Item 1.01
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Entry into a Material Definitive Agreement.
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On March 12, 2018, Orexigen
Therapeutics, Inc. (the Company) entered into a Debtor in Possession Credit and Security Agreement (the DIP Loan Agreement) with Wilmington Trust, National Association, as administrative agent (the DIP Administrative
Agent), Baupost Group Securities, L.L.C., EcoR1 Capital Fund, L.P., EcoR1 Capital Fund Qualified, L.P., 1992 MSF International Ltd, 1992 Tactical Credit Master Fund, L.P., Nineteen77 Global Multi-Strategy Alpha Master Limited, and Nineteen77
Global Multi-Strategy Alpha (Levered) Master Limited as lenders (the DIP Lenders), subject to approval of the Bankruptcy Court (as defined in Item 1.03 below). The DIP Loan Agreement provides for a $70,350,000
debtor-in-possession
credit facility (the DIP Facility) consisting of (i) new money term loans in an aggregate amount of up to $35,000,000, (ii)
roll-up
loans (where prepetition secured notes are converted into post-petition secured obligations under the DIP Facility) in an aggregate amount of $35,000,000 (collectively, the DIP Loans) and
(iii) a $350,000 fee to the DIP Lenders, which will be capitalized and added to the principal amount of the DIP Loans. The DIP Loan Agreement also provides for a $50,000 annual fee to be paid to the DIP Administrative Agent. In accordance with
the terms of the DIP Loan Agreement, the Company will use the proceeds of the DIP Facility for the following purposes: (i) to pay (a) all reasonable fees due to the DIP Lenders and the DIP Administrative Agent, as well as their
professional fees and expenses and (b) adequate protection payments to its prepetition secured noteholders and agents in connection with the use of their cash collateral, (ii) to provide working capital, (iii) for other general
corporate purposes (including to market and sell certain assets of the Company), and (iv) to pay administration costs of the Chapter 11 Case and other amounts approved by the Bankruptcy Court as set forth in the budget attached to the DIP Loan
Agreement as Exhibit A.
Pursuant to the terms of the DIP Loan Agreement, interest will accrue on the principal balance of the DIP Loans
at a rate per annum equal to LIBOR for such interest period plus 10.00% per annum. The DIP Facility is subject to certain customary representations, warranties and covenants, and the DIP Lenders obligations to fund the DIP Loans are contingent
upon the satisfaction of certain conditions, including, without limitation, the entry of interim and final orders by the Bankruptcy Court approving the DIP Facility and its terms (the DIP Orders).
Upon the occurrence of an event of default set forth in the DIP Loan Agreement (each a DIP Event of Default), the DIP
Administrative Agent has the option of any or all of the following actions: (i) declaring all of the Companys obligations under the DIP Facility to be immediately due and payable; (ii) terminating the lending commitments and the DIP
Loan Agreement; (iii) declaring a termination, reduction or restriction on the ability of the Company to use any cash collateral of the DIP Lenders or prepetition secured noteholders; and/or (iv) exercising the rights of a secured party
upon default under applicable law including the Uniform Commercial Code. The occurrence of a DIP Event of Default will cause the principal balance of the DIP Loans to accrue interest at a rate per annum equal to 2% above the
non-default
interest rate.
Subject to entry of the DIP Orders, the Companys obligations under the
DIP Loan Agreement will be (i) secured by, among other things, first priority, priming security interests in all of the Companys assets, subject only to certain carve outs and permitted exceptions, as set forth in the DIP Loan Agreement
and DIP Orders; and (ii) granted super-priority administrative claim status in the Bankruptcy Case described in Item 1.03 below, subject only to certain carve outs, as set forth in the DIP Loan Agreement and DIP Orders.
The foregoing description of the DIP Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the DIP
Loan Agreement filed as Exhibit 10.1 hereto and incorporated herein by reference.