| Item 1.01. | Entry Into a Material Definitive Agreement. |
On February 13, 2019 (the “Closing Date”), EyePoint Pharmaceuticals, Inc. (the “Company”), entered into a Term Loan Agreement (the “Loan Agreement”), among the Company, as borrower, EyePoint Pharmaceuticals US, Inc. and Icon Bioscience, Inc., as subsidiary guarantors (the “Guarantors”), CRG Servicing LLC, as administrative agent and collateral agent (the “Agent”), and the lenders party thereto from time to time, providing for a senior secured term loan of up to $60 million (the “Loan”). The Loan Agreement provides for (i) $35 million of the Loan to be advanced on the Closing Date, (ii) up to $15 million of the Loan to be advanced between the Closing Date and June 30, 2019 at the sole option of the Company, and (iii) subject to the Company and the Guarantors achieving product revenue from YUTIQ™ and DEXYCU™ of at least $25 million during any consecutive three-month period ending on or prior to March 31, 2020, up to $10 million of the Loan may be subsequently advanced.
The Loan is due and payable on December 31, 2023 (the “Maturity Date”). The proceeds of the Loan were and will be used to repay certain existing indebtedness and obligations of the Company, to pay fees and expenses related to the Loan Agreement, and for general working capital and corporate purposes.
The Loan bears interest at a per annum rate (subject to increase during an event of default) equal to 12.5%, of which 2.5% may be paidin-kind at the election of the Company, so long as no default or event of default under the Loan Agreement has occurred and is continuing. The Company is required to make quarterly, interest only payments until the Maturity Date. In addition, the Company is required to pay an upfront fee of 1.5% of the principal amount of the Loan (excluding anypaid-in-kind amounts), which is payable as amounts are advanced under the Loan. The Company will also be required to pay an exit fee equal to 6% of the aggregate principal amount advanced under the Loan Agreement.
Subject to certain exceptions, the Company is required to make mandatory prepayments of the Loan with the proceeds of assets sales and in the event of a change of control of the Company. In addition, the Company may make a voluntary prepayment of the Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on or prior to December 31, 2019, an amount equal to 10% of the aggregate outstanding principal amount of the Loan being prepaid, (ii) if prepayment occurs after December 31, 2019 and on or prior to December 31, 2020, 5% of the aggregate outstanding principal amount of the Loan being prepaid and (iii) if prepayment occurs after December 31, 2020 and on or prior to December 31, 2021, an amount equal to 3% of the aggregate outstanding principal amount of the Loan being prepaid. No prepayment premium is due on any principal prepaid after December 31, 2021.
Certain of the Company’s existing and future subsidiaries, including the Guarantors, are guaranteeing the obligations of the Company under the Loan Agreement. The obligations of the Company under the Loan Agreement and the guarantee of such obligations are secured by a pledge of substantially all of the Company’s and the Guarantors’ assets.
The Loan Agreement contains affirmative and negative covenants customary for financings of this type, including limitations on the Company’s and its subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Loan Agreement contains the following financial covenants requiring the Company and the Guarantors to maintain:
| | • | | liquidity in an amount which shall exceed the greater of (i) $5 million and (ii) to the extent the Company has incurred certain permitted debt, the minimum cash balance, if any, required of the Company by the creditors of such permitted debt; and |
| | • | | annual minimum product revenue from YUTIQ™ and DEXYCU™: (i) for the twelve-month period beginning on January 1, 2019 and ending on December 31, 2019, of at least $15 million, (ii) for the twelve-month period beginning on January 1, 2020 and ending on December 31, 2020, of at least $45 million, (iii) for the twelve-month period beginning on January 1, 2021 and ending on December 31, 2021, of at least $80 million and (iv) for the twelve-month period beginning on January 1, 2022 and ending on December 31, 2022, of at least $90 million. |
