agreement, all accrued and unpaid interest and
yield thereon, and all other outstanding amounts under the A&R Agreements and certain related documents or (b) sell the
Facility to a third party on behalf of the Lessor, in each case, subject to certain terms and conditions set forth in the
A&R Participation Agreement and the A&R Lease. Outstanding advances under the A&R Participation Agreement and
outstanding obligations under the A&R Lease may be prepaid at any time without premium or penalty, subject to customary
breakage costs.
* * *
The foregoing description of the A&R
Participation Agreement, the A&R Lease, and the A&R Guaranty is qualified in its entirety by reference to the full text
of such agreements, which are attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively, and are incorporated herein by reference.