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Item 1.01
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Entry into a Material Definitive Agreement
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On December 4, 2017, Lexicon Pharmaceuticals, Inc. (the “Company”) entered into a Loan Agreement among the Company, as borrower, certain subsidiaries of the Company from time to time party thereto, as guarantors (the “Guarantors”), BioPharma Credit PLC, as collateral agent and a lender (the “Agent”), and BioPharma Credit Investments IV Sub LP, as a lender (the “Loan Agreement”). Capitalized terms used but not otherwise defined in this Item 1.01 have the respective meanings ascribed to such terms in the Loan Agreement.
The Loan Agreement provides for a $150 million Term Loan to be extended to the Company on or about the closing date, as well as an additional $50 million Term Loan to be made available, at the Borrower’s option, by March 2019 if net sales are greater than $25 million in the preceding quarter (subject to other customary conditions). The Term Loans bear interest at a rate equal to 9.00% per annum and mature five years from the date of the first credit extension. To the extent that an Event of Default occurs and is continuing, all amounts outstanding under the Loan Agreement will bear additional interest.
The Term Loan is subject to mandatory prepayment provisions that require prepayment upon a change of control or receipt of proceeds from certain non-ordinary course transfers of assets. The Company may prepay the Term Loan in whole at its option at any time. Any prepayment of the Term Loan is subject to customary make-whole premiums and prepayment premiums.
The obligations under the Loan Agreement are guaranteed by the Guarantors and secured by a first lien security interest in substantially all of the assets (subject to certain exceptions) of the Company and the Guarantors.
The Loan Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default applicable to the Company and the Guarantors, but does not include any financial covenants relating to the achievement or maintenance of revenue, cash flow or cash and investment requirements. If an event of default occurs and is continuing, the Agent may, or at the request of the Required Lenders, shall, declare all amounts outstanding under the Loan Agreement to be immediately due and payable.
The foregoing description of the Loan Agreement is qualified in its entirety by reference to such Loan Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
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The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 2.03.
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Item 7.01
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Regulation FD Disclosure
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On December 5, 2017, the Company issued a press release announcing the execution of the Loan Agreement discussed above, a copy of which is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K, including the attached Exhibit 99.1, is being “furnished” pursuant to Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.